[Federal Register Volume 89, Number 52 (Friday, March 15, 2024)]
[Rules and Regulations]
[Pages 19026-19126]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-04736]
[[Page 19025]]
Vol. 89
Friday,
No. 52
March 15, 2024
Part II
Department of Energy
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10 CFR Part 430
Energy Conservation Program: Energy Conservation Standards for
Residential Clothes Washers; Direct Final Rule
Federal Register / Vol. 89, No. 52 / Friday, March 15, 2024 / Rules
and Regulations
[[Page 19026]]
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DEPARTMENT OF ENERGY
10 CFR Part 430
[EERE-2017-BT-STD-0014]
RIN 1904-AF58
Energy Conservation Program: Energy Conservation Standards for
Residential Clothes Washers
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Direct final rule.
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SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including residential
clothes washers (``RCWs''). In this direct final rule, the U.S.
Department of Energy (``DOE'') is adopting amended energy conservation
standards for RCWs. DOE has determined that the amended energy
conservation standards for these products would result in significant
conservation of energy and are technologically feasible and
economically justified.
DATES: The effective date of this rule is July 15, 2024. If adverse
comments are received by July 3, 2024, and DOE determines that such
comments may provide a reasonable basis for withdrawal of the direct
final rule under 42 U.S.C. 6295(o), a timely withdrawal of this rule
will be published in the Federal Register. If no such adverse comments
are received, compliance with the amended standards established for
RCWs in this direct final rule is required on and after March 1, 2028.
Comments regarding the likely competitive impact of the standards
contained in this direct final rule should be sent to the Department of
Justice contact listed in the ADDRESSES section on or before April 15,
2024.
ADDRESSES: The docket for this rulemaking, which includes Federal
Register notices, public meeting attendee lists and transcripts,
comments, and other supporting documents/materials, is available for
review at www.regulations.gov. All documents in the docket are listed
in the www.regulations.gov index. However, not all documents listed in
the index may be publicly available, such as information that is exempt
from public disclosure.
The docket web page can be found at www.regulations.gov/docket/EERE-2017-BT-STD-0014. The docket web page contains instructions on how
to access all documents, including public comments, in the docket.
For further information on how to submit a comment or review other
public comments and the docket, contact the Appliance and Equipment
Standards Program staff at (202) 287-1445 or by email:
[email protected].
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 standards contained in this direct
final rule. Interested persons may contact the Antitrust Division at
[email protected] on or before the date specified in the DATES
section. Please indicate in the ``Subject'' line of your email the
title and Docket Number of this direct final rule.
FOR FURTHER INFORMATION CONTACT: Dr. Carl Shapiro, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington, DC
20585-0121. Telephone: (202) 287-5649. Email:
[email protected].
Ms. Amelia Whiting, U.S. Department of Energy, Office of the
General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC
20585-0121. Telephone: (240) 586-2588. Email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Direct Final Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. Current Test Procedure
3. The Joint Agreement
III. General Discussion
A. Scope of Coverage
B. Fairly Representative of Relevant Points of View
C. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
D. Energy Savings
1. Determination of Savings
2. Significance of Savings
E. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared to Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Product Classes
2. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Metric Translations
2. Efficiency Analysis
a. Baseline Efficiency Levels
b. Higher Efficiency Levels
c. Semi-Automatic
3. Cost Analysis
4. Cost-Efficiency Results
D. Markups Analysis
E. Energy and Water Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy and Water Consumption
4. Energy and Water Prices
a. Energy Prices
b. Water and Wastewater Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
8. Energy Efficiency Distribution in the No-New-Standards Case
9. Payback Period Analysis
G. Shipments Analysis
H. National Impact Analysis
1. Product Efficiency Trends
2. National Energy and Water Savings
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
1. Low-Income Households
2. Senior-Only Households
3. Well-Water Households
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model and Key Inputs
a. Manufacturer Production Costs
b. Shipments Projections
c. Capital and Product Conversion Costs
d. Manufacturer Markup Scenarios
3. Discussion of MIA Comments
K. Emissions Analysis
1. Air Quality Regulations Incorporated in DOE's Analysis
L. Monetizing Emissions Impacts
1. Monetization of Greenhouse Gas Emissions
a. Social Cost of Carbon
b. Social Cost of Methane and Nitrous Oxide
c. Sensitivity Analysis Using Updated 2023 SC-GHG Estimates
2. Monetization of Other Emissions Impacts
M. Utility Impact Analysis
N. Employment Impact Analysis
O. Regulatory Impact Analysis
P. Other Comments
1. Commerce Clause
2. Test Cloth
3. National Academy of Sciences Report
V. Analytical Results and Conclusions
A. Trial Standard Levels
[[Page 19027]]
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash Flow Analysis Results
b. Direct Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy and Water Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Products
a. Performance Characteristics
b. Continued Availability of Small-Capacity Clothes Washers
c. Design Characteristics
d. Conclusion
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Residential
Clothes Washer Standards
2. Annualized Benefits and Costs of the Adopted Standards
VI. Severability
VII. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Information Quality
M. Congressional Notification
VIII. Approval of the Office of the Secretary
I. Synopsis of the Direct Final Rule
The Energy Policy and Conservation Act, Public Law 94-163, as
amended (``EPCA''),\1\ authorizes DOE to regulate the energy efficiency
of a number of consumer products and certain industrial equipment. (42
U.S.C. 6291-6317) Title III, Part B of EPCA \2\ established the Energy
Conservation Program for Consumer Products Other Than Automobiles. (42
U.S.C. 6291-6309) These products include consumer (residential) \3\
clothes washers (``RCWs''), the subject of this direct final rule. (42
U.S.C. 6292(a)(7))
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\1\ All references to EPCA in this document refer to the statute
as amended through the Energy Act of 2020, Public Law 116-260 (Dec.
27, 2020), which reflect the last statutory amendments that impact
Parts A and A-1 of EPCA.
\2\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
\3\ DOE uses the ``residential'' nomenclature and ``RCW''
abbreviation for consumer clothes washers in order to distinguish
from the ``CCW'' abbreviation used for commercial clothes washers,
which are also regulated equipment under EPCA.
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Pursuant to EPCA, any new or amended energy conservation standard
must, among other things, be designed to achieve the maximum
improvement in energy efficiency that DOE determines is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A))
Furthermore, the new or amended standard must result in significant
conservation of energy. (42 U.S.C. 6295(o)(3)(B))
In light of the above and under the authority provided by 42 U.S.C.
6295(p)(4), DOE is issuing this direct final rule amending energy
conservation standards for RCWs.
The adopted standard levels in this direct final rule were proposed
in a letter submitted to DOE jointly by groups representing
manufacturers, energy and environmental advocates, consumer groups, and
a utility. This letter, titled ``Energy Efficiency Agreement of 2023''
(hereafter, the ``Joint Agreement'' \4\), recommends specific energy
conservation standards for RCWs that, in the commenters' view, would
satisfy the EPCA requirements in 42 U.S.C. 6295(o). DOE subsequently
received letters of support for the Joint Agreement from States
including New York, California, and Massachusetts \5\ and utilities
including San Diego Gas and Electric (``SDG&E'') and Southern
California Edison (``SCE'') \6\ advocating for the adoption of the
recommended standards.
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\4\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0505.
\5\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0506.
\6\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0507.
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In accordance with the direct final rule provisions at 42 U.S.C.
6295(p)(4), DOE has determined that the recommendations contained in
the Joint Agreement are compliant with 42 U.S.C. 6295(o). As required
by 42 U.S.C. 6295(p)(4)(A)(i), DOE is also simultaneously publishing a
notice of proposed rulemaking (``NOPR'') that contains identical
standards to those adopted in this direct final rule. Consistent with
the statute, DOE is providing a 110-day public comment period on the
direct final rule. (42 U.S.C. 6295(p)(4)(B)) If DOE determines that any
comments received provide a reasonable basis for withdrawal of the
direct final rule under 42 U.S.C. 6295(o) or any other applicable law,
DOE will publish the reasons for withdrawal and continue the rulemaking
under the NOPR. (42 U.S.C. 6295(p)(4)(C)) See section II.A of this
document for more details on DOE's statutory authority.
The amended standards that DOE is adopting in this direct final
rule are the efficiency levels recommended in the Joint Agreement
(shown in Table I.1). The standards are expressed in terms of energy
efficiency ratio (``EER''), measured in pounds per kilowatt-hour per
cycle (``lb/kWh/cycle''), and water efficiency ratio (``WER''),
measured in pounds per gallon per cycle (``lb/gal/cycle''), as
determined in accordance with DOE's clothes washer test procedure
codified at title 10 of the Code of Federal Regulations (``CFR''), part
430, subpart B, appendix J (``appendix J''). The EER metric includes
active mode, inactive mode, and off mode energy use. The amended
standards recommended in the Joint Agreement are represented as trial
standard level (``TSL'') 2 in this document and described in section
V.A of this document. The Joint Agreement's standards for RCWs apply to
all products listed in Table I.1 manufactured in, or imported into, the
United States starting on March 1, 2028.
Table I.1--Energy Conservation Standards for Residential Clothes Washers
[Compliance starting March 1, 2028]
------------------------------------------------------------------------
Minimum energy Minimum water
Product class efficiency ratio efficiency ratio
(lb/kWh/cycle) (lb/gal/cycle)
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Automatic Clothes Washers:
[[Page 19028]]
Top-Loading Ultra-Compact 3.79 0.29
(less than 1.6 ft\3\
capacity)....................
Top-Loading Standard-Size (1.6 4.27 0.57
ft\3\ or greater capacity)
with an average cycle time of
30 minutes or greater........
Front-Loading Compact (less 5.02 0.71
than 3.0 ft\3\ capacity) *...
Front-Loading Standard-Size 5.52 0.77
(3.0 ft\3\ or greater
capacity) with an average
cycle time of 45 minutes or
greater......................
Semi-Automatic Clothes Washers.... 2.12 0.27
------------------------------------------------------------------------
* The standards in this table do not apply to front-loading clothes
washers with a capacity greater than or equal to 1.6 ft\3\ and less
than 3.0 ft\3\ with an average cycle time of less than 45 minutes.
A. Benefits and Costs to Consumers
Table I.2 summarizes DOE's evaluation of the economic impacts of
the adopted standards on consumers of RCWs, as measured by the average
life-cycle cost (``LCC'') savings and the simple payback period
(``PBP'').\7\ The average LCC savings are positive for all product
classes, and the PBP is less than the average lifetime of RCWs, which
is estimated to be 13.4 years (see section IV.F.6 of this document).
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\7\ The average LCC savings refer to consumers that are affected
by a standard and are measured relative to the efficiency
distribution in the no-new-standards case, which depicts the market
in the compliance year in the absence of new or amended standards
(see section IV.F.8 of this document). The simple PBP, which is
designed to compare specific efficiency levels, is measured relative
to the baseline product (see section IV.F.9 of this document).
Table I.2--Impacts of Adopted Energy Conservation Standards on Consumers
of Residential Clothes Washers
------------------------------------------------------------------------
Average LCC Simple payback
Product class savings (2022$) period (years)
------------------------------------------------------------------------
Automatic Clothes Washers:
Top-Loading Ultra-Compact n.a n.a.
(less than 1.6 ft\3\
capacity) *..................
Top-Loading Standard-Size (1.6 $111 6.2
ft\3\ or greater capacity)...
Front-Loading Compact (less 9 9.3
than 3.0 ft\3\ capacity).....
Front-Loading Standard-Size 46 1.4
(3.0 ft\3\ or greater
capacity)....................
Semi-Automatic Clothes Washers.... 284 0.5
------------------------------------------------------------------------
* The entry ``n.a.'' means not applicable because the adopted standard
is at the baseline level.
DOE's analysis of the impacts of the adopted standards on consumers
is described in section IV.F of this document.
B. Impact on Manufacturers 8
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\8\ All monetary values in this document are expressed in 2022
dollars and, where appropriate, are discounted to 2024 unless
explicitly stated otherwise.
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The industry net present value (``INPV'') is the sum of the
discounted cash flows to the industry from the base year (2024) through
the end of the analysis period, which is 30 years from the analyzed
compliance date.\9\ Using a real discount rate of 9.3 percent, DOE
estimates that the INPV for manufacturers of RCWs in the case without
amended standards is $1,707.9 million.\10\ Under the adopted standards,
which align with the efficiency levels recommended in the Joint
Agreement (represented by TSL 2, hereafter, the ``Recommended TSL'')
for RCWs, DOE estimates the change in INPV to range from -16.3 percent
to -8.6 percent, which is -$278.3 million to -$146.9 million. In order
to bring products into compliance with amended standards, it is
estimated that industry will incur total conversion costs of $320.0
million.
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\9\ DOE's analysis period extends 30-years from the compliance
year. The analysis period ranges from 2024-2056 for the no-new-
standards case and all TSLs, except for TSL 2 (the Recommended TSL).
The analysis period for the Recommended TSL ranges from 2024-2057
due to the 2028 compliance year.
\10\ The no-new-standards case INPV of $1,707.9 million reflects
the sum of discounted free cash flows from 2024-2056 (from the
reference year to 30 years after the 2027 compliance date) plus a
discounted terminal value.
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DOE's analysis of the impacts of the adopted standards on
manufacturers is described in sections IV.J and V.B.2 of this document.
C. National Benefits and Costs 11
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\11\ All monetary values in this document are expressed in 2022
dollars and, where appropriate, are discounted to 2024 unless
explicitly stated otherwise.
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DOE's analyses indicate that the adopted energy conservation
standards for RCWs would save a significant amount of energy and water.
Relative to the case without amended standards, the lifetime energy and
water savings for RCWs purchased in the 30-year period that begins in
the anticipated year of compliance with the amended standards (2028-
2057), amount to 0.67 quadrillion British thermal units (``Btu''), or
quads of energy and 1.89 trillion gallons of water, respectively.\12\
This represents a savings of 3.1 percent relative to the energy use of
these products in the case without amended standards (referred to as
the ``no-new-standards case'').
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\12\ The quantity refers to full-fuel-cycle (``FFC'') energy
savings. FFC energy savings includes the energy consumed in
extracting, processing, and transporting primary fuels (i.e., coal,
natural gas, petroleum fuels), and, thus, presents a more complete
picture of the impacts of energy efficiency standards. For more
information on the FFC metric, see section IV.H.2 of this document.
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The cumulative net present value (``NPV'') of total consumer
benefits of the standards for RCWs ranges from $3.28 billion (at a 7-
percent discount rate) to $8.71 billion (at a 3-percent discount rate).
This NPV expresses the
[[Page 19029]]
estimated total value of future operating-cost savings minus the
estimated increased product costs and installation costs for RCWs
purchased during the period 2028-2057.
In addition, the adopted standards for RCWs are projected to yield
significant environmental benefits. DOE estimates that the standards
will result in cumulative emission reductions (over the same period as
for energy savings) of 13.96 million metric tons (``Mt'') \13\ of
carbon dioxide (``CO2''), 3.65 thousand tons of sulfur
dioxide (``SO2''), 27.74 thousand tons of nitrogen oxides
(``NOX''), 124.57 thousand tons of methane
(``CH4''), 0.12 thousand tons of nitrous oxide
(``N2O''), and 0.02 tons of mercury (``Hg'').\14\ The
estimated cumulative reduction in CO2 emissions through 2030
amounts to 0.46 Mt, which is equivalent to the emissions resulting from
the annual electricity use of more than 89 thousand homes.
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\13\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO2 are presented in short tons.
\14\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy
Outlook 2023 (``AEO2023''). AEO2023 reflects, to the extent
possible, laws and regulations adopted through mid-November 2022,
including the Inflation Reduction Act. See section IV.K of this
document for further discussion of AEO2023 assumptions that effect
air pollutant emissions.
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DOE estimates the value of climate benefits from a reduction in
greenhouse gases (``GHG'') using four different estimates of the social
cost of CO2 (``SC-CO2''), the social cost of
methane (``SC-CH4''), and the social cost of nitrous oxide
(``SC-N2O''). Together these represent the social cost of
GHG (``SC-GHG''). DOE used interim SC-GHG values (in terms of benefit
per ton of GHG avoided) developed by an Interagency Working Group on
the Social Cost of Greenhouse Gases (``IWG'').\15\ The derivation of
these values is discussed in section IV.L of this document. For
presentational purposes, the climate benefits associated with the
average SC-GHG at a 3-percent discount rate are estimated to be $0.84
billion. DOE does not have a single central SC-GHG point estimate and
it emphasizes the importance and value of considering the benefits
calculated using all four sets of SC-GHG estimates.
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\15\ To monetize the benefits of reducing GHG emissions this
analysis uses the interim estimates presented in the Technical
Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide
Interim Estimates Under Executive Order 13990 published in February
2021 by the IWG (``February 2021 SC-GHG TSD''). Available at
www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
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DOE estimated the monetary health benefits of SO2 and
NOX emissions reductions, using benefit per ton estimates
from the Environmental Protection Agency,\16\ as discussed in section
IV.L of this document. DOE estimated the present value of the health
benefits would be $0.73 billion using a 7-percent discount rate, and
$1.62 billion using a 3-percent discount rate.\17\ DOE is currently
only monetizing health benefits from changes in ambient fine
particulate matter (``PM2.5'') concentrations from two
precursors (SO2 and NOX), and from changes in
ambient ozone from one precursor (for NOX), but will
continue to assess the ability to monetize other effects such as health
benefits from reductions in direct PM2.5 emissions.
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\16\ U.S. Environmental Protection Agency (``EPA''). Estimating
the Benefit per Ton of Reducing Directly Emitted PM2.5,
PM2.5 Precursors and Ozone Precursors from 21 Sectors.
Available at www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors.
\17\ DOE estimates the economic value of these emissions
reductions resulting from the considered TSLs for the purpose of
complying with the requirements of Executive Order 12866.
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Table I.3 summarizes the monetized benefits and costs expected to
result from the amended standards for RCWs. There are other important
unquantified effects, including certain unquantified climate benefits,
unquantified public health benefits from the reduction of toxic air
pollutants and other emissions, unquantified energy security benefits,
and distributional effects, among others.
Table I.3--Summary of Monetized Benefits and Costs of Adopted Energy
Conservation Standards for Residential Clothes Washers
------------------------------------------------------------------------
Billion $2022
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings...................... 17.92
Climate Benefits *................................... 0.84
Health Benefits **................................... 1.62
------------------
Total Benefits [dagger].......................... 20.38
Consumer Incremental Product Costs [Dagger].......... 9.20
------------------
Net Monetized Benefits........................... 8.71
Change in Producer Cash Flow (INPV [Dagger][Dagger]). (0.28)-(0.15)
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings...................... 8.65
Climate Benefits * (3% discount rate)................ 0.84
Health Benefits **................................... 0.73
------------------
Total Benefits [dagger].......................... 10.22
Consumer Incremental Product Costs [Dagger].......... 5.37
------------------
Net Monetized Benefits........................... 3.28
Change in Producer Cash Flow (INPV [Dagger][Dagger]). (0.28)-(0.15)
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with RCWs
shipped in 2028-2057. These results include consumer, climate, and
health benefits that accrue after 2057 from the products shipped in
2028-2057.
[[Page 19030]]
* Climate benefits are calculated using four different estimates of the
global SC-GHG (see section IV.L of this document). For presentational
purposes of this table, the climate benefits associated with the
average SC-GHG at a 3 percent discount rate are shown; however, DOE
emphasizes the importance and value of considering the benefits
calculated using all four sets of SC-GHG estimates. To monetize the
benefits of reducing GHG emissions this analysis uses the interim
estimates presented in the Technical Support Document: Social Cost of
Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive
Order 13990 published in February 2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects, such as health benefits from reductions in direct PM2.5
emissions. See section IV.L of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be quantified and monetized. For presentation
purposes, total and net benefits for both the 3-percent and 7-percent
cases are presented using the average SC-GHG with 3-percent discount
rate, but DOE does not have a single central SC-GHG point estimate.
DOE emphasizes the importance and value of considering the benefits
calculated using all four sets of SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as
installation costs.
[Dagger][Dagger] Operating Cost Savings are calculated based on the life
cycle costs analysis and national impact analysis as discussed in
detail below. See sections IV.F and IV.H of this document. DOE's
national impacts analysis includes all impacts (both costs and
benefits) along the distribution chain beginning with the increased
costs to the manufacturer to manufacture the product and ending with
the increase in price experienced by the consumer. DOE also separately
conducts a detailed analysis on the impacts on manufacturers (i.e.,
manufacturer impact analysis, or ``MIA''). See section IV.J of this
document. In the detailed MIA, DOE models manufacturers' pricing
decisions based on assumptions regarding investments, conversion
costs, cash flow, and margins. The MIA produces a range of impacts,
which is the rule's expected impact on the INPV. The change in INPV is
the present value of all changes in industry cash flow, including
changes in production costs, capital expenditures, and manufacturer
profit margins. Change in INPV is calculated using the industry
weighted average cost of capital value of 9.3 percent that is
estimated in the MIA (see chapter 12 of the direct final rule
technical support document (``TSD'') for a complete description of the
industry weighted average cost of capital). For RCWs, the change in
INPV ranges from -$279 million to -$147 million. DOE accounts for that
range of likely impacts in analyzing whether a TSL is economically
justified. See section V.C of this document. DOE is presenting the
range of impacts to the INPV under two manufacturer markup scenarios:
the Preservation of Gross Margin scenario, which is the manufacturer
markup scenario used in the calculation of Consumer Operating Cost
Savings in this table, and the Preservation of Operating Profit
scenario, where DOE assumed manufacturers would not be able to
increase per-unit operating profit in proportion to increases in
manufacturer production costs. DOE includes the range of estimated
change in INPV in the previous table, drawing on the MIA explained
further in section IV.J of this document to provide additional context
for assessing the estimated impacts of this direct final rule to
society, including potential changes in production and consumption,
which is consistent with Office of Management and Budget (``OMB'')
Circular A-4 and Executive Order (``E.O.'') 12866. If DOE were to
include the change in INPV into the net benefit calculation for this
direct final rule, the net benefits would range from $8.43 billion to
$8.56 billion at 3-percent discount rate and would range from $3.00
billion to $3.13 billion at 7-percent discount rate. Parentheses ()
indicate negative values.
The benefits and costs of the adopted standards can also be
expressed in terms of annualized values. The monetary values for the
total annualized net benefits are (1) the reduced consumer operating
costs, minus (2) the increase in product purchase prices and
installation costs, plus (3) the value of climate and health benefits
of emission reductions, all annualized.\18\
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\18\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2024, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2020 or 2030), and then discounted the present value from
each year to 2024. Using the present value, DOE then calculated the
fixed annual payment over a 30-year period, starting in the
compliance year, that yields the same present value.
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The national operating cost savings are domestic private U.S.
consumer monetary savings that occur as a result of purchasing the
covered products and are measured for the lifetime of RCWs shipped in
2028-2057. The benefits associated with reduced emissions achieved as a
result of the adopted standards are also calculated based on the
lifetime of RCWs shipped in 2028-2057. Total benefits for both the 3-
percent and 7-percent cases are presented using the average GHG social
costs with 3-percent discount rate. Estimates of total benefits values
are presented for all four SC-GHG discount rates in section V.B.6 of
this document.
Table I.4 presents the total estimated monetized benefits and costs
associated with the adopted standard, expressed in terms of annualized
values. The results under the primary estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and
health benefits from reduced NOX and SO2
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated cost of the standards adopted
in this rule is $530.1 million per year in increased equipment costs,
while the estimated annual benefits are $853.9 million in reduced
equipment operating costs, $46.9 million in climate benefits, and $71.9
million in health benefits. In this case, the net benefit would amount
to $442.5 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the standards is $513.1 million per year in increased
equipment costs, while the estimated annual benefits are $998.9 million
in reduced operating costs, $46.9 million in climate benefits, and
$90.3 million in health benefits. In this case, the net benefit would
amount to $623.0 million per year.
Table I.4--Annualized Benefits and Costs of Adopted Standards for Residential Clothes Washers
[2028-2057]
----------------------------------------------------------------------------------------------------------------
Million 2022$/year
-----------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 998.9 957.2 1,020.9
Climate Benefits *.............................................. 46.9 45.2 47.5
Health Benefits **.............................................. 90.3 87.1 91.6
-----------------------------------------------
Total Benefits [dagger]..................................... 1,136.1 1,089.5 1,160.0
Consumer Incremental Product Costs [Dagger]..................... 513.1 551.8 468.6
-----------------------------------------------
[[Page 19031]]
Net Benefits................................................ 623.0 537.7 691.4
Change in Producer Cash Flow (INPV [Dagger][Dagger])............ (27)-(14) (27)-(14) (27)-(14)
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 853.9 821.2 871.7
Climate Benefits * (3% discount rate)........................... 46.9 45.2 47.5
Health Benefits **.............................................. 71.9 69.6 72.8
-----------------------------------------------
Total Benefits [dagger]..................................... 972.6 935.9 992.0
Consumer Incremental Product Costs [Dagger]..................... 530.1 564.6 489.5
-----------------------------------------------
Net Benefits................................................ 442.5 371.3 502.5
Change in Producer Cash Flow (INPV [Dagger][Dagger])............ (27)-(14) (27)-(14) (27)-(14)
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with RCWs shipped in 2028-2057. These results
include consumer, climate, and health benefits that accrue after 2057 from the products shipped in 2028-2057.
The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the
AEO2023 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition,
incremental equipment costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the
Low Net Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used to
derive projected price trends are explained in sections IV.F.1 and IV.H.3 of this document. Note that the
Benefits and Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3 percent discount rate are shown, but DOE does not have a single central SC-GHG point estimate, and it
emphasizes the importance and value of considering the benefits calculated using all four sets of SC-GHG
estimates. To monetize the benefits of reducing GHG emissions, this analysis uses the interim estimates
presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim
Estimates Under Executive Order 13990 published in February 2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. See section IV.L of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but DOE does not have a single central SC-GHG point estimate.
[Dagger] Costs include incremental equipment costs as well as installation costs.
[Dagger][Dagger] Operating Cost Savings are calculated based on the life cycle costs analysis and national
impact analysis as discussed in detail below. See sections IV.F and IV.H of this document. DOE's national
impacts analysis includes all impacts (both costs and benefits) along the distribution chain beginning with
the increased costs to the manufacturer to manufacture the product and ending with the increase in price
experienced by the consumer. DOE also separately conducts a detailed analysis on the impacts on manufacturers
(MIA). See section IV.J of this document. In the detailed MIA, DOE models manufacturers' pricing decisions
based on assumptions regarding investments, conversion costs, cash flow, and margins. The MIA produces a range
of impacts, which is the rule's expected impact on the INPV. The change in INPV is the present value of all
changes in industry cash flow, including changes in production costs, capital expenditures, and manufacturer
profit margins. The annualized change in INPV is calculated using the industry weighted average cost of
capital value of 9.3 percent that is estimated in the MIA (see chapter 12 of the direct final rule TSD for a
complete description of the industry weighted average cost of capital). For RCWs, the annualized change in
INPV ranges from -$27 million to -$14 million. DOE accounts for that range of likely impacts in analyzing
whether a TSL is economically justified. See section V.C of this document. DOE is presenting the range of
impacts to the INPV under two manufacturer markup scenarios: the Preservation of Gross Margin scenario, which
is the manufacturer markup scenario used in the calculation of Consumer Operating Cost Savings in this table,
and the Preservation of Operating Profit scenario, where DOE assumed manufacturers would not be able to
increase per-unit operating profit in proportion to increases in manufacturer production costs. DOE includes
the range of estimated annualized change in INPV in the above table, drawing on the MIA explained further in
section IV.J of this document to provide additional context for assessing the estimated impacts of this direct
final rule to society, including potential changes in production and consumption, which is consistent with
OMB's Circular A-4 and E.O. 12866. If DOE were to include the annualized change in INPV into the annualized
net benefit calculation for this direct final rule, the annualized net benefits, using the primary estimate,
would range from $596 million to $609 million at 3-percent discount rate and would range from $415 million to
$428 million at 7-percent discount rate. Parentheses () indicate negative values.
DOE's analysis of the national impacts of the adopted standards is
described in sections IV.H, IV.K, and IV.L of this document.
D. Conclusion
DOE has determined that the Joint Agreement was submitted jointly
by interested persons that are fairly representative of relevant points
of view, in accordance with 42 U.S.C. 6295(p)(4)(A). After considering
the recommended standards and weighing the benefits and burdens, DOE
has determined that the recommended standards are in accordance with 42
U.S.C. 6295(o), which contains the criteria for prescribing new or
amended standards. Specifically, the Secretary of Energy
(``Secretary'') has determined that the adoption of the recommended
standards would result in the significant conservation of energy and
water and is the maximum improvement in energy efficiency that is
technologically feasible and economically justified. In determining
whether the recommended standards are economically justified, the
Secretary has determined that the benefits of the recommended standards
exceed the burdens. The Secretary has further concluded that the
recommended standards, when considering the benefits of energy and
water savings, positive NPV of consumer benefits, emission reductions,
the estimated monetary value of the emissions reductions, and positive
average LCC savings, would yield benefits that outweigh the negative
impacts on some consumers and on manufacturers, including the
conversion costs that could result in a reduction in INPV for
manufacturers.
[[Page 19032]]
Using a 7-percent discount rate for consumer benefits and costs and
NOX and SO2 reduction benefits, and a 3-percent
discount rate case for GHG social costs, the estimated cost of the
standards for RCWs is $495.4 million per year in increased product
costs, while the estimated annual benefits are $798.0 million in
reduced product operating costs, $45.5 million in climate benefits, and
$67.2 million in health benefits. The net benefit amounts to $415.2
million per year. DOE notes that the net benefits are substantial even
in the absence of the climate benefits,\19\ and DOE would adopt the
same standards in the absence of such benefits.
---------------------------------------------------------------------------
\19\ The information on climate benefits is provided in
compliance with Executive Order 12866.
---------------------------------------------------------------------------
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking.\20\ For
example, some covered products and equipment have most of their energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis.
---------------------------------------------------------------------------
\20\ Procedures, Interpretations, and Policies for Consideration
in New or Revised Energy Conservation Standards and Test Procedures
for Consumer Products and Commercial/Industrial Equipment, 86 FR
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------
As previously mentioned, the standards are projected to result in
estimated national energy savings of 0.67 quads FFC, the equivalent of
the primary annual energy use of 4.5 million homes. In addition, they
are projected to reduce cumulative CO2 emissions by 13.96
Mt. Based on these findings, DOE has determined the energy savings from
the standard levels adopted in this direct final rule are
``significant'' within the meaning of 42 U.S.C. 6295(o)(3)(B). A more
detailed discussion of the basis for these conclusions is contained in
the remainder of this document and the accompanying TSD.\21\
---------------------------------------------------------------------------
\21\ The TSD is available in the docket for this rulemaking at
www.regulations.gov/docket/EERE-2017-BT-STD-0014.
---------------------------------------------------------------------------
Under the authority provided by 42 U.S.C. 6295(p)(4), DOE is
issuing this direct final rule amending the energy conservation
standards for RCWs. Consistent with this authority, DOE is also
simultaneously publishing elsewhere in this Federal Register a NOPR
proposing standards that are identical to those contained in this
direct final rule. See 42 U.S.C. 6295(p)(4)(A)(i).
II. Introduction
The following section briefly discusses the statutory authority
underlying this direct final rule, as well as some of the relevant
historical background related to the establishment of standards for
RCWs.
A. Authority
EPCA authorizes DOE to regulate the energy efficiency of a number
of consumer products and certain industrial equipment. Title III, Part
B of EPCA established the Energy Conservation Program for Consumer
Products Other Than Automobiles. These products include RCWs, the
subject of this document. (42 U.S.C. 6292(a)(7)) EPCA prescribed energy
conservation standards for these products (42 U.S.C. 6295(g)(2) and
(g)(9)(A)), and directed DOE to conduct future rulemakings to determine
whether to amend these standards. (42 U.S.C. 6295(g)(4) and (g)(9)(B))
EPCA further provides that, not later than 6 years after the issuance
of any final rule establishing or amending a standard, DOE must publish
either a notice of determination that standards for the product do not
need to be amended, or a NOPR including new proposed energy
conservation standards (proceeding to a final rule, as appropriate).
(42 U.S.C. 6295(m)(1))
In establishing energy conservation standards with both energy and
water use performance standards for RCWs manufactured after January 1,
2011, Congress also directed DOE to ``determin[e] whether to amend''
those standards. (42 U.S.C. 6295(g)(9)(B)) Congress's directive, in
section 6295(g)(9)(B), to consider whether ``to amend the standards in
effect for RCWs'' refers to ``the standards'' established in the
immediately preceding paragraph, 6295(g)(9)(A). There, Congress
established energy conservation standards with both energy and water
use performance standards for RCWs. Indeed, the energy and water use
performance standards for RCWs (both top-loading and front-loading) are
each contained within a single subparagraph. See id. Everything in
section 6295(g)(9) suggests that Congress intended both of those twin
standards to be evaluated when it came time, ``[n]ot later than
December 13, 2011,'' to consider amending them. (Id. 6295(g)(9)(B)(i))
Accordingly, DOE understands its authority, under 6295(g)(9)(B), to
include consideration of amended energy and water use performance
standards for RCWs.
DOE similarly understands its authority under 42 U.S.C. 6295(m) to
amend ``standards'' for covered products to include amending both the
energy and water use performance standards for RCWs. Neither section
6295(g)(9)(B) nor section 6295(m) limit their application to ``energy
use standards.'' Rather, they direct DOE to consider amending ``the
standards,'' 42 U.S.C. 6295(g)(9)(B), or simply ``standards,'' id.
6295(m)(1)(B), which may include both energy use standards and water
use standards.
Finally, DOE is promulgating these standards as a direct final rule
pursuant to 42 U.S.C. 6295(p)(4). That section also extends broadly to
any ``energy or water conservation standard'' without qualification.
Thus, pursuant to section 6295(p)(4), DOE may, so long as the other
relevant conditions are satisfied, promulgate a direct final rule that
includes water use performance standards for a covered product like
RCWs, where Congress has already established energy and water use
performance standards.
DOE is aware that the definition of ``energy conservation
standard,'' in section 6291(6), expressly references water use only for
four products specifically named: showerheads, faucets, water closets,
and urinals. See id. However, DOE does not read the language in 6291(6)
as fully delineating the scope of DOE's authority under EPCA. Rather,
as is required of agencies in applying a statute, individual
provisions, including section 6291(6) of EPCA, must be read in the
context of the statute as a whole.
The energy conservation program was initially limited to addressing
the energy use, meaning electricity and fossil fuels, of 13 covered
products. (See sections 321 and 322 of the Energy and Policy
Conservation Act, Pub. L. 94-163, 89 Stat. 871 (December 22, 1975))
Since its inception, Congress has expanded the scope of the energy
conservation program several times, including by adding covered
products, prescribing energy conservation standards for various
products, and by addressing water use for certain covered products. For
example, in the Energy Policy Act of 1992, Congress amended the list of
covered products in 42 U.S.C. 6292 to include showerheads, faucets,
water closets and urinals and expanded DOE's authority to regulate
water use for these products. (See sec. 123, Energy Policy Act of 1992,
Pub. L. 102-486, 106 Stat. 2776 (Oct. 24, 1992)) When it did so,
Congress also made corresponding changes to the definition of
``consumer
[[Page 19033]]
product'' (42 U.S.C. 6291(1)), the definition of ``energy conservation
standard'' (42 U.S.C. 6291(6)), the section governing the promulgation
of test procedures (42 U.S.C. 6293), the criteria for prescribing new
or amended energy conservation standards (42 U.S.C. 6295(o)), and
elsewhere in EPCA.
Later, Congress further expanded the scope of the energy
conservation program several times. For instance, Congress added
products and standards directly to 42 U.S.C. 6295, the section of EPCA
that contains statutorily prescribed standards as well as DOE's
standard-setting authorities. See 42 U.S.C. 6295(a) (stating that the
``purposes of this section are to--(1) provide Federal energy
conservation standards applicable to covered products; and (2)
authorize the Secretary to prescribe amended or new energy conservation
standards for each type (or class) of covered product.''). When
Congress added these new standards and standard-setting authorities to
42 U.S.C. 6295 after the Energy Policy Act of 1992, it often did so
without making any conforming changes to other provisions in EPCA,
e.g., sections 6291 or 6292. For example, in the Energy Policy Act of
2005, Congress prescribed standards by statute, or gave DOE the
authority to set standards for, battery chargers, external power
supplies, ceiling fans, ceiling fan light kits, beverage vending
machines, illuminated exit signs, torchieres, low voltage dry-type
distribution transformers, traffic signal modules and pedestrian
modules, certain lamps, dehumidifiers, and commercial prerinse spray
valves in 42 U.S.C. 6295 without updating the list of covered products
in 42 U.S.C. 6292. (See sec. 135, Energy Policy Act of 2005, 119 Stat.
594 (Aug. 8, 2005))
Congress also expanded the scope of the energy conservation program
by directly adding water use performance standards for certain products
to 42 U.S.C. 6295. For example, in the Energy Policy Act of 2005,
Congress added a water use performance standard (but no energy use
performance standard) for commercial prerinse spray valves (``CPSVs'')
and did so without updating the list of covered products in 42 U.S.C.
6292 to include CPSVs and without adding CPSVs to the list of
enumerated products with water use performance standards in the
``energy conservation standard'' definition in 42 U.S.C. 6291(6). In
the Energy Independence and Security Act of 2007 (``EISA 2007''),
Congress amended 42 U.S.C. 6295 by prescribing standards for RCWs and
dishwashers that included both energy and water use performance
standards. (See sec. 301, EISA 2007, Pub. L. 110-140, 121 Stat. 1492
(Dec. 19, 2007)) Again, when it did so, Congress did not add these
products to the list of enumerated products with water use performance
standards in the definition of ``energy conservation standard'' in 42
U.S.C. 6291(6).
In considering how to treat these products and standards that
Congress has directly added to 42 U.S.C. 6295 without making conforming
changes to the rest of the statute, including the list of covered
products in 42 U.S.C. 6292, and the water-use products in the
definition of an ``energy conservation standard,'' DOE construes the
statute as a whole. When Congress added products and standards directly
to 42 U.S.C. 6295 it must have meant those products to be covered
products and those standards to be energy conservation standards, given
that the purpose of 42 U.S.C. 6295 is to provide ``energy conservation
standards applicable to covered products'' and to ``authorize the
Secretary to prescribe amended or new energy conservation standards for
each type (or class) of covered product.'' Elsewhere in EPCA, the
statute's references to covered products and energy conservation
standards can only be read coherently as including the covered products
and energy conservation standards Congress added directly to section
6295, even if Congress did not make conforming edits to 6291 or 6292.
For example, manufacturers are prohibited from ``distribut[ing] in
commerce any new covered product which is not in conformity with an
applicable energy conservation standard.'' (42 U.S.C. 6302(a)(5)
(emphasis added)) It would defeat congressional intent to allow a
manufacturer to distribute a product, e.g., a CPSV or ceiling fan, that
violates an applicable energy conservation standard that Congress
prescribed simply because Congress added the product directly to 42
U.S.C. 6295 without also updating the list of covered products in 42
U.S.C. 6292(a). In addition, preemption in EPCA is based on ``the
effective date of an energy conservation standard established in or
prescribed under section 6295 of this title for any covered product.''
(42 U.S.C. 6297(c) (emphasis added)) Nothing in EPCA suggests that
standards Congress adopted in 6295 lack preemptive effect, merely
because Congress did not make conforming amendments to 6291, 6292, or
6293.
It would similarly defeat congressional intent for a manufacturer
to be permitted to distribute a covered product, e.g., a clothes washer
or dishwasher, that violates a water use performance standard because
Congress added the standard to 42 U.S.C. 6295 without also updating the
definition of energy conservation standard in 42 U.S.C. 6291(6). By
prescribing directly, in 6295(g)(9), energy conservation standards for
RCWs that include both energy and water use performance standards,
Congress intended that energy conservation standards for RCWs include
both energy use and water use.
DOE recognizes that some might argue that Congress's specific
reference in section 6291(6) to water standards for showerheads,
faucets, water closets, and urinals could ``create a negative
implication'' that energy conservations standards for other covered
products may not include water use standards. See Marx v. Gen. Revenue
Corp., 568 U.S. 371, 381 (2013). ``The force of any negative
implication, however, depends on context.'' Id.; see also NLRB v. SW
Gen., Inc., 580 U.S. 288, 302 (2017) (``The expressio unius canon
applies only when circumstances support a sensible inference that the
term left out must have been meant to be excluded.'' (Alterations and
quotation marks omitted)). In this context, the textual and structural
cues discussed above show that Congress did not intend to exclude from
the definition of energy conservation standard the water use
performance standards that it specifically prescribed, and directed DOE
to amend, in section 6295. To conclude otherwise would negate the plain
text of 6295(g)(9). Furthermore, to the extent the definition of energy
conservation standards in section 6291(6), which was last amended in
the Energy Policy Act of 1992, could be read as in conflict with the
energy and water use performance standards prescribed by Congress in
EISA 2007, any such conflict should be resolved in favor of the more
recently enacted statute. See United States v. Estate of Romani, 523
U.S. 517, 530-31 (1998) (``[A] specific policy embodied in a later
Federal statute should control our construction of the priority
statute, even though it had not been expressly amended.'').
Accordingly, based on a complete reading of the statute, DOE has
determined that products and standards added directly to 42 U.S.C. 6295
are appropriately considered ``covered products'' and ``energy
conservation standards'' for the purposes of applying the various
provisions in EPCA.
The energy conservation program under EPCA, consists essentially of
four parts: (1) testing, (2) labeling, (3) the establishment of Federal
energy conservation standards, and (4) certification and enforcement
procedures. Relevant provisions of
[[Page 19034]]
EPCA specifically include definitions (42 U.S.C. 6291), test procedures
(42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), energy
conservation standards (42 U.S.C. 6295), and the authority to require
information and reports from manufacturers (42 U.S.C. 6296).
Federal energy efficiency requirements for covered products
established under EPCA generally supersede State laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal
preemption in limited instances for particular State laws or
regulations, in accordance with the procedures and other provisions set
forth under EPCA. (See 42 U.S.C. 6297(d))
Subject to certain criteria and conditions, DOE is required to
develop test procedures to measure the energy efficiency, energy use,
or estimated annual operating cost of each covered product. (42 U.S.C.
6295(r)) Manufacturers of covered products must use the prescribed DOE
test procedure as the basis for certifying to DOE that their products
comply with the applicable energy conservation standards adopted under
EPCA and when making representations to the public regarding the energy
use or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s))
Similarly, DOE must use these test procedures to determine whether the
products comply with standards adopted pursuant to EPCA. (42 U.S.C.
6295(s)) The DOE test procedures for RCWs appear at 10 CFR part 430,
subpart B, appendices J (``appendix J'') and J2 (``appendix J2'').
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including RCWs. Any new or
amended standard for a covered product must be designed to achieve the
maximum improvement in energy efficiency that the Secretary determines
is technologically feasible and economically justified. (42 U.S.C.
6295(o)(2)(A)) Furthermore, DOE may not adopt any standard that would
not result in the significant conservation of energy. (42 U.S.C.
6295(o)(3)(B))
Moreover, DOE may not prescribe a standard if DOE determines by
rule that the standard is not technologically feasible or economically
justified. (42 U.S.C. 6295(o)(3)(B)) In deciding whether a proposed
standard is economically justified, DOE must determine whether the
benefits of the standard exceed its burdens. (42 U.S.C.
6295(o)(2)(B)(i)) DOE must make this determination after receiving
comments on the proposed standard, and by considering, to the greatest
extent practicable, the following seven statutory factors:
(1) The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered products that are likely to result from the standard;
(3) The total projected amount of energy (or, as applicable, water)
savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered
products likely to result from the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary considers relevant.
(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
Further, EPCA, as codified, establishes a rebuttable presumption
that a standard is economically justified if the Secretary finds that
the additional cost to the consumer of purchasing a product complying
with an energy conservation standard level will be less than three
times the value of the energy savings during the first year that the
consumer will receive as a result of the standard, as calculated under
the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing
any amended standard that either increases the maximum allowable energy
use or decreases the minimum required energy efficiency of a covered
product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe
an amended or new standard if interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States in any covered product type (or
class) of performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those generally available in the United States. (42 U.S.C.
6295(o)(4))
EPCA specifies requirements when promulgating an energy
conservation standard for a covered product that has two or more
subcategories. A rule prescribing an energy conservation standard for a
type (or class) of product must specify a different standard level for
a type or class of products that has the same function or intended use
if DOE determines that products within such group: (A) consume a
different kind of energy from that consumed by other covered products
within such type (or class); or (B) have a capacity or other
performance-related feature which other products within such type (or
class) do not have and such feature justifies a higher or lower
standard. (42 U.S.C. 6295(q)(1)) In determining whether a performance-
related feature justifies a different standard for a group of products,
DOE considers such factors as the utility to the consumer of such a
feature and other factors DOE deems appropriate. (Id.) Any rule
prescribing such a standard must include an explanation of the basis on
which such higher or lower level was established. (42 U.S.C.
6295(q)(2))
Additionally, pursuant to the amendments contained in the EISA
2007, Public Law 110-140, final rules for new or amended energy
conservation standards promulgated after July 1, 2010, are required to
address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3))
Specifically, when DOE adopts a standard for a covered product after
that date, it must, if justified by the criteria for adoption of
standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and
off mode energy use into a single standard, or, if that is not
feasible, adopt a separate standard for such energy use for that
product. (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE's current test procedures
for RCWs address standby mode and off mode energy use, as do the
amended standards adopted in this direct final rule.
Finally, EISA 2007 amended EPCA, in relevant part, to grant DOE
authority to issue a final rule (i.e., a ``direct final rule'')
establishing an energy conservation standard upon receipt of a
statement submitted jointly by interested persons that are fairly
representative of relevant points of view (including representatives of
manufacturers of covered products, States, and efficiency advocates),
as determined by the Secretary, that contains recommendations with
respect to an energy or water conservation standard. (42 U.S.C.
6295(p)(4)) Pursuant to 42 U.S.C. 6295(p)(4), the Secretary must also
determine whether a jointly-submitted recommendation for an energy or
water conservation standard satisfies 42 U.S.C. 6295(o) or 42 U.S.C.
6313(a)(6)(B), as applicable.
[[Page 19035]]
The direct final rule must be published simultaneously with a NOPR
that proposes an energy or water conservation standard that is
identical to the standard established in the direct final rule, and DOE
must provide a public comment period of at least 110 days on the
proposal. (42 U.S.C. 6295(p)(4)(A)-(B)) While DOE typically provides a
comment period of 60 days on proposed standards, for a NOPR
accompanying a direct final rule, DOE provides a comment period of the
same length as the comment period on the direct final rule--i.e., 110
days. Based on the comments received during this period, the direct
final rule will either become effective, or DOE will withdraw it not
later than 120 days after its issuance if: (1) one or more adverse
comments is received, and (2) DOE determines that those comments, when
viewed in light of the rulemaking record related to the direct final
rule, may provide a reasonable basis for withdrawal of the direct final
rule under 42 U.S.C. 6295(o). (42 U.S.C. 6295(p)(4)(C)) Receipt of an
alternative joint recommendation may also trigger a DOE withdrawal of
the direct final rule in the same manner. (Id.)
DOE has previously explained its interpretation of its direct final
rule authority. In a final rule amending the Department's ``Procedures,
Interpretations and Policies for Consideration of New or Revised Energy
Conservation Standards for Consumer Products'' at 10 CFR part 430,
subpart C, appendix A (``Process Rule'' or ``appendix A''), DOE noted
that it may issue standards recommended by interested persons that are
fairly representative of relative points of view as a direct final rule
when the recommended standards are in accordance with 42 U.S.C. 6295(o)
or 42 U.S.C. 6313(a)(6)(B), as applicable. 86 FR 70892, 70912 (Dec. 13,
2021). But the direct final rule provision in EPCA does not impose
additional requirements applicable to other standards rulemakings,
which is consistent with the unique circumstances of rules issued
through consensus agreements under DOE's direct final rule authority.
Id. DOE's discretion remains bounded by its statutory mandate to adopt
a standard that results in the maximum improvement in energy efficiency
that is technologically feasible and economically justified--a
requirement found in 42 U.S.C. 6295(o). Id. As such, DOE's review and
analysis of the Joint Agreement is limited to whether the recommended
standards satisfy the criteria in 42 U.S.C. 6295(o).
B. Background
1. Current Standards
In a direct final rule published on May 31, 2012 (``May 2012 Direct
Final Rule''), DOE prescribed the current energy conservation standards
for RCWs manufactured on or after January 1, 2018. 77 FR 32308.\22\
These standards are set forth in DOE's regulations at 10 CFR
430.32(g)(4). These standards are consistent with a prior joint
proposal submitted to DOE by interested parties representing
manufacturers, energy and environmental advocates, and consumer
groups.\23\ The current standards are defined in terms of a minimum
allowable integrated modified energy factor (``IMEF''), measured in
cubic feet per kilowatt-hour per cycle (``ft\3\/kWh/cycle''), and
maximum allowable integrated water factor (``IWF''), measured in
gallons per cycle per cubic foot (``gal/cycle/ft\3\''), as measured
according to appendix J2.
---------------------------------------------------------------------------
\22\ DOE published a confirmation of effective date and
compliance date for the direct final rule on October 1, 2012. 77 FR
59719.
\23\ Available at www.regulations.gov/document/EERE-2008-BT-STD-0019-0032.
Table II.1--Federal Energy Efficiency Standards for Residential Clothes
Washers
------------------------------------------------------------------------
Minimum integrated
modified energy Maximum integrated
Product class factor (ft\3\/kWh/ water factor (gal/
cycle) cycle/ft\3\)
------------------------------------------------------------------------
Top-Loading, Compact (less 1.15 12.0
than 1.6 ft\3\ capacity)...
Top-Loading, Standard (1.6 1.57 6.5
ft\3\ or greater capacity).
Front-Loading, Compact (less 1.13 8.3
than 1.6 ft\3\ capacity)...
Front-Loading, Standard (1.6 1.84 4.7
ft\3\ or greater capacity).
------------------------------------------------------------------------
For top-loading semi-automatic clothes washers, a design standard
currently applies, which requires such products to have an unheated
rinse water option. 10 CFR 430.32(g)(1).
2. Current Test Procedure
As discussed, DOE's current energy conservation standards for RCWs
are expressed in terms of IMEF and IWF as measured using appendix J2.
(See 10 CFR 430.32(g)(4))
In a final rule published on June 1, 2022 (``June 2022 TP Final
Rule''), DOE finalized a new test procedure (TP) at appendix J, which
defines new energy efficiency metrics: an energy efficiency ratio
(i.e., EER) and a water efficiency ratio (i.e., WER). 87 FR 33316,
33319. EER is defined as the quotient of the weighted-average load size
divided by the total clothes washer energy consumption per cycle, with
such energy consumption expressed as the sum of (1) the machine
electrical energy consumption, (2) the hot water energy consumption,
(3) the energy required for removal of the remaining moisture in the
wash load, and (4) the combined low-power mode energy consumption. 10
CFR part 430 subpart B, appendix J, section 1. WER is defined as the
quotient of the weighted-average load size divided by the total
weighted per-cycle water consumption for all wash cycles in gallons.
Id. For both EER and WER, a higher value indicates more efficient
performance. The standards enacted by this direct final rule are
expressed in terms of the EER and WER metrics as measured according to
the newly established test procedure contained in appendix J.
---------------------------------------------------------------------------
\24\ The signatories to the Joint Agreement include AHAM,
American Council for an Energy-Efficient Economy, Alliance for Water
Efficiency, Appliance Standards Awareness Project, Consumer
Federation of America, Consumer Reports, Earthjustice, National
Consumer Law Center, Natural Resources Defense Council, Northwest
Energy Efficiency Alliance, and Pacific Gas and Electric Company.
Members of AHAM's Major Appliance Division that make the affected
products include: Alliance Laundry Systems, LLC; Asko Appliances AB;
Beko US Inc.; Brown Stove Works, Inc.; BSH Home Appliances
Corporation; Danby Products, Ltd.; Electrolux Home Products, Inc.;
Elicamex S.A. de C.V.; Faber; Fotile America; GE Appliances, a Haier
Company; L'Atelier Paris Haute Design LLG; LG Electronics; Liebherr
USA, Co.; Midea America Corp.; Miele, Inc.; Panasonic Appliances
Refrigeration Systems (PAPRSA) Corporation of America; Perlick
Corporation; Samsung Electronics America Inc.; Sharp Electronics
Corporation; Smeg S.p.A; Sub-Zero Group, Inc.; The Middleby
Corporation; U-Line Corporation; Viking Range, LLC; and Whirlpool
Corporation.
---------------------------------------------------------------------------
3. The Joint Agreement
On September 25, 2023, DOE received a joint statement (i.e., the
Joint Agreement) recommending standards
[[Page 19036]]
for RCWs, that was submitted by groups representing manufacturers,
energy and environmental advocates, consumer groups, and a utility.\24\
In addition to the recommended standards for RCWs, the Joint Agreement
also included separate recommendations for several other covered
products.\25\ And, while acknowledging that DOE may implement these
recommendations in separate rulemakings, the Joint Agreement also
stated that the recommendations were recommended as a complete package
and each recommendation is contingent upon the other parts being
implemented. DOE understands this to mean that the Joint Agreement is
contingent upon DOE initiating rulemaking processes to adopt all of the
recommended standards in the agreement. That is distinguished from an
agreement where issuance of an amended energy conservation standard for
a covered product is contingent on issuance of amended energy
conservation standards for the other covered products. If the Joint
Agreement were so construed, it would conflict with the anti-
backsliding provision in 42 U.S.C. 6295(o)(1), because it would imply
the possibility that, if DOE were unable to issue an amended standard
for a certain product, it would have to withdraw a previously issued
standard for one of the other products. The anti-backsliding provision,
however, prevents DOE from withdrawing or amending an energy
conservation standard to be less stringent. As a result, DOE will be
proceeding with individual rulemakings that will evaluate each of the
recommended standards separately under the applicable statutory
criteria.
---------------------------------------------------------------------------
\25\ The Joint Agreement contained recommendations for 6 covered
products: refrigerators, refrigerator-freezers, and freezers;
residential clothes washers; consumer clothes dryers; dishwashers;
consumer conventional cooking products; and miscellaneous
refrigeration products.
---------------------------------------------------------------------------
A court decision issued after DOE received the Joint Agreement is
also relevant to this rule. On March 17, 2022, various States filed a
petition seeking review of a final rule revoking two final rules that
established product classes for residential dishwashers with a cycle
time for the normal cycle of 60 minutes or less, top-loading RCWs and
certain classes of consumer clothes dryers with a cycle time of less
than 30 minutes, and front-loading RCWs with a cycle time of less than
45 minutes (collectively, ``short cycle product classes''). The
petitioners argued that the final rule revoking the short cycle product
classes violated EPCA and was arbitrary and capricious. On January 8,
2024, the United States Court of Appeals for the Fifth Circuit granted
the petition for review and remanded the matter to DOE for further
proceedings consistent with the Fifth Circuit's opinion. See Louisiana
v. United States Department of Energy, 90 F.4th 461 (5th Cir. 2024).
On February 14, 2024, following the Fifth Circuit's decision in
Louisiana v. United States Department of Energy, DOE received a second
joint statement from this same group of stakeholders in which the
signatories reaffirmed the Joint Agreement, stating that the
recommended standards represent the maximum levels of efficiency that
are technologically feasible and economically justified.\26\ In the
letter, the signatories clarified that ``short-cycle'' product classes
for RCWs, consumer clothes dryers, and dishwashers did not exist at the
time that the signatories submitted their recommendations and it is
their understanding that these classes also do not exist at the current
time. Accordingly, the parties clarified that the Joint Agreement did
not address short-cycle product classes. The signatories also stated
that they did not anticipate that the recommended energy conservation
standards in the Joint Agreement will negatively affect features or
performance, including cycle time, for RCWs.
---------------------------------------------------------------------------
\26\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0509.
---------------------------------------------------------------------------
The Joint Agreement recommends amended standard levels for RCWs as
presented in Table II.2. (Joint Agreement, No. 505 at p. 9) Details of
the Joint Agreement recommendations for other products are provided in
the Joint Agreement posted in the docket.\27\
---------------------------------------------------------------------------
\27\ The Joint Agreement is available in the docket at
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0505.
Table II.2--Recommended Amended Energy Conservation Standards for Residential Clothes Washers
----------------------------------------------------------------------------------------------------------------
Minimum energy Minimum water
Product class efficiency ratio (lb/ efficiency ratio (lb/ Compliance date
kWh/cycle) gal/cycle)
----------------------------------------------------------------------------------------------------------------
Top-Loading, Ultra-Compact (less than 3.79 0.29 March 1, 2028.
1.6 ft\3\ capacity).
Top-Loading, Standard-Size (1.6 ft\3\ or 4.27 0.57
greater capacity).
Front-Loading, Compact (less than 1.6 5.02 0.71
ft\3\ capacity).
Front-Loading, Standard-Size (1.6 ft\3\ 5.52 0.77
or greater capacity).
Semi-Automatic Clothes Washers.......... 2.12 0.27
----------------------------------------------------------------------------------------------------------------
When the Joint Agreement was submitted, DOE was conducting a
rulemaking to consider amending the standards for RCWs. As part of that
process, DOE published a NOPR and announced a public meeting on March
3, 2023 (``March 2023 NOPR''), seeking comment on its proposed amended
standards to inform its decision consistent with its obligations under
EPCA and the Administrative Procedure Act (``APA''). 88 FR 13520. The
March 2023 NOPR proposed amended standards defined in terms of the EER
and WER metrics as measured according to appendix J. Id. at 88 FR
13522. The March 2023 NOPR also proposed to re-establish a product
class, and establish new performance standards, for semi-automatic
clothes washers. Id. at 88 FR 13541.\28\ The March 2023 NOPR TSD is
available at: www.regulations.gov/document/EERE-2017-BT-STD-0014-0058.
---------------------------------------------------------------------------
\28\ Top-loading semi-automatic clothes washers were subject to
a design standard requiring an unheated rinse water option, as
established by section 5(g) of the National Appliance Energy
Conservation Act of 1987, Public Law 100-12.
---------------------------------------------------------------------------
Although DOE is adopting the Joint Agreement as a direct final rule
and no longer proceeding with its own rulemaking, DOE did consider
relevant comments, data, and information obtained during that
rulemaking process in determining whether the recommended standards
from the Joint Agreement are in accordance with 42 U.S.C. 6295(o). Any
discussion of comments, data, or information in this direct final rule
that were obtained during DOE's prior rulemaking will include a
parenthetical reference that
[[Page 19037]]
provides the location of the item in the public record.\29\
---------------------------------------------------------------------------
\29\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for residential clothes washers.
(Docket No. EERE-2017-BT-STD-0014, which is maintained at
www.regulations.gov) The references are arranged as follows:
(commenter name, comment docket ID number at page number of that
document).
---------------------------------------------------------------------------
III. General Discussion
DOE is issuing this direct final rule after determining that the
recommended standards submitted in the Joint Agreement meet the
requirements in 42 U.S.C. 6295(p)(4). More specifically, DOE has
determined that the recommended standards were submitted by interested
persons that are fairly representative of relevant points of view and
the recommended standards satisfy the criteria in 42 U.S.C. 6295(o).
On March 17, 2022, various States filed a petition seeking review
of a final rule revoking two final rules that established product
classes for residential dishwashers with a cycle time for the normal
cycle of 60 minutes or less, top-loading RCWs and certain classes of
consumer clothes dryers with a cycle time of less than 30 minutes, and
front-loading RCWs with a cycle time of less than 45 minutes
(collectively, ``short cycle product classes''). The petitioners argued
that the final rule revoking the short cycle product classes violated
EPCA and was arbitrary and capricious. On January 8, 2024, the United
States Court of Appeals for the Fifth Circuit granted the petition for
review and remanded the matter to DOE for further proceedings
consistent with the Fifth Circuit's opinion. See Louisiana v. United
States Department of Energy, 90 F.4th 461 (5th Cir. 2024).
Following the Fifth Circuit's decision, the signatories to the
Joint Agreement submitted a second letter to DOE, which stated that
Joint Recommendation did not ``address'' ``short-cycle product
classes.'' \30\ That is because, as the letter explained, such product
classes ``did not exist'' at the time of the Joint Agreement.
---------------------------------------------------------------------------
\30\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0509.
---------------------------------------------------------------------------
In a recently issued request for information (``RFI''),\31\ DOE is
commencing a rulemaking process on remand from the Fifth Circuit (the
``Remand Proceeding'') by soliciting further information, relevant to
the issues identified by the Fifth Circuit, regarding any short cycle
product classes. In that Remand Proceeding, DOE will conduct the
analysis required by 42 U.S.C. 6295(q)(1)(B) to determine whether any
short-cycle products have a ``capacity or other performance-related
feature [that] . . . justifies a higher or lower standard from that
which applies (or will apply) to other products. . . .''
---------------------------------------------------------------------------
\31\ See www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=68.
---------------------------------------------------------------------------
The current standards applicable to any products within the scope
of that proceeding remain unchanged by this rule. See 10 CFR 430.32(g).
Consistent with the Joint Parties' letter, short-cycle products are not
subject to the amended standards adopted by this direct final rule
(``DFR''). If the short-cycle products that DOE will consider in the
Remand Proceeding were subject to these standards, that would have the
practical effect of limiting the options available in the Remand
Proceeding. That is because EPCA's anti-backsliding provision precludes
DOE from prescribing any amended standard ``which increases the maximum
allowable energy use'' of a covered product. 42 U.S.C. 6295(o)(1).
Accordingly, were the products at issue in the Remand Proceeding also
subject to the amended standards adopted here, the Department could
only reaffirm the standards adopted in this direct final rule or adopt
more stringent standards.
The Joint Agreement specifies the product classes for RCWs: semi-
automatic; top-loading, ultra-compact; top-loading, standard-size;
front-loading, compact; and front-loading, standard-size. Although
these product classes were not further divided by cycle time, DOE
understands them to exclude top-loading standard-size RCWs with an
average cycle time of less than 30 minutes, and front-loading standard-
size RCWs with an average cycle time of less than 45 minutes. As noted
above, any such ``short-cycle'' RCWs will be considered in the Remand
Proceeding; the current standards applicable to such ``short-cycle''
RCWs are unchanged by this rule.
Under the direct final rule authority at 42 U.S.C. 6295(p)(4), DOE
evaluates whether recommended standards are in accordance with criteria
contained in 42 U.S.C. 6295(o). DOE does not have the authority to
revise recommended standards submitted under the direct final rule
provision in EPCA. Therefore, DOE did not analyze any additional
product classes beyond those product classes included in the Joint
Agreement. That is, DOE has not separately considered or established
amended standards applicable to any short-cycle product classes. In the
event that DOE establishes short-cycle product classes, pursuant to the
rulemaking on remand from the Fifth Circuit, DOE will necessarily
consider what amended standards ought to apply to any such product
classes and will do so in conformance with EPCA.
DOE notes that the data and analysis used to support this direct
final rule includes information for standard-size, top-loading and
front-loading clothes washers that is not distinguished by cycle time
and is representative of all clothes washers currently on the market
today. To the extent that any short cycle products were included in
this data and analysis, DOE believes the amount of such data is
negligible.
A. Scope of Coverage
Before discussing how the Joint Agreement meets the requirements
for issuing a direct final rule, it is important to clarify the scope
of coverage for the recommended standards. EPCA does not define the
term ``clothes washer.'' (See 42 U.S.C. 6291) DOE has defined a
``clothes washer'' as a consumer product designed to clean clothes,
utilizing a water solution of soap and/or detergent and mechanical
agitation or other movement, and must be one of the following classes:
automatic clothes washers, semi-automatic clothes washers, and other
clothes washers. 10 CFR 430.2. This direct final rule covers those
consumer products that meet the definition of ``clothes washer,'' as
codified at 10 CFR 430.2.
An ``automatic clothes washer'' is a class of clothes washer that
has a control system which is capable of scheduling a preselected
combination of operations, such as regulation of water temperature,
regulation of the water fill level, and performance of wash, rinse,
drain, and spin functions without the need for user intervention
subsequent to the initiation of machine operation. Some models may
require user intervention to initiate these different segments of the
cycle after the machine has begun operation, but they do not require
the user to intervene to regulate the water temperature by adjusting
the external water faucet valves. Id.
A ``semi-automatic clothes washer'' is a class of clothes washer
that is the same as an automatic clothes washer except that user
intervention is required to regulate the water temperature by adjusting
the external water faucet valves. Id. ``Other clothes washer'' means a
class of clothes washer that is not an automatic or semi-automatic
clothes washer. Id.
See section IV.A.1 of this document for discussion of the product
classes analyzed in this direct final rule.
B. Fairly Representative of Relevant Points of View
Under the direct final rule provision in EPCA, recommended energy
[[Page 19038]]
conservation standards must be submitted by interested persons that are
fairly representative of relevant points of view (including
representatives of manufacturers of covered products, States, and
efficiency advocates) as determined by DOE. (42 U.S.C. 6295(p)(4)(A))
With respect to this requirement, DOE notes that the Joint Agreement
included a trade association, the Association of Home Appliance
Manufacturers (``AHAM''), which represents 12 manufacturers of
RCWs.\32\ The Joint Agreement also included environmental and energy-
efficiency advocacy organizations, consumer advocacy organizations, and
a gas and electric utility company. Additionally, DOE received a letter
in support of the Joint Agreement from the States of New York,
California, and Massachusetts (see comment No. 506). DOE also received
a letter in support of the Joint Agreement from the gas and electric
utility, SDG&E, and the electric utility, SCE (see comment No. 507). As
a result, DOE has determined that the Joint Agreement was submitted by
interested persons who are fairly representative of relevant points of
view.
---------------------------------------------------------------------------
\32\ These companies include: Alliance Laundry Systems, LLC;
Asko Appliances AB; Beko US Inc.; BSH Home Appliances Corporation;
Danby Products, Ltd.; Electrolux Home Products, Inc.; GE Appliances,
a Haier Company; LG Electronics; Midea America Corp.; Miele, Inc.;
Samsung Electronics America Inc.; and Whirlpool Corporation.
---------------------------------------------------------------------------
C. Technological Feasibility
1. General
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and prototype designs that could improve the
efficiency of the products or equipment that are the subject of the
rulemaking. As the first step in such an analysis, DOE develops a list
of technology options for consideration in consultation with
manufacturers, design engineers, and other interested parties. 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. Sections 6(b)(3)(i) and 7(b)(1) of the
Process Rule.
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
practicability to manufacture, install, and service; (2) adverse
impacts on product utility or availability; (3) adverse impacts on
health or safety and (4) unique-pathway proprietary technologies.
Section 7(b)(2)-(5) of the Process Rule. Section IV.B of this document
discusses the results of the screening analysis for RCWs, particularly
the designs DOE considered, those it screened out, and those that are
the basis for the standards considered in this rulemaking. For further
details on the screening analysis for this rulemaking, see chapter 4 of
the direct final rule TSD.
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt a new or 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(o)(2)(A))
Accordingly, in the engineering analysis, DOE determined the maximum
technologically feasible (``max-tech'') improvements in energy
efficiency for RCWs, using the design parameters for the most efficient
products available on the market or in working prototypes. The max-tech
levels that DOE determined for this rulemaking are described in section
IV.C of this document and in chapter 5 of the direct final rule TSD.
D. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy savings from application of the
TSL to RCWs purchased in the 30-year period that begins in the year of
compliance with the amended standards (2027-2056 for all TSLs except
the Recommended TSL, i.e., TSL 2, and 2028-2057 for TSL 2).\33\ The
savings are measured over the entire lifetime of products purchased in
the 30-year analysis period. DOE quantified the energy savings
attributable to each TSL as the difference in energy consumption
between each standards case and the no-new-standards case. The no-new-
standards case represents a projection of energy consumption that
reflects how the market for a product would likely evolve in the
absence of amended energy conservation standards.
---------------------------------------------------------------------------
\33\ DOE also presents a sensitivity analysis that considers
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------
DOE used its national impact analysis (``NIA'') spreadsheet models
to estimate national energy savings (``NES'') and national water
savings (``NWS'') from potential amended standards for RCWs. The NIA
spreadsheet model (described in section IV.H of this document)
calculates energy savings in terms of site energy, which is the energy
directly consumed by products at the locations where they are used. For
electricity, DOE reports national energy savings in terms of primary
energy savings, which is the savings in the energy that is used to
generate and transmit the site electricity. For natural gas, the
primary energy savings are considered to be equal to the site energy
savings. DOE also calculates NES in terms of 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.\34\ DOE's approach is based on the calculation
of an FFC multiplier for each of the energy types used by covered
products or equipment. For more information on FFC energy savings, see
section IV.H.2 of this document.
---------------------------------------------------------------------------
\34\ 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 any new or amended 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))
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking.\35\ For
example, some covered products and equipment have most of their energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand.
---------------------------------------------------------------------------
\35\ Procedures, Interpretations, and Policies for Consideration
in New or Revised Energy Conservation Standards and Test Procedures
for Consumer Products and Commercial/Industrial Equipment, 86 FR
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------
Accordingly, DOE evaluates the significance of energy savings on a
case-by-case basis, taking into account the significance of cumulative
FFC national energy savings, the cumulative FFC emissions reductions,
and the need to confront the global climate crisis, among other
factors.
As stated, the standard levels adopted in this direct final rule
are projected to result in national energy savings of 0.67 quads, the
equivalent of the primary annual energy use of 4.5 million homes. Based
on the amount of FFC savings, the corresponding reduction in emissions,
[[Page 19039]]
and the need to confront the global climate crisis, DOE has determined
the energy savings from the standard levels adopted in this direct
final rule are ``significant'' within the meaning of 42 U.S.C.
6295(o)(3)(B).
E. 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)(I)(VII)) The
following sections discuss how DOE has addressed each of those seven
factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of potential new or amended standards on
manufacturers, DOE conducts an MIA, as discussed in section IV.J of
this document. DOE first uses an annual cash-flow approach to determine
the quantitative impacts. This step includes both a short-term
assessment--based on the cost and capital requirements during the
period between when a regulation is issued and when entities must
comply with the regulation--and a long-term assessment over a 30-year
period. The industry-wide impacts analyzed include (1) INPV, which
values the industry on the basis of expected future cash flows; (2)
cash flows by year; (3) changes in revenue and income; and (4) other
measures of impact, as appropriate. Second, DOE analyzes and reports
the impacts on different types of manufacturers, including impacts on
small manufacturers. Third, DOE considers the impact of standards on
domestic manufacturer employment and manufacturing capacity, as well as
the potential for standards to result in plant closures and loss of
capital investment. Finally, DOE takes into account cumulative impacts
of various DOE regulations and other regulatory requirements on
manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and payback period (``PBP'') associated with new or
amended standards. These measures are discussed further in the
following section. For consumers in the aggregate, DOE also calculates
the national net present value of the consumer costs and benefits
expected to result from particular standards. DOE also evaluates the
impacts of potential standards on identifiable subgroups of consumers
that may be affected disproportionately by a standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered product in the
type (or class) compared to any increase in the price of, or in the
initial charges for, or maintenance expenses of, the covered product
that are likely to result from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP
analysis.
The LCC is the sum of the purchase price of a product (including
its installation) and the operating cost (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC analysis requires a variety of inputs, such as
product prices, product energy consumption, energy prices, maintenance
and repair costs, product lifetime, and discount rates appropriate for
consumers. To account for uncertainty and variability in specific
inputs, such as product lifetime and discount rate, DOE uses a
distribution of values, with probabilities attached to each value.
The PBP is the estimated amount of time (in years) it takes
consumers to recover the increased purchase cost (including
installation) of a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
due to a more-stringent standard by the change in annual operating cost
for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that consumers will
purchase the covered products in the first year of compliance with new
or amended standards. The LCC savings for the considered efficiency
levels are calculated relative to the case that reflects projected
market trends in the absence of new or amended standards. DOE's LCC and
PBP analysis is discussed in further detail in section IV.F of this
document.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for adopting an energy conservation standard, EPCA requires
DOE, in determining the economic justification of a standard, to
consider the total projected energy savings that are expected to result
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As
discussed in section IV.H of this document, DOE uses the NIA
spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Products
In evaluating design options and the impact of potential standard
levels, DOE evaluates potential standards that would not lessen the
utility or performance of the considered products. (42 U.S.C.
6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards
adopted in this document 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 standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It
also directs the Attorney General to determine the impact, if any, of
any lessening of competition likely to result from a standard and to
transmit such determination to the Secretary within 60 days of the
publication of a proposed rule, together with an analysis of the nature
and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) DOE will
transmit a copy of this direct final rule to the Attorney General with
a request that the Department of Justice (``DOJ'') provide its
determination on this issue. DOE will consider DOJ's comments on the
rule in determining whether to withdraw the direct final rule. DOE will
also publish and respond to the DOJ's comments in the Federal Register
in a separate document.
f. Need for National Energy Conservation
DOE also considers the need for national energy and water
conservation in determining whether a new or amended standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy
savings from the adopted standards are likely to provide improvements
to the security and reliability of the Nation's energy system.
Reductions in the demand for electricity also may result in reduced
costs for maintaining the reliability of the Nation's electricity
system. DOE conducts a utility impact analysis to estimate how
standards may affect the Nation's needed power generation capacity, as
discussed in section IV.M of this document.
DOE maintains that environmental and public health benefits
associated with the more efficient use of energy are important to take
into account when considering the need for national energy
conservation. The adopted standards are likely to result in
environmental
[[Page 19040]]
benefits in the form of reduced emissions of air pollutants and
greenhouse gases (``GHGs'') associated with energy production and use.
DOE conducts an emissions analysis to estimate how potential standards
may affect these emissions, as discussed in section IV.K of this
document; the estimated emissions impacts are reported in section V.B.6
of this document. DOE also estimates the economic value of emissions
reductions resulting from the considered TSLs, as discussed in section
IV.L of this document.
g. Other Factors
In determining whether an energy conservation standard is
economically justified, DOE may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To
the extent DOE identifies any relevant information regarding economic
justification that does not fit into the other categories described
previously, DOE could consider such information under ``other
factors.''
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the effect potential amended
energy conservation standards would have on the payback period for
consumers. These analyses include, but are not limited to, the 3-year
payback period contemplated under the rebuttable-presumption test. In
addition, DOE routinely conducts an economic analysis that considers
the full range of impacts to consumers, manufacturers, the Nation, and
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The
results of this analysis serve as the basis for DOE's evaluation of the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification). The rebuttable presumption payback calculation
is discussed in section IV.F of this document.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this
rulemaking with regard to RCWs. Separate subsections address each
component of DOE's analyses, including relevant comments DOE received
during its separate rulemaking to amend the energy conservation
standards for RCWs prior to receiving the Joint Agreement.
DOE used several analytical tools to estimate the impact of the
standards considered in this document. The first tool is a spreadsheet
that calculates the LCC savings and PBP of potential amended or new
energy conservation standards. The national impacts analysis uses a
second spreadsheet set that provides shipments projections and
calculates national energy savings and net present value of total
consumer costs and savings expected to result from potential energy
conservation standards. DOE uses the third spreadsheet tool, the
Government Regulatory Impact Model (``GRIM''), to assess manufacturer
impacts of potential standards. These three spreadsheet tools are
available on the DOE website for this rulemaking: www.regulations.gov/docket/EERE-2017-BT-STD-0014. Additionally, DOE used output from the
latest version of the U.S. Energy Information Administration (``EIA'')
Annual Energy Outlook (``AEO'') for the emissions and utility impact
analyses.
A. Market and Technology Assessment
DOE develops information in the market and technology assessment
that provides an overall picture of the market for the products
concerned, including the purpose of the products, the industry
structure, manufacturers, market characteristics, and technologies used
in the products. This activity includes both quantitative and
qualitative assessments, based primarily on publicly-available
information. The subjects addressed in the market and technology
assessment for this rulemaking include (1) identification of product
classes, (2) manufacturers and industry structure, (3) existing
efficiency programs, (4) shipments information, (5) market and industry
trends, and (6) technologies or design options that could improve the
energy efficiency of RCW. The key findings of DOE's market assessment
are summarized in the following sections. See chapter 3 of the direct
final rule TSD for further discussion of the market and technology
assessment.
1. Product Classes
The Joint Agreement specifies the five product classes for RCWs.
(Joint Agreement, No. 505 at p. 9) In this direct final rule, DOE is
adopting the product classes from the Joint Agreement, as listed in
Table IV.1.
Table IV.1--Joint Agreement Residential Clothes Washer Product Classes
------------------------------------------------------------------------
Product class
-------------------------------------------------------------------------
Automatic Clothes Washers:
Top-Loading Ultra-Compact (less than 1.6 ft\3\ capacity).
Top-Loading Standard-Size (1.6 ft\3\ or greater capacity).
Front-Loading Compact (less than 3.0 ft\3\ capacity).
Front-Loading Standard-Size (3.0 ft\3\ or greater capacity).
Semi-Automatic Clothes Washers.
------------------------------------------------------------------------
DOE further notes that product classes established through EPCA's
direct final rule authority are not subject to the criteria specified
at 42 U.S.C. 6295(q)(1) for establishing product classes. Nevertheless,
in accordance with 42 U.S.C. 6295(o)(4)--which is applicable to direct
final rules--DOE has concluded that the standards adopted in this
direct final rule will not result in the unavailability in any covered
product type (or class) of performance characteristics, features,
sizes, capacities, and volumes that are substantially the same as those
generally available in the United States currently.\36\ DOE's findings
in this regard are discussed in detail in section V.B.4 of this
document.
---------------------------------------------------------------------------
\36\ EPCA specifies that DOE may not prescribe an amended or new
standard if the Secretary finds (and publishes such finding) that
interested persons have established by a preponderance of the
evidence that the standard is likely to result in the unavailability
in the United States in any covered product type (or class) of
performance characteristics (including reliability), features,
sizes, capacities, and volumes that are substantially the same as
those generally available in the United States at the time of the
Secretary's finding. (42 U.S.C. 6295(o)(4)).
---------------------------------------------------------------------------
2. Technology Options
In this direct final rule, DOE considered the technology options
listed in Table IV.2, consistent with the table of technology options
presented in the March 2023 NOPR. See 88 FR 13520, 13541. DOE notes
that it did not receive any comments regarding the technology options
analyzed in the March 2023 NOPR.
In general, technology options for RCWs may reduce energy use
alone, water use alone, or both energy and water use together. Because
the energy used to heat any hot water consumed by the RCW is included
as part of the EER metric, technologies that decrease hot water use
also inherently decrease energy use. In Table IV.2, the technology
options that reduce energy use alone are those indicated as methods for
decreasing machine energy, drying energy, and standby energy. One
[[Page 19041]]
technology option--spray rinse--reduces water use alone, listed among
the methods for decreasing water use.\37\ The technology options that
reduce both energy and water use together are the remaining three
options among the methods for decreasing water use, as well as those
indicated as methods for reducing water heating energy.
---------------------------------------------------------------------------
\37\ Since nearly all RCWs use only cold water in the rinse
portion of the cycle (i.e., generally no hot water is used in the
rinse portion of the cycle), spray rinse reduces water use without
any corresponding reduction in energy use.
---------------------------------------------------------------------------
Chapter 3 of the TSD for this direct final rule includes a detailed
list and descriptions of all technology options identified for RCWs,
including a discussion of how each technology option reduces energy use
only, water use only, or both energy and water use together.
Table IV.2--Technology Options for Residential Clothes Washers
------------------------------------------------------------------------
-------------------------------------------------------------------------
Methods for Decreasing Water Use: *
Adaptive water fill controls.
Hardware features enabling lower water levels.
Spray rinse.
Polymer bead cleaning.
Methods for Decreasing Machine Energy:
More efficient motor.
Direct drive motor.
Methods for Decreasing Water Heating Energy:
Wash temperature decrease.
Ozonated laundering.
Methods for Decreasing Drying Energy:
Hardware features enabling spin speed increase.
Spin time increase.
Methods for Decreasing Standby Energy:
Lower standby power components.
Methods for Increasing Overall Efficiency:
Capacity increase.
------------------------------------------------------------------------
* Most of the methods for decreasing water use are also methods for
decreasing water heating energy, since less hot water is used.
B. Screening Analysis
DOE uses the following screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in commercially viable, existing
prototypes will not be considered further.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production of a technology in commercial products
and reliable installation and servicing of the technology could not be
achieved on the scale necessary to serve the relevant market at the
time of the projected compliance date of the standard, then that
technology will not be considered further.
(3) Impacts on product utility. If a technology is determined to
have a significant adverse impact on the utility of the product to
subgroups of consumers, or result in the unavailability of any covered
product type with performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as products generally available in the United States at the time,
it will not be considered further.
(4) Safety of technologies. If it is determined that a technology
would have significant adverse impacts on health or safety, it will not
be considered further.
(5) Unique-pathway proprietary technologies. If a technology has
proprietary protection and represents a unique pathway to achieving a
given efficiency level, it will not be considered further due to the
potential for monopolistic concerns.
10 CFR part 430, subpart C, appendix A, sections 6(b)(3) and 7(b).
In sum, if DOE determines that a technology, or a combination of
technologies, fails to meet one or more of the listed five criteria, it
will be excluded from further consideration in the engineering
analysis.
The subsequent sections of this document discuss DOE's evaluation
of each technology option against the screening analysis criteria and
whether DOE determined that a technology option should be excluded
(``screened out'') based on the screening criteria. The results of the
screening analysis are discussed in greater detail in chapter 4 of the
TSD for this direct final rule.
1. Screened-Out Technologies
DOE partially screened out capacity increase as a technology
option. Specifically, DOE screened out any capacity increase that would
require a corresponding increase in cabinet width larger than 27
inches, on the basis of the practicability to install and service RCWs
with cabinet widths larger than 27 inches. DOE recognizes that products
with a width greater than 27 inches may not be able to fit through many
standards-size interior doorways.
DOE also screened out ozonated laundering and polymer bead cleaning
on the basis of their practicability to install, manufacture, and
service. Polymer bead cleaning is also a unique-pathway proprietary
technology. DOE also screened out electrolytic disassociation of water
on the basis that this technology could have impacts on product utility
or availability. Chapter 3 of the TSD for this direct final rule
includes a detailed description of each of these technology options.
DOE notes that the results of the screening analysis conducted for
this direct final rule align with the screening analysis DOE conducted
for the March 2023 NOPR. See 88 FR 13520, 13542-13453. In the March
2023 NOPR, DOE sought comment on whether any additional technology
options should be screened out on the basis of any of the screening
criteria. Id. at 88 FR 13543. In conducting the screening analysis for
this direct final rule, DOE considered comments it had received in
response to the March 2023 NOPR.
Fisher et al.\38\ commented that the proposed standards are not
technologically feasible because they would require manufacturers to
overhaul many design features that have the potential to impact
performance.\39\ (Fisher et al., No. 463 at pp. 2-3)
---------------------------------------------------------------------------
\38\ ``Fisher et al.'' refers to a joint comment from Travis
Fisher, Rachael Wilfong, and Kevin Dayaratna. Although these
individual commenters are associated with The Heritage Foundation,
the comment states that the views expressed in it should not be
construed as representing any official position of The Heritage
Foundation. (Fisher et al., No. 463 at p. 1).
\39\ DOE did not include Fisher et al.'s comments about spin-
time increase and wash temperature decrease in top-loading standard-
size RCWs at the proposed standard level because the adopted
standard level in this direct final rule is different than what was
proposed in the March 2023 NOPR.
---------------------------------------------------------------------------
In response to Fisher et al.'s comment regarding technological
feasibility due to potential impacts on certain aspects of clothes
washer performance, DOE has concluded that the standards adopted in
this direct final rule are technologically feasible as the technologies
used to achieve the adopted standards are widely incorporated in
commercial products already. Sections 6(b)(3)(i) and 7(b)(1) of the
Process Rule. Furthermore, DOE has determined through analysis of test
data that the standards adopted in this direct final rule will not
lessen the utility or performance of the RCWs under consideration in
this rulemaking, as discussed further in section V.B.4 of this
document.
NEEA et al.\40\ supported the inclusion in the analysis of larger
wash baskets for top-loading models at higher efficiency levels,
assuming common sense limitations to ensure similar installation
locations. (NEEA et al., No. 455 at p. 5)
---------------------------------------------------------------------------
\40\ ``NEEA et al.'' refers to a joint comment from Northwest
Energy Efficiency Alliance (``NEEA''), Commonwealth Edison Company,
and Natural Resources Defense Council.
---------------------------------------------------------------------------
Appliance Standards Awareness Project (``ASAP''), American Council
for an Energy-Efficient Economy (``ACEEE''), and the New York State
Energy Research and Development Authority (``NYSERDA'') commented that,
contrary to concerns raised at DOE's public meeting, manufacturers
[[Page 19042]]
have increased top-loading RCW capacity from 3.8 ft\3\ to 5.3 ft\3\
without a meaningful increase in cabinet dimensions, which supports DOE
screening out from the analysis any capacity increase that would
increase cabinet widths. (ASAP, ACEEE, and NYSERDA, No. 458 at p. 4)
Samsung Electronics America, Inc. (``Samsung'') commented that the
necessary technological advancements and solutions identified by DOE
are readily available and accessible, which aligned with DOE's
assessment of the technological feasibility of the standards proposed
in the March 2023 NOPR. (Samsung, No. 461 at p. 4)
Strauch commented that direct-drive or brushless permanent magnet
(``BPM'') motors will increase RCW cost and decrease reliability.
(Strauch, No. 430 at p. 2)
DOE notes that the incremental cost of higher-efficiency design
options is considered as part of the engineering analysis, from which
DOE derives its cost efficiency ``curves.'' DOE's analysis specifically
accounts for the increased cost of implementing direct drive and BPM
motors to improve efficiency. (See section IV.C.4 of this document and
chapter 5 of the direct final rule TSD) In response to Strauch's
comment asserting that direct drive and BPM motors will decrease
reliability, DOE does not have any data on the comparative reliability
of RCWs that use various motor technologies. However, as discussed
further in section IV.F.5 of this document, DOE's analysis does
incorporate an assumption of increased repair costs for higher
efficiency RCWs. DOE additionally notes that multiple RCW manufacturers
offer warranties specifically for the direct drive motor component of
the clothes washer ranging from 10-year \41\ or 20-year \42\ warranties
to lifetime \43\ warranties--indicative of manufacturers' expectation
of the relatively high reliability of these components.
---------------------------------------------------------------------------
\41\ See, for example, www.maytag.com/services/limited-10-year-warranty.html.
\42\ See, for example, www.samsung.com/latin_en/microsite/20-years-warranty/.
\43\ See, for example, www.kenmore.com/warranty-information/#washers.
---------------------------------------------------------------------------
Whirlpool Corporation (``Whirlpool'') commented that DOE's proposal
may create consumer accessibility issues for shorter-than-average
consumers and consumers with disabilities or limited mobility, as they
may struggle to reach the bottom of larger-capacity RCWs, which
manufacturers will have to deepen to satisfy the standards proposed in
the March 2023 NOPR, because the width of cabinets cannot be increased
beyond standard doorway clearance. (Whirlpool, No. 462 at p. 9)
Whirlpool commented that people of average and below-average height may
not be able to access the bottom of deeper-basket top-loading RCWs
without bringing their feet off the ground, which could create a fall
hazard and possible soft-tissue compression of the chest and abdominal
area. (Id. at p. 10) Whirlpool commented that some people could be
forced to shift to a front-loading configuration, further increasing
the ownership cost and eliminating any potential operating cost savings
for many consumers. (Id.) Whirlpool asserted that larger-capacity top-
loading RCWs would be ineligible for compliance with the Americans with
Disabilities Act, due to strict requirements for height and depth of
units. (Id.) Whirlpool also commented that there is a loss of utility
as some consumers do not want or need to use larger load sizes as well
as installation problems related to smaller doorways and basements.
(Whirlpool, Public Transcript, No. 91 at pp. 82-83)
Mannino,\44\ in referencing Whirlpool's comment during the public
webinar that people have a hard time reaching the bottom of larger
tubs,\45\ added that many customers have a step stool next to their
RCWs that they must stand on to get waist-high so they can bend over
far enough to take their clothes out. (Mannino, Public Webinar
Transcript, No. 91 at p. 84)
---------------------------------------------------------------------------
\44\ ``Mannino'' refers to comments made by Michael Mannino
representing Appliance Service Systems during the public webinar
held March 28, 2023.
\45\ Whirlpool, Public Webinar Transcript, No. 91 at pp. 8283.
---------------------------------------------------------------------------
DOE notes that, as discussed in section V.B.4.b of this document,
for this direct final rule DOE has re-evaluated its assumption from the
March 2023 NOPR that capacity increase would be required to meet the
standards proposed in the March 2023 NOPR for top-loading standard-size
RCWs. For this direct final rule, DOE has conducted additional analysis
that indicates that the amended standards can be met by all capacities
currently available on the market without the need to implement the
design option of increasing capacity. Therefore, manufacturers will
continue to be able to offer the same range of capacities as are
currently available on the market. In chapter 5 of the direct final
rule TSD, DOE provides example design pathways that manufacturers could
use to achieve higher efficiency without increasing capacity as a
design option, such that DOE does not expect it will raise
accessibility concerns.
Whirlpool further commented that DOE must work closely with the
Consumer Product Safety Commission (``CPSC'') to understand their work
and ensure that RCWs can safely withstand high spin speeds under
spontaneous unbalanced load conditions, given that the standards
proposed in the March 2023 NOPR would effectively mandate higher spin
speeds. (Id. at p. 13) AHAM noted that although higher spin speeds are
an available option to increase efficiency, UL formed a working group
to address recalls that happened with vertical axis clothes washers and
instantaneous out-of-balance events that happened in the field. AHAM
commented that DOE must coordinate with the CPSC as it considers
certain technology options because manufacturers will need to dedicate
resources to ensure that increased spin speeds do not decrease product
safety. (AHAM, No. 464 at p. 17)
Representatives Latta et al.\46\ commented that increased spin
speeds to meet amended standards could increase the potential for load
imbalance issues. (Representatives Latta et al., No. 456 at pp. 2-3)
---------------------------------------------------------------------------
\46\ ``Representatives Latta et al.'' refers to a joint comment
from the following members of the U.S. House of Representatives:
Robert E. Latta (OH), H. Morgan Griffith (VA), Russ Fulcher (ID),
Rick W. Allen (GA), and Greg Pence (IN).
---------------------------------------------------------------------------
DOE only considered spin increase as a design option insofar as it
is already demonstrated in RCWs available on the market. The prevalence
of high-speed spin features currently available on the market is
indicative that RCWs can be designed to safely withstand such spin
speeds. DOE notes that models at the Recommended TSL would also require
faster spin speeds compared to the baseline, and the Recommended TSL is
supported by the Joint Commenters, which includes manufacturers with
commercially available products that meet or exceed these levels being
safely used today by consumers. As previously discussed, on February
14, 2024, DOE received a second joint statement from the same group of
stakeholders that submitted the Joint Agreement (of which Whirlpool is
a member) in which the signatories reaffirmed the standards recommended
in the Joint Agreement.\47\ In particular, the letter states that the
joint stakeholders do not anticipate the recommended standards will
negatively affect features or performance.
---------------------------------------------------------------------------
\47\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0509.
---------------------------------------------------------------------------
AHAM commented that high-frequency components (e.g., variable-speed
motors) in higher-efficiency RCWs contribute to RCWs losing power
[[Page 19043]]
due to so-called ``nuisance tripping'' of the electrical outlet. (AHAM,
No. 464 at pp. 17-22) Specifically, AHAM explained that arc-fault
circuit-interrupters (``AFCIs'') are devices required by the National
Electrical Code and local building codes that trip and disable
appliances when they detect certain electrical signals, including
conducted emissions. (Id. at p. 17) AHAM commented that many AFCI
manufacturers implement more stringent tripping thresholds than those
recommended by the Federal Communications Commission or the National
Electrical Manufacturers Association, and that the variability in AFCI
tripping thresholds among AFCI manufacturers creates a major challenge
for home appliance manufacturers in making products more efficient,
noting that AFCI manufacturers are not required to publicize changes to
the tripping thresholds or update the relevant industry standard with
this information. (Id. at pp. 17-18) AHAM commented that DOE must not
endanger manufacturers' ability to address this issue by pushing RCWs
towards use of components that generate higher frequency conducted
emissions, such as variable-speed motors. (Id. at p. 19) AHAM requested
that DOE consider how updated standards will impact manufacturers'
ability to meet the specifications required to prevent AFCI nuisance
tripping, quantify this impact, and adjust its analysis accordingly.
(Id.)
AHAM further commented on similar issues regarding ground-fault
circuit interrupters (``GFCIs''), which are also devices required by
the National Electrical Code that trip and disable appliances when they
detect a ground-fault. (Id. at p. 20) AHAM commented that while
appliance manufacturers can add filters to help avoid nuisance
tripping, doing so increases energy consumption and does not solve the
root cause, which AHAM states is highly variable GFCI tripping
thresholds at high frequencies. (Id.) AHAM noted that the latest
Underwriters Laboratory (``UL'') standard for GFCIs \48\ does not
define the electrical amperage tripping threshold for frequencies other
than 60 Hertz. (Id. at p. 21) AHAM commented that UL has conducted a
study that verified that components operating at high frequencies
contribute to nuisance tripping, even when no electrical hazard exists.
(Id. at p. 20) The UL study referenced by AHAM explored the root causes
of reported interoperability incidents (i.e., nuisance tripping)
between certain GFCIs and home appliances, including RCWs. (Id. at pp.
59-68) The UL study referenced by AHAM noted that its results were used
in a proposal to add a GFCI interoperability test to the UL standard
for appliances that are plugged into GFCIs,\49\ and that the results
from the study are anticipated to facilitate the development of new
performance requirements for UL 943 for frequencies other than 60
Hertz. (Id.)
---------------------------------------------------------------------------
\48\ UL 943 is the standard for Ground-Fault Circuit-
Interrupters.
\49\ UL 101 is the standard for Leakage Current for Utilization
Equipment.
---------------------------------------------------------------------------
AHAM requested that DOE use its expertise and resources to properly
investigate what it characterizes as the technological incompatibility
between high-frequency components and AFCIs/GFCIs and suggested that
DOE adjust its analysis and quantify the impact from nuisance tripping.
(Id. at p. 22)
In response to AHAM's concern regarding high-frequency components'
impact on nuisance tripping, DOE emphasizes that it only considered
design options that are already demonstrated in RCWs available on the
market. DOE is aware of the potential for ``nuisance tripping'' of GFCI
circuit protectors by high-frequency components such as variable-speed
motors. However, DOE understands that nuisance tripping can generally
be mitigated through the use of best practices for reducing leakage
current, such as minimizing electrical cable lengths and ensuring that
filtered and unfiltered cables are separated to whatever extent
possible to reduce leakage current. Additionally, optimizing the
variable-frequency controller power filter to reduce total leakage
current to levels below the GFCI detection limits can further prevent
GFCI tripping. To the extent that the use of additional electronic
components is needed in conjunction with the use of design options with
high-frequency components (such as variable-speed motors), and to the
extent that such additional electronic components are provided in RCWs
currently on the market that make use of such design options, DOE's
teardown analysis captures any additional cost associated with such
components.
DOE notes that despite any potential for nuisance tripping, a wide
range of appliances on the market today, including clothes washers,
implement variable-frequency drives in their designs. The inclusion of
these variable-frequency drive designs in units on the market suggests
that they do not have a significant impact on the consumer utility of
these products. DOE notes that variable-speed motors have been used in
RCWs for over a decade \50\ and observes the widespread usage of
variable-speed motors in RCWs currently on the market, as discussed
further in chapter 5 of the direct final rule TSD. DOE is not aware of
widespread issues with the currently available products that would
warrant exclusion from consideration. Further, as indicated by the
Joint Agreement of which AHAM was a signatory, products at the standard
level being adopted in this direct final rule are widely available,
have significant market share--as the adopted standard represents the
ENERGY STAR level--and manufacturers have not indicated consumer
dissatisfaction with the clothes washers commercially available today.
---------------------------------------------------------------------------
\50\ See, for example, discussion of variable-speed motors in
chapter 5 of the TSD accompanying the energy conservation standards
May 2012 Direct Final Rule. Available at www.regulations.gov/document/EERE-2008-BT-STD-0019-0047.
---------------------------------------------------------------------------
2. Remaining Technologies
Through a review of each technology, DOE concludes that all of the
other identified technologies listed in Table IV.3 meet all screening
criteria to be examined further as design options in DOE's direct final
rule analysis. In summary, DOE did not screen out the following
technology options:
Table IV.3--Retained Design Options for Residential Clothes Washers
------------------------------------------------------------------------
-------------------------------------------------------------------------
Methods for Decreasing Water Use *
Adaptive water fill controls.
Hardware features enabling lower water levels.
Spray rinse.
Methods for Decreasing Machine Energy
More efficient motor.
Direct drive motor.
Methods for Decreasing Water Heating Energy
Wash temperature decrease.
Methods for Decreasing Drying Energy
Hardware features enabling spin speed increase.
Spin time increase.
Methods for Decreasing Standby Energy
Lower standby power components.
Methods for Increasing Overall Efficiency
Capacity increase (without requiring a cabinet width increase).
------------------------------------------------------------------------
* Most of the methods for decreasing water use are also methods for
decreasing water heating energy, since less hot water is used.
As discussed, technology options for RCWs may reduce energy use
alone, water use alone, or both energy and water use together. The
technology options that reduce energy use alone are those indicated as
methods for decreasing machine energy, drying energy, and standby
energy. Spray rinse, indicated as one of the methods for reducing water
use, reduces water use alone. The technology options that reduce both
energy and water use
[[Page 19044]]
together are the remaining two options among the methods for decreasing
water use, as well as those indicated as methods for reducing water
heating energy.
DOE determined that these technology options are technologically
feasible because they are being used or have previously been used in
commercially-available products or working prototypes. DOE also finds
that all of the remaining technology options meet the other screening
criteria (i.e., practicable to manufacture, install, and service and do
not result in adverse impacts on consumer utility, product
availability, health, or safety). For additional details, see chapter 4
of the direct final rule TSD.
C. Engineering Analysis
The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of RCWs. There are two
elements to consider in the engineering analysis; the selection of
efficiency levels to analyze (i.e., the ``efficiency analysis'') and
the determination of product cost at each efficiency level (i.e., the
``cost analysis''). In determining the performance of higher-efficiency
products, DOE considers technologies and design option combinations not
eliminated by the screening analysis. For each product class, DOE
estimates the baseline cost, as well as the incremental cost for the
product at efficiency levels above the baseline. The output of the
engineering analysis is a set of cost-efficiency ``curves'' that are
used in downstream analyses (i.e., the LCC and PBP analyses and the
NIA).
1. Metric Translations
As discussed in section II.B.2 of this document, the June 2022 TP
Final Rule established a new test procedure, appendix J, which
established new EER and WER efficiency metrics. 87 FR 33316. Appendix J
also incorporates a number of revisions that affect the per-cycle
energy and water use in comparison to results obtained under the
current appendix J2 test procedure. See 10 CFR part 430, subpart B,
appendix J. In the March 2023 NOPR, DOE identified efficiency levels
initially in terms of the existing IMEF and IWF metrics and used a
translation equation to convert the identified IMEF and IWF levels into
corresponding EER and WER levels as the basis for the proposed amended
standards. 88 FR 13520, 13545. The translation equation was based on
testing performed by DOE on a representative sample of RCW models. Id.
at 88 FR 13555-13559.
In this direct final rule, DOE used the same translation equations
presented in the March 2023 NOPR to translate efficiency levels from
the appendix J2 metrics (i.e., IMEF and IWF) into the appendix J
metrics (i.e., EER and WER).
2. Efficiency Analysis
DOE typically uses one of two approaches to develop energy
efficiency levels for the engineering analysis: (1) relying on observed
efficiency levels in the market (i.e., the efficiency-level approach),
or (2) determining the incremental efficiency improvements associated
with incorporating specific design options to a baseline model (i.e.,
the design-option approach). Using the efficiency-level approach, the
efficiency levels established for the analysis are determined based on
the market distribution of existing products (in other words, based on
the range of efficiencies and efficiency level ``clusters'' that
already exist on the market). Using the design option approach, the
efficiency levels established for the analysis are determined through
detailed engineering calculations and/or computer simulations of the
efficiency improvements from implementing specific design options that
have been identified in the technology assessment. DOE may also rely on
a combination of these two approaches. For example, the efficiency-
level approach (based on actual products on the market) may be extended
using the design option approach to interpolate to define ``gap fill''
levels (to bridge large gaps between other identified efficiency
levels) and/or to extrapolate to the ``max-tech'' level (particularly
in cases where the ``max-tech'' level exceeds the maximum efficiency
level currently available on the market).
For this direct final rule, DOE used an efficiency-level approach,
supplemented with the design-option approach for certain ``gap fill''
efficiency levels. The efficiency-level approach is appropriate for
RCWs given the availability of certification data to determine the
market distribution of existing products and to identify efficiency
level ``clusters'' that already exist on the market.
In conducting the efficiency analysis for the automatic clothes
washer product classes, DOE first identified efficiency levels in terms
of the current IMEF and IWF metrics defined in appendix J2 that are the
most familiar to interested parties. DOE also initially determined the
cost-efficiency relationships based on these metrics. Following that,
DOE translated each efficiency level into its corresponding EER and WER
values using the translation equations developed for each product
class, as discussed previously in section IV.C.1 of this document.
For the semi-automatic product class, for which reliable
certification data is unavailable, DOE tested a representative sample
of units to appendix J and used that set of data points to determine
the baseline and higher efficiency levels, as described further in
section IV.C.2.c of this document.
The efficiency levels that DOE considered in the engineering
analysis are attainable using technologies currently available on the
market in RCWs. DOE used the results of the testing and teardown
analyses to determine a representative set of technologies and design
strategies that manufacturers use to achieve each higher efficiency
level. This information provides interested parties with additional
transparency of assumptions and results, and the ability to perform
independent analyses for verification. Chapter 5 of the direct final
rule TSD describes the methodology and results of the analysis used to
derive the cost-efficiency relationships.
a. Baseline Efficiency Levels
For each product class, DOE generally selects a baseline model as a
reference point for each class, and measures changes resulting from
potential energy conservation standards against the baseline. The
baseline model in each product class represents the characteristics of
a product typical of that class (e.g., capacity, physical size).
Generally, a baseline model is one that just meets current energy
conservation standards, or, if no standards are in place, the baseline
is typically the most common or least efficient unit on the market.
In defining the baseline efficiency levels for this direct final
rule, DOE considered comments it had received in response to the
baseline efficiency levels proposed in the March 2023 NOPR.
In the March 2023 NOPR, DOE analyzed the baseline efficiency levels
shown in Table IV.4 for each automatic product class. 88 FR 13520,
13546. The semi-automatic product class is discussed separately in
section IV.C.2.c of this document.
[[Page 19045]]
Table IV.4--Baseline Efficiency Levels Analyzed in the March 2023 NOPR
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minimum IMEF (ft Maximum IWF (gal/ Minimum EER (lb/ Minimum WER (lb/
Product class Description \3\/kWh/cycle) cycle/ft \3\) kWh/cycle) gal/cycle)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-Loading Ultra-Compact (<1.6 ft \3\)..... Current DOE standard.......... 1.15 12.0 3.79 0.29
Top-Loading Standard-Size (>=1.6 ft \3\).... Current DOE standard.......... 1.57 6.5 3.50 0.38
Front-Loading Compact (<3.0 ft \3\)......... Current DOE standard for front- 1.84 4.7 4.41 0.53
loading standard-size (>=1.6
ft \3\) *.
Front-Loading Standard-Size (>=3.0 ft \3\).. ENERGY STAR v. 7.0 **......... 2.38 3.7 5.02 0.64
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Although the current DOE standard for front-loading compact (<1.6 ft \3\) is 1.13 IMEF/8.3 IWF, no front-loading units are currently on the market
with a capacity <1.6 ft \3\. The baseline efficiency level proposed in the March 2023 NOPR reflected the currently applicable standard for front-
loading RCWs with capacities between 1.6 and 3.0 ft \3\.
** Although the current DOE standard for front-loading standard-size (>=1.6 ft \3\) is 1.84 IMEF/4.7 IWF, at the time of analysis, the least efficient
front-loading standard-size RCW available on the market had an efficiency rating of 2.38 IMEF/3.7 IWF. DOE noted in the March 2023 NOPR that although
DOE's Compliance Certification Database (``CCD'') includes front-loading standard-size RCWs that are rated at the current standard level of 1.84 IMEF,
it had determined through testing that these units perform significantly above their rated value at the current standard level. 88 FR 13520, 13545.
In the March 2023 NOPR, DOE discussed an alternate approach it was
considering for defining the baseline levels. Id. at 88 FR 13561. The
baseline efficiency levels defined in the March 2023 NOPR represented
an IMEF-to-EER translation based on ``consistent spin'' performance
\51\ across all the cycle settings required for testing. DOE observed
through testing, however, that some units on the market are designed
such that only the cycle setting required for measuring the remaining
moisture content (``RMC'') under appendix J2 (i.e., the Cold/Cold cycle
with maximum load size) is optimized \52\ to achieve a favorable RMC
value; on such units, the spin portion of the cycle is significantly
faster or longer on the Cold/Cold setting with a maximum load size than
for the other temperature settings or load sizes that are tested as
part of the energy test. Id. at 88 FR 13556. As discussed in the March
2023 NOPR, comments submitted by a manufacturer suggested that, were
DOE to amend standards based on appendix J, manufacturers that
currently use ``Cold/Cold optimized spin'' would likely increase the
spin speeds or spin durations across all temperature settings to match
the spin behavior of the Cold/Cold temperature setting; i.e., such
units would be redesigned to exhibit ``consistent spin'' performance to
provide the lowest possible (i.e., best possible) RMC measurement under
appendix J. Id. at 88 FR 13557. Under the alternate approach to
defining the baseline efficiency levels discussed in the March 2023
NOPR, DOE would define the baseline efficiency levels based on a
translation between appendix J2 and appendix J metrics without
consideration of any changes to spin implementations as a result of
adopting the new appendix J test procedure. Id. at 88 FR 13561. DOE
referred to this in the March 2023 NOPR as the ``unadjusted'' baseline
approach. Id. Using this approach, the baseline level presented in the
March 2023 NOPR would instead be considered efficiency level (``EL'')
1.
---------------------------------------------------------------------------
\51\ In the March 2023 NOPR, DOE discussed its observation of
various approaches used by manufacturers for the final spin portion
of the wash cycle across all the cycle setting required for testing.
88 FR 13520, 13561. DOE used the term ``consistent spin'' to refer
to units in which the characteristics of the spin cycle (e.g., spin
speed, spin time) are consistent across temperature selections. Id.
at 88 FR 13556. On such units, RMC values measured on Warm/Cold,
Hot/Cold, and Extra Hot/Cold cycles are substantially similar to the
RMC value measured on the Cold/Cold cycle. Id.
\52\ DOE used the term ``Cold/Cold optimized spin'' in the March
2023 NOPR to refer to units in which the spin cycle is optimized on
the Cold/Cold setting with maximum load size. Id.
---------------------------------------------------------------------------
DOE sought comment on the baseline efficiency levels analyzed in
the March 2023 NOPR for each product class. Id. at 88 FR 13546. DOE
also sought comment on whether it should consider defining an
``unadjusted'' baseline efficiency level based on a translation between
appendix J2 and appendix J metrics without consideration of any changes
to spin implementations as a result of adopting the appendix J test
procedure. Id. at 88 FR 13561.
AHAM agreed with DOE's proposal to establish the baseline at the
current DOE standard for top-loading standard-size RCWs and at the
current standard for front-loading standard-size RCWs for the front-
loading compact product class. (AHAM, No. 464 at pp. 16-17)
AHAM opposed DOE's proposal to establish the baseline for front-
loading standard-size RCWs at the ENERGY STAR v. 7.0 level and instead
recommended establishing the baseline at the current DOE standard. (Id.
at p. 17) AHAM commented that even if DOE tested some products that
meet higher levels of efficiency than their rated values, that may not
universally be the case; and that even if it is, the DOE standard does
continue to represent the baseline, as those products are designed in
order to ensure they meet the current energy conservation standard.
(Id.) AHAM further commented that DOE's approach does not match the
intent of establishing the baseline, which is to identify the least-
efficient product and set the baseline at that level. (Id.) As such,
AHAM recommended that DOE establish the baseline at the current DOE
standard for front-loading standard-size products. (Id.)
In response to AHAM's comment regarding the definition of the
baseline level for front-loading standard-size RCWs, DOE is adopting
AHAM's recommended approach for this direct final rule and defining the
baseline level for the front-loading standard-size product class as the
current DOE standard (corresponding to 1.84 IMEF/5.7 IWF).\53\
---------------------------------------------------------------------------
\53\ In this direct final rule (``DFR''), DOE labels the EL
corresponding to the current DOE standard as ``DFR Baseline'' and
the EL corresponding to ENERGY STAR v. 7.0 as ``NOPR Baseline.''
---------------------------------------------------------------------------
The California Investor-Owned Utilities (``CA IOUs'') \54\
recommended that DOE use an ``unadjusted'' baseline efficiency level as
presented in appendix 5A of the March 2023 NOPR TSD and update the
market share distributions by including a ``consistent spin''
implementation technology option reflecting the existing market. (CA
IOUs, No. 460 at pp. 3-4) The CA IOUs stated that they acknowledge the
challenges of transitioning to the new test procedure's energy and
water metrics, but maintain that assuming all
[[Page 19046]]
units will adopt the ``consistent spin'' implementation method and that
incorporating this assumption as the baseline for each product class
does not represent real-world usage. (Id.) The CA IOUs recommended DOE
use the least efficient tested EER in its test sample to define the
baseline efficiency level and that DOE may apply consistent spin
implementation and the associated cost and energy savings as a
technology improvement at EL 1. (Id. at p. 4) The CA IOUs noted that
this method would respect DOE's expectation that manufacturers adopt a
consistent spin profile in response to appendix J. (Id.) The CA IOUs
commented that this approach should also result in updates to the
efficiency distribution for all product classes where DOE found units
with a non-consistent spin implementation. (Id.) The CA IOUs stated the
same market distribution calculations and adjustments should be
implemented for top-loading standard-size, front-loading compact, and
semi-automatic product classes since all were found to have products
with non-consistent spin implementation in DOE's testing. (Id.) The CA
IOUs further stated that these adjustments to DOE's analysis will
accurately represent energy savings from this rulemaking by properly
characterizing existing products and their variety of spin
implementations. (Id. at pp. 4-5) The CA IOUs requested that, should
DOE decline to adopt the proposed methodology, DOE clarify its position
on the inclusion of the costs associated with the spin improvements.
(Id. at p. 5) The CA IOUs requested that DOE ensure uniformity in its
treatment of consistent spin profiles to account for both or none of
the savings and costs. (Id.)
---------------------------------------------------------------------------
\54\ The ``CA IOUs'' includes Pacific Gas and Electric Company,
SDG&E, and SCE.
---------------------------------------------------------------------------
In response to the CA IOUs' recommendation to use the
``unadjusted'' baseline approach to define the baseline efficiency
levels, DOE has further evaluated this approach and determined that DOE
would not be able to reliably extrapolate its test results to the
entire market to determine how market shares would need to be
apportioned between an ``unadjusted'' baseline level and the baseline
level defined in the March 2023 NOPR using the translation equations.
More specifically, although DOE identified units in its test sample
with ``Cold/Cold optimized'' spin characteristic, DOE was not able to
determine a consistent pattern of implementation of this
characteristic--either among manufacturers or product platforms--that
could be used to extrapolate to the entire RCW market. For example,
DOE's test results indicated that some individual manufacturers use
different spin characteristics across their RCW model offerings (e.g.,
using ``consistent spin'' on some models, while using ``Cold/Cold
optimized spin'' on other model), and in some cases across different
individual models within the same product family (e.g., among front-
loading standard-size models designed and built on the same underlying
product platform). DOE recognizes that by not explicitly accounting for
changes to spin implementation at the baseline level for some portion
of the market, any incremental energy savings attributable to the
change in test procedure to appendix J are not accounted for in DOE's
assessment of the total energy savings resulting from the amended
standards enacted by this direct final rule. Regarding DOE's accounting
of any costs associated with such changes in spin implementation, DOE
is not assigning any additional manufacturing cost to the baseline
level with respect to this issue. The design changes incorporated into
DOE's cost-efficiency curves at the amended standard level already
include any necessary structural improvements that would potentially be
required to convert a product from using a ``Cold/Cold optimized'' spin
implementation to a ``consistent spin'' implementation (e.g., more
robust bearings or suspension to accommodate increased spin speeds).
b. Higher Efficiency Levels
To establish higher efficiency levels for the analysis, DOE
reviewed data in DOE's CCD to evaluate the range of efficiencies for
RCWs currently available on the market.\55\
---------------------------------------------------------------------------
\55\ DOE's Compliance Certification Database is available at
www.regulations.doe.gov/certification-data. Analysis conducted May
2023.
---------------------------------------------------------------------------
As part of DOE's analysis, the maximum available efficiency level
is the highest efficiency unit currently available on the market. DOE
also defines a ``max-tech'' efficiency level to represent the maximum
possible efficiency for a given product in each product class. (42
U.S.C. 6295(p)(1)) DOE typically determines max-tech levels based on
technologies that are either commercially available or have been
demonstrated as working prototypes. If the max-tech design meets DOE's
screening criteria, DOE considers the design in further analysis.
In defining the higher efficiency levels for this direct final
rule, DOE considered comments it had received in response to the higher
efficiency levels proposed in the March 2023 NOPR.
In the March 2023 NOPR, DOE tentatively determined that the max-
tech efficiency level for each RCW product class corresponds to the
maximum available level for each product class. 88 FR 13520, 13546. In
other words, DOE did not define or analyze any efficiency levels higher
than those currently available on the market. Id.
As noted, EPCA requires that any new or amended energy conservation
standard be designed to achieve the maximum improvement in energy
efficiency that is technologically feasible. (42 U.S.C. 6295(o)(2)(A))
For RCWs, a determination of technological feasibility must encompass
not only an achievable reduction in energy and/or water consumption,
but also the ability of the product to perform its intended function
(i.e., wash clothing) at reduced energy or water levels.\56\ Attributes
that are relevant to consumers encompass multiple aspects of RCW
operation such as stain removal, solid particle removal, rinsing
effectiveness, fabric gentleness, cycle time, noise, vibration, and
others. Each of these attributes may be affected by energy and water
efficiency levels, and achieving better performance in one attribute
may require a tradeoff with one or more other attributes. DOE does not
have the means to be able to determine whether a product that uses less
water or energy than the maximum efficiency level available on the
market would represent a viable (i.e., technologically feasible)
product that would satisfy consumer expectations regarding all the
other aspects of RCW performance that are not measured by the DOE test
procedure. As far as DOE is aware, the complexity of the
interdependence among all these attributes precludes being able to use
a computer model or other similar means to predict changes in these
product attributes as a result of reduced energy and water levels.
Rather, as far as DOE is aware, such determinations are made in an
iterative fashion through extensive product testing as part of
manufacturers' design processes.
---------------------------------------------------------------------------
\56\ As an extreme example, DOE could consider a hypothetical
RCW that reduces its water consumption to near-zero, but such a
product would not be viable for washing clothing, given current
technology.
---------------------------------------------------------------------------
DOE sought comment on the higher efficiency levels analyzed in the
March 2023 NOPR for each product class. Id. at 88 FR 13549.
DOE did not receive any comments regarding the higher efficiency
levels analyzed in the March 2023 NOPR.
At each higher efficiency level, both energy use and water use
decrease through the implementation of
[[Page 19047]]
combinations of design options that individually either reduce energy
use alone, reduce water use alone, or reduce both energy and water use
together, as discussed previously in section IV.A.2 of this document.
Chapter 5 of the direct final rule TSD provides a detailed discussion
of the specific design changes that DOE believes manufacturers would
typically use to meet each higher efficiency level considered in this
engineering analysis, including a discussion of whether such design
changes would reduce energy use only, water use only, or reduce both
energy and water use together.
In this direct final rule, DOE analyzed the higher efficiency
levels shown in Tables IV.5 through IV.8, consistent with the levels
analyzed in the March 2023 NOPR.
Table IV.5--Top-Loading Ultra-Compact (<1.6 ft\3\) Efficiency Levels
--------------------------------------------------------------------------------------------------------------------------------------------------------
IMEF (ft \3\ /kWh/ IWF (gal/cycle/ft
EL Efficiency level description cycle) \3\) EER (lb/kWh/cycle) WER (lb/gal/cycle)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline............................. Current DOE standard............. 1.15 12.0 3.79 0.29
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table IV.6--Top-Loading Standard-Size (>=1.6 ft\3\) Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Efficiency
EL level IMEF (ft \3\/kWh/ IWF (gal/cycle/ft EER (lb/kWh/ WER (lb/gal/
description cycle) \3\) cycle) cycle)
----------------------------------------------------------------------------------------------------------------
Baseline........... Current DOE 1.57 6.5 3.50 0.38
standard.
1.................. Gap fill....... 1.82 5.4 3.89 0.47
2.................. ENERGY STAR v. 2.06 4.3 4.27 0.57
8.1.
3.................. 2015-2017 2.38 3.7 4.78 0.63
Consortium for
Energy
Efficiency
(``CEE'') Tier
1.
4.................. Maximum 2.76 3.2 5.37 0.67
available
(2016/2017
ENERGY STAR
Most
Efficient).
----------------------------------------------------------------------------------------------------------------
Table IV.7--Front-Loading Compact (<3.0 ft\3\) Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Efficiency
EL level IMEF (ft \3\/kWh/ IWF (gal/cycle/ft EER (lb/kWh/ WER (lb/gal/
description cycle) \3\) cycle) cycle)
----------------------------------------------------------------------------------------------------------------
Baseline........... Current DOE 1.84 4.7 4.41 0.53
standard for
front-loading
standard-size
(>=1.6 ft \3\).
1.................. ENERGY STAR v. 2.07 4.2 4.80 0.62
8.1 level for
units <=2.5 ft
\3\.
2.................. 2023 ENERGY 2.20 3.7 5.02 0.71
STAR Most
Efficient for
units <=2.5 ft
\3\.
3.................. Gap fill....... 2.50 3.5 5.53 0.75
4.................. Maximum 2.76 3.2 5.97 0.80
available
(ENERGY STAR
v. 8.1 level
for units >2.5
ft \3\).
----------------------------------------------------------------------------------------------------------------
Table IV.8--Front-Loading Standard-Size (>=3.0 ft\3\) Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Efficiency level IMEF (ft \3\/kWh/ IWF (gal/cycle/ft EER (lb/kWh/ WER (lb/gal/
EL description cycle) \3\) cycle) cycle)
----------------------------------------------------------------------------------------------------------------
DFR Baseline...... Current DOE 1.84 4.7 4.31 0.38
standard.
NOPR Baseline..... ENERGY STAR v. 2.38 3.7 5.02 0.64
7.0.
1................. Gap fill........ 2.60 3.5 5.31 0.69
2................. ENERGY STAR v. 2.76 3.2 5.52 0.77
8.1.
3................. 2023 ENERGY STAR 2.92 3.2 5.73 0.77
Most Efficient.
4................. Maximum 3.10 2.9 5.97 0.85
available.
----------------------------------------------------------------------------------------------------------------
c. Semi-Automatic
As discussed in section IV.A.1 of this document, this direct final
rule re-establishes a separate product class for semi-automatic clothes
washers and establishes performance-based standards for semi-automatic
clothes washers. In considering the definition of efficiency levels for
semi-automatic clothes washers for this direct final rule, DOE used the
same methodology it had proposed in the March 2023 NOPR.
As discussed in the March 2023 NOPR, given the lack of specificity
in appendix J2 regarding the testing of semi-automatic clothes washers,
and the significant differences in testing between appendix J2 versus
appendix J for semi-automatic clothes washers, DOE tentatively
determined that it could not develop an accurate correlation between
appendix J2 metrics (i.e., IMEF and IWF) and appendix J metrics (i.e.,
EER and WER) for semi-automatic clothes washers. Id. at 88 FR 13549.
Therefore, DOE proposed to define efficiency levels in terms of EER and
WER directly rather than first defining efficiency levels in terms of
IMEF and IWF and then developing translation equations to translate
those levels to EER and WER. Id. As discussed in the March 2023 NOPR,
DOE determined efficiency levels for the semi-automatic clothes washer
product class by testing a representative sample of models on the
market and observing the range of EER and WER results. Id.
[[Page 19048]]
DOE sought comment on the efficiency levels analyzed in the March 2023
NOPR for semi-automatic RCWs. Id.
DOE did not receive any comments regarding the efficiency levels
analyzed in the March 2023 NOPR for semi-automatic RCWs. In this direct
final rule, DOE used the efficiency levels defined in the March 2023
NOPR for semi-automatic RCWs.
Table IV.9 shows the efficiency levels for the semi-automatic
product class. See chapter 5 of the direct final rule TSD for more
details.
Table IV.9--Semi-Automatic Efficiency Levels
----------------------------------------------------------------------------------------------------------------
EER (lb/kWh/ WER (lb/gal/
EL Efficiency level description cycle) cycle)
----------------------------------------------------------------------------------------------------------------
Baseline.............................. Minimum available................. 1.60 0.17
1..................................... Gap fill.......................... 2.12 0.27
2..................................... Maximum available................. 2.51 0.36
----------------------------------------------------------------------------------------------------------------
3. Cost Analysis
The cost analysis portion of the engineering analysis is conducted
using one or a combination of cost approaches. The selection of cost
approach depends on a suite of factors, including the availability and
reliability of public information, characteristics of the regulated
product, and the availability and timeliness of purchasing the product
on the market. The cost approaches are summarized as follows:
Physical teardowns: Under this approach, DOE physically
dismantles a commercially available product, component-by-component, to
develop a detailed bill of materials for the product.
Catalog teardowns: In lieu of physically deconstructing a
product, DOE identifies each component using parts diagrams (available
from manufacturer websites or appliance repair websites, for example)
to develop the bill of materials for the product.
Price surveys: If neither a physical nor catalog teardown
is feasible (for example, for tightly integrated products such as
fluorescent lamps, which are infeasible to disassemble and for which
parts diagrams are unavailable) or cost-prohibitive and otherwise
impractical (e.g., large commercial boilers), DOE conducts price
surveys using publicly available pricing data published on major online
retailer websites and/or by soliciting prices from distributors and
other commercial channels.
In the present case, DOE conducted the analysis using the physical
teardown approach. For each product class, DOE tore down a
representative sample of models spanning the entire range of efficiency
levels, as well as multiple manufacturers within each product class.
DOE aggregated the results so that the cost-efficiency relationship
developed for each product class reflects DOE's assessment of a market-
representative ``path'' to achieve each higher efficiency level. The
resulting bill of materials provides the basis for the manufacturer
production cost (``MPC'') estimates.
To account for manufacturers' profit margin, DOE applies a
multiplier (the manufacturer markup) to the MPC. The resulting
manufacturer selling price (``MSP'') is the price at which the
manufacturer distributes a unit into commerce. DOE developed an average
manufacturer markup by examining the annual Securities and Exchange
Commission (``SEC'') 10-K reports filed by publicly-traded
manufacturers primarily engaged in appliance manufacturing and whose
combined product range includes RCWs.\57\ See chapter 12 of the TSD for
this direct final rule for additional detail on the manufacturer
markup.
---------------------------------------------------------------------------
\57\ U.S. Securities and Exchange Commission, Electronic Data
Gathering, Analysis, and Retrieval (EDGAR) system. Available at
www.sec.gov/edgar/search/ (last accessed June 30, 2023).
---------------------------------------------------------------------------
4. Cost-Efficiency Results
In developing the baseline and incremental MPCs for each defined
product class for this direct final rule, DOE considered comments it
had received in response to the cost-efficiency results presented in
the March 2023 NOPR.
As discussed in the March 2023 NOPR, in support of this rulemaking,
DOE conducted teardowns on 47 RCW models, which covered the entire
range of efficiency levels within each analyzed product class. See
chapter 5 of the March 2023 NOPR TSD.
DOE sought comment in the March 2023 NOPR on the baseline and
incremental MPCs developed for each product class. Id. at 88 FR 13553.
ASAP, ACEEE, and NYSERDA commented that they believe DOE is likely
overestimating incremental cost increases, especially for top-loading
standard-size RCWs. (ASAP, ACEEE, and NYSERDA, No. 458 at p. 2) ASAP,
ACEEE, and NYSERDA stated that while DOE assumes in the engineering
analysis that baseline top-loading RCWs have enameled baskets and that
units meeting the standards proposed in the March 2023 NOPR would have
stainless steel baskets, NEEA market research found that almost two-
thirds of baseline top-loading standard-size RCW sales already include
stainless steel baskets, including half of the least-expensive baseline
models. (Id.) ASAP, ACEEE, and NYSERDA further commented that DOE has
historically overestimated cost increases from energy efficiency
standards, and they noted that a 2022 Spurlock & Fujita study \58\
concluded that baseline RCW prices stayed flat while efficiency
increased by 30 percent, demonstrating that efficiency standards for
RCWs benefit all consumers and that low-income consumers were not
priced out of the market. (Id. at pp. 2-3) ASAP, ACEEE, and NYSERDA
commented that historical trends suggest that any incremental increases
in first cost experienced by customers will likely be smaller than
those estimated by DOE. (Id. at p. 3)
---------------------------------------------------------------------------
\58\ C.A. Spurlock & K.S. Fujita, ``Equity implications of
market structure and appliance energy efficiency regulation,''
Energy Policy, 2022, Vol. 165, 112943.
---------------------------------------------------------------------------
In response to the comment from ASAP, ACEEE, and NYSERDA regarding
the prevalence of stainless steel wash baskets at the baseline level,
in this direct final rule, DOE has updated its approach to calculating
the baseline MPC for top-loading standard-size RCWs to reflect a
market-weighted average of the use of stainless steel wash baskets
versus enameled steel at the baseline level. DOE used information
derived through confidential manufacturer interviews to determine the
market weightings of each basket type. DOE has determined that using a
market-weighted average provides a more accurate representation of the
industry-average MPC at the baseline level for the top-loading
standard-size product class.
In response to the comment from ASAP, ACEEE, and NYSERDA that DOE
has historically overestimated cost
[[Page 19049]]
increases from amended standards, DOE notes that the MPCs developed as
part of the engineering analysis reflect observations of technologies
as they are implemented on the market at the time of the analysis. As
discussed further in chapter 5 of the direct final rule TSD, DOE takes
into account that certain component-level costs would generally be
lower on a per-unit basis due to higher production volumes that would
result if DOE were to establish standards at a particular higher
efficiency level.\59\ To the extent that the actual cost of an improved
baseline product brought to market in compliance with amended standards
is less than the cost predicted by DOE in a prior rulemaking analysis,
DOE notes that product cost reductions may not necessarily be related
to efficiency redesigns even if implemented at the same time as
efficiency-related design changes. For example, throughout the home
appliance industry, DOE has observed a trend of greater use of plastic
components to replace components that were previously made of metal or
other more expensive materials. Manufacturers may also implement
product redesigns that require fewer parts, therefore resulting in
shorter assembly times and lower manual labor costs. DOE further notes
that manufacturers may choose to implement such non-efficiency design
changes at the same time as efficiency-related design changes in order
to minimize the number of product redesigns. DOE often does not have
insights into future non-efficiency related design changes being
considered by manufacturers. Furthermore, trends that may have occurred
in the past that resulted in cost reductions (e.g., increased used of
plastic components) would be expected to reach a ``saturation point''
and would therefore not be expected to continue indefinitely into the
future. For these reasons, it would be inappropriately speculative, and
therefore unjustifiable, for DOE to assume that non-efficiency related
product cost reductions realized in the past would continue to be
realized in the future in conjunction with future product redesigns
prompted by amended efficiency standards.
---------------------------------------------------------------------------
\59\ In general, higher product volumes result in lower per-unit
costs for each part.
---------------------------------------------------------------------------
AHAM commented that the changes to load sizes in new appendix J
will increase the inherent RMC in the loads, while the standards
proposed in the March 2023 NOPR require RMC to be extremely low at the
end of the cycle. (AHAM, No. 464 at p. 2) AHAM stated that in order to
meet the standards proposed in the March 2023 NOPR using the updated
test procedure, manufacturers will need to increase spin speed and high
spin speed plateau times. (Id.) AHAM further commented that the changes
to spin speed and time would drive motor, structure, and possible other
design changes (such as larger counterweights in front-loading RCWs).
(Id.) AHAM further commented that the changes to tested temperature
settings in new appendix J will force cycle redesigns such as lowering
the warmest warm temperature and other changes that add significant
cost to maintain current levels of performance. (Id.)
In response to AHAM's comment regarding the impacts of the new test
procedure on tested values, DOE notes that the translation equations
developed to translate IMEF efficiency levels into EER efficiency
levels inherently account for all the changes between the two test
procedures, including the change in load size and the tested
temperature settings.\60\ The application of these translation
equations is such that the translated EER level corresponding to a
given IMEF level represents the same level of stringency as the IMEF
level, even though the underlying RMC value may be different and/or the
tested temperature selections may be weighted differently. As such, DOE
has determined that the estimated costs associated with achieving
higher efficiency levels in terms of IMEF and IWF are representative of
the costs associated with achieving the corresponding EER and WER
levels as determined through application of the translation equations.
---------------------------------------------------------------------------
\60\ As discussed in section IV.C.1 of this document, these
translation equations were developed by testing a representative
sample of RCWs to both the appendix J test procedure and the
appendix J2 test procedure, and correlating the results.
---------------------------------------------------------------------------
Finally, for this direct final rule, DOE updated the underlying raw
material prices used in its cost model to reflect current raw material
prices, which resulted in slight changes to the MPC values in
comparison to the values used in the March 2023 NOPR. Table IV.10
presents the baseline MPCs for each product class as determined for
this direct final rule. Tables IV.11 through IV.14 provide the
incremental MPCs for each higher efficiency level for each product
class as determined for this direct final rule. As discussed, no
automatic top-loading compact RCWs are available on the market that
exceed the baseline level. Accordingly, DOE did not consider any higher
efficiency levels for this product class.
Table IV.10--Baseline Manufacturer Production Costs
[2022$]
------------------------------------------------------------------------
Manufacturer
Product class production cost
------------------------------------------------------------------------
Top-Loading Ultra-Compact (less than 1.6 ft \3\ $340.99
capacity)..........................................
Top-Loading Standard-Size (1.6 ft \3\ or greater 263.56
capacity)..........................................
Front-Loading Compact (less than 3.0 ft \3\ 307.19
capacity)..........................................
Front-Loading Standard-Size (3.0 ft \3\ or greater 438.11
capacity)..........................................
Semi-Automatic...................................... 177.77
------------------------------------------------------------------------
Table IV.11--Incremental Manufacturer Production Costs for Top-Loading Standard-Size (>=1.6 ft \3\) Product
Class
[2022$]
----------------------------------------------------------------------------------------------------------------
EL IMEF IWF EER WER Incremental cost
----------------------------------------------------------------------------------------------------------------
Baseline.................... 1.57 6.5 3.50 0.38 ..................
1........................... 1.82 5.4 3.89 0.47 $49.55
2........................... 2.06 4.3 4.27 0.57 91.83
[[Page 19050]]
3........................... 2.38 3.7 4.78 0.63 99.90
4........................... 2.76 3.2 5.37 0.67 103.41
----------------------------------------------------------------------------------------------------------------
Table IV.12--Incremental Manufacturer Production Costs for Front-Loading Compact (<3.0 ft\3\) Product Class
[2022$]
----------------------------------------------------------------------------------------------------------------
EL IMEF IWF EER WER Incremental cost
----------------------------------------------------------------------------------------------------------------
Baseline.................... 1.84 4.7 4.41 0.53 ..................
1........................... 2.07 4.2 4.80 0.62 $33.27
2........................... 2.20 3.7 5.02 0.71 57.03
3........................... 2.50 3.5 5.53 0.75 79.67
4........................... 2.76 3.2 5.97 0.80 81.29
----------------------------------------------------------------------------------------------------------------
Table IV.13--Incremental Manufacturer Production Costs for Front-Loading Standard-Size (>=3.0 ft\3\) Product
Class
[2022$]
----------------------------------------------------------------------------------------------------------------
EL IMEF IWF EER WER Incremental cost
----------------------------------------------------------------------------------------------------------------
DFR Baseline................ 1.84 4.7 4.31 0.38 ..................
NOPR Baseline............... 2.38 3.7 5.02 0.64 $0.00
1........................... 2.60 3.5 5.31 0.69 24.33
2........................... 2.76 3.2 5.52 0.77 42.03
3........................... 2.92 3.2 5.73 0.77 48.86
4........................... 3.10 2.9 5.97 0.85 58.27
----------------------------------------------------------------------------------------------------------------
Table IV.14--Incremental Manufacturer Production Costs for Semi-Automatic Product Class
[2022$]
----------------------------------------------------------------------------------------------------------------
EL EER WER Incremental cost
----------------------------------------------------------------------------------------------------------------
Baseline.................................................... 1.60 0.17 ..................
1........................................................... 2.12 0.27 $8.35
2........................................................... 2.51 0.36 13.58
----------------------------------------------------------------------------------------------------------------
D. Markups Analysis
The markups analysis develops appropriate markups (e.g., retailer
markups, distributor markups, contractor markups) in the distribution
chain and sales taxes to convert the MSP estimates derived in the
engineering analysis to consumer prices, which are then used in the LCC
and PBP analysis. At each step in the distribution channel, companies
mark up the price of the product to cover business costs and profit
margin.
For RCWs, the main parties in the post-manufacturer distribution
chain are retailers/distributors and consumers.
DOE developed baseline and incremental markups for each actor in
the distribution chain. Baseline markups are applied to the price of
products with baseline efficiency, while incremental markups are
applied to the difference in price between baseline and higher-
efficiency models (the incremental cost increase). The incremental
markup is typically less than the baseline markup and is designed to
maintain similar per-unit operating profit before and after new or
amended standards.\61\
---------------------------------------------------------------------------
\61\ Because the projected price of standards-compliant products
is typically higher than the price of baseline products, using the
same markup for the incremental cost and the baseline cost would
result in higher per-unit operating profit. While such an outcome is
possible, DOE maintains that in markets that are reasonably
competitive it is unlikely that standards would lead to a
sustainable increase in profitability in the long run.
---------------------------------------------------------------------------
For the March 2023 NOPR, DOE relied on economic data from the U.S.
Census Bureau to estimate average baseline and incremental markups.\62\
---------------------------------------------------------------------------
\62\ U.S. Census Bureau, Annual Wholesale Trade Survey. 2017.
Available at www.census.gov/awts (last accessed May 2, 2023).
---------------------------------------------------------------------------
For this direct final rule, DOE considered comments it had received
regarding the markups analysis conducted for the March 2023 NOPR. The
approach for determining markups in this direct final rule was the same
approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, AHAM commented that it, along
with AHRI and other stakeholders, disputes DOE's distinction between
markups from manufacturers to end customers for the base case and those
for costs added to meet proposed standards. (AHAM, No. 464 at p. 34)
AHAM presented data, including quotes from retailers, which AHAM
believes contradicts DOE's process and theory, arguing that it lacks
empirical evidence and relies on discredited theories. (Id.) AHAM
commented that DOE's theory is inconsistent with the data DOE presents,
as the price of RCWs has decreased over time while retailer gross
[[Page 19051]]
margins have remained constant. (Id.) AHAM asserted that DOE cannot
disregard data that contradicts its analysis and must take these
comments into account to avoid arbitrary and capricious rulemaking.
(Id. at p. 35)
DOE's incremental markup approach assumes that an increase in
operating profits, which is implied by keeping a fixed markup when the
product price goes up, is unlikely to be viable over time in a
reasonably competitive market like household appliance retailers. The
Herfindahl-Hirschman Index (``HHI'') reported by the 2017 Economic
Census indicates that the household appliance stores sector (North
American Industry Classification System (``NAICS'') 443141) is a
competitive marketplace.\63\ DOE recognizes that actors in the
distribution chains are likely to seek to maintain the same markup on
appliances in response to changes in manufacturer selling prices after
an amendment to energy conservation standards. However, DOE believes
that retail pricing is likely to adjust over time as those actors are
forced to readjust their markups to reach a medium-term equilibrium in
which per-unit profit is relatively unchanged before and after
standards are implemented.
---------------------------------------------------------------------------
\63\ 2017 Economic Census, Selected sectors: Concentration of
largest firms for the U.S. Available at www.census.gov/data/tables/2017/econ/economic-census/naics-sector-44-45.html.
---------------------------------------------------------------------------
DOE acknowledges that markup practices in response to amended
standards are complex and varying with business conditions. However,
DOE's analysis necessarily only considers changes in appliance
offerings that occur in response to amended standards and isolates the
effect of amended standards from other factors. Obtaining data on
markup practices in the situation described above is very challenging.
Hence, DOE continues to maintain that its assumption that standards do
not facilitate a sustainable increase in profitability is reasonable.
Chapter 6 of the direct final rule TSD provides details on DOE's
development of markups for RCWs.
E. Energy and Water Use Analysis
The purpose of the energy and water use analysis is to determine
the annual energy and water consumption of RCWs at different
efficiencies in representative U.S. single-family homes, multi-family
residences, and mobile homes, and to assess the energy savings
potential of increased RCW efficiency. The energy and water use
analysis estimates the range of energy and water use of RCWs in the
field (i.e., as they are actually used by consumers). The energy and
water use analysis provides the basis for other analyses DOE performed,
particularly assessments of the energy and water savings and the
savings in consumer operating costs that could result from adoption of
amended or new standards.
To establish a reasonable range of energy and water consumption in
the field for RCWs, DOE primarily used data from 2020 Residential
Energy Conservation Survey (``RECS'').\64\ RECS is a national sample
survey of housing units that collects statistical information on the
consumption of and expenditures for energy in housing units along with
data on energy-related characteristics of the housing units and
occupants. The 2020 RECS collected data on 18,496 housing units and was
constructed by EIA to be a national representation of the household
population in the United States. DOE's assumptions for establishing an
RCW sample included the following considerations:
---------------------------------------------------------------------------
\64\ U.S. Department of Energy--Energy Information
Administration, Residential Energy Consumption Survey: 2020 Public
Use Data Files, 2020. Available at www.eia.gov/consumption/residential/data/2020/ (last accessed June 28, 2023).
---------------------------------------------------------------------------
The household had a clothes washer.
Clothes washer use was greater than zero.
DOE divided the sample of households into five sub-samples to
characterize the product classes being analyzed: top-loading ultra-
compact RCWs; automatic, top-loading standard-size RCWs; automatic,
front-loading compact RCWs; automatic, front-loading standard-size
RCWs; and semi-automatic RCWs. For ultra-compact, compact, and semi-
automatic clothes washers, DOE developed a sub-sample consisting of
households from multi-family buildings, manufactured homes, and single-
family homes with less than 1,000 square feet and no garage or
basement, since DOE reasoned that such products are most likely to be
found in these housing types.
The energy and water use analysis requires DOE to establish a range
of total annual usage or annual number of cycles in order to estimate
annual energy and water consumption by a clothes washer unit. DOE
unutilized data from the 2020 RECS, which provided information on the
number of laundry loads washed (clothes washer cycles) per week for
sample households. The average annual energy and water consumption were
then calculated, reflecting an average annual weighted usage of 210
cycles per year (206 cycles for top-loading RCWs and 217 cycles for
front-loading RCWs).
For each sample household, DOE estimated the field-based annual
energy and water use of the clothes washer by multiplying the annual
number of clothes washer cycles for each household by the per-cycle
energy and water use values established by the engineering analysis
(using the DOE test procedure) for each considered efficiency level.
Per-cycle clothes washer energy use is calculated in the test procedure
as the sum of per-cycle machine energy use associated with the clothes
washer (including the energy used to heat water and remove moisture
from clothing),\65\ and combined low-power-mode energy use.
---------------------------------------------------------------------------
\65\ The per-cycle energy consumption associated with a given
clothes washer has three components: energy used for heating water,
operating the machine, and drying the clothes.
---------------------------------------------------------------------------
For this direct final rule, DOE considered comments it had received
regarding the energy and water use analysis conducted for the March
2023 NOPR. The approach used for this direct final rule is largely the
same as the approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, Whirlpool commented that DOE
appears to double-count the savings for drying energy between the RCW
standard analysis and the consumer clothes dryer standard analysis.
(Whirlpool, No. 462 at p. 14) Whirlpool noted that DOE's RCW analysis
assumed an RMC of 37 percent and 33 percent were needed to meet the
standard levels proposed in the March 2023 NOPR (for top-loading and
front-loading, respectively), whereas the clothes dryer test procedure
at 10 CFR part 430, subpart B, appendix D2 (``appendix D2''), assumes
an initial moisture content of 57.5 percent. (Id.) Whirlpool commented
that this effectively accounts for a significantly higher moisture
content of the clothes going into the clothes dryer than would be
allowed for coming out of the clothes washer under the standards for
RCWs proposed in the March 2023 NOPR. (Id.) Whirlpool suggested that
DOE choose which appliance (clothes washers or clothes dryers) should
include the reduction of RMC in its analysis, and that the analysis for
the other standard should not also account for it. (Id.) Whirlpool
commented that the current approach may hurt consumers who may not get
the full savings they are expecting and significantly impact the
economic analysis, selection of efficiency levels, and whether the
level is economically justified. (Id.)
AHAM commented that DOE is overestimating the expected energy
savings between clothes washers and
[[Page 19052]]
clothes dryers by assuming an RMC at the proposed standard of 37
percent for top-loading standard-size RCWs and of 33 percent for front-
loading standard-size RCWs, which is lower than the initial moisture
content of 57.5 percent in the clothes dryers test procedure. (AHAM,
No. 464 at p. 23) AHAM commented that DOE is therefore assuming that
the drying cycle requires more energy than is needed. (Id.) AHAM
commented that these assumptions overestimate the savings that many
consumers will experience when purchasing a laundry pair and that DOE
should better estimate the savings by considering the pair purchase
rate and usage of older clothes washers with possibly higher RMC values
after the standard goes into effect. (Id.)
To the greatest extent possible, DOE avoids double-counting between
the RCW standards analysis and the consumer clothes dryer standards
analysis, as explained by the following. Amended RCW standards result
in less total moisture needing to be removed from the clothing in a
clothes dryer, whereas amended consumer clothes dryer standards result
in a less energy-intensive process for removing that moisture. As such,
the drying energy savings associated with amended RCW standards
represent savings experienced through shorter drying times (due to the
clothing being ``less wet'' after the completion of the wash cycle due
to faster spin speeds), whereas the drying energy savings associated
with amended consumer clothes dryer standards represents savings
attributable to improvements to the inherent efficiency of the drying
process itself. Pertaining to this RCW standards analysis, the clothes
dryer energy savings associated with reduced RMC values--essentially
resulting in shorter drying cycles--would be experienced by consumers
regardless of whether a consumer purchases a new clothes dryer
alongside a new RCW or continues to use their existing clothes dryer.
For RCWs, the embedded assumptions and usage factors defined in the
test procedure for calculating drying energy are intended to reflect
the characteristics of the current installed stock of consumer clothes
dryers on a nationally representative basis. Similarly, for clothes
dryers, the assumed initial moisture content value defined in the
clothes dryer test procedure is intended to reflect the characteristics
of the current installed stock of RCWs on a nationally representative
basis. DOE regularly reevaluates these assumptions and usage factors as
part of its test procedure rulemakings--and adjusts each value when
warranted--to ensure that each respective test procedure produces test
results that are nationally representative as the markets for these
products evolve over time, in part due to amended energy conservation
standards.
Alliance for Water Efficiency (``AWE'') recommended that DOE
evaluate energy embedded in the water that will be saved as a result of
the proposed standard. (AWE, No. 444 at p. 4) AWE stated that it has
developed a tool for evaluating the water savings, costs, and benefits
of urban water conservation programs and for projecting future demands
that provides a range of estimates for embedded water and wastewater
energy. (Id.) AWE recommended that DOE use the estimates from AWE's
conservation tracking tool for calculating the energy embedded in the
water and noted that DOE could also adjust this based on the
assumptions it is currently using for private wells. (Id.)
DOE has previously determined that EPCA does not direct DOE to
consider the energy used for water treatment and delivery. In the May
2012 Direct Final Rule, DOE noted that EPCA directs DOE to consider
``the total projected amount of energy, or as applicable, water,
savings likely to result directly from the imposition of the
standard.'' 77 FR 32308, 32346 (quoting 42 U.S.C.
6295(o)(2)(B)(i)(III)). In the May 2012 Direct Final Rule, DOE
interpreted ``directly from the imposition of the standard'' to include
energy used in the generation, transmission, and distribution of fuels
used by appliances. Unlike the energy used for water treatment and
delivery, both DOE's current accounting of primary energy savings and
the full-fuel-cycle measure are directly linked to the energy used by
appliances. Id.
ASAP, ACEEE, and NYSERDA noted that data found in the 2016
Residential End Uses of Water (``REUW'') report suggest that DOE may be
significantly underestimating the average number of RCW loads per year.
(ASAP, ACEEE, and NYSERDA, No. 458 at p. 3)
AWE recommended that DOE use actual data from 2016 REUW or other
actual end-use data for its assumptions about RCW loads per year. (AWE,
No. 444 at p. 3) AWE stated that there are often large gaps between
consumer survey responses and actual behavior when it comes to fixture
and appliance uses, and therefore data from reports like 2016 REUW or
other sources, such as smart metering companies, could be more reliable
than the 2015 RECS. (Id.) AWE recommended that DOE consider using
actual customer end use beyond the EIA's survey data and, in the
absence of data from additional sources, DOE should use 285 loads per
year based on actual data from 2016 REUW, instead of 234 load per year.
(Id.)
DOE has reviewed the 2016 REUW report, published by the Water
Research Foundation, which analyzed RCW end-use data from detailed log
data from 737 households. However, DOE noticed a significant disparity
between the annual clothes washer usage reported in this report
compared to the latest data from the 2020 RECS. Specifically, as noted
by AWE, the 2016 REUW shows an average of 285 loads per year compared
to an average of 210 cycles per year determined based on the 2020 RECS.
DOE acknowledges that RECS is based on household reported frequency of
average clothes washer usage per week rather than on contemporaneous
logs taken by households, which could be more reliable on an individual
basis. However, unlike the 2016 REUW \66\ or any other field metered
consumer end-use data that DOE is aware of, the 2020 RECS consists of a
nationally representative sample of housing units including more than
10,000 households that report RCW usage.
---------------------------------------------------------------------------
\66\ The 2016 REUW only covered the following States: Colorado,
Arizona, Georgia, Texas, Washington, and Florida.
---------------------------------------------------------------------------
Although stakeholders suggested that the cycles per year determined
based on RECS may be underestimated, the 2020 RECS is the most
comprehensive and most current data source available on this topic,
and, as such, DOE is adopting the lower usage reported in the latest
RECS. This approach results in a conservative estimate for energy and
water savings.
Representatives Latta et al. commented that DOE's energy savings
analysis assumes consumers will wash full loads because they have
larger RCWs, and asserted that DOE offers little evidence to suggest
consumers will modify their behavior by washing larger loads to achieve
the full efficiency benefits of owning large-capacity clothes washers.
(Representatives Latta et al., No. 456 at p. 2)
Whirlpool commented that the assumption made by DOE that larger
RCWs lead to energy savings is incorrect. (Whirlpool, No. 462 at pp. 8-
9) Whirlpool asserted that many consumers do laundry based on the size
of their laundry basket or on a regular schedule, disregarding the
RCW's available capacity; despite load sensing technology, larger RCWs
may be less efficient for the same load size compared to smaller ones;
some consumers may not fill the wash basket completely, compromising
the benefits
[[Page 19053]]
of larger capacity RCWs for better cleaning. (Id.)
ASAP, ACEEE, and NYSERDA noted that DOE's per-cycle energy and
water use analysis is based on the test procedure, which assumes that
load sizes are larger for larger machines. (ASAP, ACEEE, and NYSERDA,
No. 458 at p. 3) ASAP, ACEEE, and NYSERDA stated that by assuming that
tub capacity would increase from 4.0 to 4.7 ft\3\ in response to the
standards for top-loading standard-size RCWs proposed in the March 2023
NOPR, DOE's energy and water use analysis thereby assumes that
consumers wash 15 percent more clothing annually under the proposed
standard. (Id.) ASAP, ACEEE, and NYSERDA asserted that this assumption
that tub capacity would increase and lead to more clothing washed
annually seems unlikely and has the effect of reducing overall energy,
water, and cost savings in the downstream analysis. (Id.)
The energy and water use values associated with each efficiency
level in the energy use analysis are derived from testing conducted
according to the new appendix J test procedure, as described by ASAP,
ACEEE, and NYSERDA. Indeed, for the top-loading standard-size
efficiency levels for which DOE has modeled as increase in tub size as
a design option path, the associated energy and water use estimates are
based on the assumed use of larger load sizes--as defined by the test
procedure--while assuming the same number of annual cycles (i.e., 206
cycles for top-loading RCWs) at each efficiency level. 87 FR 33316,
33330-33334 DOE acknowledges that this analytical framework reflects
more clothing being washed annually in units with larger tub
capacities. Under this methodology, maintaining the same volume of
annual clothing washed at the efficiency levels where capacity
increases could be modeled by either reducing the number of annual
cycles, or assuming the same load size is used in the larger-capacity
units as for the smaller-capacity units, or some combination of both.
DOE notes that data from historical RECS indicates that the average use
of each RCW has steadily declined from 292 cycles in 2005, 282 cycles
in 2009, 235 cycles in 2015, to 210 cycles in the 2020 RECS. This
decline in usage trend aligns with a significant increase in washing
machine capacity, which grew from shipments-weighted 2.52 ft\3\ to 4.25
ft\3\ between 1991 and 2020, according to data submitted by AHAM. The
data indicate that on average the volume of clothing washed by U.S.
households has remained constant over the past 15 years and consumers
generally are capitalizing on the larger capacity of RCWs to conduct
fewer, but fuller loads.\67\ Additionally, the 2020 RECS estimate of
210 cycles per year reflects the range of RCW capacities within the
stock, as well as the range of load sizes consumers use for their
laundry. As the RECS data does not include information about household
washing machine capacities and load sizes, utilizing a single weighted
average annual usage across efficiency levels leads to conservative
estimates for energy and water savings when compared to using higher
annual usage cycles for the baseline and lower annual usage cycles for
higher efficiency levels. DOE assumes that household washing volumes
remain constant, leading to fewer laundry cycles with the use of a
larger RCW.
---------------------------------------------------------------------------
\67\ In this direct final rule, DOE has not studied whether
there is any correlation between the declining annual usage of
clothes washers and other potential factors, such as changes in
detergent formulations, changes in types of clothing, or changes in
household dynamics.
---------------------------------------------------------------------------
Chapter 7 of the direct final rule TSD provides details on DOE's
energy use analysis for RCWs.
F. Life-Cycle Cost and Payback Period Analysis
DOE conducted LCC and PBP analyses to evaluate the economic impacts
on individual consumers of potential energy conservation standards for
RCWs. The effect of new or amended energy conservation standards on
individual consumers usually involves a reduction in operating cost and
an increase in purchase cost. DOE used the following two metrics to
measure consumer impacts:
The LCC is the total consumer expense of an appliance or
product over the life of that product, consisting of total installed
cost (manufacturer selling price, distribution chain markups, sales
tax, and installation costs) plus operating costs (expenses for energy
and water use, maintenance, and repair). To compute the operating
costs, DOE discounts future operating costs to the time of purchase and
sums them over the lifetime of the product.
The PBP is the estimated amount of time (in years) it
takes consumers to recover the increased purchase cost (including
installation) of a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
at higher efficiency levels by the change in annual operating cost for
the year that amended or new standards are assumed to take effect.
For any given efficiency level, DOE measures the change in LCC
relative to the LCC in the no-new-standards case, which reflects the
estimated efficiency distribution of RCWs in the absence of new or
amended energy conservation standards. In contrast, the PBP for a given
efficiency level is measured relative to the baseline product.
For each considered efficiency level in each product class, DOE
calculated the LCC and PBP for a nationally representative set of
residential housing units. As stated previously, DOE developed
household samples from the 2020 RECS. For each sample household, DOE
determined the energy and water consumption for the RCWs and the
appropriate energy and water prices. By developing a representative
sample of households, the analysis captured the variability in energy
and water consumption and energy and water prices associated with the
use of RCWs.
Inputs to the calculation of total installed cost include the cost
of the product--which includes MPCs, manufacturer markups, retailer and
distributor markups, and sales taxes--and installation costs. Inputs to
the calculation of operating expenses include annual energy and water
consumption, energy and water prices and price projections, repair and
maintenance costs, product lifetimes, and discount rates. DOE created
distributions of values for product lifetime, discount rates, and sales
taxes, with probabilities attached to each value, to account for their
uncertainty and variability.
The computer model DOE uses to calculate the LCC relies on a Monte
Carlo simulation to incorporate uncertainty and variability into the
analysis. The Monte Carlo simulations randomly sample input values from
the probability distributions and RCW user samples. For this
rulemaking, the Monte Carlo approach is implemented in MS Excel
together with the Crystal Ball\TM\ add-on.\68\ The model calculated the
LCC for products at each efficiency level for 10,000 housing units per
simulation run. The analytical results include a distribution of 10,000
data points showing the range of LCC savings for a given efficiency
level relative to the no-new-standards case efficiency distribution. In
performing an iteration of the Monte Carlo simulation for a given
consumer, product efficiency is chosen based on its probability. If the
chosen product efficiency is greater than
[[Page 19054]]
or equal to the efficiency of the standard level under consideration,
the LCC calculation reveals that a consumer is not impacted by the
standard level. By accounting for consumers who already purchase more-
efficient products, DOE avoids overstating the potential benefits from
increasing product efficiency.
---------------------------------------------------------------------------
\68\ Crystal Ball\TM\ is commercially available software tool to
facilitate the creation of these types of models by generating
probability distributions and summarizing results within Excel,
available at www.oracle.com/technetwork/middleware/crystalball/overview/index.html (last accessed July 6, 2023).
---------------------------------------------------------------------------
DOE calculated the LCC and PBP for consumers of RCWs as if each
were to purchase a new product in the first year of required compliance
with amended standards. Amended standards apply to RCWs manufactured 3
years after the date on which any amended standard is published. (42
U.S.C. 6295(m)(4)(A)(i)) Therefore, DOE used 2027 as the first year of
compliance with any considered TSLs for RCWs, except for the
Recommended TSL. For the Recommended TSL, DOE used 2028 as the first
year of compliance.
Table IV.15 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The subsections that follow
provide further discussion. Details of the spreadsheet model, and of
all the inputs to the LCC and PBP analyses, are contained in chapter 8
of the direct final rule TSD and its appendices.
Table IV.15--Summary of Inputs and Methods for the LCC and PBP Analysis
*
------------------------------------------------------------------------
Inputs Source/method
------------------------------------------------------------------------
Product Cost...................... Derived by multiplying MPCs by
manufacturer and retailer markups
and sales tax, as appropriate. Used
historical data to derive a price
scaling index to project product
costs.
Installation Costs................ Baseline installation cost
determined with data from RS Means
Residential Cost Data 2022. Assumed
no change with efficiency level.
Annual Energy and Water Use....... Per cycle energy and water use
multiplied by the cycles per year.
Average number of cycles based on
field data. Variability: Based on
the 2020 RECS.
Energy and Water Prices........... Electricity: Based on EIA's Form 861
data for 2022.
Variability: Regional energy prices
determined for 9 Census Divisions.
Water: Based on 2020 Raftelis
Financial Consultants (``RFC'')/
American Water Works Association
(``AWWA'') Survey.
Variability: Regional water prices
determined for 4 Census Regions.
Energy and Water Price Trends..... Based on AEO2023 price projections.
Water: Forecasted using Bureau of
Labor Statistics (``BLS'') historic
water price index information.
Repair and Maintenance Costs...... Repair costs vary by product class
and vary between ENERGY STAR and
non-ENERGY STAR RCWs.
Product Lifetime.................. Average: 13.4 years.
Discount Rates.................... Approach involves identifying all
possible debt or asset classes that
might be used to purchase the
considered appliances, or might be
affected indirectly. Primary data
source was the Federal Reserve
Board's Survey of Consumer
Finances.
Compliance Date................... TSL 1, TSL 3, and TSL 4: 2027.
TSL 2 (Recommended TSL): 2028.
------------------------------------------------------------------------
* Not used for PBP calculation. References for the data sources
mentioned in this table are provided in the sections following the
table or in chapter 8 of the direct final rule TSD.
The LCC Monte Carlo simulations draw from the efficiency
distributions and randomly assign an efficiency to the RCW purchased by
each sample household in the no-new-standards case. The resulting
percent shares within the sample match the market shares in the
efficiency distributions.
In the March 2023 NOPR, DOE performed a random assignment of
efficiency levels to consumers in its Monte Carlo sample. 88 FR 13520,
13564. While DOE acknowledges that economic factors may play a role
when consumers decide on what type of RCW to install, assignment of RCW
product efficiency for a given installation, based solely on economic
measures such as life-cycle cost or simple payback period, most likely
would not fully and accurately reflect actual real-world installations.
There are a number of market failures discussed in the economics
literature that illustrate how purchasing decisions with respect to
energy efficiency are unlikely to be perfectly correlated with energy
use, as described below. DOE maintains that the method of assignment,
which is in part random, is a reasonable approach, because it simulates
behavior in the RCW product market, where market failures result in
purchasing decisions not being perfectly aligned with economic
interests, and is more realistic than relying only on apparent cost-
effectiveness criteria derived from the limited information in RECS.
DOE further emphasizes that its approach does not assume that all
purchasers of RCW products make economically irrational decisions
(i.e., the lack of a correlation is not the same as a negative
correlation). By using this approach, DOE acknowledges the uncertainty
inherent in the data and minimizes any bias in the analysis by using
random assignment, as opposed to assuming certain market conditions
that are unsupported given the available evidence.
The following discussion provides more detail about the various
market failures that affect RCW product purchases. First, consumers are
motivated by more than simple financial trade-offs. There are consumers
who are willing to pay a premium for more energy-efficient products
because they are environmentally conscious.\69\ There are also several
behavioral factors that can influence the purchasing decisions of
complicated multi-attribute products, such as RCW products. For
example, consumers (or decision makers in an organization) are highly
influenced by choice architecture, defined as the framing of the
decision, the surrounding circumstances of the purchase, the
alternatives available, and how they are presented for any given choice
scenario.\70\ The same consumer or decision maker may make different
choices depending on the characteristics of the decision context (e.g.,
the timing of the purchase, competing demands for funds), which have
nothing to do with the characteristics of the alternatives themselves
or their prices. Consumers or decision makers also face a variety of
other behavioral phenomena including
[[Page 19055]]
loss aversion, sensitivity to information salience, and other forms of
bounded rationality.\71\ Thaler, who won the Nobel Prize in Economics
in 2017 for his contributions to behavioral economics, and Sunstein
point out that these behavioral factors are strongest when the
decisions are complex and infrequent, when feedback on the decision is
muted and slow, and when there is a high degree of information
asymmetry.\72\ These characteristics describe almost all purchasing
situations of appliances and equipment, including RCWs. The
installation of a new or replacement RCW product is done very
infrequently, as evidenced by the mean lifetime of 13.4 years. Further,
if the purchaser of the RCW is not the entity paying the energy costs
(e.g., a building owner and tenant), there may be little to no feedback
on the purchase. Additionally, there are systematic market failures
that are likely to contribute further complexity to how products are
chosen by consumers, as explained in the following paragraphs. The
first of these market failures--the split-incentive or principal-agent
problem--is likely to significantly affect RCWs. The principal-agent
problem is a market failure that results when the consumer that
purchases the equipment does not internalize all of the costs
associated with operating the equipment. Instead, the user of the
product, who has no control over the purchase decision, pays the
operating costs. There is a high likelihood of split-incentive problems
in the case of rental properties where the landlord makes the choice of
what RCW product to install, whereas the renter is responsible for
paying water and energy bills.
---------------------------------------------------------------------------
\69\ Ward, D.O., Clark, C.D., Jensen, K.L., Yen, S.T., &
Russell, C.S. (2011): ``Factors influencing willingness-to pay for
the ENERGY STAR[supreg] label,'' Energy Policy, 39 (3), 1450-1458
(available at: www.sciencedirect.com/science/article/abs/pii/S0301421510009171) (last accessed August 1, 2023).
\70\ Thaler, R.H., Sunstein, C.R., and Balz, J.P. (2014).
``Choice Architecture'' in The Behavioral Foundations of Public
Policy, Eldar Shafir (ed).
\71\ Thaler, R.H., and Bernartzi, S. (2004). ``Save More
Tomorrow: Using Behavioral Economics in Increase Employee Savings,''
Journal of Political Economy 112(1), S164-S187. See also Klemick,
H., et al. (2015), ``Heavy-Duty Trucking and the Energy Efficiency
Paradox: Evidence from Focus Groups and Interviews,'' Transportation
Research Part A: Policy & Practice, 77, 154-166 (providing evidence
that loss aversion and other market failures can affect otherwise
profit-maximizing firms).
\72\ Thaler, R.H., and Sunstein, C.R. (2008). Nudge: Improving
Decisions on Health, Wealth, and Happiness. New Haven, CT: Yale
University Press.
---------------------------------------------------------------------------
In addition to the split-incentive problem, there are other market
failures that are likely to affect the choice of RCW product efficiency
made by consumers. For example, unplanned replacements due to
unexpected failure of equipment such as RCW products are strongly
biased toward like-for-like replacement (i.e., replacing the non-
functioning product with a similar or identical product). Time is a
constraining factor during unplanned replacements, and consumers may
not consider the full range of available options on the market, despite
their availability. The consideration of alternative product options is
far more likely for planned replacements and installations in new
construction.
Additionally, Davis and Metcalf \73\ conducted an experiment
demonstrating that, even when consumers are presented with energy
consumption information, the nature of the information available to
consumers (e.g., from EnergyGuide labels) results in an inefficient
allocation of energy efficiency across households with different usage
levels. Their findings indicate that households are likely to make
decisions regarding the efficiency of the air conditioning equipment of
their homes that do not result in the highest net present value for
their specific usage pattern (i.e., their decision is based on
imperfect information and, therefore, is not necessarily optimal).
Also, most consumers did not properly understand the labels
(specifically whether energy consumption and cost estimates were
national averages or specific to their State). As such, consumers did
not make the most informed decisions.
---------------------------------------------------------------------------
\73\ Davis, L.W., and G.E. Metcalf (2016): ``Does better
information lead to better choices? Evidence from energy-efficiency
labels,'' Journal of the Association of Environmental and Resource
Economists, 3(3), 589-625 (available at: www.journals.uchicago.edu/doi/full/10.1086/686252) (last accessed August 1, 2023).
---------------------------------------------------------------------------
In part because of the way information is presented, and in part
because of the way consumers process information, there is also a
market failure consisting of a systematic bias in the perception of
equipment energy usage, which can affect consumer choices. Attari et
al.\74\ show that consumers tend to underestimate the energy use of
large energy-intensive appliances (such as air conditioners,
dishwashers, and consumer clothes dryers), but overestimate the energy
use of small appliances (such as light bulbs). Therefore, it is
possible that consumers systematically underestimate the energy use
associated with RCWs, resulting in less cost-effective purchases.
---------------------------------------------------------------------------
\74\ Attari, S.Z., M.L. DeKay, C.I. Davidson, and W. Bruine de
Bruin (2010): ``Public perceptions of energy consumption and
savings.'' Proceedings of the National Academy of Sciences 107(37),
16054-16059 (available at: www.pnas.org/content/107/37/16054) (last
accessed August 1, 2023).
---------------------------------------------------------------------------
These market failures affect a sizeable share of the consumer
population. A study by Houde \75\ indicates that there is a significant
subset of consumers that appear to purchase appliances without taking
into account their energy efficiency and operating costs at all.
---------------------------------------------------------------------------
\75\ Houde, S. (2018): ``How Consumers Respond to Environmental
Certification and the Value of Energy Information,'' The RAND
Journal of Economics, 49 (2), 453-477 (available at:
onlinelibrary.wiley.com/doi/full/10.1111/1756-2171.12231) (last
accessed August 1, 2023).
---------------------------------------------------------------------------
The existence of market failures in the residential sector is well
supported by the economics literature and by a number of case studies.
If DOE developed an efficiency distribution that assigned RCW product
efficiency in the no-new-standards case solely according to energy use
or economic considerations such as life-cycle cost or payback period,
the resulting distribution of efficiencies within the consumer sample
would not reflect any of the market failures or behavioral factors
above. Thus, DOE concludes such a distribution would not be
representative of the RCW product market. Further, even if a specific
household is not subject to the market failures above, the purchasing
decision of RCW product efficiency can be highly complex and influenced
by a number of factors (e.g., aesthetics) not captured by the building
characteristics available in the RECS sample. These factors can lead to
households or building owners choosing an RCW product efficiency that
deviates from the efficiency predicted using only energy use or
economic considerations such as life-cycle cost or payback period.
There is a complex set of behavioral factors, with sometimes
opposing effects, affecting the RCW product market. It is impractical
to model every consumer decision incorporating all of these effects at
this extreme level of granularity given the limited available data.
Given these myriad factors, DOE estimates the resulting distribution of
such a model, if it were possible, would be very scattered with high
variability. It is for this reason DOE utilizes a random distribution
(after accounting for efficiency market share constraints) to
approximate these effects. The methodology is not an assertion of
economic irrationality, but instead, it is a methodological
approximation of complex consumer behavior. The analysis is neither
biased toward high or low energy savings. The methodology does not
preferentially assign lower-efficiency RCW products to households in
the no-new-standards case where savings from the rule would be
greatest, nor does it preferentially assign lower-efficiency RCW
products to households in the no-new-standards case where savings from
the rule would be smallest. Some consumers were assigned the RCW
products that they would have chosen if they had engaged in perfect
economic considerations when purchasing the products. Others were
assigned less-efficient RCW products
[[Page 19056]]
even where a more-efficient product would eventually result in life-
cycle savings, simulating scenarios where, for example, various market
failures prevent consumers from realizing those savings. Still others
were assigned RCW products that were more efficient than one would
expect simply from life-cycle costs analysis, reflecting, say,
``green'' behavior, whereby consumers ascribe independent value to
minimizing harm to the environment.
For this direct final rule, DOE considered comments it had received
regarding the LCC analysis conducted for the March 2023 NOPR. The LCC
approach used for this direct final rule is largely the same as the
approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, AHAM commented that DOE's
reliance on the RECS database in its analysis is introducing outlier
values into its LCC analysis. (AHAM, No. 464 at p. 36) AHAM commented
that the documentation of the 2015 RECS reveals uncertainties, errors,
and approximations within its data, making it difficult to determine
the accuracy of consumption projections for individual housing units.
(Id. at p. 37) AHAM therefore cautioned DOE against relying on
potentially inaccurate outlier values, noting that this concern is
highlighted by the significant difference between the mean and median
LCC savings at any standard level, where these measures should ideally
be closely aligned. (Id.) AHAM urged DOE to use median values instead
of mean values to mitigate these data issues. (Id.)
As described in section IV.E of this document., DOE's energy and
water use analysis for this direct final rule is derived based on 2020
RECS, which provides household's clothes washer loads information
ranging from 1 cycle to 30 cycles per week. The field-based annual
energy and water use for each household then feed into the LCC
analysis. DOE notes that there is no indication that any of households
in the RECS sample represent non-valid data that should be excluded as
an outlier. Excluding minimum and maximum values from the field-based
usage statistics would result in a less accurate representation of the
actual energy and water consumption patterns exhibited by households
participating in the survey. However, as a standardized approach, DOE
presents all statistical results of LCC savings in chapter 8 of its TSD
(i.e., box plots). This approach allows stakeholders to observe the
full range of LCC savings and understand the distribution of results,
enabling a more informed evaluation of the potential impacts of
proposed standards. In addition, DOE's decision on amended standards is
not solely determined by (mean) LCC savings. While LCC savings play a
role, they may be considered alongside other critical factors,
including the percentage of negatively impacted consumers, the simple
payback period, and the overall impact on manufacturers.
AHAM commented that DOE should focus on conducting a purchase
decision analysis instead of relying on outcomes and long-term cost
analyses. (AHAM, No. 464 at p. 33) AHAM commented that the basis for
regulation lies in identifying consumer and systemic market failures,
where consumer failure refers to making ``incorrect'' decisions due to
a lack of information. (Id.) AHAM suggested that modeling efforts
should prioritize identifying rational decisions, as it is unreasonable
to predict actual outcomes given the numerous unpredictable factors
that can influence them. (Id.) AHAM commented on the importance of
considering the actual conditions and expectations of purchasers in
DOE's LCC model, separate from the broader economic impact analysis.
(Id. at p. 34) AHAM suggested that the LCC model should assess the
extent of market failure by comparing the actual rate of energy-
efficient product purchases with the rate that rational consumers would
choose. (Id.)
In response to the March 2023 NOPR, an anonymous commenter stated
that the proposed rule change makes questionable assumptions about
consumer behavior, particularly the expectation that consumers will buy
their RCWs within the first year, which might skew the cost-benefit
analysis. (Anonymous, No. 391 at p. 1)
First, DOE notes that the LCC analysis currently relies on market
data on the distribution of efficiency of products to assign products
with varying efficiency performance to each household when compliance
with the standard becomes required. This approach is intended to
simulate the range of individual outcomes likely to result from the
hypothetical setting of a revised energy conservation standard at
various levels of efficiency when the data needed to develop a product-
specific consumer choice model are currently unavailable. DOE does not
negate the consumer decision theory established in the broad behavioral
economic field; rather, this is a methodological decision made by DOE
after considering the existence of various systematic market failures
(e.g., information asymmetries, bounded rationality, principal-agent
relationship, etc.) and their implication in rational versus actual
purchase behavior. The outcome of the LCC is not considered in
isolation, but in the context of the broader set of analyses, including
the NIA. Additionally, DOE's shipment analysis takes into account
consumers' sensitivity to higher purchase prices under a considered
TSL. DOE assumes that when market impacts occur, some consumers would
prefer to repair or purchase a used unit rather than buy a new clothes
washer when amended standards take effect. This approach ensures that
the national cost-benefit results are neither skewed nor biased. See
chapter 9 of the direct final rule TSD for details.
1. Product Cost
To calculate consumer product costs, DOE multiplied the MPCs
developed in the engineering analysis by the markups described
previously (along with sales taxes). DOE used different markups for
baseline products and higher-efficiency products, because DOE applies
an incremental markup to the increase in MSP associated with higher-
efficiency products.
Economic literature and historical data suggest that the real costs
of many products may trend downward over time according to ``learning''
or ``experience'' curves. Experience curve analysis implicitly includes
factors such as efficiencies in labor, capital investment, automation,
materials prices, distribution, and economies of scale at an industry-
wide level.\76\ To derive the learning rate parameter for RCWs, DOE
obtained historical Producer Price Index (``PPI'') data for ``household
laundry equipment'' between 1948 and 2016 and ``major household
appliance: primary products'' between 2016 and 2022 from the Bureau of
Labor Statistics' (``BLS'') to form a time series price index
representing household laundry equipment from 1948 to 2022.\77\ These
two PPI series are the most current and disaggregated price index that
includes RCWs, and DOE assumes that the price trend estimated from the
household laundry equipment PPI is representative of that for RCWs.
Inflation-adjusted price indices were calculated by dividing the PPI
series by the gross
[[Page 19057]]
domestic product index from Bureau of Economic Analysis for the same
years. The estimated learning rate (defined as the fractional reduction
in price expected from each doubling of cumulative production) is 17.2
percent. See chapter 8 of the direct final rule TSD for further details
on this topic.
---------------------------------------------------------------------------
\76\ Taylor, M. and Fujita, K.S. Accounting for Technological
Change in Regulatory Impact Analyses: The Learning Curve Technique.
LBNL-6195E. Lawrence Berkeley National Laboratory, Berkeley, CA.
April 2013. Available at escholarship.org/uc/item/3c8709p4#page-1.
\77\ ``Household laundry equipment'' PPI (PCU3352203352204) is
available through May 2016, and ``major household appliance: primary
products'' PPI (PCU335220335220P) is available from May 2016 to
present. See more information at www.bls.gov/ppi/ (last accessed
June 13, 2023).
---------------------------------------------------------------------------
For this direct final rule, DOE considered comments it had received
regarding the methodology for calculating consumer product costs that
was presented in the March 2023 NOPR. The approach used for this direct
final rule is largely the same as the approach DOE had used for the
March 2023 NOPR analysis.
In response to the March 2023 NOPR, AHAM commented that DOE's
application of a ``learning or experience curve'' to reduce expected
extra manufacturing costs required to meet proposed standard levels
lacks a solid theoretical foundation. (AHAM, No. 464 at p. 35) AHAM
commented that the approach, based solely on empirical relationships,
demands clear alignment with the actual products under consideration,
with a necessity to adjust equations when data changes shape. (Id. at
pp. 35-36) AHAM commented that DOE's justification that continued use
of learning rates is justified by past price declines is DOE confusing
past correlation with future causation and questions the basis for
forward projection. (Id. at p. 36) AHAM further opposed the proposed
continuous function form of future trends, particularly given signs of
data ``flattening'' in DOE's learning curve equation and that all
recent data is above the line drawn by the equation. AHAM commented
that such ``learning'' should not be projected beyond labor and
materials costs, given it does not logically apply to overheads, sales,
marketing, general and administrative costs, or depreciation and
financing costs. (Id. at p. 36)
DOE notes that there is considerable empirical evidence of
consistent price declines for appliances in the past few decades.
Several studies examined refrigerator retail prices during different
periods of time and showed that prices had been steadily falling while
efficiency had been increasing, for example Dale et al. (2009) \78\ and
Taylor et al. (2015).\79\ Given the limited data availability on
historical manufacturing costs broken out by different components, DOE
utilized the Producer Price Index (``PPI'') published by the BLS as a
proxy for manufacturing costs to represent the analyzed product as a
whole. Thus, DOE applied the price learning to the entire costs and did
not consider the applicability of learning on individual cost
components. While products may experience varying degrees of price
learning during different product stages, DOE modeled the average
learning rate based on the full historical PPI series to capture the
overall price evolution in relation to the cumulative shipments. DOE
also conducted sensitivity analyses that are based on a particular
segment of the PPI data for household laundry products manufacturing to
investigate the impact of alternative product price projections in the
LCC (constant price) and NIA (high price learning and constant price)
of this direct final rule. For details of the sensitivity results, see
appendix 8F and appendix 10C of the direct final rule TSD.
---------------------------------------------------------------------------
\78\ Dale, L., C. Antinori, M. McNeil, James E. McMahon, and K.
S. Fujita. Retrospective evaluation of appliance price trends.
Energy Policy. 2009. 37 (2) pp. 597-605. doi.org/10.1016/j.enpol.2008.09.087.
\79\ Taylor, M., C. A. Spurlock, and H.-C. Yang. Confronting
Regulatory Cost and Quality Expectations. An Exploration of
Technical Change in Minimum Efficiency Performance Standards. 2015.
Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United
States). Report No. LBNL-1000576. Available at www.osti.gov/biblio/1235570/ (last accessed June 30, 2023).
---------------------------------------------------------------------------
Representatives Latta et al. expressed concern at the consumer cost
impact of the proposed standards, noting that top-loading standard-size
RCWs currently on the market meeting the standard proposed in the March
2023 NOPR have a manufacturer's suggested retail price (``MSRP'') of
over $1,000, a price that Representatives Latta et al. characterized as
out of reach for many consumers and that is over $400 higher than the
MSRP of entry-level models. (Representatives Latta et al., No. 456 at
p. 2)
DOE notes that in most cases--and in particular for top-loading
standard-size RCWs--the MSRP of an existing model at a certain higher
efficiency level does not reflect the consumer purchase price that
would be expected if DOE were to enact an amended standard at that
higher efficiency level, for two main reasons. First, current models at
higher efficiency levels are produced at significantly lower shipment
volumes than baseline models, which generally results in higher per-
unit costs for each component part for the higher efficiency models.
Second, higher efficiency models are often ``bundled'' with non-
efficiency related features that add additional cost to the product and
contribute to the overall higher MSRP. Because of these drawbacks to
using MSRP as the basis for evaluating the economic justification of a
higher standard, DOE instead uses a reverse-engineering approach--
combined with a detailed analysis of markups--to estimate the impact on
consumer purchase price that would be expected as a result of an
amended standard. As discussed in sections IV.C.3 and IV.D of this
document, DOE evaluates the cost impact to consumers by developing
incremental MPC costs and multiplying the MPCs by various markups to
develop the consumer purchase price. This approach allows DOE to
account for any economies of scale that would result from producing
more efficient RCWs at larger shipment volumes and to isolate the cost
of any non-efficiency-related features that are often bundled with
higher-efficiency RCWs on the market today.
2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the product. DOE used data from
2022 RS Means Residential Cost Data to estimate the baseline
installation cost for RCWs.\80\ DOE found no evidence that installation
costs would be impacted with increased efficiency levels.
---------------------------------------------------------------------------
\80\ RS Means Company Inc., RS Means Residential Cost Data
(2022). Available at https://rsmeans.com/.
---------------------------------------------------------------------------
3. Annual Energy and Water Consumption
For each sampled household, DOE determined the energy and water
consumption for an RCW at different efficiency levels using the
approach described previously in section IV.E of this document.
4. Energy and Water Prices
a. Energy Prices
Because marginal electricity and gas prices more accurately capture
the incremental savings associated with a change in energy use from
higher efficiency, it provides a better representation of incremental
change in consumer costs than average electricity and gas prices.
Therefore, DOE applied average electricity and gas prices for the
energy use of the product purchased in the no-new-standards case, and
marginal electricity and gas prices for the incremental change in
energy use associated with the other efficiency levels considered.
DOE derived electricity prices in 2022 using data from Edison
Electric Institute (``EEI'') Typical Bills and Average Rates reports
for summer and winter 2022.\81\
[[Page 19058]]
Based upon comprehensive, industry-wide surveys, this semi-annual
report presents typical monthly electric bills and average kilowatt-
hour costs to the customer as charged by investor-owned utilities. For
the residential sector, DOE calculated electricity prices using the
methodology described in Coughlin and Beraki (2018).\82\
---------------------------------------------------------------------------
\81\ Edison Electric Institute. Typical Bills and Average Rates
Report. Winter 2022, Summer 2022. Available at www.eei.org/resourcesandmedia/products/Pages/Products.aspx.
\82\ Coughlin, K. and B. Beraki. 2018. Residential Electricity
Prices: A Review of Data Sources and Estimation Methods. Lawrence
Berkeley National Lab. Berkeley, CA. Report No. LBNL-2001169.
Available at ees.lbl.gov/publications/residential-electricity-prices-review.
---------------------------------------------------------------------------
DOE's methodology allows electricity prices to vary by sector,
region and season. In the analysis, variability in electricity prices
is chosen to be consistent with the way the consumer economic and
energy use characteristics are defined in the LCC analysis.
DOE obtained data for calculating regional prices of natural gas
from the EIA publication, Natural Gas Navigator.\83\ This publication
presents monthly volumes of natural gas deliveries and average prices
by State for residential, commercial, and industrial customers. DOE
used the complete annual data for 2022 to calculate an average annual
price for each census division. Residential natural gas prices were
adjusted by applying seasonal marginal price factors to reflect a
change in a consumer's bill associated with a change in energy
consumed.
---------------------------------------------------------------------------
\83\ U.S. Department of Energy-Energy Information
Administration. Natural Gas Navigator 2022. Available at
www.eia.gov/naturalgas/data.php.
---------------------------------------------------------------------------
DOE assigned average prices to each household in the LCC sample
based on its location and its baseline electricity and gas consumption.
For sampled households who were assigned a product efficiency greater
than or equal to the considered level for a standard in the no-new-
standards case, DOE assigned marginal prices to each household based on
its location and the decremented electricity and gas consumption. In
the LCC sample, households could be assigned to one of nine census
divisions. See chapter 8 of the direct final rule TSD for details.
To estimate energy prices in future years, DOE multiplied the 2022
energy prices by the projection of annual average price changes for
each of the nine census divisions from the Reference case in AEO2023,
which has an end year of 2050.\84\ To estimate price trends after 2050,
the 2046-2050 average was used for all years.
---------------------------------------------------------------------------
\84\ EIA. Annual Energy Outlook 2023. Available at www.eia.gov/outlooks/aeo/ (last accessed June 20, 2023).
---------------------------------------------------------------------------
b. Water and Wastewater Prices
DOE obtained residential water and wastewater price data from the
Water and Wastewater Rate Survey conducted by Raftelis Financial
Consultants and the American Water Works Association.\85\ The survey
covers approximately 194 water utilities and 140 wastewater utilities
analyzing each industry (water and wastewater) separately. For each
water or wastewater utility, DOE calculated the average-price-per-unit
volume by dividing the total volumetric cost by the volume delivered.
DOE also calculated the marginal price by dividing the incremental cost
by the increased volume charged at each consumption level.
---------------------------------------------------------------------------
\85\ Raftelis Financial Consultants, Inc. 2020 RFC/AWWA Water
and Wastewater Rate Survey. 2021. Charlotte, NC, Kansas City, MO,
and Pasadena, CA.
---------------------------------------------------------------------------
The samples that DOE obtained of the water and wastewater utilities
is too small to calculate regional prices for all U.S. Census
divisions. Therefore, DOE calculated regional costs for water and
wastewater service at the Census region level (Northeast, South,
Midwest, and West) by weighting each State in a region by its
population.
For this direct final rule analysis, DOE has updated its
methodology for developing water prices for consumers who rely on a
private well water system, instead of the public supply system in
consideration of stakeholder comments received in response to the March
2023 NOPR DOE primarily considered well maintenance costs and pump
operating costs when developing the average water price. Conversely,
DOE only considered pump operating costs when developing the marginal
price for well users. As a result, the estimated average and marginal
water prices for well users are $1.24 and $0.39 per thousand gallons,
respectively. For septic tank users, DOE considered only the septic
tank maintenance cost when determining the average price and excluded
the marginal cost component, as any marginal costs are likely to be
negligible. DOE is unable to develop Census-region-level well water and
septic tank prices due to the limitation of available data. As a
result, the same values were used for each Census region.
To determine the current percentage of the U.S. population served
by private wells and septic tanks, DOE used historical American Housing
Survey (``AHS'') data from 1990 to 2021 to develop a projection for
2027, the effective year of potential new standards for RCWs except for
the Recommended TSL.\86\ The effective year of the Recommended TSL is
2028.
---------------------------------------------------------------------------
\86\ The U.S. Census Bureau. The American Housing Survey. Years
1970-2021. Available at www.census.gov/programs-surveys/ahs.html
(last accessed June 12, 2023).
---------------------------------------------------------------------------
DOE then conducted random simulations \87\ to determine the sample
of households in rural areas served by private wells and septic tanks.
Based on the estimated sample, well water prices and septic tank prices
were assigned to sampled households accordingly. Furthermore, DOE
estimated the septic tank user population and assigned corresponding
septic tank prices to households relying on public water systems.
---------------------------------------------------------------------------
\87\ DOE utilized random simulations to more accurately assess
the distribution of households in rural areas using private wells
and septic tanks. These simulations were designed to randomly assign
users of well water and septic tanks, based on the estimated
percentage of the well water and septic tank user population in each
census region, thereby incorporating uncertainties and
variabilities.
---------------------------------------------------------------------------
To estimate the future trend for public water and wastewater
prices, DOE used data on the historic trend in the national water price
index (U.S. city average) from 1988 through 2022 provided by the Labor
Department's BLS.\88\ DOE extrapolated the future trends based on the
linear growth from 1988 to 2022. DOE used the extrapolated trend to
forecast prices through 2050. To estimate the price trend after 2050,
DOE used a constant value derived from the average values from 2046
through 2050.
---------------------------------------------------------------------------
\88\ U.S. Department of Labor-Bureau of Labor Statistics,
Consumer Price Indexes, Item: Water and sewerage maintenance, Series
Id: CUSR0000SEHG01, U.S. city average, 2022. Washington, DC.
Available at www.bls.gov/cpi/home.htm#data.
---------------------------------------------------------------------------
To estimate the future trend for well water and septic tank prices,
DOE used data on the historic trend in the overall national consumer
price index (``CPI'') from 1988 through 2022 provided by the Labor
Department's BLS.\89\ DOE extrapolated the future trends based on the
linear growth from 1988 to 2022. DOE used the extrapolated trend to
forecast prices through 2050. To estimate the price trend after 2050,
DOE used a constant value derived from the average values from 2046
through 2050.
---------------------------------------------------------------------------
\89\ U.S. Department of Labor-Bureau of Labor Statistics,
Consumer Price Indexes, All Items, Series Id: CUUR0000SA0, U.S. city
average, 2022. Washington, DC. Available at www.bls.gov/cpi/home.htm#data.
---------------------------------------------------------------------------
In response to the March 2023 NOPR, AHAM commented that it
previously suggested that DOE should consider the actual water costs
for households on well systems, acknowledge that there are no
incremental costs for consumers
[[Page 19059]]
using septic systems, and treat these consumers as a separate subgroup
instead of averaging them into composite water and sewer costs. AHAM
noted that while DOE implemented AHAM's recommendation on sewer costs,
it disregarded the other two suggestions without explanation. (AHAM,
No. 464 at pp. 37-38)
As discussed, DOE agrees with AHAM that consumers using septic
systems have near-zero marginal costs for wastewater and has updated
the analysis accordingly. As discussed in section IV.I.3 of this
document, DOE has also included an analysis of well-water users in the
consumer subgroup analysis.
AHAM commented that it opposed DOE's use of ``economic value of
water'' in the LCC model. According to AHAM, private well users pay the
actual marginal cost of water, primarily the electricity for pumping,
not an ``economic value''. AHAM noted that while there are embedded
costs for drilling a well, these costs are sunk and the marginal cost
is electricity. AHAM suggested that if DOE insists on the ``economic
value'', DOE should define it, demonstrate how well-water use reduces
water availability, and quantify the actual ``economic value'' of lost
well water. (AHAM, No. 464, at p. 38) AHAM further stated that even if
there is an ``economic value'', it should be considered in the NIA, not
the LCC. (Id. at p. 39)
DOE agrees with AHAM that ``economic value of water'' is not the
actual price that well users would pay. Hence, for this direct final
rule, DOE has adjusted its methodology regarding water price for well
users and septic tank price. To derive well water price, DOE conducted
a comprehensive literature review and took into consideration the
inputs provided by AHAM. As a result, DOE estimated the average water
price for well users to be $1.24 per thousand gallons, with a marginal
price of $0.39 per thousand gallons representing the electricity cost
for pumping as suggested by AHAM. Regarding septic tank price, DOE
estimated the average cost to be $1.30 per thousand gallons and
excluded the marginal cost component, as it may be negligible or close
to $0 per thousand gallons. For details of the well water and septic
tank prices, see chapter 8 of the direct final rule TSD. In addition,
in the LCC, DOE has explicitly assigned well water and septic users
randomly to the rural population based on estimated population and
given them well and/or septic specific prices; DOE is no longer using
composite water and sewer costs applied to the entire sample. As such,
well and/or septic users are now fully accounted for in the LCC sample.
AWE commented that it is unclear why DOE referred to the water and
sewerage maintenance item from the CPI to determine future price trends
for water and sewage. AWE stated that DOE's methodology for price
trends regarding RCWs deviates from the methodology DOE proposed
regarding dishwashers. AWE recommended that DOE use the RFC/AWWA Water
and Wastewater Rate Survey for both dishwashers and RCWs because the
RFC/AWWA survey is more accurate and representative of price trend data
between 1998 and 2020. (AWE, No. 444 at pp. 2-3)
RFC/AWWA provides water and wastewater rates survey data every two
years for U.S. water and wastewater utilities. For each of the RFC/AWWA
surveys, utilities in the sample respond voluntarily to the survey
questions, with a limited number of overlapping utilities in each
survey year. For this reason, it is possible that the annual change in
rates may be affected by which utilities respond to the survey. In
addition, the rate data are reported in usage tiers set by each utility
and not on actual household water consumption.
The BLS Water and Sewer CPI sample represents 600 to 700 quotes for
water or sewer service, and the sample is consistent for four years,
which reduces the possible year over year bias as compared to RFC/AWWA.
Additionally, the Water and Sewer CPI was estimated based on consumer
water bills that were related to household water consumption.
Therefore, DOE concludes that the BLS' CPI water and sewer data better
reflect the nationally representative price trends. DOE therefore used
the CPI for water and sewer for its public utilities' water and
wastewater price trend forecast for this direct final rule.
DOE used a similar methodology to develop future water and
wastewater prices in its dishwasher standard rulemaking as it used in
the March 2023 NOPR analysis. The only difference between the two
standards rulemaking analyses is that for RCWs, DOE used a constant
value derived from the average values from 2046 through 2050 to
estimate the price trend after 2050, whereas in the dishwashers NOPR,
published May 19, 2023 (88 FR 32514), DOE used the 2050 value for the
price trend after 2050.\90\ As described previously, for this direct
final rule, DOE has used the same approach as the March 2023 NOPR for
water and wastewater (including well water and septic tank) price
trends after 2050.
---------------------------------------------------------------------------
\90\ Additional details regarding the dishwasher analysis are
provided in the NOPR TSD, available at www.regulations.gov/document/EERE-2019-BT-STD-0039-0032.
---------------------------------------------------------------------------
5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing product
components that have failed in an appliance; maintenance costs are
associated with maintaining the operation of the product. Typically,
small incremental increases in product efficiency entail no, or only
minor, changes in repair and maintenance costs compared to baseline
efficiency products.
For RCWs, DOE determined the repair cost associated with loading
type and clothes washer capacity commonly found on an appliance repair
website.\91\ DOE estimated the average repair cost for an RCW is about
$241, ranging from $123 to $294 over the product lifetime and then
converted to annual cost. For maintenance cost, DOE conducted a
literature review of maintenance cost available from a variety of
sources, including online resources. DOE estimated the annual
maintenance cost for an RCW is approximately $27, including costs of
clothes washer cleaners and of running clothes washer cleaning cycles.
---------------------------------------------------------------------------
\91\ Fixr, How Much Does It Cost to Repair a Washing Machine?
Available at www.fixr.com/costs/washing-machine-repair#washing-machine-repair-cost-by-type-of-repair.
---------------------------------------------------------------------------
Typically, small incremental increases in product efficiency
produce no, or only minor, changes in repair and maintenance costs
compared to baseline efficiency products. For this direct final rule
analysis, DOE estimated that for repair costs, there is a cost
difference between an ENERGY STAR and non-ENERGY STAR RCW of
approximately $47 for a front-loading RCW and $34 for a top-loading
RCW, based on information aggregated from manufacturer interviews. For
maintenance costs, DOE assumed that there is no change with efficiency
level for RCWs.\92\
---------------------------------------------------------------------------
\92\ Based on literature reviews, DOE found that manufacturers
recommend monthly self-cleaning for RCWs, regardless of the clothes
washer's loading type and efficiency level.
---------------------------------------------------------------------------
For this direct final rule, DOE considered comments it had received
regarding its determination of maintenance and repair costs in the
March 2023 NOPR. The approach used for this direct final rule is
largely the same as the approach DOE had used for the March 2023 NOPR
analysis.
In response to the March 2023 NOPR, Representatives Latta et al.
commented that additional product complexity to
[[Page 19060]]
meet amended standard levels could drive higher repair costs.
(Representatives Latta et al., No. 456 at pp. 2-3)
As discussed in the March 2023 NOPR, DOE implemented higher repair
costs for ENERGY STAR qualified and above ENERGY STAR qualified RCWs
compared to the baseline models based on information obtained through
manufacturer interviews. These same inputs have been used in the
current direct final rule analysis. DOE estimated the cost difference
between an ENERGY STAR and non-ENERGY STAR RCW of approximately $34 for
a top-loading and $47 for a front-loading RCW. See section 8.3.5 of
chapter 8 of the direct final rule TSD for details.
The National Multifamily Housing Council (``NMHC'') and National
Apartment Association (``NAA'') recommended that DOE reevaluate the
costs and ongoing operations and maintenance impacts of longer cycle
times, multiple wash cycles, and increased stress on the equipment.
(NMHC and NAA, No. 451 at pp. 3-4)
CEI \93\ commented that expensive repairs, including ones within
the first 3 years of purchase, are no longer uncommon, and that
consumers will often not undertake repairs that cost half or more of
the price of a new machine. CEI noted that these problems are likely to
be exacerbated by the standards proposed in the March 2023 NOPR. (CEI,
No. 454 at p. 3)
---------------------------------------------------------------------------
\93\ ``CEI'' includes the comments of the Competitive Enterprise
Institute (``CEI'') and Michael Mannino.
---------------------------------------------------------------------------
CEI asserted that repair costs would likely increase, leading
consumers to refrain from repairs under the proposed rule if they cost
half or more of the price of a new machine. However, CEI did not
provide additional supporting data for DOE to consider to suggest that
the repair price would be higher than what was used in the March 2023
NOPR and for this direct final rule analysis. As described in section
IV.F.5 of this document, DOE has estimated a slight increase in
retirement for RCWs before reaching 4 years of age using the latest
2020 RECS and AHS data.
As stated in section V.B.4 of this document, at TSL 2--the
standards level adopted in this direct final rule--DOE's data
demonstrates no negative impact on consumer utility, including cycle
time. For further discussion of performance as it relates to amended
standards, see section V.B.4.a of this document.
6. Product Lifetime
Product lifetime is the age at which an appliance is retired from
service. To determine estimates for RCW lifetime, DOE conducted an
analysis of standard-capacity RCW lifetime in the field based on a
combination of shipments data and data on the ages of the clothes
washer products reported in the household stock from RECS conducted in
2001, 2005, 2009, 2015, and 2020.\94\
---------------------------------------------------------------------------
\94\ U.S. Department of Energy--Energy Information
Administration, Residential Energy Consumption Survey (``RECS''),
Multiple Years (1990, 1993, 1997, 2001, 2005, 2009, 2015, and 2020).
Available at www.eia.gov/consumption/residential/.
---------------------------------------------------------------------------
The data allowed DOE to estimate a survival function, which
provided an average appliance lifetime of approximately 14 years. From
the 2015 RECS to the 2020 RECS, there was a 3.6 percent increase in the
number of RCWs under 5 years of age, and an additional 0.7 percent of
RCWs lasting beyond 15 years. Therefore, for this direct final rule,
DOE has slightly updated its estimated average lifetime for RCWs to
13.4 years, with a distribution that includes 1.4 percent more RCWs
retiring before reaching 4 years and 2.9 percent more RCWs remaining
after 15 years and up to 30 years, compared to the Weibull lifetime
probability distribution used in the March 2023 NOPR.
For this direct final rule, DOE considered comments it had received
regarding its estimation of product lifetime in the March 2023 NOPR.
The approach used for this direct final rule is largely the same as the
approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, NEEA et al. commented in
support of using a 13.7-year product lifetime. (NEEA et al., No. 455 at
p. 5)
The AGs of TN et al.\95\ commented that DOE's lack of consideration
of the reduced lifetime and associated costs of a more complex product
is not appropriate. Additionally, the AGs of TN et al. argued that a
major component of the product's lifetime energy use is the energy
consumed in manufacturing the product and that decreased water and
energy use almost always come at the cost of increased complexity, with
attendant increased maintenance costs and decreased lifespan. As such,
the AGs of TN et al. state that DOE ignored lifecycle energy use and
lifecycle cost and failed to consider an important aspect of the
problem. (AGs of TN et al., No. 438 at p. 6 (citing Motor Vehicle Mfrs.
Ass'n, 463 U.S. at 43))
---------------------------------------------------------------------------
\95\ The ``AGs of TN et al.'' include the attorneys general
(``AGs'') of Tennessee, Alabama, Arkansas, Florida, Georgia, Idaho,
Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana,
Nebraska, Ohio, Oklahoma, South Carolina, Texas, Utah, Virginia, and
West Virginia.
---------------------------------------------------------------------------
In response to the March 2023 NOPR, Representatives Latta et al.
commented that additional product complexity to meet amended standard
levels could drive shorter product lifespans. (Representatives Latta et
al., No. 456 at pp. 2-3)
CEI commented that DOE does not acknowledge that its rules have
shortened the useful lives of clothes washers and other appliances and
that DOE also ignores the resulting adverse environmental impacts,
which include the greater energy and other resources that go into
manufacturing additional clothes washers as well as additional landfill
and other disposal requirements for discarded units.\96\ (CEI, No. 454
at pp. 6-7) CEI asserted that the decline in RCW reliability and useful
lifetime, especially since the 2007 standards, has been evident to
those servicing machines over that time span. (Id. at pp. 2-3)
---------------------------------------------------------------------------
\96\ DOE did not address CEI's comments about the greater energy
and other resources that go into manufacturing additional RCWs as
well as additional landfill and disposal costs for discarded units
because it is outside the scope of a standards rulemaking.
---------------------------------------------------------------------------
In the public webinar, Whirlpool commented that the average
lifespan of an RCW should not only be based on historical data, as the
additional stresses placed on the mechanical components (due to the
combination of higher resistance and less water, which creates more
tension, torque, and wear on the motor) could pose as a challenge in
reaching the 13.7-year lifespan in the future. (Whirlpool, Public
Webinar Transcript, No. 91 at pp. 35-36)
In the public webinar, Mannino stated that most clothes washers
fail after three to four years. Mannino asked how DOE arrived at its
estimate. (Mannino, Public Webinar Transcript, No. 91 at p. 32)
DOE also received comments from 23 additional individual commenters
expressing concerns regarding the standards' impact on the product's
lifetime.
DOE notes that it does not have data to corroborate a causal
connection between the stringency of efficiency standards and the
expected service lifetime of RCWs. Moreover, commenters have not
provided DOE additional information or data that demonstrates that
more-efficient clothes washers have shorter or longer product lifetimes
than less-efficient clothes washers. As a result, DOE has not
identified differences in lifetime based on differences in efficiency.
[[Page 19061]]
As stated, DOE updated the Weibull lifetime distribution used for
this direct final rule based on the recent data from RECS and AHS. The
updated data indicates a slightly shorter lifetime and delayed
replacement of RCWs than was considered in the March 2023 NOPR based on
previous RECS and other data sources.
Furthermore, as discussed in chapter 5 of the TSD for this direct
final rule, the incremental MPCs developed in this analysis reflect
units currently available on the market. Therefore, to the extent that
units on the market incorporate more robust mechanical components (such
as bearings, motors, etc.), DOE's analysis already accounts for the
cost of these components at higher efficiency levels.
See chapter 8 of the direct final rule TSD for further details.
7. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate
to households to estimate the present value of future operating cost
savings. DOE estimated a distribution of discount rates for RCWs based
on the opportunity cost of consumer funds.
DOE applies weighted average discount rates calculated from
consumer debt and asset data, rather than marginal or implicit discount
rates.\97\ The LCC analysis estimates net present value over the
lifetime of the product, so the appropriate discount rate will reflect
the general opportunity cost of household funds, taking this time scale
into account. Given the long time horizon modeled in the LCC, the
application of a marginal interest rate associated with an initial
source of funds is inaccurate. Regardless of the method of purchase,
consumers are expected to continue to rebalance their debt and asset
holdings over the LCC analysis period, based on the restrictions
consumers face in their debt payment requirements and the relative size
of the interest rates available on debts and assets. DOE estimates the
aggregate impact of this rebalancing using the historical distribution
of debts and assets.
---------------------------------------------------------------------------
\97\ The implicit discount rate is inferred from a consumer
purchase decision between two otherwise identical goods with
different first cost and operating cost. It is the interest rate
that equates the increment of first cost to the difference in net
present value of lifetime operating cost, incorporating the
influence of several factors: transaction costs; risk premiums and
response to uncertainty; time preferences; interest rates at which a
consumer is able to borrow or lend. The implicit discount rate is
not appropriate for the LCC analysis because it reflects a range of
factors that influence consumer purchase decisions, rather than the
opportunity cost of the funds that are used in purchases.
---------------------------------------------------------------------------
To establish residential discount rates for the LCC analysis, DOE
identified all relevant household debt or asset classes in order to
approximate a consumer's opportunity cost of funds related to appliance
energy cost savings. It estimated the average percentage shares of the
various types of debt and equity by household income group using data
from the Federal Reserve Board's triennial Survey of Consumer Finances
\98\ (``SCF'') starting in 1995 and ending in 2019. Using the SCF and
other sources, DOE developed a distribution of rates for each type of
debt and asset by income group to represent the rates that may apply in
the year in which amended standards would take effect. DOE assigned
each sample household a specific discount rate drawn from one of the
distributions. The average rate across all types of household debt and
equity and income groups, weighted by the shares of each type, is 4.3
percent. See chapter 8 of the direct final rule TSD for further details
on the development of consumer discount rates.
---------------------------------------------------------------------------
\98\ The Federal Reserve Board, Survey of Consumer Finances
(1995, 1998, 2001, 2004, 2007, 2010, 2013, 2016, and 2019).
Available at www.federalreserve.gov/econres/scfindex.htm.
---------------------------------------------------------------------------
8. Energy Efficiency Distribution in the No-New-Standards Case
To accurately estimate the share of consumers that would be
affected by a potential energy conservation standard at a particular
efficiency level, DOE's LCC analysis considered the projected
distribution (market shares) of product efficiencies under the no-new-
standards case (i.e., the case without amended or new energy
conservation standards).
To estimate the energy efficiency distribution of top-loading
standard-size, front-loading compact, and front-loading standard-size
RCWs for 2027 and 2028, DOE used shipments-weighted energy efficiency
ratio (``SWEER'') for 2020 as a starting point, based on information
provided by AHAM. (AHAM, No. 54 at pp. 2-3) To project the trend in
efficiency, DOE considered recent trends in DOE's RCW CCD and the
potential effect of labeling programs such as ENERGY STAR on RCWs. DOE
estimated an annual efficiency improvement of 0.4 and 0.1 percent for
top-loading standard-size and front-loading (compact and standard-size)
clothes washers, respectively. For semi-automatic clothes washers, DOE
used the CCD database to develop a product efficiency distribution
under the no-new-standards case.
The estimated market shares for the no-new-standards case for RCWs
are shown in Tables IV.16 through IV.19. See chapter 8 of the direct
final rule TSD for further information on the derivation of the
efficiency distributions.
Table IV.16--No-New-Standards Case Market Share in 2027: Top-Loading and Semi-Automatic Residential Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-loading ultra-compact Top-loading standard-size Semi-Automatic
--------------------------------------------------------------------------------------------------
Efficiency level EER (lb/ WER (lb/ EER (lb/ WER (lb/ EER (lb/ WER (lb/
kWh/ gal/ Share (%) kWh/ gal/ Share (%) kWh/ gal/ Share (%)
cycle) cycle) cycle) cycle) cycle) cycle)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline............................................. 3.79 0.29 100 3.50 0.38 61.0 1.60 0.17 21.0
1.................................................... ......... ......... ......... 3.89 0.47 5.9 2.12 0.27 71.0
2.................................................... ......... ......... ......... 4.27 0.57 27.4 2.51 0.36 8.0
3.................................................... ......... ......... ......... 4.78 0.63 4.7 ......... ......... .........
4.................................................... ......... ......... ......... 5.37 0.67 1.0 ......... ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table IV.17--No-New-Standards Case Market Share in 2027: Front-Loading Residential Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Front-loading compact Front-loading standard-size
-----------------------------------------------------------------------------------------------------------
Efficiency level EER (lb/kWh/ WER (lb/gal/ EER (lb/kWh/ WER (lb/gal/
cycle) cycle) Share (%) cycle) cycle) Share (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
DFR Baseline................................ ................ ................ ................ 4.31 0.38 0
[[Page 19062]]
NOPR Baseline............................... 4.41 0.53 0 5.02 0.64 2.0
1........................................... 4.80 0.62 38.7 5.31 0.69 5.6
2........................................... 5.02 0.71 45.8 5.52 0.77 45.1
3........................................... 5.53 0.75 14.5 5.73 0.77 38.0
4........................................... 5.97 0.80 1.0 5.97 0.85 9.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table IV.18--No-New-Standards Case Market Share in 2028: Top-Loading and Semi-Automatic Residential Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-loading ultra-compact Top-loading standard-size Semi-automatic
--------------------------------------------------------------------------------------------------
Efficiency level EER (lb/ WER (lb/ EER (lb/ WER (lb/ EER (lb/ WER (lb/
kWh/ gal/ Share (%) kWh/ gal/ Share (%) kWh/ gal/ Share (%)
cycle) cycle) cycle) cycle) cycle) cycle)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline............................................. 3.79 0.29 100 3.50 0.38 59.5 1.60 0.17 21.0
1.................................................... ......... ......... ......... 3.89 0.47 6.7 2.12 0.27 71.0
2.................................................... ......... ......... ......... 4.27 0.57 27.4 2.51 0.36 8.0
3.................................................... ......... ......... ......... 4.78 0.63 5.4 ......... ......... .........
4.................................................... ......... ......... ......... 5.37 0.67 1.1 ......... ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table IV.19--No-New-Standards Case Market Share in 2028: Front-Loading Residential Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Front-loading compact Front-loading standard-size
-----------------------------------------------------------------------------------------------------------
Efficiency level EER (lb/kWh/ WER (lb/gal/ EER (lb/kWh/ WER (lb/gal/
cycle) cycle) Share (%) cycle) cycle) Share (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
DFR Baseline................................ ................ ................ ................ 4.31 0.38 0.0
NOPR Baseline............................... 4.41 0.53 0.0 5.02 0.64 2.0
1........................................... 4.80 0.62 38.8 5.31 0.69 5.4
2........................................... 5.02 0.71 45.2 5.52 0.77 45.0
3........................................... 5.53 0.75 14.9 5.73 0.77 38.4
4........................................... 5.97 0.80 1.1 5.97 0.85 9.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
The LCC Monte Carlo simulations draw from the efficiency
distributions and randomly assign an efficiency to the RCW purchased by
each sample household in the no-new-standards case. The resulting
percent shares within the sample match the market shares in the
efficiency distributions.
9. Payback Period Analysis
The payback period is the amount of time (expressed in years) it
takes the consumer to recover the additional installed cost of more-
efficient products, compared to baseline products, through energy cost
savings. Payback periods that exceed the life of the product mean that
the increased total installed cost is not recovered in reduced
operating expenses.
The inputs to the PBP calculation for each efficiency level are the
change in total installed cost of the product and the change in the
first-year annual operating expenditures relative to the baseline. DOE
refers to this as a ``simple PBP'' because it does not consider changes
over time in operating cost savings. The PBP calculation uses the same
inputs as the LCC analysis when deriving first-year operating costs.
As noted previously, EPCA establishes a rebuttable presumption that
a standard is economically justified if the Secretary finds that the
additional cost to the consumer of purchasing a product complying with
an energy conservation standard level will be less than three times the
value of the first year's energy savings resulting from the standard,
as calculated under the applicable test procedure. (42 U.S.C.
6295(o)(2)(B)(iii)) For each considered efficiency level, DOE
determined the value of the first year's energy savings by calculating
the energy savings in accordance with the applicable DOE test
procedure, and multiplying those savings by the average energy price
projection for the year in which compliance with the amended standards
would be required.
An anonymous commenter expressed concerns regarding the LCC and PBP
associated with the proposed rule change to increase energy efficiency
of RCWs. (Anonymous, No. 391 at p. 1) The anonymous commenter
questioned the time it would take for the benefits to outweigh the
costs, as the proposed rule suggests net positive outcomes over a
period of less than the average product lifespan of 13 years, but also
notes the 30-year timeframe for the cost-benefit analysis in asking how
long until the benefits will be recognizable. The anonymous commented
sought clarity on when the benefits will become noticeable and raises
logistical concerns about the implementation of the rule change. (Id.)
As described in section V.B.1.a of this document (see Tables V.4
through V.12), the simple payback period for top-loading and front-
loading standard-size RCWs is 6.2 years and 1.4 years, respectively,
which is less than half of estimated lifetime, i.e., 13.4 years. The
30-year timeframe used to calculate cumulative operating costs in the
LCC analysis, is determined based on product lifetimes with Weibull
probability distributions.
DOE notes that the estimated simple payback period can be subject
to change depending on several factors, such as households' RCW usage
and utility bill rates, including energy and water price rates. In
general, if a household runs their RCW more frequently at higher energy
and water rates, it will result in a shorter payback period and vice
versa.
[[Page 19063]]
G. Shipments Analysis
DOE uses projections of annual product shipments to calculate the
national impacts of potential amended or new energy conservation
standards on energy use, NPV, and future manufacturer cash flows.\99\
The shipments model takes an accounting approach, tracking market
shares of each product class and the vintage of units in the stock.
Stock accounting uses product shipments as inputs to estimate the age
distribution of in-service product stocks for all years. The age
distribution of in-service product stocks is a key input to
calculations of both the NES and NPV, because operating costs for any
year depend on the age distribution of the stock.
---------------------------------------------------------------------------
\99\ DOE uses data on manufacturer shipments as a proxy for
national sales, as aggregate data on sales are lacking. In general,
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------
To project RCW shipments under the no-new-standards case, DOE
utilized historical shipments data from AHAM. DOE estimated RCW
shipments by projecting shipments into two market segments: (1)
replacement of existing RCWs; (2) new housing.
To project RCW replacement shipments, DOE developed retirement
functions from RCW lifetime estimates and applied them to the existing
products in the housing stock, which are tracked by vintage. To
estimate shipments to new housing units, DOE used projections of new
housing starts coupled with RCWs' saturation data. In other words, to
project the shipments for new housing units for any given year, DOE
multiplied the housing projections by the estimated saturation of RCWs
for new housing units. For new housing completions and mobile home
placements, DOE used recorded data through 2022,\100\ and adopted the
projections from AEO2023 for 2023-2050. DOE used the data contained in
the 2020 RECS to characterize ownership of RCWs in households across
various housing types, including multi-family housing.
---------------------------------------------------------------------------
\100\ U.S. Census. Characteristics of New Housing. Available at
www.census.gov/construction/chars/.
---------------------------------------------------------------------------
DOE aggregated the above two market segments for any given year
during the analysis period \101\ (2027-2056) and divided total RCW
shipments into its five product classes. For this direct final rule,
DOE estimated the market share between top-loading and front-loading
RCWs based on shipments trends and forecast data by clothes washer
loading type provided by AHAM between 2010 and 2024.\102\ To project
market share between top-loading and front-loading RCWs after 2024, the
2012-2024 average is used for all years. DOE estimated market share for
top-loading and front-loading RCWs would remain at 73.5 percent and
26.5 percent, respectively. DOE then disaggregated the top-loading RCW
market share into three product classes (i.e., ultra-compact, standard-
size, and semi-automatic) and front-loading into two product classes
(i.e., compact and standard-size). In addition, DOE assumed the annual
growth rate for semi-automatic and top-loading ultra-compact clothes
washers would be at 0.2 percent. Table IV.20 shows the estimated market
share and shipments for each product class.
---------------------------------------------------------------------------
\101\ The analysis period for TSL 2 (the Recommended TSL) is
2028-2057.
\102\ AHAM, 2022 AHAM Data Trends & Forecasts, August 10, 2022.
Table IV.20--Market Share and Shipments by Product Class in 2027 and 2028
----------------------------------------------------------------------------------------------------------------
Market share in
Product class 2027 and 2028 Shipments in 2027 Shipments in 2028
(%) (million) (million)
----------------------------------------------------------------------------------------------------------------
Top-Loading, Ultra-Compact............................. 0.6 0.06 0.07
Top-Loading, Standard-Size............................. 71.3 7.73 7.83
Front-Loading, Compact................................. 1.6 0.18 0.18
Front-Loading, Standard-Size........................... 24.8 2.69 2.73
Semi-Automatic......................................... 1.6 0.17 0.17
--------------------------------------------------------
Total.............................................. 100 10.84 10.98
----------------------------------------------------------------------------------------------------------------
To project RCW shipments under a standards case, DOE used a price
elasticity parameter, which relates the incremental total installed
cost to total RCW shipments, and an efficiency elasticity parameter,
which relates the change in the operating cost to RCW shipments. Both
types of elasticity relate changes in demand to changes in the
corresponding characteristic (price or efficiency). A regression
analysis estimated these terms separately from each other and found
that the price elasticity of demand for several appliances is on
average -0.45.\103\ Thus, for example, a price increase of 10 percent
would result in a shipments decrease of 4.5 percent, all other factors
held constant. The same regression analysis found that the efficiency
elasticity is estimated to be on average 0.2 (i.e., a 10-percent
efficiency improvement, equivalent to a 10-percent decrease in
operating costs, would result in a shipments increase of 2 percent, all
else being equal).
---------------------------------------------------------------------------
\103\ Fujita, S., Estimating Price Elasticity using Market-Level
Appliance Data. LBNL-188289 (August 2015). Available at eta-publications.lbl.gov/sites/default/files/lbnl-188289.pdf.
---------------------------------------------------------------------------
DOE assumed when market impact occurs (i.e., when shipments drop
under a standards case), the affected consumers would either repair
their product or purchase a used RCW rather than a new one. In the
repair scenario, the model assumes that the product's life is extended
by approximately 5 years. In the used product scenario, the model
assumes the remaining average lifetime for a used RCW is 7 years.
Therefore, this market impact effectively influences the decision
between repairing or replacing the product, as well as the decision
between purchasing a used clothes washer or a new one.
For this direct final rule, DOE considered comments it had received
regarding its shipments analysis for the March 2023 NOPR. The approach
used for this direct final rule is largely the same as the approach DOE
had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, The CA IOUs commented that they
agree that the relative market share for top-loading RCWs from 2012 on
has remained reasonably stagnant, but they also noted that the relative
market share for top-loading RCWs was more fluid before 2012. (CA IOUs,
No. 460 at p. 7) The CA IOUs stated that relative market share
movements from front-loading to top-loading RCWs correlate with DOE
compliance dates for amended energy conservation standards. (Id.) The
CA IOUs noted that the standard levels
[[Page 19064]]
proposed in the March 2023 NOPR are the first significant change in
relative installed cost between top-loading and front-loading RCWs
since 2007, and based on prior trends, the CA IOUs expect the front-
loading RCW relative market share to increase. (Id. at p. 8) The CA
IOUs recommended that DOE should amend the top-loading and front-
loading market shares to reflect some expected shift from top-loading
to front-loading RCWs based on the correlation of first-cost to market
share relative to past energy conservation standard compliance dates.
(Id.)
Electrolux Home Products, Inc. (``Electrolux'') commented that data
from the September 2021 TSD \104\ showed a projected market share loss
for front-loading RCWs due to the standard at EL 3 proposed in the
March 2023 NOPR. (Electrolux, No. 449 at p. 2) Electrolux further
commented that these market trends between top-loading and front-
loading RCWs should play a more significant role in the energy analysis
due to the extensive energy and water savings that can be realized by
consumers transitioning from top-loading RCWs to more efficient front-
loading RCWs. (Id.) Electrolux requested that DOE set standards for
front-loading RCWs at a better value than proposed in the March 2023
NOPR in order to reduce the expanding energy gap with top-loading RCWs.
(Id.)
---------------------------------------------------------------------------
\104\ Available at www.regulations.gov/document/EERE-2017-BT-STD-0014-0030.
---------------------------------------------------------------------------
As stated in the March 2023 NOPR, DOE acknowledges the challenge of
lacking historical retail pricing, sales data, and energy consumption
data for top-loading and front-loading RCWs. These data are crucial for
developing a regression model that accurately projects the market share
between the two loading types of RCWs. In this direct final rule, DOE
is not adopting the standards level proposed in the March 2023 NOPR.
Instead, DOE is adopting a standards level that is one level below the
efficiency level proposed in the March 2023 NOPR level for top-loading
standard-size RCWs. Under the adopted standards, the incremental
equipment price from the baseline model to an ENERGY STAR-rated top-
loading standard-size RCW is $146, while the price difference between
the adopted standard level top-loading RCW and the adopted standard
level front-loading RCW is $227. Therefore, DOE does not expect that
the adopted standards will drive consumers to shift from the top-
loading to the front-loading RCW market because front-loading RCWs will
continue to be more expensive. In line with the approach taken in the
March 2023 NOPR, DOE assumed a frozen scenario for market shifting
(i.e., no market shifting) under the standards case in this direct
final rule. 88 FR 13520, 13571.
See chapter 9 of the direct final rule TSD for details.
H. National Impact Analysis
The NIA assesses the national energy savings (``NES''), national
water savings (``NWS''), and the NPV from a national perspective of
total consumer \105\ costs and savings that would be expected to result
from new or amended standards at specific efficiency levels.\106\ DOE
calculates the NES, NWS, and NPV for the potential standard levels
considered based on projections of annual product shipments, along with
the annual energy and water consumption and total installed cost data
from the energy and water use and LCC analyses. For the present
analysis, DOE projected the energy and water savings, operating cost
savings, product costs, and NPV of consumer benefits over the lifetime
of RCWs sold from 2027 through 2056 for all TSLs other than 2028
through 2057 for TSL 2 (the Recommended TSL detailed in the Joint
Agreement).
---------------------------------------------------------------------------
\105\ ``Consumer'' in this context refers to consumers of the
product being regulated.
\106\ The NIA accounts for impacts in the 50 States and U.S.
territories.
---------------------------------------------------------------------------
DOE evaluates the impacts of new or amended standards by comparing
a case without such standards with standards-case projections. The no-
new-standards case characterizes energy use and consumer costs for each
product class in the absence of new or amended energy conservation
standards. For this projection, DOE considers historical trends in
efficiency and various forces that are likely to affect the mix of
efficiencies over time. DOE compares the no-new-standards case with
projections characterizing the market for each product class if DOE
adopted new or amended standards at specific energy efficiency levels
(i.e., the TSLs or standards cases) for that class. For the standards
cases, DOE considers how a given standard would likely affect the
market shares of products with efficiencies greater than the standard.
DOE uses a spreadsheet model to calculate the energy savings and
the national consumer costs and savings from each TSL. Interested
parties can review DOE's analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses typical values
(as opposed to probability distributions) as inputs.
Table IV.21 summarizes the inputs and methods DOE used for the NIA
analysis for the direct final rule. Discussion of these inputs and
methods follows the table. See chapter 10 of the direct final rule TSD
for further details.
Table IV.21--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments......................... Annual shipments from shipments
model.
Compliance Date of Standard....... TSL 1, TSL 3, and TSL 4: 2027
TSL 2 (Recommended TSL): 2028.
Efficiency Trends................. No-new-standards case: Annual
shipments-weighted efficiency
improvement of 0.4 percent for top-
loading standard-size and 0.1
percent for both front-loading
compact and standard-size clothes
washers.
Standard cases: ``Roll up''
equipment to meet potential
efficiency level.
Annual Energy and Water Annual weighted-average values are a
Consumption per Unit. function of energy use at each TSL.
Total Installed Cost per Unit..... Annual weighted-average values are a
function of cost at each TSL.
Incorporates projection of future
product prices based on historical
data.
Annual Energy Cost per Unit....... Annual weighted-average values as a
function of the annual energy and
water consumption per unit and
energy prices.
Repair and Maintenance Cost per Annual values change between non-
Unit. ENERGY STAR and ENERGY STAR
efficiency levels.
Energy and Water Price Trends..... AEO2023 projections (to 2050) and
constant value based on average
between 2046-2050 thereafter.
Historical PPI extrapolated
projection (to 2050) and constant
value based on average between 2046-
2050 thereafter.
[[Page 19065]]
Energy Site-to-Primary and FFC A time-series conversion factor
Conversion. based on AEO2023.
Discount Rate..................... 3 percent and 7 percent.
Present Year...................... 2024.
------------------------------------------------------------------------
1. Product Efficiency Trends
A key component of the NIA is the trend in energy efficiency
projected for the no-new-standards case and each of the standards
cases. Section IV.F.8 of this document describes how DOE developed an
energy efficiency distribution for the no-new-standards case, which
yields a shipment-weighted average efficiency, for each of the
considered product classes for the year of anticipated compliance with
an amended standard. To project the trend in efficiency absent amended
standards for RCWs over the entire shipments projection period, DOE
considered recent trends in its CCD data and the potential effect of
programs such as ENERGY STAR. As discussed in section IV.F.8 of this
document, DOE estimated an annual efficiency improvement of 0.4 percent
and 0.1 percent for top-loading standard-size and front-loading
(compact and standard-size) RCWs, respectively.
For the standards cases, DOE used a ``roll-up'' scenario to
establish the shipment-weighted efficiency for the year that standards
are assumed to become effective (2027 or 2028). In this scenario, the
market shares of products in the no-new-standards case that do not meet
the standard under consideration would ``roll up'' to meet the new
standard level, and the market share of products above the standard
would remain unchanged. See chapter 10 of the direct final rule TSD for
details.
2. National Energy and Water Savings
The national energy and water savings analysis involves a
comparison of national energy and water consumption of the considered
products between each potential standards case (``TSL'') and the case
with no amended energy conservation standards. DOE calculated the
national energy and water consumption by multiplying the number of
units (stock) of each product (by vintage or age) by the unit energy
and water consumption (also by vintage). DOE calculated annual NES and
NWS based on the difference in national energy and water consumption
for the no-new-standards case and for each higher efficiency standard
case. DOE estimated energy consumption and savings based on site energy
and converted the electricity consumption and savings to primary energy
(i.e., the energy consumed by power plants to generate site
electricity) using annual conversion factors derived from AEO2023.
Cumulative energy and water savings are the sum of the NES and NWS for
each year over the timeframe of the analysis.
In 2011, in response to the recommendations of a committee on
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy
Efficiency Standards'' appointed by the National Academy of Sciences,
DOE announced its intention to use FFC measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the
approaches discussed in the August 18, 2011 notification, DOE published
a statement of amended policy in which DOE explained its determination
that EIA's National Energy Modeling System (``NEMS'') is the most
appropriate tool for its FFC analysis and its intention to use NEMS for
that purpose. 77 FR 49701 (Aug. 17, 2012). NEMS is a public domain,
multi-sector, partial equilibrium model of the U.S. energy sector \107\
that EIA uses to prepare its Annual Energy Outlook. The FFC factors
incorporate losses in production and delivery in the case of natural
gas (including fugitive emissions) and additional energy used to
produce and deliver the various fuels used by power plants. The
approach used for deriving FFC measures of energy use and emissions is
described in appendix 10B and 13A of the direct final rule TSD.
---------------------------------------------------------------------------
\107\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview 2009, DOE/EIA-0581(2009), October 2009.
Available at www.eia.gov/forecasts/aeo/index.cfm (last accessed June
24, 2023).
---------------------------------------------------------------------------
Use of higher-efficiency products is sometimes associated with a
direct rebound effect, which refers to an increase in utilization of
the product due to the increase in efficiency.
For this direct final rule, DOE considered comments it had received
in response to the March 2023 NOPR regarding potential rebound effects.
In response to the March 2023 NOPR, AHAM commented that changes to
water level requirements would cause perceptions of inadequate cleaning
performance and lead consumers to take actions (e.g., using alternative
wash options with extra water or re-washing clothes) that cause real
energy performance to diverge from DOE's projections. AHAM suggested
that DOE include such effects in the analysis of total energy and water
savings by adjusting upwards over time the average per unit energy and
water consumption. (AHAM, No. 464 at pp. 2-3) AHAM stated that although
there may not yet be data demonstrating a rebound effect because
current standards have not yet caused such an effect, standards that
are excessively stringent--such as those DOE proposed in the March 2023
NOPR--could cause a rebound effect. (Id. at p. 24)
Whirlpool commented that the proposed standards would cause
consumers to alter their purchasing behavior due to the perceived loss
of utility, poor performance, and increased up-front cost of RCWs
meeting the proposed standards. (Whirlpool, No. 462 at p. 5)
Specifically, Whirlpool commented that consumers may delay purchases
and repair older, less efficient appliances past their normal, expected
life. (Id.) Whirlpool commented that this shift in behavior will likely
have the opposite impact on energy use that DOE anticipates, as
consumers will continue to use their older and less efficient
appliances instead of purchasing newer, more efficient models. (Id.)
Whirlpool commented that DOE overestimated the total energy and water
savings from the proposed standard because consumers may compensate for
decreased utility and functionality by opting for more energy- and
water-intensive washing options, washing loads multiple times to make
up for loss in performance or wash clothes multiple times to recover
lost performance. (Id. at p. 13)
CEI noted that consumer behavior resulting from performance-related
deficiencies may well lead to increased water use for some consumers.
(CEI, No. 454 at p. 5)
The AGs of TN et al. commented that DOE's dismissal of Whirlpool's
observation that ``decreasing water
[[Page 19066]]
levels and wash temperatures would negatively impact consumer
perceptions that their clothes washers are working correctly'' and
DOE's defense that manufacturers had not provided quantitative data
regarding ``human reactions'' is unjustified and that DOE should
attempt the task of modeling consumer reactions. The AGs of TN et al.
argued that DOE ignored the comment and that in doing so, DOE
``entirely fail[s] to consider an important aspect of the problem.''
(AGs of TN et al., No. 438 at p. 6 (citing Motor Vehicle Mfrs. Ass'n of
U.S., Inc. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983))
DOE also received comments from over 50 individual commenters
expressing concern that amended standards could lead to more energy-
and water-intensive usage of RCWs, thereby counteracting any energy or
water savings resulting from amended standards.
As discussed further in section V.B.4.a of this document, in
response to the March 2023 NOPR, AHAM and manufacturers presented data
and information indicating that there are uncertainties regarding
potential impacts on certain aspects of product performance at the
standard levels proposed in the March 2023 NOPR (i.e., TSL 3) that
could lead consumers to opt for more energy- and water-intensive
washing, and that changes to consumer usage patterns to mitigate such
impacts could jeopardize the energy and water savings that would be
achieved at the proposed efficiency levels.
DOE notes that in response to the March 2023 NOPR, manufacturers
did not provide any specific data nor express any specific concerns
regarding clothes washer performance at TSL 2 (i.e., the Recommended
TSL corresponding to the standards level adopted in this direct final
rule). DOE's own data demonstrates no negative impact at TSL 2 on the
cleaning performance, wash temperature, and mechanical action scores of
RCWs, indicating there would be no loss of consumer utility at TSL 2.
Furthermore, as previously discussed, on February 14, 2024, DOE
received a second joint statement from the same group of stakeholders
that submitted the Joint Agreement (including AHAM, and Whirlpool as a
member) in which the signatories reaffirmed the standards recommended
in the Joint Agreement.\108\ In particular, the letter states that the
stakeholders do not anticipate the recommended standards will
negatively affect features or performance, and that DOE's test data
shows, and industry experience agrees, that the recommended standard
levels for RCWs can maintain good cleaning performance and do not
preclude the ability to provide high wash temperatures. For further
discussion of clothes washer performance as it relates to amended
standards, see section V.B.4.a of this document.
---------------------------------------------------------------------------
\108\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0509.
---------------------------------------------------------------------------
DOE acknowledges that this conclusion is contrary to its
assumptions in the final rule that it published on December 16, 2020
(``December 2020 Final Rule''). 85 FR 81359. There, DOE assumed that
consumers might need to re-run their clothes washers or clothes dryers
through multiple cycles ``to adequately clean or dry their clothing.''
Id. at 85 FR 81365. In this rulemaking, DOE has found no evidence
suggesting that consumers are running their RCW multiple times at TSL 2
(i.e., the Recommended TSL), which corresponds to the current ENERGY
STAR efficiency level for both top-loading and front-loading standard-
size RCW product classes. This is supported by data presented in
section IV.E of this document and comments from Water Demand Management
(``WaterDM''). (WaterDM, No. 508 at p. 3) According to the historical
RECS data, average consumer usage of RCWs has steadily declined from
292 cycles per year per RCW in the 2005 RECS to 210 cycles per year per
RCW in the 2020 RECS, while the average household size has remained
essentially unchanged during the same period (average of 3 household
members). This indicates a significant downward trend in the average
number of cycles run on each RCW over the past 15 years, despite the
implementation of RCW energy conservation standards. These include the
first standard, Tier 1, introduced in 2004, followed by Tier 2 in 2007,
and the current amended standard, Tier 1 in 2015 and Tier 2 in 2018.
Additionally, data from WaterDM corroborates this trend, showing a
decline in the average number of clothes washer loads per household per
day from 0.81 in 1999 to 0.71 in 2023, despite the decrease in water
use per load from 41 gallons to 25 gallons and increase in capacity of
clothes washer during the same period. The amount of water used per
pound of clothes washed has decreased during this time and yet there is
no evidence that cleaning performance was negatively impacted (through
the usage of multiple cycles to clean a given load of clothes). These
data indicate that amended energy conservation standards have not
resulted in consumers re-running loads of laundry purportedly due to
reduced cleaning performance.
Given that there is no evidence of any previous RCW standard
increasing RCW cycles per year, and in fact, instead cycles per year
have decreased over time through multiple standards, DOE determines
that a standard at TSL 2 would not be expected to lead consumers to opt
for more energy- and water-intensive washing.
To better understand and quantify the uncertainties of any impacts
of potential standards at TSL 3 and TSL 4 on consumer behavior, for
this direct final rule, DOE has conducted a sensitivity analysis of
possible increased use of the ``deep fill'' option on top-loading
standard-size RCWs at CEE Tier 1 (TSL 3) and max-tech (TSL 4), which
are more stringent TSLs than being adopted in this direct final rule.
Specifically, DOE considered the possibility that consumers might opt
for more energy- and water-intensive washing using the deep fill option
available on their top-loading RCWs. DOE assumed that in this case
consumers would choose to wash their loads with more water, resulting
in less energy and water savings compared to the standard projections.
The sensitivity analysis compares the energy and water savings, as well
as the NPV, between scenarios with and without the deep fill usage
option, quantifying the impact of altered consumer behavior on the
analytical results. The analysis does not model a change for product
classes lacking a deep fill option, like front-loading RCWs, nor does
it consider aspects of consumer behavior unrelated to usage intensity,
such as the delayed replacement of older clothes washers.
The overall FFC national energy savings decrease by approximately 2
percent and national water savings decrease by less than 2 percent,
compared to the default case. For details on the NIA sensitivity
analysis results, see appendix 10E of the direct final rule TSD.
3. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits
experienced by consumers are (1) total annual installed cost, (2) total
annual operating costs (energy and water costs and repair and
maintenance costs), and (3) a discount factor to calculate the present
value of costs and savings. DOE calculates net savings each year as the
difference between the no-new-standards case and each standards case in
terms of total savings in operating costs versus total increases in
installed
[[Page 19067]]
costs. DOE calculates operating cost savings over the lifetime of each
product shipped during the projection period.
As discussed in section IV.F.1 of this document, DOE developed RCW
price trends based on historical PPI data. DOE applied the same trends
to project prices for each product class at each considered efficiency
level. By 2056, which is the end date of the projection period, the
average RCW price is projected to drop 17.2 percent relative to 2022.
Non-energy efficiency related features are excluded from the
manufacturer production cost, therefore, the decline in price does not
include any price adders associated with non-energy efficiency related
features. DOE is not aware if such data exists and notes that the
projected drop in price may not reflect real market prices. DOE's
projection of product prices is described in appendix 10C of the direct
final rule TSD.
To evaluate the effect of uncertainty regarding the price trend
estimates, DOE investigated the impact of different product price
projections on the consumer NPV for the considered TSLs for RCWs. In
addition to the default price trend, DOE considered two product price
sensitivity cases: (1) a high price-decline case based on PPI data for
the period 1980-2022 and (2) a constant price trend at the 2022 value.
Compared to the default price trend, which exhibits an annual price
decline rate of 0.58 percent, the high price-decline case exhibits an
annual decline rate of 1.15 percent, and the constant price case
exhibits no annual decline. For the Recommended TSL under the high-
price decline case, consumer NPV increases by 10 percent and 14 percent
given discount rates of 3 percent and 7 percent, respectively. Under
the constant price case, consumer NPV decreases by 12 percent and 16
percent given discount rates of 3 percent and 7 percent, respectively.
The derivation of these price trends and the results of these
sensitivity cases are described in appendix 10C of the direct final
rule TSD.
The energy and water cost savings are calculated using the
estimated energy and water savings in each year and the projected price
of the appropriate form of energy and water. To estimate energy prices
in future years, DOE multiplied the average regional energy prices by
the projection of annual national-average residential energy price
changes in the Reference case from AEO2023, which has an end year of
2050. To estimate price trends after 2050, the 2046-2050 average was
used for all years. To estimate water prices in future years, DOE
multiplied the average national water prices by the projection of
annual national-average residential water price changes in the
extrapolated future water price trend, which is based on the historical
water price index from 1988 to 2022. As part of the NIA, DOE also
analyzed scenarios that used inputs from variants of the AEO2023
Reference case that have lower and higher economic growth. Those cases
have lower and higher energy price trends compared to the Reference
case. NIA results based on these cases are presented in appendix 10C of
the direct final rule TSD.
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. For this
direct final rule, DOE estimated the NPV of consumer benefits using
both a 3-percent and a 7-percent real discount rate. DOE uses these
discount rates in accordance with guidance provided by the Office of
Management and Budget (``OMB'') to Federal agencies on the development
of regulatory analysis.\109\ The discount rates for the determination
of NPV are in contrast to the discount rates used in the LCC analysis,
which are designed to reflect a consumer's perspective. The 7-percent
real value is an estimate of the average before-tax rate of return to
private capital in the U.S. economy. The 3-percent real value
represents the ``social rate of time preference,'' which is the rate at
which society discounts future consumption flows to their present
value.
---------------------------------------------------------------------------
\109\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at
www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf (last accessed June 24, 2023).
---------------------------------------------------------------------------
I. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended energy
conservation standards on consumers, DOE evaluates the impact on
identifiable subgroups of consumers that may be disproportionately
affected by a new or amended national standard. The purpose of a
subgroup analysis is to determine the extent of any such
disproportional impacts. DOE evaluates impacts on particular subgroups
of consumers by analyzing the LCC impacts and PBP for those particular
consumers from alternative standard levels.
For this direct final rule, DOE analyzed the impacts of the
considered standard levels on three subgroups: (1) low-income
households, (2) senior-only households, and (3) well-water households.
The analysis used subsets of the 2020 RECS sample composed of
households that meet the criteria for the considered subgroups. DOE
used the LCC and PBP spreadsheet model to estimate the impacts of the
considered efficiency levels on these subgroups. Chapter 11 in the
direct final rule TSD describes the consumer subgroup analysis. The
sections below discuss the individual subgroups, and additional details
are found in chapter 11 of the direct final rule TSD.
1. Low-Income Households
Low-income households are significantly more likely to be renters
or to live in subsidized housing units, compared to households that are
not low-income. In these cases, the landlord purchases the equipment
and may pay the energy bill as well.
For this direct final rule analysis, DOE divided low-income
households into three sub-subgroups: (1) renters who pay energy bill;
(2) renters who do not pay energy bill; and (3) homeowners. The 2020
RECS includes data on whether a household pays for the energy bill,
allowing DOE to categorize households in the analysis narrowly,\110\
excluding any costs or benefits that are accrued by either a landlord
or subsidized housing agency. This allows DOE to determine in a more
accurate manner whether low-income households are disproportionately
affected by an amended energy conservation standard. Table IV.22 shows
the distribution of low-income household clothes washer users with
respect to whether they rent or own and whether they pay the energy
bill.
---------------------------------------------------------------------------
\110\ The energy bill includes fuel type of electricity, natural
gas, or propane consumed by a household.
[[Page 19068]]
Table IV.22--Characterization of Low-Income Households in the Sample for Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percentage of low-income sample
-----------------------------------------------------------------
Semi-automatic, Impact of higher Impact of first cost
Type of household * Top-loading, Front-loading, top-loading, Front-loading, efficiency on energy increase
standard- size standard- size ultra-compact compact (%) bill
(%) (%) (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Renters (Pay for Energy Bill) **..... 40 43 50 57 Full/Partial savings... None.***
Renters (Do Not Pay for Energy Bill) 4 4 5 8 None................... None.***
**.
Owners............................... 56 53 45 36 Full/Partial savings... Full.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* RECS 2020 lists three categories: (1) Owned or being bought by someone in your household (here classified as ``Owners'' in this table); (2) Rented
(here classified as ``Renters'' in this table); (3) Occupied without payment of rent (also classified as ``Renters'' in this table). Renters include
occupants in subsidized housing including public housing, subsidized housing in private properties, and other households that do not pay rent. RECS
2020 does not distinguish homes in subsidized or public housing.
** RECS 2020 lists four categories for each of the fuels used by a household: (1) Household is responsible for paying for all used in this home; (2) All
used in this home is included in the rent or condo fee; (3) Some is paid by the household, some is included in the rent or condo fee; and 4) Paid for
some other way. ``Do Not Pay for Energy Bill'' includes only category (2). Partial energy bill savings would occur in cases of category (3).
*** Low-income renters typically do not purchase a clothes washer. Therefore, it is unclear if the renters would be asked to pay the full or partial of
the total installed cost. As a result, DOE estimated there would be no impact of first cost increase for low-income renters and occupants in public
housing and other households that do not pay rent.
For this direct final rule, DOE considered comments it had received
regarding its consideration of low-income households in the March 2023
NOPR. DOE notes that although several of the comments discussed below
are from AHAM, as previously discussed, on February 14, 2024, DOE
received a second joint statement from the same group of stakeholders
that submitted the Joint Agreement (including AHAM) in which the
signatories reaffirmed the standards recommended in the Joint
Agreement.\111\ In particular, the letter states that ``the recommended
standards represent the maximum levels of efficiency that are
technologically feasible and economically justified'' (emphasis added).
The approach used for this direct final rule is largely the same as the
approach DOE had used for the March 2023 NOPR analysis.
---------------------------------------------------------------------------
\111\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0509.
---------------------------------------------------------------------------
In response to the March 2023 NOPR, AHAM stated that an updated
energy conservation standard should be aligned with DOE's analytical
principles and Executive Order 13985, which requires agencies to assess
whether its programs and policies perpetuate systemic barriers to
opportunities and benefits for people in underserved communities. AHAM
comment that it is inappropriate to concentrate the negative impacts of
the standard on low-income and traditionally underserved communities
and that these consumers cannot pay more for more efficient RCWs and
assume they will get a payback over time on their electric bill. (AHAM,
No. 464 at pp. 11-12) AHAM commented the highest savings a renter would
receive on their monthly bill under the standards proposed in the March
2023 NOPR for top-loading standard-size RCWs, according to DOE's
analysis, would be 82 cents. (Id. at p. 32) AHAM further commented that
the increased upfront costs attributable to the standards proposed in
the March 2023 NOPR are high enough that they will likely be noticed by
a landlord or a builder and, based on the comments by the associations
representing those stakeholders, AHAM stated that those costs are
likely to be passed onto renters, offsetting any savings. (Id. at p.
33)
Whirlpool commented that many low-income households are renters and
that DOE has no evidence for its assumption that renters will benefit
from operational savings with no cost impacts. (Whirlpool, No. 462 at
p. 6) Whirlpool stated that landlords pass along their costs to
consumers to the extent they are able, or elect to delay their purchase
of a new clothes washer. (Id. at pp. 6-7) Whirlpool commented that DOE
must account for the impact of increased product costs on rental costs
for consumers. (Id. at p. 7)
CEI commented that the March 2023 NOPR discussion of consumer sub-
groups misses the possibility of adverse impacts on low-income
households. (CEI, No. 454 at p. 5) CEI commented that landlords will
not absorb the higher purchase price of compliant RCWs, but instead
will include the cost in rental rates, harming low-income renters.
(Id.)
According to the RECS clothes washer sample, around 47 percent of
low-income households that have a clothes washer are renters. In most
cases, the property owner would purchase a new clothes washer. While
the owner might seek to pass on some of the cost in the rent, the
ability to do so is constrained to some extent by lease agreements that
set rents for a specific period and larger market forces that influence
rent levels in particular locations. In such circumstances, renters who
pay the utility bill would see a significant net benefit from a higher-
efficiency RCW over the product lifetime, and this is seen in the
results of DOE's analysis (see chapter 11 of the direct final rule
TSD). DOE notes that there continues to be a lack of data to
corroborate the notion that landlords pass on some, or all, of
increased appliance costs to tenants. However, for this direct final
rule, DOE implemented a scenario assuming that landlords would pass
some of the incremental RCW costs to renters in the LCC. The results
indicate that this scenario would not impact DOE's decision on amended
standards. For details of the sensitivity results, see appendix 11A of
the direct final rule TSD.
AHAM commented that DOE has not established that there is a
significant proportion of split incentive issues between tenants and
landlords. (AHAM, No. 464 at p. 26) AHAM commented that continuing to
assert the presence of a split incentive situation without any
supporting data is arbitrary and capricious stating that no states
require landlords to provide clothes washers and a significant portion
of rental housing would have to have clothes washers provided by
landlords, which DOE has not established. (Id.) AHAM stated that the
maximum potential universe of low-income households where a split
incentive might exist is a small fraction of all low-income households.
(Id.) AHAM stated that a split incentive may exist in only a small
fraction of low-income households, noting that using 2020 RECS, only 30
[[Page 19069]]
percent of low-income households with clothes washers and who pay their
utilities are renters. (Id. at p. 26) AHAM noted that only 13 percent
of those households live in housing units with two or more units and
eight percent live in buildings with five or more units. (Id.) AHAM
further noted that when low-income households live in units where the
landlord provides clothes washers, they are most likely to be in multi-
family buildings, and most likely in apartment buildings with five or
more units because anecdotal experience is that clothes washers are
rarely provided in single family rental units. (Id. at p. 27) AHAM
concluded that the maximum percentage of low-income households with
landlord supplied clothes washers is less than 10 percent of all low-
income households. (Id.)
CEI commented that DOE overestimated the percentage of low-income
households who are renters rather than homeowners. (CEI, No. 454 at p.
5)
The CA IOUs supported DOE's decision to divide the low-income
subgroup into renters and non-renters. (CA IOUs, No. 460 at p. 6) The
CA IOUs noted that renters have a lower share of ENERGY STAR appliances
than non-renters, partially due to the split incentive market failure
where landlords are responsible for purchasing major home appliances
while renters are responsible for paying utility bills. (Id.)
The existence of a split incentive across a substantial number of
U.S. households, in which a tenant pays for the cost of electricity
while the building owner furnishes appliances, has been identified
through a number of studies of residential appliance and equipment use
broadly, and for clothes washers in low-income settings in specific.
Building from early work including Jaffe and Stavins (1994),\112\
Murtishaw and Sathaye (2006) \113\ discussed the presence of landlord-
tenant split incentives (i.e., the ``principal-agent problem'') in the
context of refrigeration, water heating, space heating, and lighting in
rental housing. While the study did not focus on the low-income
household, they estimated that 35 percent of total residential site
energy use is subject to split incentives based on these four products
alone. In the specific context of clothes washers, Spurlock and Fujita
(2022) \114\ estimated that while clothes washers are more common for
households above the poverty line, the majority of households at or
below the threshold have a clothes washer in their home; 87 percent of
low-income individuals who rented their homes were found to pay the
electricity bill resulting from their energy use, such that they were
likely subject to a scenario in which their landlord purchased the
appliance, but they paid the operating costs. Spurlock and Fujita
(2022), Houde and Spurlock (2016),\115\ and citations therein (e.g.,
Davis 2012) \116\ also further elaborated on split incentives in rental
housing and their association with generally lower efficiency among the
appliances used by renters.
---------------------------------------------------------------------------
\112\ A.B. Jaffe and R.N. Stavins (1994) The energy-efficiency
gap What does it mean?
Energy Policy, 22 (10) 804-810, available at doi.org/10.1016/0301-4215(94)90138-4.
\113\ Murtishaw, S., & Sathaye, J. (2006). Quantifying the
Effect of the Principal-Agent Problem on US Residential Energy Use.
Lawrence Berkeley National Laboratory. Available at
escholarship.org/uc/item/6f14t11t.
\114\ C.A. Spurlock and K.S. Fujita (2022), Equity implications
of market structure and appliance energy efficiency regulation,
Energy Policy, 165 (112943), available at doi.org/10.1016/j.enpol.2022.112943.
\115\ S. Houde, C.A. Spurlock (2016), Minimum Energy Efficiency
Standards for Appliances: Old and New Economic Rationales. Economics
of Energy & Environmental Policy, 5(2), 65-84. Available at
www.jstor.org/stable/26189506.
\116\ L.W. Davis (2012), Evaluating the slow adoption of energy
efficient investments: are renters less likely to have energy
efficient appliances? The Design and Implementation of US Climate
Policy, University of Chicago Press (2012), pp. 301-316.
---------------------------------------------------------------------------
With regard to AHAM's assertion that the maximum percent of low-
income households with landlord-provided clothes washers is less than
10 percent of all low-income households, DOE notes that AHAM's
assertion only considers households with incomes under $34,000, who
have clothes washers in their units, and who pay their energy bills.
This differs from DOE's definition of low-income households, which is
based on poverty thresholds established by the U.S. Census Bureau.\117\
As described in chapter 11 of the direct final rule TSD, DOE defines
low-income households by varying poverty thresholds based on household
size and the number of related children under 18 years old.
Consequently, using the same 2020 RECS data, DOE's analysis indicates
that low-income renters who have an RCW and pay their energy bills
constitute roughly 40 percent of all low-income households.
Furthermore, within this group, approximately 43 percent reside in
single-family houses, 20 percent in buildings with 2 to 4 units, and 25
percent in buildings with 5 or more units. As a result, DOE's analysis
concludes that there is a substantial fraction of split-incentive issue
among low-income households.
---------------------------------------------------------------------------
\117\ U.S. Census Bureau, How the Census Bureau Measures
Poverty, available at www.census.gov/topics/income-poverty/poverty/guidance/poverty-measures.html.
---------------------------------------------------------------------------
AHAM commented that low-income consumers typically purchase entry-
level RCWs, the proposed rule \118\ would disproportionately and
negatively affect low-income households and lead them to incur debt,
purchase a used clothes washer, repair a current one, or use the
laundromat--meaning they will be forced to spend more time doing
laundry than other consumers or will not actually conserve water and
energy or save money. (AHAM, No. 464 at p. 11)
---------------------------------------------------------------------------
\118\ DOE notes that the standards adopted in this direct final
rule are the same as those proposed standards in the March 2023 NOPR
for three of the five product classes, but are less stringent than
the standards proposed in the March 2023 NOPR for the other two
product classes.
---------------------------------------------------------------------------
AHAM commented that it commissioned Bellomy Research to conduct a
study focusing on the impact of higher appliance prices on low-income
households.\119\ (AHAM, No. 464 at p. 27) AHAM commented that the study
found that 52 percent of households earning under $50,000 annually
would resort to buying a used clothes washer or delay purchasing one
due to cost. (Id.) AHAM further commented that 72 percent of households
with incomes below $25,000 would not pay more upfront for a more
energy-efficient clothes washer that would save them in energy bills
over the next ten years. These households were 1.7 times more likely to
have a top-loading clothes washer with an agitator and one-third as
likely to own a front-loading clothes washer. (Id. at p. 28) AHAM
additionally commented that, 73 percent of households earning under
$25,000 would experience negative to extremely negative impacts from
being forced to buy a new clothes washer. (Id.) AHAM commented that
these findings contradict DOE's theoretical analysis and highlight the
need for government initiatives that recognize and mitigate impacts on
underserved communities. (Id. at p. 27)
---------------------------------------------------------------------------
\119\ The Bellomy Research study was sponsored by Whirlpool.
(Whirlpool, No. 462 at p. 6)
---------------------------------------------------------------------------
Representatives Latta et al. commented that low-income consumers in
particular are least likely to be able to afford new appliances.
(Representatives Latta et al., No. 456 at pp. 1-2) Representatives
Latta et al. stated that DOE's analysis fails to consider the
unintended consequences of upfront cost increases, including high
interest rate financing and lost energy savings from delayed
replacement of older, less-efficient appliances. (Id.)
[[Page 19070]]
Salman cited concerns with DOE's proposed standards for RCWs,\120\
over costs, particularly the impact on low-income households. (Salman,
No. 446 at p. 1)
---------------------------------------------------------------------------
\120\ DOE notes that the standards adopted in this direct final
rule are the same as those proposed March 2023 NOPR for three of the
five product classes, but are less stringent than the standards
proposed in the March 2023 NOPR for the other two product classes.
---------------------------------------------------------------------------
DOE's low-income LCC subgroup analysis uses inputs specific to low-
income consumers to estimate the impact of adopted standards. There is
evidence that prior efficiency standards, by acting on a market
substantially more complex than the simplified model of perfect
competition, have aligned with improvements in efficiency (and in some
cases additional product attributes) while maintaining a constant price
for ``entry-level'' products. For example, Spurlock and Fujita (2022)
examined appliance point of sales data and noted that the 2004 and 2007
RCW efficiency standards were associated with 30-percent increase in
product efficiency contemporaneous with no change in average price
within the baseline market segment (i.e., ``entry-level'' RCWs).
DOE notes that, while unable to review the specific survey
instrument and resulting dataset, this summary of AHAM survey findings
implies that the framing does not reflect the context of a revised
minimum energy conservation standard. Specifically, these are impacts
AHAM is claiming would occur based on the full cost of a new RCW and
are not specifically relevant to the potential increased incremental
cost of purchasing a new RCW in a standards case. The incremental cost,
which is substantially less than the full cost of an RCW, varies
depending on the considered standard levels. Additionally, as described
in section IV.G of this document, DOE implemented an extended repair
scenario and a second-hand market scenario to capture the market impact
resulting from consumers' sensitivity to increased clothes washer
prices.
AHAM commented that DOE's approach to assessing the cost of
appliances for low-income households, which uses a static balance
sheet, fails to consider capital availability and non-financial costs
faced by these households, such as missed payments on essential
expenses like food and housing. (AHAM, No. 464 at p. 29) AHAM presented
data showing that the lowest 30 percent income groups have no
discretionary income to save, making it impossible for them to
rebalance their balance sheets after making a purchase. AHAM commented
that DOE does not provide a theory or explanation for how low-income
households with negative discretionary cash flow can realistically
rebalance their balance sheets, undermining the accuracy of DOE's
predictions. AHAM commented on disparities between DOE's projections
and interest rates and data from sources like the Bureau of Consumer
Financial Protection, suggesting that DOE's estimates are not reliable.
(Id. at p. 30) AHAM commented that regardless of income, savings as low
as the projected savings in this rule are not enough to be noticed on
the monthly flow of funds, will not provide an opportunity to rebalance
a balance sheet, and do not constitute a benefit to consumers. (AHAM,
No. 464 at p. 32)
AHAM commented that DOE should undertake a full study of the
effects of standards on low-income households beyond simply restating
its belief that the balance sheet approach is appropriate in the face
of comments and data demonstrating the inaccuracy of this belief.
(AHAM, No. 464 at p. 31) AHAM further commented that DOE's assumption
that consumers pay the water and sewer bill directly is an unproven
and, often, incorrect, assumption. (Id. at p. 32)
Strauch expressed concern that future dollar savings are not
accessible for immediate purchase, making it unaffordable for
individuals with limited incomes or fixed budgets. (Strauch, No. 430 at
p. 2)
DOE notes that the LCC is not predicting a purchase decision.
Rather, it estimates the net present value of the financial impact of a
given standard level over the lifetime of the product (e.g., 13 years)
assuming the standard-compliant product has already been installed, and
allows for comparison of this value across different hypothetical
minimum efficiency levels. It is applied to future-year energy costs
and non-energy operations and maintenance costs in order to calculate
the net present value of the appliance to a household at the time of
installation. The consumer discount rate reflects the opportunity cost
of receiving energy cost savings in the future, rather than at the time
of purchase and installation. The opportunity cost of receiving
operating cost savings in future years, rather than in the first year
of the modeled period, is dependent on the rate of return that could be
earned if invested into an interest-bearing asset or the interest cost
accrual avoided by paying down debt. Consumers in all income groups
generally hold a variety of assets (e.g., certificates of deposit,
stocks, bonds) and debts (e.g., mortgage, credit cards, vehicle loan),
which vary in amount over time as consumers allocate their earnings,
make new investments, etc. Thus, the consumer discount rate is
estimated as a weighted average of the rates and proportions of the
various types of assets and debts held by households in each income
group, as reported by the Survey of Consumer Finances. Furthermore, DOE
notes that the Survey of Consumer Finances shows that consumers across
all income groups generally rebalance their assets and debts over time.
Whirlpool commented that DOE's analysis appears to not account for
the fact that a significant portion of consumers, especially low-income
consumers, finance their appliance purchases, either through personal
loans, in-house financing, rent-to-own, or by putting purchases on
their credit cards. Whirlpool commented that it wasn't clear if DOE
included the likely financing and actual rates paid by consumers in the
analysis. Whirlpool commented that many more consumers than DOE
anticipates may end up saving no money (and may spend more money) as a
result of the proposed rule.\121\ (Whirlpool, No. 462 at p. 6)
---------------------------------------------------------------------------
\121\ DOE notes that the standards adopted in this direct final
rule are the same as those proposed March 2023 NOPR for three of the
five product classes, but are less stringent than the standards
proposed in the March 2023 NOPR for the other two product classes.
---------------------------------------------------------------------------
As discussed, the LCC analysis estimates the net present value of
the financial impact of a given standard level over the lifetime of the
product. In the case of top-loading standard-size RCWs, the price
differential between EL 3 and baseline is $160. When a consumer
purchased the more efficient unit on a credit card with a 25 percent
APR, it would amount to an additional financing cost of about $3 per
month in the first year of leaving the balance on the card. While the
compound interest could start to accumulate if the balance was left
unpaid for an extended period of time, it would be an unusual case as
the Survey of Consumer Finances shows that consumers across all income
groups generally rebalance their assets and debts.
AHAM commented that DOE's analysis overstates the operating costs
savings from reduced water use in washing machines, as many households,
especially in multi-family buildings, don't directly pay for water and
sewer, as costs are often covered by landlords or included in common
charges. AHAM commented that condominium owners bear the cost of
efficient clothes washers, but don't see direct water bill savings
because water and sewer
[[Page 19071]]
chargers are included in many condominium fees, possibly leading to
negative life cycle cost savings. AHAM suggested that DOE should
separately analyze multi-family housing units that do not directly pay
for water and sewer costs. (AHAM, No. 464 at pp. 39-40)
Whirlpool commented that many consumers in living arrangements
where water is not sub-metered (e.g., multi-family housing) are low-
income renters, so DOE's estimated reduction in the cost of water is
likely inapplicable. (Whirlpool, No. 462 at p. 6)
AHAM and Whirlpool identified two groups of consumers who may not
see water bill savings as a result of an amended standard: (1)
condominium owners in multi-family buildings where water and sewer
costs are included in common charges and (2) low-income renters in
multi-family housing where water is not sub-metered and/or costs are
covered by landlords.
DOE notes that RECS does not identify whether or not a household
pays its water bill. With regard to the first group, if assuming that
owners in multi-family buildings who are identified in RECS as not
paying their energy bill also do not pay their water bill, this group
represents less than 0.5 percent of the national sample, indicating a
relatively small group. With regard to the second group, in DOE's low-
income subgroup analysis, DOE assumes that households that do not pay
their energy bill also do not pay their water bill and therefore do not
accrue any operating cost savings from considered standards. Therefore,
this issue is already accounted for in the subgroup results.
2. Senior-Only Households
Annual clothes washer usage for senior-only households is
significantly less than the full household sample because the household
size for senior-only families is typically either one or two people. A
household size equal to or larger than three members accounts for less
than 1 percent of senior-only households. Therefore, as described in
section V.B.1 of this document, the percentage of senior-only RCW
consumers experiencing a net cost at TSL 2 (the Recommended TSL) is
greater (35 percent for top-loading standard-size RCWs) than in the
full LCC sample (27 percent for top-loading standard-size RCWs). The
simple payback period for senior-only households at TSL 2 is 1.7 years
longer than in the full LCC sample.
For this direct final rule, DOE considered comments it had received
regarding its consideration of senior-only households in the March 2023
NOPR. The approach used for this direct final rule is largely the same
as the approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, Strauch expressed concern that
senior households are unlikely to recover the added cost of energy-
efficient products during their lifetime. (Strauch, No. 430 at p. 2)
Strauch commented that even existing rebate programs do not
sufficiently offset the increased up-front cost, particularly for
senior households who may not benefit from these savings. (Id.)
Strauch did not provide supporting data to demonstrate that senior
households are unlikely to recover from increased purchase price at the
adopted standard level over the course of their lifetime. DOE is not
able to perform an analysis on seniors who might not be able to recoup
the savings due to their age. However, DOE has described in section
V.B.1 of this document, at the Recommended TSL, the positive average
LCC savings across all product classes for senior consumers--except for
front-loading compact RCWs for which about more than 70 percent of
senior consumers have positive cost savings--outweigh the negative
average LCC savings of $1 for front-loading compact RCWs for senior
consumers.
3. Well-Water Households
In response to the March 2023 NOPR, AHAM commented that DOE should
analyze well water households as a separate group due to substantial
cost differences compared to municipal water users, noting that well
water costs are about 6 percent of the combined cost of municipal water
and sewer. AHAM commented that for top-loading standard-size RCWs at EL
3, using the real cash costs for water and sewer, the mean and median
LCC savings are negative, resulting in a net cost for about 60 percent
of these households. AHAM commented that the actual cash costs also
reveal negative LCC savings for most front-loading compact clothes
washer households and about half of front-loading standard-size clothes
washer households. AHAM commented that DOE should therefore adjust its
proposals acknowledging the burden on this group. (AHAM, No. 464 at p.
39)
Whirlpool commented that the March 2023 NOPR does not adequately
consider the cost impacts on consumers residing in rural households.
Whirlpool commented that many rural households use well and septic
systems for which the cost of water and sewer is very low, leading to
less savings than DOE anticipates. Additionally, Whirlpool stated that
the water used by RCWs using well water has no societal benefit from
water reductions because they are ultimately replenished by
groundwater. (Whirlpool, No. 462 at pp. 5-6) Representatives Latta et
al. commented that DOE overestimates savings for many rural consumers
who use a well and septic system, for which water operating cost
savings from the proposed standard are essentially zero.
(Representatives Latta et al., No. 456 at p. 2)
As described in section IV.F.4 of this document, for this direct
final rule, DOE has made adjustments to its method for estimating well
water and septic costs. The updated average well water and septic tank
prices is 8.8 percent \122\ of the combined cost of municipal water and
sewer costs. In addition, DOE has specifically assigned well water
price and septic tank price to well users instead of using the
composite water and wastewater prices. This means that the national LCC
analysis accounts for the potential financial burden on households
using well water systems, and it acknowledges that some well water
users might experience increased costs under the amended efficiency
standards. In addition, DOE presents results for the well user subgroup
in chapter 11 of the TSD.
---------------------------------------------------------------------------
\122\ DOE's estimate is higher than that provided by AHAM (i.e.,
6 percent) because DOE factored in maintenance costs for septic
systems, whereas AHAM did not.
---------------------------------------------------------------------------
Chapter 11 in the direct final rule TSD describes the consumer
subgroup analysis.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the financial impacts of amended
energy conservation standards on manufacturers of RCWs and to estimate
the potential impacts of such standards on direct employment and
manufacturing capacity. The MIA has both quantitative and qualitative
aspects and includes analyses of projected industry cash flows, the
INPV, investments in research and development (``R&D'') and
manufacturing capital, and domestic manufacturing employment.
Additionally, the MIA seeks to determine how amended energy
conservation standards might affect manufacturing employment, capacity,
and competition, as well as how standards contribute to overall
regulatory burden. Finally, the MIA serves to identify any
disproportionate impacts on manufacturer subgroups, including small
business manufacturers.
[[Page 19072]]
The quantitative part of the MIA primarily relies on the Government
Regulatory Impact Model (``GRIM''), an industry cash flow model with
inputs specific to this rulemaking. The key GRIM inputs include data on
the industry cost structure, unit production costs, product shipments,
manufacturer markups, and investments in R&D and manufacturing capital
required to produce compliant products. The key GRIM outputs are the
INPV, which is the sum of industry annual cash flows over the analysis
period, discounted using the industry-weighted average cost of capital,
and the impact to domestic manufacturing employment. The model uses
standard accounting principles to estimate the impacts of more-
stringent energy conservation standards on a given industry by
comparing changes in INPV and domestic manufacturing employment between
a no-new-standards case and the various standards cases. To capture the
uncertainty relating to manufacturer pricing strategies following
amended standards, the GRIM estimates a range of possible impacts under
different manufacturer markup scenarios.
The qualitative part of the MIA addresses manufacturer
characteristics and market trends. Specifically, the MIA considers such
factors as a potential standard's impact on manufacturing capacity,
competition within the industry, the cumulative impact of other DOE and
non-DOE regulations, and impacts on manufacturer subgroups. The
complete MIA is outlined in chapter 12 of the direct final rule TSD.
DOE conducted the MIA for this rulemaking in three phases. In Phase
1 of the MIA, DOE prepared a profile of the RCW manufacturing industry
based on the market and technology assessment and publicly-available
information. This included a top-down analysis of RCW manufacturers
that DOE used to derive preliminary financial inputs for the GRIM
(e.g., revenues; materials, labor, overhead, and depreciation expenses;
selling, general, and administrative expenses (``SG&A''); and R&D
expenses). DOE also used public sources of information to further
calibrate its initial characterization of the RCW manufacturing
industry, including company filings of form 10-K from the SEC,\123\
corporate annual reports, the U.S. Census Bureau's Annual Survey of
Manufactures (``ASM''),\124\ and reports from Dun & Bradstreet.\125\
---------------------------------------------------------------------------
\123\ U.S. Securities and Exchange Commission, Electronic Data
Gathering, Analysis, and Retrieval (EDGAR) system. Available at
www.sec.gov/edgar/search/ (last accessed June 30, 2023).
\124\ U.S. Census Bureau, Annual Survey of Manufactures.
``Summary Statistics for Industry Groups and Industries in the U.S.
(2022).'' Available at www.census.gov/programs-surveys/asm/data/tables.html (last accessed June 30, 2023).
\125\ The Dun & Bradstreet Hoovers login is available at
app.dnbhoovers.com (last accessed June 30, 2023).
---------------------------------------------------------------------------
In Phase 2 of the MIA, DOE prepared a framework industry cash-flow
analysis to quantify the potential impacts of amended energy
conservation standards. The GRIM uses several factors to determine a
series of annual cash flows starting with the announcement of the
standard and extending over a 30-year period following the compliance
date of the standard. These factors include annual expected revenues,
costs of sales, SG&A and R&D expenses, taxes, and capital expenditures.
In general, energy conservation standards can affect manufacturer cash
flow in three distinct ways: (1) creating a need for increased
investment, (2) raising production costs per unit, and (3) altering
revenue due to higher per-unit prices and changes in sales volumes.
In addition, during Phase 2, DOE developed interview guides to
distribute to manufacturers of RCWs in order to develop other key GRIM
inputs, including product and capital conversion costs, and to gather
additional information on the anticipated effects of energy
conservation standards on revenues, direct employment, capital assets,
industry competitiveness, and subgroup impacts.
In Phase 3 of the MIA, DOE conducted structured, detailed
interviews with representative manufacturers. During these interviews,
DOE discussed engineering, manufacturing, procurement, and financial
topics to validate assumptions used in the GRIM and to identify key
issues or concerns. As part of Phase 3, DOE also evaluated subgroups of
manufacturers that may be disproportionately impacted by amended
standards or that may not be accurately represented by the average cost
assumptions used to develop the industry cash flow analysis. Such
manufacturer subgroups may include small business manufacturers, low-
volume manufacturers, niche players, and/or manufacturers exhibiting a
cost structure that largely differs from the industry average. DOE
identified one subgroup for a separate impact analysis: small business
manufacturers. The small business subgroup is discussed in chapter 12
of the direct final rule TSD.
2. Government Regulatory Impact Model and Key Inputs
DOE uses the GRIM to quantify the changes in cash flow due to new
or amended standards that result in a higher or lower industry value.
The GRIM uses a standard, annual discounted cash-flow analysis that
incorporates manufacturer costs, manufacturer markups, shipments, and
industry financial information as inputs. The GRIM models changes in
costs, distribution of shipments, investments, and manufacturer margins
that could result from an amended energy conservation standard. The
GRIM spreadsheet uses the inputs to arrive at a series of annual cash
flows, beginning in 2024 (the base year of the analysis) and continuing
30 years after the analyzed compliance year.\126\ DOE calculated INPVs
by summing the stream of annual discounted cash flows during this
period. For manufacturers of RCWs, DOE used a real discount rate of 9.3
percent, which was derived from industry financials and then modified
according to feedback received during manufacturer interviews.
---------------------------------------------------------------------------
\126\ For the no-new-standards case and all TSLs except the
Recommended TSL, the analysis period ranges from 2024-2056. For the
Recommended TSL, the analysis period ranges from 2024-2057.
---------------------------------------------------------------------------
The GRIM calculates cash flows using standard accounting principles
and compares changes in INPV between the no-new-standards case and each
standards case. The difference in INPV between the no-new-standards
case and a standards case represents the financial impact of the new or
amended energy conservation standard on manufacturers. As discussed
previously, DOE developed critical GRIM inputs using a number of
sources, including publicly available data, results of the engineering
analysis, results of the shipments analysis, and information gathered
from industry stakeholders during the course of manufacturer
interviews. The GRIM results are presented in section V.B.2 of this
document. Additional details about the GRIM, the discount rate, and
other financial parameters can be found in chapter 12 of the direct
final rule TSD.
a. Manufacturer Production Costs
Manufacturing more efficient products is typically more expensive
than manufacturing baseline products due to the use of more complex
components, which are typically more costly than baseline components.
The changes in the MPCs of covered products can affect the revenues,
gross margins, and cash flow of the industry. DOE conducted this
analysis using the
[[Page 19073]]
physical teardown approach. The resulting bill of materials provides
the basis for the MPC estimates. In this rulemaking, DOE relies on an
efficiency-level approach, supplemented with the design-option approach
for certain ``gap fill'' efficiency levels. The efficiency-level
approach is appropriate for RCWs, given the availability of
certification data to determine the market distribution of existing
products and to identify efficiency level ``clusters'' that already
exist on the market. For a complete description of the MPCs, see
section IV.C of this document and chapter 5 of the direct final rule
TSD.
b. Shipments Projections
The GRIM estimates manufacturer revenues based on total unit
shipment projections and the distribution of those shipments by
efficiency level. Changes in sales volumes and efficiency mix over time
can significantly affect manufacturer finances. For this analysis, the
GRIM uses the NIA's annual shipment projections derived from the
shipments analysis from the base year (2024) to the end of the analysis
period (30 years after the analyzed compliance date \127\). See section
IV.G of this document and chapter 9 of the direct final rule TSD for
additional details.
---------------------------------------------------------------------------
\127\ Id.
---------------------------------------------------------------------------
c. Capital and Product Conversion Costs
New or amended energy conservation standards could cause
manufacturers to incur conversion costs to bring their production
facilities and product designs into compliance. DOE evaluated the level
of conversion-related expenditures that would be needed to comply with
each considered efficiency level in each product class. For the MIA,
DOE classified these conversion costs into two major groups: (1)
capital conversion costs; and (2) product conversion costs. Capital
conversion costs are investments in property, plant, and equipment
necessary to adapt or change existing production facilities such that
new compliant product designs can be fabricated and assembled. Product
conversion costs are investments in research, development, testing,
marketing, and other non-capitalized costs necessary to make product
designs comply with new or amended energy conservation standards.
DOE relied on information derived from manufacturer interviews, the
engineering analysis, and product teardowns to evaluate the level of
capital and product conversion costs manufacturers would likely incur
at the various TSLs. During interviews, DOE asked manufacturers to
estimate the capital conversion costs (e.g., changes in production
processes, equipment, and tooling) required to meet the various
efficiency levels. DOE also asked manufacturers to estimate the
redesign effort, engineering resources, and marketing expenses required
at various efficiency levels to quantify the product conversion costs.
Based on manufacturer feedback, DOE also estimated ``re-flooring''
costs associated with replacing obsolete display models in big-box
stores (e.g., Lowe's, Home Depot, Best Buy) due to higher standards.
Some manufacturers stated that with a new product release, big-box
retailers discount outdated display models, and manufacturers share any
losses associated with discounting the retail price. The estimated re-
flooring costs for each efficiency level were incorporated into the
product conversion cost estimates, as DOE modeled the re-flooring costs
as a marketing expense. DOE also estimated industry costs associated
with re-rating basic models in accordance with appendix J, as detailed
in the June 2022 TP Final Rule. 87 FR 33316. Manufacturer data were
aggregated to better reflect the industry as a whole and to protect
confidential information. DOE then scaled up the aggregate capital and
product conversion cost feedback from interviews to estimate total
industry conversion costs.
DOE adjusted the conversion cost estimates developed in support of
the March 2023 NOPR to 2022$ for this analysis.
In general, DOE assumes all conversion-related investments occur
between the year of publication of the direct final rule and the year
by which manufacturers must comply with the new standard. The
conversion cost figures used in the GRIM can be found in section V.B.2
of this document. For additional information on the estimated capital
and product conversion costs, see chapter 12 of the direct final rule
TSD.
d. Manufacturer Markup Scenarios
MSPs include direct manufacturing production costs (i.e., labor,
materials, and overhead estimated in DOE's MPCs) and all non-production
costs (i.e., SG&A, R&D, and interest), along with profit. To calculate
the MSPs in the GRIM, DOE applied a multiplier (the manufacturer
markup) to the MPCs estimated in the engineering analysis for each
product class and efficiency level. Modifying these manufacturer
markups in the standards case yields different sets of impacts on
manufacturers. For the MIA, DOE modeled two standards-case scenarios to
represent uncertainty regarding the potential impacts on prices and
profitability for manufacturers following the implementation of amended
energy conservation standards: (1) a preservation of gross margin
percentage scenario; and (2) a preservation of operating profit
scenario. These scenarios lead to different manufacturer markup values
that, when applied to the MPCs, result in varying revenue and cash flow
impacts.
Under the preservation of gross margin percentage scenario, DOE
applied a single uniform ``gross margin percentage'' across all
efficiency levels, which assumes that manufacturers would be able to
maintain the same amount of profit as a percentage of revenues at all
efficiency levels within a product class. As manufacturer production
costs increase with efficiency, this scenario implies that the per-unit
dollar profit will increase. DOE assumed a gross margin percentage of
18 percent for all product classes.\128\ Manufacturers tend to believe
it is optimistic to assume that they would be able to maintain the same
gross margin percentage as their production costs increase,
particularly for minimally efficient products. Therefore, this scenario
represents a high bound of industry profitability under an amended
energy conservation standard.
---------------------------------------------------------------------------
\128\ The gross margin percentage of 18 percent is based on a
manufacturer markup of 1.22.
---------------------------------------------------------------------------
In the preservation of operating profit scenario, as the cost of
production goes up under a standards case, manufacturers are generally
required to reduce their manufacturer markups to a level that maintains
base-case operating profit. DOE implemented this scenario in the GRIM
by lowering the manufacturer markups at each TSL to yield approximately
the same earnings before interest and taxes in the standards case as in
the no-new-standards case in the year after the expected compliance
date of the amended standards.\129\ The implicit assumption behind this
scenario is that the industry can only maintain its operating profit in
absolute dollars after the standard takes effect.
---------------------------------------------------------------------------
\129\ For TSL 2 (the Recommended TSL), the modeled compliance
date is 2028. For the remaining TSLs, the modeled compliance date is
2027.
---------------------------------------------------------------------------
A comparison of industry financial impacts under the two scenarios
is presented in section V.B.2.a of this document.
3. Discussion of MIA Comments
For this direct final rule, DOE considered comments it had received
[[Page 19074]]
regarding its manufacturer impact analysis presented in the March 2023
NOPR. The approach used for this direct final rule is largely the same
as the approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, AHAM stated that it cannot
comment on the accuracy of DOE's approach for including how
manufacturers would potentially recover costs and investments due to
amended standards, but AHAM stated its support for DOE's intent in the
microwave ovens energy conservation standards rulemaking to include
those conversion costs and investments in the actual costs of products
and retail prices.\130\ (AHAM, No. 464 at p. 40) AHAM urged DOE to
apply the same conceptual approach used in the microwave ovens
rulemaking in this RCW rulemaking and all future rulemakings. (Id.)
---------------------------------------------------------------------------
\130\ Technical Support Document: Energy Efficiency Program For
Commercial And Industrial Equipment: Microwave Ovens. Available at
www.regulations.gov/document/EERE-2017-BT-STD-0023-0022.
---------------------------------------------------------------------------
DOE models different standards-case manufacturer markup scenarios
to represent uncertainty regarding the potential impacts on prices and
profitability for manufacturers following the implementation of amended
energy conservation standards. The analyzed manufacturer markup
scenarios vary by rulemaking as they are meant to reflect the potential
range of financial impacts for manufacturers of the specific covered
product or equipment. As discussed in section IV.J.2.d of this
document, for RCWs, DOE modeled two standards-case manufacturer markup
scenarios to represent the uncertainty regarding the potential impacts
on prices and profitability for manufacturers following the
implementation of amended energy conservation standards. For the March
2023 NOPR, DOE applied the preservation of gross margin percentage
scenario to reflect an upper bound of industry profitability and a
preservation of operating profit scenario to reflect a lower bound of
industry profitability under amended standards. 88 FR 13520, 13576-
13577 DOE used these scenarios to reflect the range of realistic
profitability impacts under more-stringent standards. Manufacturing
more efficient RCWs is generally more expensive than manufacturing
baseline RCWs, as reflected by the MPCs estimated in the engineering
analysis. Under the preservation of gross margin scenario for RCWs,
incremental increases in MPCs at higher efficiency levels result in an
increase in per-unit dollar profit per unit sold. In interviews,
multiple manufacturers asserted that they would likely need to reduce
manufacturer markups under more stringent standards to remain
competitive in the marketplace. Therefore, the preservation of gross
margin scenario represents the upper bound of industry profitability
under amended standards. Applying the approach used in the microwave
ovens rulemaking (i.e., a conversion cost recovery scenario) would
result in manufacturers increasing manufacturer markups under amended
standards. Based on information gathered during confidential interviews
in support of the March 2023 NOPR and a review of financial statements
of companies engaged in manufacturing RCWs, DOE does not expect that
the RCW industry would increase manufacturer markups as a direct result
of amended standards absent non-energy efficiency-related features.
Furthermore, in response to the March 2023 NOPR, DOE did not receive
any public or confidential data indicating that industry would increase
manufacturer markups in response to more stringent standards.
Therefore, DOE used the two manufacturer markup scenarios from the
March 2023 NOPR for this direct final rule analysis.
AHAM commented that laundry products (RCWs and consumer clothes
dryers) are designed and used in pairs. (AHAM, No. 464 at p. 44) AHAM
encouraged DOE to issue final rules for RCWs and consumer clothes
dryers on the same date so that the compliance dates for these products
are aligned. (Id.) AHAM stated that there will be an additional design
cycle for either or both clothes washers and clothes dryers if the
effective dates for the two products are out of sync. (Id.) AHAM
commented that the existing DOE analysis does not capture this
situation, which creates a significant technical and financial burden
for manufacturers. (Id.) AHAM commented that coordinated compliance
dates would greatly reduce burden on manufacturers and retailers. (Id.)
DOE is adopting the Recommended TSL in this direct final rule. The
Joint Agreement included recommendations for other appliance standards
rulemakings: RCWs; consumer clothes dryers; consumer conventional
cooking products; dishwashers; refrigerators, refrigerator-freezers,
and freezers; and miscellaneous refrigeration products. The signatories
indicate that the Joint Agreement for the six rulemakings should be
considered as a joint recommendation of standards, to be adopted in its
entirety. (Joint Agreement, No. 505 at p. 3) The Joint Agreement
specifies a compliance date of March 1, 2028, for both RCWs and
consumer clothes dryers. (Id.) Therefore, DOE did not adjust its
conversion cost estimates to account for the time and investments
associated with an additional design cycle as DOE assumed the
compliance dates for RCWs and consumer clothes dryers would align.
Representatives Latta et al. urged DOE to evaluate options to
address the cumulative regulatory impact on domestic appliance
manufacturers of the unprecedented number of recently proposed
standards, which also include consumer clothes dryers, consumer
conventional cooking products, refrigerators, refrigerator-freezers,
and freezers--with more to come. (Representatives Latta et al., No. 456
at p. 3) Representatives Latta et al. recommended that, given the
serious concerns and ongoing uncertainty in the market, DOE should work
with appliance manufacturers to incorporate their feedback before
moving to finalize new efficiency standards. (Id.)
NMHC and NAA commented that this rulemaking comes as part of a
series of similar rulemakings DOE is proposing to change performance
standards for essential residential appliances. (NMHC and NAA, No. 451
at p. 4) NMHC and NAA stated that DOE took over 100 actions related to
energy efficiency standards in 2022 and noted that DOE's August 2021
Report to Congress on Energy Conservation Standards Activity showed DOE
had promulgated 71 energy conservation standards rulemakings since the
last report in July 2019. (Id.) NMHC and NAA commented that they are
concerned the number of changes for marginal efficiency gains will
outpace the ability of the manufacturing sector and supplier partners
to alleviate existing product shortages and delays, while creating new
barriers to cost-effective and timely appliance procurement. (Id.)
Accordingly, NMHC and NAA recommended DOE consider the collective
impacts of these requirements. (Id.)
AHAM also urged DOE to consider cumulative regulatory burden in its
analysis and decision-making process. (AHAM, No. 464 at p. 41) AHAM
commented that the nature of EPCA's requirements that energy
conservation standards be reviewed every 6 years creates a never-ending
cycle in which manufacturers need to constantly update or redesign
products to meet new or amended standards. (Id.) AHAM commented that
many home appliance rulemakings will likely have compliance dates in
2027. (Id.) AHAM noted that the proposed levels for RCWs,
refrigerators, refrigerator-freezers
[[Page 19075]]
and freezers, consumer conventional cooking products, miscellaneous
refrigeration products, room air conditioners, and microwave ovens will
require significant redesign of products. (Id. at p. 42) AHAM asserted
that engineers will therefore need to spend all their time redesigning
products, test technicians will spend their time conducting testing to
support re-design and certify products, and other will speed
significant time on business planning, marketing, labeling, etc.--
pulling resources from other development efforts. (Id.) AHAM commented
that manufacturers will also need to re-tool factories as a result of
standards for some of these rulemakings. (Id.) AHAM commented that
since there is a short lead-in compliance period under EPCA and that
compliance will likely be required in a similar timeframe, there is
significant regulatory burden for the home appliance industry. (Id.)
AHAM asserted that DOE's analysis does not adequately account for
cumulative regulatory burden. (Id.) AHAM encouraged DOE to acknowledge
the cumulative regulatory burden its proposals place on industry. (Id.)
AHAM stated that DOE needs to acknowledge the cumulative regulatory
burden its proposals place on industry and suggested DOE could reduce
cumulative regulatory burden by spacing out the timing of final rules,
allowing more lead-time by delaying the publication of final rules in
the Federal Register after they have been issued, and reducing the
stringency of standards such that fewer products would require
redesign. (Id.) AHAM encouraged DOE to incorporate combined conversion
costs across rulemakings into the GRIM in order to quantify cumulative
regulatory burden, and to consider the potential impact of these
rulemakings more broadly on the economy and on inflation. (Id.)
Regarding stakeholders' requests to consider cumulative regulatory
burden in its analysis and decision-making process, DOE analyzes
cumulative regulatory burden in accordance with section 13(g) of the
Process Rule. For this direct final rule, DOE examined Federal,
product-specific regulations that could affect RCW manufacturers that
take effect approximately 3 years before or after the 2028 compliance
date. Table V.20 in section V.B.2.e of this document presents the DOE
energy conservations standards that would impact manufacturers of RCWs
in the 2025 to 2031 timeframe. As shown in Table V.20, DOE considers
the potential cumulative regulatory burden from other DOE energy
conservation standards rulemakings for consumer clothes dryers,
consumer conventional cooking products, refrigerators, refrigerator-
freezers, and freezers, miscellaneous refrigeration products, room air
conditioners, and microwave ovens in this direct final rule analysis.
Regarding AHAM's suggestion about spacing out the timing of final
rules for home appliance rulemakings to reduce regulatory burden, DOE
has statutory requirements under EPCA on the timing of rulemakings. For
RCWs, consumer clothes dryers, consumer conventional cooking products,
dishwashers, refrigerators, refrigerator-freezers and freezers,
miscellaneous refrigeration products, and room air conditioners,
amended standards apply to covered products manufactured 3 years after
the date on which any new or amended standard is published. (42 U.S.C.
6295(m)(4)(A)(i)) For miscellaneous refrigeration products, amended
standards apply 5 years after the date on which any new or amended
standard is published. (42 U.S.C. 6295(l)(2)) However, the multi-
product Joint Agreement recommends alternative compliance dates. As
discussed in section II.B.3 of this document, the Joint Agreement
recommendations are in accordance with the statutory requirements of 42
U.S.C. 6295(p)(4) for the issuance of a direct final rule DOE.
Therefore, as compared to the EPCA-required lead time of 3-years, RCW
manufacturers have more lead time to meet amended standards at the
Recommend TSL.
Regarding the pace of DOE's activity on energy conservation
rulemakings, DOE has statutory requirements under EPCA on the timing of
appliance rulemakings. For RCWs, EPCA provides that, not later than 6
years after the issuance of any final rule establishing or amending a
standard, DOE must publish either a notice of determination that
standards for the product do not need to be amended, or a NOPR
including new proposed energy conservation standards (proceeding to a
final rule, as appropriate). (42 U.S.C. 6295(m)(1)) Regarding
incorporating the combined conversion costs across rulemakings into the
GRIM, DOE is concerned that combined results would make it more
difficult to discern the direct impact of the amended standard on
covered manufacturers, particularly for rulemakings where there is only
partial overlap of manufacturers. If DOE were to combine the conversion
costs from multiple regulations, as requested, it would be appropriate
to match the combined conversion costs with the combined revenues of
the regulated products. For rulemakings with only a partial overlap of
manufacturers, conversion costs would be spread over a larger revenue
base and result in less severe INPV impacts when evaluated on a percent
change basis.
Whirlpool commented that DOE's analysis fails to consider
significant costs to both manufacturers and consumers, as well as the
likely diminution in market competition and product utility and
performance. (Whirlpool, No. 462 at p. 4) Whirlpool stated that DOE
must consider all costs that manufacturers must bear to develop and
market products that meet the proposed standard and that the proposed
standard will result in wholesale removal of certain products and
features from the market.\131\ (Id.) Whirlpool commented that the
standards proposed in the March 2023 NOPR would reduce competition by
narrowing the range of RCWs available, including functionally phasing
out small- and mid-size top-loading RCWs, while making it difficult to
distinguish them based on features, such as traditional agitators. (Id.
at p. 14) Whirlpool also expressed concern that product consolidation
could cause industry consolidation. (Id.)
---------------------------------------------------------------------------
\131\ DOE notes that the standards adopted in this direct final
rule are the same as the proposed in the March 2023 NOPR for three
of the five product classes, but are less stringent than the
standards proposed in the March 2023 NOPR for the other two product
classes.
---------------------------------------------------------------------------
Fisher et al. commented that by regulating based on one or two
characteristics, and by prioritizing energy efficiency over other
compelling factors, DOE is stifling the free market, hindering broader
innovation, and discouraging the production of products that consumers
actually want to buy. (Fisher et al., No. 463 at p. 4) Fisher et al.
commented that EPCA specifically calls for DOE to consider the impact
of lessening competition--which is likely given the significantly
higher standards for RCWs--and prevents the Secretary from implementing
or amending a standard that will cause the unavailability in the United
States of any covered product type (or class). Fisher et al. stated
that given that DOE is proposing significantly higher standard for
different classes of RCWs, it is possible for these regulations to
impact competition, unintended, or otherwise.\132\ (Id. at p. 3)
Additionally, Fisher et al. added that energy efficiency regulations
adversely affect lower-income consumers, which is a consumer
[[Page 19076]]
subgroup that DOE targets as part of its analysis in the March 2023
NOPR and a group already harmed by consistently high inflation. (Id. at
p. 5) Fisher et al. commented that the proposed standards are not
economically justified and should be thrown out stating that they have
the potential to substantially impact competition and the availability
of products. (Id.)
---------------------------------------------------------------------------
\132\ DOE notes that the standards adopted in this direct final
rule are the same as the proposed in the March 2023 NOPR for three
of the five product classes, but are less stringent than the
standards proposed in the March 2023 NOPR for the other two product
classes.
---------------------------------------------------------------------------
Regarding the impact on product utility and consumer features, DOE
considers features that provide consumer utility in its analysis of
energy conservation standards (see section V.B.4 of this document for
additional details). Specifically, one of the seven statutory factors
for prescribing amended standards for covered products, such as RCWs,
includes evaluating the impact of potential standard levels to ensure
that amended standards would not lessen the utility or performance of
the considered products (see section III.E.1 of this document for a
discussion of how DOE has addressed each of those seven factors in this
rulemaking). Regarding the potential loss of features such as
traditional agitators, DOE notes that the adopted standards for RCWs do
not preclude the ability to offer agitators. See section V.B.4.c of
this document for additional details.
Regarding concerns that amended standards would phase out small-
and mid-size top-loading RCWs, DOE modeled incremental increases in
capacity for top-loading standard-size RCWs based on the most common
design strategy currently used by manufacturers at these efficiency
levels as well as information gathered during manufacturer interviews
about the likely design path to improve efficiency. As discussed
further in section V.B.4.b of this document, DOE's engineering analysis
indicates that the efficiencies required by the Recommended TSL are
technically achievable across the entire capacity range of top-loading
standard-size RCWs. Therefore, while the MPCs for the top-loading
standard-size product class reflect increases in capacity at EL 2, EL
3, and EL 4, meeting the Recommended TSL (corresponding to EL 2 for the
top-loading standard-size product class) is technologically feasible at
smaller capacities. Thus, the Recommended TSL does not require
manufacturers to increase the capacity of small- and mid-size models.
Such units can feasibly achieve the adopted standard level through the
use of other available design options. In chapter 5 of the direct final
rule TSD, DOE provides example design pathways that manufacturers could
use to achieve higher efficiency without increasing capacity as a
design option.
Regarding the impact on competition, DOE notes that it will provide
DOJ with copies of this direct final rule and TSD for review to
determine the impact, if any, of any lessening of competition likely to
result from a standard. DOE will consider DOJ's comments on the rule in
determining whether to withdraw the direct final rule. See section
V.B.5 of this document for additional details. DOE also notes that the
majority of RCW original equipment manufacturers (``OEMs'') already
offer RCWs that meet the Recommended TSL. Of the nine OEMs with top-
loading standard-size products, six OEMs offer models that meet the
Recommended TSL efficiencies. These six OEMs of top-loading standard-
size RCWs collectively account for over 95 percent of overall top-
loading standard-size RCW shipments. Of the seven OEMs with front-
loading standard-size products, six OEMs offer models that meet the
Recommended TSL efficiencies. These six OEMs of front-loading standard-
size RCWs collectively account for over 98 percent of overall front-
loading standard-size RCW shipments. Given that most companies already
offer products that meet the Recommended TSL, DOE does not anticipate
amended standards would significantly lessen the level of competition
in the RCW market.
Representatives Latta et al. expressed concern about the negative
impact of the standards proposed in the March 2023 NOPR on the U.S.
home appliance manufacturing industry, as the TSD estimates that the
standards proposed in the March 2023 NOPR for RCWs could eliminate
8,121 American jobs as manufacturers reassess their production
locations. (Representatives Latta et al., No. 456 at p. 3)
Representatives Latta et al. commented that DOE should take no actions
that cause harm to the domestic manufacturing industry and result in a
significant loss of American jobs. (Id.)
Regarding the potential for a reduction in direct employment as a
result of amended standards, DOE notes that the standards adopted in
this direct final rule are the same as the proposed in the March 2023
NOPR for three of the five product classes, but are less stringent than
the standards proposed in the March 2023 NOPR for the other two product
classes. DOE provides a range of potential quantitative impacts to
direct employment and a discussion of the potential qualitative impacts
to direct employment in section V.B.2.b of this document. The upper
bound of the direct employment analysis corresponds to an increase in
the number of domestic workers that results from amended energy
conservation standards if manufacturers continue to produce the same
scope of covered products within the United States after compliance
takes effect. To establish a conservative lower bound of direct
employment impacts, DOE assumes all manufacturers would shift
production to foreign countries. The estimated 8,121 domestic
production worker jobs cited by Representatives Latta et al. reflected
the conservative lower bound should all manufacturers move production
facilities outside of the United States. As stated in the March 2023
NOPR, at lower TSLs, DOE believes the likelihood of changes in
production location due to amended standards are low due to the
relatively minor production line updates required. Compared to the
levels proposed in the March 2023 NOPR, DOE is adopting lower
efficiency levels for top-loading and front-loading standard-size
product classes. In confidential interviews conducted in advance of the
March 2023 NOPR, DOE's contractors discussed the potential impact of
more stringent standards on production location decisions under non-
disclosure agreements (``NDAs''). See appendix 12A of the direct final
rule TSD for a blank copy of the interview guide. During confidential
interviews, manufacturers did not express concerns about the need to
relocate production facilities to remain competitive at the Recommended
TSL (i.e., TSL 2). Nearly all OEMs already manufacture top-loading and
front-loading standard-size RCWs that meet the adopted levels in
domestic manufacturing facilities. Of the nine OEMs with top-loading
standard-size products, six OEMs offer models that meet TSL 2
efficiencies. These six OEMs that currently offer top-loading standard-
size RCW models that meet TSL 2 efficiencies collectively account for
over 95 percent of overall top-loading standard-size RCW shipments. Of
the seven OEMs with front-loading standard-size products, six OEMs
offer models that meet TSL 2 efficiencies.
Salman commented that amended standards could disproportionately
affect small manufacturers, including training and hiring costs, and
potentially endanger jobs. Salman further commented that ``low-
skilled'' workers would be particularly affected by this, and that
industry consolidation may result. (Salman, No. 446 at pp. 1-2) Salman
recommended that DOE provide financial support that helps them
transform their machinery and retrain their workforce. (Id. at p. 2)
DOE discusses the potential impacts of amended standards on the one
small
[[Page 19077]]
domestic original equipment manufacturer (``OEM'') of RCWs in the NOPR
published elsewhere in this issue of the Federal Register and chapter
12 of the direct final rule TSD. Regarding the potential for industry
consolidation, as discussed in section III.E.1.e of this document, DOE
will transmit a copy of this direct final rule to the Attorney General
with a request that DOJ provide its determination on this issue. DOE
will consider DOJ's comments on the rule in determining whether to
withdraw the direct final rule. DOE will also publish and respond to
the DOJ's comments in the Federal Register in a separate document.
Additionally, DOE analyzes the potential impacts of amended standards
on U.S. direct employment for the overall RCW industry in section
V.B.2.b of this document.
Regarding the suggestion for DOE to provide financial support to
small manufacturers, additional compliance flexibilities may be
available to small manufacturers through other means. EPCA provides
that a manufacturer whose annual gross revenue from all of its
operations does not exceed $8 million may apply for an exemption from
all or part of an energy conservation standard for a period not longer
than 24 months after the effective date of a final rule establishing
the standard. (42 U.S.C. 6295(t)) Additionally, manufacturers subject
to DOE's energy efficiency standards may apply to DOE's Office of
Hearings and Appeals for exception relief under certain circumstances.
Manufacturers should refer to 10 CFR part 430, subpart E, and 10 CFR
part 1003 for additional details.
K. Emissions Analysis
The emissions analysis consists of two components. The first
component estimates the effect of potential energy conservation
standards on power sector and site (where applicable) combustion
emissions of CO2, NOX, SO2, and Hg.
The second component estimates the impacts of potential standards on
emissions of two additional greenhouse gases, CH4 and
N2O, as well as the reductions in emissions of other gases
due to ``upstream'' activities in the fuel production chain. These
upstream activities comprise extraction, processing, and transporting
fuels to the site of combustion.
The analysis of electric power sector emissions of CO2,
NOX, SO2, and Hg uses emissions intended to
represent the marginal impacts of the change in electricity consumption
associated with amended or new standards. The methodology is based on
results published for the AEO, including a set of side cases that
implement a variety of efficiency-related policies. The methodology is
described in appendix 13A in the direct final rule TSD. The analysis
presented in this document uses projections from AEO2023. Power sector
emissions of CH4 and N2O from fuel combustion are
estimated using Emission Factors for Greenhouse Gas Inventories
published by the Environmental Protection Agency (EPA).\133\
---------------------------------------------------------------------------
\133\ Available at www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf (last accessed June 12,
2022).
---------------------------------------------------------------------------
The on-site operation of RCWs involves combustion of fossil fuels
and results in emissions of CO2, NOX,
SO2, CH4, and N2O where these products
are used. Site emissions of these gases were estimated using Emission
Factors for Greenhouse Gas Inventories and, for NOX and
SO2, emissions intensity factors from an EPA
publication.\134\
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\134\ U.S. Environmental Protection Agency. External Combustion
Sources. In Compilation of Air Pollutant Emission Factors. AP-42.
Fifth Edition. Volume I: Stationary Point and Area Sources. Chapter
1. Available at www.epa.gov/air-emissions-factors-and-quantification/ap-42-compilation-air-emissions-factors#Proposed/
(last accessed June 12, 2022).
---------------------------------------------------------------------------
FFC upstream emissions, which include emissions from fuel
combustion during extraction, processing, and transportation of fuels,
and ``fugitive'' emissions (direct leakage to the atmosphere) of
CH4 and CO2, are estimated based on the
methodology described in chapter 15 of the direct final rule TSD.
The emissions intensity factors are expressed in terms of physical
units per megawatt hour (``MWh'') or Million British Thermal Units
(``MMBtu'') of site energy savings. For power sector emissions,
specific emissions intensity factors are calculated by sector and end
use. Total emissions reductions are estimated using the energy savings
calculated in the national impact analysis.
1. Air Quality Regulations Incorporated in DOE's Analysis
DOE's no-new-standards case for the electric power sector reflects
the AEO, which incorporates the projected impacts of existing air
quality regulations on emissions. AEO2023 reflects, to the extent
possible, laws and regulations adopted through mid-November 2022,
including the emissions control programs discussed in the following
paragraphs and certain provisions of the Inflation Reduction Act.\135\
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\135\ For further information, see the Assumptions to AEO2023
report that sets forth the major assumptions used to generate the
projections in the Annual Energy Outlook. Available at www.eia.gov/outlooks/aeo/assumptions/ (last accessed June 24, 2023).
---------------------------------------------------------------------------
SO2 emissions from affected electric generating units
(``EGUs'') are subject to nationwide and regional emissions cap-and-
trade programs. Title IV of the Clean Air Act sets an annual emissions
cap on SO2 for affected EGUs in the 48 contiguous States and
the District of Columbia (``DC''). (42 U.S.C. 7651 et seq.)
SO2 emissions from numerous States in the eastern half of
the United States are also limited under the Cross-State Air Pollution
Rule (``CSAPR''). 76 FR 48208 (Aug. 8, 2011). CSAPR requires these
States to reduce certain emissions, including annual SO2
emissions, and went into effect as of January 1, 2015.\136\ The AEO
incorporates implementation of CSAPR, including the update to the CSAPR
ozone season program emission budgets and target dates issued in 2016.
81 FR 74504 (Oct. 26, 2016). Compliance with CSAPR is flexible among
EGUs and is enforced through the use of tradable emissions allowances.
Under existing EPA regulations, for states subject to SO2
emissions limits under CSAPR, any excess SO2 emissions
allowances resulting from the lower electricity demand caused by the
adoption of an efficiency standard could be used to permit offsetting
increases in SO2 emissions by another regulated EGU.
---------------------------------------------------------------------------
\136\ CSAPR requires states to address annual emissions of
SO2 and NOX, precursors to the formation of
fine particulate matter (``PM2.5'') pollution, in order
to address the interstate transport of pollution with respect to the
1997 and 2006 PM2.5 National Ambient Air Quality
Standards (``NAAQS''). CSAPR also requires certain states to address
the ozone season (May-September) emissions of NOX, a
precursor to the formation of ozone pollution, in order to address
the interstate transport of ozone pollution with respect to the 1997
ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a
supplemental rule that included an additional five states in the
CSAPR ozone season program; 76 FR 80760 (Dec. 27, 2011)
(Supplemental Rule), and EPA issued the CSAPR Update for the 2008
ozone NAAQS. 81 FR 74504 (Oct. 26, 2016).
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However, beginning in 2016, SO2 emissions began to fall
as a result of the Mercury and Air Toxics Standards (``MATS'') for
power plants.\137\ 77 FR 9304 (Feb. 16, 2012). The final rule
establishes power plant emission standards for mercury, acid gases, and
non-mercury metallic toxic pollutants. Because of the emissions
reductions under the MATS, it is unlikely that excess SO2
emissions allowances resulting from the lower electricity demand would
be needed or used to
[[Page 19078]]
permit offsetting increases in SO2 emissions by another
regulated EGU. Therefore, energy conservation standards that decrease
electricity generation will generally reduce SO2 emissions.
DOE estimated SO2 emissions reduction using emissions
factors based on AEO2023.
---------------------------------------------------------------------------
\137\ In order to continue operating, coal power plants must
have either flue gas desulfurization or dry sorbent injection
systems installed. Both technologies, which are used to reduce acid
gas emissions, also reduce SO2 emissions.
---------------------------------------------------------------------------
CSAPR also established limits on NOX emissions for
numerous States in the eastern half of the United States. Energy
conservation standards would have little effect on NOX
emissions in those States covered by CSAPR emissions limits if excess
NOX emissions allowances resulting from the lower
electricity demand could be used to permit offsetting increases in
NOX emissions from other EGUs. In such case, NOX
emissions would remain near the limit even if electricity generation
goes down. Depending on the configuration of the power sector in the
different regions and the need for allowances, however, NOX
emissions might not remain at the limit in the case of lower
electricity demand. That would mean that standards might reduce
NOX emissions in covered States. Despite this possibility,
DOE has chosen to be conservative in its analysis and has maintained
the assumption that standards will not reduce NOX emissions
in States covered by CSAPR. Standards would be expected to reduce
NOX emissions in the States not covered by CSAPR. DOE used
AEO2023 data to derive NOX emissions factors for the group
of States not covered by CSAPR.
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and, as such, DOE's energy conservation
standards would be expected to slightly reduce Hg emissions. DOE
estimated mercury emissions reduction using emissions factors based on
AEO2023, which incorporates the MATS.
L. Monetizing Emissions Impacts
As part of the development of this direct final rule, for the
purpose of complying with the requirements of Executive Order 12866,
DOE considered the estimated monetary benefits from the reduced
emissions of CO2, CH4, N2O,
NOX, and SO2 that are expected to result from
each of the TSLs considered. In order to make this calculation
analogous to the calculation of the NPV of consumer benefit, DOE
considered the reduced emissions expected to result over the lifetime
of products shipped in the projection period for each TSL. This section
summarizes the basis for the values used for monetizing the emissions
benefits and presents the values considered in this direct final rule.
To monetize the benefits of reducing GHG emissions, this analysis
uses the interim estimates presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
Under Executive Order 13990 published in February 2021 by the IWG.
1. Monetization of Greenhouse Gas Emissions
DOE estimates the monetized benefits of the reductions in emissions
of CO2, CH4, and N2O by using a
measure of the SC of each pollutant (e.g., SC-CO2). These
estimates represent the monetary value of the net harm to society
associated with a marginal increase in emissions of these pollutants in
a given year, or the benefit of avoiding that increase. These estimates
are intended to include (but are not limited to) climate-change-related
changes in net agricultural productivity, human health, property
damages from increased flood risk, disruption of energy systems, risk
of conflict, environmental migration, and the value of ecosystem
services.
DOE exercises its own judgment in presenting monetized climate
benefits as required by applicable Executive orders, and DOE would
reach the same conclusion presented in this direct final rule in the
absence of the social cost of greenhouse gases. That is, the social
costs of greenhouse gases, whether measured using the February 2021
interim estimates presented by the Interagency Working Group on the
Social Cost of Greenhouse Gases or by another means,\138\ did not
affect the rule ultimately adopted by DOE.
---------------------------------------------------------------------------
\138\ See section IV.L.3 of this document which describes the
sensitivity analysis DOE conducted using EPA's updated 2023 SC-GHG
estimates.
---------------------------------------------------------------------------
DOE estimated the global social benefits of CO2,
CH4, and N2O reductions using SC-GHG values that
were based on the interim values presented in the Technical Support
Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim
Estimates under Executive Order 13990, published in February 2021 by
the IWG (``February 2021 SC-GHG TSD''). The SC-GHG is the monetary
value of the net harm to society associated with a marginal increase in
emissions in a given year, or the benefit of avoiding that increase. In
principle, the SC-GHG includes the value of all climate change impacts,
including (but not limited to) changes in net agricultural
productivity, human health effects, property damage from increased
flood risk and natural disasters, disruption of energy systems, risk of
conflict, environmental migration, and the value of ecosystem services.
The SC-GHG therefore, reflects the societal value of reducing emissions
of the gas in question by one metric ton. The SC-GHG is the
theoretically appropriate value to use in conducting benefit-cost
analyses of policies that affect CO2, N2O, and
CH4 emissions. As a member of the IWG involved in the
development of the February 2021 SC-GHG TSD, DOE agrees that the
interim SC-GHG estimates represent the most appropriate estimate of the
SC-GHG for this rule, which was developed using the interim estimates.
DOE continues to evaluate recent developments in the scientific
literature, including the updated 2023 SC-GHG estimates published by
EPA in December 2023 within their rulemaking on oil and natural gas
sector sources.\139\
---------------------------------------------------------------------------
\139\ Available at www.epa.gov/system/files/documents/2023-12/eo12866_oil-and-gas-nsps-eg-climate-review-2060-av16-final-rule-20231130.pdf.
---------------------------------------------------------------------------
The SC-GHG estimates presented here were developed over many years,
using transparent process, peer-reviewed methodologies, the best
science available at the time of that process, and with input from the
public. Specifically, in 2009, the IWG, which included DOE and other
executive branch agencies and offices was established to ensure that
agencies were using the best available science and to promote
consistency in the social cost of carbon (SC-CO2) values
used across agencies. The IWG published SC-CO2 estimates in
2010 that were developed from an ensemble of three widely cited
integrated assessment models (IAMs) that estimate global climate
damages using highly aggregated representations of climate processes
and the global economy combined into a single modeling framework. The
three IAMs were run using a common set of input assumptions in each
model for future population, economic, and CO2 emissions
growth, as well as equilibrium climate sensitivity--a measure of the
globally averaged temperature response to increased atmospheric
CO2 concentrations. These estimates were updated in 2013
based on new versions of each IAM. In August 2016 the IWG published
estimates of the social cost of methane (SC-CH4) and nitrous
oxide (SC-N2O) using methodologies that are consistent with
the methodology underlying the SC-CO2 estimates. The
modeling approach that extends the IWG SC-CO2 methodology to
non-CO2 GHGs has undergone multiple stages of peer review.
The SC-CH4 and SC-N2O estimates were developed by
Marten et
[[Page 19079]]
al.\140\ and underwent a standard double-blind peer review process
prior to journal publication. In 2015, as part of the response to
public comments received to a 2013 solicitation for comments on the SC-
CO2 estimates, the IWG announced a National Academies of
Sciences, Engineering, and Medicine review of the SC-CO2
estimates to offer advice on how to approach future updates to ensure
that the estimates continue to reflect the best available science and
methodologies. In January 2017, the National Academies released their
final report, Valuing Climate Damages: Updating Estimation of the
Social Cost of Carbon Dioxide, and recommended specific criteria for
future updates to the SC-CO2 estimates, a modeling framework
to satisfy the specified criteria, and both near-term updates and
longer-term research needs pertaining to various components of the
estimation process.\141\ Shortly thereafter, in March 2017, President
Trump issued Executive Order 13783, which disbanded the IWG, withdrew
the previous TSDs, and directed agencies to ensure SC-CO2
estimates used in regulatory analyses are consistent with the guidance
contained in OMB's Circular A-4, ``including with respect to the
consideration of domestic versus international impacts and the
consideration of appropriate discount rates'' (E.O. 13783, section
5(c)). Benefit-cost analyses following E.O. 13783 used SC-GHG estimates
that attempted to focus on the U.S.-specific share of climate change
damages as estimated by the models and were calculated using two
discount rates recommended by Circular A-4, 3 percent and 7 percent.
All other methodological decisions and model versions used in SC-GHG
calculations remained the same as those used by the IWG in 2010 and
2013, respectively.
---------------------------------------------------------------------------
\140\ Marten, A. L., E. A. Kopits, C. W. Griffiths, S. C.
Newbold, and A. Wolverton. Incremental CH4 and
N2O mitigation benefits consistent with the U.S.
Government's SC-CO2 estimates. Climate Policy. 2015.
15(2): pp. 272-298.
\141\ National Academies of Sciences, Engineering, and Medicine.
Valuing Climate Damages: Updating Estimation of the Social Cost of
Carbon Dioxide. 2017. The National Academies Press: Washington, DC.
Available at nap.nationalacademies.org/catalog/24651/valuing-climate-damages-updating-estimation-of-the-social-cost-of.
---------------------------------------------------------------------------
On January 20, 2021, President Biden issued Executive Order 13990,
which re-established the IWG and directed it to ensure that the U.S.
Government's estimates of the social cost of carbon and other
greenhouse gases reflect the best available science and the
recommendations in the National Academies 2017 report. The IWG was
tasked with first reviewing the SC-GHG estimates currently used in
Federal analyses and publishing interim estimates within 30 days of the
E.O. that reflect the full impact of GHG emissions, including by taking
global damages into account. The interim SC-GHG estimates published in
February 2021 are used here to estimate the climate benefits for this
rulemaking. The E.O. instructs the IWG to undertake a fuller update of
the SC-GHG estimates that takes into consideration the advice in the
National Academies 2017 report and other recent scientific literature.
The February 2021 SC-GHG TSD provides a complete discussion of the
IWG's initial review conducted under E.O. 13990. In particular, the IWG
found that the SC-GHG estimates used under E.O. 13783 fail to reflect
the full impact of GHG emissions in multiple ways.
First, the IWG found that the SC-GHG estimates used under E.O.
13783 fail to fully capture many climate impacts that affect the
welfare of U.S. citizens and residents, and those impacts are better
reflected by global measures of the SC-GHG. Examples of omitted effects
from the E.O. 13783 estimates include direct effects on U.S. citizens,
assets, and investments located abroad, supply chains, U.S. military
assets and interests abroad, and tourism, and spillover pathways such
as economic and political destabilization and global migration that can
lead to adverse impacts on U.S. national security, public health, and
humanitarian concerns. In addition, assessing the benefits of U.S. GHG
mitigation activities requires consideration of how those actions may
affect mitigation activities by other countries, as those international
mitigation actions will provide a benefit to U.S. citizens and
residents by mitigating climate impacts that affect U.S. citizens and
residents. A wide range of scientific and economic experts have
emphasized the issue of reciprocity as support for considering global
damages of GHG emissions. If the United States does not consider
impacts on other countries, it is difficult to convince other countries
to consider the impacts of their emissions on the United States. The
only way to achieve an efficient allocation of resources for emissions
reduction on a global basis--and so benefit the U.S. and its citizens--
is for all countries to base their policies on global estimates of
damages. As a member of the IWG involved in the development of the
February 2021 SC-GHG TSD, DOE agrees with this assessment and,
therefore, in this rule DOE centers attention on a global measure of
SC-GHG. This approach is the same as that taken in DOE regulatory
analyses from 2012 through 2016. A robust estimate of climate damages
that accrue only to U.S. citizens and residents does not currently
exist in the literature. As explained in the February 2021 SC-GHG TSD,
existing estimates are both incomplete and an underestimate of total
damages that accrue to the citizens and residents of the U.S. because
they do not fully capture the regional interactions and spillovers
discussed above, nor do they include all of the important physical,
ecological, and economic impacts of climate change recognized in the
climate change literature. As noted in the February 2021 SC-GHG TSD,
the IWG will continue to review developments in the literature,
including more robust methodologies for estimating a U.S.-specific SC-
GHG value, and explore ways to better inform the public of the full
range of carbon impacts. As a member of the IWG, DOE will continue to
follow developments in the literature pertaining to this issue.
Second, the IWG found that the use of the social rate of return on
capital (7 percent under current OMB Circular A-4 guidance) to discount
the future benefits of reducing GHG emissions inappropriately
underestimates the impacts of climate change for the purposes of
estimating the SC-GHG. Consistent with the findings of the National
Academies and the economic literature, the IWG continued to conclude
that the consumption rate of interest is the theoretically appropriate
discount rate in an intergenerational context,\142\ and recommended
that
[[Page 19080]]
discount rate uncertainty and relevant aspects of intergenerational
ethical considerations be accounted for in selecting future discount
rates.
---------------------------------------------------------------------------
\142\ Interagency Working Group on Social Cost of Carbon. Social
Cost of Carbon for Regulatory Impact Analysis under Executive Order
12866. 2010. United States Government. Available at: www.epa.gov/sites/default/files/2016-12/documents/scc_tsd_2010.pdf (last
accessed April 15, 2022); Interagency Working Group on Social Cost
of Carbon. Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order No. 12866. 78 FR
70586 (November 16, 2013). Available at: www.federalregister.gov/documents/2013/11/26/2013-28242/technical-support-document-technical-update-of-the-social-cost-of-carbon-for-regulatory-impact
(last accessed April 15, 2022); Interagency Working Group on Social
Cost of Greenhouse Gases, United States Government. Technical
Support Document: Technical Update on the Social Cost of Carbon for
Regulatory Impact Analysis-Under Executive Order 12866. August 2016.
Available at: www.epa.gov/sites/default/files/2016-12/documents/sc_co2_tsd_august_2016.pdf (last accessed January 18, 2022);
Interagency Working Group on Social Cost of Greenhouse Gases, United
States Government. Addendum to Technical Support Document on Social
Cost of Carbon for Regulatory Impact Analysis under Executive Order
12866: Application of the Methodology to Estimate the Social Cost of
Methane and the Social Cost of Nitrous Oxide. August 2016. Available
at: www.epa.gov/sites/default/files/2016-12/documents/addendum_to_sc-ghg_tsd_august_2016.pdf (last accessed January 18,
2022).
---------------------------------------------------------------------------
Furthermore, the damage estimates developed for use in the SC-GHG
are estimated in consumption-equivalent terms, and so an application of
OMB Circular A-4's guidance for regulatory analysis would then use the
consumption discount rate to calculate the SC-GHG. DOE agrees with this
assessment and will continue to follow developments in the literature
pertaining to this issue. DOE also notes that while OMB Circular A-4,
as published in 2003, recommends using 3-percent and 7-percent discount
rates as ``default'' values, Circular A-4 also reminds agencies that
``different regulations may call for different emphases in the
analysis, depending on the nature and complexity of the regulatory
issues and the sensitivity of the benefit and cost estimates to the key
assumptions.'' On discounting, Circular A-4 recognizes that ``special
ethical considerations arise when comparing benefits and costs across
generations,'' and Circular A-4 acknowledges that analyses may
appropriately ``discount future costs and consumption benefits. . .at a
lower rate than for intragenerational analysis.'' In the 2015 Response
to Comments on the Social Cost of Carbon for Regulatory Impact
Analysis, OMB, DOE, and the other IWG members recognized that
``Circular A-4 is a living document'' and ``the use of 7 percent is not
considered appropriate for intergenerational discounting. There is wide
support for this view in the academic literature, and it is recognized
in Circular A-4 itself.'' Thus, DOE concludes that a 7-percent discount
rate is not appropriate to apply to value the social cost of greenhouse
gases in the analysis presented in this analysis.
To calculate the present and annualized values of climate benefits,
DOE uses the same discount rate as the rate used to discount the value
of damages from future GHG emissions, for internal consistency. That
approach to discounting follows the same approach that the February
2021 SC-GHG TSD recommends ``to ensure internal consistency--i.e.,
future damages from climate change using the SC-GHG at 2.5 percent
should be discounted to the base year of the analysis using the same
2.5 percent rate.'' DOE has also consulted the National Academies' 2017
recommendations on how SC-GHG estimates can ``be combined in RIAs
[regulatory impact analyses] with other cost and benefits estimates
that may use different discount rates.'' The National Academies
reviewed several options, including ``presenting all discount rate
combinations of other costs and benefits with [SC-GHG] estimates.''
As a member of the IWG involved in the development of the February
2021 SC-GHG TSD, DOE agrees with the above assessment and will continue
to follow developments in the literature pertaining to this issue.
While the IWG works to assess how best to incorporate the latest, peer
reviewed science to develop an updated set of SC-GHG estimates, it set
the interim estimates to be the most recent estimates developed by the
IWG prior to the group being disbanded in 2017. The estimates rely on
the same models and harmonized inputs and are calculated using a range
of discount rates. As explained in the February 2021 SC-GHG TSD, the
IWG has recommended that agencies revert to the same set of four values
drawn from the SC-GHG distributions based on three discount rates as
were used in regulatory analyses between 2010 and 2016 and were subject
to public comment. For each discount rate, the IWG combined the
distributions across models and socioeconomic emissions scenarios
(applying equal weight to each) and then selected a set of four values
recommended for use in benefit-cost analyses: an average value
resulting from the model runs for each of three discount rates (2.5
percent, 3 percent, and 5 percent), plus a fourth value, selected as
the 95th percentile of estimates based on a 3 percent discount rate.
The fourth value was included to provide information on potentially
higher-than-expected economic impacts from climate change. As explained
in the February 2021 SC-GHG TSD, and DOE agrees, this update reflects
the immediate need to have an operational SC-GHG for use in regulatory
benefit-cost analyses and other applications that was developed using a
transparent process, peer-reviewed methodologies, and the science
available at the time of that process. Those estimates were subject to
public comment in the context of dozens of proposed rulemakings as well
as in a dedicated public comment period in 2013.
There are a number of limitations and uncertainties associated with
the SC-GHG estimates. First, the current scientific and economic
understanding of discounting approaches suggests discount rates
appropriate for intergenerational analysis in the context of climate
change are likely to be less than 3 percent, near 2 percent or
lower.\143\ Second, the IAMs used to produce these interim estimates do
not include all of the important physical, ecological, and economic
impacts of climate change recognized in the climate change literature
and the science underlying their ``damage functions''--i.e., the core
parts of the IAMs that map global mean temperature changes and other
physical impacts of climate change into economic (both market and
nonmarket) damages--lags behind the most recent research. For example,
limitations include the incomplete treatment of catastrophic and non-
catastrophic impacts in the integrated assessment models, their
incomplete treatment of adaptation and technological change, the
incomplete way in which inter-regional and intersectoral linkages are
modeled, uncertainty in the extrapolation of damages to high
temperatures, and inadequate representation of the relationship between
the discount rate and uncertainty in economic growth over long time
horizons. Likewise, the socioeconomic and emissions scenarios used as
inputs to the models do not reflect new information from the last
decade of scenario generation or the full range of projections. The
modeling limitations do not all work in the same direction in terms of
their influence on the SC-CO2 estimates. However, as
discussed in the February 2021 SC-GHG TSD, the IWG has recommended
that, taken together, the limitations suggest that the interim SC-GHG
estimates used in this direct final rule likely underestimate the
damages from GHG emissions. DOE concurs with this assessment.
---------------------------------------------------------------------------
\143\ Interagency Working Group on Social Cost of Greenhouse
Gases. 2021. Technical Support Document: Social Cost of Carbon,
Methane, and Nitrous Oxide Interim Estimates under Executive Order
13990. February. United States Government. Available at
www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution/.
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DOE's derivations of the SC-CO2, SC-N2O, and
SC-CH4 values used for this direct final rule are discussed
in the following sections, and the results of DOE's analyses estimating
the benefits of the reductions in emissions of these GHGs are presented
in section V.B.6 of this document.
a. Social Cost of Carbon
The SC-CO2 values used for this direct final rule were
based on the values developed for the February 2021 SC-GHG TSD, which
are shown in Table IV.23 in five-year increments from 2020 to 2050. The
set of annual values that DOE used, which was adapted from estimates
published by EPA,\144\ is
[[Page 19081]]
presented in appendix 14A of the direct final rule TSD. These estimates
are based on methods, assumptions, and parameters identical to the
estimates published by the IWG (which were based on EPA modeling), and
include values for 2051 to 2070. DOE expects additional climate
benefits to accrue for products still operating after 2070, but a lack
of available SC-CO2 estimates for emissions years beyond
2070 prevents DOE from monetizing these potential benefits in this
analysis.
---------------------------------------------------------------------------
\144\ See EPA, Revised 2023 and Later Model Year Light-Duty
Vehicle GHG Emissions Standards: Regulatory Impact Analysis,
Washington, DC, December 2021. Available at nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1013ORN.pdf (last accessed February 21, 2023).
Table IV.23--Annual SC-CO Values From 2021 Interagency Update, 2020-2050
[2020$ per Metric Ton CO]
----------------------------------------------------------------------------------------------------------------
Discount rate and statistic
---------------------------------------------------------------
5% 3% 2.5% 3%
Year ---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
2020............................................ 14 51 76 152
2025............................................ 17 56 83 169
2030............................................ 19 62 89 187
2035............................................ 22 67 96 206
2040............................................ 25 73 103 225
2045............................................ 28 79 110 242
2050............................................ 32 85 116 260
----------------------------------------------------------------------------------------------------------------
DOE multiplied the CO2 emissions reduction estimated for
each year by the SC-CO2 value for that year in each of the
four cases. DOE adjusted the values to 2022$ using the implicit price
deflator for gross domestic product (``GDP'') from the Bureau of
Economic Analysis. To calculate a present value of the stream of
monetary values, DOE discounted the values in each of the four cases
using the specific discount rate that had been used to obtain the SC-
CO2 values in each case.
For this direct final rule, DOE considered comments it had received
regarding its approach for monetizing greenhouse gas emissions in the
March 2023 NOPR. The approach used for this direct final rule is
largely the same as the approach DOE had used for the March 2023 NOPR
analysis.
In response to the March 2023 NOPR, the AGs of TN et al. commented
that DOE's misguided use of the SC-GHG estimates is a significant
problem with the proposed standards. (AGs of TN et al., No. 438 at p.
1) The AGs of TN et al. attached as evidence their comment letter in
response to DOE's proposed standards for consumer conventional cooking
products, in which they expressed detailed concerns about the IWG
estimates. The AGs of TN et al. noted that the reversal of the
preliminary injunction that a coalition of States received in Louisiana
v. Biden, 585 F. Supp. 3d 840 (W.D. La. 2022) does not change the
criticisms in the aforementioned comment letter. (AGs of TN et al., No.
438 at p. 2)
CEI reiterated its comments in response to a NOPR for residential
furnaces published on July 7, 2022, which noted numerous flaws with the
IWG 2021 estimates, nearly all of which serve to overstate the
calculated benefits of avoided emissions. CEI commented that IWG used
improperly low discount rates, relied on climate models that have
consistently overstated actual warming and on baseline emission
scenarios that assume an increasingly coal-centric global energy system
through 2100 and beyond, while downplaying the capacity for adaptation
to mitigate climate impacts. (CEI, No. 454 at pp. 6-7) CEI stated the
other questionable assumptions, including the claimed climate benefits
out 300 years into the future and the use of global rather than
national benefits, are skewed toward inflating the end result. (Id. at
p. 7)
Fisher et al. commented that researchers at the Heritage Foundation
found that under very reasonable assumptions, these models can offer a
plethora of different estimates of the social cost of carbon (``SCC''),
ranging from extreme damages to overall benefits. Fisher et al. stated
that this research makes it apparent that the vast potential estimates
of the SCC suggest that the economic impact of climate change is highly
questionable. Fisher et al. commented that the variability in the SCC
that is used to justify this rule renders the rule as arbitrary and
capricious. (Fisher et al., No. 463 at p. 6)
Strauch stated that the social cost of carbon is a dubious concept,
suggesting that its validity is increasingly doubted due to
discrepancies between climate models and observed temperatures.
(Strauch, No. 430 at p. 3)
DOE notes that the standards in this direct final rule are not
based on the SC-GHG and that DOE would issue the same standards even in
the absence of the climate benefits.
The IWG's SC-GHG estimates were developed over many years, using a
transparent process, peer-reviewed methodologies, the best science
available at the time of that process, and with input from the public.
A number of criticisms raised in the comment letter attached by the AGs
of TN et al. were addressed by the IWG in its February 2021 SC-GHG TSD,
and previous parts of this section summarized the IWG's conclusions on
key issues, including the question of discount rates cited by CEI. The
IWG's 2016 TSD and the 2017 National Academies report provide detailed
discussions of the ways in which the modeling underlying the
development of the SC-GHG estimates addressed quantified sources of
uncertainty. In the February 2021 SC-GHG TSD, the IWG stated that the
models used to produce the interim estimates do not include all of the
important physical, ecological, and economic impacts of climate change
recognized in the climate change literature. For these same impacts,
the science underlying their ``damage functions'' lags behind the most
recent research. In the judgment of the IWG, these and other
limitations suggest that the range of four interim SC-GHG estimates
presented in the TSD likely underestimate societal damages from GHG
emissions. The IWG is in the
[[Page 19082]]
process of assessing how best to incorporate the latest peer-reviewed
science and the recommendations of the National Academies to develop an
updated set of SC-GHG estimates.
AHAM objected to DOE using the social cost of carbon and other
monetization of emissions reductions benefits in its analysis of the
factors EPCA requires DOE to balance in determining the appropriate
standard. AHAM stated that while it may be acceptable for DOE to
continue its current practice of examining the social cost of carbon
and monetization of other emissions reductions benefits as
informational so long as the underlying interagency analysis is
transparent and vigorous, the monetization analysis should not impact
the TSL DOE selects as a new or amended standard. AHAM commented that
it is inappropriate for DOE to rely upon the highly subjective and
ever-changing monetization estimates in justifying an energy
conservation standard. (AHAM, No. 464 at p. 46) Additionally, AHAM
stated they do not necessarily object to DOE considering the benefits,
they object to DOE relying upon those benefits to justify a rule given
the uncertain and ever-evolving nature of those estimates. AHAM
commented that EPCA requires DOE to balance the factors, such that DOE
must consider EPCA's factors together and achieve a balance of impacts
and benefits. (Id.)
The AGs of TN et al. stated that the rote application of the IWG
estimates is inappropriate. (AGs of TN et al., No. 438 at p. 2) The AGs
of TN et al. stated that even if it is important to take into account
emissions reductions when considering the need for national energy
conservation, the IWG estimates are unlawful and poor methods for doing
so. The AGs of TN et al. commented that the IWG's SC-GHG estimates are
fundamentally flawed and are an unreliable metric on which to base
administrative action. The AGs of TN et al. requested that DOE revisit
its reliance on those numbers in this and other standards. (Id.)
As stated in section III.F.1.f of this document, DOE accounts for
the environmental and public health benefits associated with the more
efficient use of energy, including those connected to global climate
change, as they are important to take into account when considering the
need for national energy conservation. (See 42 U.S.C.
6295(o)(2)(B)(i)(IV)) In addition, Executive Order 13563, which was re-
affirmed on January 21, 2021, stated that each agency must, among other
things: ``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).'' For these reasons, DOE
includes the monetized value of emissions reductions in its evaluation
of potential standard levels. While the benefits associated with
reduction of GHG emissions inform DOE's evaluation of potential
standards, the action of proposing or adopting specific standards is
not ``based on'' the SC-GHG values, as DOE would reach the same
conclusion regarding the economic justification of standards presented
in this direct final rule without considering the social cost of
greenhouse gases. At the Recommended TSL, the average LCC savings for
all product classes is positive. In addition, the FFC national energy
savings are significant and the NPV of consumer benefits is positive
using both a 3-percent and 7-percent discount rate. Even when measured
at the more conservative discount rate of 7 percent, the NPV of
consumer benefits is over 11 times higher than the maximum estimated
manufacturers' loss in INPV.
Fisher et al. commented that even assuming the climate has the
highest sensitivity to CO2 emissions under the variety of
possibilities envisioned by the Intergovernmental Panel on Climate
Change (``IPCC''), the proposed standards do not have any tangible
impacts on global temperatures, and therefore the DOE should refrain
from considering environmental impacts in its assessment of the
proposed standards. (Fisher et al., No. 463 at p. 7)
In the context of global CO2 emissions, any single
policy action is likely to have a relatively small impact. As long as
that impact can be quantified in a reasonable manner, however, it is
consistent with sound regulatory analysis to include such impacts. As
noted above, while the benefits associated with reduction of GHG
emissions inform DOE's evaluation of potential standards, the action of
proposing or adopting specific standards is not ``based on'' the SC-GHG
values, as DOE would reach the same conclusion regarding the economic
justification of standards presented in this direct final rule without
considering the social cost of greenhouse gases.
b. Social Cost of Methane and Nitrous Oxide
The SC-CH4 and SC-N2O values used for this
direct final rule were based on the values developed for the February
2021 SC-GHG TSD. Table IV.24 shows the updated sets of SC-
CH4 and SC-N2O estimates from the latest
interagency update in 5-year increments from 2020 to 2050. The full set
of annual values used is presented in appendix 14A of the direct final
rule TSD. To capture the uncertainties involved in regulatory impact
analysis, DOE has determined it is appropriate to include all four sets
of SC-CH4 and SC-N2O values, as recommended by
the IWG. DOE derived values after 2050 using the approach described
above for the SC-CO2.
Table IV.24--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2050 (2020$ per Metric Ton)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SC-CH4 SC-N2O
-------------------------------------------------------------------------------------------------------------------------------
Discount Rate and Statistic Discount Rate and Statistic
-------------------------------------------------------------------------------------------------------------------------------
Year 5% 3% 2.5% 3% 5% 3% 2.5% 3%
-------------------------------------------------------------------------------------------------------------------------------
95th 95th
Average Average Average percentile Average Average Average percentile
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2020............................................................ 670 1500 2000 3900 5800 18000 27000 48000
2025............................................................ 800 1700 2200 4500 6800 21000 30000 54000
2030............................................................ 940 2000 2500 5200 7800 23000 33000 60000
2035............................................................ 1100 2200 2800 6000 9000 25000 36000 67000
2040............................................................ 1300 2500 3100 6700 10000 28000 39000 74000
2045............................................................ 1500 2800 3500 7500 12000 30000 42000 81000
2050............................................................ 1700 3100 3800 8200 13000 33000 45000 88000
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 19083]]
DOE multiplied the CH4 and N2O emissions
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates for that year in each of the cases. DOE
adjusted the values to 2022$ using the implicit price deflator for GDP
from the Bureau of Economic Analysis. To calculate a present value of
the stream of monetary values, DOE discounted the values in each of the
cases using the specific discount rate that had been used to obtain the
SC-CH4 and SC-N2O estimates in each case.
c. Sensitivity Analysis Using Updated 2023 SC-GHG Estimates
In December 2023, EPA issued a new set of SC-GHG (``2023 SC-GHG'')
estimates in connection with a final rulemaking under the Clean Air
Act.\145\ For this rulemaking, DOE used these updated 2023 SC-GHG
values to conduct a sensitivity analysis of the value of GHG emissions
reductions associated with alternative standards for RCWs. This
sensitivity analysis provides an expanded range of potential climate
benefits associated with amended standards. The final year of the 2023
SC-GHG estimates is 2080; therefore, DOE did not monetize the climate
benefits of GHG emissions reductions occurring after 2080.
---------------------------------------------------------------------------
\145\ Available at: www.epa.gov/environmental-economics/scghg.
---------------------------------------------------------------------------
The overall climate benefits are larger when using the higher,
updated 2023 SC-GHG estimates, compared to the climate benefits using
the older IWG SC-GHG estimates. However, DOE's conclusion that the
standards are economically justified remains the same regardless of
which SC-GHG estimates are used.
The results of the sensitivity analysis are presented in appendix
14C of the direct final rule TSD.
2. Monetization of Other Emissions Impacts
For this direct final rule, DOE estimated the monetized value of
NOX and SO2 emissions reductions from electricity
generation using benefit per ton estimates for that sector from the
EPA's Benefits Mapping and Analysis Program.\146\ DOE used EPA's values
for PM2.5-related benefits associated with NOX
and SO2 and for ozone-related benefits associated with
NOX for 2025 and 2030, and 2040, calculated with discount
rates of 3 percent and 7 percent. DOE used linear interpolation to
define values for the years not given in the 2025 to 2040 period; for
years beyond 2040, the values are held constant. DOE combined the EPA
regional benefit-per-ton estimates with regional information on
electricity consumption and emissions from AEO2023 to define weighted-
average national values for NOX and SO2 (see
appendix 14B of the direct final rule TSD).
---------------------------------------------------------------------------
\146\ U.S. Environmental Protection Agency. Estimating the
Benefit per Ton of Reducing Directly-Emitted PM2.5,
PM2.5 Precursors and Ozone Precursors from 21 Sectors.
Available at www.epa.gov/benmap/estimating-benefit-ton-reducing-directly-emitted-pm25-pm25-precursors-and-ozone-precursors.
---------------------------------------------------------------------------
DOE also estimated the monetized value of NOX and
SO2 emissions reductions from site use of natural gas in
RCWs using benefit per ton estimates from the EPA's Benefits Mapping
and Analysis Program. Although none of the sectors covered by EPA
refers specifically to residential and commercial buildings, the sector
called ``area sources'' would be a reasonable proxy for residential and
commercial buildings.\147\ The EPA document provides high and low
estimates for 2025 and 2030 at 3- and 7-percent discount rates.\148\
DOE used the same linear interpolation and extrapolation as it did with
the values for electricity generation.
---------------------------------------------------------------------------
\147\ ``Area sources'' represents all emission sources for which
states do not have exact (point) locations in their emissions
inventories. Because exact locations would tend to be associated
with larger sources, ``area sources'' would be fairly representative
of small dispersed sources like homes and businesses.
\148\ ``Area sources'' are a category in the 2018 document from
EPA, but are not used in the 2021 document cited previously.
Available at www.epa.gov/sites/default/files/2018-02/documents/sourceapportionmentbpttsd_2018.pdf.
---------------------------------------------------------------------------
DOE multiplied the site emissions reduction (in tons) in each year
by the associated $/ton values, and then discounted each series using
discount rates of 3 percent and 7 percent as appropriate.
M. Utility Impact Analysis
The utility impact analysis estimates the changes in installed
electrical capacity and generation projected to result for each
considered TSL. The analysis is based on published output from the NEMS
associated with AEO2023. NEMS produces the AEO Reference case, as well
as a number of side cases that estimate the economy-wide impacts of
changes to energy supply and demand. For the current analysis, impacts
are quantified by comparing the levels of electricity sector
generation, installed capacity, fuel consumption and emissions in the
AEO2023 Reference case and various side cases. Details of the
methodology are provided in the appendices to chapters 13 and 15 of the
direct final rule TSD.
The output of this analysis is a set of time-dependent coefficients
that capture the change in electricity generation, primary fuel
consumption, installed capacity and power sector emissions due to a
unit reduction in demand for a given end use. These coefficients are
multiplied by the stream of electricity savings calculated in the NIA
to provide estimates of selected utility impacts of potential new or
amended energy conservation standards.
N. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one
factor in selecting a standard. Employment impacts from new or amended
energy conservation standards include both direct and indirect impacts.
Direct employment impacts are any changes in the number of employees of
manufacturers of the products subject to standards, their suppliers,
and related service firms. The MIA addresses those impacts. Indirect
employment impacts are changes in national employment that occur due to
the shift in expenditures and capital investment caused by the purchase
and operation of more-efficient appliances. Indirect employment impacts
from standards consist of the net jobs created or eliminated in the
national economy, other than in the manufacturing sector being
regulated, caused by (1) reduced spending by consumers on energy, (2)
reduced spending on new energy supply by the utility industry, (3)
increased consumer spending on the products to which the new standards
apply and other goods and services, and (4) the effects of those three
factors throughout the economy.
One method for assessing the possible effects on the demand for
labor of such shifts in economic activity is to compare sector
employment statistics developed by the BLS. BLS regularly publishes its
estimates of the number of jobs per million dollars of economic
activity in different sectors of the economy, as well as the jobs
created elsewhere in the economy by this same economic activity. Data
from BLS indicate that expenditures in the utility sector generally
create fewer jobs (both directly and indirectly) than expenditures in
other sectors of the economy.\149\ There are many reasons for these
differences, including wage differences and the fact that the utility
sector is more capital-
[[Page 19084]]
intensive and less labor-intensive than other sectors. Energy
conservation standards have the effect of reducing consumer utility
bills. Because reduced consumer expenditures for energy likely lead to
increased expenditures in other sectors of the economy, the general
effect of efficiency standards is to shift economic activity from a
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, the BLS
data suggest that net national employment may increase due to shifts in
economic activity resulting from energy conservation standards.
---------------------------------------------------------------------------
\149\ See U.S. Department of Commerce-Bureau of Economic
Analysis. Regional Multipliers: A User Handbook for the Regional
Input-Output Modeling System (``RIMS II''). 1997. U.S. Government
Printing Office: Washington, DC. Available at https://www.bea.gov/resources/methodologies/RIMSII-user-guide (last accessed July 1,
2021).
---------------------------------------------------------------------------
DOE estimated indirect national employment impacts for the standard
levels considered in this direct final rule using an input/output model
of the U.S. economy called Impact of Sector Energy Technologies version
4 (``ImSET'').\150\ ImSET is a special-purpose version of the ``U.S.
Benchmark National Input-Output'' (``I-O'') model, which was designed
to estimate the national employment and income effects of energy-saving
technologies. The ImSET software includes a computer-based I-O model
having structural coefficients that characterize economic flows among
187 sectors most relevant to industrial, commercial, and residential
building energy use.
---------------------------------------------------------------------------
\150\ Livingston, O. V., S. R. Bender, M. J. Scott, and R. W.
Schultz. ImSET 4.0: Impact of Sector Energy Technologies Model
Description and User's Guide. 2015. Pacific Northwest National
Laboratory: Richland, WA. PNNL-24563.
---------------------------------------------------------------------------
DOE notes that ImSET is not a general equilibrium forecasting
model, and that the uncertainties involved in projecting employment
impacts, especially changes in the later years of the analysis. Because
ImSET does not incorporate price changes, the employment effects
predicted by ImSET may over-estimate actual job impacts over the long
run for this rule. Therefore, DOE used ImSET only to generate results
for near-term timeframes (2027-2031), where these uncertainties are
reduced. For more details on the employment impact analysis, see
chapter 16 of the direct final rule TSD.
O. Regulatory Impact Analysis
For any regulatory action that the Administrator of the Office of
Information and Regulatory Affairs (``OIRA'') within OMB determines is
a significant regulatory action under section 3(f)(1) of E.O. 12866,
section 6(a)(3)(C) of E.O. 12866 requires Federal agencies to provide
an assessment, including the underlying analysis, of costs and benefits
of potentially effective and reasonably feasible alternatives to the
planned regulation, identified by the agencies or the public (including
improving the current regulation and reasonably viable non-regulatory
actions), and an explanation why the planned regulatory action is
preferable to the identified potential alternatives. 58 FR 51735,
51741. As discussed further in section VII.A of this document, OIRA has
determined that this final regulatory action constitutes a
``significant regulatory action'' within the scope of section 3(f)(1)
of E.O. 12866, as amended by E.O. 14094. Accordingly, DOE conducted a
regulatory impact analysis (``RIA'') for this direct final rule.
As part of the RIA, DOE identifies major alternatives to standards
that represent feasible policy options to reduce the energy and water
consumption of the covered product. DOE evaluates each alternative in
terms of its ability to achieve significant energy and water savings at
a reasonable cost, and compares the effectiveness of each alternative
to the effectiveness of the finalized standard. DOE recognizes that
voluntary or other non-regulatory efforts by manufacturers, utilities,
and other interested parties can substantially affect energy and water
efficiency or reduce energy and water consumption. DOE bases its
assessment on the recorded impacts of any such initiatives to date, but
also considers information presented by interested parties regarding
the impacts current initiatives may have in the future. Further details
regarding the RIA are provided in chapter 17 of the direct final rule
TSD.
NMHC and NAA commented that the proposed rulemaking accompanies a
series of similar rulemakings DOE is proposing, all seeking to change
the performance standards for essential residential appliances. (NMHC
and NAA, No. 451 at p. 4) NMHC and NAA recommended that DOE consider
the collective impacts of these requirements and recognize that, in
practice, the effect of individual pricing increases is magnified when
housing providers must manage cost escalations across multiple products
at once. (Id.)
While EPCA does not specifically require DOE to consider the
cumulative burden of standards on appliance purchasers when evaluating
the economic justification of specific standards, DOE is sympathetic to
the potential for such a burden. DOE is aware that the compliance dates
of revised standards for a number of major appliances (clothes washers,
consumer clothes dryers, dishwashers, and consumer conventional cooking
products) are in 2027 or 2028, and those for refrigerators are in 2029
or 2030. However, consumers' replacement of older appliances with
standards-compliant ones would occur gradually over time. In addition,
the incremental cost increase of the adopted standards is relatively
small on a percentage basis for most of these appliances.
Strauch commented that DOE's analysis does not appear to address
the cumulative regulatory burden on consumers, commenting that consumer
choice is diminished as many rulemakings are being pushed out in a
short time frame. (Strauch, No. 430 at p. 3) Salman commented that DOE
providing vouchers to low-income families to purchase new, energy
efficient RCWs could lower the short-term cost barrier and facilitate
wider adoption of sustainable laundry solutions. (Salman, No. 446 at p.
2)
AWE recommended that the Federal Government increase funding,
rebates, direct install programs, tax credits, and other incentives to
replace older, less-efficient RCWs. (AWE, No. 444 at p. 6) AWE
recommended that DOE use whatever authorities and funding available to
help minimize additional up-front costs for consumers and accelerate
the replacement of older RCWs. (Id.) AWE stated that, according to data
from the REU 2016 study, rebates offered by local water utilities for
RCWs have resulted in significant water savings since 1999. (Id.)
As discussed, E.O. 12866 directs DOE to assess potentially
effective and reasonably feasible alternatives to the planned
regulation, and to provide an explanation why the planned regulatory
action is preferable to the identified potential alternatives. As part
of the RIA, DOE analyzed five non-regulatory policy alternatives to the
finalized standards for RCWs, including consumer rebates, consumer tax
credits, manufacturer tax credits, voluntary energy efficiency targets,
and bulk government purchases. The energy saving benefits from the
alternative policies, range from 0.01 percent to 9.5 percent of the
benefits from the Recommended TSL. Chapter 17 of the direct final rule
TSD provides DOE's analysis of the impacts of these alternatives to the
planned regulation.
Notwithstanding the requirements of E.O. 12866, as discussed, DOE
is required by EPCA to establish or amend standards for a covered
product that are designed to achieve the maximum improvement in energy
efficiency, which the Secretary determines is technologically feasible
and economically justified. (42 U.S.C. 6295(o)(2)(A)) DOE has
determined that amended standards enacted by this direct final rule
achieve the maximum
[[Page 19085]]
improvement in energy efficiency that is technologically feasible and
economically justified.
P. Other Comments
As discussed previously, DOE considered relevant comments, data,
and information obtained during its own rulemaking process in
determining whether the recommended standards from the Joint Agreement
are in accordance with 42 U.S.C. 6295(o). And while some of those
comments were directed at specific aspects of DOE's analysis of the
Joint Agreement under 42 U.S.C. 6295(o), others were more generally
applicable to DOE's energy conservation standards rulemaking program as
a whole. The ensuing discussion focuses on these general comments
concerning energy conservation standards issued under EPCA.
1. Commerce Clause
The AGs of TN et al. commented that DOE's approach to Congress's
Commerce Clause is improper because precedent dictates that Congress
can only regulate intrastate activity under the Commerce Clause when
that activity ``substantially affects interstate commerce.'' (AGs of TN
et al., No. 438 at p. 3) The AGs of TN et al. commented that for the
proposed standards to reach the intrastate market for RCWs, DOE must
show that the intrastate activity covered by 42 U.S.C. 6291(17) and
6302(5) substantially affects the interstate market for those products
and the proposed standards show no constitutional basis for applying
the standards to intrastate commerce in RCWs. (Id. at pp. 3-4) The AGs
of TN et al. added that if such an analysis showed the intrastate
market did not substantially affect the interstate market (and so was
not properly the subject of Federal regulation), then DOE would be
obligated to redo its cost-benefit analysis since the proposed
standards would apply to a more limited set of products--those
traveling interstate. Additionally, the AGs of TN et al. stated that
even if DOE finds that intrastate commerce in clothes washers
substantially affects interstate commerce, it should still exclude
purely intrastate activities from any promulgated standard. (Id. at p.
4)
The AGs of TN et al. commented that the involvement of water
conservation and water efficiency adds to the issue. (Id.) The AGs of
TN et al. cited two cases involving State water rights and commented
that because the proposed standards regulate water use, they trench on
the States' authority in that area. (Id.) The AGs of TN et al.
commented that since the proposed standards involve the regulation of
consumer goods and water use, fields traditionally belonging to the
States, it suggests that EPCA does not provide DOE such sweeping
authority. (Id. at p. 5) The AGs of TN et al. commented that all
intrastate activity should be excluded from the proposed standards,
even if such activity substantially affects interstate commerce in
RCWs. (Id.)
New York State Public Service Commission (``NYS PSC'') recommended
that DOE reject arguments from commenters who suggest that DOE lacks
the authority to implement the proposed standards for RCWs, stating
that (1) the United States Constitution empowers Congress, and (2)
violate the concept of the separation of powers. (NYS PSC, No. 450 at
p. 4) NYS PSC stated that the U.S. Constitution empowers Congress to
enact legislation to regulate interstate commerce and it is well-
settled that objects that move in interstate commerce are subject to
Federal regulation and within Congress's authority to provide that
objects moving in interstate commerce meet certain standards. NYS PSC
added that there is no support for the notion that the delegation of
authority to DOE to set energy efficiency standards runs afoul of the
constitutional prohibition on executive agencies exercising legislative
powers under either the ``nondelegation'' doctrine or ``major
questions'' doctrine; noting that there is an ``intelligible
principle'' provided by Congress to guide DOE's regulations and an
express command from Congress to regulate this field of economic
activity. (Id.)
DOE also received 13 comments from individual commenters
questioning DOE's authority to promulgate energy efficiency standards.
In response to the AGs of TN et al., DOE believes the scope of the
standard proposed in the March 2023 NOPR and the amended standard
adopted in this direct final rule properly includes all RCWs
distributed in commerce for personal use or consumption because
intrastate activity regulated by 42 U.S.C. 6291(17) and 6302 is
inseparable from and substantially affects interstate commerce. DOE has
clear authority under EPCA to regulate the energy use of a variety of
consumer products and certain commercial and industrial equipment,
including the subject RCWs. See 42 U.S.C. 6295. Based on this statutory
authority, DOE has a long-standing practice of issuing standards with
the same scope as the standards in this direct final rule. For example,
DOE has maintained a similar scope of products (except for the
differentiation of a semi-automatic product class \151\ and the suds-
saving product class \152\) in the direct final rule that amended the
current standards for RCWs, which was published on May 31, 2012 (77 FR
32308), and the prior final rule that amended standards for RCWs, which
published on January 12, 2001 (66 FR 3314). DOE disagrees with the AGs
of TN et al.'s contention that the Commerce clause, the Tenth
Amendment, States' water rights, or any canons of statutory
construction limit DOE's clear and long-standing authority under EPCA
to adopt the standard, including its scope, in this direct final rule.
A further discussion regarding the AGs of TN et al.'s federalism
concerns can be found at section VII.E of this document.
---------------------------------------------------------------------------
\151\ The May 2012 Direct Final Rule for RCWs removed the semi-
automatic product class because DOE was not aware of any RCWs on the
market at that time. 77 FR 32308, 32317.
\152\ Similarly, the suds-saving product class was removed in
the May 2012 Direct Final Rule because DOE did not identify any RCWs
in that product class on the market at that time. Id.
---------------------------------------------------------------------------
2. Test Cloth
Both appendix J and appendix J2 require that testing on clothes
washers be conducted using specialized test cloth that conforms to the
specifications outlined in 10 CFR part 430, subpart B, appendix J3
(``appendix J3''). These specifications include fiber content, thread
count, fabric weight, and weave type, among other requirements. Test
cloth is manufactured in batches called ``lots,'' which are quantities
of test cloth that have been manufactured with the same batches of
cotton and polyester during one continuous process.
In response to the March 2023 NOPR, AHAM \153\ commented that
manufacturers of RCWs do not have an adequate supply of uniform test
cloth to evaluate redesigns for the potential new standards. (AHAM, No.
503 at p. 4) AHAM further commented that Lot 25A, the latest lot of
test cloth produced for the clothes washer industry, fails to meet the
defined specifications for thread diameter, and the weave is
inconsistent with the specification cloth used by manufacturers during
product testing for the past 8 years. (Id.)
---------------------------------------------------------------------------
\153\ AHAM's supplemental comment (No. 503) was received 64 days
after the comment submission deadline. DOE generally will not
consider late filed comments, but may exercise its discretion to do
so where necessary and appropriate. In this case, DOE is considering
AHAM's comment because its tardiness has not disrupted DOE's
consideration of this matter and because the comment regards a
subject important to this matter.
---------------------------------------------------------------------------
DOE is currently working closely with industry via the AHAM Test
Cloth Task Force in its evaluation of the suitability
[[Page 19086]]
of Lot 25A as well as to develop short-term and long-term solutions to
mitigate any potential concerns regarding the availably of test cloth
for the clothes washer industry.
3. National Academy of Sciences Report
The National Academies of Sciences, Engineering, and Medicine
(``NAS'') periodically appoint a committee to peer review the
assumptions, models, and methodologies that DOE uses in setting energy
conservation standards for covered products and equipment. The most
recent such peer review was conducted in a series of meetings in 2020,
and NAS issued the report \154\ in 2021 detailing its findings and
recommendations on how DOE can improve its analyses and align them with
best practices for cost-benefit analysis.
---------------------------------------------------------------------------
\154\ National Academies of Sciences, Engineering, and Medicine.
2021. Review of Methods Used by the U.S. Department of Energy in
Setting Appliance and Equipment Standards. Washington, DC: The
National Academies Press. Available at doi.org/10.17226/25992 (last
accessed August 2, 2023).
---------------------------------------------------------------------------
AHAM stated that despite previous requests from AHAM and others,
DOE has failed to review and incorporate the recommendations of the NAS
report, instead indicating that it will conduct a separate rulemaking
process without such a process having been initiated. (AHAM, No. 464 at
pp. 24-25) AHAM further stated that DOE seems to be ignoring the
recommendations in the NAS Report and even conducting analysis that is
opposite to the recommendations. AHAM commented that DOE cannot
continue to perpetuate the errors in its analytical approach that have
been pointed out by stakeholders and the NAS report as to do so will
lead to arbitrary and capricious rules. (Id.)
As discussed, the rulemaking process for establishing new or
amended standards for covered products and equipment are specified at
appendix A to subpart C of 10 CFR part 430, and DOE periodically
examines and revises these provisions in separate rulemaking
proceedings. The recommendations in the NAS report, which pertain to
the processes by which DOE analyzes energy conservation standards, will
be considered by DOE in a separate rulemaking process.
V. Analytical Results and Conclusions
The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for RCWs.
It addresses the TSLs examined by DOE, the projected impacts of each of
these levels if adopted as energy conservation standards for RCWs, and
the standards levels that DOE is adopting in this direct final rule.
Additional details regarding DOE's analyses are contained in the direct
final rule TSD supporting this document.
A. Trial Standard Levels
In general, DOE typically evaluates potential new or amended
standards for products and equipment by grouping individual efficiency
levels for each class into TSLs. Use of TSLs allows DOE to identify and
consider manufacturer cost interactions between the product classes, to
the extent that there are such interactions, and price elasticity of
consumer purchasing decisions that may change when different standard
levels are set.
In the analysis conducted for this direct final rule, DOE analyzed
the benefits and burdens of four TSLs for RCWs. DOE developed TSLs that
combine efficiency levels for each analyzed product class. DOE presents
the results for the TSLs in this document, while the results for all
efficiency levels that DOE analyzed are in the direct final rule TSD.
Tables V.1 through V.3 present the TSLs and the corresponding
efficiency levels that DOE has identified for potential amended energy
conservation standards for RCWs. TSL 4 represents the maximum
technologically feasible (``max-tech'') energy and water efficiency for
all product classes. TSL 3 represents the ENERGY STAR Most-Efficient
level for front-loading RCWs and CCE Tier 1 for top-loading RCWs. TSL
2--which corresponds to the Recommended TSL in the Joint Agreement--
represents the ENERGY STAR Most Efficient level for front-loading
compact RCWs, and ENERGY STAR v. 8.1 for top-loading and front-loading
standard-size RCWs. TSL 1 represents EL 1 across all product classes.
Table V.1--Trial Standard Levels for Top-Loading Residential Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-loading, ultra-compact Top-loading, standard-size
-------------------------------------------------------------------------------------------------------------------
TSL EER (lb/kWh/ WER (lb/gal/ Efficiency EER (lb/kWh/ WER (lb/gal/
Efficiency level cycle) cycle) level cycle) cycle)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1................................... Baseline.......................... 3.79 0.29 1 3.89 0.47
2................................... Baseline.......................... 3.79 0.29 2 4.27 0.57
3................................... Baseline.......................... 3.79 0.29 3 4.78 0.63
4................................... Baseline.......................... 3.79 0.29 4 5.37 0.67
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.2--Trial Standard Levels for Front-Loading Residential Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Front-loading, compact Front-loading, standard-size
-----------------------------------------------------------------------------------------------
TSL Efficiency EER (lb/kWh/ WER (lb/gal/ Efficiency EER (lb/kWh/ WER (lb/gal/
level cycle) cycle) level cycle) cycle)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 1 4.80 0.62 1 5.31 0.69
2....................................................... 2 5.02 0.71 2 5.52 0.77
3....................................................... 2 5.02 0.71 3 5.73 0.77
4....................................................... 4 5.97 0.80 4 5.97 0.85
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 19087]]
Table V.3--Trial Standard Levels for Semi-Automatic Residential Clothes Washers
----------------------------------------------------------------------------------------------------------------
Semi-automatic
-----------------------------------------------
TSL Efficiency EER (lb/kWh/ WER (lb/gal/
level cycle) cycle)
----------------------------------------------------------------------------------------------------------------
1............................................................... 1 2.12 0.27
2............................................................... 1 2.12 0.27
3............................................................... 1 2.12 0.27
4............................................................... 2 2.51 0.36
----------------------------------------------------------------------------------------------------------------
While representative ELs were included in the TSLs, DOE considered
all efficiency levels as part of its analysis.\155\
---------------------------------------------------------------------------
\155\ Efficiency levels that were analyzed for this direct final
rule are discussed in section IV.C.2 of this document. Results by
efficiency level are presented in TSD chapters 8, 10, and 12.
---------------------------------------------------------------------------
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
DOE analyzed the economic impacts on RCW consumers by looking at
the effects that potential amended standards at each TSL would have on
the LCC and PBP. DOE also examined the impacts of potential standards
on selected consumer subgroups. These analyses are discussed in the
following sections.
a. Life-Cycle Cost and Payback Period
In general, higher-efficiency products affect consumers in two
ways: (1) purchase price increases and (2) annual operating costs
decrease. Inputs used for calculating the LCC and PBP include total
installed costs (i.e., product price plus installation costs), and
operating costs (i.e., annual energy use, energy prices, energy price
trends, repair costs, and maintenance costs). The LCC calculation also
uses product lifetime and a discount rate. Chapter 8 of the direct
final rule TSD provides detailed information on the LCC and PBP
analyses.
Tables V.4 through V.12 show the LCC and PBP results for the TSLs
considered for each product class. In the first of each pair of tables,
the simple payback is measured relative to the baseline product. In the
second table, the impacts are measured relative to the efficiency
distribution in the no-new-standards case in the compliance year (see
section IV.F.8 of this document). Because some consumers purchase
products with higher efficiency in the no-new-standards case, the
average savings are less than the difference between the average LCC of
the baseline product and the average LCC at each TSL. The savings refer
only to consumers who are affected by a standard at a given TSL. Those
who already purchase a product with efficiency at or above a given TSL
are not affected. Consumers for whom the LCC increases at a given TSL
experience a net cost.
Table V.4--Average LCC and PBP Results for Top-Loading Ultra-Compact Residential Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
---------------------------------------------------------------- Simple payback Average
TSL Efficiency level First year's Lifetime years lifetime years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1, 3, 4................... Baseline................ $840 $84 $913 $1,753 ................ 13.4
2 **...................... Baseline................ 836 84 919 1,755 ................ 13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year of 2028.
Table V.5--Average LCC and PBP Results for Top-Loading Standard-Size Residential Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
---------------------------------------------------------------- Simple payback Average
TSL Efficiency level First year's Lifetime years lifetime years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................ $690 $174 $1,917 $2,607 ................ 13.4
1......................... 1....................... 770 156 1,715 2,485 4.4 13.4
2 **...................... 2....................... 833 151 1,661 2,494 6.2 13.4
3......................... 3....................... 851 146 1,598 2,448 5.7 13.4
4......................... 4....................... 856 143 1,569 2,425 5.4 13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year of 2028.
[[Page 19088]]
Table V.6--Average LCC Savings Relative to the No-New-Standards Case for Top-Loading Standard-Size Residential
Clothes Washers
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL Efficiency level Average LCC consumers that
savings \*\ 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1...................................................... 1 $122 16
2 **................................................... 2 111 27
3...................................................... 3 116 28
4...................................................... 4 133 26
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year
of 2028.
Table V.7--Average LCC and PBP Results for Front-Loading Compact Residential Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
---------------------------------------------------------------- Simple payback Average lifetime
TSL Efficiency level First year's Lifetime years years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................ $774 $93 $1,024 $1,798 ................ 13.4
1......................... 1....................... 827 88 959 1,786 9.6 13.4
2 **...................... 2....................... 861 84 918 1,779 9.3 13.4
3......................... 2....................... 865 84 913 1,778 9.5 13.4
4......................... 4....................... 904 77 838 1,742 8.0 13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year of 2028.
Table V.8--Average LCC Savings Relative to the No-New-Standards Case for Front-Loading Compact Residential
Clothes Washers
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL Efficiency level Average LCC consumers that
savings \*\ 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1...................................................... 1 $0 0
2**.................................................... 2 9 21
3...................................................... 2 8 22
4...................................................... 4 38 35
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year
of 2028.
Table V.9--Average LCC and PBP Results for Front-Loading Standard-Size Residential Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
---------------------------------------------------------------- Simple payback Average
TSL Efficiency level First year's Lifetime years lifetime years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
DFR Baseline............ $1,027 $172 $1,922 $2,948 ................ 13.4
NOPR Baseline........... 1,027 137 1,510 2,536 ................ 13.4
1......................... 1....................... 1,066 131 1,445 2,511 0.9 13.4
2 **...................... 2....................... 1,088 125 1,389 2,477 1.4 13.4
3......................... 3....................... 1,105 123 1,359 2,464 1.6 13.4
4......................... 4....................... 1,120 118 1,303 2,423 1.7 13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year of 2028.
[[Page 19089]]
Table V.10--Average LCC Savings Relative to the No-New-Standards Case for Front-Loading Standard-Size
Residential Clothes Washers
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL Efficiency level Average LCC consumers that
savings \*\ 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1...................................................... 1 $26 1
2 **................................................... 2 46 2
3...................................................... 3 15 20
4...................................................... 4 49 16
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year
of 2028.
Table V.11--Average LCC and PBP Results for Semi-Automatic Residential Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs 2022$
---------------------------------------------------------------- Simple Average
TSL Efficiency level First year's Lifetime payback years lifetime years
Installed cost operating cost operating cost LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.................. $525 $134 $1,456 $1,981 .............. 13.4
1, 3........................ 1......................... 538 107 1,156 1,694 0.5 13.4
2 **........................ 1......................... 536 107 1,164 1,700 0.5 13.4
4........................... 2......................... 547 95 1,023 1,569 0.6 13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year of 2028.
Table V.12--Average LCC Savings Relative to the No-New-Standards Case for Semi-Automatic Residential Clothes
Washers
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------------
Percent of
TSL Efficiency level Average LCC consumers that
savings\*\ 2022$ experience net
cost
----------------------------------------------------------------------------------------------------------------
1, 3................................................... 1 $280 0%
2 **................................................... 1 284 0
4...................................................... 2 188 0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year
of 2028.
b. Consumer Subgroup Analysis
In the consumer subgroup analysis, DOE estimated the impact of the
considered TSLs on low-income households and senior-only households.
Tables V.13 through V.16 compares the average LCC savings and PBP at
each efficiency level for the consumer subgroups with similar metrics
for the entire consumer sample for each RCW product class. In most
cases, the average LCC savings for low-income households at the
considered efficiency levels are higher and payback periods are lower
relative to the results for all households across all product classes.
However, LCC savings for senior-only households are significantly
different when compared to the average for all households across all
product classes, i.e., lower LCC savings and longer payback periods.
Chapter 11 of the direct final rule TSD presents the complete LCC and
PBP results for the subgroups.
Table V.13--Comparison of LCC Savings and PBP for Consumer Subgroups and All Households; Top-Loading Standard-
Size Residential Clothes Washers
----------------------------------------------------------------------------------------------------------------
Low-income Senior-only Well-users
households households households All households
----------------------------------------------------------------------------------------------------------------
Average LCC Savings (2022$)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... $149 $73 $22 $122
TSL 2 **........................................ 162 48 (31) 111
TSL 3........................................... 156 59 6 116
TSL 4........................................... 176 72 38 133
----------------------------------------------------------------------------------------------------------------
[[Page 19090]]
Payback Period (years)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... 2.5 6.0 8.3 4.4
TSL 2 **........................................ 3.5 8.4 13.5 6.2
TSL 3........................................... 3.2 7.7 10.9 5.7
TSL 4........................................... 3.0 7.3 9.1 5.4
----------------------------------------------------------------------------------------------------------------
Consumers with Net Benefit (%)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... 47 39 27 45
TSL 2 **........................................ 45 30 16 39
TSL 3........................................... 71 57 44 67
TSL 4........................................... 77 64 56 73
----------------------------------------------------------------------------------------------------------------
Consumers with Net Cost (%)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... 10 22 33 16
TSL 2 **........................................ 16 35 50 27
TSL 3........................................... 17 37 50 28
TSL 4........................................... 16 35 43 26
----------------------------------------------------------------------------------------------------------------
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year
of 2028.
Table V.14--Comparison of LCC Savings and PBP for Consumer Subgroups and All Households; Front-Loading Compact
Residential Clothes Washers
----------------------------------------------------------------------------------------------------------------
Low-income Senior-only Well-users
households households households All households
----------------------------------------------------------------------------------------------------------------
Average LCC Savings (2022$)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... $0 $0 $0 $0
TSL 2 **........................................ 39 (1) (13) 9
TSL 3........................................... 38 (2) (13) 8
TSL 4........................................... 75 21 24 38
----------------------------------------------------------------------------------------------------------------
Payback Period (years)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... 2.7 12.2 16.3 9.6
TSL 2 **........................................ 2.6 11.8 16.6 9.3
TSL 3........................................... 2.6 12.0 16.6 9.5
TSL 4........................................... 2.2 10.0 11.1 8.0
----------------------------------------------------------------------------------------------------------------
Consumers with Net Benefit (%)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... 0 0 0 0
TSL 2 **........................................ 27 14 8 17
TSL 3........................................... 27 14 8 17
TSL 4........................................... 75 56 55 64
----------------------------------------------------------------------------------------------------------------
Consumers with Net Cost (%)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... 0 0 0 0
TSL 2 **........................................ 7 25 31 21
TSL 3........................................... 7 25 31 22
TSL 4........................................... 13 43 44 35
----------------------------------------------------------------------------------------------------------------
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year
of 2028.
Table V.15--Comparison of LCC Savings and PBP for Consumer Subgroups and All Households; Front-Loading Standard-
Size Residential Clothes Washers
----------------------------------------------------------------------------------------------------------------
Low-income Senior-only Well-users
households households households All households
----------------------------------------------------------------------------------------------------------------
Average LCC Savings (2022$)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... $38 $5 ($1) 26
TSL 2 **........................................ 60 21 (0.4) 46
TSL 3........................................... 19 8 11 15
[[Page 19091]]
TSL 4........................................... 55 31 18 49
----------------------------------------------------------------------------------------------------------------
Payback Period (years)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... 0.5 1.2 2.2 0.9
TSL 2 **........................................ 0.7 1.9 3.3 1.4
TSL 3........................................... 0.8 2.1 3.5 1.6
TSL 4........................................... 0.8 2.3 3.8 1.7
----------------------------------------------------------------------------------------------------------------
Consumers with Net Benefit (%)..................................................................................
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... 1 1 1 1
TSL 2 **........................................ 5 4 2 5
TSL 3........................................... 34 27 33 31
TSL 4........................................... 72 68 58 75
----------------------------------------------------------------------------------------------------------------
Consumers with Net Cost (%)
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... 1 1 1 1
TSL 2 **........................................ 1 3 5 2
TSL 3........................................... 13 24 18 20
TSL 4........................................... 12 23 33 16
----------------------------------------------------------------------------------------------------------------
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year
of 2028.
Table V.16--Comparison of LCC Savings and PBP for Consumer Subgroups and All Households; Semi-Automatic
Residential Clothes Washers
----------------------------------------------------------------------------------------------------------------
Low-income Senior-only Well-users
households households households All households
----------------------------------------------------------------------------------------------------------------
Average LCC Savings (2022$)
----------------------------------------------------------------------------------------------------------------
TSL 1, 3........................................ $307 $211 $166 $280
TSL 2 **........................................ 310 214 167 284
TSL 4........................................... 204 141 116 188
----------------------------------------------------------------------------------------------------------------
Payback Period (years)
----------------------------------------------------------------------------------------------------------------
TSL 1, 3........................................ 0.2 0.7 0.8 0.5
TSL 2 **........................................ 0.2 0.6 0.8 0.5
TSL 4........................................... 0.2 0.7 0.9 0.6
----------------------------------------------------------------------------------------------------------------
Consumers with Net Benefit (%)
----------------------------------------------------------------------------------------------------------------
TSL 1, 3........................................ 19 21 21 21
TSL 2 **........................................ 19 21 21 21
TSL 4........................................... 83 92 90 92
----------------------------------------------------------------------------------------------------------------
Consumers with Net Cost (%)
----------------------------------------------------------------------------------------------------------------
TSL 1, 3........................................ 0 0 0 0
TSL 2 **........................................ 0 0 0 0
TSL 4........................................... 0 0 2 0
----------------------------------------------------------------------------------------------------------------
** All the TSLs except TSL 2 (the Recommended TSL) have a compliance year of 2027. TSL 2 has a compliance year
of 2028.
c. Rebuttable Presumption Payback
As discussed in section III.E.2 of this document, EPCA establishes
a rebuttable presumption that an energy conservation standard is
economically justified if the increased purchase cost for a product
that meets the standard is less than three times the value of the
first-year energy savings resulting from the standard. In calculating a
rebuttable presumption payback period for each of the considered TSLs,
DOE used discrete values, and, as required by EPCA, based the energy
use calculation on the DOE test procedures for RCWs. In contrast, the
PBPs presented in section V.B.1 of this document were calculated using
distributions that reflect the range of energy use in the field.
Table V.17 presents the rebuttable-presumption payback periods for
the considered TSLs for RCWs. While DOE examined the rebuttable-
presumption criterion, it considered whether the standard levels
considered for this rule are economically justified through a more
detailed analysis of the economic impacts of those levels, pursuant to
42 U.S.C. 6295(o)(2)(B)(i), that considers the full range of impacts to
the consumer, manufacturer, Nation, and environment. The results of
that analysis serve as the basis for DOE to
[[Page 19092]]
definitively evaluate the economic justification for a potential
standard level, thereby supporting or rebutting the results of any
preliminary determination of economic justification.
Table V.17--Rebuttable-Presumption Payback Periods
----------------------------------------------------------------------------------------------------------------
Trial standard level
Product class ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
years
----------------------------------------------------------------------------------------------------------------
Top-Loading Ultra-Compact *..................... n.a. n.a. n.a. n.a.
Top-Loading Standard-Size....................... 3.7 5.1 4.6 4.2
Front-Loading Compact........................... 6.5 6.7 6.8 5.8
Front-Loading Standard-Size..................... 0.9 1.3 1.5 1.6
Semi-Automatic.................................. 0.3 0.3 0.3 0.4
----------------------------------------------------------------------------------------------------------------
* The entry ``n.a.'' means not applicable because the evaluated standard is the baseline.
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of amended energy
conservation standards on manufacturers of RCWs. The next section
describes the expected impacts on manufacturers at each considered TSL.
Chapter 12 of the direct final rule TSD explains the analysis in
further detail.
a. Industry Cash Flow Analysis Results
In this section, DOE provides GRIM results from the analysis, which
examines changes in the industry that would result from a standard. The
following tables summarize the estimated financial impacts (represented
by changes in INPV) of potential amended energy conservation standards
on manufacturers of RCWs, as well as the conversion costs that DOE
estimates manufacturers of RCWs would incur at each TSL.
The impact of potential amended energy conservation standards were
analyzed under two scenarios: (1) the preservation of gross margin
percentage; and (2) the preservation of operating profit, as discussed
in section IV.J.2.d of this document. The preservation of gross margin
percentage applies a ``gross margin percentage'' of 18 percent for all
product classes and all efficiency levels.\156\ This scenario assumes
that a manufacturer's per-unit dollar profit would increase as MPCs
increase in the standards cases and represents the upper-bound to
industry profitability under potential amended energy conservation
standards.
---------------------------------------------------------------------------
\156\ The gross margin percentage of 18 percent is based on a
manufacturer markup of 1.22.
---------------------------------------------------------------------------
The preservation of operating profit scenario reflects
manufacturers' concerns about their inability to maintain margins as
MPCs increase to reach more-stringent efficiency levels. In this
scenario, while manufacturers make the necessary investments required
to convert their facilities to produce compliant products, operating
profit does not change in absolute dollars and decreases as a
percentage of revenue. The preservation of operating profit scenario
results in the lower (or more severe) bound to impacts of potential
amended standards on industry.
Each of the modeled scenarios results in a unique set of cash flows
and corresponding INPV for each TSL. INPV is the sum of the discounted
cash flows to the industry from the base year through the end of the
analysis period (30 years from the analyzed compliance year).\157\ The
``change in INPV'' results refer to the difference in industry value
between the no-new-standards case and standards case at each TSL. To
provide perspective on the short-run cash flow impact, DOE includes a
comparison of free cash flow between the no-new-standards case and the
standards case at each TSL in the year before amended standards would
take effect. This figure provides an understanding of the magnitude of
the required conversion costs relative to the cash flow generated by
the industry in the no-new-standards case.
---------------------------------------------------------------------------
\157\ The analysis period ranges from 2024 to 2056 for the no-
new-standards case and all TSLs, except for TSL 2 (the Recommended
TSL). The analysis period for TSL 2 ranges from 2024 to 2057 due to
the 2028 compliance year.
---------------------------------------------------------------------------
Conversion costs are one-time investments for manufacturers to
bring their manufacturing facilities and product designs into
compliance with potential amended standards. As described in section
IV.J.2.c of this document, conversion cost investments occur between
the year of publication of the direct final rule and the year by which
manufacturers must comply with the amended standard. The conversion
costs can have a significant impact on the industry's short-term cash
flow and generally result in lower free cash flow in the period between
the publication of the direct final rule and the compliance date of
potential amended standards. Conversion costs are independent of the
manufacturer markup scenarios and are not presented as a range in this
analysis.
Table V.18--Manufacturer Impact Analysis Results for Residential Clothes Washers
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
No-new-
Unit standards TSL 1 TSL 2 TSL 3 TSL 4
case
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
INPV............................... 2022$ millions......... 1,707.9 1,639.0 to 1,710.7.......... 1,429.6 to 1,560.9.......... 1,053.8 to 1,234.5.......... 535.8 to 738.2.
Change in INPV *................... %...................... .......... (4.0) to 0.2................ (16.3) to (8.6)............. (38.3) to (27.7)............ (68.6) to (56.8).
Free Cash Flow (2026) **........... 2022$ millions......... *** 136.6 113.2....................... 29.9........................ (166.7)..................... (428.8).
Change in Free Cash Flow (2026) **. %...................... .......... (17.1)...................... (97.8)...................... (222.0)..................... (413.9).
Product Conversion Costs........... 2022$ millions......... .......... 27.3........................ 91.9........................ 197.5....................... 253.2.
Capital Conversion Costs........... 2022$ millions......... .......... 31.8........................ 228.1....................... 527.1....................... 1,068.0.
Total Conversion Costs............. 2022$ millions......... .......... 59.0........................ 320.0....................... 724.6....................... 1,321.2.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses denote negative (-) values.
** TSL 2 (the Recommended TSL) represents the change in free cash flow in 2027, a year before the 2028 compliance date.
[[Page 19093]]
*** In 2027, the no-new-standards free cash flow is $136.4 million.
The majority of the INPV impacts are associated with standard-size
product classes because top-loading standard-size and front-loading
standard-size RCWs comprise approximately 96 percent of the total RCW
domestic shipments. More specifically, the majority of the INPV impacts
are associated with top-loading RCWs due to the high volume of
shipments, the high percentage of shipments at minimum efficiency, and
the likely design paths required to meet more stringent standards. Top-
loading RCWs account for approximately 74 percent of current standard-
size RCW shipments in 2027. DOE's shipments analysis estimates
approximately 66 percent of top-loading shipments are currently at the
baseline efficiency level. Additionally, the engineering analysis,
informed by conversations with manufacturers, indicates that the likely
design path to meet the efficiencies required at TSL 3 and TSL 4 would
require notable capital investments. In particular, many manufacturers
would likely increase tub capacity of top-loading standard-size units
with capacities of less than 4.7 ft\3\ to meet these higher
efficiencies. In contrast, DOE's shipments analysis assumes no front-
loading RCW shipments are at the DFR Baseline efficiency level and
DOE's engineering analysis suggests that increases in tub capacity
would not be required for front-loading RCW models to reach max-tech.
Thus, as DOE considers increasingly stringent TSLs, the top-loading
standard-size product class tends to drive industry investments and
negative INPV impacts. See chapter 5 of the direct final rule TSD for a
detailed discussion of design paths to reach higher efficiencies.
At TSL 1, the standard represents the least stringent efficiencies
(EL 1) for all product classes. The change in INPV is expected to range
from -4.0 to 0.2 percent. At this level, free cash flow is estimated to
decrease by 17.1 percent compared to the no-new-standards case value of
$136.6 million in the year 2026, the year before the 2027 standards
year. DOE's shipments analysis estimates approximately 54 percent of
current shipments meet this level.\158\
---------------------------------------------------------------------------
\158\ Current shipments refer to annual product shipments in
2024 from the shipments analysis.
---------------------------------------------------------------------------
At TSL 1, DOE expects most manufacturers would incur limited
conversion costs to reach the efficiencies required. The conversion
costs primarily stem from changes required for top-loading standard-
size RCWs. DOE's shipments analysis estimates approximately 34 percent
of current top-loading standard-size RCWs meet this level (EL 1). In
contrast, nearly all the front-loading standard-size RCWs currently
meet the efficiencies required at this level. Industry capital
conversion costs include tooling updates and costs associated with
transitioning models with porcelain wash baskets to stainless steel
wash baskets. Product conversion costs may be necessary for product
development and testing. DOE expects industry to incur some re-flooring
costs. DOE estimates capital conversion costs of $31.8 million and
product conversion costs of $27.3 million. Conversion costs total $59.0
million.
At TSL 1, the shipment-weighted average MPC for all RCWs is
expected to increase by 6.4 percent relative to the no-new-standards
case shipment-weighted average MPC for all RCWs in 2027. In the
preservation of gross margin percentage scenario, the slight increase
in cashflow slightly outweighs the $59.0 million in conversion costs,
causing a minor positive change in INPV at TSL 1 under this scenario.
Under the preservation of operating profit scenario, the manufacturer
markup decreases in 2028, the year after the analyzed 2027 compliance
year. This reduction in the manufacturer markup and the $59.0 million
in conversion costs incurred by manufacturers cause a slightly negative
change in INPV at TSL 1 under the preservation of operating profit
scenario.
At TSL 2 (i.e., the Recommended TSL), the standard represents the
ENERGY STAR v. 8.1 efficiency levels for the front-loading and top-
loading standard-size product classes, the ENERGY STAR Most Efficient
level for the front-loading compact product class, and a gap fill level
for the semi-automatic product class. The change in INPV is expected to
range from -16.3 to -8.6 percent. At this level, free cash flow is
estimated to decrease by 97.8 percent compared to the no-new-standards
case value of $136.4 million in the year 2027, the year before the
Recommended TSL standards year. DOE's shipments analysis estimates
approximately 49 percent of current shipments meet this level. For the
top-loading standard-size RCWs, front-loading compact RCWs, and front-
loading standard-size RCWs, TSL 2 corresponds to EL 2. For the
remaining product classes, the efficiencies required at TSL 2 are the
same as TSL 1. For top-loading standard-size RCWs, approximately 31
percent of current shipments meet the efficiencies required by TSL 2.
However, most manufacturers with top-loading standard-size models offer
products at or above the efficiencies required. Of the nine OEMs with
top-loading standard-size products, six OEMs offer models that meet the
efficiencies required. To meet TSL 2, DOE expects manufacturers would
incorporate wash plate designs, direct drive motors, and hardware
features enabling spin speed increases into top-loading standard-size
RCWs. Beyond these design options, some manufacturers may choose to
increase the tub capacities of certain top-loading standard-size RCWs
(i.e., models with capacities of less than 4.4 ft\3\) to meet the TSL 2
efficiencies.\159\ Increasing RCW capacity could require a new cabinet,
tub, and drum designs, which would necessitate costly investments in
manufacturing equipment and tooling. For front-loading standard-size
RCWs, approximately 92 percent of shipments meet the efficiencies
required by TSL 2. Of the seven OEMs with front-loading standard-size
products, six OEMs offer models that meet the efficiencies required.
Product conversion costs may be necessary for designing, prototyping,
and testing new or updated platforms. Additionally, DOE expects
industry to incur more re-flooring costs compared to the prior TSL as
more display units would need to be replaced. DOE estimates capital
conversion costs of $228.1 million and product conversion costs of
$91.9 million. Conversion costs total $320.0 million.
---------------------------------------------------------------------------
\159\ See section V.B.4.b of this document for further
discussion of DOE's determination of alternate pathways that could
be used to achieve higher efficiency levels that would not require
an increase in capacity.
---------------------------------------------------------------------------
At TSL 2, the shipment-weighted average MPC for all RCWs is
expected to increase by 12.1 percent relative to the no-new-standards
case shipment-weighted average MPC for all RCWs in 2028. In the
preservation of gross margin percentage scenario, the increase in
cashflow is outweighed by the $320.0 million in conversion costs,
causing a negative change in INPV at TSL 2 under this scenario. Under
the preservation of operating profit scenario, the manufacturer markup
decreases in 2029, the year after the analyzed compliance year. This
reduction in the manufacturer markup and the $320.0 million in
conversion costs incurred by manufacturers cause a moderate negative
change in INPV at TSL 2 under
[[Page 19094]]
the preservation of operating profit scenario.
At TSL 3, the standard represents the ENERGY STAR Most Efficient
level for the front-loading product classes, the CEE Tier 1 level for
the top-loading standard-size product class, and a gap fill level for
the semi-automatic product class. The change in INPV is expected to
range from -38.3 to -27.7 percent. At this level, free cash flow is
estimated to decrease by 222.0 percent compared to the no-new-standards
case value of $136.6 million in the year 2026, the year before the 2027
standards year. DOE's shipments analysis estimates approximately 18
percent of current shipments meet this level.
For the front-loading and top-loading standard-size product
classes, TSL 3 corresponds to EL 3. For the remaining product classes,
TSL 3 corresponds to the same efficiency level as TSL 2. At this level,
the increase in conversion costs is mainly driven by the top-loading
standard-size product class. Currently, approximately 3 percent of top-
loading standard-size shipments meet TSL 3 efficiencies. Of the nine
OEMs with top-loading standard-size products, only two offer models
that meet the efficiencies required at TSL 3. The remaining seven OEMs
would need to redesign all their existing top-loading standard-size
platforms to meet this level.
To meet TSL 3, top-loading RCW designs would likely need to
incorporate hardware features to enable faster spin speeds. These
hardware updates may include reinforced wash baskets, more robust
suspension and balancing system, and more advanced sensors. An
increasing portion of top-loading standard-size RCWs (i.e., those
models with capacities less than 4.7 ft\3\) may choose to increase tub
capacity.\160\ Increasing RCW capacity could require new cabinet, tub,
and drum designs. The changes would necessitate investments in new
equipment and tooling. DOE expects industry to incur more re-flooring
costs compared to prior TSLs as more display units would need to be
replaced. DOE estimates capital conversion costs of $527.1 million and
product conversion costs of $197.5 million. Conversion costs total
$724.6 million.
---------------------------------------------------------------------------
\160\ See section V.B.4.b of this document for further
discussion of DOE's determination of alternate pathways that could
be used to achieve higher efficiency levels that would not require
an increase in capacity.
---------------------------------------------------------------------------
At TSL 3, the large conversion costs result in a free cash flow
dropping below zero in the years before the standards year. The
negative free cash flow calculation indicates manufacturers may need to
access cash reserves or outside capital to finance conversion efforts.
At TSL 3, the shipment-weighted average MPC for all RCWs is
expected to increase by 14.4 percent relative to the no-new-standards
case shipment-weighted average MPC for all RCWs in 2027. In the
preservation of gross margin percentage scenario, the increase in
cashflow is outweighed by the $724.6 million in conversion costs,
causing a large change in INPV at TSL 3 under this scenario. Under the
preservation of operating profit scenario, the manufacturer markup
decreases in 2028, the year after the analyzed compliance year. This
reduction in the manufacturer markup and the $724.6 million in
conversion costs incurred by manufacturers cause a significant negative
change in INPV at TSL 3 under the preservation of operating profit
scenario.
At TSL 4, the standard represents the max-tech energy and water
efficiencies for all product classes. The change in INPV is expected to
range from -68.6 to -56.8 percent. At this level, free cash flow is
estimated to decrease by 413.9 percent compared to the no-new-standards
case value of $136.6 million in the year 2026, the year before the 2027
standards year. DOE's shipments analysis estimates approximately 4
percent of current shipments meet this level.
As previously discussed, the max-tech efficiencies required for
standard-size RCWs drive the increase in conversion costs from the
prior TSLs. Currently, less than 1 percent of top-loading standard-size
RCW shipments and approximately 9 percent of front-loading standard-
size RCW shipments meet max-tech levels. Out of the nine top-loading
standard-size OEMs, only one offers models that meet the efficiencies
required by TSL 4. Out of the seven front-loading standard-size OEMs,
only two offer models that meet the efficiencies required by TSL 4.
Max-tech would require most manufacturers to significantly redesign
their RCW platforms. DOE expects most standard-size RCW manufacturers
would need to further increase spin speeds as compared to prior TSLs.
An increasing portion of top-loading standard-size RCWs (i.e., models
with capacities of less than 5.0 ft\3\) may choose to increase tub
capacity to achieve the RMC values required at this level.\161\ In
interviews, two manufacturers stated that max-tech levels would require
a total renovation of existing production facilities. Some
manufacturers further stated that their product portfolio would be
limited due to the lack of differentiation possible under a max-tech
standard, which would potentially limit their ability to serve certain
consumer segments and hurt profitability. DOE expects industry would
incur approximately the same re-flooring costs as TSL 3 since few
models exist at the higher levels. At TSL 4, reaching max-tech
efficiency levels is a billion-dollar investment for industry. DOE
estimates capital conversion costs of $1,068.0 million and product
conversion costs of $253.2 million. Conversion costs total $1,321.2
million.
---------------------------------------------------------------------------
\161\ See section V.B.4.b of this document for further
discussion of DOE's determination of alternate pathways that could
be used to achieve higher efficiency levels that would not require
an increase in capacity.
---------------------------------------------------------------------------
At TSL 4, the large conversion costs result in a free cash flow
dropping below zero in the years before the standards year. The
negative free cash flow calculation indicates manufacturers may need to
access cash reserves or outside capital to finance conversion efforts.
At TSL 4, the shipment-weighted average MPC for all RCWs is
expected to increase by 15.9 percent relative to the no-new-standards
case shipment-weighted average MPC for all RCWs in 2027. In the
preservation of gross margin percentage scenario, the increase in
cashflow is outweighed by the $1,321.2 million in conversion costs,
causing a significant negative change in INPV at TSL 4 under this
scenario. Under the preservation of operating profit scenario, the
manufacturer markup decreases in 2028, the year after the analyzed
compliance year. This reduction in the manufacturer markup and the
$1,321.2 million in conversion costs incurred by manufacturers cause a
significant negative change in INPV at TSL 4 under the preservation of
operating profit scenario.
b. Direct Impacts on Employment
To quantitatively assess the potential impacts of amended energy
conservation standards on direct employment in the RCWs industry, DOE
used the GRIM to estimate the domestic labor expenditures and number of
direct employees in the no-new-standards case and in each of the
standards cases during the analysis period. For the direct final rule,
DOE used the most up-to-date information available. DOE calculated
these values using statistical data from the 2021 ASM,\162\ BLS
[[Page 19095]]
employee compensation data,\163\ results of the engineering analysis,
and manufacturer interviews conducted in support of the March 2023
NOPR.
---------------------------------------------------------------------------
\162\ U.S. Census Bureau, Annual Survey of Manufactures.
``Summary Statistics for Industry Groups and Industries in the U.S
(2021).'' Available at www.census.gov/programs-surveys/asm/data/tables.html (last accessed June 30, 2023).
\163\ U.S. Bureau of Labor Statistics. ``Employer Costs for
Employee Compensation--March 2023.'' June 16, 2023. Available at
www.bls.gov/news.release/archives/ecec_06162023.pdf (last accessed
June 30, 2023).
---------------------------------------------------------------------------
Labor expenditures related to product manufacturing depend on the
labor intensity of the product, the sales volume, and an assumption
that wages remain fixed in real terms over time. The total labor
expenditures in each year are calculated by multiplying the total MPCs
by the labor percentage of MPCs. The total labor expenditures in the
GRIM were then converted to total production employment levels by
dividing production labor expenditures by the average fully burdened
wage multiplied by the average number of hours worked per year per
production worker. To do this, DOE relied on the ASM inputs: Production
Workers Annual Wages, Production Workers Annual Hours, Production
Workers for Pay Period, and Number of Employees. DOE also relied on BLS
employee compensation data to determine the fully burdened wage ratio.
The fully burdened wage ratio factors in paid leave, supplemental pay,
insurance, retirement and savings, and legally required benefits.
The number of production employees is then multiplied by the U.S.
labor percentage to convert total production employment to total
domestic production employment. The U.S. labor percentage represents
the industry fraction of domestic manufacturing production capacity for
the covered product. This value is derived from manufacturer
interviews, product database analysis, and publicly available
information. DOE estimates that 92 percent of RCWs are produced
domestically.
The domestic production employees estimate covers production line
workers, including line supervisors, who are directly involved in
fabricating and assembling products within the OEM facility. Workers
performing services that are closely associated with production
operations, such as materials handling tasks using forklifts, are also
included as production labor. DOE's estimates only account for
production workers who manufacture the specific products covered by
this direct final rule.
Non-production workers account for the remainder of the direct
employment figure. The non-production employees estimate covers
domestic workers who are not directly involved in the production
process, such as sales, engineering, human resources, and
management.\164\ Using the amount of domestic production workers
calculated above, non-production domestic employees are extrapolated by
multiplying the ratio of non-production workers in the industry
compared to production employees. DOE assumes that this employee
distribution ratio remains constant between the no-new-standards case
and standards cases.
---------------------------------------------------------------------------
\164\ The comprehensive description of production and non-
production workers is available at ``Definitions and Instructions
for the Annual Survey of Manufacturers, MA-10000'' (pp. 13-14),
www2.census.gov/programs-surveys/asm/technical-documentation/questionnaire/2021/instructions/MA_10000_Instructions.pdf (last
accessed June 30, 2023).
---------------------------------------------------------------------------
Using the GRIM, DOE estimates that in the absence of new energy
conservation standards, there would be 9,070 domestic production and
non-production workers for RCWs in 2027. Table V.19 shows the range of
the impacts of energy conservation standards on U.S. manufacturing
employment in the RCW industry. The following discussion provides a
qualitative evaluation of the range of potential impacts presented in
Table V.19.
Table V.19--Domestic Direct Employment Impacts for Residential Clothes Washer Manufacturers in the Analyzed Compliance Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-new-standards
case TSL 1 TSL 2 TSL 3 TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Employment........................................ *** 9,070 10,400 11,821 11,785 11,857
(Production Workers + Non-Production Workers) in 2027 **.
Potential Changes in Direct Employment Workers *......... ................. (8,097)-1,330 (8,097)-2,638 (8,097)-2,715 (8,097)-2,787
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential direct employment impacts. Numbers in parentheses indicate negative numbers.
** TSL 2 (the Recommended TSL) represents the direct employment in 2028.
*** In 2028, the no-new-standards case direct employment estimate is 9,183.
The direct employment impacts shown in Table V.19 represent the
potential domestic employment changes that could result following the
compliance date for the RCWs covered in this rulemaking. The upper
bound estimate corresponds to an increase in the number of domestic
workers that results from amended energy conservation standards if
manufacturers continue to produce the same scope of covered products
within the United States after compliance takes effect. To establish a
conservative lower bound, DOE assumes all manufacturers would shift
production to foreign countries. At lower TSLs, DOE believes the
likelihood of changes in production location due to amended standards
are low due to the relatively minor production line updates required.
However, as amended standards increase in stringency and both the
complexity and cost of production facility updates increases,
manufacturers are more likely to revisit their production location
decisions. At max-tech, manufacturers representing a large portion of
the market noted concerns about the level of investment, about the
potential need to relocate production lines in order to remain
competitive, and about the conversion period of 3 years being
insufficient to make the necessary manufacturing line updates. At the
Recommended TSL (i.e., TSL 2), DOE expects that the likelihood of
changes in production location as a direct result of amended standards
are relatively low. Nearly all OEMs already produce top-loading
standard-size and front-loading standard-size RCWs that meet the TSL 2
efficiencies in U.S. manufacturing facilities. Of the nine OEMs with
top-loading standard-size products, six OEMs offer models that meet TSL
2 efficiencies. These six OEMs that currently offer top-loading
standard-size RCW models that meet TSL 2 efficiencies collectively
account for over 95 percent of overall top-loading standard-size RCW
shipments.
[[Page 19096]]
Of the seven OEMs with front-loading standard-size products, six OEMs
offer models that meet TSL 2 efficiencies.
Additional detail on the analysis of direct employment can be found
in chapter 12 of the direct final rule TSD. Additionally, the
employment impacts discussed in this section are independent of the
employment impacts from the broader U.S. economy, which are documented
in chapter 16 of the direct final rule TSD.
c. Impacts on Manufacturing Capacity
As discussed in section V.B.2.a of this document, meeting the
efficiencies required for each TSL would require varying levels of
resources and investment. A standard level requiring notably faster
spin speeds, namely TSL 3 and TSL 4, would necessitate product redesign
to account for the increased spin speeds as well as the noise,
vibration, and fabric care concerns related to the spin speeds required
to meet these higher TSLs. These updates may include designing and
manufacturing reinforced wash baskets, instituting a more robust
suspension and balancing system, increasing the number of sensors, and
incorporating more advanced sensors. For top-loading standard-size
RCWs, manufacturers could potentially choose to increase tub capacity
of smaller models to meet the efficiencies required at higher TSLs.
Many manufacturers would need to invest in new tooling and equipment to
either produce entirely new wash basket lines or ramp up production of
their existing larger-capacity wash baskets. Based on a review of
current CCD model listings and manufacturer feedback during
confidential interviews, DOE's engineering analysis reflects a design
path in which TSL 2 is achieved with a capacity increase from 4.0 ft\3\
to 4.4 ft\3\, TSL 3 is achieved with a capacity increase to 4.7 ft\3\,
and TSL 4 is achieved with a capacity increase to 5.0 ft\3\ for the
top-loading standard-size product class. In interviews, some
manufacturers expressed concerns--particularly at max-tech--that the 3-
year period between the announcement of a final rule and the compliance
date of the amended energy conservation standard might be insufficient
to update production facilities and design, test, and manufacture the
necessary number of products to meet demand. For the remaining TSLs,
including TSL 2 (the Recommended TSL), most manufacturers could likely
maintain manufacturing capacity levels and continue to meet market
demand under amended energy conservation standards. Furthermore, at the
Recommended TSL, manufacturers will have a 4-year period between the
announcement of the direct final rule and the compliance date of the
amended energy conservation standards. Thus, DOE does not expect
manufacturers will face long-term capacity constraints due to the
standard levels detailed in this direct final rule.
d. Impacts on Subgroups of Manufacturers
Using average cost assumptions to develop industry cash-flow
estimates may not capture the differential impacts among subgroups of
manufacturers. Small manufacturers, niche players, or manufacturers
exhibiting a cost structure that differs substantially from the
industry average could be affected disproportionately. DOE investigated
small businesses as a manufacturer subgroup that could be
disproportionally impacted by energy conservation standards and could
merit additional analysis. DOE did not identify any other adversely
impacted manufacturer subgroups for this rulemaking based on the
results of the industry characterization.
DOE analyzes the impacts on small businesses in a separate analysis
for the standards proposed in the NOPR published elsewhere in this
issue of the Federal Register and in chapter 12 of the direct final
rule TSD. In summary, the Small Business Administration (``SBA'')
defines a ``small business'' as having 1,500 employees or less for
NAICS 335220, ``Major Household Appliance Manufacturing.'' \165\ Based
on this classification, DOE identified one domestic OEM that qualifies
as a small business. For a discussion of the impacts on the small
business manufacturer subgroup, see chapter 12 of the direct final rule
TSD.
---------------------------------------------------------------------------
\165\ U.S. Small Business Administration. ``Table of Small
Business Size Standards.'' (Effective March 17, 2023) Available at
www.sba.gov/document/support-table-size-standards (last accessed
June 30, 2023).
---------------------------------------------------------------------------
e. Cumulative Regulatory Burden
One aspect of assessing manufacturer burden involves looking at the
cumulative impact of multiple DOE standards and the regulatory actions
of other Federal agencies and States that affect the manufacturers of a
covered product or equipment. While any one regulation may not impose a
significant burden on manufacturers, the combined effects of several
existing or impending regulations may have serious consequences for
some manufacturers, groups of manufacturers, or an entire industry.
Multiple regulations affecting the same manufacturer can strain profits
and lead companies to abandon product lines or markets with lower
expected future returns than competing products. For these reasons, DOE
conducts an analysis of cumulative regulatory burden as part of its
rulemakings pertaining to appliance efficiency.
For the cumulative regulatory burden analysis, DOE examines
Federal, product-specific regulations that could affect RCW
manufacturers that take effect approximately 3 years before or after
the 2028 compliance date. This information is presented in Table V.20.
Table V.20--Compliance Dates and Expected Conversion Expenses of Federal Energy Conservation Standards Affecting Residential Clothes Washer Original
Equipment Manufacturers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry
Number of OEMs Number of OEMs Approx. standards Industry conversion costs/
Federal energy conservation standard * affected by this compliance year conversion costs equipment revenue
rule ** (Millions) *** (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Portable Air Conditioners.................................. 9 2 2025 $320.9 6.7
85 FR 1378................................................. (2015$)
(January 10, 2020).........................................
Consumer Clothes Dryers[dagger]............................ 15 13 2027 $149.7 1.8
87 FR 51734................................................ (2020$)
(August 23, 2022)..........................................
[[Page 19097]]
Miscellaneous Refrigeration Products[dagger]............... 38 6 2029 $126.9 3.1
88 FR 19382................................................ (2021$)
(March 31, 2023)...........................................
Automatic Commercial Ice Makers[dagger].................... 23 1 2027 $15.9 0.6
88 FR 30508................................................ (2022$)
(May 11, 2023).............................................
Dishwashers[dagger]........................................ 21 12 2027 $125.6 2.1
88 FR 32514................................................ (2021$)
(May 19, 2023).............................................
Refrigerated Bottled or Canned Beverage Vending 5 1 2028 $1.5 0.2
Machines[dagger].......................................... (2022$)
88 FR 33968................................................
(May 25, 2023).............................................
Room Air Conditioners...................................... 8 4 2026 $24.8 0.4
88 FR 34298................................................ (2021$)
(May 26, 2023).............................................
Microwave Ovens............................................ 18 10 2026 $46.1 0.7
88 FR 39912................................................ (2021$)
(June 20, 2023)............................................
Commercial Water Heating Equipment......................... 15 1 2026 $42.7 5.3
88 FR 69686................................................ (2022$)
(October 6, 2023)..........................................
Consumer Water Heaters[dagger]............................. 22 3 2030 $228.1 1.3
88 FR 49059................................................ (2022$)
(July 28, 2023)............................................
Consumer Boilers[dagger]................................... 24 1 2030 $98.0 3.6%
88 FR 55128................................................ (2022$)
(August 14, 2023)..........................................
Dehumidifiers[dagger]...................................... 20 4 2028 $6.9 0.4
88 FR 76510................................................ (2022$)
(November 6, 2023).........................................
Consumer Furnaces.......................................... 15 1 2029 $162.0 1.8
88 FR 87502................................................ (2022$)
(December 18, 2023)........................................
Commercial Refrigerators, Refrigerator-Freezers, and 83 3 2028 $226.4 1.6
Freezers[dagger].......................................... (2022$)
88 FR 70196................................................
(October 10, 2023).........................................
Refrigerators, Refrigerator-Freezers, and Freezers......... 63 11 2029 and $830.3 1.3
89 FR 30262................................................ 2030[Dagger] (2022$)
(January 17, 2024).........................................
Consumer Conventional Cooking Products..................... 35 8 2028 $66.7 0.3
89 FR 11434................................................ (2022$)
(February 14, 2024)........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This column presents the total number of OEMs identified in the energy conservation standard rule that is contributing to cumulative regulatory
burden.
** This column presents the number of OEMs producing RCWs that are also listed as OEMs in the identified energy conservation standard that is
contributing to cumulative regulatory burden.
*** This column presents industry conversion costs as a percentage of equipment revenue during the conversion period. Industry conversion costs are the
upfront investments manufacturers must make to sell compliant products/equipment. The revenue used for this calculation is the revenue from just the
covered product/equipment associated with each row. The conversion period is the time frame over which conversion costs are made and lasts from the
publication year of the final rule to the compliance year of the energy conservation standard. The conversion period typically ranges from 3 to 5
years, depending on the rulemaking.
[[Page 19098]]
[dagger] These rulemakings are at the NOPR stage, and all values are subject to change until finalized through publication of a final rule.
[Dagger] For the refrigerators, refrigerator-freezers, and freezers energy conservation standards direct final rule, the compliance year (2029 or 2030)
varies by product class.
As shown in Table V.20, the rulemakings with the largest overlap of
RCW OEMs include consumer clothes dryers, consumer conventional cooking
products, dishwashers, refrigerators, refrigerator-freezers, and
freezers, and miscellaneous refrigeration products, which are all part
of the multi-product Joint Agreement submitted by interested
parties.\166\ As detailed in the Joint Agreement, the signatories
indicated that their recommendations should be considered a ``complete
package.'' The signatories further stated that ``each part of this
agreement is contingent upon the other parts being implemented.''
(Joint Agreement, No. 505 at p. 3)
---------------------------------------------------------------------------
\166\ The microwave ovens energy conservation standards final
rule (88 FR 39912), which has 10 overlapping OEMs, was published
prior to the joint submission of the multi-product Joint Agreement.
---------------------------------------------------------------------------
The multi-product Joint Agreement states the ``jointly recommended
compliance dates will achieve the overall energy and economic benefits
of this agreement while allowing necessary lead-times for manufacturers
to redesign products and retool manufacturing plants to meet the
recommended standards across product categories.'' (Joint Agreement,
No. 505 at p. 2) The staggered compliance dates help mitigate
manufacturers' concerns about their ability to allocate sufficient
resources to comply with multiple concurrent amended standards and
about the need to align compliance dates for products that are
typically designed or sold as matched pairs (such as RCWs and consumer
clothes dryers). See section IV.J.3 of this document for stakeholder
comments about cumulative regulatory burden. See Table V.21 for a
comparison of the estimated compliance dates based on EPCA-specified
timelines and the compliance dates detailed in the Joint Agreement.
Table V.21--Expected Compliance Dates for Multi-Product Joint Agreement
----------------------------------------------------------------------------------------------------------------
Estimated compliance
Rulemaking year based on EPCA Compliance year in the joint agreement
requirements
----------------------------------------------------------------------------------------------------------------
Consumer Clothes Dryers........................ 2027 2028.
RCWs........................................... 2027 2028.
Consumer Conventional Cooking Products......... 2027 2028.
Dishwashers.................................... 2027 2027.*
Refrigerators, Refrigerator-Freezers, and 2027 2029 or 2030 depending on the product
Freezers. class.
Miscellaneous Refrigeration Products........... 2029 2029.
----------------------------------------------------------------------------------------------------------------
* Estimated compliance year. The Joint Agreement states, ``3 years after the publication of a final rule in the
Federal Register.'' (Joint Agreement, No. 505 at p. 2)
3. National Impact Analysis
This section presents DOE's estimates of the national energy
savings and the NPV of consumer benefits that would result from each of
the TSLs considered as potential amended standards.
a. Significance of Energy and Water Savings
To estimate the energy and water savings attributable to potential
amended standards for RCWs, DOE compared their energy and water
consumption under the no-new-standards case to their anticipated energy
and water consumption under each TSL. The savings are measured over the
entire lifetime of products purchased in the 30-year period that begins
in the year of anticipated compliance with amended standards (2027-
2056).\167\ Tables V.22 and V.23 present DOE's projections of the
national energy and water savings for each TSL considered for RCWs. The
savings were calculated using the approach described in section IV.H of
this document.
---------------------------------------------------------------------------
\167\ The analysis period for TSL 2 (the Recommended TSL) is
2028-2057.
Table V.22--Cumulative National Energy Savings for Residential Clothes Washers; 30 Years of Shipments
[2027-2056] *
----------------------------------------------------------------------------------------------------------------
Trial standard level
---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
quads
---------------------------------------------------------------
Primary energy.................................. 0.56 0.64 1.29 2.03
FFC energy...................................... 0.58 0.67 1.34 2.12
----------------------------------------------------------------------------------------------------------------
* The analysis period for TSL 2 (the Recommended TSL) is 2028-2057.
[[Page 19099]]
Table V.23--Cumulative National Water Savings for Residential Clothes Washers; 30 Years of Shipments
[2027-2056] *
----------------------------------------------------------------------------------------------------------------
Trial standard level
-------------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
trillion gallons
-------------------------------------------------------------------
Water Savings............................... 1.16 1.89 2.33 2.73
----------------------------------------------------------------------------------------------------------------
* The analysis period for TSL 2 (the Recommended TSL) is 2028-2057.
OMB Circular A-4 \168\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies to consider the variability of key elements
underlying the estimates of benefits and costs. For this rulemaking,
DOE undertook a sensitivity analysis using 9 years, rather than 30
years, of product shipments. The choice of a 9-year period is a proxy
for the timeline in EPCA for the review of certain energy conservation
standards and potential revision of and compliance with such revised
standards.\169\ The review timeframe established in EPCA is generally
not synchronized with the product lifetime, product manufacturing
cycles, or other factors specific to RCWs. Thus, such results are
presented for informational purposes only and are not indicative of any
change in DOE's analytical methodology. The NES and NWS sensitivity
analysis results based on a 9-year analytical period are presented in
Tables V.24 and V.25. The impacts are counted over the lifetime of RCWs
purchased during the period 2027-2035.\170\
---------------------------------------------------------------------------
\168\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. Available at www.whitehouse.gov/omb/information-for-agencies/circulars/ (last accessed June 24, 2023).
DOE used the prior version of Circular A-4 (2003) as a result of the
effective date of the new version.
\169\ EPCA requires DOE to review its standards at least once
every 6 years, and requires, for certain products, a 3-year period
after any new standard is promulgated before compliance is required,
except that in no case may any new standards be required within 6
years of the compliance date of the previous standards. (42 U.S.C.
6295(m)) While adding a 6-year review to the 3-year compliance
period adds up to 9 years, DOE notes that it may undertake reviews
at any time within the 6-year period and that the 3-year compliance
date may yield to the 6-year backstop. A 9-year analysis period may
not be appropriate given the variability that occurs in the timing
of standards reviews and the fact that for some products, the
compliance period is 5 years rather than 3 years.
\170\ The analysis period for TSL 2 (the Recommended TSL) is
2028-2036.
Table V.24--Cumulative National Energy Savings for Residential Clothes Washers; 9 Years of Shipments
[2027-2035] *
----------------------------------------------------------------------------------------------------------------
Trial standard level
---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
quads
---------------------------------------------------------------
Primary energy.................................. 0.23 0.27 0.46 0.66
FFC energy...................................... 0.24 0.28 0.48 0.69
----------------------------------------------------------------------------------------------------------------
* The analysis period for TSL 2 (the Recommended TSL) is 2028-2036.
Table V.25--Cumulative National Water Savings for Residential Clothes Washers; 9 Years of Shipments
[2027-2035] *
----------------------------------------------------------------------------------------------------------------
Trial standard level
-------------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
trillion gallons
-------------------------------------------------------------------
Water Savings............................... 0.47 0.71 0.84 0.95
----------------------------------------------------------------------------------------------------------------
* The analysis period for TSL 2 (the Recommended TSL) is 2028-2036.
b. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV of the total costs and savings for
consumers that would result from the TSLs considered for RCWs. In
accordance with OMB's guidelines on regulatory analysis,\171\ DOE
calculated NPV using both a 7-percent and a 3-percent real discount
rate. Table V.26 shows the consumer NPV results with impacts counted
over the lifetime of products purchased during the period 2027-
2056.\172\
---------------------------------------------------------------------------
\171\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003. Available at:
obamawhitehouse.archives.gov/omb/circulars_a004_a-4 (last accessed
July 1, 2021).
\172\ The analysis period for TSL 2 (the Recommended TSL) is
2028-2057.
[[Page 19100]]
Table V.26--Cumulative Net Present Value of Consumer Benefits for Residential Clothes Washers; 30 Years of
Shipments
[2027-2056] *
----------------------------------------------------------------------------------------------------------------
Trial standard level
Discount rate ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
billion 2022$
---------------------------------------------------------------
3 percent....................................... 8.48 8.71 14.68 21.12
7 percent....................................... 3.78 3.28 5.96 8.76
----------------------------------------------------------------------------------------------------------------
* The analysis period for TSL 2 (the Recommended TSL) is 2028-2057.
The NPV results based on the aforementioned 9-year analytical
period are presented in Table V.27. The impacts are counted over the
lifetime of products purchased during the period 2027-2035.\171\ As
mentioned previously, such results are presented for informational
purposes only and are not indicative of any change in DOE's analytical
methodology or decision criteria.
Table V.27--Cumulative Net Present Value of Consumer Benefits for Residential Clothes Washers; 9 Years of
Shipments
[2027-2035] *
----------------------------------------------------------------------------------------------------------------
Trial standard level
Discount rate ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
billion 2022$
---------------------------------------------------------------
3 percent....................................... 4.03 4.37 6.57 8.79
7 percent....................................... 2.24 2.11 3.45 4.75
----------------------------------------------------------------------------------------------------------------
* The analysis period for TSL 2 (the Recommended TSL) is 2028-2057.
The previous results reflect the use of a default trend to estimate
the change in price for RCWs over the analysis period (see section
IV.F.1 of this document). DOE also conducted a sensitivity analysis
that considered one scenario with a higher rate of price decline than
the reference case and one scenario with no price decline. The results
of these alternative cases are presented in appendix 10C of the direct
final rule TSD. In the high-price-decline case, the NPV of consumer
benefits is higher than in the default case. In the no-price-decline
case, the NPV of consumer benefits is lower than in the default case.
c. Indirect Impacts on Employment
DOE estimates that amended energy conservation standards for RCWs
will reduce energy and water expenditures for consumers of those
products, with the resulting net savings being redirected to other
forms of economic activity. These expected shifts in spending and
economic activity could affect the demand for labor. As described in
section IV.N of this document, DOE used an input/output model of the
U.S. economy to estimate indirect employment impacts of the TSLs that
DOE considered. There are uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Therefore, DOE generated results for near-term timeframes
(2027-2031),\173\ where these uncertainties are reduced.
---------------------------------------------------------------------------
\173\ The analysis period for TSL 2 (the Recommended TSL) is
2028-2032.
---------------------------------------------------------------------------
The results suggest that the adopted standards are likely to have a
negligible impact on the net demand for labor in the economy. The net
change in jobs is so small that it would be imperceptible in national
labor statistics and might be offset by other, unanticipated effects on
employment. Chapter 16 of the direct final rule TSD presents detailed
results regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
As stated, EPCA, as codified, contains the provision that the
Secretary may not prescribe an amended or new standard if interested
persons have established by a preponderance of the evidence that the
standard is likely to result in the unavailability in the United States
in any covered product type (or class) of performance characteristics
(including reliability), features, sizes, capacities, and volumes that
are substantially the same as those generally available in the United
States. (42 U.S.C. 6295(o)(4))
As discussed in the following sections, DOE has concluded that the
standards adopted in this direct final rule will not lessen the utility
or performance of the RCWs under consideration in this rulemaking.
Manufacturers of these products currently offer units that meet or
exceed the adopted standards.
a. Performance Characteristics
EPCA authorizes DOE to design test procedures that measure energy
efficiency, energy use, water use, or estimated annual operating cost
of a covered product during a representative average use cycle or
period of use. (42 U.S.C. 6293(b)(3)) Representative average use of a
clothes washer reflects, in part, a consumer using the clothes washer
to achieve an acceptable level of cleaning performance. DOE recognizes
that in general, a consumer-acceptable level of cleaning performance
can be easier to achieve through the use of higher amounts of energy
and water use during the clothes washer cycle. Conversely, maintaining
acceptable cleaning performance can be more difficult as energy and
water levels are reduced. As such, improving one aspect of clothes
washer performance, such as reducing energy and/or water use as a
result of energy conservation standards, may require manufacturers to
make a
[[Page 19101]]
trade-off with one or more other aspects of performance, such as
cleaning performance, depending on which performance characteristics
are prioritized by the manufacturer. Currently, DOE's test procedures
address the energy and water efficiency of clothes washers, but do not
prescribe a method for testing clothes washer cleaning performance or
other consumer-relevant attributes of performance.
DOE has identified through its market research certain high-
efficiency RCWs that achieve equal or better cleaning performance than
lower-efficiency RCWs in third-party performance reviews. For example,
in the March 2023 NOPR, DOE referenced performance ratings published by
Consumer Reports,\174\ which DOE recognizes is one popular resource for
consumers seeking independent reviews of consumer products. 88 FR
13520, 13599. According to information provided on its website, the
test method used by Consumer Reports appears to be similar in nature to
AHAM's cleaning performance test procedure, but inconsistent with the
test conditions prescribed by DOE's appendix J test procedure; \175\
nevertheless, its test results provide an objective measure of the
performance capabilities for products currently on the market. Id.
---------------------------------------------------------------------------
\174\ Consumer Reports ratings of clothes washers. Available at:
www.consumerreports.org/appliances/washing-machines/ (last accessed
September 23, 2022).
\175\ Consumer Reports describes its washing performance test as
reflecting the degree of color change to swatches of fabric that
were included in an 8-pound test load of mixed cotton items using
the unit's ``most aggressive'' normal cycle.
---------------------------------------------------------------------------
In the March 2023 NOPR, DOE sought comment on whether the Consumer
Reports test produces cleaning performance results that are
representative of an average use cycle as measured by the DOE test
procedure. Id. DOE also sought comment on how relative cleaning
performance results would vary if tested under test conditions
consistent with the DOE appendix J test procedure. Id. DOE received no
comments in response to these specific requests for comment.
In addition to considering the Consumer Reports ratings, in support
of the March 2023 NOPR, DOE conducted performance testing on a
representative sample of top-loading standard-size and front-loading
standard-size units, which collectively represent around 98 percent of
RCW shipments. Id. at 88 FR 13599. DOE provided the detailed results of
its testing in a performance characteristics test report made available
in the docket for this rulemaking. In particular, DOE evaluated wash
temperatures, stain removal, mechanical action (i.e., ``wear and
tear''), and cycle duration across the range of efficiency levels
considered in the analysis. Specifically, DOE evaluated wash
temperatures and cycle time based on test data performed according to
DOE's new appendix J test procedure; additionally, DOE evaluated
cleaning performance and fabric care based on additional testing
performed according to the soil/stain removal and mechanical action
tests specified in AHAM's HLW-2-2020 test method: Performance
Evaluation Procedures for Household Clothes Washers (``AHAM HLW-2-
2020''). Id. The AHAM HLW-2-2020 test method does not prescribe
specific test conditions for performing the test (e.g., inlet water
temperatures conditions, load size, test cycle, or wash/rinse
temperature selection). Id. For each RCW in its test sample, DOE tested
the Hot Wash/Cold Rinse (``Hot'') temperature selection \176\ in the
Normal cycle \177\ using the large load size \178\ specified in
appendix J, as well as using the inlet water temperatures and ambient
conditions specified in appendix J. Id. at 88 FR 13600. DOE
specifically analyzed the Hot cycle with the large load size because
(1) DOE's understanding at the time of the March 2023 NOPR was that the
Hot temperature selection would be the temperature selection most
likely targeted for reduced wash temperature as a design option for
achieving a higher energy efficiency rating; (2) the large load size is
more challenging to clean than the small load size; and (3) all units
in the test sample offer a Hot temperature selection (allowing for
consistent comparison across units). Id. DOE stated in the March 2023
NOPR that it expects that the Hot temperature selection with the large
load size is the cycle combination most likely to experience the types
of performance compromises described by AHAM and manufacturers. Id. In
sum, DOE selected the most conservative assumptions for its performance
testing investigation to allow DOE to better understand the potential
impacts on performance at various efficiency levels for RCWs. Id.
---------------------------------------------------------------------------
\176\ Figure 2.12.1.2 of appendix J provides a flow chart
defining the Hot Wash/Cold Rinse temperature selection. Generally,
the Hot Wash/Cold Rinse temperature selection corresponds to the
hottest available wash temperature less than 140 [deg]F, with
certain exceptions as provided in Figure 2.12.1.2.
\177\ Section 1 of appendix J defines the Normal cycle as the
cycle recommended by the manufacturer (considering manufacturer
instructions, control panel labeling, and other markings on the
clothes washer) for normal, regular, or typical use for washing up
to a full load of normally soiled cotton clothing.
\178\ Table 5.1 of appendix J defines the small and large load
sizes to be tested according to the clothes washer's measured
capacity.
---------------------------------------------------------------------------
In the March 2023 NOPR, DOE requested comment on its use of the Hot
temperature selection with the large load size to evaluate potential
impacts on clothes washer performance as a result of amended standards.
Id.
AHAM commented that the warm wash (``Warm'') temperature selection
would be the selection most likely targeted for reduced wash
temperature as a design option for achieving higher efficiency--rather
than Hot, as DOE asserted in the March 2023 NOPR--because the Warm
setting is more heavily weighted in the test procedure due to its
larger usage factor. (AHAM, No. 464 at pp. 4-5)
In response to AHAM's comment, DOE acknowledges that each degree of
temperature reduction on the Warm temperature setting would provide a
greater improvement to measured efficiency than each degree of
temperature reduction on the Hot temperature setting, given the higher
usage factor of the Warm temperature setting in the DOE test
procedures. Despite this, DOE notes that the Hot temperature setting--
which on the large majority of clothes washers provides the highest
temperature available in the Normal cycle--would be the temperature
setting that provides the highest level of cleaning performance for
soils and stains that require heated water for adequate removal.\179\
As such, testing the Hot setting \180\ provides a measure of the
maximum soil and stain removal performance that can be achieved in the
Normal cycle for soils and stains that require heated water for
adequate removal. Measuring the maximum soil and stain removal
performance of a clothes washer provides an indication of how the
maximum performance of a clothes washer may be impacted at different
efficiency levels. For these reasons, DOE has determined that an
analysis of cleaning performance using the Hot temperature setting
\181\ is appropriate for determining whether the highest level of
performance that can be achieved by the clothes washer on the Normal
cycle would be negatively impacted at higher standard levels.
---------------------------------------------------------------------------
\179\ On models that provide an ``Extra Hot'' temperature
setting in the Normal cycle, the Extra Hot setting would be expected
to provide the highest cleaning performance of such soils and
stains.
\180\ Or, alternatively, the Extra Hot setting on clothes
washers that provide an Extra Hot setting in the Normal cycle.
\181\ Or, alternatively, the Extra Hot setting on clothes
washers that provide an Extra Hot setting in the Normal cycle.
---------------------------------------------------------------------------
[[Page 19102]]
Additionally, as discussed in detail in the March 2023 NOPR, DOE
also performed the Soil/Stain Removal test and Mechanical Action test
specified in industry standard AHAM HLW-2-2020. 88 FR 13520, 13600. The
Soil/Stain Removal test evaluates the performance of household clothes
washers in removing representative soils and stains from fabric. Id.
The Mechanical Action test measures the amount of ``wear and tear''
applied by the clothes washer to the textiles. Id.
DOE requested comment on its use of the Soil/Stain Removal test and
Mechanical Action test specified in AHAM HLW-2-2020 as the basis for
evaluating performance-related concerns expressed by AHAM and
manufacturers. Id.
The performance characteristics test report that accompanied the
March 2023 NOPR provides detailed test results in table and graphical
format. Id. The discussion throughout the remainder of this section
summarizes the key preliminary conclusions from the test results as
presented in the March 2023 NOPR. Id.
To evaluate whether more-stringent standards may reduce water
temperatures below the 85 [deg]F threshold and thus potentially
decrease cleaning performance for fatty soils, DOE analyzed the wash
temperature of the hottest temperature selection available in the
Normal cycle for each RCW in the test sample. Id. For front-loading
standard-size RCWs, DOE's test data showed no identifiable correlation
between efficiency and the hottest available wash temperature in the
Normal cycle. Id. At the proposed standard level (i.e., NOPR TSL 4,
corresponding to EL 3), considering units both slightly higher and
slightly lower than EL 3, the hottest available wash temperature in the
Normal cycle ranged from around 70 [deg]F to around 140 [deg]F. Id.
This closely matched the range of the hottest wash temperatures
available on units at lower efficiency levels, which ranged from around
80 [deg]F to around 155 [deg]F. Id. Notably, at EL 3, multiple models
from multiple manufacturers provided wash temperatures higher than the
85 [deg]F threshold and would therefore be able to dissolve and clean
fatty soils. Id.
For top-loading standard-size RCWs, DOE's test data showed that for
units at EL 2 and below, the hottest available wash temperature in the
Normal cycle ranged from around 70 [deg]F to around 110 [deg]F. Id. At
EL 3 (considering units both slightly higher and slightly lower than EL
3), the hottest available wash temperature in the Normal cycle ranged
from around 80 [deg]F to around 100 [deg]F. Id. Several models from
multiple manufacturers demonstrated temperatures higher than the 85
[deg]F threshold and would therefore be able to dissolve and clean
fatty soils. Id.
Based on this data, DOE tentatively concluded that the proposed
standard level (i.e., NOPR TSL 4), would not require a substantive
reduction in hot water temperature on the hottest temperature selection
in the Normal cycle, and would not preclude the ability to provide wash
temperatures above the 85 [deg]F threshold. Id.
In the March 2023 NOPR, DOE requested comment on its wash
temperature data presented in the performance characteristics test
report and on its tentative conclusions derived from this data. Id. DOE
requested any additional data that DOE should consider about wash
temperatures at the proposed standard level. Id.
To evaluate whether more-stringent standards would result in a
decrease in stain removal performance, DOE conducted the Soil/Stain
Removal test specified in AHAM HLW-2-2020 using the Hot temperature
selection with the largest load size, as described. Id. In particular,
one of the stains evaluated in the AHAM HLW-2-2020 Soil/Stain Removal
test is sebum--an oily, waxy substance produced by skin glands.\182\
Id. For front-loading standard-size RCWs, DOE's test data showed no
observable correlation between efficiency and the total cleaning score
as measured by the AHAM test method.\183\ Id. At EL 3 (considering
units both slightly higher and slightly lower than EL 3), total
cleaning scores ranged from around 86 to around 99 (higher is better).
Id. At lower efficiency levels, total cleaning scores ranged from
around 90 to around 96. Id.
---------------------------------------------------------------------------
\182\ The standardized soil/stain strips used in the AHAM HLW-2-
2020 test consist of square test fabric swatches carrying five
different types of stains: red wine, chocolate and milk, blood,
carbon black/mineral oil, and pigment/sebum.
\183\ The Total Cleaning Score represents cleaning performance--
as measured by the amount of stain removed from the standardized
soil/stain strips--as a percentage of the cleaning performance
achieved by a reference ``maximum'' wash cycle performed on a
reference clothes washer. The Total Cleaning Score may be less than
or greater than 100%. A higher Total Cleaning Score represents
better cleaning performance.
---------------------------------------------------------------------------
For top-loading standard-size RCWs, DOE's test data showed that for
units at EL 2 and below, total cleaning scores ranged from around 90 to
around 98. Id. DOE discussed in the March 2023 NOPR that the clustering
of data at or above a score of 90 (as measured on the Hot temperature
selection with the large load size) likely represents a market-
representative threshold of stain removal performance as measured with
this cycle configuration. Id. DOE's total cleaning scores at EL 3 for
stain removal also included a score of 90, which indicated that
manufacturers can produce RCWs at EL 3, while maintaining a level of
stain removal that is market-representative. Id. at 88 FR 13601. DOE
also looked at the implementation of prioritizing hardware design
options over reduced wash temperatures. Id. When hardware design
options are implemented, DOE's analysis suggested that the proposed
standard level would not preclude the ability to provide total cleaning
scores for top-loading units equally as high as the highest scores
currently achieved by units at lower efficiency levels. Id.
In the March 2023 NOPR, DOE requested comment on its stain removal
data presented in the performance characteristics test report and on
its conclusions derived from this data. Id. In particular, DOE
requested comment on whether the clustering of data at or above a score
of 90 (as measured on the Hot temperature selection with the large load
size) corresponds to a market-representative threshold of stain removal
performance as measured with this cycle configuration. Id. DOE
additionally requested comment on its analysis indicating that
implementing additional hardware design options, rather than reducing
wash temperatures, on EL 2 units could enable total cleaning scores at
EL 3 that are equally as high as the highest scores currently achieved
by units at lower efficiency levels. Id.
To evaluate whether more-stringent standards would result in an
increase in wear and tear on clothing, DOE conducted the Mechanical
Action test specified in AHAM HLW-2-2020 concurrently with the Soil/
Stain Removal test as described. Id. at 88 FR 13601.
For top-loading standard-size RCWs, DOE's test data showed that
units at EL 3 have lower (i.e., better) mechanical action scores than
baseline-rated units, indicating that the higher-efficiency units
provide less wear and tear than the baseline units in the test sample.
Id. Specifically, at EL 3, mechanical action scores ranged from around
150 to around 175, closely matching the range at EL 2, which ranged
from around 150 to around 170. Id. At lower efficiency levels,
mechanical action scores ranged from around 190 to around 230. Id. The
data suggested that the better mechanical action scores at the higher
efficiency levels may correlate with the use of wash plates (i.e.,
impellers) at those levels, compared to the use of
[[Page 19103]]
traditional agitators at the lower efficiency levels. Id.
For front-loading standard-size RCWs, DOE's test data showed that
for units at or below EL 2, mechanical action scores range from around
135 to around 180. Id. At EL 3 (considering units both slightly higher
and slightly lower than EL 3), mechanical action scores ranged from
around 160 to around 210. Id. Although some units at EL 3 had higher
(i.e., worse) mechanical action scores than the lower-efficiency units,
the low end of the range was less than (i.e., better than) some of the
baseline-rated units. Id. DOE stated in the March 2023 NOPR that it was
not aware of any industry-accepted threshold for acceptable mechanical
action performance, and there was no significant clustering of DOE's
data to suggest any particular market-representative threshold. Id.
Based on this data from the March 2023 NOPR, DOE tentatively
concluded that the proposed standard level (i.e., NOPR TSL 4) would not
preclude the ability to provide mechanical action scores comparable to
the scores for units at lower efficiency levels. Id.
DOE requested comment on its mechanical action data presented in
the performance characteristics test report and on its conclusions
derived from this data. Id. In particular, DOE requested comment on
whether there is a market-representative threshold of mechanical action
performance as measured on the Hot temperature selection using the
large load size. Id. DOE also requested comment on whether better
mechanical action scores at higher top-loading efficiency levels are
attributable to the use of wash plates rather than traditional
agitators in those higher-efficiency units. Id.
To evaluate whether more-stringent standards would result in an
increase in cycle time, DOE measured the average cycle time as defined
in appendix J for each unit in the test sample. Id. For both top-
loading standard-size and front-loading standard-size RCWs, DOE's test
data showed no observable correlation between efficiency and average
cycle time. Id. For top-loading standard-size RCWs, the average cycle
time for the entire product class was around 50 minutes, as measured
according to the appendix J test procedure. Id. At EL 3 (considering
units both slightly higher and slightly lower than EL 3), cycle time
ranged from around 35 minutes to around 65 minutes. Id. This closely
matched the range of units at lower efficiency levels, which ranged
from around 35 minutes to around 70 minutes. Id. For front-loading
standard-size RCWs, the average cycle time for the entire product class
was around 45 minutes, as measured according to the appendix J test
procedure. Id. At EL 3 (considering units both slightly higher and
slightly lower than EL 3), cycle time ranged from around 40 minutes to
around 55 minutes. Id. This closely matched the range of units at lower
efficiency levels, which ranged from around 35 minutes to around 65
minutes. Id.
Based on this data, DOE tentatively concluded that the proposed
standard level (i.e., NOPR TSL 4), would not result in an increase in
average cycle time as measured by appendix J. Id.
In the March 2023 NOPR, DOE requested comment on its cycle time
data presented in the performance characteristics test report and on
its conclusions derived from this data. Id.
In summary, DOE tentatively concluded in the March 2023 NOPR that
the proposed standard level (i.e., NOPR TSL 4) can be achieved with key
performance attributes (e.g., wash temperatures, stain removal,
mechanical action, and cycle duration) that are largely comparable to
the performance of lower-efficiency units available on the market
today. Id. Based on DOE's testing of models that currently meet the
proposed standards, DOE stated in the March 2023 NOPR that it would not
expect performance to be compromised at the proposed standard level.
Id.
In the March 2023 NOPR, DOE sought comment on its testing and
assessment of performance attributes (i.e., wash temperatures, stain
removal, mechanical action, and cycle duration), particularly at the
proposed standard level (i.e., NOPR TSL 4). Id. DOE sought additional
data that stakeholders would like DOE to consider on performance
attributes at NOPR TSL 4 efficiencies as well as the current minimum
energy conservation standards. Id.
ASAP, ACEEE, and NYSERDA supported DOE's performance testing
methodology and agreed with DOE that clothes washer performance
(including wash temperature, stain removal, mechanical action, and
cycle time) would not be negatively impacted by the standards proposed
in the March 2023 NOPR. (ASAP, ACEEE, and NYSERDA, No. 458 at pp. 3-4)
ASAP, ACEE, and NYSERDA noted that manufacturers have previously
commented that reducing water temperatures below 85 [deg] F could make
it difficult to remove fatty soils from both, but that DOE's analysis
demonstrates that by prioritizing hardware improvements in meeting the
proposed standards for top-loading units could provide cleaning
performance equivalent to the highest performance achieved by units at
lower efficiency levels. (Id. at p. 4) ASAP, ACEEE, and NYSERDA
commented that, in agreement with DOE testing results, Consumer Reports
ratings indicate that efficient top-loading models, using impellers
rather than agitators, generally perform better than less-efficient
units. (Id.) ASAP, ACEEE, and NYSERDA further commented that top-
loading models meeting the proposed standard have lower (i.e., better)
mechanical action scores than baseline units, indicating that the
higher-efficiency machines cause less wear and tear on clothing than
inefficient baseline unit. (Id.)
NEEA et al. commented that NEEA research, Consumer Reports testing,
and consumer ratings on national retailers' websites confirm that top-
loading RCWs that meet NOPR TSL 5 have excellent cleaning performance
and receive high ratings from consumers, demonstrating no correlation
between efficiency and cleaning performance. (NEEA et al., No. 455 at
pp. 3-4)
The CA IOUs supported DOE's conclusion that RCWs meeting NOPR TSL 4
will maintain their cleaning performance. (CA IOUs, No. 460 at p. 8)
The CA IOUs commented that DOE's testing and analysis provide
sufficient justification that along with sustained cleaning
performance, the standard levels proposed in the March 2023 NOPR will
not increase clothing wear and tear, or require longer average cycle
times. (Id. at p. 10)
Samsung supported DOE's efforts and detailed testing and analysis
to consider the impact of the standard levels proposed in the March
2023 NOPR on performance. (Samsung, No. 461 at p. 3) Samsung commented
that DOE's testing, data, and results support the proposed levels at
NOPR TSL 4, providing a systematic and comprehensive evaluation of
potential impacts on key performance metrics. (Id.) Samsung commented
that DOE's performance test data show that there is no loss in cleaning
performance or increase in wear and tear when comparing top-loading
machines with agitators and wash plates. (Id. at p. 4)
CEI commented that neither the March 2023 NOPR nor the accompanying
TSD mention mold, but that mold accumulation in RCWs--rare in pre-2007-
standards models--is now a common problem, particularly in front-
loading models. (Id. at p. 4) CEI listed unpleasant odors, compromised
clothes washer performance, and stains on washed items as outcomes of
mold and commented that the situation requires many consumers to
periodically run the clothes washer empty with a cleaning
[[Page 19104]]
agent designed to eliminate mold. (Id.) CEI added that such cleaning
agents have become strong sellers, which is evidence of how widespread
the mold issue has become and that this process of washing the clothes
washer adds to energy and water use. (Id.) CEI commented that rather
than acknowledge this issue, the standard levels proposed in the March
2023 NOPR increase the energy and water restrictions that caused the
mold problem in the first place. (Id.)
During the public webinar, Mannino commented that cleaning
performance and mold concerns started in the 2000s. (Mannino, Public
Webinar Transcript, No. 91 at p. 85) Mannino expressed concern that
after three to five years of use clothes no longer smell or look clean
after a clothes washer cycle and that these problems may not appear
when testing brand new models. (Id. at pp. 62-63)
With regard to concerns about mold accumulation and odors,
commenters have not presented any evidentiary basis for asserting that
such concerns are a result of energy conservation standards applicable
to RCWs. DOE understands that front-loading clothes washers are
inherently more prone to retaining moisture--which in turn may
contribute to the growth of mold or other odor-causing buildup--in
components such as the rubber gasket that seals the front door opening,
which by necessity has a complex geometry with folds and crevices that
can retain moisture when the clothes washer is not in use. DOE notes
that the ``first generation'' of front-loading clothes washers was
widely introduced to the U.S. market in the early 2000s, prior to the
establishment of any performance-based energy conservation standards
for front-loading clothes washers. DOE is aware that at least four
major RCW manufacturers have settled class-action litigation suits
regarding concerns over mold and odors in these first-generation
product lines sold on the market during the 2000s.\184\ DOE is also
aware that in response to such concerns, manufacturers implemented a
variety of design strategies in their ``second generation'' front-
loading designs to prevent the growth of mold or other odor-causing
buildup. In particular, DOE has observed through market research and
reverse-engineering teardowns the use of the following such design
strategies in front-loading models currently on the market: drain holes
in the bottom of the rubber door gasket; air vents connecting interior
spaces within the clothes washer to the outside air; internal fans that
circulate air through the wash drum after cycle completion; the use of
antimicrobial materials for certain internal components exposed to
moisture; and door hinge designs that keep the door slightly ajar when
not in use. DOE is not aware of any data, nor have any interested
parties provided such data, to indicate that mold or odor concerns--to
the extent that such concerns may persist despite the aforementioned
product design innovations--would be any more prevalent at higher
efficiency levels than at the current standard levels.
---------------------------------------------------------------------------
\184\ (1) In re: LG Front Load Washing Machine Class Action
Litigation, Case No. 2:08-cv-00051-MCA-LDW, U.S. District Court for
the District of New Jersey, applicable to certain models purchased
between 2002 and 2006; (2) In re: Whirlpool Corp. Front-Loading
Washers Settlement, Case No. 1:08-WP-65000, U.S. District Court for
the Northern District of Ohio, applicable to certain models
purchased between 2001 and 2010; (3) Grasso, et al. v. Electrolux
Home Products Inc., Case No. 8:16-cv-00911, U.S. District Court for
the Middle District of Florida, applicable to certain models
purchased between 2004 and 2011; and (4) Cobb v. BSH Home Appliances
Corporation, Case No. 8:10-cv-00711, U.S. District Court for the
Central District of California, applicable to certain models
purchased between 2004 and 2011.
---------------------------------------------------------------------------
CEI stated that EPCA does not prioritize efficiency above all else
and that EPCA prohibits setting an efficiency standard that would
sacrifice any desired product characteristic. (CEI, No. 454 at pp. 2-3)
CEI commented that a reduction in the quality of RCWs has already
occurred due to previous efficiency standards applied by DOE in 1994,
2004, 2007, 2015, and 2018, noting that the standards in 2007 and
beyond have been particularly problematic and that several respects of
RCW quality have declined since then. (Id. at p. 3) CEI commented that
problems stem from the fact that compliant models must use considerably
less water per cycle, and that the traditional agitator in many models
has been replaced by what CEI characterizes as more-efficient, but
less-effective alternatives. (Id.) CEI commented that these problems
would be exacerbated by the proposed rule, which would require further
reductions in energy and water use. (Id.) CEI commented that DOE had
not acknowledged adverse impacts of its earlier standards and continues
to ignore real-world evidence that consumer utility has suffered. (Id.)
During the public webinar, Mannino commented that consumers in some
cases load larger capacity top-loading RCWs completely to the top with
clothing, which causes the clothing to not come out clean. (Mannino,
Public Webinar Transcript, No. 91 at p. 84)
Strauch expressed concern about negative impacts to RCW performance
with higher efficiency levels. (Strauch, No. 430 at p. 1) Strauch
specifically expressed concern about lower wash temperatures, higher
spin speeds, and increased spin duration as a result of the standards
proposed in the March 2023 NOPR. (Id.) Strauch further expressed
concern about decreased utility and performance at the proposed
standard level and stated that the proposal should therefore be
reconsidered. (Id. at p. 3) Additionally, DOE received comments from
around 120 individual commenters expressing concerns regarding cleaning
performance. Of these, 11 individuals emphasized what they described as
the burden of cleaning very dirty loads. DOE also received comments
from around 50 individuals expressing specific concerns about extended
cycle time.
Representatives Latta et al. commented that the standards proposed
in the March 2023 NOPR \185\ would likely lead to longer and faster
spin speeds, with resulting negative consequences for consumers
including longer cycle times, increased noise, and increased wrinkling
and tangling. (Representatives Latta et al., No. 456 at p. 2)
---------------------------------------------------------------------------
\185\ DOE notes that the standards adopted in this direct final
rule are the same as the proposed in the March 2023 NOPR for three
of the five product classes, but are less stringent than the
standards proposed in the March 2023 NOPR for the other two product
classes.
---------------------------------------------------------------------------
Representatives Latta et al. further expressed concern that the
impact of the standards proposed in the March 2023 NOPR on product
performance were not adequately reviewed and addressed by DOE as
required under EPCA. (Id. at p. 2) Representatives Latta et al.
commented that to meet the standards proposed in the March 2023 NOPR,
manufacturers would likely produce units that reduce water use and
water temperatures, which could result in reduced cleaning and rinsing
performance. (Id.) Representatives Latta et al. stated faster spin
speeds would also drive greater potential for load imbalance issues,
and increased product complexity could drive higher costs and shorter
product lifespans. (Id. at pp. 2-3)
GE Appliances (``GEA'') commented that the standards proposed in
the March 2023 NOPR will lead to increased cycle times. (GEA, No. 457
at p. 3) GEA commented that DOE's analysis shows the RMC requirements
resulting from the standards proposed in the March 2023 NOPR will
require higher spin speed (which takes greater time for the clothes
washer to reach) and longer spin times. (Id.) GEA pointed out that DOE
previously recognized the importance of cycle time to consumer
[[Page 19105]]
satisfaction and used cycle time impact as a factor in evaluating
standards impact and should do so in this rulemaking as well. (Id.)
GEA further commented that the increased spin speeds required by
the standards proposed in the March 2023 NOPR will lead to a higher
incidence of canceled cycles because all modern top-loading RCWs use
software monitoring of machine performance to assure safety during the
spin cycle by detecting out-of-balance loads. (Id.) GEA commented that
the standards proposed in the March 2023 NOPR will require
exceptionally high spin speeds for top-loading RCWs--likely at least
900 RPM--and when an out-of-balance condition occurs, the machine will
first attempt to rebalance the load though the ability to do so can be
limited. (Id.) GEA commented that if an out-of-balance condition
continues to exist, the wash cycle will be canceled before it is
complete, leading either to a higher RMC than intended or truly wet
clothes that a consumer is likely to rewash. (Id.)
AHAM commented that there is a correlation between several cleaning
scores and tested IMEF in DOE's test data, contrary to DOE's
statements. (AHAM, No. 464 at p. 3) AHAM commented that DOE did not
evaluate whether there is a correlation between water use/efficiency
and cleaning performance. (Id.) AHAM noted that the two top-loading
RCWs in DOE's test sample that meet the standards proposed in the March
2023 NOPR have the lowest cleaning scores in the test sample. (Id. at
p. 4) AHAM further commented that DOE should not rely primarily on
modeled data to conclude that higher ELs will not negatively impact
cleaning performance, particularly in light of AHAM's data, which
demonstrate the opposite. (Id.) AHAM acknowledged that it is possible
to address performance challenges using expensive technology options
present in the most fully featured products currently on the market,
but that DOE did not account for those costs in its analysis. (Id. at
p. 10) AHAM commented that low-income consumers should not have to
sacrifice performance to meet their price requirements. (Id.)
AHAM provided data indicating that there is a decrease in cleaning
performance by about 5 points for both the Warm and Hot temperature
settings when the wash temperature is decreased by around 30 [deg]F to
what AHAM characterizes as the temperatures that would be required
under the proposed standards. (Id. at p. 5)
AHAM commented that it believes decreased water levels are likely
to be the largest contributor to decreased performance, in part because
the standards proposed in the March 2023 NOPR would make equal load
distribution more difficult, leading to more frequent out-of-balance
loads. (Id. at p. 5) AHAM noted that an increase in out-of-balance
loads would increase water usage on some percentage of loads in top-
loading RCWs designed to meet the standards proposed in the March 2023
NOPR, which would undercut DOE's projected savings. (Id.) AHAM also
commented that load turnover will be significantly decreased as a
result of the lower water levels and provided data from manufacturers
that indicated an 86-87-percent difference in load turnover between a
unit meeting current standards and a prototype meeting DOE's minimum
WER for top-loading standard-size RCWs. (Id. at pp. 5-6) AHAM stated
that it will be harder to remove soils from the full load without
sufficient turnover of the load. (Id. at p. 7)
AHAM further provided manufacturer testing data that showed the
impact of low load turnover and of the standards proposed in the March
2023 NOPR on the ability of an RCW to remove larger particles (such as
mud, sand, hair, and vomit). (Id. at p. 7) AHAM indicated that the test
unit modified to meet the proposed standards required a 10-minute
increase in cycle time to achieve cleaning performance scores
comparable to (but still under) that of a unit meeting the current
standards. (Id.) AHAM commented, with supporting photographs, that a
modified unit meeting the proposed standards was unable to remove muddy
towel sediment despite the increase in cycle time, creating a potential
health issue when consumers attempt to wash out soils like vomit. (Id.
at pp. 8-9)
AHAM commented that there is significant consumer push-back on
reduced water quantity and motion, and their perceived effect on wash
performance. (Id. at p. 10) AHAM asserted that consumers who perceive
that their clothes washers do not use enough water complain to
manufacturers, rely more on higher water cycles, or engage in ``hacks''
such as manually adding more water to wet the clothes prior to the
start of the cycle and that these practices are counter to DOE's energy
and water efficiency goals. (Id. at pp. 10-11) AHAM commented that not
enough time has elapsed to demonstrate that the water level per cycle
is a distinct feature of value to consumers, but that low water levels
are a product characteristic that significant portions of consumers
dislike. (Id. at p. 11)
Whirlpool commented that the standards proposed in the March 2023
NOPR would lessen the utility and performance of clothes washers,
particularly for small- and mid-sized RCWs. (Whirlpool, No. 462 at p.
7) Whirlpool commented that the proposal would result in fewer product
features and model types, reducing the utility of numerous clothes
washers, degrading their overall performance, fundamentally altering
consumer choices, and changing how consumers will do their laundry.
(Id.)
Whirlpool commented that DOE's performance evaluation in the March
2023 NOPR lacks comprehensive analysis on noise and vibration,
wrinkling, tangling, rinse performance, particulate removal and
residues, water level, and load motion. (Id. at p. 11) Whirlpool
further commented that the March 2023 NOPR also fails to provide
justification for the limited performance evaluation, ignoring several
performance metrics that Whirlpool claims matter most to consumers.
(Id.)
Whirlpool commented that DOE's data does not support the conclusion
that performance will be satisfactory or reach consumer-acceptable
limits for the evaluated performance metrics at the standard level
proposed in the March 2023 NOPR. (Id. at p. 11) Whirlpool further
commented that DOE's analysis does not address the capacity of high-
performing models that exist at higher efficiency levels. (Id. at pp.
11-12) Whirlpool commented that DOE's analysis only examines the
performance of currently available models and does not include expense.
(Id. at p. 12) Whirlpool commented that there is a consumer-relevant
difference in retail price between the premium models that DOE
evaluated and the cost DOE estimated for the purchase of an RCW meeting
the standard level proposed in the March 2023 NOPR. (Id.)
Whirlpool commented that providing a consumer-acceptable level of
load motion is one of the biggest challenges to redesigning a top-
loading RCW to meet the standards proposed in the March 2023 NOPR. (Id.
at p. 12) Whirlpool commented that based on its own consumer testing,
Whirlpool supported AHAM's data that the rollover rate falls below the
minimum consumer acceptance threshold to meet the standards proposed in
the March 2023 NOPR. (Id.) Whirlpool commented that a test cycle
designed to meet the proposed standards failed to meet the consumer-
acceptance threshold for load motion by over 82 percent and only offers
13 percent of the load motion compared to a model certified at the
[[Page 19106]]
current standard (which exceeds the threshold by 200 percent). (Id.)
Whirlpool commented that faster spin speeds would create consumer-
perceptible challenges with wrinkling and tangling from fabric becoming
compressed. (Id. at pp. 12-13) Whirlpool further commented that
consumers may believe their clothes never got wet as they may observe
dry spots on their clothes at the end of the cycle due to enhanced
moisture extraction, with lower water levels reinforcing that
perception. (Id.)
DOE greatly appreciates the test data and information submitted by
AHAM and individual manufacturers for DOE's review. This additional
data and information provided has helped inform DOE's evaluation of
potential amended standards for RCWs. Specifically, the additional data
and information provided by AHAM indicates that there are uncertainties
regarding potential impacts on certain aspects of product performance
at the standard levels proposed in the March 2023 NOPR and that changes
to consumer usage patterns to mitigate such impacts could jeopardize
the energy and water savings that would be achieved at the proposed
efficiency levels.
As discussed in section V.C of this document, DOE is finalizing the
amended standard level at TSL 2, the Recommended TSL. For both top-
loading and front-loading standard-size RCWs, TSL 2 corresponds to EL
2, which is equivalent to the current ENERGY STAR qualification
criteria for each product class. DOE notes that this amended standard
level for both top-loading and front-loading standard-size RCWs is less
stringent than the level proposed in the March 2023 NOPR (i.e., TSL 3),
which corresponded to EL 3 for both product classes.
As discussed in the March 2023 NOPR, DOE tentatively concluded that
the proposed standard level for top-loading standard-size RCWs could be
achieved with key performance attributes (e.g., wash temperatures,
stain removal, mechanical action, and cycle duration) that are largely
comparable to the performance of lower-efficiency units available on
the market today. 88 FR 13520, 13601. Specifically, with regard to wash
temperatures, DOE tentatively concluded that the proposed standard
level would not require a substantive reduction in hot water
temperatures and, in particular, would not preclude the ability to
provide wash temperatures above the important 85 [deg]F threshold
mentioned by manufacturers. Id. at 88 FR 13600. With regard to stain
removal, DOE tentatively concluded that a market-representative level
of performance can be maintained at EL 3, and that maintaining the
highest level of performance currently achieved at lower efficiency
levels would be technically achievable at EL 3. Id. at 88 FR 13601.
With regard to mechanical action, DOE tentatively concluded that the
proposed standard level would not require preclude the ability to
provide mechanical action scores comparable to the scores for units at
lower efficiency levels. Id. With regard to cycle time, DOE tentatively
concluded that the proposed standard level would not result in an
increase in average cycle time. Id.
However, manufacturers presented additional data suggesting that
other attributes of clothes washer performance not specifically
evaluated by DOE may be negatively impacted at TSLs 3 and 4 for
particularly heavily soiled clothing loads, given current design
technologies and approaches. DOE understands that consumers expect that
a clothes washer provides a consumer-acceptable level of cleaning
performance across a range of potential clothing loads. DOE further
understands that consumers that experience any such negative impacts on
product performance could potentially alter their usage patterns, for
example by using more energy-intensive settings more frequently (e.g.,
Extra-Hot temperature setting); using more water-intensive cycle
options (e.g., Deep Fill option; extra rinse cycles); using non-
regulated cycles (e.g., Heavy Duty cycle); or re-washing clothing that
has not been cleaned sufficiently. Such changes to consumer usage
patterns may counteract the energy and water savings that DOE has
estimated would be achieved at TSLs 3 and 4. As discussed previously in
section IV.H.2 of this document, DOE conducted a sensitivity analysis
on the potential impact to energy and water savings that would result
from changes to consumer usage patterns at TSL 3 and TSL 4.
Conversely, at TSL 2 (i.e., the Recommended TSL corresponding to
the standards level adopted in this direct final rule), DOE's data
demonstrates no negative impact on the performance or cycle time of
both top-loading and front-loading RCWs. Specifically, for top-loading
standard-size RCWs, DOE's test data show wash temperatures in the
Normal cycle as high as 110 [deg]F at EL 2, matching the highest wash
temperatures observed in units at lower efficiency levels. DOE test
data for top-loading standard-size RCWs also indicate cleaning scores
as high as 98 at EL 2, representing the highest scores among DOE's
entire test sample, and higher than the scores observed at lower
efficiency levels. Regarding mechanical action, DOE's test data show
that for top-loading standard-size RCWs at EL 2, the mechanical action
scores range from around 150 to around 170--significantly lower (i.e.,
better) than the range at lower efficiency levels. DOE's test data
further show that for top-loading standard-size RCWs, the range of
cycle times at EL 2 is no higher than for units at lower efficiency
levels. Specifically, among units in DOE's test sample that meet or
exceed EL 2, cycle time ranges from around 35 minutes to around 65
minutes. This closely matches the range of units at lower efficiency
levels, which range from around 35 minutes to around 70 minutes.
For front-loading standard-size RCWs, DOE's test data showed no
identifiable correlation between efficiency and the hottest available
wash temperature in the Normal cycle. Among units that meet or exceed
EL 2, the hottest available wash temperatures in the Normal cycle range
from around 70 [deg]F to around 140 [deg]F. This closely matches the
range of the hottest wash temperatures available on units at lower
efficiency levels, which ranged from around 80 [deg]F to around 155
[deg]F. DOE's test data also shows no observable correlation between
efficiency and cleaning score. Among units that meet or exceed EL 2,
cleaning scores range from around 86 to around 99. At lower efficiency
levels, total cleaning scores ranged from around 90 to around 96.
Regarding mechanical action, DOE's test data shows that at EL 2,
mechanical action scores range from around 160 to around 195 (lower is
better), compared to a range of around 135 to around 180 for units at
lower efficiency levels. DOE's test data further show that for front-
loading standard-size RCWs, the range of cycle times at EL 2 is no
higher than for units at lower efficiency levels. Specifically, among
units in DOE's test sample that meet or exceed EL 2, cycle time ranges
from around 40 minutes to around 55 minutes. This closely matches the
range of units at lower efficiency levels, which range from around 35
minutes to around 65 minutes.
DOE notes that in response to the March 2023 NOPR, manufacturers
did not provide any specific data nor express any specific concerns
regarding clothes washer performance at TSL 2 (corresponding to EL 2).
Based on the information available, including DOE test results as
summarized in the preceding paragraphs, DOE concludes that no lessening
of product utility or performance would occur at TSL 2. As previously
discussed, on February 14, 2024, DOE received a second joint
[[Page 19107]]
statement from the same group of stakeholders that submitted the Joint
Agreement in which the signatories reaffirmed the standards recommended
in the Joint Agreement.\186\ In particular, the letter states that
DOE's test data show, and industry experience agrees, that the
recommended standard levels for RCWs can maintain good cleaning
performance and do not preclude the ability to provide high wash
temperatures.
---------------------------------------------------------------------------
\186\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0509.
---------------------------------------------------------------------------
The test data presented in the March 2023 NOPR contradict certain
conclusions and presumptions made by DOE in previous rulemakings with
regards to cycle times. In particular, in a NOPR published on August
13, 2020 (``August 2020 NOPR''), which preceded the December 2020 Final
Rule, DOE stated its presumption that the shortest possible cycle times
currently available on the market represent the models for which
manufacturers have prioritized cycle time while maintaining adequate
performance across the other performance aspects; and that based on
this presumption, the current energy conservation standards may be
precluding manufacturers from bringing models to the market with
substantially shorter cycle times. 85 FR 49297, 49305; reiterated at 85
FR 81359, 81361. DOE further asserted that offering products with
shorter cycle times would require more per-cycle energy and/or water
use than would be permitted under the current standards in order to
maintain the same level of performance in other areas (e.g., cleaning,
noise, etc.). Id.
DOE has determined, contrary to the August 2020 NOPR's assumptions,
that current energy conservation standards have not prevented the sale
of RCWs with shorter cycle times. DOE's test data presented in the
March 2023 NOPR indicates no discernable correlation between efficiency
level and cycle time for either top-loading standard-size or front-
loading standard-size RCWs (i.e., the RCW product classes subject to
the December 2020 Final Rule). Indeed, for top-loading standard-size
RCWs, the most efficient model in DOE's test sample has the same cycle
time of 48 minutes as the least efficient minimally-compliant model in
DOE's test sample. The models with the lowest cycle times of 35 and 36
minutes achieve higher efficiency levels EL 1 and EL 3, respectively.
Similarly, for front-loading standard-size RCWs, the most efficient
model in DOE's test sample has a cycle time of 41 minutes,
substantially similar to the baseline unit with a cycle time of 36
minutes. The model with the lowest cycle time of 33 minutes achieves
higher efficiency level EL 1. Based on this data, DOE reaches a
different conclusion than was reached in the December 2020 Final Rule.
In particular, noting that DOE's data shows no discernable correlation
between efficiency and cycle time, this data does not support DOE's
prior assertion that the current energy conservation standards may be
precluding manufacturers from bringing models to the market with
substantially shorter cycle times, or DOE's prior presumption that
offering products with shorter cycle times would require more per-cycle
energy and/or water use than would be permitted under the current
standards.
Furthermore, in the second joint statement submitted February 14,
2024, by the signatories of the Joint Agreement, the signatories
acknowledge that DOE's investigative testing shows that cycle times at
the recommended levels for RCWs are the same as RCWs on the market
today.
Finally, for the reasons discussed above, DOE has also determined
that the standards adopted in this rule will not require increased
cycle times.
As discussed, the adopted standards level for standard-size RCWs
corresponds to the ENERGY STAR level for each product class. The ENERGY
STAR certified product list indicates a wide range of models currently
available on the market at this level. Currently, approximately 31
percent of all top-loading standard-size shipments meet this level. Of
the nine OEMs offering top-loading standard-size RCWs, six OEMs offer
166 basic models that meet the final standard level. These six OEMs
that currently offer top-loading standard-size RCW models that meet the
final standard level collectively account for over 95 percent of
overall top-loading standard-size RCW shipments. Currently,
approximately 92 percent of all front-loading standard-size shipments
meet this level. Of the seven OEMs with front-loading standard-size
products, six OEMs offer 169 basic models (representing approximately
89 percent of all front-loading standard-size basic models).
Samsung recommended that DOE formalize its performance test plan or
a similar approach to qualify the test cycle, similar to the approach
used in the recently finalized dishwasher test procedure. (Samsung, No.
461 at p. 3) Samsung commented that ensuring products perform their
basic functions during energy tests is of utmost importance, and if
manufacturers compromise performance to achieve higher efficiency, it
may diminish consumer trust in the U.S. Federal Trade Commission
(``FTC'') EnergyGuide label and DOE minimum efficiency standards. (Id.)
Samsung stated that the modes of operation tested, typically the
default mode, must demonstrate a minimum level of acceptable
functionality, because if the tested default mode fails to meet
expectations, the consumer may resort to using more energy-consuming
modes, defeating the purpose of energy efficiency standards. (Id.)
EPCA authorizes DOE to design test procedures that measure energy
efficiency, energy use, water use (in the case of showerheads, faucets,
water closets and urinals), or estimated annual operating cost of a
covered product during a representative average use cycle or period of
use. (42 U.S.C. 6293(b)(3)) As discussed, DOE's test procedures address
the energy and water efficiency of RCWs, but do not prescribe a method
for testing clothes washer cleaning performance or other consumer-
relevant attributes of performance.
DOE's test procedure for clothes washers requires testing using the
Normal cycle,\187\ and consequently compliance with the applicable
standards is determined based on the measured energy and water use of
the Normal cycle. As the clothes washer market continuously evolves to
higher levels of efficiency--either as a result of mandatory minimum
standards or in response to voluntary programs such as ENERGY STAR--it
becomes increasingly more important that DOE ensures that its test
procedure continues to reflect representative use. As such, the Normal
cycle that is used to test the clothes washer for energy and water
performance must be one that provides a consumer-acceptable level of
cleaning performance, even as efficiency increases.
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\187\ As discussed, the Normal cycle is defined as the cycle
recommended by the manufacturer (considering manufacturer
instructions, control panel labeling, and other markings on the
clothes washer) for normal, regular, or typical use for washing up
to a full load of normally soiled cotton clothing. Section 1 of
appendix J.
---------------------------------------------------------------------------
DOE has previously considered in the June 2022 TP Final Rule
whether to propose amendments to the test procedure to define what
constitutes ``washing up to a full load of normally soiled cotton
clothing'' (i.e., the cleaning performance) to ensure that DOE's
clothes washer test procedure accurately and fully tests clothes
washers during a representative average use cycle. 87 FR 33316, 33352.
After evaluating the existing ENERGY STAR
[[Page 19108]]
test procedure for determining clothes washer cleaning performance and
the industry test method AHAM HLW-2-2020, DOE determined in the June
2022 TP Final Rule that it was unable to assess whether the additional
burden that would be introduced by these cleaning performance test
methods would be outweighed by the benefits of incorporating either
test. Id. Although test procedure development is outside the scope of
this rulemaking, DOE continues to evaluate the merits of establishing a
cleaning performance test method for clothes washers. DOE would
consider any proposals regarding cleaning performance test methods
under a separate test procedure rulemaking.
b. Continued Availability of Small-Capacity Clothes Washers
In the March 2023 NOPR, DOE discussed how its engineering analysis
accompanying the March 2023 NOPR indicated that increases in capacity
would likely be required to achieve higher efficiency levels beyond EL
1 for the top-loading standard-size product class.\188\ 88 FR 13520,
13540. In chapter 5 of the TSD accompanying the March 2023 NOPR, DOE
discussed its findings that at EL 2, top-loading standard-size RCWs
currently on the market have capacities of approximately 4.4 ft\3\ (an
increase compared to a typical capacity of 4.0 ft\3\ at EL 1); units at
EL 3 have capacities of approximately 4.7 ft\3\; and units at EL 4 have
capacities of approximately 5.0 ft\3\. (See section 5.5.3.2 of the NOPR
TSD)
---------------------------------------------------------------------------
\188\ DOE notes that it did not model the use of capacity
increase as a design option for any other product classes in the
March 2023 NOPR, having tentatively determined that capacity
increase is not necessary to achieve higher efficiencies for those
product classes. 88 FR 13520, 13543.
---------------------------------------------------------------------------
Whirlpool commented that DOE's proposal will effectively phase out
small- and mid-sized capacity ``standard-size'' RCWs. (Whirlpool, No.
462 at p. 7) Whirlpool commented that the standards proposed in the
March 2023 NOPR fail to account for the inherent benefit that large-
capacity RCWs receive in the calculation of efficiency metrics. (Id.)
Whirlpool further commented that it is unaware of any top-loading RCWs
currently available on the market that are at 4.7 ft\3\ and meet the
proposed EL 3 standards, contradictory to DOE's assumption. (Id. At p.
8) Whirlpool commented that lower-income consumers and consumers with
limited space cannot afford to accommodate physically larger RCWs and
that smaller-capacity units also tend to be more affordable. (Id.)
Whirlpool stated that it has previously offered RCWs with capacities
exceeding 6.0 ft\3\, but many consumers had difficulty installing these
in their homes due to the increase in physical dimensions and trouble
accessing the bottom of the clothes washer basket. (Id.) Whirlpool
added that the elimination of small- and mid-size capacity RCWs would
be extremely harmful to U.S. manufacturers, as an overwhelming majority
of sales are for RCWs smaller than 4.7 ft\3\. (Id.) Whirlpool further
commented that for small RCWs to extract the same amount of water,
faster spin speeds are required because of the smaller basket size, but
are limited by safety considerations. (Id. At p. 13)
Whirlpool further commented that larger-capacity RCWs can more
easily meet the standards proposed in the March 2023 NOPR with better
RMC and therefore fewer additional technology options added to the
product, lesser performance degradation, and lower incremental product
costs than small- or mid-sized RCWs. (Id. At p. 12) Whirlpool commented
that a small- to mid-size RCW would need to increase spin speed to
dramatically reduce moisture extraction during the spin phase and would
need to implement other technology options (lower water temperatures,
lower water levels, and more efficient controls) compared to a larger-
capacity RCW. (Id.)
Representatives Latta et al. expressed concern that the standards
proposed in the March 2023 NOPR are biased in favor of larger-capacity
RCWs and eliminates a consumer's choice to buy smaller RCWs that better
meet their needs and space requirements. (Representatives Latta et al.,
No. 456 at p. 2) Representatives Latta et al. commented that the TSD
indicates RCW capacities would need to be increased to meet the new
standards--with top-loading RCW capacity increasing to 4.7 ft\3\ or
more--which creates potential accessibility challenges due to the
increased height of the machine. (Id.)
AHAM commented that products with smaller capacities provide a
utility to consumers because they can be used in tighter spaces, can be
moved from place to place, or can be used together with a standard-size
RCW. (AHAM, No. 464 at p. 14) AHAM stated its agreement with DOE's
statement in the RFI published on August 2, 2019, that these products,
because of their smaller size, cannot achieve the same levels of
efficiency as larger products. (Id.) AHAM commented that increases in
capacity for top-loading RCWs are required to achieve higher efficiency
levels beyond EL 1, demonstrating that a capacity bias still exists in
the new EER and WER metrics. (Id. At pp. 12-13) AHAM commented that DOE
must ensure that it accounts for that bias in order to ensure that
small- and average-sized capacities are not eliminated from the market
or overly burdened. (Id.) AHAM noted that front-loading RCWs have
technological limitations such as drum diameter and volume and top-
loading RCWs have the unique installation and usage conditions that
limit the attainable efficiency of smaller units. (Id. At pp. 14-15)
AHAM commented that capacity itself is an option DOE projects will be
used to increase efficiency and that the larger the capacity, the
easier it is to incorporate various other technology options as well.
(Id.) AHAM commented that under EPCA, capacity provides consumer
utility and is an appropriate basis for establishing product class and
that the standards proposed in the March 2023 NOPR will decrease the
ability of manufacturers to provide smaller capacities, despite DOE's
claim that it has addressed the capacity bias inherent in the test
procedure. (Id. (citing 42 U.S.C. 6295(q))) AHAM commented that DOE
must do more to ensure utility associated with various capacities is
not lost as a result of its standards, particularly because once DOE
finalizes standards, there is no opportunity to fix the problem due to
EPCA's anti-backsliding provision. (Id. (citing 42 U.S.C. 6295(o)(1))).
EPCA prohibits DOE from prescribing an amended or new standard that
is likely to result in the unavailability in the United States in any
covered product type (or class) of performance characteristics
(including reliability), features, sizes, capacities, and volumes that
are substantially the same as those generally available in the United
States at the time of the Secretary's finding. (42 U.S.C. 6295(o)(4))
DOE notes that its observations and tentative determinations in the
March 2023 NOPR regarding top-loading RCW capacity were based on DOE's
observations of models currently on the market, which are subject to
the current IMEF and IWF metrics as measured under the current appendix
J2 test procedure. Under the current metrics, the lack of lower-
capacity units at higher efficiency levels suggests that increasing
capacity is required to achieve higher efficiency levels beyond EL 1.
Accordingly, the ``path'' that DOE modeled for achieving higher
efficiency levels incorporated increases in capacity at EL 2, EL 3, and
EL 4, reflecting the existing market.
However, DOE notes that the new EER and WER metrics defined in
appendix J, by measuring efficiency on a per-pound
[[Page 19109]]
of clothing basis rather than a per-cubic foot of capacity basis,
significantly reduce the inherent large-capacity bias provided by the
current IMEF and IWF metrics.\189\ As such, under the new EER and WER
metrics, smaller-capacity units will no longer be inherently
disadvantaged in comparison to larger-capacity units and will be able
to achieve higher levels of efficiency than are achievable under the
current IMEF and IWF metrics. As a result, DOE expects that the new EER
and WER metrics will significantly reduce the correlation between RCW
capacity and efficiency (i.e., DOE expects that manufacturers will no
longer need to increase capacity as a necessary means for achieving
higher efficiency levels).
---------------------------------------------------------------------------
\189\ In the June 2022 TP Final Rule, DOE noted that under the
current metrics in appendix J2, energy use (i.e., the denominator of
the IMEF equation) scales with weighted-average load size, whereas
capacity (i.e., the numerator of the IMEF equation) scales with
maximum load size. 87 FR 33316, 33349. This provides an inherent
numerical advantage to large-capacity clothes washers that is
disproportionate to the efficiency advantage that can be achieved
through ``economies of scale'' associated with washing larger loads.
Id. This relationship applies similarly to water efficiency through
the IWF equation. Id.
---------------------------------------------------------------------------
Furthermore, as previously discussed, on February 14, 2024, DOE
received a second joint statement from the same group of stakeholders
that submitted the Joint Agreement (including AHAM, of which Whirlpool
is a member) in which the signatories reaffirmed the standards
recommended in the Joint Agreement.\190\ In particular, the letter
states that the stakeholders do not anticipate the recommended
standards will negatively affect features, which DOE assumes would also
include capacity.
---------------------------------------------------------------------------
\190\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0509.
---------------------------------------------------------------------------
For this direct final rule, DOE updated its engineering analysis to
show multiple ``paths'' that manufacturers could take to reach higher
efficiency levels, based on the use of the new EER and WER metrics.
Specifically, for top-loading standard-size RCWs, DOE modeled multiple
approaches that manufacturers could use to achieve higher efficiency
levels under the new metrics, without increasing capacity. In
particular, the updated analysis shows viable pathways to achieve the
amended standards enacted by this direct final rule for top-loading
standard-size units of any capacity. Through this analysis, DOE has
determined that an increase in capacity is not required as a means for
achieving the amended standards enacted by this direct final rule.
Accordingly, DOE has also determined that the amended standards would
not preclude the availability of smaller-capacity RCWs on the market.
Chapter 5 of the direct final rule TSD provides tables of the
representative breakdown among machine energy use, heating energy use,
drying energy use, and low-power-mode energy use for each of these
approaches to achieving the higher efficiencies of top-loading
standard-size product classes.
c. Design Characteristics
This section discusses comments received from manufacturers
regarding certain design characteristics: consumer control over water
levels, porcelain wash baskets, and agitators. DOE notes that as
previously discussed, on February 14, 2024, DOE received a second joint
statement from the same group of stakeholders that submitted the Joint
Agreement (including AHAM, of which GEA and Whirlpool are members) in
which the signatories reaffirmed the standards recommended in the Joint
Agreement.\191\ In particular, the letter states that the stakeholders
do not anticipate the recommended standards will negatively affect
features or performance, which DOE assumes would include those design
characteristics considered here.
---------------------------------------------------------------------------
\191\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0509.
---------------------------------------------------------------------------
Consumer Control Over Water Levels
DOE discussed in chapter 5 of the NOPR TSD that most typically,
current baseline top-loading standard-size RCWs provide both manual and
automatic (adaptive) water fill controls; or user-adjustable automatic
controls, which enable the user to customize the amount of water used
during the wash cycle. Some units may provide only manual controls or
only automatic water fill control. (See section 5.5.3.2 of the NOPR
TSD)
In response to the March 2023 NOPR, GEA commented that its consumer
research has shown that consumers rate the ability to control the water
level in their clothes washers in the top quartile of attributes they
value, and that the standards proposed in the March 2023 NOPR will
result in the elimination of manual consumer control over water levels
in top-loading RCWs. (GEA, No. 457 at p. 2) GEA explained they
completed consumer preference research and the manual consumer control
feature is in the top quartile for attributes consumers value in
washing machines across all potential features, including durability,
warranty coverage, product life, and wash performance. (Id.)
Additionally, GEA stated that the standards proposed in the March 2023
NOPR will reduce the amount of water used per-load in a top-loading RCW
and will result in a visible difference to consumers. (Id. at p. 3)
DOE also received comments from around 40 individual commenters
expressing concerns that the standards proposed in the March 2023 NOPR
would reduce RCW water levels.
DOE notes that the amended standards enacted by this direct final
rule for top-loading standard-size RCWs do not preclude the ability to
offer consumer control over water levels, as demonstrated by the
current availability of top-loading standard-size RCWs at the adopted
standard level that offer a variety of cycle options that allow the
consumer to modulate water levels, including but not limited to Deep
Fill,\192\ Deep Wash,\193\ Water Plus,\194\ Extra Rinse,\195\
Prewash,\196\ and Pre Soak.\197\
---------------------------------------------------------------------------
\192\ See for example, Maytag MVW7232HC at www.maytag.com/washers-and-dryers/washers/top-load-washers/p.smart-top-load-washer-with-extra-power-button-5.3-cu.-ft.mvw7232hc.html?.
\193\ See for example, LG WT7400CV at www.lg.com/us/washers-dryers/lg-wt7400cv-top-load-washer.
\194\ Id.
\195\ See for example, Kenmore 21652 at www.kenmore.com/products/kenmore-2621652n-21652-top-load-27-washer-white/.
\196\ Id.
\197\ See for example Samsung WA50R5200AW at www.samsung.com/us/home-appliances/washers/top-load/wa5200-5-0-cu--ft--top-load-washer-with-active-waterjet-wa50r5200aw-us/.
---------------------------------------------------------------------------
Porcelain Baskets
DOE discussed in chapter 5 of the NOPR TSD that the baseline top-
loading standard-size RCW design uses an enameled steel (i.e.,
porcelain) wash basket, and that manufacturers would need to switch to
a stainless steel wash basket at EL 1 to accommodate the faster spin
speeds required to achieve EL 1 efficiency. (See section 5.5.3.2 of the
NOPR TSD)
In response to the March 2023 NOPR, Whirlpool commented that the
proposed standards will remove porcelain baskets from the market.
(Whirlpool, No. 462 at p. 11)
Strauch commented in opposition of the loss of porcelain drums at
the proposed standard level. (Strauch, No. 430 at p. 2)
DOE evaluated the use of a stainless steel wash basket (as one of
the hardware changes enabling spin speed increase) within its screening
analysis--the purpose of which is to determine which design options to
retain as the basis for considering higher efficiency levels. This
change in wash basket
[[Page 19110]]
material meets all five screening criteria as described in section IV.B
of this document. Specifically, stainless steel wash baskets are
technologically feasible; practicable to manufacture, install, and
service on the scale necessary to serve the relevant market at the time
of the compliance date of the standard; do not have a significant
adverse impact on the product's utility; do not have a significant
adverse impact on the product's safety; and are not a proprietary
technology. Furthermore, DOE is not aware of any distinct consumer
utility provided by the use of porcelain wash baskets, nor have any
commenters identified any such consumer utility. For these reasons, DOE
considers the use of stainless steel wash baskets to be a viable
approach for improving energy and/or water efficiency and to therefore
be considered as a ``design option'' in the subsequent engineering
analysis.
To the extent that manufacturers currently produce porcelain wash
baskets, DOE accounts for the product redesign and capital investments
associated with transitioning models with porcelain wash baskets to
stainless steel wash baskets in the MIA. DOE also accounts for the
potential stranded assets that may result from amending standards,
including the early retirement of equipment and tooling associated with
producing porcelain wash baskets. See chapter 12 of the direct final
rule TSD for additional information on conversion costs and stranded
assets.
Agitators
The inner drum of a baseline top-loading standard-size RCW
typically contains a vertically oriented agitator in the center of the
drum, which undergoes a twisting motion. The motion of the agitator,
which is powered by an electric motor, circulates the clothes around
the center of the wash basket. Some agitators have a corkscrew-like
design that also circulates the clothing vertically from the bottom to
the top of the basket. Higher-efficiency top-loading RCWs typically use
a disk-shaped ``wash plate,'' rather than a vertical agitator, to move
the clothes within the basket. The rotation of the wash plate
underneath the clothing circulates the clothes throughout the wash
drum.
In the March 2023 NOPR, DOE proposed to adopt an amended standard
for top-loading, standard-size RCWs that corresponded to the CEE Tier 1
level. As discussed in the March 2023 NOPR, DOE's market analysis
indicated that top loading models currently on the market at the CEE
Tier 1 level use wash plates (i.e., do not have agitators). 88 FR
13520, 13602. DOE stated in the March 2023 NOPR that it was aware of
top-loading RCWs without an agitator that achieve equal or better
cleaning performance than top-loading RCWs with a traditional-style
agitator in Consumer Reports performance reviews. Id.
DOE sought comment on any aspects of cleaning performance that
provide differentiation between the use of an agitator or a wash plate
that are not reflected in the Consumer Reports washing performance
ratings evaluated in the March 2023 NOPR. 88 FR 13520, 13602. DOE
sought comment on whether any lessening of the utility or performance
of top-loading standard-size RCWs, in accordance with 42 U.S.C.
6295(o)(2)(B)(i)(IV), would result from a potential standard that would
preclude the use of a traditional agitator. Id. In particular, DOE
sought information and data on how such utility or performance would be
measured or evaluated. Id.
GEA commented that the standards proposed in the March 2023 NOPR
would eliminate the use of traditional agitators in top-loading RCWs.
(Id. at pp. 2-3) GEA noted that agitators in top-loading RCWs are such
an important feature that GEA includes it as a specific filter for
consumers on its website, as do major retailers. (Id.)
Whirlpool commented that the standards proposed in the March 2023
NOPR would remove key consumer-friendly features like agitators from
the market. (Whirlpool, No. 462 at p. 11) Whirlpool commented that the
elimination of agitators would be concerning, as shipment data show
that the majority of consumers greatly prefer agitators for top-loading
RCWs. (Id.) Whirlpool further commented that there is a strong consumer
perception that performance is enhanced by the presence of a
traditional agitator due to observed load motion. (Id.) Whirlpool
asserted that agitators encourage even distribution of the loads and
minimize out-of-balance conditions. (Id.)
Strauch commented in opposition of the loss of agitators at the
proposed standard level. (Strauch, No. 430 at p. 2)
During the public webinar, Mannino commented that consumers are
saying they do not see as much load turnover in large RCWs with wash
plates compared to RCWs with agitators and noted that in one
technician's experience, RCWs with agitators have better cleaning
performance. (Id. at p. 85)
Representatives Latta et al. commented that the standards proposed
in the March 2023 NOPR would likely result in the elimination of
consumer-desired features such as agitators. (Representatives Latta et
al., No. 456 at p. 2)
DOE notes that the standards adopted in this direct final rule for
RCWs do not preclude the ability to offer agitators. All major top-
loading standard-size RCW manufacturers offer models at the ENERGY STAR
level--which is equivalent to the amended standard level enacted by
this direct final rule--that include an agitator.\198\
---------------------------------------------------------------------------
\198\ See, for example, GE PTW705BPTDG at www.geappliances.com/appliance/GE-Profile-5-3-cu-ft-Capacity-Washer-with-Smarter-Wash-Technology-and-FlexDispense-PTW705BPTDG; Kenmore 29152 at
www.kenmore.com/products/kenmore-29152-4-4-cu-ft-energy-star-174-he-top-load-washer-w-triple-action-agitator-white/; LG WT7155CW at
www.lg.com/us/washers-dryers/lg-wt7155cw-top-load-washer; Maytag
MVW7230HW at www.maytag.com/washers-and-dryers/washers/top-load-washers/p.smart-capable-top-load-washer-with-extra-power-button-5.2-cu.-ft.mvw7230hw.html; and Samsung WA49B5205AW at www.samsung.com/us/home-appliances/washers/top-load/4-9-cu--ft--capacity-top-load-washer-with-activewave--agitator-and-active-waterjet-in-white-wa49b5205aw-us/.
---------------------------------------------------------------------------
d. Conclusion
For the reasons discussed in the previous sections, and based on
the additional confirming statements from the Joint Agreement
signatories, DOE has concluded that the standards adopted in this
direct final rule will not lessen the utility or performance of the
RCWs under consideration in this rulemaking.
5. Impact of Any Lessening of Competition
DOE considered any lessening of competition that would be likely to
result from new or amended standards. As discussed in section III.E.1.e
of this document, EPCA 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 in writing to the Secretary within 60
days of the publication of a proposed rule, together with an analysis
of the nature and extent of the impact. To assist the Attorney General
in making this determination, DOE will provide the DOJ with copies of
this direct final rule and the TSD for review.
6. Need of the Nation To Conserve Energy
Enhanced energy efficiency, where economically justified, improves
the Nation's energy security, strengthens the economy, and reduces the
environmental impacts (costs) of energy production. Reduced electricity
demand
[[Page 19111]]
due to energy conservation standards is also likely to reduce the cost
of maintaining the reliability of the electricity system, particularly
during peak-load periods. Chapter 15 in the direct final rule TSD
presents the estimated impacts on electricity generating capacity,
relative to the no-new-standards case, for the TSLs that DOE considered
in this rulemaking.
Energy conservation resulting from potential energy conservation
standards for RCWs is expected to yield environmental benefits in the
form of reduced emissions of certain air pollutants and greenhouse
gases. Table V.28 provides DOE's estimate of cumulative emissions
reductions expected to result from the TSLs considered in this
rulemaking. The emissions were calculated using the multipliers
discussed in section IV.K of this document. DOE reports annual
emissions reductions for each TSL in chapter 13 of the direct final
rule TSD.
Table V.28--Cumulative Emissions Reduction for Residential Clothes Washers Shipped During the Period 2027-2056 *
----------------------------------------------------------------------------------------------------------------
Trial standard level
---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Electric Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 11.6 12.6 28.1 49.9
CH4 (thousand tons)............................. 0.8 0.9 1.7 2.6
N2O (thousand tons)............................. 0.1 0.1 0.2 0.4
NOX (thousand tons)............................. 6.7 7.0 17.0 32.8
SO2 (thousand tons)............................. 3.1 3.6 6.8 10.1
Hg (tons)....................................... 0.0 0.0 0.0 0.1
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 1.2 1.3 3.1 5.8
CH4 (thousand tons)............................. 116.0 123.7 292.5 551.8
N2O (thousand tons)............................. 0.0 0.0 0.0 0.0
NOX (thousand tons)............................. 19.3 20.7 48.5 90.9
SO2 (thousand tons)............................. 0.1 0.1 0.1 0.2
Hg (tons)....................................... 0.0 0.0 0.0 0.0
----------------------------------------------------------------------------------------------------------------
Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 12.9 14.0 31.2 55.8
CH4 (thousand tons)............................. 116.7 124.6 294.1 554.5
N2O (thousand tons)............................. 0.1 0.1 0.2 0.4
NOX (thousand tons)............................. 26.0 27.7 65.5 123.7
SO2 (thousand tons)............................. 3.2 3.6 7.0 10.3
Hg (tons)....................................... 0.0 0.0 0.0 0.1
----------------------------------------------------------------------------------------------------------------
* The analysis period for TSL 2 (the Recommended TSL) is 2028-2057.
As part of the analysis for this rule, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
that DOE estimated for each of the considered TSLs for RCWs. Section
IV.L of this document discusses the estimated SC-CO2 values
that DOE used. Table V.29 presents the value of CO2
emissions reduction at each TSL for each of the SC-CO2
cases. The time-series of annual values is presented for the selected
TSL in chapter 14 of the direct final rule TSD.
Table V.29--Present Value of CO2 Emissions Reduction for Residential Clothes Washers Shipped During the Period
2027-2056 *
----------------------------------------------------------------------------------------------------------------
SC-CO2 case
---------------------------------------------------------------
Discount rate and statistics
---------------------------------------------------------------
TSL 5% 3% 2.5% 3%
---------------------------------------------------------------
95th
Average Average Average Percentile
----------------------------------------------------------------------------------------------------------------
million 2022$
---------------------------------------------------------------
1............................................... 152 615 947 1,873
2............................................... 160 655 1,011 1,993
3............................................... 354 1,456 2,250 4,427
4............................................... 618 2,563 3,971 7,790
----------------------------------------------------------------------------------------------------------------
* The analysis period for TSL 2 (the Recommended TSL) is 2028-2057.
[[Page 19112]]
As discussed in section IV.L.2 of this document, DOE estimated the
climate benefits likely to result from the reduced emissions of methane
and N2O that DOE estimated for each of the considered TSLs
for RCWs. Table V.30 presents the value of the CH4 emissions
reduction at each TSL, and Table V.31 presents the value of the
N2O emissions reduction at each TSL. The time-series of
annual values is presented for the selected TSL in chapter 14 of the
direct final rule TSD.
Table V.30--Present Value of Methane Emissions Reduction for Residential Clothes Washers Shipped During the
Period 2027-2056 *
----------------------------------------------------------------------------------------------------------------
SC-CH4 case
---------------------------------------------------------------
Discount rate and statistics
---------------------------------------------------------------
TSL 5% 3% 2.5% 3%
---------------------------------------------------------------
95th
Average Average Average Percentile
----------------------------------------------------------------------------------------------------------------
million 2022$
---------------------------------------------------------------
1............................................... 62 174 239 462
2............................................... 65 184 253 487
3............................................... 152 432 595 1,144
4............................................... 280 806 1,115 2,135
----------------------------------------------------------------------------------------------------------------
* The analysis period for TSL 2 (the Recommended TSL) is 2028-2057.
Table V.31--Present Value of Nitrous Oxide Emissions Reduction for Residential Clothes Washers Shipped During
the Period 2027-2056 *
----------------------------------------------------------------------------------------------------------------
SC-N2O case
---------------------------------------------------------------
Discount rate and statistics
---------------------------------------------------------------
TSL 5% 3% 2.5% 3%
---------------------------------------------------------------
95th
Average Average Average Percentile
----------------------------------------------------------------------------------------------------------------
million 2022$
---------------------------------------------------------------
1............................................... 0.5 1.8 2.8 4.9
2............................................... 0.5 2.0 3.1 5.4
3............................................... 1.1 4.0 6.1 10.7
4............................................... 1.6 6.2 9.5 16.5
----------------------------------------------------------------------------------------------------------------
* The analysis period for TSL 2 (the Recommended TSL) is 2028-2057.
DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other GHG emissions to changes in
the future global climate and the potential resulting damages to the
global and U.S. economy continues to evolve rapidly. DOE, together with
other Federal agencies, will continue to review methodologies for
estimating the monetary value of reductions in CO2 and other
GHG emissions. This ongoing review will consider the comments on this
subject that are part of the public record for this and other
rulemakings, as well as other methodological assumptions and issues.
DOE notes, however, that the adopted standards would be economically
justified even without inclusion of monetized benefits of reduced GHG
emissions.
DOE also estimated the monetary value of the economic benefits
associated with NOX and SO2 emissions reductions
anticipated to result from the considered TSLs for RCWs. The dollar-
per-ton values that DOE used are discussed in section IV.L of this
document. Table V.32 presents the present value for NOX
emissions reduction for each TSL calculated using 7-percent and 3-
percent discount rates, and Table V.33 presents similar results for
SO2 emissions reductions. The results in these tables
reflect application of EPA's low dollar-per-ton values, which DOE used
to be conservative. The time-series of annual values is presented for
the selected TSL in chapter 14 of the direct final rule TSD.
Table V.32--Present Value of NOX Emissions Reduction for Residential
Clothes Washers Shipped During the Period 2027-2056 *
------------------------------------------------------------------------
TSL 7% Discount rate 3% Discount rate
------------------------------------------------------------------------
million 2022$
-------------------------------------
1................................. 593 1,279
3................................. 608 1,357
4................................. 1,349 3,030
5................................. 2,329 5,379
------------------------------------------------------------------------
* The analysis period for TSL 2 (the Recommended TSL) is 2028-2057.
[[Page 19113]]
Table V.33--Present Value of SO2 Emissions Reduction for Residential
Clothes Washers Shipped During the Period 2027-2056 *
------------------------------------------------------------------------
TSL 7% Discount rate 3% Discount rate
------------------------------------------------------------------------
million 2022$
-------------------------------------
1................................. 112 235
3................................. 120 263
4................................. 229 498
5................................. 324 718
------------------------------------------------------------------------
* The analysis period for TSL 2 (the Recommended TSL) is 2028-2057.
Not all the public health and environmental benefits from the
reduction of greenhouse gases, NOX, and SO2 are
captured in the values above, and additional unquantified benefits from
the reductions of those pollutants as well as from the reduction of
direct PM and other co-pollutants may be significant. DOE has not
included monetary benefits of the reduction of Hg emissions because the
amount of reduction is very small.
7. Other Factors
The Secretary of Energy, in determining whether a standard is
economically justified, may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No
other factors were considered in this analysis.
8. Summary of Economic Impacts
Table V.34 presents the NPV values that result from adding the
estimates of the economic benefits resulting from reduced GHG,
NOX, and SO2 emissions to the NPV of consumer
benefits calculated for each TSL considered in this rulemaking. The
consumer benefits are domestic U.S. monetary savings that occur as a
result of purchasing the covered products, and are measured for the
lifetime of products shipped in 2027-2056.\199\ The climate benefits
associated with reduced GHG emissions resulting from the adopted
standards are global benefits, and are also calculated based on the
lifetime of RCWs shipped during the period 2027-2056.\200\
---------------------------------------------------------------------------
\199\ The analysis period for TSL 2 (the Recommended TSL) is
2028-2057.
\200\ Id.
Table V.34--Consumer NPV Combined With Present Value of Climate Benefits and Health Benefits
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
Using 3% discount rate for Consumer NPV and Health Benefits (billion 2022$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case.......................... 10.2 10.6 18.7 28.1
3% Average SC-GHG case.......................... 10.8 11.2 20.1 30.6
2.5% Average SC-GHG case........................ 11.2 11.6 21.1 32.3
3% 95th percentile SC-GHG case.................. 12.3 12.8 23.8 37.2
----------------------------------------------------------------------------------------------------------------
Using 7% discount rate for Consumer NPV and Health Benefits (billion 2022$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case.......................... 4.7 4.2 8.0 12.3
3% Average SC-GHG case.......................... 5.3 4.8 9.4 14.8
2.5% Average SC-GHG case........................ 5.7 5.3 10.4 16.5
3% 95th percentile SC-GHG case.................. 6.8 6.5 13.1 21.4
----------------------------------------------------------------------------------------------------------------
C. Conclusion
When considering new or amended energy conservation standards, the
standards that DOE adopts for any type (or class) of covered product
must be designed to achieve the maximum improvement in energy
efficiency that the Secretary determines is technologically feasible
and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining
whether a standard is economically justified, the Secretary must
determine whether the benefits of the standard exceed its burdens by,
to the greatest extent practicable, considering the seven statutory
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or
amended standard must also result in significant conservation of
energy. (42 U.S.C. 6295(o)(3)(B))
For this direct final rule, DOE considered the impacts of amended
standards for RCWs at each TSL, beginning with the maximum
technologically feasible level, to determine whether that level was
economically justified. Where the max-tech level was not justified, DOE
then considered the next most efficient level and undertook the same
evaluation until it reached the highest efficiency level that is both
technologically feasible and economically justified and saves a
significant amount of energy.
To aid the reader as DOE discusses the benefits and/or burdens of
each TSL, tables in this section present a summary of the results of
DOE's quantitative analysis for each TSL. In addition to the
quantitative results presented in the tables, DOE also considers other
burdens and benefits that affect economic justification. These include
the impacts on identifiable subgroups of consumers who may be
disproportionately affected by a national standard and impacts on
employment.
DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy
savings in the absence of government intervention. Much of this
literature attempts to explain why consumers appear to undervalue
energy efficiency improvements. There is evidence that consumers
undervalue future energy
[[Page 19114]]
savings as a result of (1) a lack of information; (2) a lack of
sufficient salience of the long-term or aggregate benefits; (3) a lack
of sufficient savings to warrant delaying or altering purchases; (4)
excessive focus on the short term, in the form of inconsistent
weighting of future energy cost savings relative to available returns
on other investments; (5) computational or other difficulties
associated with the evaluation of relevant tradeoffs; and (6) a
divergence in incentives (for example, between renters and owners, or
builders and purchasers). Having less than perfect foresight and a high
degree of uncertainty about the future, consumers may trade off these
types of investments at a higher than expected rate between current
consumption and uncertain future energy cost savings.
It is important to recognize that while DOE is promulgating two
separate regulatory actions for energy efficiency standards for RCWs
and consumer clothes dryers, clothes washers and dryers are
complementary products, and they are sometimes sold and purchased
together as joint goods. This type of consumer purchasing behavior is
not typical of DOE energy efficiency standards. These products are
available in a variety of combinations and the efficiency and/or
product class of one product does not restrict the efficiency and/or
product class of the other. The efficiency levels are independent of
each other. Hence, DOE does not directly model the joint purchasing
decision of clothes washers and dryers in this rule. It is possible
that if only one machine fails, consumers could replace one machine or
could replace both machines jointly. If consumers replace both machines
when one fails, aggregate lifecycle costs would be the combination of
impacts as presented in both final rules.
Consumers value a variety of attributes in RCWs. These attributes
can factor into consumer purchasing decisions along with installation
and operating cost. For example, DOE understands certain consumers make
purchasing decisions on non-efficiency attributes such as color or
other visual features such as control panel layout, which may overlap
with efficiency considerations related to and a potential preference
for mechanical over electronic controls.
One specific attribute related to the joint use of clothes washers
and dryers worth noting is the moisture content of clothes as consumers
wash and dry them. DOE recognizes that amended RCW standards could
result in less total moisture needing to be removed from the clothing
in a clothes dryer, whereas amended consumer clothes dryer standards
could result in a less energy-intensive process for removing that
moisture. As explained in section IV.E of this document, the amended
dryer test procedure in appendix D2 includes incoming RMC values (i.e.,
a starting lower moisture content for the load) that are more
representative of the resulting moisture content seen in high-
efficiency clothes washers. Due to the uniqueness of the Joint
Recommendation where the clothes washer and dryer proposals and
compliance dates were aligned, the consumer clothes dryer rulemaking
encompasses these lower initial moisture values as a starting point for
the energy use analysis, so the effect of faster spin speeds resulting
in less ``wet'' clothes is already captured by DOE. The relative
comparison of efficiency levels for a given product would remain the
same, even if the baseline energy consumption were adjusted due to an
increase in efficiency in the complementary product.
General considerations for consumer welfare and preferences as well
as the special cases of complementary goods are areas DOE plans to
explore in a forthcoming RFI related to the agency's updates to its
overall analytic framework.
In DOE's current regulatory analysis, potential changes in the
benefits and costs of a regulation due to changes in consumer purchase
decisions are included in two ways. First, if consumers forego the
purchase of a product in the standards case, this decreases sales for
product manufacturers, and the impact on manufacturers attributed to
lost revenue is included in the MIA. Second, DOE accounts for energy
savings attributable only to products actually used by consumers in the
standards case; if a standard decreases the number of products
purchased by consumers, this decreases the potential energy savings
from an energy conservation standard. DOE provides estimates of
shipments and changes in the volume of product purchases in chapter 9
of the direct final rule TSD. However, DOE's current analysis does not
explicitly control for heterogeneity in consumer preferences,
preferences across subcategories of products or specific features, or
consumer price sensitivity variation according to household
income.\201\
---------------------------------------------------------------------------
\201\ P.C. Reiss and M.W. White. Household Electricity Demand,
Revisited. Review of Economic Studies. 2005. 72(3): pp. 853-883.
doi: 10.1111/0034-6527.00354.
---------------------------------------------------------------------------
1. Benefits and Burdens of TSLs Considered for Residential Clothes
Washer Standards
Tables V.35 and V.36 summarize the quantitative impacts estimated
for each TSL for RCWs. The national impacts are measured over the
lifetime of RCWs purchased in the 30-year period that begins in the
anticipated year of compliance with amended standards (2027-2056 for
all TSLs except TSL 2, i.e., the ``Recommended TSL'' for RCWs, and
2028-2057 for TSL 2). The energy savings, emissions reductions, and
value of emissions reductions refer to full-fuel-cycle results. DOE is
presenting monetized benefits of GHG emissions reductions in accordance
with the applicable Executive orders and DOE would reach the same
conclusion presented in this document in the absence of the social cost
of greenhouse gases, including the Interim Estimates presented by the
Interagency Working Group. The efficiency levels contained in each TSL
are described in section V.A of this document.
Table V.35--Summary of Analytical Results for Residential Clothes Washer TSLs: National Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
Cumulative FFC National Energy Savings
----------------------------------------------------------------------------------------------------------------
Quads........................................... 0.58 0.67 1.34 2.12
----------------------------------------------------------------------------------------------------------------
Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 12.88 13.96 31.22 55.77
CH4 (thousand tons)............................. 116.74 124.57 294.14 554.46
N2O (thousand tons)............................. 0.11 0.12 0.24 0.38
[[Page 19115]]
NOX (thousand tons)............................. 26.03 27.74 65.47 123.66
SO2 (thousand tons)............................. 3.18 3.65 6.97 10.33
Hg (tons)....................................... 0.02 0.02 0.05 0.07
----------------------------------------------------------------------------------------------------------------
Present Value of Benefits and Costs (3% discount rate, billion 2022$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................. 12.99 17.92 26.18 34.19
Climate Benefits *.............................. 0.79 0.84 1.89 3.38
Health Benefits **.............................. 1.51 1.62 3.53 6.10
---------------------------------------------------------------
Total Benefits [dagger]..................... 15.30 20.38 31.60 43.66
Consumer Incremental Product Costs [Dagger]..... 4.51 9.20 11.50 13.07
---------------------------------------------------------------
Consumer Net Benefits....................... 8.48 8.71 14.68 21.12
Total Net Benefits...................... 10.79 11.18 20.10 30.59
----------------------------------------------------------------------------------------------------------------
Present Value of Benefits and Costs (7% discount rate, billion 2022$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................. 6.61 8.65 12.90 16.61
Climate Benefits *.............................. 0.79 0.84 1.89 3.38
Health Benefits **.............................. 0.70 0.73 1.58 2.65
---------------------------------------------------------------
Total Benefits [dagger]..................... 8.11 10.22 16.37 22.64
Consumer Incremental Product Costs [Dagger]..... 2.83 5.37 6.94 7.86
---------------------------------------------------------------
Consumer Net Benefits....................... 3.78 3.28 5.96 8.76
Total Net Benefits...................... 5.28 4.85 9.43 14.79
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with RCWs shipped during the period 2027-2056 for
all TSLs except for TSL 2 (the Recommended TSL). These results include benefits to consumers which accrue
after 2056 from the products shipped during the period 2027-2056. For TSL 2, this table presents the costs and
benefits associated with RCWs shipped during the period 2028-2057.
* Climate benefits are calculated using four different estimates of the SC-CO2, SC-CH4, and SC-N2O. Together,
these represent the global SC-GHG. For presentational purposes of this table, the climate benefits associated
with the average SC-GHG at a 3-percent discount rate are shown; however, DOE emphasizes the importance and
value of considering the benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits
of reducing GHG emissions, this analysis uses the interim estimates presented in the Technical Support
Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990
published in February 2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate.
[Dagger] Costs include incremental equipment costs as well as installation costs.
Table V.36--Summary of Analytical Results for Residential Clothes Washer TSLs: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 ** TSL 3 TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (million 2022$) (No- 1,639.0 to 1,710.7.......... 1,429.6 to 1,560.9.......... 1,053.8 to 1,234.5......... 535.8 to 738.2.
new-standards case INPV =
1,707.9).
Industry NPV (% change)........... (4.0) to 0.2................ (16.3) to (8.6)............. (38.3) to (27.7)........... (68.6) to (56.8).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Average LCC Savings (2022$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-Loading Ultra-Compact......... n.a......................... n.a......................... n.a........................ n.a.
Top-Loading Standard-Size......... $122........................ $111........................ $116....................... $133.
Front-Loading Compact............. 0........................... 9........................... 8.......................... 38.
Front-Loading Standard-Size....... 26.......................... 46.......................... 15......................... 49.
Semi-Automatic.................... 280......................... 284......................... 280........................ 188.
Shipment-Weighted Average *....... 98.......................... 96.......................... 91......................... 111.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Simple PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-Loading Ultra-Compact......... n.a......................... n.a......................... n.a........................ n.a.
Top-Loading Standard-Size......... 4.4......................... 6.2......................... 5.7........................ 5.4.
Front-Loading Compact............. 9.6......................... 9.3......................... 9.5........................ 8.0.
Front-Loading Standard-Size....... 0.9......................... 1.4......................... 1.6........................ 1.7.
Semi-Automatic.................... 0.5......................... 0.5......................... 0.5........................ 0.6.
Shipment-Weighted Average *....... 3.6......................... 4.9......................... 4.6........................ 4.4.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent of Consumers that Experience a Net Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-Loading Ultra-Compact......... n.a......................... n.a......................... n.a........................ n.a.
Top-Loading Standard-Size......... 16.......................... 27.......................... 28......................... 26.
Front-Loading Compact............. 0........................... 21.......................... 22......................... 35.
Front-Loading Standard-Size....... 1........................... 2........................... 20......................... 16.
[[Page 19116]]
Semi-Automatic.................... 0........................... 0........................... 0.......................... 0.
Shipment-Weighted Average *....... 12.......................... 20.......................... 25......................... 23.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values. The entry ``n.a.'' means not applicable because there is no change in the standard at certain TSLs.
* Weighted by shares of each product class in total projected shipments in 2027 except for TSL 2 (the Recommended TSL).
** For TSL 2 (the Recommended TSL), shipment-weighted averages are weighted by shares of each product class in total projected shipments in 2028.
DOE first considered TSL 4, which represents the max-tech
efficiency levels for all product classes. Specifically for top-loading
standard-size RCWs, DOE's expected design path for TSL 4 (which
represents EL 4 for this product class) incorporates the use of a
direct drive motor, stainless steel basket and more robust suspension
and balancing systems (as methods for enabling faster spin speeds), a
wash plate (as a means for enabling reduced water levels), reduced hot
and warm wash water temperatures compared to temperatures available on
baseline units, spray rinse, the fastest achievable spin speeds, and an
increase in tub size compared to the baseline (as a means for reducing
energy and water use on a per-pound of clothing basis).\202\ Among
these design options, use of a direct drive motor, stainless steel
basket and more robust suspension and balancing systems, reduced wash
water temperatures, and fastest achievable spin speeds reduce energy
use only; spray rinse reduces water use only; and the wash plate and
increase in tub size reduce both energy and water use together.\203\
---------------------------------------------------------------------------
\202\ As discussed previously, DOE's direct final rule analysis
indicates that an increase in tub capacity is not required to
achieve EL 5; however, manufacturers are currently implementing this
design option in EL 5 models currently available on the market.
\203\ As discussed previously in section IV.A.2 of this
document, because the energy used to heat the water consumed by the
RCW is included as part of the EER energy use metric, technologies
that decrease hot water use also inherently decrease energy use.
---------------------------------------------------------------------------
For front-loading standard-size RCWs, DOE's expected design path
for TSL 4 (which represents EL 4 for this product class) incorporates
the use of the most efficient available direct drive motor, the
implementation of advanced sensors, the fastest achievable spin speeds,
and lower cold water volume (but with no change to total hot water
use). Among these design options, the direct drive motor, more advanced
sensors, and faster spin speeds reduce energy use only; whereas the
lower cold water volume reduces water use only.
TSL 4 would save an estimated 2.12 quads of energy and 2.73
trillion gallons of water, an amount DOE considers significant. Under
TSL 4, the NPV of consumer benefit would be $8.76 billion using a
discount rate of 7 percent, and $21.12 billion using a discount rate of
3 percent.
The cumulative emissions reductions at TSL 4 are 55.77 Mt of
CO2, 10.33 thousand tons of SO2, 123.66 thousand
tons of NOX, 0.07 tons of Hg, 554.46 thousand tons of
CH4, and 0.38 thousand tons of N2O. The estimated
monetary value of the climate benefits from reduced GHG emissions
(associated with the average SC-GHG at a 3-percent discount rate) at
TSL 4 is $3.38 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 4 is $2.65 billion using a 7-percent discount rate and $6.10
billion using a 3-percent discount rate.
Using a 7-percent discount rate for consumer benefits and costs,
health benefits from reduced SO2 and NOX
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated total NPV at TSL 4 is $14.79
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 4 is $30.59 billion. The estimated total
NPV is provided for additional information; however, DOE primarily
relies upon the NPV of consumer benefits when determining whether a
standard level is economically justified.
At TSL 4, the average LCC impact is a savings of $133 for top-
loading standard-size, $38 for front-loading compact, $49 for front-
loading standard-size, and $188 for semi-automatic clothes washers. The
simple payback period is 5.4 years for top-loading standard-size, 8.0
years for front-loading compact, 1.7 years for front-loading standard-
size, and 0.6 years for semi-automatic clothes washers. The fraction of
consumers experiencing a net LCC cost is 26 percent for top-loading
standard-size, 35 percent for front-loading compact, 16 percent for
front-loading standard-size, and zero percent for semi-automatic
clothes washers. For the top-loading standard-size product class, which
represents 71 percent of the market, TSL 4 would increase the first
cost by $166, in comparison to an installed cost of $690 for baseline
units. For the front-loading standard-size product class, which
represents 25 percent of the market, TSL 4 would increase the first
cost by $93, compared to an installed cost of $1,027 for baseline
units. At TSL 4, the standard for top-loading ultra-compact RCWs is at
the baseline, resulting in no LCC impact, no simple PBP, and no
consumers experiencing a net LCC cost. Additionally, as a result of
lower costs associated with well water and septic tanks in rural areas,
about 40 percent of well-water households would experience a net LCC
cost at TSL 4.
At TSL 4, the projected change in INPV ranges from a decrease of
$1,172.0 million to a decrease of $969.6 million, which correspond to a
decrease of 68.6 percent and 56.8 percent, respectively. The loss in
INPV is largely driven by industry conversion costs as manufacturers
work to redesign their portfolios of model offerings and re-tool entire
factories to comply with amended standards at this level. Industry
conversion costs could reach $1,321.2 million at this TSL.
Conversion costs at max-tech are significant, as nearly all
existing RCW models would need to be redesigned to meet the required
efficiencies. Currently, approximately 4 percent of RCW annual
shipments meet the max-tech levels. For top-loading standard-size RCWs,
which DOE projects will account for 71 percent of annual shipments in
2027, less than 1 percent of current shipments meet this level. Of the
nine OEMs offering top-loading standard-size products, one OEM offers
five basic models (representing approximately 1 percent of all top-
loading standard-size basic models) that meet the efficiencies required
by TSL 4. The remaining eight OEMs would need to overhaul their
existing platforms and make significant updates to their production
facilities. Those manufacturers may need to incorporate increased tub
capacities, wash plate designs, direct drive motors, reinforced wash
baskets, robust suspension and balancing systems, and advanced sensors.
These product changes require significant investment. In interviews,
several manufacturers expressed concerns about their ability to meet
[[Page 19117]]
existing market demand given the required scale of investment, redesign
effort, and 3-year compliance timeline.
At TSL 3 and higher, manufacturers expressed concerns and presented
data regarding potential impacts to product performance, including wash
temperatures, cleaning and rinsing performance, and fabric care. At TSL
4, such concerns and uncertainties would be further exacerbated.
Consumers that experience any such negative impacts on product
performance could potentially alter their usage patterns, for example
by using more energy-intensive settings more frequently (e.g., Extra-
Hot temperature setting); using more water-intensive cycle options
(e.g., Deep Fill option; extra rinse cycles); using non-regulated
cycles (e.g., Heavy Duty cycle); or re-washing clothing that has not
been cleaned sufficiently. Such changes to consumer usage patterns may
counteract the energy and water savings that DOE has estimated would be
achieved at TSL 4. For these reasons, DOE cannot be certain that the
designs associated with TSL 4 efficiencies would not negatively impact
certain aspects of standard-size RCW performance and consequently may
jeopardize the energy and water savings that would be achieved at these
efficiency levels. DOE emphasizes that its findings in this regard are
based on the data available at this time and are predicated on the
current state of clothes washer technology. Additional data that could
become available, as well as future advances in washing technologies
and design strategies, could alleviate any such concerns or
uncertainties regarding product performance and could lead DOE to reach
a different conclusion in a future rulemaking.
Based upon the above considerations, the Secretary concludes that
at TSL 4 for RCWs, the benefits of energy and water savings, positive
NPV of consumer benefits, and emission reductions would be outweighed
by the potential for negative consumer utility impacts, which may
jeopardize the energy and water savings that would be achieved at TSL
4, and the impacts on manufacturers, including the large potential
reduction in INPV. DOE estimated the potential loss in INPV to be as
high as 68 percent. The potential losses in INPV are primarily driven
by large conversion costs that must be made ahead of the compliance
date. At max-tech, manufacturers would need to make significant upfront
investments to update nearly all product lines and manufacturing
facilities. Manufacturers expressed concern that they would not be able
to complete product and production line updates within the 3-year
conversion period. Consequently, the Secretary has concluded that TSL 4
is not economically justified.
DOE then considered TSL 3, which represents the ENERGY STAR Most
Efficient level for the front-loading product classes, the CEE Tier 1
level for the top-loading standard-size product class, and a gap fill
level for the semi-automatic product classes.\204\ Specifically, for
top-loading standard-size RCWs, DOE's expected design path for TSL 3
(which represents EL 3 for this product class) incorporates many of the
same technologies and design strategies as described for TSL 4. At TSL
3, top-loading standard-size units would incorporate a direct drive
motor, stainless steel basket and more robust suspension and balancing
systems (as methods for enabling faster spin speeds), a wash plate (as
a means for enabling reduced water levels), and spray rinse, consistent
with TSL 4. Models at TSL 3 would also incorporate slightly reduced hot
wash water temperatures compared to temperatures available on baseline
units, faster spin speeds compared to the baseline (although not as
fast as TSL 4), and an increase in tub size compared to the baseline
(as a means for reducing energy and water use on a per-pound of
clothing basis).\205\ Among these design options, use of a direct drive
motor, stainless steel basket and more robust suspension and balancing
systems, reduced wash water temperatures, and faster spin speeds reduce
energy use only; spray rinse reduces water use only; and the wash plate
and increase in tub size reduce both energy and water use together.
---------------------------------------------------------------------------
\204\ Tables IV.6 and IV.8 of this document provide the and
ENERGY STAR Most Efficient and CEE Tier 1 equivalencies between the
current metrics (IMEF and IWF) and the new metrics (EER and WER) for
the top-loading and front-loading standard-size product classes,
respectively.
\205\ As discussed previously, DOE's direct final rule analysis
indicates that an increase in tub capacity is not required to
achieve EL 3; however, manufacturers are currently implementing this
design option in EL 3 models currently available on the market.
---------------------------------------------------------------------------
For front-loading standard-size RCWs, DOE's expected design path
for TSL 3 (which represents EL 3 for this product class) incorporates
the use of the most efficient direct drive motor available, spin speeds
that are faster than the baseline level but not as fast as at TSL 4,
and lower water volume (but with no change to total hot water heating).
Among these design options, the direct drive motor and faster spin
speeds reduce energy use only; whereas the lower water volume reduces
water use only.
TSL 3 would save an estimated 1.34 quads of energy and 2.33
trillion gallons of water, an amount DOE considers significant. Under
TSL 3, the NPV of consumer benefit would be $5.96 billion using a
discount rate of 7 percent, and $14.68 billion using a discount rate of
3 percent.
The cumulative emissions reductions at TSL 3 are 31.22 Mt of
CO2, 6.97 thousand tons of SO2, 65.47 thousand
tons of NOX, 0.05 tons of Hg, 294.14 thousand tons of
CH4, and 0.24 thousand tons of N2O. The estimated
monetary value of the climate benefits from reduced GHG emissions
(associated with the average SC-GHG at a 3-percent discount rate) at
TSL 3 is $1.89 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 3 is $1.58 billion using a 7-percent discount rate and $3.53
billion using a 3-percent discount rate.
Using a 7-percent discount rate for consumer benefits and costs,
health benefits from reduced SO2 and NOX
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated total NPV at TSL 3 is $9.43
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 3 is $20.10 billion. The estimated total
NPV is provided for additional information; however, DOE primarily
relies upon the NPV of consumer benefits when determining whether a
standard level is economically justified.
At TSL 3, the average LCC impact is a savings of $116 for top-
loading standard-size, $8 for front-loading compact, $15 for front-
loading standard-size, and $280 for semi-automatic clothes washers. The
simple payback period is 5.7 years for top-loading standard-size, 9.5
years for front-loading compact, 1.6 years for front-loading standard-
size, and 0.5 years for semi-automatic clothes washers. The fraction of
consumers experiencing a net LCC cost is 28 percent for top-loading
standard-size, 22 percent for front-loading compact, 20 percent for
front-loading standard-size, and zero percent for semi-automatic
clothes washers. For the top-loading standard-size product class, TSL 3
would increase the first cost by $160, in comparison to an installed
cost of $690 for baseline units. For the front-loading standard-size
product class, TSL 3 would increase the first cost by $78, compared to
an installed cost of $1,027 for baseline units. At TSL 3, the standard
for top-loading ultra-compact RCWs is at the baseline, resulting in no
LCC impact, no simple PBP, and no consumers
[[Page 19118]]
experiencing a net LCC cost. Overall, across all product classes,
around 25 percent of consumers would experience a net LCC cost at TSL
3. DOE estimates that about 16 percent of low-income households would
experience a net LCC cost at TSL 3, and as a result of having generally
smaller households and lower annual usage, about 33 percent of senior-
only households would experience a net LCC cost at TSL 3. Additionally,
as a result of lower costs associated with well water and septic tanks
in rural areas, about 41 percent of well-water households would
experience a net LCC cost at TSL 3.
At TSL 3, the projected change in INPV ranges from a decrease of
$654.1 million to a decrease of $473.3 million, which correspond to a
decrease of 38.3 percent and 27.7 percent, respectively. The loss in
INPV is largely driven by industry conversion costs as manufacturers
work to redesign their portfolios of model offerings and update
production facilities to comply with amended standards at this level.
Industry conversion costs could reach $724.6 million at this TSL.
For top-loading standard-size products, approximately 3 percent of
shipments meet TSL 3. Of the nine OEMs offering top-loading standard-
size products, two OEMs offer 20 basic models (representing
approximately 4 percent of all top-loading standard-size basic models)
that meet the efficiencies required by TSL 3. At this level, the
remaining seven manufacturers would likely implement largely similar
design options as at TSL 4, but to a lesser extent for the increase in
tub size and hardware changes associated with faster spin speeds (e.g.,
reinforced wash baskets, robust suspension and balancing systems, and
advanced sensors)--which are faster than the baseline level but not as
fast as TSL 4. Although top-loading standard-size RCW manufacturers
indicated that meeting TSL 3 efficiencies would require a less-
extensive redesign than meeting TSL 4 efficiencies, these product
changes would still require significant investment.
As discussed above, manufacturers expressed concerns and presented
data regarding potential impacts to product performance, including wash
temperatures, cleaning and rinsing performance, and fabric care. DOE's
analysis of third-party clothes washer performance ratings as well as
DOE's own performance testing on a representative sample of top-loading
standard-size and front-loading standard-size RCWs suggested that TSL 3
can be achieved with key performance attributes (e.g., wash
temperatures, stain removal, mechanical action, and cycle duration)
that are largely comparable to the performance of lower-efficiency
units available on the market today. However, manufacturers presented
additional data suggesting that other attributes of clothes washer
performance not specifically evaluated by DOE may be negatively
impacted at TSL 3 for particularly heavily soiled clothing loads, given
current design technologies and approaches. For these reasons, DOE
cannot be certain that the designs associated with TSL 3 efficiencies
would not negatively impact certain aspects of standard-size RCW
performance and consequently may jeopardize the energy and water
savings that would be achieved at these efficiency levels. As with TSL
4, DOE emphasizes that its findings in this regard are based on the
data available at this time and are predicated on the current state of
clothes washer technology. Additional data that could become available,
as well as future advances in washing technologies and design
strategies, could alleviate any such concerns or uncertainties
regarding product performance and could lead DOE to reach a different
conclusion in a future rulemaking.
Based upon the above considerations, the Secretary concludes that
at TSL 3 for RCWs, the benefits of energy and water savings, positive
NPV of consumer benefits, and emission reductions would be outweighed
by the potential for negative consumer utility impacts, which may
jeopardize the energy and water savings that could be achieved at TSL
3, and the impacts on manufacturers, including the large potential
reduction in INPV. DOE estimates the potential loss in INPV to be as
high as 38 percent. The potential losses in INPV are primarily driven
by large conversion costs associated with redesigning top-loading
standard-size RCWs that must be made ahead of the compliance date.
Consequently, the Secretary has concluded that TSL 3 is not
economically justified.
DOE then considered the Recommended TSL, which represents the
ENERGY STAR v.8.1 level for the top-loading and front-loading standard-
size product classes, the ENERGY STAR Most Efficient level for the
front-loading compact, and a gap fill level for the semi-automatic
product classes.\206\ DOE's expected design path for top-loading
standard-size RCWs at the Recommended TSL (which represents EL 2 for
this product class) incorporates a direct drive motor, stainless steel
basket and more robust suspension and balancing systems (as methods for
enabling faster spin speeds), and spray rinse. Models at the
Recommended TSL would also require faster spin speeds compared to the
baseline (although not as fast as at TSL 3), lower water volume (but
with no change to total hot water heating energy), and may include an
increase in tub size compared to the baseline (as a potential means for
reducing energy and water use on a per-pound of clothing basis).\207\
Among these design options, use of a direct drive motor, stainless
steel basket and more robust suspension and balancing systems, and
faster spin speeds reduce energy use only; spray rinse reduces water
use only; and the lower water volume reduces water use only. Any
potential increase in tub size would reduce both energy and water use
together.
---------------------------------------------------------------------------
\206\ Tables IV.6 and IV.8 of this document provide the ENERGY
STAR v.8.1 and ENERGY STAR Most Efficient equivalencies between the
current metrics (IMEF and IWF) and the new metrics (EER and WER) for
the top-loading and front-loading standard-size product classes,
respectively.
\207\ As discussed previously, DOE's direct final rule analysis
indicates that an increase in tub capacity is not required to
achieve EL 2; however, manufacturers are currently implementing this
design option in EL 2 models currently available on the market.
---------------------------------------------------------------------------
For front-loading standard-size RCWs, DOE's expected design path
for the Recommended TSL (which represents EL 2 for this product class)
incorporates the use of a direct drive motor, spin speeds that are
faster than the baseline level but not as fast as at TSL 3, and lower
water volume (but with no change to total hot water heating energy).
Among these design options, the direct drive motor and faster spin
speeds reduce energy use only; whereas the lower water volume reduces
water use only.
The Recommended TSL would save an estimated 0.67 quads of energy
and 1.89 trillion gallons of water, an amount DOE considers
significant. Under the Recommended TSL, the NPV of consumer benefit
would be $3.28 billion using a discount rate of 7 percent, and $8.71
billion using a discount rate of 3 percent.
The cumulative emissions reductions at the Recommended TSL are
13.96 Mt of CO2, 3.65 thousand tons of SO2, 27.74
thousand tons of NOX, 0.02 tons of Hg, 124.57 thousand tons
of CH4, and 0.12 thousand tons of N2O. The
estimated monetary value of the climate benefits from reduced GHG
emissions (associated with the average SC-GHG at a 3-percent discount
rate) at the Recommended TSL is $0.84 billion. The estimated monetary
value of the health benefits from reduced SO2 and
NOX emissions at the Recommended TSL is
[[Page 19119]]
$0.73 billion using a 7-percent discount rate and $1.62 billion using a
3-percent discount rate.
Using a 7-percent discount rate for consumer benefits and costs,
health benefits from reduced SO2 and NOX
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated total NPV at the Recommended
TSL is $4.85 billion. Using a 3-percent discount rate for all benefits
and costs, the estimated total NPV at the Recommended TSL is $11.18
billion. The estimated total NPV is provided for additional
information; however, DOE primarily relies upon the NPV of consumer
benefits when determining whether a standard level is economically
justified.
At the Recommended TSL, the average LCC impact is a savings of $111
for top-loading standard-size, $9 for front-loading compact, $46 for
front-loading standard-size, and $284 for semi-automatic clothes
washers. The simple payback period is 6.2 years for top-loading
standard-size, 9.3 years for front-loading compact, 1.4 years for
front-loading standard-size, and 0.5 years for semi-automatic clothes
washers. The fraction of consumers experiencing a net LCC cost is 27
percent for top-loading standard-size, 21 percent for front-loading
compact, 2 percent for front-loading standard-size, and zero percent
for semi-automatic clothes washers. For the top-loading standard-size
product class, The Recommended TSL would increase the first cost by
$146, in comparison to an installed cost of $687 for baseline units in
2028. For the front-loading standard-size product class, the
Recommended TSL would increase the first cost by $67, compared to an
installed cost of $1,021 for baseline units in 2028. At the Recommended
TSL, the standard for top-loading ultra-compact RCWs is at the
baseline, resulting in no LCC impact, no simple PBP, and no consumers
experiencing a net LCC cost. Overall, across all product classes,
around 20 percent of consumers would experience a net LCC cost at the
Recommended TSL. DOE estimates that about 12 percent of low-income
households would experience a net LCC cost at the Recommended TSL, and
as a result of smaller households and lower annual usage, about 26
percent of senior-only households would experience a net LCC cost at
the Recommended TSL. Additionally, as a result of lower costs
associated with well water and septic tanks in rural areas, about 37
percent of well-water households would experience a net LCC cost at the
Recommended TSL.
At the Recommended TSL, the projected change in INPV ranges from a
decrease of $278.3 million to a decrease of $146.9 million, which
corresponds to decreases of 16.3 percent and 8.6 percent, respectively.
Industry conversion costs could reach $320.0 million at this TSL.
At this level, many existing top-loading standard-size products
would need to be redesigned to meet the Recommended TSL efficiencies;
however, there are a wide range of top-loading standard-size models
currently available on the market due to manufacturers' participation
in the ENERGY STAR program. Currently, approximately 49 percent of RCW
shipments meet the Recommended TSL efficiencies, including
approximately 31 percent of all top-loading standard-size shipments. Of
the nine OEMs with top-loading standard-size products, six OEMs offer
166 basic models (representing approximately 30 percent of all top-
loading standard-size basic models) that meet the Recommended TSL
efficiencies. These six OEMs that currently offer top-loading standard-
size RCW models that meet the Recommended TSL efficiencies collectively
account for over 95 percent of overall top-loading standard-size RCW
shipments. At this level, a substantial number of front-loading
standard-size products are available on the market due to
manufacturers' participation in the ENERGY STAR program. Currently,
approximately 92 percent of front-loading standard-size shipments meet
the Recommended TSL. Of the seven OEMs with front-loading standard-size
products, six OEMs offer 169 basic models (representing approximately
89 percent of all front-loading standard-size basic models) that meet
the Recommended TSL efficiencies.
For all TSLs considered in this direct final rule--except for the
Recommended TSL--DOE is bound by the 3-year lead time requirements in
EPCA when determining compliance dates (i.e., compliance with amended
standards required in 2027). For the Recommended TSL, DOE's analysis
utilized the March 1, 2028, compliance date specified in the Joint
Agreement as it was an integral part of the multi-product joint
recommendation. A 2028 compliance year provides manufacturers
additional flexibility to spread capital requirements, engineering
resources, and conversion activities over a longer period of time
depending on the individual needs of each manufacturer. Furthermore,
these delayed compliance dates provide additional lead time and
certainty for suppliers of components that improve efficiency.
At the Recommended TSL, DOE's data demonstrates no negative impact
on consumer utility for both top-loading and front-loading RCWs.
Manufacturers did not provide any specific data nor express any
specific concerns regarding clothes washer performance at the
Recommended TSL. In addition, in the second joint statement from the
same group of stakeholders that submitted the Joint Agreement states
that DOE's test data and industry experience agrees that the
recommended standard level for RCWs can maintain good cleaning
performance and do not preclude the ability to provide high wash
temperatures.\208\ Based on the information available, DOE concludes
that no lessening of product utility or performance would occur at the
Recommended TSL.
---------------------------------------------------------------------------
\208\ This document is available in the docket at:
www.regulations.gov/comment/EERE-2017-BT-STD-0014-0509.
---------------------------------------------------------------------------
After considering the analysis and weighing the benefits and
burdens, the Secretary has concluded that at a standard set at the
Recommended TSL for RCWs would be economically justified. At the
Recommended TSL, the average LCC savings for all product classes is
positive. An estimated 27 percent of top-loading standard-size users,
21 percent of front-loading compact, 2 percent of front-loading
standard-size, and zero percent of semi-automatic clothes washer
consumers experience a net cost. At the Recommended TSL, the positive
average LCC savings across all product classes and cost savings for
approximately two-thirds of RCWs consumers, outweigh the negative
average LLC savings of $20 for well-water households and the 37 percent
of these households that might experience a net cost. DOE notes that
its analysis ensures that the financial implications for households
with wells and/or septic systems are comprehensively incorporated into
the national LCC analysis. In addition, the FFC national energy savings
are significant and the NPV of consumer benefits is positive using both
a 3-percent and 7-percent discount rate. Notably, the benefits to
consumers vastly outweigh the cost to manufacturers. At the Recommended
TSL, the NPV of consumer benefits, even measured at the more
conservative discount rate of 7 percent is over 11 times higher than
the maximum estimated manufacturers' loss in INPV. The standard levels
at the Recommended TSL are economically justified even without weighing
the
[[Page 19120]]
estimated monetary value of emissions reductions. When those emissions
reductions are included--representing $ 0.84 billion in climate
benefits (associated with the average SC-GHG at a 3-percent discount
rate), and $ 1.62 billion (using a 3-percent discount rate) or $ 0.73
billion (using a 7-percent discount rate) in health benefits--the
rationale becomes stronger still.
As stated, DOE conducts the walk-down analysis to determine the TSL
that represents the maximum improvement in energy efficiency that is
technologically feasible and economically justified as required under
EPCA. The walk-down is not a comparative analysis, as a comparative
analysis would result in the maximization of net benefits instead of
energy savings that are technologically feasible and economically
justified, which would be contrary to the statute. 86 FR 70892, 70908.
Although DOE has not conducted a comparative analysis to select the
amended energy conservation standards, DOE notes that as compared to
TSL 4 and TSL 3, the Recommended TSL has a lower maximum decrease in
INPV and lower manufacturer conversion costs.
Accordingly, the Secretary has concluded that the Recommended TSL
would offer the maximum improvement in efficiency that is
technologically feasible and economically justified and would result in
the significant conservation of energy.
Therefore, based on the previous considerations, DOE adopts the
energy conservation standards for RCWs at the Recommended TSL.
While DOE considered each potential TSL under the criteria laid out
in 42 U.S.C. 6295(o) as discussed above, DOE notes that the Recommended
TSL for RCWs adopted in this direct final rule is part of a multi-
product Joint Agreement covering six rulemakings (RCWs; consumer
clothes dryers; consumer conventional cooking products; dishwashers;
refrigerators, refrigerator-freezers, and freezers; and miscellaneous
refrigeration products). The signatories indicate that the Joint
Agreement for the six rulemakings should be considered as a joint
statement of recommended standards, to be adopted in its entirety.
(Joint Agreement, No. 505 at p. 3) As discussed in section V.B.2.e of
this document, many RCW OEMs also manufacture consumer clothes dryers;
consumer conventional cooking products; dishwashers; refrigerators,
refrigerator-freezers, and freezers; and miscellaneous refrigeration
products. Therefore, there are potential integrated benefits to the
Joint Agreement. Rather than requiring compliance with five amended
standards in a single year (2027),\209\ the negotiated multi-product
Joint Agreement staggers the compliance dates for the five amended
standards over a 4-year period (2027-2030). In response to the March
2023 NOPR, AHAM expressed concerns about the timing of ongoing home
appliance rulemakings. Specifically, AHAM commented that the
combination of the stringency of DOE's proposals, the short lead-in
time under EPCA to comply with standards, and the overlapping timeframe
of multiple standards affecting the same manufacturers represents
significant cumulative regulatory burden for the home appliance
industry. (AHAM, No. 464 at pp. 41-42) AHAM has submitted similar
comments to other ongoing home appliance rulemakings.\210\
---------------------------------------------------------------------------
\209\ The analyses for residential clothes washers (88 FR
13520); consumer clothes dryers (87 FR 51734); consumer conventional
cooking products (88 FR 6818); dishwashers (88 FR 32514); and
refrigerators, refrigerator-freezers, and freezers (88 FR 12452)
utilized a 2027 compliance year for analysis at the proposed rule
stage. Miscellaneous refrigeration products (88 FR 12452) utilized a
2029 compliance year for the NOPR analysis.
\210\ AHAM has submitted written comments regarding cumulative
regulatory burden for the other five rulemakings included in the
multi-product Joint Agreement. AHAM's written comments on cumulative
regulatory burden are available at: www.regulations.gov/comment/EERE-2014-BT-STD-0058-0046 (pp. 12-13) for consumer clothes dryers;
www.regulations.gov/comment/EERE-2014-BT-STD-0005-2285 (pp. 44-47)
for consumer conventional cooking products; www.regulations.gov/comment/EERE-2019-BT-STD-0039-0051 (pp. 21-24) for dishwashers;
www.regulations.gov/comment/EERE-2017-BT-STD-0003-0069 (pp. 20-22)
for refrigerators, refrigerator-freezers, and freezers; and
www.regulations.gov/comment/EERE-2020-BT-STD-0039-0031 (pp. 12-15)
for miscellaneous refrigeration products.
---------------------------------------------------------------------------
As AHAM is a key signatory of the Joint Agreement, DOE understands
that the compliance dates recommended in the Joint Agreement would help
reduce cumulative regulatory burden. These compliance dates help
relieve concern on the part of some manufacturers about their ability
to allocate sufficient resources to comply with multiple concurrent
amended standards and about the need to align compliance dates for
products that are typically designed or sold as matched pairs. The
Joint Agreement also provides additional years of regulatory certainty
for manufacturers and their suppliers.
For RCWs and consumer clothes dryers specifically, aligned
compliance dates would help reduce cumulative regulatory burden for the
13 OEMs that manufacture both RCWs and consumer clothes dryers. In
response to the March 2023 NOPR, AHAM commented that laundry products
(RCWs and consumer clothes dryers) are designed and used in pairs.
(AHAM, No. 464 at p. 44) AHAM stated that an additional design cycle
for clothes washers and/or clothes dryers may be necessary if the
effective compliance dates for the two products were out of sync and
this would undermine the investment and associated recovery assumptions
underlying the MIA from the consumer clothes dryer rulemaking. (Id.)
The amended energy conservation standards for RCWs, which are
expressed in EER and WER, are shown in Table V.37.
Table V.37--Amended Energy Conservation Standards for Residential
Clothes Washers
------------------------------------------------------------------------
Minimum energy Minimum water
Product class efficiency ratio efficiency ratio
(lb/kWh/cycle) (lb/gal/cycle)
------------------------------------------------------------------------
Automatic Clothes Washers:
Top-Loading Ultra-Compact (less 3.79 0.29
than 1.6 ft\3\ capacity).........
Top-Loading Standard-Size (1.6 4.27 0.57
ft\3\ or greater capacity)...
Front-Loading Compact (less 5.02 0.71
than 3.0 ft\3\ capacity).....
Front-Loading Standard-Size 5.52 0.77
(3.0 ft\3\ or greater
capacity)....................
Semi-Automatic Clothes Washers 2.12 0.27
------------------------------------------------------------------------
[[Page 19121]]
2. Annualized Benefits and Costs of the Adopted Standards
The benefits and costs of the adopted standards can also be
expressed in terms of annualized values. The annualized net benefit is
(1) the annualized national economic value (expressed in 2022$) of the
benefits from operating products that meet the adopted standards
(consisting primarily of operating cost savings from using less
energy), minus increases in product purchase costs, and (2) the
annualized monetary value of the climate and health benefits.
Table V.38 shows the annualized values for RCWs under the
Recommended TSL, expressed in 2022$. The results under the primary
estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and
health benefits from reduced NOX and SO2
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated cost of the standards adopted
in this rule is $530.1 million per year in increased equipment costs,
while the estimated annual benefits are $853.9 million in reduced
equipment operating costs, $46.9 million in climate benefits, and $71.9
million in health benefits. In this case, the net benefit would amount
to $442.5 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the standards is $513.1 million per year in increased
equipment costs, while the estimated annual benefits are $998.9 million
in reduced operating costs, $46.9 million in climate benefits, and
$90.3 million in health benefits. In this case, the net benefit would
amount to $623.0 million per year.
Table V.38--Annualized Benefits and Costs of Adopted Standards (Recommended TSL) for Residential Clothes Washers
[2028-2057]
----------------------------------------------------------------------------------------------------------------
Million 2022$/year
-----------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 998.9 957.2 1,020.9
Climate Benefits *.............................................. 46.9 45.2 47.5
Health Benefits **.............................................. 90.3 87.1 91.6
----------------------------------------------------------------------------------------------------------------
Total Benefits [dagger]..................................... 1,136.1 1,089.5 1,160.0
Consumer Incremental Product Costs [Dagger]..................... 513.1 551.8 468.6
----------------------------------------------------------------------------------------------------------------
Net Benefits................................................ 623.0 537.7 691.4
Change in Producer Cash Flow (INPV [Dagger][Dagger])............ (27)-(14) (27)-(14) (27)-(14)
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 853.9 821.2 871.7
Climate Benefits * (3% discount rate)........................... 46.9 45.2 47.5
Health Benefits **.............................................. 71.9 69.6 72.8
----------------------------------------------------------------------------------------------------------------
Total Benefits [dagger]..................................... 972.6 935.9 992.0
Consumer Incremental Product Costs [Dagger]..................... 530.1 564.6 489.5
----------------------------------------------------------------------------------------------------------------
Net Benefits................................................ 442.5 371.3 502.5
Change in Producer Cash Flow (INPV [Dagger][Dagger])............ (27)-(14) (27)-(14) (27)-(14)
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with RCWs shipped in 2028-2057. These results
include consumer, climate, and health benefits that accrue after 2057 from the products shipped in 2028-2057.
The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the
AEO2023 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition,
incremental equipment costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the
Low Net Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used to
derive projected price trends are explained in sections IV.F.1 and IV.H.3 of this document. Note that the
Benefits and Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3 percent discount rate are shown, but DOE does not have a single central SC-GHG point estimate, and it
emphasizes the importance and value of considering the benefits calculated using all four sets of SC-GHG
estimates. To monetize the benefits of reducing GHG emissions, this analysis uses the interim estimates
presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim
Estimates Under Executive Order 13990 published in February 2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. See section IV.L of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but DOE does not have a single central SC-GHG point estimate.
[Dagger] Costs include incremental equipment costs as well as installation costs.
[[Page 19122]]
[Dagger][Dagger] Operating Cost Savings are calculated based on the life cycle costs analysis and national
impact analysis as discussed in detail below. See sections IV.F and IV.H of this document. DOE's national
impact analysis includes all impacts (both costs and benefits) along the distribution chain beginning with the
increased costs to the manufacturer to manufacture the product and ending with the increase in price
experienced by the consumer. DOE also separately conducts a detailed analysis on the impacts on manufacturers
(MIA). See section IV.J of this document. In the detailed MIA, DOE models manufacturers' pricing decisions
based on assumptions regarding investments, conversion costs, cashflow, and margins. The MIA produces a range
of impacts, which is the rule's expected impact on the INPV. The change in INPV is the present value of all
changes in industry cash flow, including changes in production costs, capital expenditures, and manufacturer
profit margins. The annualized change in INPV is calculated using the industry weighted average cost of
capital value of 9.3 percent that is estimated in the MIA (see chapter 12 of the direct final rule TSD for a
complete description of the industry weighted average cost of capital). For RCWs, the annualized change in
INPV ranges from -$27 million to -$14 million. DOE accounts for that range of likely impacts in analyzing
whether a TSL is economically justified. See section V.C of this document. DOE is presenting the range of
impacts to the INPV under two manufacturer markup scenarios: the Preservation of Gross Margin scenario, which
is the manufacturer markup scenario used in the calculation of Consumer Operating Cost Savings in this table,
and the Preservation of Operating Profit scenario, where DOE assumed manufacturers would not be able to
increase per-unit operating profit in proportion to increases in manufacturer production costs. DOE includes
the range of estimated annualized change in INPV in the above table, drawing on the MIA explained further in
section IV.J of this document to provide additional context for assessing the estimated impacts of this direct
final rule to society, including potential changes in production and consumption, which is consistent with
OMB's Circular A-4 and E.O. 12866. If DOE were to include the annualized change in INPV into the annualized
net benefit calculation for this direct final rule, the annualized net benefits, using the primary estimate,
would range from $596 million to $609 million at 3-percent discount rate and would range from $415 million to
$428 million at 7-percent discount rate. Parentheses () indicate negative values.
VI. Severability
DOE added a new paragraph (g)(2)(ii) into 10 CFR 430.32 to provide
that each energy and water conservation for each RCW category is
separate and severable from one another, and that if any energy or
water conservation standard is stayed or determined to be invalid by a
court of competent jurisdiction, the remaining standards shall continue
in effect. This severability clause is intended to clearly express the
Department's intent that should an energy or water conservation
standard for any product class be stayed or invalidated, the other
conservation standards shall continue in effect. In the event a court
were to stay or invalidate one or more energy or water conservation
standards for any product class as finalized, the Department would want
the remaining energy conservation standards as finalized to remain in
full force and legal effect.
VII. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
Executive Order (``E.O.'') 12866, ``Regulatory Planning and
Review,'' as supplemented and reaffirmed by E.O. 13563, ``Improving
Regulation and Regulatory Review,'' 76 FR 3821 (Jan. 21, 2011), and
amended by E.O. 14094, ``Modernizing Regulatory Review,'' 88 FR 21879
(April 11, 2023), requires agencies, to the extent permitted by law, 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 E.O. 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 (``OIRA'') in the Office of Management and Budget (``OMB'') 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,
this final regulatory action is consistent with these principles.
Section 6(a) of E.O. 12866 also requires agencies to submit
``significant regulatory actions'' to OIRA for review. OIRA has
determined that this final regulatory action constitutes a
``significant regulatory action'' within the scope of section 3(f) of
E.O. 12866. DOE has provided to OIRA an assessment, including the
underlying analysis, of benefits and costs anticipated from the final
regulatory action, together with, to the extent feasible, a
quantification of those costs; and an assessment, including the
underlying analysis, of costs and benefits of potentially effective and
reasonably feasible alternatives to the planned regulation, and an
explanation why the planned regulatory action is preferable to the
identified potential alternatives. These assessments are summarized in
this preamble and further detail can be found in the technical support
document for this rulemaking.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (``IRFA'')
and a final regulatory flexibility analysis (``FRFA'') for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by E.O. 13272, ``Proper Consideration of Small Entities in Agency
Rulemaking,'' 67 FR 53461 (Aug. 16, 2002), DOE published procedures and
policies on February 19, 2003, to ensure that the potential impacts of
its rules on small entities are properly considered during the
rulemaking process. 68 FR 7990. DOE has made its procedures and
policies available on the Office of the General Counsel's website
(www.energy.gov/gc/office-general-counsel).
DOE is not obligated to prepare a regulatory flexibility analysis
for this rulemaking because there is not a requirement to publish a
general notice of proposed rulemaking under the Administrative
Procedure Act. See 5 U.S.C. 601(2), 603(a). As discussed previously,
DOE has determined that the Joint Agreement meets the necessary
requirements under EPCA to issue this direct final rule for energy
conservation standards for RCWs under the procedures in 42 U.S.C.
6295(p)(4). DOE notes that the NOPR for energy conservation standards
for RCWs published elsewhere in this issue of the Federal Register
contains an IRFA.
[[Page 19123]]
C. Review Under the Paperwork Reduction Act
Under the procedures established by the Paperwork Reduction Act of
1995 (``PRA''), a person is not required to respond to a collection of
information by a Federal agency unless that collection of information
displays a currently valid OMB Control Number.
OMB Control Number 1910-1400, Compliance Statement Energy/Water
Conservation Standards for Appliances, is currently valid and assigned
to the certification reporting requirements applicable to covered
products, including RCWs.
DOE's certification and compliance activities ensure accurate and
comprehensive information about the energy and water use
characteristics of covered products and covered equipment sold in the
United States. Manufacturers of all covered products and covered
equipment must submit a certification report before a basic model is
distributed in commerce, annually thereafter, and if the basic model is
redesigned in such a manner to increase the consumption or decrease the
efficiency of the basic model such that the certified rating is no
longer supported by the test data. Additionally, manufacturers must
report when production of a basic model has ceased and is no longer
offered for sale as part of the next annual certification report
following such cessation. DOE requires the manufacturer of any covered
product or covered equipment to establish, maintain, and retain the
records of certification reports, of the underlying test data for all
certification testing, and of any other testing conducted to satisfy
the requirements of part 429, part 430, and/or part 431. Certification
reports provide DOE and consumers with comprehensive, up-to-date
efficiency information and support effective enforcement.
Revised certification data will be required for RCWs to demonstrate
compliance with the amended standards enacted in this direct final
rule, which are based on different metrics than the current standards.
However, DOE is not amending certification or reporting requirements
for RCWs in this direct final rule. Instead, DOE may consider proposals
to amend the certification requirements and reporting for RCWs under a
separate rulemaking regarding appliance and equipment certification.
DOE will address changes to OMB Control Number 1910-1400 at that time,
as necessary.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act of 1969
(``NEPA''), DOE has analyzed this rule in accordance with NEPA and
DOE's NEPA implementing regulations (10 CFR part 1021). DOE has
determined that this rule qualifies for categorical exclusion under 10
CFR part 1021, subpart D, appendix B, categorical exclusion B5.1,
because it is a rulemaking that establishes energy conservation
standards for consumer products or industrial equipment, none of the
exceptions identified in B5.1(b) apply, no extraordinary circumstances
exist that require further environmental analysis, and it meets the
requirements for application of a categorical exclusion. See 10 CFR
1021.410. Therefore, DOE has determined that promulgation of this rule
is not a major Federal action significantly affecting the quality of
the human environment within the meaning of NEPA, and does not require
an environmental assessment or an environmental impact statement.
E. Review Under Executive Order 13132
E.O. 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999), imposes
certain requirements on Federal agencies formulating and implementing
policies or regulations that preempt State law or that have federalism
implications. The Executive order requires agencies to examine the
constitutional and statutory authority supporting any action that would
limit the policymaking discretion of the States and to carefully assess
the necessity for such actions. The Executive order also requires
agencies to have an accountable process to ensure meaningful and timely
input by State and local officials in the development of regulatory
policies that have federalism implications. On March 14, 2000, DOE
published a statement of policy describing the intergovernmental
consultation process it will follow in the development of such
regulations. 65 FR 13735.
In the March 2023 NOPR, DOE tentatively determined that the
proposed rule would not have a substantial direct effect on the States,
on the relationship between the National Government and the States, or
on the distribution of power and responsibilities among the various
levels of government. 88 FR 13520, 13616. Furthermore, DOE stated that
EPCA governs and prescribes Federal preemption of State regulations as
to energy conservation for the products that are the subject of the
proposed rule and that States can petition DOE for exemption from such
preemption to the extent, and based on criteria, set forth in EPCA. Id.
(citing 42 U.S.C. 6297). Accordingly, DOE concluded that no further
action was required by E. O. 13132.
The AGs of TN et al. commented that DOE's conclusion regarding E.O.
13132 in the March 2023 NOPR is incorrect because the proposed
standards have significant federalism implications within the meaning
of E.O. 13132. (AGs of TN et al., No. 438 at p. 3) The AGs of TN et al.
commented that if the proposed standards are promulgated, ``[a]ny State
regulation which sets forth procurement standards'' relating to clothes
washers is ``superseded'' unless those ``standards are more stringent
than the corresponding Federal energy conservation standards'' and
preempting, even in part, State procurement rules directly affects the
States and alters the Federal-State relationship by directly regulating
the States. (Id.) The AGs of TN et al. commented that States own
appliances like clothes washers, which indicates the proposed standards
implicate reliance interests DOE must take into consideration. (Id.
citing Dep't of Homeland Sec. v. Regents of the Univ. of Cal., 140 S.
Ct. 1891, 1913 (2020)) The AGs of TN et al. added that the standards
will have an effect on the States that could give rise to ``substantial
direct compliance costs,'' and since the proposed efficiency standards
are ``not required by statute,'' section 6(b) of E.O. 13132 applies.
(Id.)
DOE reiterates that this direct final rule does not have
significant federalism implications. DOE has examined this rule and has
determined that it would not have a substantial direct effect on the
States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government. EPCA governs and expressly prescribes
Federal preemption of State regulations as to energy conservation for
the products that are the subject of this direct final rule. States can
petition DOE for exemption from such preemption to the extent, and
based on criteria, set forth in EPCA. (42 U.S.C. 6297) Therefore, no
further action is required by Executive Order 13135.
Even if DOE were to find otherwise, with regards to the AGs of TN
et al.'s arguments regarding section 6(c) of E.O.
[[Page 19124]]
13132, DOE notes that the AGs of TN et al. do not provide any examples
of a state procurement rule that conflicts with the standards adopted
in this rulemaking and DOE is not aware of any such conflicts. While it
is possible that a State may have to revise its procurement standards
to reflect the new standards, States can petition DOE for exemption
from such preemption to the extent, and based on criteria, set forth in
EPCA. Absent such information, DOE concludes that no further action
would be required by E.O. 13132 even if the Executive order were
applicable here. Moreover, assuming the hypothetical preemption alleged
by the AGs of TN et al. were to present itself, DOE notes, that like
all interested parties, states were presented with an opportunity to
engage in the rulemaking process early in the development of the
proposed rule. Prior to publishing the proposed rulemaking, on August
2, 2019, DOE published an RFI to collect data and information to help
DOE determine whether any new or amended standards for RCWs would
result in a significant amount of additional energy savings and whether
those standards would be technologically feasible and justified. 84 FR
37794. DOE then published a notification of availability of a
preliminary technical support document on September 29, 2021, and
sought public comment again. 86 FR 53886. DOE extended the comment
period on that document by 45 days. 86 FR 59889. Finally, DOE published
a notification of data availability to present the results of
additional testing conducted to develop the translations between the
current and then proposed test procedure. 87 FR 21816. As such, states
were provided the opportunity to meaningful and substantial input as
envisioned by the Executive order.
With regards to the AGs of TN et al.'s arguments regarding section
6(b) of E.O. 13132, the potential effect alleged by the AGs of TN et
al. is the same effect experienced by all RCW consumers--models
manufactured after a specific date must meet the revised efficiency
standards. This impact does not constitute a ``substantial'' impact as
required by the Executive order. Further, contrary to the assertions of
the AGs of TN et al., the direct final rule is required by law. As
noted previously, where DOE determines that a proposed amended standard
is designed to achieve the maximum improvement in energy efficiency and
is both technologically feasible and economically justified, it must
adopt it. Therefore, section 6(b) is inapplicable. Executive Order
13132, section 6(b) (applicable to regulation ``that is not required by
statute'').
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of E.O. 12988, ``Civil
Justice Reform,'' imposes on Federal agencies the general duty to
adhere to the following requirements: (1) eliminate drafting errors and
ambiguity, (2) write regulations to minimize litigation, (3) provide a
clear legal standard for affected conduct rather than a general
standard, and (4) promote simplification and burden reduction. 61 FR
4729 (Feb. 7, 1996). Regarding the review required by section 3(a),
section 3(b) of E.O. 12988 specifically requires that Executive
agencies make every reasonable effort to ensure that the regulation (1)
clearly specifies the preemptive effect, if any, (2) clearly specifies
any effect on existing Federal law or regulation, (3) provides a clear
legal standard for affected conduct while promoting simplification and
burden reduction, (4) specifies the retroactive effect, if any, (5)
adequately defines key terms, and (6) addresses other important issues
affecting clarity and general draftsmanship under any guidelines issued
by the Attorney General. Section 3(c) of E.O. 12988 requires Executive
agencies to review regulations in light of applicable standards in
section 3(a) and section 3(b) to determine whether they are met or it
is unreasonable to meet one or more of them. DOE has completed the
required review and determined that, to the extent permitted by law,
this direct final rule meets the relevant standards of E.O. 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'')
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a regulatory action likely to result in a rule that may cause the
expenditure by State, local, and Tribal governments, in the aggregate,
or by the private sector of $100 million or more in any one year
(adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. 62 FR 12820. DOE's policy statement is also available at
www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
DOE has concluded that this direct final rule may require
expenditures of $100 million or more in any one year by the private
sector. Such expenditures may include (1) investment in research and
development and in capital expenditures by RCW manufacturers in the
years between the direct final rule and the compliance date for the new
standards and (2) incremental additional expenditures by consumers to
purchase higher-efficiency RCWs, starting at the compliance date for
the applicable standard.
Section 202 of UMRA authorizes a Federal agency to respond to the
content requirements of UMRA in any other statement or analysis that
accompanies the direct final rule. (2 U.S.C. 1532(c)) The content
requirements of section 202(b) of UMRA relevant to a private sector
mandate substantially overlap the economic analysis requirements that
apply under section 325(o) of EPCA and Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of this document and the TSD for this
direct final rule respond to those requirements.
Under section 205 of UMRA, DOE is obligated to identify and
consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. (2 U.S.C. 1535(a)) DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the rule unless DOE publishes an
explanation for doing otherwise, or the selection of such an
alternative is inconsistent with law. As required by 42 U.S.C. 6295(m),
this direct final rule establishes amended energy conservation
standards for RCWs that are designed to achieve the maximum improvement
in energy efficiency that DOE has determined to be both technologically
feasible and economically justified, as required by 6295(o)(2)(A) and
6295(o)(3)(B). A full discussion of the alternatives considered by DOE
is presented in chapter 17 of the TSD for this direct final rule.
[[Page 19125]]
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
Although this direct final rule would not have any impact on the
autonomy or integrity of the family as an institution as defined, this
rule could impact a family's well-being. When developing a Family
Policymaking Assessment, agencies must assess whether: (1) the action
strengthens or erodes the stability or safety of the family and,
particularly, the marital commitment; (2) the action strengthens or
erodes the authority and rights of parents in the education, nurture,
and supervision of their children; (3) the action helps the family
perform its functions, or substitutes governmental activity for the
function; (4) the action increases or decreases disposable income or
poverty of families and children; (5) the proposed benefits of the
action justify the financial impact on the family; (6) the action may
be carried out by State or local government or by the family; and
whether (7) the action establishes an implicit or explicit policy
concerning the relationship between the behavior and personal
responsibility of youth, and the norms of society.
DOE has considered how the proposed benefits of this rule compare
to the possible financial impact on a family (the only factor listed
that is relevant to this final rule). As part of its rulemaking
process, DOE must determine whether the energy conservation standards
contained in this direct final rule are economically justified. As
discussed in section V.C.1 of this document, DOE has determined that
the standards are economically justified because the benefits to
consumers far outweigh the costs to manufacturers. Families will also
see LCC savings as a result of this final rule. Moreover, as discussed
further in section V.B.1 of this document, DOE has determined that for
low-income households, average LCC savings and PBP at the considered
efficiency levels are improved (i.e., higher LCC savings and lower
payback period) as compared to the average for all households. Further,
the standards will also result in climate and health benefits for
families.
I. Review Under Executive Order 12630
Pursuant to E.O. 12630, ``Governmental Actions and Interference
with Constitutionally Protected Property Rights,'' 53 FR 8859 (March
18, 1988), DOE has determined that this rule would not result in any
takings that might require compensation under the Fifth Amendment to
the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to
review most disseminations of information to the public under
information quality guidelines established by each agency pursuant to
general guidelines issued by OMB. OMB's guidelines were published at 67
FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR
62446 (Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving
Implementation of the Information Quality Act (April 24, 2019), DOE
published updated guidelines which are available at www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has
reviewed this direct final rule under the OMB and DOE guidelines and
has concluded that it is consistent with applicable policies in those
guidelines.
K. Review Under Executive Order 13211
E.O. 13211, ``Actions Concerning Regulations That Significantly
Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 (May 22,
2001), requires Federal agencies to prepare and submit to OIRA at OMB,
a Statement of Energy Effects for any significant energy action. A
``significant energy action'' is defined as any action by an agency
that promulgates or is expected to lead to promulgation of a final
rule, and that (1) is a significant regulatory action under Executive
Order 12866, or any successor order; and (2) is likely to have a
significant adverse effect on the supply, distribution, or use of
energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any significant energy action, the
agency must give a detailed statement of any adverse effects on energy
supply, distribution, or use should the proposal be implemented, and of
reasonable alternatives to the action and their expected benefits on
energy supply, distribution, and use.
DOE has concluded that this regulatory action, which sets forth
amended energy conservation standards for RCWs, is not a significant
energy action because the standards are not likely to have a
significant adverse effect on the supply, distribution, or use of
energy, nor has it been designated as such by the Administrator at
OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects
on this direct final rule.
L. Information Quality
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (``OSTP''), issued its Final Information
Quality Bulletin for Peer Review (``the Bulletin'') 70 FR 2664 (Jan.
14, 2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the Bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as ``scientific information
the agency reasonably can determine will have, or does have, a clear
and substantial impact on important public policies or private sector
decisions'' 70 FR 2664, 2667.
In response to OMB's Bulletin, DOE conducted formal peer reviews of
the energy conservation standards development process and the analyses
that are typically used and prepared a report describing that peer
review.\211\ Generation of this report involved a rigorous, formal, and
documented evaluation using objective criteria and qualified and
independent reviewers to make a judgment as to the technical/
scientific/business merit, the actual or anticipated results, and the
productivity and management effectiveness of programs and/or projects.
Because available data, models, and technological understanding have
changed since 2007, DOE has engaged with the National Academy of
Sciences to review DOE's analytical methodologies to ascertain whether
modifications are needed to improve DOE's analyses. DOE is in the
process of evaluating the resulting report.\212\
---------------------------------------------------------------------------
\211\ The 2007 ``Energy Conservation Standards Rulemaking Peer
Review Report'' is available at energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0 (last
accessed July 10, 2023).
\212\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards.
---------------------------------------------------------------------------
M. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation
[[Page 19126]]
of this rule prior to its effective date. The report will state that
the Office of Information and Regulatory Affairs has determined that
this rule meets the criteria set forth in 5 U.S.C. 804(2).
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this direct
final rule.
List of Subjects in 10 CFR Part 430
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Imports,
Intergovernmental relations, Reporting and recordkeeping requirements,
Small businesses.
Signing Authority
This document of the Department of Energy was signed on February
29, 2024, by Jeffrey Marootian, Principal Deputy Assistant Secretary
for Energy Efficiency and Renewable Energy, pursuant to delegated
authority from the Secretary of Energy. That document with the original
signature and date is maintained by DOE. For administrative purposes
only, and in compliance with requirements of the Office of the Federal
Register, the undersigned DOE Federal Register Liaison Officer has been
authorized to sign and submit the document in electronic format for
publication, as an official document of the Department of Energy. This
administrative process in no way alters the legal effect of this
document upon publication in the Federal Register.
Signed in Washington, DC, on March 1, 2024.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
For the reasons set forth in the preamble, DOE amends part 430 of
chapter II, subchapter D, of title 10 of the Code of Federal
Regulations, as set forth below:
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
0
1. The authority citation for part 430 continues to read as follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
0
2. Amend Sec. 430.32 by revising paragraph (g) to read as follows:
Sec. 430.32 Energy and water conservation standards and their
compliance dates.
* * * * *
(g) Clothes washers. (1) Clothes washers manufactured on or after
January 1, 2018, shall have an Integrated Modified Energy Factor no
less than, and an Integrated Water Factor no greater than:
------------------------------------------------------------------------
Integrated
modified energy Integrated water
Product class factor (cu.ft./ factor (gal/
kWh/cycle) cycle/cu.ft.)
------------------------------------------------------------------------
(i) Top-loading, Compact (less 1.15 12.0
than 1.6 ft\3\ capacity).........
(ii) Top-loading, Standard (1.6 1.57 6.5
ft\3\ or greater capacity).......
(iii) Front-loading, Compact (less 1.13 8.3
than 1.6 ft\3\ capacity).........
(iv) Front-loading, Standard (1.6 1.84 4.7
ft\3\ or greater capacity).......
------------------------------------------------------------------------
(2) Clothes washers manufactured on or after March 1, 2028:
(i) Shall have an Energy Efficiency Ratio and a Water Efficiency
Ratio no less than:
------------------------------------------------------------------------
Energy efficiency Water efficiency
Product class ratio (lb/kWh/ ratio (lb/gal/
cycle) cycle)
------------------------------------------------------------------------
(A) Automatic Clothes Washers:....
(1) Top-Loading Ultra-Compact 3.79 0.29
(less than 1.6 ft\3\
capacity)....................
(2) Top-Loading Standard-Size 4.27 0.57
(1.6 ft\3\ or greater
capacity) \1\................
(3) Front-Loading Compact 5.02 0.71
(less than 3.0 ft\3\
capacity) \2\................
(4) Front-Loading Standard- 5.52 0.77
Size (3.0 ft\3\ or greater
capacity) \3\................
(B) Semi-Automatic Clothes Washers 2.12 0.27
------------------------------------------------------------------------
\1\ The energy conservation standards in this table do not apply to top-
loading standard-size clothes washers with an average cycle time less
than 30 minutes.
\2\ The energy conservation standards in this table do not apply to
front-loading clothes washers with a capacity greater than or equal to
1.6 ft\3\ and less than 3.0 ft\3\ with an average cycle time of less
than 45 minutes.
\3\ The energy conservation standards in this table do not apply to
front-loading standard-size clothes washers with an average cycle time
less than 45 minutes.
(ii) The provisions of this paragraph (g)(2) are separate and
severable from one another. Should a court of competent jurisdiction
hold any provision(s) of this section to be stayed or invalid, such
action shall not affect any other provisions of this section.
* * * * *
[FR Doc. 2024-04736 Filed 3-14-24; 8:45 am]
BILLING CODE 6450-01-P