Energy Conservation Program: Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending Machines

DEPARTMENT OF ENERGY

10 CFR Parts 429 and 431

[Docket Number EERE-2013-BT-STD-0022]

RIN 1904-AD00

Energy Conservation Program: Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending Machines

AGENCY:

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

ACTION:

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

SUMMARY:

The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including refrigerated bottled or canned beverage vending machines (beverage vending machine). EPCA also requires the U.S. Department of Energy (DOE) to periodically determine whether more-stringent, amended standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this NOPR, DOE proposes amended energy conservation standards for Class A and Class B beverage vending machines. DOE is also proposing to amend the definition for Class A equipment to more clearly differentiate Class A and Class B equipment, as well as to amend the definition of combination vending machine. In addition, DOE proposes to establish definitions and new energy conservations standards for Combination A and Combination B classes of beverage vending machines. This NOPR also announces a public meeting to receive comment on these proposed standards and associated analyses and results, and announces the availability of the NOPR technical support document (TSD).

DATES:

DOE will hold a public meeting on Tuesday, September 29, 2015, from 10 a.m. to 3 p.m., in Washington, DC. The meeting also will be broadcast as a webinar. See section VII of this NOPR, “Public Participation,” for webinar registration information, participant instructions, and information about the capabilities available to webinar participants.

DOE will accept comments, data, and information regarding this NOPR before and after the public meeting, but no later than October 19, 2015. See section VII of this NOPR, “Public Participation,” for details.

Comments regarding the likely competitive impact of the proposed standard should be sent to the Department of Justice contact listed in the

ADDRESSES

section before September 18, 2015.

ADDRESSES:

The public meeting will be held at the U.S. Department of Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., Washington, DC 20585.

Any comments submitted must identify the NOPR for Energy Conservation Standards for Beverage Vending Machines, and provide docket number EERE-2013-BT-STD-0022 and/or regulatory information number (RIN) number 1904-AD00. Comments may be submitted using any of the following methods:

1.

Federal eRulemaking Portal: www.regulations.gov.

Follow the instructions for submitting comments.

2.

Email: BVM2013STD0022@ee.doe.gov.

Include the docket number and/or RIN in the subject line of the message.

3.

Postal Mail:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. If possible, please submit all items on a compact disc (CD), in which case it is not necessary to include printed copies.

4.

Hand Delivery/Courier:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Program, 950 L'Enfant Plaza SW., Suite 600, Washington, DC 20024. Telephone: (202) 586-2945. If possible, please submit all items on a CD, in which case it is not necessary to include printed copies.

Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule may be submitted to the Office of Energy Efficiency and Renewable Energy through the methods listed above and by email to

Chad_S._Whiteman@omb.eop.gov.

For detailed instructions on submitting comments and additional information on the rulemaking process, see section VII of this NOPR (Public Participation).

Docket:

The docket, which includes

Federal Register

notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at

www.regulations.gov.

All documents in the docket are listed in the

www.regulations.gov

index. However, some documents listed in the index, such as those containing information that is exempt from public disclosure, may not be publicly available.

A link to the docket Web page can be found at:

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/73

. This Web page contains a link to the docket for this NOPR on the

www.regulations.gov

site. The

www.regulations.gov

Web page contains simple instructions on how to access all documents, including public comments, in the docket. See section VII of this NOPR, “Public Participation,” for further information on how to submit comments through

www.regulations.gov.

EPCA requires the Attorney General to provide DOE a written determination of whether the proposed standard is likely to lessen competition. The U.S. Department of Justice Antitrust Division invites input from market participants and other interested persons with views on the likely competitive impact of the proposed standard. Interested persons may contact the Division at

energy.standards@atr.usdoj.gov

before September 18, 2015. Please indicate in the “Subject” line of your email the title and Docket Number of this rulemaking notice.

FOR FURTHER INFORMATION CONTACT:

Mr. John Cymbalsky, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-2J, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 287-1692. Email:

refrigerated_beverage_vending_machines@ee.doe.gov.

Ms. Sarah Butler, U.S. Department of Energy, Office of General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-0121, (202) 586-1777, Email:

Sarah.Butler@hq.doe.gov.

For further information on how to submit a comment, review other public comments and the docket, or participate in the public meeting, contact Ms. Brenda Edwards at (202) 586-2945 or by email:

Brenda.Edwards@ee.doe.gov.

SUPPLEMENTARY INFORMATION:

This notice of proposed rulemaking proposes to incorporate by reference into 10 CFR part 431 the testing methods contained in the following commercial standards:

(1) ASTM Standard E 1084-86 (Reapproved 2009), “Standard Test Method for Solar Transmittance (Terrestrial) of Sheet Materials Using Sunlight,” approved April 1, 2009.

Copies of ASTM standards may be purchased from ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA, 19428, (877) 909-2786, or at

www.astm.org.

See IV.N for a further discussion of this standard.

Table of Contents

I. Synopsis of the Proposed Rule

A. Benefits and Costs to Customers

B. Impact on Manufacturers

C. National Benefits and Costs

D. Conclusion

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for Beverage Vending Machines

III. General Discussion

A. Equipment Classes and Scope of Coverage

B. Test Procedure

C. Compliance Dates

D. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

E. Energy Savings

1. Determination of Savings

2. Significance of Savings

F. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Customers

b. Savings in Operating Costs Compared to Increase in Price (Life-Cycle Costs)

c. Energy Savings

d. Lessening of Utility or Performance of Equipment

e. Impact of Any Lessening of Competition

f. Need for National Energy Conservation

g. Other Factors

2. Rebuttable Presumption

IV. Methodology and Discussion of Related Comments

A. Market and Technology Assessment

1. Equipment Classes

a. Class A and Class B Beverage Vending Machines

b. Combination Vending Machines

2. Machines Vending Perishable Goods

3. Technology Assessment

B. Screening Analysis

C. Engineering Analysis

1. Baseline Equipment and Representative Sizes

2. Refrigerants

3. Design Options Analyzed and Maximum Technologically Feasible Efficiency Level

4. Manufacturer Production Costs

D. Markups Analysis

E. Energy Use Analysis

F. Life-Cycle Cost and Payback Period Analyses

1. Customer Purchase Prices

2. Energy Prices

3. Maintenance, Repair, and Installation Costs

4. Equipment Lifetime

5. Discount Rates

6. Equipment Efficiency in the No-New-Standards Case

7. Split Incentives

G. National Impact Analysis

1. Shipments Analysis

a. Market Share by Equipment Class

b. Market Share by Refrigerant

c. High and Low Shipments Assumptions

2. Forecasted Efficiency Trends

3. National Energy Savings Analysis

a. Full-Fuel-Cycle Analysis

4. Net Present Value Analysis

H. Customer Subgroup Analysis

I. Manufacturer Impact Analysis

1. Overview

2. Government Regulatory Impact Model

a. Government Regulatory Impact Model Key Inputs

b. Government Regulatory Impact Model Scenarios

3. Manufacturer Interviews

a. Uncertainty Regarding Potential EPA Phaseout of Hazardous Refrigerants

b. Impact on Product Utility

c. Availability of Higher Efficiency Components

4. Discussion of Comments

J. Emissions Analysis

K. Monetizing Carbon Dioxide and Other Emissions Impacts

1. Social Cost of Carbon

a. Monetizing Carbon Dioxide Emissions

b. Development of Social Cost of Carbon Values

c. Current Approach and Key Assumptions

2. Valuation of Other Emissions Reductions

L. Utility Impact Analysis

M. Employment Impact Analysis

N. Description of Materials Incorporated by Reference

V. Analytical Results and Conclusions

A. Trial Standard Levels

B. Economic Justification and Energy Savings

1. Economic Impacts on Commercial Customers

a. Life-Cycle Cost and Payback Period

b. Life-Cycle Cost Subgroup Analysis

c. Rebuttable Presumption Payback

2. Economic Impact on Manufacturers

a. Industry Cash-Flow Analysis Results

b. Impacts on Direct Employment

c. Impacts on Manufacturing Capacity

d. Impacts on Subgroups of Manufacturers

e. Cumulative Regulatory Burden

3. National Impact Analysis

a. Significance of Energy Savings

b. Net Present Value of Customer Costs and Benefits

c. Indirect Impacts on Employment

4. Impact on Utility or Performance of Equipment

5. Impact of Any Lessening of Competition

6. Need of the Nation to Conserve Energy

7. Other Factors

C. Proposed Standards

1. Benefits and Burdens of Trial Standard Levels Considered for Beverage Vending Machines

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

B. Review Under the Regulatory Flexibility Act

1. Description and Estimated Number of Small Entities Regulated

2. Description and Estimate of Compliance Requirements

3. Significant Alternatives to the Rule

C. Review Under the Paperwork Reduction Act of 1995

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

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

I. Review Under Executive Order 12630

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

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

VII. Public Participation

A. Attendance at the Public Meeting

B. Procedure for Submitting Requests to Speak and Prepared General Statements for Distribution

C. Conduct of the Public Meeting

D. Submission of Comments

E. Issues on Which DOE Seeks Comment

VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

Title III, Part A

1

of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy Conservation Program for Consumer Products Other Than Automobiles.

2

These products include refrigerated bottled or canned beverage vending machines (beverage vending machines or BVMs), the subject of this NOPR. (42 U.S.C. 6295(v))

3

1

For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A.

2

All references to EPCA in this document refer to the statute as amended through the Energy Efficiency Improvement Act of 2015 (EEIA 2015), Pub. L. 114-11 (April 30, 2015).

3

Because Congress included beverage vending machines in Part A of Title III of EPCA, the consumer product provisions of Part A (not the industrial equipment provisions of Part A-1) apply to beverage vending machines. DOE placed the regulatory requirements specific to beverage vending machines in Title 10 of the Code of Federal Regulations (CFR), part 431, “Energy Efficiency Program for Certain Commercial and Industrial Equipment” as a matter of administrative convenience based on their type and will refer to beverage vending machines as “equipment” throughout this document because of their placement in 10 CFR part 431. Despite the placement of beverage vending machines in 10 CFR part 431, the relevant provisions of Title A of EPCA and 10 CFR part 430, which are applicable to all product types specified in Title A of EPCA, are applicable to beverage vending machines. See 74 FR 44914, 44917 (Aug. 31, 2009).

Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must result in a significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) In accordance with these and other statutory provisions discussed in this NOPR, DOE proposes new and amended energy conservation standards for beverage vending machines. The proposed standards,

which are described in terms of the maximum daily energy consumption (MDEC) as a function of refrigerated volume, are shown in Table I.1. Specifically, DOE is proposing to amend the energy conservation standards established by the 2009 BVM final rule for Class A and Class B beverage vending machines. In addition, DOE is proposing to establish two new equipment classes at 10 CFR 431.292, Combination A and Combination B, as well as new energy conservation standards for those equipment classes. These proposed standards, if adopted, would apply to all equipment listed in Table I.1 and manufactured in, or imported into, the United States on or after the date 3 years after the publication of the final rule for this rulemaking.

Table I.1—Proposed Energy Conservation Standards for Beverage Vending Machines

Equipment class *

Proposed energy

conservation

standards **

Maximum daily energy

consumption (MDEC)

kWh/day

†

A

0.041 × V + 1.92‡

B

0.033 × V + 1.42‡

Combination A

0.044 × V + 1.64‡

Combination B

0.044 × V + 1.36‡

* See section IV.A.1 of this NOPR for a discussion of equipment classes.

** “V” is the representative value of refrigerated volume (ft

3

) of the BVM model, as measured in accordance with the method for determining refrigerated volume adopted in the recently amended DOE test procedure for beverage vending machines and appropriate sampling plan requirements at 10 CFR 429.52(a)(3). 80 FR 45758 (July 31, 2015). See section III.B and V.A for more details.

† kilowatt hours per day.

‡ Trial Standard Level (TSL) 4.

A. Benefits and Costs to Customers

Table I.2 and Table I.3 present DOE's evaluation of the economic impacts of the proposed energy conservation standards on customers, or purchasers, of beverage vending machines, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP).

4

This analysis is based upon the use of two refrigerants, CO

2

(R-744) and propane (R-290). These refrigerants were selected for analysis based on the recent actions of the U.S. Environmental Protection Agency's (EPA's) Significant New Alternatives Policy (SNAP) program,

5

including the listing of propane as acceptable in BVM applications under Rule 19 (80 FR 19454, 19491; April 10, 2015) and the change of status of R-134a to unacceptable in BVM applications beginning January 1, 2019 under Rule 20. 80 FR 42870, 42917-42920 (July 20, 2015). The selected refrigerants on which this proposal is based was also guided by visible trends within the BVM marketplace and feedback from interested parties during public meetings, in written comments, and during manufacturer interviews.

4

The average LCC savings are measured relative to the efficiency distribution in the no-new-standards case, which depicts the market in the compliance year (see section IV.F.6 of this notice). The simple PBP, which is designed to compare specific efficiency levels, is measured relative to the baseline model (see section IV.C.1 of this notice). DOE acknowledges that not all BVM customers are also the entity that is responsible for the energy costs of operating the beverage vending machine in the field. However, there are many different contracting mechanisms for leasing and operating beverage vending machines, which are influenced by many factors, including the capital cost of the machine and the annual operating costs. As such, DOE believes that a simple “customer” LCC-model accurately demonstrates the cost-effectiveness of the potential energy efficiency improvements resulting from any new or amended standards, regardless of by whom the costs and benefits are borne.

5

The Environmental Protection Agency's (EPA) Significant New Alternatives Policy (SNAP) program, which is the U.S. government regulatory program responsible for maintaining the list of alternatives to ozone-depleting substances allowed for use within specific applications in the United States, has taken two rulemaking actions that concern refrigerants for the U.S. refrigerated vending machine market. See section IV.C.2 for more details.

The average LCC savings are positive for all equipment classes and refrigerants, and the PBP is less than the average lifetime of the equipment, which is estimated to be 13.5 years.

Table I.2—Impacts of Proposed Energy Conservation Standards on Customers of Beverage Vending Machines—CO

2

Refrigerant

Equipment class

Life-cycle cost savings

2014$

Payback

period

years

Class A

173

3.6

Class B

534

2.3

Combination A

1,344

1.4

Combination B

1,098

0.6

Table I.3—Impacts of Proposed Energy Conservation Standards on Customers of Beverage Vending Machines—Propane Refrigerant

Equipment class

Life-cycle cost savings

2014$

Payback

period

years

Class A

265

1.1

Class B

838

1.3

Combination A

1,405

1.1

Combination B

1,153

0.5

DOE's analysis of the impacts of the proposed standards on customers is described in section V of this NOPR.

B. Impact on Manufacturers

The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (2015 to 2048). Using a real discount rate of 8.5 percent, DOE estimates that the INPV in the case without amended standards for manufacturers of beverage vending machines is $ 62.7 million.

6

Under the proposed standards, DOE expects that INPV may change by approximately −$3.5 million to −$0.2 million, which is −5.6 percent to −0.2 percent. DOE also expects industry conversion costs associated with amended standards compliance to total $2.8 million.

6

All monetary values in section I.B of this notice are expressed in 2014 dollars; discounted values are discounted to 2014 unless explicitly stated otherwise.

DOE's analysis of the impacts of the proposed standards on manufacturers is described in section V.B.2 of this NOPR.

C. National Benefits and Costs

7

7

All monetary values in section I.C of this notice are expressed in 2014 dollars and are discounted to 2014.

DOE's analyses indicate that the proposed energy conservation standards for beverage vending machines would save a significant amount of energy. The cumulative energy savings amount to 0.223 quadrillion Btus (quads) for beverage vending machines purchased in the 30-year period that begins in the year of compliance with new and amended standards for Class A, Class B, Combination A, and Combination B beverage vending machines (2019-2048),

8

relative to the case without

amended standards. This represents a savings of 39 percent relative to the energy use of this equipment in the case without amended standards (referred to as the “no-new-standards case”).

9

8

The standards analysis period for national benefits covers the 30-year period, plus the life of equipment purchased during the period. In the past DOE presented energy savings results for only the 30-year period that begins in the year of compliance. In the calculation of economic impacts, however, DOE considered operating cost savings measured over the entire lifetime of products purchased in the 30-year period. DOE has chosen to modify its presentation of national energy savings to be consistent with the approach used for its national economic analysis.

9

The no-new-standards case represents a mix of efficiencies above the minimum efficiency level (EL 0). Please see section IV.F.6 for a more detail description of associated assumptions.

The cumulative net present value (NPV) of total customer costs and savings of the proposed standards for beverage vending machines range from $0.42 billion (at a 7-percent discount rate) to $1.10 billion (at a 3-percent discount rate

10

). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for beverage vending machines purchased in 2019-2048.

10

These discount rates are used in accordance with the Office of Management and Budget (OMB) guidance to Federal agencies on the development of regulatory analysis (OMB Circular A-4, September 17, 2003), and section E, “Identifying and Measuring Benefits and Costs,” therein. Further details are provided in section IV.G of this notice.

In addition, the proposed standards would have significant environmental benefits. The energy savings described above are estimated to result in cumulative emission reductions (for equipment purchased in 2019-2048) of 13 million metric tons (MMt)

11

of carbon dioxide (CO

2

), 60 thousand tons of methane (CH

4

), 11 thousand tons of sulfur dioxide (SO

2

), 20 thousand tons of nitrogen oxides (NO

X

), 0.2 thousand tons of nitrogen oxide (N

2

O), and 0.03 tons of mercury (Hg).

12

The cumulative reduction in CO

2

emissions through 2030 amounts to 1.83 MMt, which is equivalent to the emissions resulting from the annual electricity use of about 250,000 homes.

11

A metric ton is equivalent to 1.1 short tons. Results for CH

4

, SO

2

, NO

X

, N

2

O, and Hg are presented in short tons.

12

DOE calculated emissions reductions relative to the

Annual Energy Outlook 2014

(

AEO2014

) reference case, which generally represents current legislation and environmental regulations for which implementing regulations were available as of October 31, 2013.

The value of the CO

2

reductions is calculated using a range of values per metric ton of CO

2

(otherwise known as the social cost of carbon, or SCC) developed by a recent Federal interagency process.

13

The derivation of the SCC values is discussed in section IV.K of this NOPR. DOE estimates that the present monetary value of the CO

2

emissions reduction is between $0.1 and $1.2 billion, with a value of $0.4 billion using the central SCC case represented by $40.0 per metric ton in 2015. DOE also estimates the present monetary value of the NO

X

emissions reduction is between $1.8 and $18.8 million at a 7-percent discount rate and between $4.4 and $45.1 million at a 3-percent discount rate.

14

13

Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866,

Interagency Working Group on Social Cost of Carbon, United States Government (May 2013; revised July 2015) (Available at

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

14

DOE is currently investigating valuation of avoided Hg and SO

2

emissions.

Table I.4 summarizes the national economic costs and benefits expected to result from these proposed standards for beverage vending machines.

Table I.4—Summary of National Economic Benefits and Costs of Proposed Energy Conservation Standards for Beverage Vending Machines*

Category

Present Value

million 2014$

Discount Rate

%

Benefits

Customer Operating Cost Savings

520

7

1,301

3

CO

2

Reduction Monetized Value ($12.2/metric ton case)**

85

5

CO

2

Reduction Monetized Value ($40.0/metric ton case)**

400

3

CO

2

Reduction Monetized Value ($62.3/metric ton case)**

638

2.5

CO

2

Reduction Monetized Value ($116.8/metric ton case)**

1,220

3

NO

X

Reduction Monetized Value (at $2,723/ton)**

10

7

25

3

Total Benefits †

930

7

1,725

3

Costs

Customer Incremental Installed Costs

103

7

201

3

Net Benefits

Including CO

2

and NO

X

Reduction Monetized Value

837

7%

1,524

3

* This table presents the costs and benefits associated with beverage vending machines shipped in 2019-2048. These results include benefits to customers that accrue after the last year of analyzed shipments (2048) from the equipment purchased during the 30-year analysis period. The costs account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule.

** The CO

2

values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5 percent, 3 percent, and 2.5 percent discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3-percent discount rate. The SCC time series used by DOE incorporates an escalation factor. The value for NO

X

is the average of high and low values found in the literature.

† Total benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to SCC value of $40.0/metric ton in 2015.

The benefits and costs of these proposed standards for beverage vending machines sold in 2019-2048 can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are the sum of (1) the national economic value of the benefits in reduced operating costs, minus (2) the increases in equipment purchase and installation costs, plus (3) the value of the benefits of CO

2

and NO

X

emission reductions, all annualized.

15

15

DOE used a two-step calculation process to convert the time-series of costs and benefits into annualized values. First, DOE calculated a present value in 2015, the year used for discounting the NPV of total customer costs and savings, for the time-series of costs and benefits using discount rates of 3 and 7 percent for all costs and benefits except for the value of CO

2

reductions. For the latter, DOE used a range of discount rates, as shown in Table I.4. From the present value, DOE then calculated the fixed annual payment over a 30-year period (2019 through 2048) that yields the same present value. The fixed annual payment is the annualized value. Although DOE calculated annualized values, this does not imply that the time-series of cost and benefits from which the annualized values were determined is a steady stream of payments.

Although DOE believes that the values of operating cost savings and CO

2

emission reductions are both important, two issues are relevant. First, the national operating savings are domestic U.S. customer monetary savings that occur as a result of market transactions, whereas the value of CO

2

reductions is based on a global value. Second, the assessments of operating cost savings and CO

2

savings are performed with different methods that use different time frames for analysis. The national operating cost savings is measured for the lifetime of beverage vending machines shipped in the 30-year analysis period beginning the year compliance is required with the new and amended standards. Because CO

2

emissions have a very long residence time in the atmosphere,

16

the SCC values in future years reflect future CO

2

emissions impacts resulting from the emission of one ton of CO

2

in each year. These impacts continue well beyond 2100.

16

The atmospheric lifetime of CO

2

is estimated of the order of 30-95 years. Jacobson, MZ (2005). “Correction to “Control of fossil-fuel particulate black carbon and organic matter, possibly the most effective method of slowing global warming.”

J. Geophys. Res.

110. pp. D14105.

Estimates of annualized benefits and costs of the proposed standards (over a 30-year period) are shown in Table I.5. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO

2

reduction, for which DOE used a 3-percent discount rate along with the average SCC series that has a value of $40.0 per metric ton in 2015,

17

the cost of the standards proposed in this rule is $10.2 million per year in increased equipment costs, while the benefits are $51.3 million per year in reduced equipment operating costs, $22.3 million from CO

2

reductions, and $1.0 million in reduced NO

X

emissions. In this case, the annualized net benefit amounts to $64 million per year. Using a 3-percent discount rate for all benefits and costs and the average SCC series that has a value of $40.0 per metric ton in 2015, the cost of the standards proposed in this rule is $11.2 million per year in increased equipment costs, while the benefits are $72.5 million per year in reduced operating costs, $22.3 million from CO

2

reductions, and $1.4 million in reduced NO

X

emissions. In this case, the net benefit amounts to $85 million per year.

17

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

DOE also calculated the low net benefits and high net benefits estimates by calculating the operating cost savings and shipments at the

AEO2014

low economic growth case and high economic growth case scenarios, respectively. The low and high benefits for incremental installed costs were derived using the low and high price learning scenarios. In addition, the low and high benefits estimates reflect low and high shipments scenarios (see section IV.G.1.c of this NOPR). The net benefits and costs for low and high net benefits estimates were calculated in the same manner as the primary estimate by using the corresponding values of operating cost savings and incremental installed costs.

Table I.5—Annualized Benefits and Costs of Proposed Energy Conservation Standards for Beverage Vending Machines

Discount rate

Primary estimate *

Low net benefits estimate *

High net benefits estimate *

million 2014$/year

Benefits

Operating Cost Savings

7%

51

48

80

3%

73

65

106

CO

2

Reduction Monetized Value ($12.2/metric ton case) **

5%

6

6

9

CO

2

Reduction Monetized Value ($40.0/metric ton case) **

3%

22

21

31

CO

2

Reduction Monetized Value ($62.3/metric ton case) **

2.5%

33

30

45

CO

2

Reduction Monetized Value ($116.8/metric ton case) **

3%

68

63

94

NO

X

Reduction Monetized Value (at $2,723/ton) **

7%

1.02

0.99

1.56

3%

1.38

1.29

1.97

Total Benefits†

7% plus CO

2

range

59 to 120

55 to 112

91 to 176

7%

75

69

112

3% plus CO

2

range

80 to 142

72 to 131

117 to 206

3%

96

86

139

Costs

Incremental Equipment Costs

7%

10.20

15.24

9.90

3%

11.18

15.57

10.46

Net Benefits

Total †

7% plus CO

2

range

49 to 110

40 to 96

81 to 166

7%

64

54

103

3% plus CO

X

range

69 to 131

56 to 113

107 to 192

3%

85

71

129

* This table presents the annualized costs and benefits associated with beverage vending machines shipped in 2019-2048. These results include benefits to customers that accrue after the last year of analyzed shipments (2048) from the equipment purchased in during the 30-year analysis period. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The primary, low benefits, and high benefits estimates utilize projections of energy prices from the

AEO2014

reference case, low estimate, and high estimate, respectively, as well as the default shipments scenario along with the low and high shipments scenarios. In addition, incremental equipment costs reflect a medium decline rate for projected equipment price trends in the primary estimate, a low decline rate for projected equipment price trends in the low benefits estimate, and a high decline rate for projected equipment price trends in the high benefits estimate. The methods used to derive projected price trends are explained in technical support document.

** The CO

2

values represent global monetized SCC values, in 2014$, in 2015 under several scenarios. The first three cases use the averages of SCC distributions calculated using 5-percent, 3-percent, and 2.5-percent discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3-percent discount rate. The SCC time series incorporates an escalation factor. The value for NO

X

(in 2014$) is an average of high and low values found in the literature.

† Total benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to the average SCC with a 3-percent discount rate ($40.0/metric ton case). In the rows labeled “7% plus CO

2

range” and “3% plus CO

2

range,” the operating cost and NO

X

benefits are calculated using the labeled discount rate, and those values are added to the full range of CO

2

values.

DOE's analysis of the national impacts of the proposed standards is described in section V.B.3 of this NOPR.

D. Conclusion

DOE has tentatively concluded that the proposed standards for beverage vending machines represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in the significant conservation of energy. DOE further notes that equipment achieving these standard levels is already commercially available for all equipment classes covered by this proposal. DOE acknowledges that equipment using the SNAP-approved refrigerants (

i.e.,

CO

2

and propane) meeting the current or proposed standard levels is not available for all equipment classes, due to the limited use of CO

2

as a refrigerant to date and the fact that propane has only recently been approved for use in BVM applications. 80 FR 19454, 19491 (April 10, 2015). However, DOE notes that Class B beverage vending machines using CO

2

and that meet the proposed standard levels are already available. In addition, DOE believes that the existing industry experience in improving the efficiency of R-134a- and CO

2

-based equipment is applicable and transferable to equipment using propane as a refrigerant. DOE has addressed the technical feasibility and economic implications of meeting the proposed standard levels utilizing CO

2

and propane refrigerants in the analyses presented in this NOPR and, based on these analyses, DOE has tentatively concluded that the benefits of the proposed standards to the nation (energy savings, positive NPV of customer benefits, customer LCC savings, and emission reductions) would outweigh the burdens (loss of INPV for manufacturers).

DOE also considered more-stringent energy efficiency levels as potential standards, and is considering them in this rulemaking. However, DOE has tentatively concluded that the potential burdens of the more-stringent energy efficiency levels would outweigh the projected benefits. Based on consideration of the public comments DOE receives in response to this NOPR and related information collected and analyzed during the course of this rulemaking effort, DOE may adopt energy efficiency levels presented in this NOPR that are either higher or lower than the proposed standards, or some combination of levels that incorporate the proposed standards in part.

II. Introduction

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

A. Authority

Title III, Part B of the Energy Policy and Conservation Act of 1975, as amended, (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified) established the Energy Conservation Program for Consumer Products Other Than Automobiles, a program covering most major household appliances (collectively referred to as “covered products”), which includes the beverage vending machine. (42 U.S.C. 6291(40)) As part of this program, EPCA directed DOE to prescribe energy conservation standards for beverage vending machines. (42 U.S.C. 6295(v)) In addition, under 42 U.S.C. 6295(m), DOE must periodically review its already established energy conservation standards for a covered product. DOE is undertaking this rulemaking to meet this EPCA requirement.

Pursuant to EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. The Secretary or the Federal Trade Commission, as appropriate, may prescribe labeling requirements for beverage vending machines. (42 U.S.C. 6294(a)(5)(A)) Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6293) Manufacturers of covered equipment must use the prescribed DOE test procedure as the basis for certifying to DOE that their equipment complies with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of that equipment. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA.

Id.

DOE recently updated its test procedure for beverage vending machines in a final rule published July 31, 2015. 80 FR 45758 (July 31, 2015). In that final rule, DOE adopted several amendments and clarifications to the DOE test procedure in the new appendix A and B of subpart Q of 10 CFR part 431. As specified in the BVM test procedure final rule, manufacturers of beverage vending machines would be required to use appendix B to demonstrate compliance with any new and amended energy conservation standards adopted as a result of this rulemaking.

DOE must follow specific statutory criteria for prescribing new or amended standards for covered equipment. As indicated previously, any new or amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For certain products, including beverage vending machines, 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))

DOE, in deciding whether a standard is economically justified, must determine, after receiving comments on the proposed standard, whether the benefits of the standard exceed its burdens by considering, to the maximum extent practicable, the following seven factors:

1. The economic impact of the standard on manufacturers and customers of products subject to the standard;

2. The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the standard;

3. The total projected amount of energy savings likely to result directly from the standard;

4. Any lessening of the utility or the performance of the covered products likely to result from the standard;

5. The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;

6. The need for national energy conservation; and

7. Other factors the Secretary of Energy considers relevant. (42 U.S.C. 6295(o)(2)(B)(i))

Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the customer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy (and, as applicable, water) savings during the first year that the customer will receive as a result of the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))

EPCA, as codified, also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States of any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))

Additionally, EPCA specifies requirements when promulgating a standard for a type or class of covered product that has two or more subcategories. DOE must specify a different standard level than that which applies generally to such type or class of products for any group of covered products that have the same function or intended use if DOE determines that products within such group: (A) Consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and which justifies a higher or lower standard. (42 U.S.C. 6294(q)(1)). In determining whether a performance-related feature justifies a different standard for a group of products, DOE generally considers such factors as the utility to the customer of the feature and other factors DOE deems appropriate.

Id.

In a rule prescribing such a standard, DOE includes an explanation of the basis on which such a higher or lower level was established. (42 U.S.C. 6295(q)(2)) DOE followed a similar process in the context of this rulemaking.

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)) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d)).

Finally, pursuant to EPCA any final rule for new or amended energy conservation standards promulgated after July 1, 2010 must address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for covered equipment after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into the standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A) and (B)) DOE reviewed the operating modes available for beverage vending machines and determined that this equipment does not have operating modes that meet the definition of standby mode or off mode, as established at 42 U.S.C. 6295(gg)(3). Specifically, beverage vending machines are typically always providing at least one main function—refrigeration. (42 U.S.C. 6295(gg)(1)(A)) DOE recognizes that in a unique equipment design, the low power mode includes disabling the refrigeration system, while for other equipment the low power mode controls only elevate the thermostat set point. Because low power modes still include some amount of refrigeration for most equipment for the vast majority of equipment, DOE believes that such a mode does not constitute a “standby mode,” as defined by EPCA, for beverage vending machines. Therefore, DOE believes that beverage vending machines do not operate under standby and off mode conditions as defined in EPCA, and that the energy use of a beverage vending machine would be captured in any standard established for active mode energy use. As such, the new and amended energy conservation standards proposed in this NOPR do not specifically address standby and off mode energy consumption for the equipment.

DOE also reviewed this regulation pursuant to Executive Order 13563. 76 FR 3821, (January 21, 2011). Executive Order 13563 is supplemental to and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, agencies are required

by Executive Order 13563 to: (1) Propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.

DOE emphasizes as well that Executive Order 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, the Office of Information and Regulatory Affairs has emphasized that such techniques may include identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes. For the reasons stated in the preamble, DOE believes that this NOPR is consistent with these principles, including the requirement that, to the extent permitted by law, benefits justify costs and that net benefits are maximized. Consistent with Executive Order 13563, and the range of impacts analyzed in this rulemaking, the energy efficiency standards proposed herein by DOE achieve maximum net benefits.

B. Background

1. Current Standards

In a final rule published on August 31, 2009 (henceforth referred to as the 2009 BVM final rule), DOE prescribed the current energy conservation standards for beverage vending machines. 74 FR 44914 (August 31, 2009). The 2009 BVM final rule established energy conservation standards for Class A and Class B beverage vending machines, with a compliance date of August 31, 2012, as shown in Table II.1. DOE also established a class of combination machines, but did not set standards for combination machines, instead reserving a place for possible development of future standards for that equipment.

Table II.1—Energy Conservation Standards for Beverage Vending Machines, Prescribed by the 2009 BVM Final Rule—Compliance Date August 31, 2012

Class

Definition

Maximum daily energy consumption

A

Class A means a refrigerated bottled or canned beverage vending machine that is fully cooled, and is not a combination vending machine

0.055 × V + 2.56

B

Class B means any refrigerated bottled or canned beverage vending machine not considered to be Class A, and is not a combination vending machine

0.073 × V + 3.16

Combination

Combination means a refrigerated bottled or canned beverage vending machine that also has non-refrigerated volumes for the purpose of vending other, non-“sealed beverage” merchandise

[reserved]

The 2009 BVM final rule document is currently available at

http://www.regulations.gov/#!documentDetail;D=EERE-2006-STD-0125-0005.

2. History of Standards Rulemaking for Beverage Vending Machines

EPCA directed the Secretary to issue, by rule, no later than August 8, 2009, energy conservation standards for beverage vending machines. (42 U.S.C. 6295(v)) On August 31, 2009, DOE issued a final rule establishing performance standards for beverage vending machines to complete the first required rulemaking cycle. 74 FR 44914.

DOE is conducting the current energy conservation standards rulemaking pursuant to 42 U.S.C. 6295(m), which requires that within 6 years of issuing any final rule establishing or amending a standard, DOE shall publish either a notice of determination that amended standards are not needed or a NOPR proposing amended standards.

In initiating this rulemaking, DOE prepared a framework document, “Energy Conservation Standards Rulemaking Framework Document for Refrigerated Beverage Vending Machines” (framework document), which describes the procedural and analytical approaches DOE anticipates using to evaluate energy conservation standards for beverage vending machines. DOE published a notice that announced both the availability of the framework document and a public meeting to discuss the proposed analytical framework for the rulemaking. That notice also invited written comments from the public. 78 FR 33262 (June 4, 2013). This document is available at

http://www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0022

DOE held the framework public meeting on June 20, 2013, at which it (1) presented the contents of the framework document; (2) described the various analyses DOE planned to conduct during the rulemaking; (3) sought comments from interested parties on these subjects; and (4) in general, sought to inform interested parties about, and facilitate their involvement in, the rulemaking. Major issues discussed at the public meeting included: (1) Equipment classes; (2) analytical approaches and methods used in the rulemaking; (3) impact of standards and burden on manufacturers; (4) technology options; (5) distribution channels and shipments; (6) impacts of outside regulations; and (7) environmental issues. At the meeting and during the comment period on the framework document, DOE received many comments that helped it identify and resolve issues pertaining to beverage vending machines relevant to this rulemaking.

DOE then gathered additional information and performed preliminary analyses to help review standards for this equipment. This process culminated in DOE publishing a notice to announce the availability of the preliminary analysis TSD and a public meeting to discuss the preliminary analysis results. 79 FR 46379 (August 8, 2014). In the preliminary analysis, DOE discussed and requested comment on

the tools and methods DOE used in performing its preliminary analysis, as well as analyses results. DOE also sought comments concerning other relevant issues that could affect potential amended standards for beverage vending machines.

Id.

The preliminary analysis provided an overview of DOE's technical and economic analyses supporting new and amended standards for beverage vending machines, discussed the comments DOE received in response to the framework document, and addressed issues raised by those comments. The preliminary analysis TSD also described the analytical framework that DOE used (and continues to use) in considering new and amended standards for beverage vending machines, including a description of the methodology, the analytical tools, and the relationships between the various analyses that are part of this rulemaking. Additionally, the preliminary analysis TSD presented in detail each analysis that DOE had performed for this equipment up to that point, including descriptions of inputs, data sources, methodologies, and results. These analyses included: (1) The market and technology assessment; (2) the screening analysis; (3) the engineering analysis; (4) the energy use analysis; (5) the markups analysis; (6) the LCC analysis; (7) the PBP analysis; (8) the shipments analysis; (9) the national impact analysis (NIA); and (10) a preliminary manufacturer impact analysis (MIA).

The preliminary TSD that presents the methodology and results of each of these analyses is available at:

http://www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0022.

In this NOPR, DOE is presenting additional and revised analysis in all of these areas.

The public meeting to review the preliminary analysis took place on September 16, 2014 (preliminary analysis public meeting). At the preliminary analysis public meeting, DOE presented the methodologies and results of the analyses prescribed in the preliminary analysis TSD. Comments received in response to the preliminary analysis have helped DOE identify and resolve issues related to the preliminary analyses and have helped refine the analyses presented in this NOPR. DOE discusses and responds to the comments received in response to the preliminary analysis in section IV of this NOPR.

III. General Discussion

DOE is proposing amended standards for Class A and Class B beverage vending machines. DOE is also proposing to amend the definition for Class A equipment to more unambiguously differentiate Class A and Class B beverage vending machines. In addition, DOE is proposing to amend the definition of combination beverage machine, expand the combination vending machine equipment category into Combination A and Combination B beverage vending machine classes, and promulgate new standards for those classes. In the subsequent sections, DOE discusses the scope of coverage, test procedure, compliance dates, technical feasibility, energy savings, and economic justification of the proposed standards.

A. Equipment Classes and Scope of Coverage

EPCA defines a beverage vending machine as “a commercial refrigerator

18

that cools bottled or canned beverages and dispenses the bottled or canned beverages on payment.” (42 U.S.C. 6291(40))

18

EPCA defines commercial refrigerator, freezer, and refrigerator-freezer at 42 U.S.C. 6311(9)(A).

When evaluating and establishing energy conservation standards, DOE divides covered equipment into equipment classes by the type of energy used or by capacity or other performance-related features that justifies a different standard. In making a determination whether a performance-related feature justify differing standards, DOE must consider such factors as the utility to the customer of the feature and other factors DOE determines are appropriate. (42 U.S.C. 6295(q))

In the 2009 BVM final rule, DOE determined that unique energy conservation standards were warranted for Class A and Class B beverage vending machines and added the following definitions to 10 CFR 431.292 to differentiate such equipment:

Class A

means a beverage vending machine that is fully cooled, and is not a combination vending machine.

Class B

means any beverage vending machine not considered to be Class A, and is not a combination vending machine.

74 FR 44914,44967 (August 31, 2009).

DOE differentiated Class A and Class B beverage vending machines based on whether the refrigerated volume (V) of equipment was fully cooled, as DOE determined that this was the most significant criteria affecting energy consumption.

Id.

at 44924.

The 2009 BVM final rule also established a definition for combination vending machine at 10 CFR 431.292.

Combination vending machine

means a beverage vending machine that also has non-refrigerated volumes for the purpose of vending other, non-“sealed beverage” merchandise.

74 FR 44914,

44967 (August 31, 2009).

DOE considered the definition of beverage vending machine broad enough to include any vending machine that cools at least one bottled or canned beverage and dispenses it upon payment. DOE elected to establish combination machines as a separate equipment class because such machines may be challenged by component availability and such machines have a distinct utility that limits their energy efficiency improvement potential compared to Class A and B beverage vending machines. However, DOE did not establish standards for combination machines in the 2009 BVM final rule.

Id.

at 44920.

While DOE's existing definitions of Class A and Class B equipment distinguish equipment based on whether or not the refrigerated volume is “fully cooled,” DOE regulations have never defined the term “fully cooled.” In the framework document, DOE suggested a definition for “fully cooled” and further refined that definition in the BVM test procedure NOPR DOE published on August 11, 2014 (2014 BVM test procedure NOPR). 79 FR 46908, 46934. In response to comments received on both the framework document and 2014 BVM test procedure NOPR, DOE is proposing in this NOPR, to modify the definition of Class A to more unambiguously differentiate Class A and Class B equipment. Specifically, DOE proposes to use the presence of a transparent front on Class A beverage vending machines as a key distinguishing characteristic between Class A and Class B equipment and proposes to adopt that distinction as part of the Class A equipment class definition.

In this NOPR, DOE is also proposing to amend the definition of combination vending machine to better align with industry definitions and provide more clarity regarding the physical characteristics of the “refrigerated” and “non-refrigerated” volumes, or compartments. In addition, DOE is proposing to expand the class of combination vending machines established in the 2009 BVM final rule to differentiate Combination A and Combination B beverage vending machines based on similar criteria used to distinguish Class A and Class B beverage vending machines (

i.e.,

the presence of a transparent front). See section IV.A.1 of this NOPR for more discussion on the equipment classes addressed in this NOPR.

B. Test Procedure

The estimates of energy use and energy saving potential considered in the NOPR analysis are based on the performance of beverage vending machines when tested in accordance with appendix B of the recently amended DOE BVM test procedure located at 10 CFR 431.294. (See sections IV.B, IV.C, and IV.E of this NOPR for more discussion.) On July 31, 2015, DOE published an amended test procedure for beverage vending machines, referred to as the 2015 BVM test procedure final rule in the

Federal Register

. 80 FR 45758 (July 31, 2015). In the 2015 BVM test procedure final rule, DOE adopted several minor amendments to clarify DOE's test procedure for beverage vending machines and also adopted several amendments related to the impact of low power modes on the measured daily energy consumption of BVM models. 80 FR 45758 (July 31, 2015). DOE also reorganized the DOE test procedure into two new appendices, appendix A and appendix B to subpart Q to part 431 of Title 10 of the

Code of Federal Regulations

and adopted a minor change to the certification and reporting requirements for beverage vending machines at 10 CFR 429.52(b)(2) and 10 CFR 431.296.

In general, the DOE BVM test procedure, as amended, incorporates by reference American National Standards Institute (ANSI)/American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 32.1-2010 to describe the measurement equipment, test conditions, and test protocol applicable to testing beverage vending machines. DOE's test procedure also specifies that the measurement of “refrigerated volume” of beverage vending machines must be in accordance with the methodology specified in Appendix C of ANSI/ASHRAE Standard 32.1-2010.

In the 2015 BVM test procedure final rule, DOE also adopted several new clarifying amendments including:

(1) Eliminating testing at the 90 °F ambient test condition;

(2) clarifying the test procedure for combination vending machines;

(3) clarifying the requirements for loading BVM models under the DOE test procedure;

(4) clarifying the specifications of the test package;

(5) clarifying the next-to-vend beverage temperature test condition;

(6) specifying placement of thermocouples during the DOE test procedure;

(7) establishing testing provisions at the lowest application product temperature;

(8) clarifying certification and reporting requirements; and

(9) clarifying the treatment of certain accessories when conducting the DOE test procedure.

These test procedure amendments are all reflected in DOE's new appendix A, which became effective August 31, 2015 and must be used by manufacturers for representations and to demonstrate compliance with the energy conservation standards beginning January 27, 2016. 80 FR 45758 (July 31, 2015).

In addition to the amendments proposed in appendix A, appendix B includes provisions for testing low power modes. The test procedure found in appendix B is to be used in conjunction with any amended standards established as a result of this rulemaking. As such, manufacturers are not required to use appendix B until the compliance date of any new or amended standards.

Id.

C. Compliance Dates

The new and amended standards proposed in this NOPR, if adopted, would apply to equipment manufactured beginning on the date 3 years after the publication date of any final rule in the

Federal Register

. DOE anticipates that any final rule would be published in 2016, resulting in a compliance date in 2019. In its analysis, DOE used a 30-year analysis period of 2019-2048.

D. Technological Feasibility

1. General

In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products 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. 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 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) Section IV.B of this NOPR discusses the results of the screening analysis for beverage vending machines, particularly the designs DOE considered, those it screened out, and those that are the basis for the TSLs in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the NOPR TSD.

2. Maximum Technologically Feasible Levels

When DOE proposes to adopt an amended standard for a type or class of covered product, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for beverage vending machines, using the design parameters for the most efficient equipment available on the market or in working prototypes. The max-tech levels that DOE determined for this rulemaking are described in section IV.C.3 of this NOPR and in chapter 5 of the NOPR TSD.

E. Energy Savings

1. Determination of Savings

For each trial standard level (TSL), DOE projected energy savings from application of the TSL to equipment purchased in the 30-year period that begins in the year of compliance with new and amended standards for beverage vending machines (2019-2048).

19

The savings are measured over the entire lifetime of equipment purchased in the 30-year analysis period. DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the no-new-standards case. The no-new-standards case represents a projection of energy consumption that reflects how the market for a product would likely evolve in the absence of new and

amended mandatory energy conservation standards.

19

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

DOE used its NIA spreadsheet models to estimate energy savings from new and amended standards. The NIA spreadsheet model (described in section IV.G of this NOPR) calculates savings in site energy, which is the energy directly consumed by products at the locations where they are used. Based on the site energy, DOE calculates national energy savings (NES) in terms of primary energy savings at the site or at power plants, and also in terms of full-fuel-cycle (FFC) energy savings. The FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels (

i.e.,

coal, natural gas, petroleum fuels), and thus presents a more complete picture of the impacts of energy conservation standards.

20

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.G.3.a of this notice.

20

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

2. Significance of Savings

To adopt standards for a covered product, DOE must determine that such action would result in “significant” energy savings. (42 U.S.C. 6295(o)(3)(B)) Although the term “significant” is not defined in the Act, the U.S. Court of Appeals for the District of Columbia Circuit, in

Natural Resources Defense Council

v.

Herrington,

768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress intended “significant” energy savings in the context of EPCA to be savings that were not “genuinely trivial.” The energy savings for the proposed standards (presented in section V.C of this NOPR) are nontrivial; therefore, DOE considers them “significant” within the meaning of section 325 of EPCA.

F. Economic Justification

1. Specific Criteria

As noted previously, EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)) The following sections discuss how DOE addressed each of those seven factors in this rulemaking.

a. Economic Impact on Manufacturers and Customers

In determining the impacts of a potential amended standard on manufacturers, DOE conducts an MIA, as discussed in section IV.I.3 of this NOPR, DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step incorporates both a short-term assessment—based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation—and a long-term assessment over a 30-year period. The industry-wide impacts analyzed include: (1) INPV, which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers, such as 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, as discussed in section IV.I of this NOPR. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers.

For individual customers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For customers in the aggregate, DOE also calculates the national NPV of the economic impacts applicable to a particular rulemaking. DOE also evaluates the LCC impacts of potential standards on identifiable subgroups of customers that may be affected disproportionately by a national standard.

b. Savings in Operating Costs Compared To Increase in Price (Life-Cycle Costs)

EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered product compared to any increase in the price of the covered product that are likely to result from the imposition of a standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analysis.

The LCC is the sum of the purchase price of a piece of equipment (including its installation) and the operating expense (including energy, maintenance, and repair expenditures) discounted over the lifetime of the equipment. The LCC analysis requires a variety of inputs such as equipment prices, equipment energy consumption, energy prices, maintenance and repair costs, equipment lifetime, and customer discount rates. To account for uncertainty and variability in specific inputs, such as equipment lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value. For its analysis, DOE assumes that customers will purchase the covered equipment in the first year of compliance with amended standards.

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.

The LCC savings and PBP analysis for the considered efficiency levels are calculated relative to the case that reflects projected market trends in the absence of amended standards. DOE identifies the percentage of customers estimated to receive LCC savings or experience an LCC increase, in addition to the average LCC savings associated with a particular standard level. DOE's LCC analysis is discussed in further detail in section IV.F of this NOPR.

c. Energy Savings

Although significant conservation of energy is a separate statutory requirement for adopting an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in more detail in section IV.G.3 of this NOPR, DOE uses spreadsheet models to project national energy savings.

d. Lessening of Utility or Performance of Equipment

In establishing classes of products, 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)) Based on data available to DOE, DOE determined that the standards proposed in this NOPR would not reduce the utility or performance of the products under consideration in this rulemaking.

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the

Attorney General, that is likely to result from a proposed standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General of the United States (Attorney General) to determine the impact, if any, of any lessening of competition likely to result from a proposed standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2) (B)(ii)) DOE will transmit a copy of this proposed rule to the Attorney General with a request that the Department of Justice (DOJ) provide its determination on this issue. DOE will publish and respond to the Attorney General's determination in the final rule.

DOE considers any lessening of competition that is likely to result from amended standards. The Attorney General determines the impact, if any, of any lessening of competition likely to result from a proposed standard, and transmits such determination to the Secretary, together with an analysis of the nature and extent of such impact.

To assist the Attorney General in making such determination, DOE will provide DOJ with copies of this NOPR and the TSD for review. DOE will consider DOJ's comments on the proposed rule in preparing the final rule, and DOE will publish and respond to DOJ's comments in that document. DOE invites comment from the public regarding the competitive impacts that are likely to result from this proposed rule. In addition, stakeholders may also provide comments separately to DOJ regarding these potential impacts. See

ADDRESSES

section for information to send comments to DOJ.

f. Need for National Energy Conservation

DOE also considers the need for national energy conservation in determining whether a new or amended standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) In evaluating the need for national energy conservation, DOE expects that the energy savings from the proposed new and amended standards are likely to provide improvements to the security and reliability of the nation's energy system. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) 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.L of this NOPR.

The proposed new and amended standards are also likely to result in environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases associated with energy production and use. DOE conducts an emissions analysis to estimate how standards may affect these emissions, as discussed in section IV.J of this NOPR. DOE reports the emissions impacts from each TSL it considered in section V.A of this NOPR. DOE also estimates the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.K of this NOPR.

g. Other Factors

EPCA allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To the extent interested parties submit any relevant information regarding economic justification that does not fit into the other categories described above, DOE could consider such information under “other factors.”

2. Rebuttable Presumption

EPCA sets forth a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the 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. (42 U.S.C. 6295(o)(2)(B)(iii)) DOE's LCC and PBP analysis generate values used to calculate the effects that proposed energy conservation standards would have on the payback period for customers. 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 customers, manufacturers, the nation, and the environment. (42 U.S.C. 6295(o)(2)(B)(i)) The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section V.B.1.c of this NOPR.

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE performed for this rulemaking. In the subsections, DOE discusses each component of the analysis and summarizes and responds to comments received in response to the preliminary analysis pertaining to each of the analyses DOE conducts.

A. Market and Technology Assessment

DOE develops information in the market and technology assessment that provides an overall picture of the market for the equipment considered, including the nature of the equipment, the industry structure, and market characteristics for the equipment. This activity consists of both quantitative and qualitative efforts based primarily on publicly available information.

DOE reviewed relevant literature and interviewed manufacturers to develop an overall picture of the BVM market in the United States. Industry publications, trade journals, government agencies, and trade organizations provided the bulk of the information, including (1) manufacturers and their market shares, (2) shipments by equipment type, (3) detailed equipment information, (4) industry trends, and (5) existing regulatory and non-regulatory equipment efficiency improvement initiatives. The analysis developed as part of the market and technology assessment is described in chapter 3 of the NOPR TSD.

1. Equipment Classes

In this NOPR, DOE is proposing to amend the energy conservation standards established by the 2009 BVM final rule for the Class A and Class B beverage vending machines. DOE believes that Class A and Class B equipment classes continue to provide different utility to customers and have different energy profiles and applicable design options, as described below. As such, DOE believes it is appropriate to separately analyze and regulate Class A and Class B equipment. In addition, as noted previously, DOE is proposing to amend the definition for Class A equipment to more clearly and unambiguously describe the equipment characteristics that make up that class and differentiate it from Class B equipment, as well as to amend the definition of combination vending machine to better align with industry definitions and provide more clarity regarding the physical characteristics of the “refrigerated” and “non-

refrigerated” volumes, or compartments.

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The definition of combination vending machine established by DOE in the 2009 BVM final rule referenced the presence of “non-refrigerated volumes” to differentiate combination vending machines from other styles of refrigerated bottled or canned beverage vending machines. In the amended definition for combination vending machine DOE is proposing in this NOPR, DOE is referring instead to “compartments,” which DOE believes captures the same intent as the term “volumes” in the previous definition, but better indicates that the “volumes” are to be physically separate.

DOE is also proposing to define two new equipment classes at 10 CFR 431.292, Combination A and Combination B, as well as establish new energy conservation standards for those equipment classes. In the 2009 BVM final rule, DOE also established a definition for combination vending machines but elected not to set standards for them at that time. 74 FR 44914, 44920 (August 31, 2009). In considering standards for combination vending machines as part of this rulemaking, similar to Class A and Class B, DOE determined that the method of cooling and presence of a transparent front are important differentiating features for combination equipment.

Table IV.1 summarizes the new and amended definitions for the four equipment classes analyzed in this NOPR. The definitions, as well as the general characteristics and differentiating features, of the four equipment classes proposed in this NOPR are described in the following subsections.

Table IV.1—Equipment Classes for Beverage Vending Machines

Class

Definition

A

A refrigerated bottled or canned beverage vending machine that is not a combination beverage vending machine and in which 25 percent or more of the surface area on the front side of the beverage vending machine is transparent

B

Any refrigerated bottled or canned beverage vending machine that is not considered to be Class A and is not a combination vending machine

Combination A

A combination vending machine where 25 percent or more of the surface area on the front side of the beverage vending machine is transparent

Combination B

A combination vending machine that is not considered to be Combination A

a. Class A and Class B Beverage Vending Machines

Class A and Class B equipment are currently differentiated based on the cooling mechanism employed by the different equipment. The distinguishing criterion between these two equipment classes is whether the equipment is fully cooled. 10 CFR 431.292.

At the time the definitions of Class A and Class B were established, DOE did not define the term “fully cooled.” In the framework document, DOE suggested defining “fully cooled” to mean a beverage vending machine within which each item in the beverage vending machine is brought to and stored at temperatures that fall within ±2 °F of the average beverage temperature, which is the average of the temperatures of all the items in the next-to-vend position for each selection.

In response to the framework document, DOE received many comments from interested parties regarding the definition of “fully cooled.” DOE proposed an alternative definition of “fully cooled” in the BVM test procedure NOPR that described “fully cooled” as “a condition in which the refrigeration system of a beverage vending machine cools product throughout the entire refrigerated volume of a machine instead of being directed at a fraction (or zone) of the refrigerated volume as measured by the average temperature of the standard test packages in the furthest from the next-to-vend positions being no more than 10 °F above the integrated average temperature of the standard test packages.” 79 FR 46908, 46934 (August 11, 2014). To accompany DOE's proposed definition of “fully cooled,” the 2014 BVM test procedure NOPR also proposed to adopt an optional test method that could be used to quantitatively differentiate between Class A and Class B equipment. 79 FR at 46917.

In response to the definition of “fully cooled” proposed in the BVM test procedure NOPR, several interested parties recommended that DOE consider an alternative differentiation between equipment types to better capture differences in energy consumption. Interested parties also suggested that the presence of a transparent or opaque front and/or the arrangement of products within the machine could be potential differentiating criteria that are more appropriate and consistent with the differentiation between equipment configurations applied in industry. Specifically, the California investor-owned utilities (CA IOUs), including Pacific Gas & Electric, Southern California Gas Company, Southern California Edison, and San Diego Gas and Electric, recommended that DOE consider an alternate differentiation between equipment types to better capture differences in energy consumption, and they suggested the consideration of the presence of a glass or opaque front and the arrangement of products within the machine. (Docket No. EERE-2013-BT-TP-0045, CA IOUs, No. 0005 at p. 1) Similarly, Sanden Vendo America Inc. (SVA) recommended that the product configuration would be more appropriate and consistent with the differentiation between equipment configurations applied in industry. (Docket No. EERE-2013-BT-TP-0045, SVA, Public Meeting Transcript, No. 0004 at p. 52).

Many interested parties also commented on the difficulty of establishing a quantitative temperature threshold to differentiate fully cooled equipment from non-fully cooled equipment that would be applicable across all BVM models. Specifically, Automated Merchandising Systems, Inc. (AMS) commented that a 10 °F temperature differential lacks empirical data. (Docket No. EERE-2013-BT-TP-0045, AMS, Public Meeting Transcript, No. 0004 at p. 54) The Coca-Cola Company (Coca-Cola) stated that they believe an 8 °F temperature threshold was acceptable to differentiate Class A, and they added that Class B machines sometimes vary by as much as 18 °F, depending on products vended and the dimensions of the machine. (Docket No. EERE-2013-BT-TP-0045, Coca-Cola, No. 0010 at p. 4) Coca-Cola also stated that the DOE expectation for all product temperatures to be maintained within a 2 °F window for fully-cooled beverage vending machine was unrealistic. (Docket No. EERE-2013-BT-TP-0045, Coca-Cola, No. 0010 at p. 4) SVA commented that 10 °F may be acceptable but stated that using physical differentiating characteristics, such as “shelf” versus “stack” style machines, may be more straightforward. (Docket No. EERE-2013-BT-TP-0045, SVA, No. 0008 at p. 2) The Northwest Energy Efficiency Alliance (NEEA) stated that many Class B vending machines typically had a temperature difference of much less than 10 °F, and urged DOE to conduct further investigation. (Docket No. EERE-2013-BT-TP-0045, NEEA, No. 0009 at p. 1)

Regarding the additional fully cooled verification test procedure, SVA stated that additional testing to confirm a model was fully cooled created additional burden. (Docket No. EERE-2013-BT-TP-0045, SVA, No. 0008 at p.

2) SVA and Coca-Cola also both noted that the introduction of additional thermocouples and the need to run additional thermocouple wire may introduce additional points of air leakage, interfere with proper airflow, and thereby affect the results of the test. (Docket No. EERE-2013-BT-TP-0045, SVA, No. 0008 at p. 2; Docket No. EERE-2013-BT-TP-0045, Coca-Cola, No. 0010 at p. 4)

In light of the extent and scope of the comments received in response to the amendments proposed in the 2014 BVM test procedure NOPR regarding the proposed definition of fully cooled, alternative criteria for differentiating Class A and Class B equipment, and the optional fully cooled verification test protocol, DOE wished to further consider potential classification options and criteria suggested by interested parties, as well as provide interested parties an additional opportunity to provide feedback on any proposals to amend the equipment class definitions. As such, DOE is responding to the comments presented by interested parties in response to the 2014 BVM test procedure NOPR and proposing an alternative approach to differentiate Class A and Class B equipment in this BVM energy conservation standard NOPR.

In considering the definition of “fully cooled” and the best way to clarify the differentiation of Class A and Class B equipment, DOE considered all the comments submitted by interested parties, as well as the manner in which equipment is currently categorized by DOE and industry. In general, DOE agrees with the comments from interested parties in that, in practice, the cooling method is often correlated with the product configuration and presence of a transparent front. Specifically, beverage vending machines with horizontal product rows are typically fully cooled and have a transparent front, while beverage vending machines with vertical product stacks are typically zone cooled and are fully opaque. This correlation occurs due to the inherent utility of a fully cooled beverage vending machine, which was acknowledged in DOE's proposed definition of “fully cooled” (79 FR 46915-46917 (August 11, 2014)) and in the 2009 BVM final rule (74 FR 44914, 44924 (August 31, 2009)). Moreover, DOE is not aware of any instances of BVM models that are not fully cooled but which have a transparent front and/or horizontal product configuration or BVM models that are fully cooled but which have and opaque front and/or vertical stacks. Thus DOE believes that, based on current equipment designs, using criteria of: (a) Whether the equipment is fully cooled, (b) whether the equipment has a transparent front; or (c) whether the vertical or horizontal product arrangement is horizontal or vertical, would result in virtually identical equipment categorization.

DOE also notes that, since DOE's engineering analysis represents typical, representative equipment designs for each equipment class (see section IV.C), the cooling method, the presence of a transparent or opaque front, and product arrangement are correlated in DOE's engineering analysis, as shown in Table IV.2.

Table IV.2—Equipment Classes Design Parameters for Beverage Vending Machines Modeled in the Engineering Analysis

Class

Cooling method

Transparent or opaque front

Vendible product orientation

A

Fully cooled

Transparent front

Horizontal product rows.

B

Zone cooled

Opaque front

Vertical product stacks.

Combination A

Fully cooled

Transparent front

Horizontal product rows.

Combination B

Zone cooled

Opaque front

Vertical product stacks.

DOE agrees with CA IOU and SVA's comments that alternative criteria, such as the presence of glass or the product configuration, may offer a more clear and unambiguous approach to differentiate Class A and Class B equipment than the cooling method, while continuing to preserve the same utility in each class of equipment. Specifically, DOE believes that the presence of a transparent front that allows a customer to view and select from all of the various next-to-vend product selections, which are all maintained at the appropriate vending temperature, is inherently related to the functionality of a beverage vending machine being “fully cooled.” DOE also notes that, theoretically, the presence of glass has a larger impact on the energy consumption of a given beverage vending machine than whether the equipment is fully cooled or whether the equipment has vertical or horizontal product arrangement. DOE believes that defining equipment classes based on a feature that is related to the unique utility and which has the largest impact on the energy use of the equipment is the most appropriate criterion to use to ensure that the utility provided by Class A equipment is maintained in the marketplace. In addition, since DOE believes that the cooling method and the presence of a glass or solid front is correlated in practice. As such, DOE believes that clarifying DOE's equipment class definitions using such an unambiguous product characteristic would not result in any changes to the classification of BVM models that are currently available on the market. 74 FR 44914, 44924 (August 31, 2009).

In light of this, DOE is proposing to amend the definition of Class A beverage vending machines to read as follows:

Class A

means a refrigerated bottled or canned beverage vending machine that is not a combination beverage vending machine and in which 25 percent or more of the surface area on the front side of the beverage vending machine is transparent.

In this BVM energy conservation standard NOPR, DOE is not proposing to substantively modify the definition of Class B, since Class B is defined as the mutually exclusive converse of Class A. However, DOE is proposing to make a minor editorial change to include the term “that” to improve readability of the definition. That is, a Class B beverage vending machine would be defined as a refrigerated bottled or canned beverage vending machine that: (1) Is not considered to be Class A; and (2) is not a combination vending machine.

DOE notes that the proposed definition of Class A is similar to and consistent with DOE's classification and definition of “closed transparent” and “closed solid” commercial refrigeration equipment. 10 CFR 431.62.

In addition to the amended definition for Class A beverage vending machines, which DOE is proposing based on comments from interested parties, DOE notes that a quantitative criteria is necessary to clearly determine whether a given BVM model “has a transparent front.” As such, DOE is also proposing to specify the procedures DOE will use in enforcement testing to clearly and

unambiguously classify Class A and Class B beverage vending machines based on percentage of transparent surface area on the front side of the beverage vending machine. Specifically, DOE is proposing language to clarify the procedure by which DOE will: (1) Determine the surface area of beverage vending machines; and (2) determine whether such surface area is transparent. However, similar to DOE's proposal for a fully cooled verification test in the 2014 BVM test procedure NOPR, these procedures would not be required for rating and certification of specific BVM models. 79 FR 46908, 46917 (August 11, 2014). Under the proposal, manufacturers would continue to be able to certify equipment as Class A or Class B based knowledge of the specific equipment dimensions and characteristics. However, DOE will use these procedures in enforcement testing to verify the appropriate equipment classification for all cases. As such, where the appropriate equipment classification is not abundantly clear, manufacturers may elect to perform the test to ensure they are categorizing their equipment properly; however, DOE reiterates that such testing is not required. To clarify that such procedures are only optional for manufacturers, DOE is proposing to add such procedures to the product-specific enforcement provisions at 10 CFR 429.134.

To determine the surface area, DOE is proposing that the total surface area of the front side of the beverage vending machine, from edge to edge, be determined as the total length multiplied by the total height of a beverage vending machine. DOE is also proposing to specify that the transparent surface area consists of all areas composed of transparent material on the front side of a beverage vending machine, and that the non-transparent surface area consists of all areas composed of material that is not transparent on the front side of a beverage vending machine. The sum of the transparent and non-transparent surface areas should equal the total surface area of the front side of a beverage vending machine, as shown in Figure IV.1.

BILLING CODE 6450-01-C

EP19AU15.007

To determine whether a material is transparent, DOE is proposing to adopt the definition of transparent that is applicable to commercial refrigeration equipment, as adopted in the 2014 commercial refrigeration equipment test procedure final rule. 10 CFR 431.62; 79 FR 22277, 22286-87, and 22308 (April 21, 2014). Under this definition, the term “transparent” applies to any material with greater than or equal to 45 percent light transmittance, as determined in accordance with the ASTM Standard E 1084-86 (Reapproved 2009), “Standard Test Method for Solar Transmittance (Terrestrial) of Sheet Materials Using Sunlight,” at normal incidence and in the intended direction of viewing. In the commercial refrigeration equipment test procedure NOPR, DOE had originally proposed that a transparent material was any material with greater than or equal to 65 percent light transmittance, consistent with the definition of total display area in the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) Standard 1200 (I-P)-2010 (AHRI 1200-2010), “Performance Rating of Commercial Refrigerated Display Merchandisers and Storage Cabinets.” 78 FR 64295, 64301-02 (October 28, 2013). However, DOE adopted a threshold of 45 percent in the final rule based on comments from interested parties regarding the characteristics of low-emissivity and high performance glass. 79 FR 22277, 22287 (April 21, 2014). DOE believes that the threshold of 45 percent light transmittance to determine transparency is equally applicable to materials that are typically used to manufacture both commercial refrigeration equipment and beverage vending machines.

Therefore, to determine whether a given material is transparent or not, DOE proposes that such material be tested in accordance with ASTM Standard E 1084-86 (Reapproved 2009) and, if the visible transmittance is greater than or equal to 45 percent, that material would be deemed to be transparent and considered in the transparent area of the beverage vending machine. When determining material properties, DOE notes that the utility of the transparent material is only applicable if the viewer can clearly see the refrigerated products contained within the refrigerated volume of the beverage vending machine. As such, DOE believes that the transparency of the beverage vending machine cabinet materials should be determined with consideration of all the materials used to construct the wall segment(s). That is, transparency should be determined for all the materials between the refrigerated volume and the ambient environment; only if the aggregate performance of all those materials yields a light transmittance of greater than or equal to 45 percent would that area be treated as transparent. For example, if a beverage vending machine wall segment was composed of sheet metal, insulation, and an opaque plastic covering, with light transmittance of 0, 0, and 0.5, respectively, the aggregate light transmittance of the side wall would be 0 and the area of that side wall would not be treated as transparent.

In accordance with the proposed, amended definition for Class A, any given BVM model would be classified as Class A or Class B based on the relative transparent and non-transparent areas on the front side of the beverage vending machine. If at least 25 percent of the surface area on the front side of the beverage vending machine is transparent, and the beverage vending machine is not a combination vending machine, then the beverage vending machine would be considered to be Class A. Conversely, if greater than 75 percent of the surface area on the front side of the beverage vending machine is not transparent, and the beverage vending machine is not a combination vending machine, than the beverage vending machine would be considered to be Class B. DOE's proposed Class A definition only considers transparent area on the front side of beverage vending machine when determining the appropriate equipment class for beverage vending machines.

DOE reiterates that this test method would be optional and would not be required for equipment certification or testing by manufacturers. Specifically, the determination of the light transmittance of a transparent material based on testing in accordance with ASTM Standard E 1084-86 (Reapproved 2009) would not be required in all cases to classify a BVM basic model as Class A or Class B, and manufacturers would continue to be able to specify the appropriate equipment class without utilizing this test method. However, the determination of the light transmittance of a transparent material would still be determined in accordance with ASTM Standard E 1084-86 (Reapproved 2009) and DOE proposes to use this test method to determine equipment classification in enforcement testing. Thus, incorporation of a quantitative test procedure is not anticipated to add to the complexity or burden of conducting the DOE test procedure for most models of beverage vending machines.

Regarding the proposed definition of “fully cooled,” DOE notes that many interested parties expressed concern about DOE's temperature differential of 10 °F between the average next-to-vend temperature and the average temperature of standard test packages placed in the furthest from next-to-vend position during the test period. Many interested parties questioned the supporting data underlying DOE's proposed temperature threshold and encouraged DOE to collect additional data. In response to these comments, DOE notes that the originally proposed 10 °F temperature differential was proposed based on the best information available to DOE. Specifically, DOE based the proposed temperature threshold on input from manufacturers provided in response to the framework document. (AMS, No. 0017 at p. 6)

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However, DOE acknowledges that AMS also noted that the number they suggested at the framework document public meeting was not based on empirical data. (Docket No. EERE-2013-BT-TP-0045, AMS, Public Meeting Transcript, No. 0004 at p. 54)

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A notation in this form provides a reference for information that is in the docket of DOE's rulemaking to develop energy conservation standards for beverage vending machines (Docket No. EERE-2011-BT-STD-0022, which is maintained at

www.regulations.gov

). This particular notation refers to a comment: submitted by Automated Merchandising Systems, Inc. (AMS); appearing in document number 0017 of the docket; and appearing on page 6 of that document. Comments submitted on other dockets will use a similar format but will include the docket number at the beginning of the citation.

To better inform the appropriate temperature threshold for classification of Class A and Class B beverage vending machines, and in response to comments received on the 2014 BVM test procedure NOPR, DOE analyzed additional data from 28 BVM units (11 Class A and 17 Class B). For these 28 units, DOE included standard test packages in the next-to-vend and furthest from next-to-vend beverage locations, as proposed in the 2014 BVM test procedure NOPR. 79 FR 46908, 46917 (August 11, 2014). DOE compared the integrated average temperature of the next-to-vend standard test packages to the average of all the furthest from next-to-vend standard test package measurements collected throughout the test (

i.e.,

a spatial and temporal average over the entire test period). Based on the collected data, DOE determined that, consistent with comments from interested parties, the proposed 10 °F temperature differential may be too stringent a criterion and may inadvertently classify some BVM models that have opaque fronts and products oriented in vertical stacks as “fully cooled” equipment, even though

the refrigerated volume is not designed or intended to be fully cooled. For example, for equipment with a small or very well insulated refrigerated volume, passive convention will act to cool more of the refrigerated volume than just the “intentionally refrigerated” next-to-vend beverage selections.

In light of this additional analysis, DOE agrees with the comments of interested parties stating that it is difficult to establish a strict range that will be universally applicable to all types of Class A and Class B beverage vending machines. Specifically, DOE's data suggests that Class B equipment may have temperature differences of less than 2 °F between the next-to-vend and furthest from next-to-vend beverage locations. Conversely, as Coca-Cola points out, Class A machines can also have temperature differentials of up to 7 °F. (Docket No. EERE-2013-BT-TP-0045, Coca-Cola, No. 0010 at p. 4)

DOE believes that modifying the definitions of Class A and Class B to rely on the presence of a transparent front allows for clear and unambiguous differentiation of equipment classes, while continuing to reflect the intent and utility of fully cooled versus non-fully cooled equipment. Further, DOE believes referencing the presence of a transparent front to identify Class A equipment aligns with DOE's and industry's interpretation of fully cooled, Class A machines to date. Therefore, DOE does not believe the proposed amendment of the Class A definition and associated optional test protocols would change the equipment class or energy conservation standard level for any equipment that is currently covered under existing standards. As such, DOE is proposing that the amended Class A and Class B definitions be effective 30 days after the publication in the

Federal Register

of any final rule establishing such a definition.

Regarding Coca-Cola's comment that 2 °F is too stringent a tolerance for all the standard test packages in the machine, DOE notes that DOE did not propose such a requirement and agrees with Coca-Cola that maintaining all the standard test packages in the next-to-vend positions within 2 °F of the specified average beverage temperature may not be feasible for all fully cooled equipment designs.

In response to SVA and Coca-Cola's concerns regarding testing burden of the proposed fully cooled verification test procedure and the potential for increased air infiltration, DOE notes that, based on the amendments being proposed in this NOPR, the fully cooled verification test procedure would not be required. However, DOE is proposing to adopt optional specifications and criteria to determine surface area and transparency to allow for clear and unambiguous verification of the appropriate equipment class for any covered BVM models where the appropriate equipment class is not clear based on the physical equipment characteristics. Because the test methods to determine surface area and transparency would not be required for certification testing and is not proposed to be part of the BVM test procedure at 10 CFR 431.296, manufacturers would not be required to take any additional temperature measurements beyond what is currently specified in ANSI/ASHRAE Standard 32.1-2010, DOE believes that the proposed optional test method would not increase the burden associated with conducting the DOE BVM test procedure.

DOE requests comment on the proposed amendment to the Class A equipment class definition. Specifically, DOE requests comment on whether the presence of a transparent front is always correlated with fully cooled equipment (section VII.E of this NOPR).

DOE requests comment on the proposed optional test protocol to determine transparent and non-transparent surface areas and whether Class A equipment typically has at least 25 percent of the surface area on the front side of the unit that is transparent or if another quantitative threshold would be more appropriate (section VII.E of this NOPR).

DOE requests comment on the proposed definition of transparent. Specifically, whether 45 percent light transmittance is an acceptable value for the glass or other transparent materials that are typically used to construct the front panel on Class A equipment (section VII.E of this NOPR).

b. Combination Vending Machines

In the 2009 BVM final rule, DOE established a definition for combination vending machines (74 FR 44914, 44920; August 31, 2009). That definition describes a combination beverage vending machine as a refrigerated bottled or canned beverage machine that also has non-refrigerated volumes for the purpose of vending other, non-“sealed beverage” merchandise. 10 CFR 431.292. However, the 2009 BVM final rule did not consider or differentiate equipment within the combination vending machine equipment category or address any specific criteria that could be used to differentiate “refrigerated” and “non-refrigerated.”

In its recent test procedure rulemaking, culminating in the 2015 BVM test procedure final rule, DOE considered the applicability of the combination vending machine definition to equipment designs it has encountered on the market, and considered stakeholder comments on the definition of “combination vending machine.” 80 FR 45758 (July 31, 2015). In the 2015 BVM test procedure final rule, DOE clarified the test procedure for combination vending machines and noted that such equipment must include compartments that are physically separated, while acknowledging that some combination equipment designs may employ a common product delivery chute between the refrigerated and non-refrigerated compartments for the purposes of delivering vendible merchandise to the customer. DOE also gave notice that it would seek to further clarify the definition of “combination vending machine” in this BVM energy conservation standard NOPR.

Id

at 45765-67.

As such, in consideration of the input of various interested parties throughout both the test procedure and energy conservation standards rulemaking processes, as well as of the range of equipment designs that DOE has observed for sale on the market, DOE is proposing, in this NOPR, an amended definition of “combination vending machine.” Specifically, DOE proposes to amend the definition of “combination vending machine” to more clearly and unambiguously establish the distinction between “refrigerated” and “non-refrigerated” compartments contained in a combination beverage vending machine. Specifically, DOE proposes that the determination of whether a compartment is refrigerated or non-refrigerated is based on whether a compartment is designed to be refrigerated, as demonstrated by the presence of temperature controls. The proposed definition is as follows:

Combination vending machine

means a bottled or canned beverage vending machine containing two or more compartments separated by a solid partition, that may or may not share a product delivery chute, in which at least one compartment is designed to be refrigerated, as demonstrated by the presence of temperature controls, and at least one compartment is not.

DOE requests comment on the proposed amendment to the definition of “combination vending machine” (section VII.E of this NOPR).

DOE also believes that, similar to Class A and Class B equipment classes, the transparency of the front side of the vending machine can differentiate certain styles of combination vending machines that provide a unique utility in the marketplace because their

specific design attributes allow the equipment to be stocked with a wider variety of product selections that can be viewed directly through the equipment's transparent front. As such, in this NOPR, DOE is also proposing to define two new equipment classes at 10 CFR 431.292, Combination A and Combination B, and proposes to define those equipment classes as follows:

Combination

A means a combination vending machine where 25 percent or more of the surface area on the front side of the beverage vending machine is transparent.

Combination B

means a combination vending machine that is not considered to be Combination A.

DOE proposes that the same definition of transparent and same optional test protocol to determine the transparency of materials and the relative surface areas of transparent and non-transparent surfaces would be applicable to combination vending machines except that, the external surface areas surrounding the non-refrigerated compartment(s) would not be considered. That is, all the surfaces that surround and enclose the compartment designed to be refrigerated (as demonstrated by the presence of temperature controls), as well as any surfaces that do not enclose any product-containing compartments (

e.g.,

surfaces surrounding any mechanical equipment or containing the product selection and delivery apparatus) should be considered in the calculation of transparent and non-transparent surface area for a beverage vending machine, as shown in Figure IV.2. Therefore, the transparent area would be determined as a sum of the transparent areas on the front side of a combination vending machine that are not surrounding compartments not designed to be refrigerated (

i.e.,

transparent areas surrounding compartments designed to be refrigerated and associated areas for product selection and delivery). The total area for a combination beverage vending machine would also be determined disregarding the surface area surrounding the compartment(s) not designed to be refrigerated. That is, the total area of the front side of the combination vending machine would be calculated as the total height multiplied by the total width from edge to edge minus the surface area surrounding any compartment(s) not designed to be refrigerated. This “total area” also represents a summation of the transparent and non-transparent areas not surrounding compartments not designed to be refrigerated, as shown in Figure IV.2. The relative transparent area on the front side of combination vending machines would be determined as the transparent area over the total area, similar to the calculation for Class A and B beverage vending machines, as discussed in section IV.A.1.a.

EP19AU15.008

DOE requests comment on the proposed definition for Combination A and Combination B (section VII.E of this NOPR).

DOE also requests comment on DOE's proposal to apply the optional test protocol for determining the surface area and transparency of materials to combination vending machines, except that the surface areas surrounding the refrigerated compartments that are not designed to be refrigerated would be excluded (section VII.E of this NOPR).

In response to the framework document and preliminary analysis, DOE received input from interested parties regarding the design, construction, and sales volume of combination machines. In preparing the analyses presented in this NOPR, DOE used additional data from publicly available literature, as well as interviews with manufacturers, as the basis for its analysis of combination vending machine equipment classes. In considering setting standards for Combination A and Combination B beverage vending machines, as proposed, DOE is also interested in information regarding the design, market prevalence, and energy performance of such combination vending machines.

AMS commented that DOE and manufacturers have expended and will continue to expend large amounts of effort and expense to improve combination machines even though they compose a small amount of the market. (AMS, No. 29 at p. 6)

In response to AMS's comment regarding the small market share of combination vending machines, DOE notes that it revised the market share of combination vending machines based on input received during the manufacturer interview process (see section IV.I.3 of this NOPR). In the analysis for this NOPR, DOE found that combination vending machines represent 18 percent of the market, as opposed to 1 percent that was found in the preliminary analysis. Thus, DOE believes new energy conservation standards for combination machines represent a potential for national energy savings. In addition, since DOE is proposing standards for combination vending machines for the first time, the baseline efficiency for such equipment is much lower than for similar Class A or Class B equipment. Therefore, larger potential savings are available for combination vending machines than for Class A and Class B equipment on a per model basis. As such, DOE continues to analyze and propose standards for this equipment in this NOPR.

DOE requests comment on its updated estimate of market share for combination vending machines (section VII.E of this NOPR).

As noted in the 2015 BVM test procedure final rule, DOE believes that both appendix A and appendix B of the amended BVM test procedure are applicable to combination vending machines. 80 FR 45758 (July 31, 2015). To clarify the applicability of certain test procedure provisions and requirements to combination vending machines, DOE adopted several clarifications to the 2015 BVM test procedure to make the treatment of combination vending machines more specific and precise. These clarifications include explicitly stating the applicability of the BVM test procedure to combination vending machines and clarifying that only the refrigerated compartment of a combination vending machine is to be evaluated in the refrigerated volume calculation and loaded with standard test packages and standard product.

Id.

at 45765-67. However, any lighting or other energy-consuming features in the non-refrigerated compartment would be fully energized during the test procedure and operated in the same manner as any lighting or features in the refrigerated compartment.

Appendix A of the BVM test procedure is applicable to combination vending machines for the purposes of making any representations regarding the energy consumption of such equipment beginning January 27, 2016. 80 FR 45758 (July 31, 2015). Beginning on the compliance date of any energy conservation standards established for combination vending machines as a result of this rulemaking, manufacturers would be required to use appendix B of the BVM test procedure for the purposes of demonstrating compliance with any such energy conservation standards and when making representations regarding the energy consumption of covered equipment.

2. Machines Vending Perishable Goods

DOE notes that there are beverage vending machines that are capable of vending certain perishable products and, as such, may require more strict temperature control than beverage vending machines that only vend non-perishable products, such as bottled or canned soda, juice, or water. DOE notes such perishable products may or may not be sealed beverages but that, if a vending machine is refrigerated and is capable of or can be configured to vend sealed beverages for at least one of the product selections, then the vending machine meets DOE's definition of beverage vending machine and must comply with DOE's regulations for this equipment.

Based on input from interested parties provided in response to the framework document and as stated in chapter 2 of the preliminary analysis TSD, DOE believes that machines capable of vending perishable goods are generally not materially different from other beverage vending machines, and that the necessary levels of temperature maintenance needed to preserve perishables are achieved through the application of control settings rather than through design changes. In addition, such equipment can be tested using DOE's existing method of testing and does not have significantly different energy consumption profiles from other beverage vending machines when tested using DOE's methodology. Therefore, DOE does not believe separate equipment classes and standard levels are warranted for beverage vending machines that are capable of vending perishable goods, and DOE is not proposing a separate class for such equipment in this NOPR. As such, equipment that vends perishable products along with at least one sealed beverage must be tested in accordance with the DOE test procedure and must meet applicable energy conservation standards. Vending machines that are not capable of vending sealed beverages or are not refrigerated do not meet DOE's definition of beverage vending machine and, as such, are not subject to standards, test procedures, and certification and reporting requirements for beverage vending machines.

DOE requests comment on its position that machines capable of vending perishable goods do not warrant separate classes due to their physical similarity to refrigerated beverage vending machines used to vend non-perishable products (section VII.E of this NOPR).

3. Technology Assessment

As part of the technology assessment, DOE developed a list of technologies to consider for improving the efficiency of beverage vending machines. DOE considers as design options all technologies that meet the screening criteria and that produce quantifiable results under the DOE test procedure.

DOE typically uses information about existing and past technology options and prototype designs to help determine which technologies manufacturers use to attain higher energy performance levels. In consultation with interested parties, DOE develops a list of technologies for consideration in its screening and engineering analyses.

Initially, these technologies encompass all those that DOE believes are technologically feasible. Since many options for improving equipment efficiency are available in existing equipment, equipment literature and direct examination of BVM units currently on the market provided much of the information underlying this analysis. While DOE notes that the majority of equipment use R-134a as a refrigerant, which will no longer be available for BVM applications at the time compliance would be required with any amended standards established as part of this final rule (80 FR 42870, 42917-42920; July 20, 2015), DOE believes that the majority of technology options considered in DOE's analysis and presented in the following list are applicable to all beverage vending machines, regardless of the refrigerant utilized. Specifically, DOE considered the following technologies in this NOPR analyses:

• higher-efficiency lighting

• higher-efficiency evaporator fan motors

• higher-efficiency evaporator fan blades

• improved evaporator design

• evaporator fan motor controllers

• low-pressure-differential evaporators

• insulation improvements (including foam insulation thickness increase and use of improved materials such as vacuum insulated panels)

• improved Glass Pack (for Class A and Combination A equipment)

• higher-efficiency compressors

• variable speed compressors

• increased condenser performance

• higher-efficiency condenser fan motors

• higher-efficiency condenser fan blades

• microchannel heat exchangers

• higher efficiency expansion valves

• improved anti-sweat heaters

• lighting controls (including timers and/or sensors)

• refrigeration low-power modes

Chapter 3 of the TSD includes the detailed description of all technology options DOE identified for consideration in this rulemaking.

B. Screening Analysis

The purpose of the screening analysis is to evaluate the technologies identified in the technology assessment to determine which technologies to consider further and which technologies to screen out. DOE consulted with industry, technical experts, and other interested parties in developing a list of energy-saving technologies for the technology assessment. DOE then applied the screening criteria to determine which technologies were unsuitable for further consideration in this rulemaking. Chapter 4 of the NOPR TSD contains details about DOE's screening criteria.

DOE uses the following four screening criteria to determine which technology options are unsuitable for further consideration in an energy conservation standards rulemaking:

1.

Technological feasibility.

DOE will consider technologies incorporated in commercial products or in working prototypes to be technologically feasible.

2.

Practicability to manufacture, install, and service.

If mass production and reliable installation and servicing of a technology in commercial equipment could be achieved on the scale necessary to serve the relevant market at the time the standard comes into effect, then DOE will consider that technology practicable to manufacture, install, and service.

3.

Adverse impacts on product utility or product availability.

If DOE determines that a technology would have a significant adverse impact on the utility of the product to significant subgroups of customers, 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 consider this technology further.

4.

Adverse impacts on health or safety.

If DOE determines that a technology will have significant adverse impacts on health or safety, it will not consider this technology further.

10 CFR Part 430, Subpart C, Appendix A, 4(a)(4) and 5(b)

These four screening criteria do not include the propriety status of design options. As noted previously, DOE will only consider efficiency levels achieved through the use of proprietary designs in the engineering analysis if they are not part of a unique path to achieve that efficiency level. DOE does not believe that any of the technologies identified in the technology assessment are proprietary, and thus, did not eliminate any technologies for that reason. Through a review of each technology, DOE found that the following technologies identified met all four screening criteria to be examined further in the analysis and decrease daily energy consumption (DEC) as measured by the BVM test procedure:

• Higher efficiency lighting

• higher efficiency evaporator fan motors

• higher efficiency evaporator fan blades

• evaporator fan motor controllers

• improved evaporator design

• low-pressure differential evaporators

• improvements to anti-sweat heaters

• improved or thicker insulation

• defrost mechanism

• higher efficiency compressors

• variable speed compressors

• microchannel heat exchangers

• improved condenser design

• higher efficiency condenser fan motors

• higher efficiency condenser fan blades

• improved glass pack design (for Class A and Combination A machines)

• lighting controls

• refrigeration low-power modes

C. Engineering Analysis

The engineering analysis establishes the relationship between an increase in energy efficiency of the equipment and the corresponding increase in manufacturer selling price (MSP) associated with that efficiency level. This relationship serves as the basis for cost-benefit calculations for individual customers, manufacturers, and the nation. DOE typically structures its engineering analysis using one of three approaches: (1) the design-option approach, (2) the efficiency-level approach, or (3) the cost-assessment (reverse engineering) approach. The next paragraphs provide overviews of these three approaches.

A design-option approach identifies individual technology options (from the market and technology assessment) that can be used alone or in combination with other technology options to increase the energy efficiency of a given BVM unit. Under this approach, cost estimates of the baseline equipment and more-efficient equipment that incorporates design options are based on manufacturer or component supplier data or engineering computer simulation models. Individual design options, or combinations of design options, are added to the baseline model in descending order of cost-effectiveness.

An efficiency-level approach establishes the relationship between manufacturer cost and increased efficiency at predetermined efficiency levels above the baseline. Under this approach, DOE typically assesses increases in manufacturer cost for incremental increases in efficiency, without identifying the technology or design options that would be used to achieve such increases.

A reverse-engineering, or cost-assessment, approach involves disassembling representative units of beverage vending machines, and estimating the manufacturing costs based on a “bottom-up” manufacturing cost assessment; such assessments use detailed data to estimate the costs for parts and materials, labor, shipping/packaging, and investment for models that operate at particular efficiency levels.

As discussed in the framework document and preliminary analysis, DOE employed the design-option approach to develop the relationship between energy use of a beverage vending machine and MSP. The decision to use this approach was made due to several factors, including the lack of numerous discrete levels of equipment efficiency currently available on the market and the prevalence of relatively easily implementable energy-saving technologies applicable to this equipment. More specifically, DOE identified design options for analysis and used a combination of industry research and teardown-based cost modeling to determine manufacturing costs, then employed numerical modeling to determine the energy consumption of each combination of design options employed in increasing equipment efficiency. The resulting range of equipment efficiency levels and associated manufacturer production costs (MPCs) were converted to MSPs using information regarding typical manufacturer markups. Typical manufacturer markups are presented in chapter 5 of the NOPR TSD.

DOE requests feedback on the manufacturer markup values used to convert MPC to MSP (section VII.E of this NOPR).

DOE revised the engineering analysis presented in the preliminary analysis based on the feedback of stakeholders, information obtained through interviews with manufacturers, additional industry research, and recent regulatory changes implemented by EPA's SNAP program. 80 FR 19454, 19491 (April 10, 2015) and 80 FR 42870, 42917-42920 (July 20, 2015). In particular, DOE conducted analyses for equipment using propane (R-290) refrigerant, in addition to CO

2

(R-744) and did not consider R-134a further in downstream analysis after 2019. In addition, DOE adjusted baseline assumptions for combination vending machines, included more representative costs for several design options, and revised lighting assumptions.

1. Baseline Equipment and Representative Sizes

For each of the two classes of equipment with current standards (Class A and Class B), DOE developed baseline configurations containing design options consistent with units designed to perform at a level that approximates the existing 2009 BVM standard. DOE based its representative size assumptions for Class A and Class B equipment on the representative sizes assumed in the 2009 BVM rulemaking and input from manufacturers during the framework and preliminary analysis phases of this rulemaking, as well as data gathered from supplemental sources. DOE believes that these representative sizes continue to reflect the design and features of current baseline equipment for Class A and Class B equipment.

For Combination A and Combination B equipment, DOE set its baseline efficiency level differently than for Class A and Class B equipment, since there are no current regulatory standards for this equipment. Specifically, DOE modeled the baseline level of efficiency for the Combination A and Combination B equipment as representing the least-efficient technology generally found in the BVM market currently for each design option analyzed. That is, the baseline efficiency level for Combination A and Combination B equipment represented the least-efficient combination of technologies available, which in some cases a baseline efficiency level with higher energy consumption than any physical combination BVM unit DOE analyzed.

Representative sizes for Combination A and Combination B were established in the preliminary analysis based on equipment available in the current market and have been maintained for this NOPR. Specific details of the representative sizes chosen for analysis and design options representing each of the baseline equipment definitions for Class A, Class B, Combination A, and Combination B beverage vending machines are described in more detail in appendix 5A of the NOPR TSD.

In response to the preliminary analysis, DOE received several comments regarding the methodology it used for setting baseline levels in the engineering analysis. SVA questioned DOE's assumption about the baseline not including low-power states and asserted that most manufacturers turn off lights prior to testing energy consumption, which is representative of low power mode. (SVA, No. 33 at p. 49)

23

Crane recommended that technologies like lighting controls in low power mode and electronically commutated motors (ECMs) are already being utilized and should not be design options to improve efficiency. (Crane Merchandising System, Inc., No. 33 at pp. 53-54). SVA stated that they did not know of additional technologies to reduce energy consumption and that manufacturers are already almost at their maximum efficiencies. (SVA, No. 30 at p.1 and No. 33 at p. 99) AMS added that it has implemented most of the listed technologies and the increased cost associated with these has been significant but the energy impacts are unknown. (AMS, No. 29 at p. 2)

23

A notation in this form provides a reference for information that is in the docket of DOE's rulemaking to develop test procedures for beverage vending machines (Docket No. EERE-2013-BT-STD-0022, which is maintained at

www.regulations.gov

). This particular notation refers to a comment: (1) Submitted by Royal Vendors, Inc.; (2) appearing in document number 11 of the docket; and (3) appearing on page 3 of that document.

In the engineering analysis for Class A and Class B equipment, DOE used the current standard level as the baseline energy consumption level. The current DOE standards are available at 10 CFR 431.296. All impacts of design options that DOE examined to improve efficiency are calculated from that level. Based on its analysis of the DOE BVM certification database as well as the list of ENERGY STAR® qualified beverage vending machines, DOE agrees with Crane and SVA that much of the equipment currently available on the market exceeds the minimum energy performance required by the current DOE standards. DOE further agrees with AMS and SVA that equipment that exceeds the current standards does so through the use of efficiency improvements beyond the baseline design, including design options that DOE uses in its analysis supporting this NOPR.

Most of the design options analyzed in this NOPR were observed by DOE in some portion of the equipment currently on the market. The presence of these design options in equipment that exceeds the current standard level serves as validation of the energy performance improvements over the baseline level that are possible with these design options. However, DOE also realizes that no two manufacturers may necessarily use the same design option pathways to improve energy performance. As such, DOE notes that its engineering analyses represent just one potential pathway to achieve the efficiency levels modeled in downstream analyses.

In response to SVA and Crane's comments regarding current manufacturer use of lighting controls, energy management systems, and low power modes to meet or exceed current energy conservation standards, DOE acknowledges that energy management systems that cannot be altered by the operator are allowed to be enabled during testing according to the current DOE test procedure. However, the engineering analysis supporting the 2009 BVM final rule did not assume the use of any such energy management system in any of the design options analyzed or in the pathway to the adopted standard level (Chapter 5 of the 2009 BVM final rule TSD; Docket No. EERE-2006-STD-0125, No. 79). While manufacturers may elect to employ whatever mix of technology options they see fit, DOE's analyses from the 2009 rulemaking did not indicate that the use of energy management systems or low power modes would be required to meet the standard levels set forth in the 2009 BVM final rule. Similarly, in this NOPR, the baseline equipment performance assumes that all lighting and accessories are on for the duration of the test and no low power modes or energy management systems are enabled. As such, DOE believes that the baseline energy performance level is achievable without the use of any energy management systems and, thus, has included them as a design option for improving the efficiency of BVM equipment.

Additionally, AMS expressed concern that the MDEC requirement for Class B machines is easier to attain than the MDEC for Class A machines. (AMS, No. 29 at p. 2-3) DOE understands that Class A units experience different heat transfer profiles than comparably sized and equipped Class B units. However, DOE is directed to independently establish energy conservation standards that are technologically feasible and economically justified for each class of covered equipment. In the 2009 BVM final rule, DOE established standards for Class A and Class B equipment based on full and independent engineering and economic analyses of the baseline equipment configurations and design options available for each equipment class. In light of inputs obtained during that rulemaking and to date in the current rulemaking, DOE intends to preserve Class A and Class B as distinct classes with separate, independently determined standard levels.

DOE requests comment on whether equipment is tested with all lighting and accessories on for the duration of the test and no low power modes or energy management systems enabled (section VII.E of this NOPR).

DOE requests information on whether the current standard level for Class A and Class B machines is achievable without the use of any energy management systems (section VII.E of this NOPR).

2. Refrigerants

At the time of this analysis, hydrofluorocarbon (HFC) refrigerants, and specifically R-134a, are used in most beverage vending machines on the market currently in the United States. In addition, based on equipment certification reports received by DOE, public statements from major end users of beverage vending machines such as Coca-Cola,

24

and information DOE obtained through confidential manufacturer interviews (see section IV.I.3), DOE has come to understand that CO

2

refrigerant is used in a small but growing portion of the BVM market.

24

One example of such a public statement is available at

http://www.coca-colacompany.com/innovation/coca-cola-installs-1-millionth-hfc-free-cooler-globally-preventing-525mm-metrics-tons-of-co2

.

As discussed earlier, the refrigerants that are available for use in the U.S. refrigerated vending machine market are changing as a result of two recent rulemaking actions by EPA's SNAP. First, EPA published proposed Rule 19 (Docket No. EPA-HQ-OAR-2014-0198) on July 9, 2014, that proposed, among other things, to list several hydrocarbons—isobutane and propane—and the hydrocarbon blend R-441A as acceptable alternatives under SNAP in the BVM application, subject to certain use conditions. 79 FR 38811. A final rule adopting these proposals became effective on May 11, 2015, and was published in the

Federal Register

on April 10, 2015. 80 FR 19454, 19491. EPA's second rulemaking under SNAP, Proposed Rule 20 (Docket No. EPA-HQ-OAR-2013-0748), was published on August 6, 2014 and proposed to change the status certain refrigerants to unacceptable for certain applications, including R-134a for BVM application, 79 FR 46126. A final rule corresponding to Proposed Rule 20 was published in the

Federal Register

on July 20, 2015. 80 FR 42870, 42917-42920 (July 20, 2015). This rule changes the status of R-134a for new vending machines to unacceptable beginning on January 1, 2019. Therefore, equipment complying with the amended BVM standards DOE is proposing in this NOPR would do so using the refrigerants allowable under the newly amended SNAP listings.

Due to the EPA SNAP rulemaking actions that were ongoing at the time of the preliminary analysis and to the small but growing prevalence of equipment using non-HFC refrigerants in the U.S. market, DOE received a number of stakeholder comments related to refrigerants in this rulemaking.

In comments in response to the preliminary analysis, NEEA drew DOE's attention to the ongoing

25

SNAP rulemakings and questioned their impacts on the final rule. The National Automatic Merchandising Association (NAMA) also commented that EPA's proposed SNAP ruling would introduce a new and significant variable that is not represented in the current data. (NAMA, No. 32 at p. 4)

25

At the time of the comment period for the BVM preliminary analysis, both SNAP rulemakings were in the proposal stage, and thus still ongoing.

In a joint written submission, the Alliance to Save Energy, American Council for an Energy-Efficient Economy, Appliance Standard Awareness Project (ASAP), Natural Resources Defense Council, and NEEA (Joint Comment) stated that DOE should examine possible efficiency improvements from the use of hydrocarbon refrigerants (Joint Comment, No. 27 at p. 2). NAMA and AMS expressed concern about the cost of hydrocarbon refrigeration systems, as well as their performance and reliability. (NAMA, No. 32 at p. 2; AMS, No. 29 at p. 2)

Additionally, DOE received comments specific to the use of CO

2

as a refrigerant. NAMA expressed concern about meeting the current DOE MDEC standards for Class A equipment using CO

2

because of the inherently lower efficiency of CO

2

compressors. (NAMA, No. 32 at p. 2) SVA commented that CO

2

refrigeration systems are less energy efficient than R-134a, but cost 50 percent more. (SVA, No. 30 at p. 1)

In response to the comments from stakeholders and due to the changes in allowable refrigerants for BVM applications arising as a result of EPA SNAP Final Rule 20 (80 FR 42870, 42917-42920; July 20, 2015), DOE analyzed the performance of Class A, Class B, Combination A, and Combination B equipment utilizing CO

2

refrigerant (R-744) and propane refrigerant (R-290) in this rulemaking.

DOE notes that while CO

2

has been approved for use in the United States in refrigerated beverage vending applications by EPA SNAP for several years, other hydrocarbons, including propane, were only recently listed as acceptable alternatives for use in refrigerated beverage vending applications in the United States with

EPA's recent publication of final rule 19, which became effective on May 11, 2015. 80 FR 19454, 19491. Although DOE is not aware of any commercially available BVM models using propane as a refrigerant, DOE has based this NOPR analysis on the use of propane as an alternative refrigerant, in addition to CO

2

, based on use of propane as a refrigerant in other similar, self-contained commercial refrigeration applications. (See

e.g.,

Docket No. EPA-HQ-OAR-2014-0198, The Environmental Investigation Agency, No. 0134) EPA also listed R-450A, an HFC/HFO blend, as acceptable for retrofitting BVMs (79 FR 62863 (October 21, 2014)) and is evaluating R-450A and other similar blends as acceptable for new beverage vending machines. However, DOE did not evaluate these refrigerants in this NOPR, as DOE is not aware of any commercially available BVM models using R-450A or other hydrocarbon blends as a refrigerant or of any significant research and development efforts on the part of domestic BVM manufacturers to commercialize this technology in the near future.

In the engineering analysis for this NOPR, DOE first conducted analysis for each equipment class based on equipment using R-134a refrigerant, the refrigerant found in the majority of equipment available today and therefore providing the most specific and comprehensive data available. DOE then conducted analysis on each equipment class, using CO

2

and propane refrigerants, by adjusting the R-134a analysis to account for the performance differences attributable to the new refrigerants. This methodology allowed DOE to leverage the large existing base of experience, data, and models for sale utilizing R-134a while ensuring that its engineering model and downstream analyses properly addressed the refrigerant landscape applicable at the time when compliance with amended standards would be required.

In conducting its CO

2

analysis, DOE used inputs that align with SVA's comment regarding a lower efficiency for CO

2

refrigeration systems. DOE adjusted its engineering analysis to account for an increase in energy use for a beverage vending machine that uses CO

2

versus a similarly equipped unit using R-134a. Specifically, DOE used a 6-percent compressor power increase, based on a separate analytical comparison of HFC and CO

2

compressors, to account for the inherent relative inefficiency of CO

2

. This figure was reviewed with manufacturers during interviews and through requests for public comment on the preliminary analysis. DOE also analyzed components for CO

2

refrigeration systems such as compressors and refrigeration coils as having higher costs than those for HFC refrigeration systems. Additionally, as CO

2

models were currently available on the market for purchase at the time of this analysis, DOE was able to procure, test, and tear down CO

2

equipment to use in corroborating its analysis.

For propane equipment, DOE used a similar methodology to that applied for CO

2

. The engineering analysis used adjusted values for compressor performance, incorporating a 15-percent reduction in energy consumption as compared to an R-134a compressor, as well as adjustments to the cost of the compressor, heat exchangers, and other system components. These factors were developed through a separate, focused analysis targeting the inherent differences in performance potential between HFC and hydrocarbon refrigerants. For a detailed explanation of the methodology used in adjusting the analysis conducted on equipment using R-134a refrigerant for analyzing CO

2

and propane beverage vending machines in this NOPR, please see chapter 5 of the NOPR TSD.

Commensurate with NAMA and SVA's comments, DOE found in its analysis that, because of the decreased efficiency of CO

2

compressors as compared to R-134a compressors, more design options would need to be implemented for equipment using CO

2

refrigerant than equipment using R-134a or propane in order to achieve the same efficiency level. However, DOE's analysis showed that both the current standard level and all of the efficiency levels analyzed, including the proposed standard level, could be met by equipment using any refrigerant. Specifically, DOE established efficiency levels for the LCC, NIA, and national energy savings (NES) analyses that could be reached using any of the refrigerants analyzed. An MPC and an MSP were assigned to each efficiency level by weighting the refrigerant-specific MSPs associated with reaching that efficiency level based on the modeled market share of each refrigerant. For more information on DOE's efficiency level selection and the formulation of market shares by refrigerant, see sections IV.E and IV.G.1 of this NOPR, respectively.

To refine its engineering analysis for beverage vending machines further, DOE requests comment and data from interested parties on several topics related to the refrigerants analyzed in the engineering analysis and their relative performance characteristics. Specifically, DOE requests information on the efficiency of CO

2

and propane compressors in BVM applications (section VII.E of this NOPR).

DOE requests comment on the conclusion that both the current standard level and all of the efficiency levels analyzed could be met by equipment using any refrigerant (section VII.E of this NOPR).

DOE requests information on the additional costs associated with CO

2

and propane refrigeration systems, respectively, including but not limited to additional costs for the compressor, evaporator, condenser, and refrigerant tubing (section VII.E of this NOPR).

DOE requests comment and information on the use of propane, isobutane, and other hydrocarbon refrigerants in current commercially available BVM models or on significant research and development efforts on the part of domestic BVM manufacturers to commercialize this technology in the near future (section VII.E of this NOPR).

DOE requests comment on the likelihood of manufacturers using propane versus isobutane refrigerant since both have been added to the list of acceptable substitutes for use in BVM applications by EPA SNAP. If it is likely that isobutane would also be implemented in BVM applications, DOE requests similar information on the efficiency of isobutane compressors and additional costs associated with isobutane refrigeration systems, including but not limited to additional costs for the compressor, evaporator, condenser, and refrigerant tubing (section VII.E of this NOPR).

3. Design Options Analyzed and Maximum Technologically Feasible Efficiency Level

In response to the preliminary analysis, DOE received several comments with specific feedback regarding the design options analyzed. Specifically, SVA commented that the physical size constraint of certain evaporator fan applications did not allow for ECM motors, and NAMA stated that more insulation would make beverage vending machines larger and impact its market acceptance. (SVA, No. 33 at p. 40 and NAMA, No. 32 at p. 1) Additionally, AMS commented that additional insulation may be added to the beverage vending machines, but this would affect the size of machine, its product capacity, and market acceptance. (AMS, No. 29 at p. 2) SVA and NAMA commented that by 2019 all machines will have light-emitting diode (LED) lighting. (SVA, No. 33 at p. 88, NAMA, No. 32 at p. 2)

DOE based the specifications used in most of the design options for the engineering analysis on observations of what is currently in use in the market, including components and features incorporated by manufacturers of beverage vending machines as well as suppliers of those components. This information was gathered from the physical procurement and teardown of models and from confidential interviews conducted with manufacturers of beverage vending machines and other types of commercial refrigerated equipment. This methodology indicated that ECM evaporator motors are included in some Class A models currently produced. Additionally, DOE did not find there to be significant size differences between ECMs and other fan motor types.

In response to NAMA and AMS, DOE notes that the design options considered included the specifications for the foam insulation, which were 1 inch and 1.125 inches in the design options in the analysis. Both of these are commonly found insulation thicknesses in units being sold currently on the market, demonstrating in the market that these foam thicknesses are not prohibitive to implement.

DOE is aware of the increasing market share of beverage vending machines using LED lighting, and all of the standard levels proposed in this NOPR are at levels where the engineering analysis indicates LEDs will be a part of the least-cost path to achieving the proposed level. The comments by SVA and NAMA support this finding.

Regarding the concerns expressed by AMS over the levels of cost incurred by manufacturers in potentially improving the efficiency of combination vending machines, DOE is analyzing these machine types in parallel as a separate equipment class alongside the Class A and Class B equipment analyzed in this rulemaking. Any new standards for combination vending machines would only be promulgated after a thorough assessment of the costs and benefits to manufacturers, customers, and the nation, and would be set at a level deemed technologically feasible and economically justified. This will include an investigation of manufacturer product and capital conversion costs as part of the MIA.

In addition to these comments regarding the implementation of design options, DOE received comments regarding use of variable speed compressors, which were not analyzed in the engineering analysis for the preliminary analysis. In its written statement, the Joint Comment drew DOE's attention to Embraco, a manufacturer of variable speed compressors, and commented that DOE should incorporate variable speed compressors into their engineering analysis and refer to 2011 residential refrigerator rule for guidance. (Joint Comment, No. 27 at p. 1) ASAP also asked if DOE had considered variable speed compressors manufactured by Embraco. (ASAP, No. 33 at p. 31) AMS commented that fractional horsepower variable speed compressors were not available in the United States anymore since they have been made obsolete by the supplier. (AMS, No. 33 at p. 27)

DOE agrees with the Joint Comment that at least one variable speed compressor model with a suitable operating capacity range is available to BVM manufacturers. However, DOE is not aware of any beverage vending machines on the market or in prototype that use this or any other model of variable speed compressor. Additionally, in public comments and during manufacturer interviews, DOE was not provided any specific data on the performance or reliability of this technology were it to be implemented in beverage vending machines. In response to the comment regarding residential refrigerators, DOE agrees that the residential refrigerator rulemaking provides good guidance regarding the calculation of potential savings associated with the technology. However, DOE is concerned that the operating characteristics of beverage vending machines, including extended pull-down periods, may differ sufficiently from those experienced by other applications in which variable speed compressors have been effectively implemented. For this reason, DOE does not believe that the residential refrigerator experience provides adequate data regarding the potential energy impacts of variable speed compressors in BVM applications. Without application-specific energy and cost data for this technology in beverage vending machines or similar applications, DOE is not able to adequately predict the potential energy savings from such a technology and assess its cost-effectiveness against other design options. Additionally, DOE is not aware of any variable speed compressors using refrigerants allowable under the new EPA SNAP rules with operating capacity ranges nominally applicable to beverage vending machines.

DOE requests comment on whether the conversion to use of any alternative refrigerant may impact the availability or relevance of any design options currently observed in equipment on the market (section VII.E of this NOPR).

DOE requests data on the use of variable speed compressors in beverage vending machines (section VII.E of this NOPR).

In the previous stages of this rulemaking, DOE requested comment regarding the maximum technologically feasible level of performance attainable with technologies currently on the market. During the preliminary analysis, DOE reviewed a wide range of information sources from which to draw data on baseline and improved vending machine performance. DOE assembled this information into cost-efficiency curves extending from the baseline to max tech for each equipment class and configuration examined through the use of the design options listed in Table IV.3. DOE reviewed and revised these cost-efficiency curves in this NOPR based on feedback from interested parties and input from manufacturers provided during the course of manufacturer interviews. DOE believes that these cost-efficiency curves capture the feasible levels of equipment performance to the extent possible at this stage in the analysis.

Table IV.3—Design Options Modeled in the Engineering Analysis

Design option

Notes

Higher efficiency lighting

e.g.,

LEDs

Higher efficiency evaporator fan motors

e.g.,

Electronically commutated motors

Evaporator fan controls

Improved evaporator design

Insulation increases or improvements

e.g.,

Thicker insulation, vacuum insulated panels

Improved glass pack

Class A and Combination A only

Higher efficiency condenser fan motors

e.g.,

Electronically commutated motors

Improved condenser design

Higher efficiency compressors

Lighting low power modes

e.g.,

Lighting timers

Refrigeration low power modes

e.g.,

Timer-based cabinet temperature rise

4. Manufacturer Production Costs

In its engineering analysis, DOE estimates costs for manufacturers to produce equipment at the baseline and at increasingly higher levels of energy efficiency. In this NOPR, DOE based this manufacturer production cost model upon data from physical disassembly of units available on the market, corroborated with information from

manufacturer literature, discussions with industry experts, input from manufacturer interviews (see section IV.I.3 of this NOPR), and other sources. The baseline units modeled in the engineering analysis incorporated refrigerants allowable under SNAP regulations at the time of the effective date of any new or amended standards, namely propane and CO

2

. As such, the manufacturer production costs at the baseline and increasing levels of efficiency all reflect the costs incurred in producing equipment using acceptable refrigerants under the final SNAP regulations issued in 2015. The incremental cost associated with producing a given BVM unit using propane or CO

2

refrigerant, as compared to a similar BVM unit using R-134a refrigerant is accounted for through the use of these refrigerant-specific cost curves. Chapter 5 of the TSD provides a detailed description of the manufacturing cost analysis.

D. Markups Analysis

DOE uses manufacturer-to-customer markups to convert the MSP estimates from the engineering analysis into customer purchase prices, which are subsequently used in the LCC and PBP analysis to evaluate how the increased cost of higher efficiency equipment compares to the annual and lifetime energy and operating cost savings resulting from such efficiency improvements. Accordingly, DOE estimates markups for baseline and all higher efficiency levels that are applied to the MSPs from t

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