Federal Register, Volume 77 Issue 104 (Wednesday, May 30, 2012)

[Federal Register Volume 77, Number 104 (Wednesday, May 30, 2012)]
[Rules and Regulations]
[Pages 31917-31963]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12340]

[[Page 31917]]

Vol. 77

Wednesday,

No. 104

May 30, 2012

Part II

Department of Energy

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10 CFR Parts 429 and 430

Energy Conservation Program: Energy Conservation Standards for
Residential Dishwashers; Final Rule and Proposed Rule

Federal Register / Vol. 77, No. 104 / Wednesday, May 30, 2012 / Rules
and Regulations

[[Page 31918]]

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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[Docket Number EERE-2011-BT-STD-0060]
RIN 1904-AC64

Energy Conservation Program: Energy Conservation Standards for
Residential Dishwashers

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 of 1975 (EPCA), as
amended, prescribes energy conservation standards for various consumer
products and certain commercial and industrial equipment, including
residential dishwashers. EPCA also requires the U.S. Department of
Energy (DOE) to determine whether amended standards would be
technologically feasible and economically justified, and would save a
significant amount of energy. In this direct final rule, DOE is
adopting amended energy conservation standards for residential
dishwashers. 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.
A notice of proposed rulemaking that proposes identical energy
efficiency standards is published elsewhere in today's Federal
Register. If DOE receives adverse comment and determines that such
comment may provide a reasonable basis for withdrawing the direct final
rule, this final rule will be withdrawn and DOE will proceed with the
proposed rule.

DATES: The effective date of this rule is September 27, 2012 unless
adverse comment is received by September 17, 2012. If adverse comments
are received that DOE determines may provide a reasonable basis for
withdrawal of the final rule, a timely withdrawal of this rule will be
published in the Federal Register. If no such adverse comments are
received, compliance with the amended standards established for
residential dishwashers in today's final rule will be required on May
30, 2013.

ADDRESSES: The docket for this rulemaking is available for review at
www.regulations.gov, including Federal Register notices, comments, and
other supporting documents/materials. All documents in the docket are
listed in the regulations.gov index. Not all documents listed in the
index may be publicly available, however, such as information that is
exempt from public disclosure.
A link to the docket Web page can be found at: http://www.regulations.gov/#!docketDetail;D=EERE-2011-BT-STD-0060. The
regulations.gov Web page contains instructions on how to access all
documents, including public comments, in the docket.
For further information on how to review the docket, contact Ms.
Brenda Edwards at (202) 586-2945 or by email:
Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT: Stephen L. Witkowski, U.S. Department
of Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Program, EE-2J, 1000 Independence Avenue SW., Washington,
DC 20585-0121. Telephone: (202) 586-7463. Email:
Stephen.Witkowski@ee.doe.gov.
Elizabeth Kohl, U.S. Department of Energy, Office of the General
Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 586-7796. Email: Elizabeth.Kohl@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Direct Final Rule and Its Benefits
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits
D. Conclusion
II. Introduction
A. Authority
B. Background
1. EISA 2007 Standards
2. History of Standards Rulemaking for Residential Dishwashers
3. Issues on Which DOE Seeks Comment
4. Test Procedure History
III. General Discussion
A. Product Classes and Scope of Coverage
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
C. Energy Savings
1. Determination of Savings
2. Significance of Savings
D. Economic Justification
1. Specific Criteria
2. Rebuttable Presumption
IV. Methodology and Discussion
A. Market and Technology Assessment
1. General
2. Products Included in This Rulemaking
3. Product Classes
4. Non-Regulatory Programs
5. Technology Options
B. Screening Analysis
C. Engineering Analysis
1. Baseline Efficiency Levels
2. Higher Efficiency Levels
3. Proprietary Designs
4. Reverse Engineering
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 Consumption
4. Energy Prices
5. Energy Price Projections
6. Water and Wastewater Prices
7. Maintenance and Repair Costs
8. Product Lifetime
9. Discount Rates
10. Compliance Date of Amended Standards
11. Base-Case Efficiency Distribution
12. Inputs to Payback Period Analysis
13. Rebuttable-Presumption Payback Period
G. National Impact Analysis--National Energy Savings and Net
Present Value Analysis
1. Shipments
2. Forecasted Efficiency in the Base Case and Standards Cases
3. Total Installed Cost per Unit
4. National Energy and Water Savings
5. Net Present Value of Consumer Benefit
H. Consumer Subgroup Analysis
I. Manufacturer Impact Analysis
1. Overview
2. GRIM Analysis
3. Manufacturer Interviews
J. Employment Impact Analysis
K. Utility Impact Analysis
L. Emissions Analysis
M. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
2. Valuation of Other Emissions Reductions
V. Analytical Results
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
2. Economic Impacts on Manufacturers
3. National Impact Analysis
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Other Factors
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Residential
Dishwashers
2. Summary of Benefits and Costs (Annualized) of the Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866 and Executive Order 13563
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001

[[Page 31919]]

K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
M. Congressional Notification
VII. Approval of the Office of the Secretary

The Secretary of Energy has approved publication of today's direct
final rule.

I. Summary of the Direct Final Rule and Its Benefits

Title III, Part B \1\ of the Energy Policy and Conservation Act of
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as
codified), established the Energy Conservation Program for Consumer
Products Other Than Automobiles. Pursuant to EPCA, any new or amended
energy conservation standard that DOE prescribes for certain products,
such as residential dishwashers, shall be designed to achieve the
maximum improvement in energy efficiency that is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A))
Furthermore, the new or amended standard must result in significant
conservation of energy. (42 U.S.C. 6295(o)(3)(B)) In accordance with
these and other statutory provisions discussed in this notice, DOE is
adopting amended energy conservation standards for residential
dishwashers. The amended standards, which are established in terms of
maximum annual energy use and maximum per-cycle water consumption, are
shown in Table I.1. These amended standards apply to all products
listed in Table I.1 and manufactured in, or imported into, the United
States on or after May 30, 2013.
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\1\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.

Table I.1--Amended Energy Conservation Standards for Residential
Dishwashers
------------------------------------------------------------------------
Compliance date: May 30, 2013
----------------------------------------
Product class Maximum annual Maximum per-cycle
energy use * water consumption
------------------------------------------------------------------------
1. Standard (>=8 place settings 307 kWh/year....... 5.0 gallons/cycle.
plus 6 serving pieces).
2. Compact (<8 place settings 222 kWh/year....... 3.5 gallons/cycle.
plus 6 serving pieces).
------------------------------------------------------------------------
* Annual energy use, expressed in kilowatt-hours (kWh) per year, is
calculated as: The sum of the annual standby electrical energy in kWh
and the product of (1) the representative average dishwasher use
cycles per year and (2) the sum of machine electrical energy
consumption per cycle in kWh, the total water energy consumption per
cycle in kWh, and, for dishwashers having a truncated normal cycle,
the drying energy consumption divided by 2 in kWh. A truncated normal
cycle is defined as the normal cycle interrupted to eliminate the
power-dry feature after the termination of the last rinse option.

These standard levels were submitted jointly to DOE by groups
representing manufacturers, energy and environmental advocates, and
consumer groups. This collective set of comments, titled ``Agreement on
Minimum Federal Efficiency Standards, Smart Appliances, Federal
Incentives and Related Matters for Specified Appliances'' (the ``Joint
Petition'' \2\), recommends specific energy conservation standards for
residential dishwashers that, in the commenters' view, would satisfy
the EPCA requirements in 42 U.S.C. 6295(o).
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\2\ DOE Docket No. EERE-2011-BT-STD-0060, Comment 1.
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A. Benefits and Costs to Consumers

Table I.2 presents DOE's evaluation of the economic impacts of
today's standards on consumers of residential dishwashers, as measured
by the average life-cycle cost (LCC) savings and the median payback
period.

Table I.2--Impacts of Today's Standards on Consumers of Residential
Dishwashers
------------------------------------------------------------------------
Average LCC Median payback
Product class savings period
(2010$) (years)
------------------------------------------------------------------------
Standard................................ 3 11.8
Compact................................. 12 0.3
------------------------------------------------------------------------

B. Impact on Manufacturers

The industry net present value (INPV) is the sum of the discounted
cash flows to the industry from the base year through the end of the
analysis period (2012 through 2047). Using a real discount rate of 8.5
percent, DOE estimates that the INPV for manufacturers of dishwashers
is $637.5 million in 2010$. Under today's standards, DOE expects that
manufacturers may lose up to 13.3 percent of their INPV, which is
approximately $84.6 million. Additionally, based on DOE's interviews
with the manufacturers of dishwashers, DOE does not expect any plant
closings or significant loss of employment as a result of today's
standards.

C. National Benefits

DOE's analyses indicate that today's standards would save a
significant amount of energy and water in 2013-2047--an estimated 0.07
quads of cumulative energy, and 0.14 trillion gallons of water.
The cumulative national net present value (NPV) of total consumer
costs and savings of today's standards in 2010$ ranges from $0.08
billion (at a 7-percent discount rate) to $0.46 billion (at a 3-percent
discount rate). This NPV expresses the estimated total value of future
operating-cost savings minus the estimated increased product costs for
products purchased in 2013-2047, discounted to 2012.

[[Page 31920]]

In addition, today's standards would have significant environmental
benefits. The energy savings would result in cumulative greenhouse gas
emission reductions of approximately 4.06 million metric tons (Mt) of
carbon dioxide (CO2) from 2013 through 2047. During this
period, the standards would also result in emissions reductions \3\ of
approximately 3.54 thousand tons of nitrogen oxides (NOX)
and zero tons of mercury (Hg).\4\
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\3\ DOE calculates emissions reductions relative to the most
recent version of the Annual Energy Outlook (AEO) Reference case
forecast. As noted in TSD chapter 15, this forecast accounts for
regulatory emissions reductions from in-place regulations at the
time of preparation of the AEO, including the Clean Air Interstate
Rule (CAIR, 70 FR 25162 (May 12, 2005)), but not the Clean Air
Mercury Rule (CAMR, 70 FR 28606 (May 18, 2005)). Subsequent
regulations, including the recently finalized CAIR replacement rule,
the Cross-State Air Pollution rule issued on July 6, 2011, will
appear in the forecast for future rulemakings.
\4\ Results for NOX and Hg are presented in short
tons. One short ton equals 2000 lbs.
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The value of the CO2 reductions is calculated using a
range of values per metric ton of CO2 (otherwise known as
the Social Cost of Carbon, or SCC) developed by a recent interagency
process. The derivation of the SCC values is discussed in section IV.M.
DOE estimates that the present monetary value of the CO2
emissions reductions is between $16 and $242 million, expressed in
2010$ and discounted to 2012. DOE also estimates that the present
monetary value of the NOX emissions reductions, expressed in
2010$ and discounted to 2012, is $2.8 million at a 7-percent discount
rate, and $5.2 million at a 3-percent discount rate.\5\
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\5\ DOE is aware of multiple agency efforts to determine the
appropriate range of values to use in evaluating the potential
economic benefits of reduced Hg emissions. DOE has decided to await
further guidance regarding consistent valuation and reporting of Hg
emissions before it monetizes Hg emissions reductions in its
rulemakings.
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Table I.3 summarizes the national economic costs and benefits
expected to result from today's standards for residential dishwashers.

Table I.3--Summary of National Economic Benefits and Costs of
Residential Dishwasher Energy Conservation Standards
------------------------------------------------------------------------
Present value
Category Million 2010$ Discount rate %
------------------------------------------------------------------------
Benefits
------------------------------------------------------------------------
Operating Cost Savings.............. 600 7
-----------------------------------
1341 3
------------------------------------------------------------------------
CO2 Reduction Monetized Value (at 16.09 5
$4.9/t) *..........................
------------------------------------------------------------------------
CO2 Reduction Monetized Value (at 79.49 3
$22.3/t) *.........................
------------------------------------------------------------------------
CO2 Reduction Monetized Value (at 133.5 2.5
$36.5/t) *.........................
------------------------------------------------------------------------
CO2 Reduction Monetized Value (at 242.5 3
$67.6/t) *.........................
------------------------------------------------------------------------
NOX Reduction Monetized Value (at 2.76 7
$2,537/ton) **.....................
-----------------------------------
5.24 3
-----------------------------------
Total Benefits [dagger]......... 683 7
-----------------------------------
1426 3
------------------------------------------------------------------------
Costs
------------------------------------------------------------------------
Incremental Installed Costs......... 522 7
-----------------------------------
881 3
------------------------------------------------------------------------
Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX[dagger]....... 161 7
-----------------------------------
545 3
------------------------------------------------------------------------
* The CO2 values represent global monetized values of the SCC in 2010
under several scenarios. The values of $4.9, $22.3, and $36.5 per
metric ton (t) are the averages of SCC distributions calculated using
5%, 3%, and 2.5% discount rates, respectively. The value of $67.6/t
represents the 95th percentile of the SCC distribution calculated
using a 3% discount rate.
** The value represents the average of the low and high NOX values used
in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using
the SCC value calculated at a 3% discount rate.

The benefits and costs of today's standards, for products sold in
2013-2047, can also be expressed in terms of annualized values. The
annualized monetary values are the sum of (1) the annualized national
economic value, expressed in 2010$, of the benefits from operating the
product (consisting primarily of operating cost savings from using less
energy, minus increases in equipment purchase and installation costs,
which is another way of representing consumer NPV, plus (2) the
annualized monetary value of the benefits of emission reductions,
including CO2 emission reductions.\6\
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\6\ DOE used a two-step calculation process to convert the time-
series of costs and benefits into annualized values. First, DOE
calculated a present value in 2012, the year used for discounting
the NPV of total consumer costs and savings, for the time-series of
costs and benefits using discount rates of 3 and 7 percent for all
costs and benefits except for the value of CO2
reductions. For the latter, DOE used a range of discount rates, as
shown in Table I.3.From the present value, DOE then calculated the
fixed annual payment over a 30-year period, starting in 2013, that
yields the same present value. This payment includes benefits to
consumers which accrue after 2047 from the dishwashers purchased
from 2013 to 2047. Costs incurred by manufacturers, some of which
may be incurred prior to 2013 in preparation for the rule, are
indirectly included as part of incremental equipment costs. The
extent of these costs and benefits depends on the projected price
trends of dishwashers because consumer demand of dishwashers is a
function of dishwasher prices. The fixed annual payment is the
annualized value. Although DOE calculated annualized values, this
does not imply that the time-series of cost and benefits from which
the annualized values were determined is a steady stream of
payments.

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[[Page 31921]]

Although adding the value of consumer savings to the values of
emission reductions provides a valuable perspective, two issues should
be considered. First, the national operating cost savings are domestic
U.S. consumer monetary savings that occur as a result of market
transactions, while the value of CO2 reductions is based on
a global value. Second, the assessments of operating cost savings and
CO2 savings are performed with different methods that use
quite different time frames for analysis. The national operating cost
savings is measured for the lifetime of residential dishwashers shipped
in 2013-2047. The SCC values, on the other hand, reflect the present
value of future climate-related impacts resulting from the emission of
one metric ton of carbon dioxide in each year. These impacts continue
well beyond 2100.
Estimates of annualized benefits and costs of today's standards are
shown in Table I.4. (All monetary values below are expressed in 2010$.)
The results under the primary estimate are as follows. Using a 7-
percent discount rate for benefits and costs other than CO2
reduction, for which DOE used a 3-percent discount rate along with the
SCC series corresponding to a value of $22.3/ton in 2010, the cost of
the standards for dishwashers in today's rule is $46 million per year
in increased equipment costs, while the benefits are $53 million per
year in reduced equipment operating costs, $3.9 million in
CO2 reductions, and $0.24 million in reduced NOX
emissions. In this case, the net benefit amounts to $11 million per
year. Using a 3-percent discount rate for all benefits and costs and
the SCC series corresponding to a value of $22.3/ton in 2010, the cost
of the standards for dishwashers in today's rule is $44 million per
year in increased equipment costs, while the benefits are $66 million
per year in reduced operating costs, $3.9 million in CO2
reductions, and $0.26 million in reduced NOX emissions. In
this case, the net benefit amounts to $27 million per year.

Table I.4--Annualized Benefits and Costs of Amended Standards for Residential Dishwashers Sold in 2013-2047 *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Monetized (million 2010$/year)
Discount rate --------------------------------------------------------------------------------------------------------------------
Primary estimate * Low net benefits estimate * High net benefits estimate *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Cost Savings.............. 7%................................... 53................................... 48................................... 59.
3%................................... 66................................... 59................................... 75.
CO2 Reduction at $4.9/t **.......... 5%................................... 1.1.................................. 1.0.................................. 1.3.
CO2 Reduction at $22.3/t **......... 3%................................... 3.9.................................. 3.5.................................. 4.7.
CO2 Reduction at $36.5/t **......... 2.5%................................. 6.1.................................. 5.4.................................. 7.2.
CO2 Reduction at $67.6/t **......... 3%................................... 12.0................................. 10.8................................. 14.2.
NOX Reduction at $2,537/ton **...... 7%................................... 0.24................................. 0.23................................. 0.27.
3%................................... 0.26................................. 0.24................................. 0.30.
Total [dagger]...................... 7% plus CO2 range.................... 54 to 65............................. 49 to 59............................. 60 to 73.
7%................................... 57................................... 52................................... 64.
3% plus CO2 range.................... 68 to 78............................. 60 to 70............................. 76 to 89.
3%................................... 70................................... 63................................... 80.
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Costs
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Incremental Product Costs........... 7%................................... 46................................... 44................................... 43.
3%................................... 44................................... 41................................... 40.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Net Benefits
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger]...................... 7% plus CO2 range.................... 8 to 19.............................. 6 to 16.............................. 17 to 30.
7%................................... 11................................... 8.................................... 20.
3% plus CO2 range.................... 24 to 35............................. 19 to 29............................. 37 to 49.
3%................................... 27................................... 22................................... 40.
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* The results include benefits to consumers which accrue after 2047 from the dishwashers purchased from 2013 through 2047. Costs incurred by manufacturers, some of which may be incurred prior
to 2013 in preparation for the rule, are indirectly included as part of incremental equipment costs. The extent of the costs and benefits will depend on the projected price trends of
dishwashers, because the consumer demand for dishwashers is a function of dishwasher prices. The Primary, Low Benefits, and High Benefits Estimates utilize forecasts of energy prices and
housing starts from the AEO2011 Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a medium decline rate for projected product
price trends in the Primary Estimate, a low decline rate for projected product price trends in the Low Benefits Estimate, and a high decline rate for projected product price trends in the
High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.G.3.
** The CO2 values represent global values (in 2010$) of the social cost of CO2 emissions in 2010 under several scenarios. The values of $4.9, $22.3, and $36.5 per ton are the averages of SCC
distributions calculated using 5-percent, 3-percent, and 2.5-percent discount rates, respectively. The value of $67.6 per ton represents the 95th percentile of the SCC distribution
calculated using a 3-percent discount rate. The value for NOX (in 2010$) is the average of the low and high values used in DOE's analysis.

[[Page 31922]]

[dagger] Total Benefits for both the 3-percent and 7-percent cases are derived using the SCC value calculated at a 3-percent discount rate, which is $22.3/t in 2010 (in 2010$). In the rows
labeled as ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range
of CO2 values.

D. Conclusion

Based on the analyses culminating in this final rule, DOE found the
benefits to the nation of the standards (energy savings, water savings,
favorable consumer LCC savings and payback period, positive NPV of
consumer benefit, and emission reductions) outweigh the burdens (profit
margin impacts that could result in a reduction in INPV and increased
operational risk for manufacturers). DOE has concluded that the
standards in today's final rule represent the maximum improvement in
energy efficiency that is technologically feasible and economically
justified, and would result in significant conservation of energy. DOE
further notes that residential dishwashers achieving these standard
levels are already commercially available.

II. Introduction

The following section briefly discusses the statutory authority
underlying today's final rule, as well as some of the relevant
historical background related to the establishment of standards for
residential dishwashers.

A. Authority

Title III, Part B of the Energy Policy and Conservation Act of 1975
(EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified)
established the Energy Conservation Program for Consumer Products Other
Than Automobiles,\7\ a program covering most major household appliances
(collectively referred to as ``covered products''), which includes the
residential dishwashers that are the subject of this rulemaking. (42
U.S.C. 6292(a)(6)) EPCA prescribed energy conservation standards for
these products (42 U.S.C. 6295(g)(1)), and directed DOE to conduct two
cycles of rulemakings to determine whether to amend these standards.
(42 U.S.C. 6295(g)(4)) DOE also notes that under 42 U.S.C. 6295(m), DOE
must periodically review its energy conservation standards for covered
products.
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\7\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
---------------------------------------------------------------------------

Pursuant to EPCA, DOE's energy conservation program for covered
products consists essentially of four parts: (1) Testing; (2) labeling;
(3) the establishment of Federal energy conservation standards; and (4)
certification and enforcement procedures. The Federal Trade Commission
(FTC) is primarily responsible for labeling, and DOE implements the
remainder of the program. Subject to certain criteria and conditions,
DOE is required to develop test procedures to measure the energy
efficiency, energy use, or estimated annual operating cost of each
covered product. (42 U.S.C. 6293) 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. Id. The DOE test procedure for
residential dishwashers currently appear at title 10 of the Code of
Federal Regulations (CFR) part 430, subpart B, appendix C.
DOE must follow specific statutory criteria for prescribing amended
standards for covered products. As indicated above, any amended
standard for a covered product must be designed to achieve the maximum
improvement in energy efficiency that is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, DOE may
not adopt any standard that would not result in the significant
conservation of energy. (42 U.S.C. 6295(o)(3)) In deciding whether an
amended standard is economically justified, DOE must determine whether
the benefits of the standard exceed its burdens. (42 U.S.C.
6295(o)(2)(B)(i)) DOE must make this determination after receiving
comments on the proposed standard and considering, to the greatest
extent practicable, the following seven factors:
1. The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
2. The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered products that are likely to result from the imposition of the
standard;
3. The total projected amount of energy, or as applicable, water,
savings likely to result directly from the imposition of the standard;
4. Any lessening of the utility or the performance of the covered
products likely to result from the imposition of the standard;
5. The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
imposition of the standard;
6. The need for national energy and water conservation; and
7. Other factors the Secretary of Energy (Secretary) considers
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
EPCA allows DOE to issue a final rule (hereinafter referred to as a
``direct final rule'') establishing an energy conservation standard on
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 conservation standard that
are in accordance with the provisions of 42 U.S.C. 6295(o). A notice of
proposed rulemaking (NOPR) that proposes an identical energy efficiency
standard must be published simultaneously with the final rule, and DOE
must provide a public comment period of at least 110 days. 42 U.S.C.
6295(p)(4). Not later than 120 days after issuance of the direct final
rule, if one or more adverse comments or an alternative joint
recommendation are received relating to the direct final rule, the
Secretary must determine whether the comments or alternative
recommendation may provide a reasonable basis for withdrawal under 42
U.S.C. 6295(o) or other applicable law. If the Secretary makes such a
determination, DOE must withdraw the direct final rule and proceed with
the simultaneously published notice of proposed rulemaking. DOE must
publish in the Federal Register the reason why the direct final rule
was withdrawn. Id.
Furthermore, EPCA, 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

[[Page 31923]]

the standard is likely to result in the unavailability in the United
States of any covered product type (or class) of performance
characteristics (including reliability), features, sizes, capacities,
and volumes that are substantially the same as those generally
available in the United States. (42 U.S.C. 6295(o)(4))
EPCA also 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. See 42 U.S.C. 6295(o)(2)(B)(iii).
Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when
promulgating a standard for a type or class of covered product that has
two or more subcategories. DOE must specify a different standard level
than that which applies generally to such type or class of products for
any group of covered products that have the same function or intended
use, if 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 than applies or will apply
to the other products within that type or class. Id. In determining
whether a performance-related feature justifies a different standard
for a group of products, DOE must consider such factors as the utility
to the consumer of such a feature and other factors DOE deems
appropriate. Id. Any rule prescribing such a standard must include an
explanation of the basis on which such higher or lower level was
established. (42 U.S.C. 6295(q)(2))
Federal energy conservation requirements generally supersede State
laws or regulations concerning energy conservation testing, labeling,
and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers
of Federal preemption for particular State laws or regulations, in
accordance with the procedures and other provisions set forth under 42
U.S.C. 6297(d)).
Any final rule for new or amended energy conservation standards
promulgated after July 1, 2010, must address standby mode and off mode
energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a
standard for 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 the
standard, or, if that is not feasible, adopt a separate standard for
such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) The
standards established in today's direct final rule address standby and
off mode energy use.
DOE notes that it is also required to amend its test procedures to
integrate measures of standby mode and off mode energy consumption into
the overall energy efficiency, energy consumption, or other energy
descriptor for each covered product unless the current test procedure
already fully accounts for and incorporates standby and off mode energy
consumption or such integration is technically infeasible. (42 U.S.C.
6295(gg)(2)) DOE is currently considering amendments to the test
procedure at appendix C to incorporate measures of off mode energy
consumption in addition to the existing measures of standby mode energy
use. 75 FR 75290 (Dec. 2, 2010); 76 FR 58346 Sept. 20, 2011)
DOE has also reviewed this regulation pursuant to Executive Order
13563, issued on January 18, 2011 (76 FR 3281, Jan. 21, 2011).
Executive Order 13563 is supplemental to and explicitly reaffirms the
principles, structures, and definitions governing regulatory review
established in Executive Order 12866. To the extent permitted by law,
agencies are required by Executive Order 13563 to: (1) Propose or adopt
a regulation only upon a reasoned determination that its benefits
justify its costs (recognizing that some benefits and costs are
difficult to quantify); (2) tailor regulations to impose the least
burden on society, consistent with obtaining regulatory objectives,
taking into account, among other things, and to the extent practicable,
the costs of cumulative regulations; (3) select, in choosing among
alternative regulatory approaches, those approaches that maximize net
benefits (including potential economic, environmental, public health
and safety, and other advantages; distributive impacts; and equity);
(4) to the extent feasible, specify performance objectives, rather than
specifying the behavior or manner of compliance that regulated entities
must adopt; and (5) identify and assess available alternatives to
direct regulation, including providing economic incentives to encourage
the desired behavior, such as user fees or marketable permits, or
providing information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies
to use the best available techniques to quantify anticipated present
and future benefits and costs as accurately as possible. In its
guidance, the Office of Information and Regulatory Affairs has
emphasized that such techniques may include identifying changing future
compliance costs that might result from technological innovation or
anticipated behavioral changes. For the reasons stated in the preamble,
DOE believes that today's direct final rule is consistent with these
principles, including that, to the extent permitted by law, agencies
adopt a regulation only upon a reasoned determination that its benefits
justify its costs and select, in choosing among alternative regulatory
approaches, those approaches that maximize net benefits.
Consistent with EO 13563, and the range of impacts analyzed in this
rulemaking, the energy conservation standards adopted herein by DOE
achieve maximum net benefits.

B. Background

1. EISA 2007 Standards
EPCA, as amended by EISA 2007, prescribed energy conservation
standards for residential dishwashers manufactured on or after January
1, 2010. 42 U.S.C. 6295(g)(10) These standards are set forth in Table
II.1.

Table II.1--Energy Conservation Standards for Residential Dishwashers
Established by EISA 2007
------------------------------------------------------------------------
Per-cycle water
Product class Annual energy consumption
use (kWh/year) (gallons/cycle)
------------------------------------------------------------------------
Standard............................ 355 6.5
Compact............................. 260 4.5
------------------------------------------------------------------------

[[Page 31924]]

The EPCA amendments in EISA 2007 also require DOE to publish a
final rule no later than January 1, 2015 determining whether to amend
the standards in effect for dishwashers manufactured on or after
January 1, 2018. (42 U.S.C. 6295(g)(10)(B)(i)) Today's final rule
fulfills this statutory requirement.
2. History of Standards Rulemaking for Residential Dishwashers
The National Appliance Energy Conservation Act of 1987 (NAECA),
Public Law 100-12 (March 17, 1989), amended EPCA and required that
dishwashers be equipped with an option to dry without heat. NAECA
further required that DOE conduct two cycles of rulemakings to
determine if amended standards are justified. (42 U.S.C. 6295(g)(1) and
(4))
On May 14, 1991, DOE issued a final rule establishing performance
standards for dishwashers to complete the first required rulemaking
cycle (56 FR 22250). Compliance with the new standards, codified at 10
CFR 430.32(f), was required on May 14, 1994.
DOE then conducted a second standards rulemaking for dishwashers.
DOE issued an advance notice of proposed rulemaking (ANOPR) on November
14, 1994 to consider amending the energy conservation standards for
clothes washers, dishwashers, and clothes dryers. 59 FR 56423.
Subsequently, DOE published a Notice of Availability of the Rulemaking
Framework for Commercial Clothes Washers and Residential Dishwashers,
Dehumidifiers, and Cooking Products. 71 FR 15059 (Mar. 27, 2006). On
November 15, 2007, DOE published a second ANOPR (hereafter, the
November 2007 ANOPR) addressing energy conservation standards for these
products. 72 FR 64432. On December 19, 2007, Congress enacted EISA
2007, which, among other things, established maximum energy and water
use levels for residential dishwashers manufactured on or after January
1, 2010. (42 U.S.C. 6295(g)(10)) DOE codified the statutory standards
for these products in a final rule published March 23, 2009. 74 FR
12058.
EPCA, as amended by EISA 2007, further requires that DOE publish a
final rule no later than January 1, 2015, to determine whether to amend
the standards in effect for dishwashers manufactured on or after
January 1, 2018. (42 U.S.C. 6295(g)(10)(B)(i)) This rulemaking fulfills
this statutory requirement.
On July 30, 2010, DOE received the Joint Petition, a comment
submitted by groups representing manufacturers (the Association of Home
Appliance Manufacturers (AHAM), Whirlpool Corporation (Whirlpool),
General Electric Company (GE), Electrolux, LG Electronics, Inc. (LG),
BSH Home Appliances (BSH), Alliance Laundry Systems (ALS), Viking
Range, Sub-Zero Wolf, Friedrich A/C, U-Line, Samsung, Sharp
Electronics, Miele, Heat Controller, AGA Marvel, Brown Stove, Haier,
Fagor America, Airwell Group, Arcelik, Fisher & Paykel, Scotsman Ice,
Indesit, Kuppersbusch, Kelon, and DeLonghi); energy and environmental
advocates (American Council for an Energy Efficient Economy (ACEEE),
Appliance Standards Awareness Project (ASAP), Natural Resources Defense
Council (NRDC), Alliance to Save Energy (ASE), Alliance for Water
Efficiency (AWE), Northwest Power and Conservation Council (NPCC), and
Northeast Energy Efficiency Partnerships (NEEP)); and consumer groups
(Consumer Federation of America (CFA) and the National Consumer Law
Center (NCLC)) (collectively, the ``Joint Petitioners''). The Joint
Petitioners recommended specific energy conservation standards for
residential dishwashers that, in their view, would satisfy the EPCA
requirements in 42 U.S.C. 6295(o). Earthjustice submitted a comment
affirming its support for the Joint Petition. (Earthjustice, No. 2 at
p. 1) \8\
---------------------------------------------------------------------------

\8\ A notation in the form ``Earthjustice, No. 2 at p. 1''
identifies a written comment that DOE has received and has included
in the docket of the standards rulemaking for residential
dishwashers (Docket No. EERE-2011-BT-STD-0060). This particular
notation refers to a comment (1) submitted by Earthjustice, (2) in
document number 2 in the docket of that rulemaking, and (3)
appearing on page 1 of document number 2.
---------------------------------------------------------------------------

After careful consideration of the Joint Petition containing a
consensus recommendation for amended energy conservation standards for
residential dishwashers, the Secretary has determined that this
``Consensus Agreement'' has been submitted by interested persons who
are fairly representative of relevant points of view on this matter.
Congress provided some guidance within the statute itself by specifying
that representatives of manufacturers of covered products, States, and
efficiency advocates are relevant parties to any consensus
recommendation. (42 U.S.C. 6295(p)(4)(A)) As delineated above, the
Consensus Agreement was signed and submitted by a broad cross-section
of the manufacturers who produce the subject products, their trade
associations, and environmental, energy efficiency and consumer
advocacy organizations. Although States were not signatories to the
Consensus Agreement, they did not express any opposition to it.
Moreover, DOE does not read the statute as requiring absolute agreement
among all interested parties before the Department may proceed with
issuance of a direct final rule. By explicit language of the statute,
the Secretary has discretion to determine when a joint recommendation
for an energy or water conservation standard has met the requirement
for representativeness (i.e., ``as determined by the Secretary'').
Accordingly, DOE will consider each consensus recommendation on a case-
by-case basis to determine whether the submission has been made by
interested persons fairly representative of relevant points of view.
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 is in accordance with 42 U.S.C. 6295(o) or 42
U.S.C. 6313(a)(6)(B), as applicable. This determination is exactly the
type of analysis that DOE conducts whenever it considers potential
energy conservation standards pursuant to EPCA. DOE applies the same
principles to any consensus recommendations it may receive to satisfy
its statutory obligation to ensure that any energy conservation
standard that it adopts achieves the maximum improvement in energy
efficiency that is technologically feasible and economically justified
and will result in significant conservation of energy. Upon review, the
Secretary determined that the Consensus Agreement submitted in the
instant rulemaking comports with the standard-setting criteria set
forth under 42 U.S.C. 6295(o). Accordingly, the consensus agreement
levels were included as trial standard level (TSL) 2 in today's rule
for residential dishwashers, the details of which are discussed at
relevant places throughout this document. The definition of the TSLs
considered in this direct final rule is discussed in section V.A.
In sum, as the relevant criteria under 42 U.S.C. 6295(p)(4) have
been satisfied, the Secretary has determined that it is appropriate to
adopt amended energy conservation standards for residential dishwashers
through this direct final rule.
As required by the same statutory provision, DOE is also
simultaneously publishing a NOPR which proposes the identical standard
levels contained in this direct final rule and is providing for a 110-
day public comment period. DOE will consider whether any comment
received during this comment period is sufficiently ``adverse'' as to
provide a reasonable basis for withdrawal of the

[[Page 31925]]

direct final rule and continuation of this rulemaking under the NOPR.
Typical of other rulemakings, it is the substance, rather than the
quantity, of comments that will ultimately determine whether a direct
final rule will be withdrawn. To this end, the substance of any adverse
comment(s) received will be weighed against the anticipated benefits of
the Consensus Agreement and the likelihood that further consideration
of the comment(s) would change the results of the rulemaking. DOE notes
that to the extent an adverse comment had been previously raised and
addressed in the rulemaking proceeding, such a submission will not
typically provide a basis for withdrawal of a direct final rule.
3. Issues on Which DOE Seeks Comment
As stated previously, in promulgating today's direct final rule
pursuant to 42 U.S.C. 6295(p)(4), DOE carefully considered the Joint
Petition submitted to DOE, which contained a consensus recommendation
for amended energy conservation standards for residential dishwashers.
For the reasons stated in this direct final rule, the Secretary
determined that the ``Consensus Agreement'' was submitted by interested
persons who are fairly representative of relevant points of view on
this matter. The Secretary also determined, for the reasons set forth
in this direct final rule, that the standards contained in the
Consensus Agreement comport with the standard-setting criteria set
forth under 42 U.S.C. 6295(o). Therefore, the Secretary promulgates
this direct final rule establishing the amended energy conservation
standards for residential dishwashers.
As required by EPCA, DOE is also simultaneously publishing a NOPR
and providing for a 110-day public comment period. 42 U.S.C.
4295(p)(4). Should DOE determine to proceed with the NOPR, or to gather
additional data for future energy conservation standards activities for
residential dishwashers, DOE will consider any comments and data
received on the direct final standards. Although comments are welcome
on all aspects of this rulemaking, DOE is particularly interested in
comments on the following:
(1) Impacts of the standards that may lessen or improve the utility
or performance of the covered products. These impacts may include
increased cycle times to wash dishware, ability to achieve good wash
performance (e.g., cleaning, rinsing) and drying performance, increase
in noise, and other potential impacts. As discussed in section IV.I.3,
manufacturers noted in interviews that any potential utility impacts
may be more significant at efficiency levels above those adopted in
today's direct final rule. DOE also seeks information on utility
impacts at higher efficiency levels and will consider such information
in any future rulemaking for dishwashers.
(2) The 2013 compliance date for the proposed standards and whether
this compliance date adequately considers the typical dishwasher model
design cycle for manufacturers.
(3) Whether repair costs for residential dishwashers would increase
at the efficiency levels indicated in today's rule due to any changes
in the design and materials and components used in order to comply with
the new efficiency standards.
(4) Where there would be any anticipated changes in the consumption
of complementary goods (e.g., dishwasher detergent, rinse aid) that may
result from the proposed standards.
(5) The 215 cycles per year estimate of consumer usage for
residential dishwashers, as well as the estimated 1-hour cycle time,
which includes all cycles available on the unit.
(6) The product lifetime for dishwashers assumed in the analysis
and the method used to derive the mean age of 15 years.
DOE has prepared a technical support document (TSD) in support of
this direct final rule. The TSD, which is available at the rulemaking
Web site,\9\ provides an overview of the activities DOE undertook in
developing standards for residential dishwashers. It presents and
describes in detail each analysis DOE performed, including descriptions
of inputs, sources, methodologies, and results. These analyses are as
follows:
---------------------------------------------------------------------------

\9\ The rulemaking Web site for residential dishwashers is
located at www1.eere.energy.gov/buildings/appliance_standards/residential/dishwashers.html.
---------------------------------------------------------------------------

(1) A market and technology assessment addresses the scope of this
rulemaking, identifies the dishwasher product classes, characterizes
the markets for the products, and reviews techniques and approaches for
improving their efficiency.
(2) A screening analysis reviews technology options to improve the
efficiency of residential dishwashers and weighs those options against
DOE's four prescribed screening criteria.
(3) An engineering analysis develops the relationship between
increased manufacturer price and increased efficiency.
(4) A markups analysis establishes markups for converting
manufacturer prices to customer product costs.
(5) An energy use analysis generates energy-use estimates for
residential dishwashers as a function of efficiency levels.
(6) A life-cycle cost analysis calculates the effects of standards
on individual customers and compares the life-cycle costs (LCC) and
payback period (PBP) of products with and without higher efficiency
standards.
(7) A shipments analysis forecasts shipments with and without
higher efficiency standards.
(8) A national impact analysis forecasts the national energy
savings (NES), and the national net present value of total consumer
costs and savings, expected to result from specific, potential energy
conservation standards for residential dishwashers.
(9) A consumer subgroup analysis discusses the effects of standards
on different subgroups of consumers.
(10) A manufacturer impact analysis discusses the effects of
standards on the finances and profitability of product manufacturers.
(11) An employment impact analysis discusses the indirect effects
of standards on national employment.
(12) A utility impact analysis discusses the effects of standards
on electric and gas utilities.
(13) An emissions analysis discusses the effects of standards on
three pollutants--sulfur dioxide (SO2), nitrogen oxides
(NOX), and mercury--as well as carbon dioxide emissions.
(14) A regulatory impact analysis discusses the impact of non-
regulatory alternatives to efficiency standards.
4. Test Procedure History
As discussed in section II. A, the DOE test procedure for
residential dishwashers is found at Title 10 of the CFR, part 430,
subpart B, appendix C. DOE originally established its test procedure
for dishwashers in 1977. 42 FR 39964 (Aug. 8, 1977). In 1983, DOE
amended the test procedure to revise the representative average-use
cycles to more accurately reflect consumer use and to address
dishwashers that use 120 degrees Fahrenheit ([deg]F) inlet water. 48 FR
9202 (March 3, 1983). DOE amended the test procedure again in 1984 to
redefine the term ``water heating dishwasher.'' 49 FR 46533 (Nov. 27,
1984). In 1987, DOE amended the test procedure to address models that
use 50 [deg]F inlet water. 52 FR 47549 (Dec. 15, 1987). In 2001, DOE
revised the test procedure's testing specifications to improve testing
repeatability, changed the definitions of ``compact dishwasher'' and
``standard dishwasher,'' and reduced the average number of use cycles
per year from 322

[[Page 31926]]

to 264. 66 FR 65091, 65095-97 (Dec. 18, 2001). In 2003, DOE again
revised the test procedure to more accurately measure dishwasher
efficiency, energy use, and water use. The 2003 dishwasher test
procedure amendments included the following revisions: (1) The addition
of a method to rate the efficiency of soil-sensing products; (2) the
addition of a method to measure standby power; and (3) a reduction in
the average-use cycles per year from 264 to 215. 68 FR 51887, 51899-903
(August 29, 2003). The current version of the test procedure includes
provisions for determining estimated annual energy use (EAEU),
estimated annual operating cost (EAOC), energy factor (EF) expressed in
cycles per kilowatt-hour (kWh), and water consumption expressed in
gallons per cycle. 10 CFR 430.23(c). As discussed in section II. A, DOE
is currently considering amendments the test procedure to incorporate
measures of off mode energy consumption in addition to the existing
measures of standby mode energy use.

III. General Discussion

A. Product Classes and Scope of Coverage

When evaluating and establishing energy conservation standards, DOE
divides covered products into product classes by the type of energy
used or by capacity or other performance-related features that
justifies a different standard. In making a determination whether a
performance-related feature justifies a different standard, DOE must
consider such factors as the utility to the consumer of the feature and
other factors DOE determines are appropriate. (42 U.S.C. 6295(q))
Existing energy conservation standards divide residential
dishwashers into two product classes based on the capacity, i.e., the
number of place settings and serving pieces that can be loaded in the
product.
Standard (capacity equal to or greater than eight place
settings plus six serving pieces)
Compact (capacity less than eight place settings plus six
serving pieces)
The Joint Petition proposes energy conservation standard levels for
standard and compact product classes based on the same capacity
definitions. (Joint Petition, No. 1 at p. 11) In this final rule, DOE
maintains the existing standard and compact product classes for
residential dishwashers. Based on a survey of products available on the
market, DOE determined that compact dishwasher provide unique utility
in their countertop or drawer configurations.

B. Technological Feasibility

1. General
In each standards rulemaking, DOE conducts a screening analysis
based on information gathered on all current technology options and
prototype designs that could improve the efficiency of the products or
equipment that are the subject of the rulemaking. As the first step in
such an analysis, DOE develops a list of technology options for
consideration in consultation with manufacturers, design engineers, and
other interested parties. DOE then determines which of those means for
improving efficiency are technologically feasible. DOE considers
technologies incorporated in commercially available products or in
working prototypes to be technologically feasible. 10 CFR part 430,
subpart C, appendix A, section 4(a)(4)(i).
After DOE 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, or service; (2) adverse impacts
on product utility or availability; and (3) adverse impacts on health
or safety. Section IV. B of this rule discusses the results of the
screening analysis for residential dishwashers, particularly the
designs DOE considered, those it screened out, and those that are the
basis for the TSLs in this rulemaking. For further details on the
screening analysis for this rulemaking, see chapter 4 of the direct
final rule TSD.
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class
of covered product, it must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for
residential dishwashers, using the design parameters for the most
efficient products available on the market or in working prototypes.
(See chapter 5 of the direct final rule TSD.) The max-tech levels that
DOE determined for this rulemaking are described in section IV.C.2 of
this final rule.

C. Energy Savings

1. Determination of Savings
DOE used its national impact analysis (NIA) spreadsheet model to
estimate energy savings from amended standards for the products that
are the subject of this rulemaking.\10\ For each TSL, DOE forecasted
energy savings beginning in the year that manufacturers would be
required to comply with amended standards, and ending in 2047. DOE
quantified the energy savings attributable to each TSL as the
difference in energy consumption between the standards case and the
base case. The base case represents the forecast of energy consumption
in the absence of amended mandatory efficiency standards, and considers
market demand for more efficient products.
---------------------------------------------------------------------------

\10\ The NIA spreadsheet model is described in section IV.G of
this notice.
---------------------------------------------------------------------------

The NIA spreadsheet model calculates the electricity savings in
site energy expressed in kilowatt-hours (kWh). Site energy is the
energy directly consumed by appliances at the locations where they are
used. DOE reports national energy savings on an annual basis in terms
of the aggregated source (primary) energy savings, which is the savings
in the energy that is used to generate and transmit the site energy.
(See chapter 10 of the direct final rule TSD). To convert site energy
to source energy, DOE derived annual conversion factors from the model
used to prepare the Energy Information Administration's (EIA) Annual
Energy Outlook 2011 (AEO2011).
2. Significance of Savings
As noted above, 42 U.S.C. 6295(o)(3)(B) prevents DOE from adopting
a standard for a covered product unless such standard would result in
``significant'' energy savings. Although the term ``significant'' is
not defined in the Act, the U.S. Court of Appeals, in Natural Resources
Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985),
indicated that Congress intended ``significant'' energy savings in this
context to be savings that were not ``genuinely trivial.'' The energy
savings for all of the TSLs considered in this rulemaking (presented in
section V.3.a) are nontrivial, and, therefore, DOE considers them
``significant'' within the meaning of section 325 of EPCA.

D. Economic Justification

1. Specific Criteria
As noted in section II.A, EPCA provides seven factors to be
evaluated in

[[Page 31927]]

determining whether a potential energy conservation standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)) The following
sections discuss how DOE has addressed each of those seven factors in
this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of an amended standard on manufacturers,
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 analysis period.
The industry-wide impacts analyzed include industry net present value
(INPV), which values the industry on the basis of expected future cash
flows; cash flows by year; changes in revenue and income; and 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 life-cycle cost (LCC) and payback period (PBP) associated
with new or amended standards. The LCC, which is specified separately
in EPCA as one of the seven factors to be considered in determining the
economic justification for a new or amended standard, 42 U.S.C.
6295(o)(2)(B)(i)(II), is discussed in the following section. For
consumers in the aggregate, DOE also calculates the national net
present value of the economic impacts throughout the forecast period
applicable to a particular rulemaking.
b. Life-Cycle Costs
The LCC is the sum of the purchase price of a product (including
its installation) and the operating expense (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC savings for the considered efficiency levels are
calculated relative to a base case that reflects likely market trends
in the absence of amended standards. The LCC analysis requires a
variety of inputs, such as product prices, product energy consumption,
energy prices, maintenance and repair costs, product lifetime, and
consumer discount rates. In its analysis, DOE assumed that consumers
will purchase the considered products in the first year of compliance
with amended standards.
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. Using this approach,
DOE identifies the percentage of consumers estimated to receive LCC
savings or experience an LCC increase, in addition to the average LCC
savings associated with a particular standard level. In addition to
identifying ranges of impacts, DOE evaluates the LCC impacts of
potential standards on identifiable subgroups of consumers that may be
affected disproportionately by a national standard.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for imposing 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)) DOE uses
the NIA spreadsheet results in its consideration of total projected
energy savings.
d. Lessening of Utility or Performance of Products
In establishing classes of products, and in evaluating design
options and the impact of potential standard levels, DOE developed
standards for residential dishwashers that would not lessen the utility
or performance of those products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) The
TSL adopted in today's direct final rule will not reduce the utility or
performance of the dishwashers under consideration in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider any lessening of competition that is
likely to result from standards. It also directs the Attorney General
of the United States (Attorney General) to determine the impact, if
any, of any lessening of competition likely to result from a proposed
standard and to transmit such determination to the Secretary within 60
days of the publication of a direct final rule and simultaneously
published proposed rule, together with an analysis of the nature and
extent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)) DOE
published the proposed rule containing energy conservation standards
identical to those set forth in today's direct final rule and
transmitted a copy of today's direct final rule and the accompanying
TSD to the Attorney General, requesting 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 proceed with the direct
final rule. DOE will also publish and respond to DOJ's comments in the
Federal Register in a separate notice.
f. Need for National Energy Conservation
The energy savings from new or amended 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.
Energy savings from today's standards also are likely to result in
environmental benefits in the form of reduced emissions of air
pollutants and greenhouse gases associated with energy production. DOE
reports the environmental effects from today's standards, and from each
TSL it considered, in the emissions analysis contained in chapter 15 in
the direct final rule TSD and in section V.B.6 of this notice. DOE also
reports estimates of the economic value of emissions reductions
resulting from the considered TSLs.
g. Other Factors
EPCA allows the Secretary of Energy, in determining whether a
standard is economically justified, to consider any other factors that
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII))
In developing this direct final rule, DOE has also considered the
submission of the Joint Petition, which DOE believes sets forth a
statement by interested persons that are fairly representative of
relevant points of view (including representatives of manufacturers of
covered products, and efficiency advocates) and contains
recommendations with respect to an energy conservation standard that
are in accordance with 42 U.S.C. 6295(o). (Although States were not
signatories to the Consensus Agreement, they did not express any
opposition to it.) DOE has encouraged the submission of consensus
agreements as a way to bring diverse

[[Page 31928]]

interested parties together, to develop an independent and probative
analysis useful in DOE standard setting, and to expedite the rulemaking
process. DOE also believes that standard levels recommended in the
Consensus Agreement may increase the likelihood for regulatory
compliance, while decreasing the risk of litigation.
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the effect potential 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.11 of this direct final rule and chapter 8
of the direct final rule TSD.

IV. Methodology and Discussion

DOE used two spreadsheet tools to estimate the impact of today's
direct final rule. The first spreadsheet calculates LCCs and PBPs of
potential new energy conservation standards. The second provides
shipments forecasts and then calculates impacts of potential energy
conservation standards on national energy savings and net present
value. The two spreadsheets are available online at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/dishwashers.html. The Department also assessed manufacturer impacts,
largely through use of the Government Regulatory Impact Model (GRIM).
Additionally, DOE estimated the impacts on utilities and the
environment of energy conservation standards for residential
dishwashers. DOE used a version of EIA's National Energy Modeling
System (NEMS) for the utility and environmental analyses. The NEMS
model simulates the energy sector of the U.S. economy. EIA uses NEMS to
prepare its Annual Energy Outlook, a widely known baseline energy
forecast for the United States. For more information on NEMS, refer to
The National Energy Modeling System: An Overview, DOE/EIA-0581 (98)
(Feb.1998), available at: http://tonto.eia.doe.gov/FTPROOT/forecasting/058198.pdf.
The version of NEMS used for appliance standards analysis, which
makes minor modifications to the AEO version, is called NEMS-BT.\11\
NEMS-BT offers a sophisticated picture of the effect of standards,
because it accounts for the interactions among the various energy
supply and demand sectors and the economy as a whole.
---------------------------------------------------------------------------

\11\ EIA approves the use of the name ``NEMS'' to describe only
an AEO version of the model without any modification to code or
data. Because the present analysis entails some minor code
modifications and runs the model under various policy scenarios that
deviate from AEO assumptions, the name ``NEMS-BT'' refers to the
model as used here. (BT stands for DOE's Building Technologies
Program.)
---------------------------------------------------------------------------

A. Market and Technology Assessment

1. General
When beginning an energy conservation standards rulemaking, DOE
develops information that provides an overall picture of the market for
the products concerned, including the purpose of the products, the
industry structure, and market characteristics. 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 products covered
by the rulemaking, quantities and types of products sold and offered
for sale, retail market trends, product classes and manufacturers,
regulatory and non-regulatory programs, and technology options that
could improve the energy efficiency of the product(s) under
examination. See chapter 3 of the direct final rule TSD for further
discussion of the market and technology assessment.
2. Products Included in This Rulemaking
DOE defines ``dishwasher'' under EPCA as ``a cabinet-like appliance
which with the aid of water and detergent, washes, rinses, and dries
(when a drying process is included) dishware, glassware, eating
utensils, and most cooking utensils by chemical, mechanical and/or
electrical means and discharges to the plumbing drainage system.'' (10
CFR 430.2) DOE considers this definition to encompass built-in,
portable, and countertop dishwashers.
3. Product Classes
Existing energy conservation standards divide residential
dishwashers into two product classes based on capacity: (1) Standard;
and (2) compact. As mentioned previously in section III.A, DOE is
maintaining these product classes for this rulemaking.
4. Non-Regulatory Programs
As part of the market and technology assessment, DOE reviews non-
regulatory programs promoting energy efficient residential appliances
in the United States. Non-regulatory programs that DOE considers in its
market and technology assessment include ENERGY STAR and the Consortium
for Energy Efficiency (CEE) Super-Efficient Home Appliance Initiative
(SEHA).
ENERGY STAR is a voluntary labeling program administered jointly by
the U.S. Environmental Protection Agency (EPA) and DOE. ENERGY STAR
identifies energy efficient products through a qualification
process.\12\ To qualify, a product must exceed Federal minimum
standards by a specified amount, or if no Federal standard exists, a
product must exhibit select energy-saving features. ENERGY STAR
specifications currently exist for residential dishwashers.
---------------------------------------------------------------------------

\12\ For more information, please visit www.energystar.gov.
---------------------------------------------------------------------------

The CEE SEHA program develops initiatives for its North American
members to promote the manufacture and purchase of energy efficient
products and services.\13\ The program establishes efficiency tiers
beyond the DOE energy conservation standards and the ENERGY STAR
specifications. Currently, CEE has set two efficiency tiers above the
ENERGY STAR specification for standard dishwashers, and one efficiency
tier above the ENERGY STAR specification for compact dishwashers.
---------------------------------------------------------------------------

\13\ For more information, please visit www.cee1.org.
---------------------------------------------------------------------------

5. Technology Options
As part of the market and technology assessment, DOE developed a
list of technologies to consider for improving the efficiency of
residential dishwashers, as shown in Table IV.1. These technologies
encompass all those DOE believes would improve energy efficiency and
are technologically feasible, most of which were identified for the
November 2007 ANOPR. 72 FR

[[Page 31929]]

64432, 64451 (Nov. 15, 2007). In addition to those technology options
identified in the November 2007 ANOPR, DOE also considered the use of
control strategies to decrease energy and water consumption. This
technology option is a change in the product's operation. For instance,
a manufacturer may lower the temperature of a wash or rinse cycle to
decrease the amount of internal water heating required. Often,
decreases in water temperatures or water use are combined with longer
cycles to limit the impact on wash performance.

Table IV.1--Initial Technology Options for Residential Dishwashers
------------------------------------------------------------------------

-------------------------------------------------------------------------
1. Condenser drying.
2. Control Strategies.
3. Fan/jet drying.
4. Flow-through heating.
5. Improved fill control.
6. Improved food filter.
7. Improved motor efficiency.
8. Improved spray-arm geometry.
9. Increased insulation.
10. Low-standby-loss electronic controls.
11. Microprocessor controls and fuzzy logic, including adaptive or soil-
sensing controls.
12. Modified sump geometry, with and without dual pumps.
13. Reduced inlet-water temperature.
14. Supercritical carbon dioxide washing.
15. Ultrasonic washing.
16. Variable washing pressures and flow rates.
------------------------------------------------------------------------

B. Screening Analysis

DOE uses the following four screening criteria to determine which
technology options are suitable for further consideration.
(1) Technological feasibility. DOE will consider technologies
incorporated in commercial products or in working prototypes to be
technologically feasible. (The technological feasibility of options was
discussed in the preceding section as part of the market and technology
assessment.)
(2) Practicability to manufacture, install, and service. If mass
production and reliable installation and servicing of a technology in
commercial products could be achieved on the scale necessary to serve
the relevant market at the time the standard comes into effect, then
DOE will consider that technology practicable to manufacture, install,
and service.
(3) Adverse impacts on product utility or product availability. If
DOE determines a technology would have significant adverse impact on
the utility of the product to significant subgroups of consumers, or
would result in the unavailability of any covered product type with
performance characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
generally available in the United States at the time, it will not
consider this technology further.
(4) Adverse impacts on health or safety. If DOE determines that a
technology will have significant adverse impacts on health or safety,
it will not consider this technology further.
(10 CFR part 430, subpart C, appendix A, (4)(a)(4) and (5)(b)).
Technologies that pass through the screening analysis are referred
to as ``design options'' in the engineering analysis. Details of the
screening analysis are provided in chapter 4 of the direct final rule
TSD.
Based on the preliminary determinations made in the November 2007
ANOPR (72 FR 64432, 64454-55 (Nov. 15, 2007)), and further analysis of
the initial technology options, DOE retained the design options shown
in Table IV.2 for its subsequent analyses. These remaining design
options met all of the screening criteria listed above.

Table IV.2--Design Options Retained for Engineering Analysis
------------------------------------------------------------------------

-------------------------------------------------------------------------
1. Condenser drying.
2. Control Strategies.
3. Fan/jet drying.
4. Flow-through heating.
5. Improved fill control.
6. Improved food filter.
7. Improved motor efficiency.
8. Improved spray-arm geometry.
9. Increased insulation.
10. Low-standby-loss electronic controls.
11. Microprocessor controls and fuzzy logic, including adaptive or soil-
sensing controls.
12. Modified sump geometry, with and without dual pumps.
13. Variable washing pressures and flow rates.
------------------------------------------------------------------------

C. Engineering Analysis

In the engineering analysis, DOE evaluates a range of product
efficiency levels and their associated manufacturing costs. The purpose
of the analysis is to estimate the incremental manufacturer production
costs (MPCs) associated with increasing efficiency levels above that of
the baseline model in each product class. The engineering analysis
considers technologies not eliminated in the screening analysis,
designated as design options, in developing cost-efficiency curves,
which subsequently are used for the LCC and PBP analyses.
DOE has identified the following three methodologies for generating
the manufacturing costs needed for the engineering analysis: (1) The
design-option approach, which provides the incremental costs of adding
to a baseline model design options that will improve its efficiency;
(2) the efficiency-level approach, which provides the relative costs of
achieving increases in energy efficiency levels, without regard to the
particular design options used to achieve such increases; and (3) the
cost-assessment (or reverse-engineering) approach, which provides
``bottom-up'' manufacturing cost assessments for achieving various
levels of increased efficiency, based on detailed data regarding costs
for parts and material, labor, shipping/packaging, and investment for
models that operate at particular efficiency levels.
DOE conducted the engineering analyses for the standard product
class in this rulemaking using the efficiency-level approach, combined
with the cost-assessment approach, to develop a manufacturing cost for
each efficiency level. DOE chose this approach because the efficiency
levels considered in the engineering analysis are attainable using
technologies currently available on the market for residential
dishwashers. This approach involved physically disassembling
commercially available products, consulting with outside experts,
reviewing publicly available cost and performance information, and
modeling equipment costs.
Given the data available for the compact product class, DOE used
the design-option approach to develop the cost-efficiency relationship.
There are very few, disparate platforms (i.e., countertop units and
dishdrawers) available on the market for this product class. Therefore,
DOE developed the cost-efficiency relationship by estimating the
incremental costs of adding specific design options to a baseline model
that would provide sufficient improvement in efficiency to achieve the
higher efficiency levels considered for the analysis. DOE weighted the
costs at each efficiency level by market share of each platform.
To provide interested parties with additional information about
DOE's assumptions and results and the ability to perform independent
analyses for verification, DOE associated each efficiency level with
specific technologies that manufacturers might use. Chapter 5 of the
direct final rule TSD describes the methodology and results of the
efficiency level analysis used to derive the cost-efficiency
relationships.
1. Baseline Efficiency Levels
The baseline efficiency levels for both the standard and compact
product classes are based on the current DOE

[[Page 31930]]

energy conservation standards for annual energy use and per-cycle water
consumption. These standards took effect for residential dishwashers
manufactured on or after January 1, 2010. (42 U.S.C. 6295 (g)(10))
Table IV.3 below shows the baseline efficiency level for each
residential dishwasher product class.

Table IV.3--Baseline Efficiency Levels for Residential Dishwasher
Analysis
------------------------------------------------------------------------
Per-cycle water
Product class Annual energy consumption
use (kWh/year) (gallons/cycle)
------------------------------------------------------------------------
Standard............................ 355 6.5
Compact............................. 260 4.5
------------------------------------------------------------------------

2. Higher Efficiency Levels
DOE considered efficiency levels higher than baseline levels based
on specifications prescribed by ENERGY STAR and CEE's Super-Efficient
Home-Appliances Initiative. The highest efficiency levels were defined
by the maximum available technology that DOE could identify on the
market. (DOE did not identify any working prototypes that were more
efficient than the maximum available technology on the market.) Where
the increments between adjacent efficiency levels were large, DOE
proposed to add an intermediate ``gap-fill'' level. Efficiency Level 2
for standard dishwashers and Efficiency Level 1 for compact dishwashers
correspond to the efficiency levels proposed in the Consensus Agreement
discussed in section II.B.2. Table IV.4 and Table IV.5 show the
efficiency levels analyzed in today's direct final rule, based on
annual energy use and per-cycle water consumption.

Table IV.4--Efficiency Levels for Standard Residential Dishwasher Analysis
----------------------------------------------------------------------------------------------------------------
Efficiency level
------------------------------------
Level Efficiency level reference source Per-cycle water
Annual energy consumption (gal/
use (kWh/year) cycle)
----------------------------------------------------------------------------------------------------------------
Baseline............................... DOE Standard...................... 355 6.5
EL 1................................... ENERGY STAR (effective August 11, 324 5.8
2009).
EL 2................................... CEE Tier 1/Consensus Agreement.... 307 5.0
EL 3................................... CEE Tier 2/Upcoming ENERGY STAR 295 4.25
(effective January 20, 2012).
EL 4................................... Gap Fill *........................ 234 3.8
EL 5................................... Maximum Available *............... 180 1.6
----------------------------------------------------------------------------------------------------------------
* Source: ENERGY STAR-qualified dishwashers as of January 30, 2011.

Table IV.5--Efficiency Levels for Compact Residential Dishwasher Analysis
----------------------------------------------------------------------------------------------------------------
Per-cycle water
Level Efficiency level description Annual energy consumption
use * (kWh/year) (gal/cycle)
----------------------------------------------------------------------------------------------------------------
Baseline................................ DOE Standard...................... 260 4.5
EL 1.................................... Consensus Agreement/Upcoming 222 3.5
ENERGY STAR (effective January
20, 2012).
EL 2.................................... Maximum Available \*\............. 154 2.1
----------------------------------------------------------------------------------------------------------------
* Source: ENERGY STAR-qualified dishwashers as of January 30, 2011.

3. Proprietary Designs
In its engineering and economic analyses DOE considers all design
options that are commercially available or present in a working
prototype, including proprietary designs and technologies. DOE will
consider a proprietary design in the subsequent analyses only if the
achieved efficiency level can also be reached using other
nonproprietary design options. If the proprietary design is the only
approach available to achieve a given efficiency level, then DOE will
reject that efficiency level to avoid impacts on competition that would
likely result. DOE solicited comment on any proprietary design options
during its manufacturer interviews, and although manufacturers
mentioned several technologies that are currently in development, these
technologies are not required to meet the efficiency levels considered
in this analysis. Therefore, DOE believes that all efficiency levels in
today's direct final rule can be achieved without the use of
proprietary designs.
4. Reverse Engineering
Based on product teardowns and cost modeling, DOE developed overall
cost-efficiency relationships for the standard and compact product
classes. Table IV.6 and Table IV.7 show DOE's estimates of incremental
manufacturing costs for improvement of dishwasher efficiency above the
baseline. Chapter 5 of the direct final rule TSD provides details on
DOE's engineering analysis and development of the cost-efficiency
curves.

[[Page 31931]]

Table IV.6--Cost-Efficiency Relationship for Standard Residential Dishwashers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per-cycle water Incremental manufacturing cost
Efficiency level Annual energy consumption (gal/-----------------------------------------------------
use (kWh/year) cycle) (2010$) ($/kWh/yr) ($/gal/cycle)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..................................................... 355 6.5 ................ ................ ................
EL 1......................................................... 324 5.8 18.27 0.59 26.10
EL 2......................................................... 307 5.0 31.82 0.66 21.21
EL 3......................................................... 295 4.25 69.23 1.15 30.77
EL 4......................................................... 234 3.8 75.18 0.62 27.85
EL 5......................................................... 180 1.6 82.95 0.47 16.93
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table IV.7--Cost-Efficiency Relationship for Compact Residential Dishwashers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per-cycle water Incremental manufacturing cost
Efficiency level Annual energy consumption -----------------------------------------------------
use (kWh/year) (gal/cycle) (2010$) ($/kWh/yr) ($/gal/cycle)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline...................................................... 260 4.5 ................ ................ ................
EL 1.......................................................... 222 3.5 1.00 0.03 1.00
EL 2.......................................................... 154 2.1 12.11 0.11 5.05
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Markups Analysis

The markups analysis develops appropriate markups in the
distribution chain to convert the estimates of manufacturer cost
derived in the engineering analysis to consumer prices. At each step in
the distribution channel, companies mark up the price of the product to
cover business costs and profit margin. For dishwashers, the main
parties in the distribution chain are manufacturers and retailers.
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 residential
dishwashers.
For retailers, DOE developed separate markups for baseline products
(baseline markups) and for the incremental cost of more efficient
products (incremental markups). Incremental markups are coefficients
that relate the change in the manufacturer sales price of higher-
efficiency models to the change in the retailer sales price. DOE relied
on economic data from the U.S. Census Bureau to estimate average
baseline and incremental markups.\14\
---------------------------------------------------------------------------

\14\ U.S. Census, 2002 Business Expenditure Survey (BES),
Electronics and Appliance Stores sectors.
---------------------------------------------------------------------------

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

E. Energy and Water Use Analysis

DOE's energy and water use analysis estimated the range of energy
and water use of dishwashers in the field, i.e., as they are actually
used by consumers. The energy and water use analysis provided 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 DOE's adoption of amended standards.
DOE determined a range of annual energy and per-cycle water
consumption of dishwashers by multiplying the per-cycle energy use and
per-cycle water use of each considered design by the number of cycles
per year in a representative sample of U.S. households.
DOE estimated the per-cycle energy use by subtracting the annual
energy use associated with standby power from the total annual energy
use and dividing the result by the national average number of
dishwasher cycles per year. DOE used data provided by AHAM on the total
annual dishwasher energy use and the standby power use for each
considered efficiency level.
DOE analyzed per-cycle energy consumption based on two components:
(1) Water-heating energy, and (2) machine (motor) and drying energy.
The largest component of dishwasher energy consumption is water-heating
energy use, which is the energy required to heat the inlet water to the
temperature for dishwashing. The machine energy consists of the motor
energy (for water pumping and food disposal) and drying energy consists
of energy to dry cleaned dishes.
DOE estimated the per-cycle water-heating energy consumption based
on DOE's dishwasher test procedure (which refers to this quantity as
``water energy consumption''). DOE estimated this energy consumption
for dishwashers that operate with a nominal inlet water temperature of
120 [deg]F, the most common situation in U.S. homes. For a dishwasher
using electrically heated water, the water energy consumption,
expressed in kWh per cycle, is equal to the water consumption per cycle
times a nominal water heater temperature rise of 70 [deg]F times the
specific heat of water (0.0024 kWh per gallon per [deg]F).\15\ For a
dishwasher using gas-heated or oil-heated water, the calculation is the
same, but also incorporates a nominal water heater recovery efficiency
of 0.75.\16\
---------------------------------------------------------------------------

\15\ The water heater temperature rise of 70 [deg]F assumes an
average water heater inlet temperature of 50 [deg]F, as specified as
the national average in the dishwasher test procedure.
\16\ The recovery efficiency indicates how efficient a water
heater is at heating water. The DOE test procedure for dishwashers
specifies a recovery efficiency of 0.75 for gas-fired water heating,
which is representative of gas water heaters currently in the
housing stock.
---------------------------------------------------------------------------

The per-cycle machine and drying energy was determined by
subtracting the per-cycle water-heating energy consumption from the
per-cycle total energy consumption.
DOE determined the standby annual energy consumption by multiplying
the energy use in standby mode per hour by the hours the dishwasher is
in standby mode, which is the difference between the number of hours in
a year and the active hours, which is equal to the number of dishwasher
cycles per year multiplied by cycle time, which is estimated to be one
hour.\17\
---------------------------------------------------------------------------

\17\ The one-hour cycle time is an estimate of the typical cycle
time for a dishwasher. Actual cycle times vary based on wash
selection, load, and model of dishwasher.
---------------------------------------------------------------------------

DOE estimated the per-cycle water use by efficiency level in its
engineering analysis, as described in chapter 5 of the direct final
rule TSD.

[[Page 31932]]

To estimate the number of cycles per year in a representative
sample of U.S. households, DOE analyzed data from the Energy
Information Administration (EIA)'s 2005 Residential Energy Consumption
Survey (RECS), which was the most recent such survey available at the
time of DOE's analysis.\18\ 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. Of the more
than 4,800 households in RECS, almost 2,500 have dishwashers. For each
household using a dishwasher, RECS provides data on the number of
dishwasher cycles in the following bins: (1) Less than once per week,
(2) once per week, (3) 2-3 times per week, (4) 4-6 times per week, (5)
at least once per day. DOE converted the above to annual values and
created a triangular or uniform distribution for each bin. DOE randomly
assigned a specific numerical value from within the appropriate bin to
each household in the dishwasher sample. The average number of cycles
per year derived from the RECS 2005 data is 174.
---------------------------------------------------------------------------

\18\ For information on RECS, see www.eia.doe.gov/emeu/recs/.
---------------------------------------------------------------------------

DOE also analyzed a review of survey data \19\ to estimate the
average number of dishwasher cycles per year. In the review, survey
data on consumers' dishwasher usage habits were collected from a number
of sources including several dishwasher manufacturers, detergent
manufacturers, energy and consumer interest groups, independent
researchers, and government agencies. These data were also used to
develop the 2003 dishwasher test procedure amendments, which included a
reduction in the average cycles per year from 264 to 215.\20\ Because
the survey data are more comprehensive than the RECS data, for today's
rule DOE chose an average usage of 215 cycles per year as the most
representative value for average dishwasher use.
---------------------------------------------------------------------------

\19\ Available at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/survey_data.pdf.
\20\ 68 FR 51887 (August 29, 2003). The 215 value was based on
the review's recommendation that the number of average-use cycles
per year be reduced into the range of 200 to 233 cycles.
---------------------------------------------------------------------------

To estimate the annual number of cycles for each RECS household in
the dishwasher sample, DOE multiplied the specific value derived from
RECS by the ratio of 215 cycles to 174 cycles (the RECS average). The
resulting range of values used in the LCC analysis is consistent with
the average use in the DOE dishwasher test procedure.
Table IV.8 shows the estimated average annual energy and water use
for each efficiency level analyzed for standard dishwashers.

Table IV.8--Standard Dishwashers: Average Annual Energy and Water Use by Efficiency Level
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual energy use Annual water use
-----------------------------------------------------------------------------------------
Efficiency level Water heating * Machine + drying Standby [dagger] Total
------------------------------------------------------------------------ gal/year
kWh/year kWh/year kWh/year kWh/year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline...................................................... 234.8 120.2 0.0 355 1,398
1............................................................. 209.5 94.8 19.7 324 1,247
2............................................................. 180.6 111.9 14.5 307 1,075
3............................................................. 153.5 127.0 14.5 295 914
4............................................................. 137.3 82.2 14.5 234 817
5............................................................. 57.8 107.7 14.5 180 344
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Shown for the case of electrically heated water.
[dagger] Standby annual energy use based on a dishwasher cycle length of one hour.
Standby hours = 8,760 hours - (215 cycles x 1 hour) = 8,545 hours.

Table IV.9--Compact Dishwashers: Average Annual Energy and Water Use by Efficiency Level
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual energy use Annual water use
-----------------------------------------------------------------------------------------
Efficiency level Water heating * Machine + drying Standby [dagger] Total
------------------------------------------------------------------------ gal/year
kWh/year kWh/year kWh/year kWh/year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline...................................................... 162.5 77.8 19.7 260 968
1............................................................. 126.4 75.9 19.7 222 753
2............................................................. 75.9 63.6 14.5 154 452
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Shown for the case of electrically heated water.
[dagger] Standby annual energy use based on a dishwasher cycle length of one hour.
Standby hours = 8,760 hours - (215 cycles x 1 hour) = 8,545 hours.

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

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
dishwashers. The LCC is the total consumer expense over the life of a
product, consisting of purchase and installation costs plus operating
costs (expenses for energy use, maintenance, and repair). To compute
the operating costs, DOE discounts future operating costs to the time
of purchase and sums them over the lifetime of the product. The PBP 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 (normally higher) due to a more
stringent standard by the change in average annual operating cost
(normally lower) that results from the standard.

[[Page 31933]]

For any given efficiency level, DOE measures the PBP and the change
in LCC relative to an estimate of the base-case appliance efficiency
levels. The base-case estimate reflects the market in the absence of
new or amended energy conservation standards, including the market for
products that exceed the current energy conservation standards.
For each considered efficiency level in each product class, DOE
calculated the LCC and PBP for a nationally representative set of
housing units. For the analysis for today's rule, DOE developed
household samples from the 2005 RECS. For each sample household, DOE
determined the energy consumption for the dishwasher and the
appropriate electricity price. By developing a representative sample of
households, the analysis captured the variability in energy consumption
and energy prices associated with the use of residential dishwashers.
Inputs to the calculation of total installed cost include the cost
of the product--which includes manufacturer costs, manufacturer
markups, retailer and distributor markups, and sales taxes--and
installation costs. Inputs to the calculation of operating expenses
include annual energy consumption, energy and water prices and price
projections, repair and maintenance costs, product lifetimes, discount
rates, and the year that compliance with standards is required. 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 and PBP, which
incorporates Crystal Ball (a commercially available software program),
relies on a Monte Carlo simulation to incorporate uncertainty and
variability into the analysis. The Monte Carlo simulations randomly
sample input values from the probability distributions and dishwasher
user samples. The model calculated the LCC and PBP for products at each
efficiency level for 10,000 housing units per simulation run.
Table IV.10 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
and its appendices of the direct final rule TSD (see Table 8.1.1 for a
summary of inputs).

Table IV.10--Summary of Inputs and Methods for the LCC and PBP Analysis
*
------------------------------------------------------------------------
Inputs Source/method
------------------------------------------------------------------------
Product Cost................. Derived by multiplying manufacturer cost
by manufacturer and retailer markups and
sales tax, as appropriate. Used
historical data to derive a price
scaling index to forecast product costs.
Installation Costs........... Baseline installation cost determined
with data from RS Means. Assumed no
change with efficiency level.
Annual Energy and Water Use.. The sum of the total per-cycle annual
energy and water use multiplied by the
number of cycles per year and the
standby annual energy use. Average
number of cycles based on ADL field
data.
Variability: Based on the 2005 RECS
normalized to the average number of
cycles.
Energy and Water Prices...... Electricity: Based on EIA's Form 861 data
for 2010.
Variability: Regional energy prices
determined for 13 regions.
Water: Based on 2010 AWWA/Raftelis
Survey.
Variability: By census region.
Energy and Water Price Trends Energy: Forecasted using Annual Energy
Outlook 2011 (AEO2011) price forecasts.
Water: Forecasted using BLS historic
water price index information.
Repair and Maintenance Costs. Assumed no change with efficiency level.
Product Lifetime............. Estimated using survey results from RECS
(1990, 1993, 1997, 2001, 2005) and the
U.S. Census American Housing Survey
(2005, 2007), along with historic data
on appliance shipments.
Variability: Characterized using Weibull
probability distributions.
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 SCF ** for 1989,
1992, 1995, 1998, 2001, 2004 and 2007.
Compliance Date.............. 2018.[dagger]
------------------------------------------------------------------------
* 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.
** Survey of Consumer Finances.
[dagger] For TSL 2, DOE used 2013 as the compliance date.

1. Product Cost
To calculate consumer product costs, DOE multiplied the
manufacturer selling prices developed in the engineering analysis by
the supply-chain markups described above (along with sales taxes). DOE
used different markups for baseline products and higher-efficiency
products, because DOE applies an incremental markup to the increase in
MSP associated with higher-efficiency products.
Examination of historical price data for a number of appliances
that have been subject to energy conservation standards indicates that
an assumption of constant real prices and costs may overestimate long-
term trends in appliance prices. Economic literature and historical
data suggest that the real costs of these products may in fact trend
downward over time according to ``learning'' or ``experience'' curves.
Experience curve analysis focuses on entire industries (often operating
globally) and aggregates over many causal factors that may not be well
characterized. 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.\21\ Since market competition is very effective, learning in
one plant or firm rapidly diffuses to other firms as well, leading to
industry-wide effects.
---------------------------------------------------------------------------

\21\ Newell, R.G., 2000. Incorporation of Technological Learning
into NEMS Buildings Modules. U.S. Department of Energy, Energy
Information Administration, Washington, DC.

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

[[Page 31934]]

On February 22, 2011, DOE published a Notice of Data Availability
(NODA, 76 FR 9696) stating that DOE may consider improving regulatory
analysis by addressing equipment price trends. In the NODA, DOE
proposed that when sufficiently long-term data are available on the
cost or price trends for a given product, it would analyze the
available data to forecast future trends.
Many commenters were supportive of DOE moving from an assumption-
based equipment price trend forecasting method to a data-driven
methodology for forecasting price trends. Other commenters were
skeptical that DOE could accurately forecast price trends given the
many variables and factors that can complicate both the estimation and
the interpretation of the numerical price trend results and the
relationship between price and cost. DOE evaluated the concerns
expressed about its proposed approach for incorporating experience in
its forecasts of product prices and determined that retaining an
assumption-based approach of a constant real price trend was not
consistent with the historical data for residential dishwashers.
Therefore, DOE developed a range of potential price trends that was
consistent with the available data.
For the default price trend for this final rule, DOE estimated an
experience rate for residential dishwashers based on an analysis of
long-term historical data. DOE derived a dishwasher price index from
1988 to 2010 using Producer Price Index (PPI) data for miscellaneous
household appliances from the Bureau of Labor Statistics' (BLS). (PPI
data specific to residential dishwashers were not available.) An
inflation-adjusted price index was calculated using the GDP price
deflator for the same years. This proxy for historic price data was
then regressed on the quantity of dishwashers produced, based on a
corresponding series for total shipments of dishwashers.
To calculate an experience rate, a least-squares power-law fit was
performed on the dishwasher price index versus cumulative shipments
(including imports). DOE then derived a price factor index, with the
price in 2010 equal to 1, to forecast prices in the year of compliance
for amended energy conservation standards in the LCC and PBP analysis,
and for the NIA, for each subsequent year through 2047. The index value
in each year is a function of the experience rate and the cumulative
production through that year. To derive the latter, DOE used projected
shipments from the base case projections made for the NIA (see section
IV.G.1 of this notice). The average annual rate of price decline in the
default case is 1.27 percent. By 2047, which is the end date of the
forecast period, the price is forecasted to drop 38 percent relative to
2010. For the baseline model, the average price decreases from $630 in
2010 to $392 in 2047 (values given in 2010$). DOE's forecast of product
prices for dishwashers is described in further detail in appendix 8-E
of the direct final rule TSD.
For the NIA, DOE also considered several alternative price trends
as sensitivity cases (see section IV.G.3 for a description). In
recognition of the uncertainty regarding estimation of future product
price trends, DOE will continue to review the relevant literature and
seek to continually improve and refine its methodology through
research, enhancements to its models and by seeking public input. DOE
will also work to ensure the robustness of its data sets as a means to
ensure the reliability of its projections.
2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the product. DOE used data from
the 2010 RS Means Plumbing Cost data book to estimate the baseline
installation cost. DOE found no evidence that installation costs would
be impacted with increased efficiency levels.
3. Annual Energy Consumption
For each sampled household, DOE determined the energy consumption
for a dishwasher at different efficiency levels using the approach
described above in section IV.E.
4. Energy Prices
DOE derived average annual energy prices for 13 geographic areas
consisting of the nine U.S. Census divisions, with four large states
(New York, Florida, Texas, and California) treated separately. For
Census divisions containing one of those large states, DOE calculated
the regional average excluding the data for the large state.
DOE calculated average residential electricity prices for each of
the 13 geographic areas using data from EIA's Form EIA-861 database
(based on ``Annual Electric Power Industry Report'').\22\ DOE
calculated an average annual regional residential price by: (1)
Estimating an average residential price for each utility (by dividing
the residential revenues by residential sales); and (2) weighting each
utility by the number of residential consumers it served in that
region. The final rule analysis used the data for 2009, the most recent
data available.
---------------------------------------------------------------------------

\22\ Available at: www.eia.doe.gov/cneaf/electricity/page/eia861.html.
---------------------------------------------------------------------------

DOE calculated average residential natural gas prices for each of
the 13 geographic areas using data from EIA's ``Natural Gas Monthly.''
\23\ DOE calculated average annual regional residential prices by: (1)
Estimating an average residential price for each State; and (2)
weighting each State by the number of residential consumers. The direct
final rule analysis used the data for 2010.
---------------------------------------------------------------------------

\23\ Available at: http://www.eia.gov/oil_gas/natural_gas/data_publications/natural_gas_monthly/ngm.html.
---------------------------------------------------------------------------

5. Energy Price Projections
To estimate energy prices in future years, DOE multiplied the
average regional energy prices discussed in the preceding section by
the forecast of annual average residential energy price changes in the
Reference case from AEO2011, which has an end year of 2035.\24\ To
estimate price trends after 2035, DOE used the average annual rate of
change in prices from 2020 to 2035.
---------------------------------------------------------------------------

\24\ U.S. Energy Information Administration. Annual Energy
Outlook 2011. Washington, DC. April 2011.
---------------------------------------------------------------------------

6. Water and Wastewater Prices
For today's direct final rule, DOE obtained data on water and
wastewater prices for 2010 from the Water and Wastewater Rate Survey
conducted by Raftelis Financial Consultants and the water utility
association, AWWA. The survey, which analyzes each industry separately,
covers approximately 308 water utilities and 228 wastewater utilities.
The water survey includes, for each utility, the cost to consumers of
purchasing a given volume of water or treating a given volume of
wastewater. The data provide a division of the total consumer cost into
fixed and volumetric charges. DOE's calculations use only the
volumetric charge to calculate water and wastewater prices, because
only this charge is affected by a change in water use. Average water
and wastewater prices were estimated for each of four census regions.
Each RECS household was assigned a water and wastewater price depending
on its census region location.
DOE also used price information for households that use well water
and a septic tank from the National Ground Water Association, as well
as national cost data on residential septic systems from the National
Onsite Wastewater Recycling Association (NOWRA).
Chapter 8 of the direct final rule TSD provides more detail about
DOE's

[[Page 31935]]

approach to developing water and wastewater prices.
7. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing 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 produce no, or only minor, changes in
repair and maintenance costs compared to baseline efficiency products.
DOE requested information from manufacturers during interviews as
to whether maintenance and repair costs are a function of efficiency
level and product class. Manufacturers responded that these costs would
not increase with efficiency. Therefore, DOE did not assume that more
efficient dishwashers would have greater repair or maintenance costs.
8. Product Lifetime
Because the lifetime of appliances varies depending on utilization
and other factors, DOE develops a distribution of lifetimes from which
specific values are assigned to the appliances in the samples. DOE
conducted an analysis of residential dishwasher lifetimes in the field
based on a combination of shipments data and RECS 2005 data on the ages
of the dishwashers reported in the household stock. As described in
chapter 8 of the direct final rue TSD, the analysis yielded an estimate
of mean age for residential dishwashers of approximately 15 years. It
also yielded a survival function that DOE incorporated as a probability
distribution in its LCC analysis. See chapter 8 of the direct final
rule TSD for further details on the method and sources DOE used to
develop product lifetimes.
9. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate
to households to estimate the present value of future operating costs.
DOE estimated a distribution of residential discount rates for
dishwashers based on consumer financing costs and opportunity cost of
any uses of their funds, including investments in more-efficient
appliances.
To establish residential discount rates for the LCC analysis, DOE
identified all debt or asset classes that might be used to purchase
dishwashers, including household assets that might be affected
indirectly. It estimated the average percentage shares of the various
debt or asset classes for the average U.S. household using data from
the Federal Reserve Board's Survey of Consumer Finances (SCF) for 1989,
1992, 1995, 1998, 2001, 2004, and 2007. Using the SCF and other
sources, DOE then developed a distribution of rates for each type of
debt and asset 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,
weighted by the shares of each class, is 5.1 percent. DOE used the same
approach for today's direct final rule. See chapter 8 in the direct
final rule TSD for further details on the development of consumer
discount rates.
10. Compliance Date of Amended Standards
In the context of EPCA, the compliance date is the future date when
parties subject to the requirements of a new or amended standard must
comply. EPCA, as amended by EISA 2007, requires that DOE publish a
final rule no later than January 1, 2015, to determine whether to amend
the standards in effect for dishwashers manufactured on or after
January 1, 2018. (42 U.S.C. 6295(g)(10)(B)) Where appropriate, DOE
calculated the LCC and PBP for dishwashers as if consumers would
purchase new products in 2018. As discussed in section II.B.2, TSL 2,
which corresponds to the Consensus Agreement level for standard
dishwashers, has a compliance date of 2013. Thus, for TSL 2, DOE used
2013 as the compliance year.
11. Base-Case Efficiency Distribution
To accurately estimate the share of consumers that would be
affected by a standard at a particular efficiency level, DOE's LCC
analysis considered the projected distribution of product efficiencies
that consumers purchase under the base case (i.e., the case without new
energy efficiency standards). DOE refers to this distribution of
product of efficiencies as a base-case efficiency distribution.
To estimate the base-case efficiency distribution of standard-sized
dishwashers for 2013 and 2018, DOE relied on data submitted by AHAM for
the current rulemaking. These data provide shares of shipments by
efficiency level for 2002-2005 and 2008-2010. These data show
significant increase in the share of ENERGY STAR products in both
periods. To predict the market shares for each efficiency level in 2013
and 2018, DOE considered the shares and market trends present in the
AHAM data and assumed these trends would continue in a manner
consistent with the decline in average energy use.
For compact dishwashers, AHAM data for efficiency distributions
were not available. Thus, DOE first considered 2010 market data from
the NPD Group, Inc.\25\ These data show that nearly all shipments for
both standard and compact dishwashers are at the baseline efficiency
level. For the compact class base-case distribution, however, there
were only two types of compact dishwashers in the NPD data set:
``countertop'' and ``portable.'' DOE is not aware of any portable
dishwashers currently on the market in the United States that would be
classified as compact size based on the number of place settings.
Further, there are no compact dishdrawer platforms included in the NPD
dataset, which DOE believes represent a sizeable fraction of compact
dishwasher shipments. As a result, DOE estimated compact base-case
efficiencies from its research on the number of models available at
each efficiency level. Of the eight compact dishwashers listed in the
FTC database for manufacturer certifications in 2010, four are
dishdrawer models with similar performance. Therefore, DOE allocated
half of shipments to the dishdrawer platform that meets candidate
standard level (CSL) 2. DOE further estimated, based on the number of
countertop models and underlying platforms contained within the CEC and
FTC databases, that half of remaining shipments (25 percent of total
compact dishwasher shipments) would meet CSL 1, while the remaining 25
percent of compact shipments are at the baseline.
---------------------------------------------------------------------------

\25\ NPD Group, Inc. offers marketing research services,
industry tracking, data collection, and analysis. For more
information, please visit: www.npdgroup.com.
---------------------------------------------------------------------------

The estimated shares for the base-case efficiency distribution for
dishwashers are shown in Table IV.11. See chapter 8 of the direct final
rule TSD for further information on the derivation of the base-case
efficiency distributions. For standard-sized dishwashers, DOE also
considered an alternative base-case efficiency distribution that uses a
different set of historical data. This distribution is described in
appendix 8-F of the direct final rule TSD.

[[Page 31936]]

Table IV.11--Dishwasher Base-Case Efficiency Distribution by Product Class in 2013
----------------------------------------------------------------------------------------------------------------
Efficiency level Standard (% of Compact (% of
CSL (kWh) shipments) shipments)
----------------------------------------------------------------------------------------------------------------
Baseline............................................... 355 3.8 25.0
1...................................................... 324 32.3 25.0
2...................................................... 307 28.0 50.0
3...................................................... 295 16.4 .................
4...................................................... 234 13.8 .................
5...................................................... 180 5.6 .................
----------------------------------------------------------------------------------------------------------------

12. Inputs to Payback Period Analysis
The payback period is the amount of time it takes the consumer to
recover the additional installed cost of more efficient products,
compared to baseline products, through energy cost savings. Payback
periods are expressed in years. 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 are the total installed cost of
the product to the customer for each efficiency level and the average
annual operating expenditures for each efficiency level. The PBP
calculation uses the same inputs as the LCC analysis, except that
discount rates are not needed.
13. Rebuttable-Presumption Payback Period
As noted above, EPCA, as amended, establishes a rebuttable
presumption that a standard is economically justified if the Secretary
finds that the additional cost to the consumer of purchasing a product
complying with an energy conservation standard level will be less than
three times the value of the energy (and, as applicable, water) savings
during the first year that the consumer will receive as a result of the
standard, as calculated under the test procedure in place for that
standard. (42 U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency
level, DOE determined the value of the first year's energy and water
savings by calculating the quantity of those savings in accordance with
the applicable DOE test procedure, and multiplying that amount by the
average energy and water price forecast for the year in which
compliance with the amended standard would be required. The results of
the rebuttable payback period analysis are summarized in section
V.B.1.c of this notice.

G. National Impact Analysis-National Energy Savings and Net Present
Value Analysis

The national impact analysis (NIA) assesses the national energy
savings (NES) and the national net present value (NPV) of total
consumer costs and savings that would be expected to result from new or
amended standards at specific efficiency levels. (``Consumer'' in this
context refers to consumers of the product being regulated.) DOE
calculates the NES and NPV based on projections of annual appliance
shipments, along with the annual energy consumption and total installed
cost data from the energy use and LCC analyses.\26\ For the present
analysis, DOE forecasted the energy savings, operating cost savings,
product costs, and NPV of consumer benefits for products sold from 2018
through 2047.\27\
---------------------------------------------------------------------------

\26\ For the NIA, DOE adjusts the installed cost data from the
LCC analysis to exclude sales tax, which is a transfer.
\27\ For TSL 2, which assumes a compliance date in 2013, DOE
forecasted the impacts for products sold from 2013 through 2047.
---------------------------------------------------------------------------

DOE evaluates the impacts of new and amended standards by comparing
base-case projections with standards-case projections. The base-case
projections characterize energy use and consumer costs for each product
class in the absence of new or amended energy conservation standards.
DOE compares these projections 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 base-case forecast, DOE considers
historical trends in efficiency and various forces that are likely to
affect the mix of efficiencies over time. For the standards cases, DOE
also considers how a given standard would likely affect the market
shares of efficiencies greater than the standard.
DOE uses an MS Excel spreadsheet model to calculate the energy
savings and the national consumer costs and savings from each TSL. The
TSD and other documentation that DOE provides during the rulemaking
help explain the models and how to use them, and 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.
For the results presented in today's notice, DOE used projections
of energy prices and housing starts from the AEO2011 Reference case. As
part of the NIA, DOE analyzed scenarios that used inputs from the
AEO2011 Low Economic Growth and High Economic Growth cases. Those cases
have higher and lower energy price trends compared to the Reference
case, as well as higher and lower housing starts, which result in
higher and lower appliance shipments to new homes. NIA results based on
these cases are presented in appendix 10-C of the direct final rule
TSD.
Table IV.12 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.12--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments.................... Annual shipments from shipments model.
Compliance Date of Standard.. 2018.*
Base-Case Forecasted Efficiency distributions are forecasted
Efficiencies. based on historical efficiency data.
Standards-Case Forecasted Used a ``roll-up'' scenario.
Efficiencies.
Annual Energy Consumption per Annual weighted-average values are a
Unit. function of energy use at each CSL.

[[Page 31937]]

Total Installed Cost per Unit Annual weighted-average values are a
function of cost at each CSL.
Incorporates forecast of future product
prices based on historical data.
Annual Energy Cost per Unit.. Annual weighted-average values as a
function of the annual energy
consumption per unit and energy prices.
Repair and Maintenance Cost Annual values do not change with
per Unit. efficiency level.
Energy Prices................ AEO2011 forecasts (to 2035) and
extrapolation through 2047.
Energy Site-to-Source Varies yearly and is generated by NEMS-
Conversion Factor. BT.
Discount Rate................ Three and seven percent real.
Present Year................. Future expenses discounted to 2012, when
the final rule will be published.
------------------------------------------------------------------------
* For TSL 2, the compliance date is 2013.

1. Shipments
Forecasts of product shipments are needed to calculate the national
impacts of standards on energy and water use, NPV, and future
manufacturer cash flows. DOE develops shipment forecasts based on an
analysis of key market drivers for residential dishwashers. In DOE's
shipments model, shipments of products are driven by new construction
and stock replacements. The shipments model takes an accounting
approach, tracking market shares of each product class and the vintage
of units in the existing 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. DOE
also considers the impacts on shipments from changes in product
purchase price and operating cost associated with higher energy
efficiency levels.
New housing forecasts and market saturation data comprised the two
primary inputs for DOE's estimates of new construction shipments. ``New
housing'' includes newly-constructed single-family and multi-family
units (referred to as ``new housing completions'') and mobile home
placements. For new housing completions and mobile home placements, DOE
used actual data through 2008, and adopted the projections from AEO2011
for later years.
DOE calibrated the shipments model against historical dishwasher
shipments. In general, DOE estimated replacements using a product
retirement function developed from product lifetime. DOE based the
retirement function on a probability distribution for the product
lifetime that was developed in the LCC analysis. The shipments model
assumes that no units are retired below a minimum product lifetime and
that all units are retired before exceeding a maximum product lifetime.
DOE applied a price elasticity parameter to estimate the effect of
standards on dishwasher shipments. DOE estimated the price elasticity
parameter from a regression analysis that used purchase price and
efficiency data specific to residential clothes washers, refrigerators
and dishwashers during 1980-2002. The estimated ``relative price
elasticity'' incorporates the impacts from purchase price, operating
cost, and household income. Based on evidence that the price elasticity
of demand is significantly different over the short run and long run
for other consumer goods (i.e., automobiles),\28\ DOE assumed that the
relative price elasticity declines over time. DOE estimated shipments
in each standards case using the relative price elasticity along with
the change in the relative price between a standards case and the base
case.
---------------------------------------------------------------------------

\28\ S. Hymans. Consumer Durable Spending: Explanation and
Prediction, Brookings Papers on Economic Activity, 1971. Vol. 1971,
No. 1, pp. 234-239.
---------------------------------------------------------------------------

For details on the shipments analysis, see chapter 9 of the direct
final rule TSD.
2. Forecasted Efficiency in the Base Case and Standards Cases
A key component of the NIA is the trend in energy efficiency
forecasted for the base case (without new or amended standards) and
each of the standards cases. Section IV.F.11 describes how DOE
developed a base-case energy efficiency distribution (which yields a
shipment-weighted average efficiency) for each of the considered
product classes for the first year of the forecast period. To project
the trend in efficiency for standard-sized dishwashers over the entire
forecast period, DOE utilized the historical trend in shipment-weighted
average efficiency from 2002 to 2010 as provided by AHAM and considered
the potential effect of programs such as ENERGY STAR. The historical
trend demonstrates that the shipment-weighted average annual energy use
decreased by almost 90 kWh from 2002 to 2010, reaching 309 kWh. DOE fit
an exponential function to the 2002 to 2010 data that indicated that
the base-case shipment-weighted average annual energy use will
asymptotically approach a value of 290 kWh by 2025 and remain at that
level. For standard-sized dishwashers, DOE also considered an
alternative base-case efficiency trend that was estimated using a
different set of historical data. This trend is described in appendix
10-D of the direct final rule TSD.
The historical record suggests that the likely market response to
new or amended standards is that lower efficiency baseline models will
roll up to the standard efficiency level, and some products will exceed
the minimum requirements. To estimate efficiency trends in the
standards cases, DOE has used ``roll-up'' and/or ``shift'' scenarios in
its standards rulemakings. Under the ``roll-up'' scenario, DOE assumes:
(1) Product efficiencies in the base case that do not meet the standard
level under consideration would ``roll-up'' to meet the new standard
level; and (2) product efficiencies above the standard level under
consideration would not be affected. Under the ``shift'' scenario, DOE
re-orients the distribution above the new minimum energy conservation
standard.
DOE determined that a roll-up scenario is most appropriate to
establish the distribution of efficiencies for the year that compliance
with revised dishwasher standards would be required. For subsequent
years, DOE assumed that efficiency would continue to improve in each
standards case at the same rate as estimated for the base case, until
the max-tech efficiency level is reached. The details of DOE's approach
to forecast efficiency trends are described in chapter 10 of the direct
final rule TSD.

[[Page 31938]]

3. Total Installed Cost per Unit
As discussed in section IV. F. 1, DOE developed a dishwasher price
trend based on an experience rate for miscellaneous household
appliances. It used this trend to forecast the prices of dishwashers
sold in each year in the forecast period. DOE applied the same values
to forecast prices for each product class at each considered efficiency
level.
To evaluate the effect of uncertainty regarding the price trend
estimates, DOE investigated the impact of different product price
forecasts on the consumer net present value for the considered TSLs for
residential dishwashers. In addition to the default price trend, DOE
considered two product price sensitivity cases: (1) A high price
decline case based on an exponential fit using PPI data for 1991 to
2010; (2) a low price decline case based on an experience rate derived
using PPI and shipments data for 1991 to 2000. The derivation of these
price trends and the results of these sensitivity cases are described
in appendix 10-B of the direct final rule TSD. In the high price
decline case, the NPV is significantly higher than in the default case.
In the low price decline case, the NPV is slightly lower than in the
default case. The rank order of the TSLs is the same in all of the
cases.
4. National Energy and Water Savings
For each year in the forecast period, DOE calculates the national
energy and water savings for each standard level by multiplying the
stock of products affected by the energy conservation standards by the
per-unit annual energy savings. Cumulative energy and water savings are
the sum of the NES for each year.
To estimate the national energy savings expected from appliance
standards, DOE uses a multiplicative factor to convert site energy
consumption (at the home) into primary or source energy consumption
(the energy required to convert and deliver the site energy). These
conversion factors account for the energy used at power plants to
generate electricity and losses in transmission and distribution. The
conversion factors vary over time because of projected changes in
generation sources (i.e., the power plant types projected to provide
electricity to the country). The factors that DOE developed are
marginal values, which represent the response of the system to an
incremental decrease in consumption associated with appliance
standards. For today's rule, DOE used annual site-to-source conversion
factors based on the version of NEMS that corresponds to AEO2011, which
provides energy forecasts through 2035. For 2036-2047, DOE used
conversion factors that remain constant at the 2035 values.
Section 1802 of the Energy Policy Act of 2005 (EPACT 2005) directed
DOE to contract a study with the National Academy of Science (NAS) to
examine whether the goals of energy efficiency standards are best
served by measuring energy consumed, and efficiency improvements, at
the actual point of use or through the use of the full-fuel-cycle,
beginning at the source of energy production. (Pub. L. No. 109-58
(August 8, 2005)). NAS appointed a committee on ``Point-of-Use and
Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards''
to conduct the study, which was completed in May 2009. The NAS
committee defined full-fuel-cycle energy consumption as including, in
addition to site energy use: Energy consumed in the extraction,
processing, and transport of primary fuels such as coal, oil, and
natural gas; energy losses in thermal combustion in power generation
plants; and energy losses in transmission and distribution to homes and
commercial buildings.
In evaluating the merits of using point-of-use and full-fuel-cycle
(FFC) measures, the NAS committee noted that DOE uses what the
committee referred to as ``extended site'' energy consumption to assess
the impact of energy use on the economy, energy security, and
environmental quality. The extended site measure of energy consumption
includes the energy consumed during the generation, transmission, and
distribution of electricity but, unlike the full-fuel-cycle measure,
does not include the energy consumed in extracting, processing, and
transporting primary fuels. A majority of the NAS committee concluded
that extended site energy consumption understates the total energy
consumed to make an appliance operational at the site. As a result, the
NAS committee recommended that DOE consider shifting its analytical
approach over time to use a full-fuel-cycle measure of energy
consumption when assessing national and environmental impacts,
especially with respect to the calculation of greenhouse gas (GHG)
emissions. The NAS committee also recommended that DOE provide more
comprehensive information to the public through labels and other means,
such as an enhanced Web site. For those appliances that use multiple
fuels (e.g., water heaters), the NAS committee indicated that measuring
full-fuel-cycle energy consumption would provide a more complete
picture of energy consumed and permit comparisons across many different
appliances, as well as an improved assessment of impacts.
In response to the NAS committee recommendations, DOE issued a
notice of proposed policy for incorporating a full-fuel cycle analysis
into the methods it uses to estimate the likely impacts of energy
conservation standards on energy use and emissions. 75 FR 51423 (Aug.
20, 2010). In its final Statement of Policy, DOE stated that it intends
to calculate FFC energy and emission impacts by applying conversion
factors generated by the GREET model to the NEMS-based results
currently used by DOE. 76 FR 51282 (Aug. 18, 2011). Additionally, DOE
will review alternative approaches to estimating these factors and may
decide to use a model other than GREET to estimate the FFC energy and
emission impacts in any particular future appliance efficiency
standards rulemaking.
5. Net Present Value of Consumer Benefit
The inputs for determining the net present value (NPV) of the total
costs and benefits experienced by consumers of considered appliances
are: (1) Total annual installed cost, (2) total annual savings in
operating costs, and (3) a discount factor. DOE calculates net savings
each year as the difference between the base case and each standards
case in total savings in operating costs and total increases in
installed costs. DOE calculates operating cost savings over the life of
each product shipped during the forecast period.
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. For
today's direct final rule, DOE estimated the NPV of appliance 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.\29\ 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

[[Page 31939]]

is the rate at which society discounts future consumption flows to
their present value.
---------------------------------------------------------------------------

\29\ OMB Circular A-4 (Sept. 17, 2003), section E, ``Identifying
and Measuring Benefits and Costs. Available at: www.whitehouse.gov/omb/memoranda/m03-21.html.
---------------------------------------------------------------------------

H. Consumer Subgroup Analysis

In analyzing the potential impact of new or amended standards on
consumers, DOE evaluates the impact on identifiable subgroups of
consumers (e.g., low-income households) that may be disproportionately
affected by a national standard. DOE evaluates impacts on particular
subgroups of consumers primarily by analyzing the LCC impacts and PBP
for those particular consumers from alternative standard levels.
Chapter 11 in the direct final rule TSD describes the consumer subgroup
analysis. For this rule, DOE analyzed the impacts of the considered
standard levels on low-income households and senior-only households.

I. Manufacturer Impact Analysis

The following sections address the various steps taken to analyze
the impacts of the amended standards on manufacturers. These steps
include conducting a series of analyses, interviewing manufacturers,
and evaluating the information received from interested parties during
this rulemaking.
1. Overview
In determining whether an amended energy conservation standard for
residential dishwashers subject to this rulemaking is economically
justified, DOE is required to consider ``the economic impact of the
standard on the manufacturers and on the consumers of the products
subject to such standard.'' (42 U.S.C. 6295(o)(2)(B)(i)(I)) The statute
also calls for an assessment of the impact of any lessening of
competition as determined by the Attorney General that is likely to
result from the adoption of a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V))
DOE conducted the MIA to estimate the financial impact of amended
energy conservation standards on manufacturers, and to assess the
impacts of such standards on employment and manufacturing capacity.
The MIA is both a quantitative and qualitative analysis. The
quantitative part of the MIA relies on the Government Regulatory Impact
Model (GRIM), an industry cash-flow model customized for the
residential dishwashers covered in this rulemaking. See section IV.I.2
below, for details on the GRIM analysis. The qualitative part of the
MIA addresses factors such as product characteristics, characteristics
of particular firms, and market trends. The complete MIA is discussed
in chapter 12 of the direct final rule TSD. DOE conducted the MIA in
the three phases described below.
a. Phase 1, Industry Profile
In Phase 1 of the MIA, DOE prepared a profile of the residential
dishwasher industry based on the market and technology assessment
prepared for this rulemaking. Before initiating the detailed impact
studies, DOE collected information on the present and past market
structure and characteristics of the industry, tracking trends in
market share data, product attributes, product shipments, manufacturer
markups, and the cost structure for various manufacturers.
The profile also included an analysis of manufacturers in the
industry using Security and Exchange Commission 10-K filings,\30\
Standard & Poor's stock reports,\31\ and corporate annual reports
released by both public and privately held companies. DOE used this and
other publicly available information to derive preliminary financial
inputs for the GRIM including industry revenues, cost of goods sold,
and depreciation, as well as selling, general, and administrative
(SG&A), and research and development (R&D) expenses.
---------------------------------------------------------------------------

\30\ Available online at www.sec.gov.
\31\ Available online at www2.standardandpoors.com.
---------------------------------------------------------------------------

b. Phase 2, Industry Cash Flow Analysis
Phase 2 focused on the financial impacts of potential amended
energy conservation standards on the industry as a whole. Amended
energy conservation standards can affect manufacturer cash flows in
three distinct ways: (1) By creating a need for increased investment,
(2) by raising production costs per unit, and (3) by altering revenue
due to higher per-unit prices and/or possible changes in sales volumes.
DOE used the GRIM to model these effects in a cash-flow analysis of the
residential dishwasher industry. In performing this analysis, DOE used
the financial values derived during Phase 1 and the shipment
assumptions from the NIA.
c. Phase 3, Sub-Group Impact Analysis
Using average cost assumptions to develop an industry-cash-flow
estimate may not adequately assess differential impacts of amended
energy conservation standards among manufacturer subgroups. For
example, small businesses, manufacturers of niche products, or
companies exhibiting a cost structure that differs significantly from
the industry average could be more negatively affected. During the
manufacturer interviews, DOE discussed financial topics specific to
each manufacturer and obtained each manufacturer's view of the industry
as a whole. DOE reports the MIA impacts of amended energy conservation
standards by grouping together the impacts on manufacturers of certain
product classes. While DOE did not identify any other subgroup of
manufacturers of residential dishwashers that would warrant a separate
analysis, DOE specifically investigated impacts on small business
manufacturers. See section VI.B for more information.
The MIA also addresses the direct employment impacts in
manufacturing of dishwashers. DOE uses census data and information
gained through manufacturer interviews in conjunction with the GRIM to
estimate the domestic labor expenditures and number of domestic
production workers in the base case and at each TSL from 2012 to 2047.
2. GRIM Analysis
DOE uses the GRIM to quantify the changes in cash flow that result
in a higher or lower industry value. The GRIM analysis is a standard,
annual cash-flow analysis that incorporates manufacturer costs,
markups, shipments, and industry financial information as inputs, and
models changes in costs, distribution of shipments, investments, and
manufacturer margins that could result from amended energy conservation
standards. The GRIM spreadsheet uses the inputs to arrive at a series
of annual cash flows, beginning with the base year of the analysis,
2012 (which accounts for the investments needed to bring products into
compliance), and continuing to 2047. DOE uses the industry average
weighted average cost of capital (WACC) of 8.5 percent, as this
represents the minimum rate of return necessary to cover the debt and
equity obligations manufacturers use to finance operations.
DOE used the GRIM to compare INPV in the base case with INPV at
various TSLs (the standards cases). The difference in INPV between the
base and standards cases represents the financial impact of the amended
standard on manufacturers. DOE collected this information from a number
of sources, including publicly available data and interviews with a
number of manufacturers. Additional details about the GRIM can be found
in chapter 12 of the direct final rule TSD.

[[Page 31940]]

a. GRIM Key Inputs
Manufacturer Production Costs
Changes in the manufacturer production costs (MPCs) of residential
dishwashers can affect revenues, gross margins, and cash flow of the
industry, making these product cost data key GRIM inputs for DOE's
analysis. DOE created separate cost curves for standard and compact
product classes using data from tear-downs to develop both the baseline
MPCs and the incremental costs that correspond to the proposed design
options. The cost model also disaggregated the MPCs into material,
labor, overhead, and depreciation. Later, in Phase 3 of the MIA,
manufacturers validated these estimates and assumptions during
interviews. DOE used the resulting MPCs and cost breakdowns as
described in section IV.C above, and further detailed in chapter 5 of
the direct final rule TSD, for each efficiency level analyzed in the
GRIM analysis.
Base-Case Shipments Forecast
The GRIM estimates manufacturer revenues based on total unit
shipment forecasts and the distribution of these values by efficiency
level and product class. Changes in the efficiency mix at each standard
level affect manufacturer finances. For this analysis, the GRIM uses
the NIA shipments forecasts from 2012 to 2047, the end of the analysis
period.
To calculate shipments, DOE developed a single shipment model for
all dishwashers based on an analysis of key market drivers for
residential dishwashers. For greater detail on the shipments analysis,
see section IV.G.1 above or chapter 9 of the direct final rule TSD.
Product and Capital Conversion Costs
Amended energy conservation standards will cause manufacturers to
incur conversion costs to bring their production facilities and product
designs into compliance. For the MIA, DOE classified these costs into
two major groups: (1) Product conversion costs and (2) capital
conversion costs. Product conversion costs are investments in research,
development, testing, marketing, and other non-capitalized costs
focused on making product designs comply with the amended energy
conservation standard. Capital conversion costs are investments in
property, plant, and equipment to adapt or change existing production
facilities so that new product designs can be fabricated and assembled.
DOE based its estimates of both the product and capital conversion
costs that would be required to meet each TSL on information obtained
from manufacturer interviews, the design pathways considered in the
engineering analysis, and market information about the number of
platform and product families for each manufacturer. DOE's estimates of
the product and capital conversion costs for the dishwashers addressed
in this rulemaking can be found in section V.B.2 of today's final rule
and in chapter 12 of the final rule TSD.
b. GRIM Scenarios
Standards-Case Shipment Forecasts
The MIA results presented in section V.B.2 all use shipments from
the reference NIA scenario in the GRIM. To determine efficiency
distributions in the standards case for the reference NIA scenario, DOE
analyzed the roll-up scenario. In this scenario, DOE assumed that base
case shipments of products that did not meet the new standard would
roll up to meet the standard in the compliance year. See section IV.G.2
for a description of the standards case efficiency distribution. DOE
also used a relative price elasticity that considers the possibility of
higher first costs lowering total shipments in the standards case.
The reference NIA scenario used historical data to derive a price
scaling index to forecast product costs. The MPCs and MSPs in the GRIM
use the default price forecast for all scenarios. See section IV.G.4
for a discussion of DOE's price forecasting methodology.
Markup Scenarios
MSP is equal to MPC times a manufacturer markup. The MSP includes
direct manufacturing production costs (i.e., labor, material, and
overhead estimated in DOE's MPCs) and all non-production costs (i.e.,
SG&A, R&D, and interest), along with profit.
To calculate the baseline manufacturer markup, DOE evaluated
publicly available financial information for manufacturers of major
household appliances whose product offerings include residential
dishwashers. During manufacturer interviews, DOE received feedback
supporting the calculated 1.24 baseline manufacturer markup. DOE used
the baseline manufacturer markup for all products when modeling the
base case in the GRIM.
For the standards case in the GRIM, DOE modeled two 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 both GRIM
markup scenarios, DOE placed no premium on higher efficiency products.
This assumption is informed by a market structure in which over 96
percent of products currently adhere to ENERGY STAR standards, leaving
little to no room for differentiation by efficiency level alone, and
was further supported by manufacturer interviews. The two standards
case markup scenarios are (1) a flat markup scenario, and (2) a
preservation of operating profit markup scenario. Modifying these
markups from the base case to the standards cases yields different sets
of impacts on manufacturers' changing industry revenue and cash flow.
The flat markup scenario assumes that the baseline markup of 1.24
is maintained for all products in the standards case. This scenario
represents the upper bound of industry profitability as manufacturers
are able to fully pass through additional costs due to standards to
their customers under this scenario.
The preservation of operating profit markup scenario is similar to
the flat markup scenario with the exception that in the standards case,
minimally compliant products lose a fraction of the baseline markup.
This scenario is the lower bound profitability scenario and represents
a more substantial impact to the dishwasher industry as manufacturers
attempt to maintain the lowest possible prices for entry level products
while securing the same level of operating profit they saw prior to
amended standards.
3. Manufacturer Interviews
DOE interviewed manufacturers representing more than 80 percent of
residential dishwasher sales. These interviews were in addition to
those DOE conducted as part of the engineering analysis. DOE used these
interviews to tailor the GRIM to incorporate unique financial
characteristics of the industry. All interviews provided information
that DOE used to evaluate the impacts of potential amended energy
conservation standards on manufacturer cash flows, manufacturing
capacities, and employment levels. See appendix 12-A of the direct
final rule TSD for additional information on the MIA interviews. The
following sections describe the most significant issues identified by
manufacturers.
a. Dishwasher Performance
All manufacturers interviewed expressed concerns about the
potential impacts of amended standards on product performance, citing
several

[[Page 31941]]

adverse and possibly severe consequences of standards above those
agreed upon in the Joint Petition. For higher efficiency standards, the
performance metrics manufacturers expect to be most severely impacted
include wash performance, drying performance, cycle time, and the noise
levels reached in operation. In considering these metrics,
manufacturers anticipate negative reactions ranging from small but
meaningful changes in consumer behavior to higher rates of service
calls and returns. For efficiency standards well above those proposed
in the Joint Petition, manufacturers foresee blanket rejection of
poorly performing products in the market. In considering impacts to
wash performance, manufacturers cited an increase in unnecessary
rinsing or washing of dishes prior to loading the dishwasher, switching
to a more aggressive cycle, and running multiple cycles when dishes are
not adequately cleaned in a single cycle as the most likely changes in
consumer behavior. Manufacturers went on to suggest that any of these
changes would result in an increase in both energy and water
consumption over that used by a dishwasher of satisfactory performance.
To mitigate the impact of future standards on product performance,
several manufacturers recommended the adoption of a performance metric
into the test procedure and standard.
While all manufacturers suggested that the efficiency level
specified in the Joint Petition would not likely have a substantial
negative impact on wash performance, some manufacturers noted that
standards above this level would result in a decrease in performance
unless substantially higher-cost technology changes were implemented.
The comments did not indicate the specific technology changes that
would be required. Even without such technology changes, however,
several manufacturers already sell products at efficiency levels above
those specified by the Joint Petition, including the max-tech
efficiency level. Accordingly, DOE evaluated these efficiency levels as
part of this rulemaking.
b. Test Procedures
Manufacturers raised concerns over the current DOE dishwasher test
procedure and the multitude of additional dishwasher test procedures in
the field today. Several manufacturers suggested that the current DOE
test procedure does not accurately capture the energy used by
dishwashers in the field. These manufacturers cite the single cycle
specification and lack of performance metrics in the test procedure as
providing an easy avenue for circumvention of the standards. In the
scenario described, manufacturers may optimize a particular cycle to
perform well on the DOE test procedure with the implicit understanding
that this cycle will not meet customer expectations and thus will not
be used in the field as customers opt for a different, more energy-
intensive cycle.
In contrast, other manufacturers raised concerns over expanding the
test procedure to cover multiple cycles citing the additional testing
burden this would generate. Similarly, some manufacturers raised
concerns over how DOE would implement a performance test, noting that
there already exist numerous performance tests in the industry
including those developed by AHAM, IEC, and Consumer Reports and that
each performance test procedure favors a different machine cycle
algorithm.
As discussed in sections II.A and II.B.4, the DOE test procedure
for residential dishwashers is found at Title 10 of the CFR part 430,
subpart B, appendix C. DOE is considering amendments to the test
procedure to incorporate measures of standby mode and off mode energy
consumption in accordance with statutory requirements. DOE will
consider concerns regarding active mode testing provisions, including
those discussed above, in the test procedure rulemaking.
c. Increased Competition
Manufacturers of both baseline and high efficiency products
anticipate an increase in competition in industry stemming from amended
standards. Manufacturers whose market share is largely attributed to
products currently below amended standards expect to see either the
removal of features from higher efficiency units as a means to cut
costs to maintain a low-cost minimally-compliant product, or the
disappearance of entry level models as they are forced to add other
features and cost in line with current higher efficiency products. If
the latter approach prevails, manufacturers of higher efficiency
products expect to see increased competition as manufacturers which
previously focused on low efficiency products move into their target
segment of the market. As noted in section III.D.1.d, the Attorney
General provides DOE with a determination and analysis of the impact of
any lessening of competition that is likely to result from the
imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii))
d. Cumulative Regulatory Burden
Several manufacturers noted that dishwashers are but one of a suite
of appliances they produce and that the cumulative burden of research
and development to meet standards, capital expenditure and retraining
of staff to produce products at the new standards, and product testing
to certify compliance of new products represent a significant burden
when taken in combination across their various product lines.
Manufacturers suggest that the ability to establish standards in a
coordinated fashion by such vehicles as a joint petition and receiving
adequate notice of DOE's plans for amended standards are both necessary
elements in mitigating the cumulative burden and aligning changes in
efficiency regulations with the product development cycle. Cumulative
regulatory burden is discussed further in section V.B.2.e of today's
direct final rule and chapter 12 of the direct final rule TSD.

J. Employment Impact Analysis

DOE considers employment impacts in the domestic economy as one
factor in selecting a proposed standard. Employment impacts include
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 from standards
consist of the net jobs created or eliminated in the national economy,
other than in the manufacturing sector being regulated, caused by:
(1) Reduced spending by end users on energy;
(2) Reduced spending on new energy supply by the utility industry;
(3) Increased spending on new products to which the new standards
apply; and
(4) The effects of those three factors throughout the economy.
One method for assessing the possible effects on the demand for
labor of such shifts in economic activity is to compare sector
employment statistics developed by the Labor Department's Bureau of
Labor Statistics (BLS).\32\ The BLS regularly publishes its estimates
of the number of jobs per million dollars of economic activity in
different sectors of

[[Page 31942]]

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.\33\
There are many reasons for these differences, including wage
differences and the fact that the utility sector is more capital-
intensive and less labor-intensive than other sectors. Energy
conservation standards have the effect of reducing consumer utility
bills. Because reduced consumer expenditures for energy likely lead to
increased expenditures in other sectors of the economy, the general
effect of efficiency standards is to shift economic activity from a
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, based
on the BLS data alone, DOE believes net national employment will
increase due to shifts in economic activity resulting from amended
standards for dishwashers.
---------------------------------------------------------------------------

\32\ Data on industry employment, hours, labor compensation,
value of production, and the implicit price deflator for output for
these industries are available upon request by calling the Division
of Industry Productivity Studies (202-691-5618) or by sending a
request by email to dipsweb@bls.gov. Available at: www.bls.gov/news.release/prin1.nr0.htm.
\33\ See Bureau of Economic Analysis, Regional Multipliers: A
User Handbook for the Regional Input-Output Modeling System (RIMS
II). Washington, DC. U.S. Department of Commerce, 1992.
---------------------------------------------------------------------------

For the standard levels considered in today's direct final rule,
DOE estimated indirect national employment impacts using an input/
output model of the U.S. economy called Impact of Sector Energy
Technologies version 3.1.1 (ImSET).\34\ 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.
---------------------------------------------------------------------------

\34\ J. M. Roop, M. J. Scott, and R. W. Schultz, ImSET 3.1:
Impact of Sector Energy Technologies, PNNL-18412, Pacific Northwest
National Laboratory, 2009. Available at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf.
---------------------------------------------------------------------------

DOE notes that ImSET is not a general equilibrium forecasting
model, and understands the uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Because ImSET does not incorporate price changes, the
employment effects predicted by ImSET may over-estimate actual job
impacts over the long run for this rule. Because ImSET predicts small
job impacts resulting from this rule, regardless of these
uncertainties, the actual job impacts are likely to be negligible in
the overall economy. DOE may consider the use of other modeling
approaches for examining long run employment impacts. DOE also notes
that the employment impacts estimated with ImSET for the entire economy
differ from the employment impacts in the dishwasher manufacturing
sector estimated using the GRIM in the MIA. The methodologies used and
the sectors analyzed in the ImSET and GRIM models are different. For
more details on the employment impact analysis, see chapter 13 of the
direct final rule TSD.

K. Utility Impact Analysis

The utility impact analysis estimates several important effects on
the utility industry of the adoption of new or amended standards. For
this analysis, DOE used the NEMS-BT model to generate forecasts of
electricity consumption, electricity generation by plant type, and
electric generating capacity by plant type, that would result from each
TSL. DOE obtained the energy savings inputs associated with efficiency
improvements to considered products from the NIA. DOE conducts the
utility impact analysis as a scenario that departs from the latest AEO
Reference case. In the analysis for today's rule, the estimated impacts
of standards are the differences between values forecasted by NEMS-BT
and the values in the AEO2011 Reference case. For more details on the
utility impact analysis, see chapter 14 of the direct final rule TSD.

L. Emissions Analysis

In the emissions analysis, DOE estimated the reduction in power
sector emissions of CO2, NOX, and Hg from amended
energy conservation standards for distribution transformers. DOE used
the NEMS-BT computer model, which is run similarly to the AEO NEMS,
except that distribution transformer energy use is reduced by the
amount of energy saved (by fuel type) due to each TSL. The inputs of
national energy savings come from the NIA spreadsheet model, while the
output is the forecasted physical emissions. The net benefit of each
TSL is the difference between the forecasted emissions estimated by
NEMS-BT at each TSL and the AEO Reference Case. NEMS-BT tracks
CO2 emissions using a detailed module that provides results
with broad coverage of all sectors and inclusion of interactive
effects. For today's rule, DOE used the version of NEMS-BT based on
AEO2011, which incorporated projected effects of all emissions
regulations promulgated as of January 31, 2011.
SO2 emissions from affected electric generating units
(EGUs) are subject to nationwide and regional emissions cap and trading
programs, and DOE has determined that these programs create uncertainty
about the standards' impact on SO2 emissions. 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). SO2 emissions from 28 eastern States and DC are also
limited under the Clean Air Interstate Rule (CAIR, 70 Fed. Reg. 25162
(May 12, 2005)), which created an allowance-based trading program that
would gradually replaced the Title IV program in those States and DC.
Although CAIR has been remanded to EPA by the U.S. Court of Appeals for
the District of Columbia Circuit (D.C. Circuit), see North Carolina v.
EPA, 550 F.3d 1176 (D.C. Cir. 2008), it remained in effect temporarily,
consistent with the D.C. Circuit's earlier opinion in North Carolina v.
EPA, 531 F.3d 896 (D.C. Cir. 2008). On July 6, 2010, EPA issued the
Transport Rule proposal, a replacement for CAIR. 75 FR 45210 (Aug. 2,
2010). On July 6, 2011, EPA issued the final Transport Rule, titled the
Cross-State Air Pollution Rule. 76 FR 48208 (August 8, 2011). (See
http://www.epa.gov/crossstaterule/). On December 30, 2011, however, the
D.C. Circuit stayed the new rules while a panel of judges reviews them,
and told EPA to continue enforcing CAIR (see EME Homer City Generation
v. EPA, No. 11-1302, Order at *2 (D.C. Cir. Dec. 30, 2011)). The AEO
2011 NEMS-BT used for today's direct final rule assumes the
implementation of CAIR.
The attainment of emissions caps typically is flexible among EGUs
and is enforced through the use of emissions allowances and tradable
permits. Under existing EPA regulations, any excess SO2
emissions allowances resulting from the lower electricity demand caused
by the imposition of an efficiency standard could be used to permit
offsetting increases in SO2 emissions by any regulated EGU.
However, if the standard resulted in a permanent increase in the
quantity of unused emissions allowances, there would be an overall
reduction in SO2 emissions from the standards. While there
remains some uncertainty about the ultimate effects of efficiency
standards on SO2 emissions covered by the existing cap-and-
trade system, the NEMS-BT modeling system that DOE uses to forecast
emissions reductions currently indicates that no physical reductions in
power sector emissions would occur for SO2. DOE

[[Page 31943]]

acknowledges, however, that even though there is a cap on
SO2 emissions and uncertainty whether efficiency standards
would reduce SO2 emissions, it is possible that standards
could reduce the compliance cost by reducing demand for SO2
allowances.
As discussed above, the AEO 2011 NEMS used for today's direct final
rule assumes the implementation of CAIR, which established a cap on
NOX emissions in 28 eastern States and the District of
Columbia. With CAIR in effect, energy conservation standards are
expected to have little or no physical effect on NOX
emissions in the States covered by CAIR, for the same reasons that they
may have little effect on SO2 emissions. However, the
standards would be expected to reduce NOX emissions in the
22 States not affected by the CAIR. For these 22 states, DOE used NEMS-
BT to forecast NOX emission reductions from the standards
that are considered in today's direct final rule.
On February 16, 2012, EPA issued national emissions standards for
hazardous air pollutants (NESHAPs) for mercury and certain other
pollutants emitted from coal and oil-fired EGUs. 77 FR 9304. The
NESHAPs do not include emissions caps and, as such, DOE's energy
conservation standards would likely reduce Hg emissions. For the
emissions analysis for this rulemaking, DOE estimated mercury emissions
reductions using NEMS-BT based on AEO2011, which does not incorporate
the NESHAPs. DOE expects that future versions of the NEMS-BT model will
reflect the implementation of the NESHAPs.

M. Monetizing Carbon Dioxide and Other Emissions Impacts

As part of the development of this direct final rule, DOE
considered the estimated monetary benefits likely to result from the
reduced emissions of CO2 and NOX that are
expected to result from each of the considered TSLs. In order to make
this calculation similar to the calculation of the NPV of consumer
benefit, DOE considered the reduced emissions expected to result over
the lifetime of products shipped in the forecast period for each TSL.
This section summarizes the basis for the monetary values used for each
of these emissions and presents the benefits estimates considered.
For today's direct final rule, DOE is relying on a set of values
for the social cost of carbon (SCC) that was developed by an
interagency process. A summary of the basis for these values is
provided below, and a more detailed description of the methodologies
used is provided in appendix 15-A of the direct final rule TSD.
1. Social Cost of Carbon
Under Executive Order 12866, agencies must, to the extent permitted
by law, ``assess both the costs and the benefits of the intended
regulation and, recognizing that some costs and benefits are difficult
to quantify, propose or adopt a regulation only upon a reasoned
determination that the benefits of the intended regulation justify its
costs.'' The purpose of the SCC estimates presented here is to allow
agencies to incorporate the monetized social benefits of reducing
CO2 emissions into cost-benefit analyses of regulatory
actions that have small, or ``marginal,'' impacts on cumulative global
emissions. The estimates are presented with an acknowledgement of the
many uncertainties involved and with a clear understanding that they
should be updated over time to reflect increasing knowledge of the
science and economics of climate impacts.
As part of the interagency process that developed these SCC
estimates, technical experts from numerous agencies met on a regular
basis to consider public comments, explore the technical literature in
relevant fields, and discuss key model inputs and assumptions. The main
objective of this process was to develop a range of SCC values using a
defensible set of input assumptions grounded in the existing scientific
and economic literatures. In this way, key uncertainties and model
differences transparently and consistently inform the range of SCC
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
The SCC is an estimate of the monetized damages associated with an
incremental increase in carbon emissions in a given year. It is
intended to include (but is not limited to) changes in net agricultural
productivity, human health, property damages from increased flood risk,
and the value of ecosystem services. Estimates of the SCC are provided
in dollars per metric ton of carbon dioxide.
When attempting to assess the incremental economic impacts of
carbon dioxide emissions, the analyst faces a number of serious
challenges. A recent report from the National Research Council \35\
points out that any assessment will suffer from uncertainty,
speculation, and lack of information about (1) future emissions of
greenhouse gases, (2) the effects of past and future emissions on the
climate system, (3) the impact of changes in climate on the physical
and biological environment, and (4) the translation of these
environmental impacts into economic damages. As a result, any effort to
quantify and monetize the harms associated with climate change will
raise serious questions of science, economics, and ethics and should be
viewed as provisional.
---------------------------------------------------------------------------

\35\ National Research Council. Hidden Costs of Energy: Unpriced
Consequences of Energy Production and Use. National Academies Press:
Washington, DC. 2009.
---------------------------------------------------------------------------

Despite the serious limits of both quantification and monetization,
SCC estimates can be useful in estimating the social benefits of
reducing carbon dioxide emissions. Consistent with the directive quoted
above, the purpose of the SCC estimates presented here is to make it
possible for agencies to incorporate the social benefits from reducing
carbon dioxide emissions into cost-benefit analyses of regulatory
actions that have small, or ``marginal,'' impacts on cumulative global
emissions. Most Federal regulatory actions can be expected to have
marginal impacts on global emissions.
For such policies, the agency can estimate the benefits from
reduced (or costs from increased) emissions in any future year by
multiplying the change in emissions in that year by the SCC value
appropriate for that year. The net present value of the benefits can
then be calculated by multiplying each of these future benefits by an
appropriate discount factor and summing across all affected years. This
approach assumes that the marginal damages from increased emissions are
constant for small departures from the baseline emissions path, an
approximation that is reasonable for policies that have effects on
emissions that are small relative to cumulative global carbon dioxide
emissions. For policies that have a large (non-marginal) impact on
global cumulative emissions, there is a separate question of whether
the SCC is an appropriate tool for calculating the benefits of reduced
emissions. This concern is not applicable to this notice, and DOE does
not attempt to answer that question here.
At the time of the preparation of this notice, the most recent
interagency estimates of the potential global benefits resulting from
reduced CO2 emissions in 2010, expressed in 2010$, were
$4.9, $22.3, $36.5, and $67.6 per metric ton avoided. For emission
reductions that occur in later years, these values grow in real terms
over time. Additionally, the interagency group determined that a range
of values from 7 percent to 23 percent should be used to adjust the
global SCC to calculate domestic

[[Page 31944]]

effects,\36\ although preference is given to consideration of the
global benefits of reducing CO2 emissions.
---------------------------------------------------------------------------

\36\ It is recognized that this calculation for domestic values
is approximate, provisional, and highly speculative. There is no a
priori reason why domestic benefits should be a constant fraction of
net global damages over time.
---------------------------------------------------------------------------

It is important to emphasize that the interagency process is
committed to updating these estimates as the science and economic
understanding of climate change and its impacts on society improves
over time. Specifically, the interagency group has set a preliminary
goal of revisiting the SCC values within 2 years or at such time as
substantially updated models become available, and to continue to
support research in this area. In the meantime, the interagency group
will continue to explore the issues raised by this analysis and
consider public comments as part of the ongoing interagency process.
b. Social Cost of Carbon Values Used in Past Regulatory Analyses
To date, economic analyses for Federal regulations have used a wide
range of values to estimate the benefits associated with reducing
carbon dioxide emissions. In the final model year 2011 CAFE rule, the
U.S. Department of Transportation (DOT) used both a ``domestic'' SCC
value of $2 per ton of CO2 and a ``global'' SCC value of $33
per ton of CO2 for 2007 emission reductions (in 2007$),
increasing both values at 2.4 percent per year.\37\ DOT also included a
sensitivity analysis at $80 per ton of CO2. See Average Fuel
Economy Standards Passenger Cars and Light Trucks Model Year 2011, 74
FR 14196 (March 30, 2009) (Final Rule); Final Environmental Impact
Statement Corporate Average Fuel Economy Standards, Passenger Cars and
Light Trucks, Model Years 2011-2015 at 3-90 (Oct. 2008) (Available at:
www.nhtsa.gov/fuel-economy). A domestic SCC value is meant to reflect
the value of damages in the United States resulting from a unit change
in carbon dioxide emissions, while a global SCC value is meant to
reflect the value of damages worldwide.
---------------------------------------------------------------------------

\37\ Throughout this section, references to tons of
CO2 refer to metric tons.
---------------------------------------------------------------------------

A 2008 regulation proposed by DOT assumed a domestic SCC value of
$7 per ton of CO2 (in 2006$) for 2011 emission reductions
(with a range of $0-$14 for sensitivity analysis), also increasing at
2.4 percent per year. See Average Fuel Economy Standards, Passenger
Cars and Light Trucks, Model Years 2011-2015, 73 FR 24352 (May 2, 2008)
(Proposed Rule); Draft Environmental Impact Statement Corporate Average
Fuel Economy Standards, Passenger Cars and Light Trucks, Model Years
2011-2015 at 3-58 (June 2008) (Available at: www.nhtsa.gov/fuel-economy). A regulation for packaged terminal air conditioners and
packaged terminal heat pumps finalized by DOE in October of 2008 used a
domestic SCC range of $0 to $20 per ton CO2 for 2007
emission reductions (in 2007$). 73 FR 58772, 58814 (Oct. 7, 2008) In
addition, EPA's 2008 Advance Notice of Proposed Rulemaking for
Greenhouse Gases identified what it described as ``very preliminary''
SCC estimates subject to revision. See Regulating Greenhouse Gas
Emissions Under the Clean Air Act, 73 FR 44354 (July 30, 2008). EPA's
global mean values were $68 and $40 per ton CO2 for discount
rates of approximately 2 percent and 3 percent, respectively (in 2006$
for 2007 emissions).
In 2009, an interagency process was initiated to offer a
preliminary assessment of how best to quantify the benefits from
reducing carbon dioxide emissions. To ensure consistency in how
benefits are evaluated across agencies, the Administration sought to
develop a transparent and defensible method, specifically designed for
the rulemaking process, to quantify avoided climate change damages from
reduced CO2 emissions. The interagency group did not
undertake any original analysis. Instead, it combined SCC estimates
from the existing literature to use as interim values until a more
comprehensive analysis could be conducted. The outcome of the
preliminary assessment by the interagency group was a set of five
interim values: Global SCC estimates for 2007 (in 2006 dollars) of $55,
$33, $19, $10, and $5 per ton of CO2. These interim values
represent the first sustained interagency effort within the U.S.
government to develop an SCC for use in regulatory analysis. The
results of this preliminary effort were presented in several proposed
and final rules and were offered for public comment in connection with
proposed rules, including the joint EPA-DOT fuel economy and
CO2 tailpipe emission proposed rules.
c. Current Approach and Key Assumptions
Since the release of the interim values, the interagency group
reconvened on a regular basis to generate improved SCC estimates, which
were used in this direct final rule. Specifically, the group considered
public comments and further explored the technical literature in
relevant fields. The interagency group relied on three integrated
assessment models (IAMs) commonly used to estimate the SCC: The FUND,
DICE, and PAGE models.\38\ These models are frequently cited in the
peer-reviewed literature and were used in the last assessment of the
Intergovernmental Panel on Climate Change. Each model was given equal
weight in the SCC values that were developed.
---------------------------------------------------------------------------

\38\ The models are described in appendix 15-A of the direct
final rule TSD.
---------------------------------------------------------------------------

Each model takes a slightly different approach to model how changes
in emissions result in changes in economic damages. A key objective of
the interagency process was to enable a consistent exploration of the
three models while respecting the different approaches to quantifying
damages taken by the key modelers in the field. An extensive review of
the literature was conducted to select three sets of input parameters
for these models: Climate sensitivity, socio-economic and emissions
trajectories, and discount rates. A probability distribution for
climate sensitivity was specified as an input into all three models. In
addition, the interagency group used a range of scenarios for the
socio-economic parameters and a range of values for the discount rate.
All other model features were left unchanged, relying on the model
developers' best estimates and judgments.
The interagency group selected four SCC values for use in
regulatory analyses. Three values are based on the average SCC from
three integrated assessment models, at discount rates of 2.5, 3, and 5
percent. The fourth value, which represents the 95th percentile SCC
estimate across all three models at a 3-percent discount rate, is
included to represent higher-than-expected impacts from temperature
change further out in the tails of the SCC distribution.

[[Page 31945]]

Table IV.13--Social Cost of CO2, 2010-2050
[In 2007 dollars per metric ton]
----------------------------------------------------------------------------------------------------------------
Discount rate
---------------------------------------------------
5% Avg 3% Avg 2.5% Avg 3% 95th
----------------------------------------------------------------------------------------------------------------
2010........................................................ 4.7 21.4 35.1 64.9
2015........................................................ 5.7 23.8 38.4 72.8
2020........................................................ 6.8 26.3 41.7 80.7
2025........................................................ 8.2 29.6 45.9 90.4
2030........................................................ 9.7 32.8 50.0 100.0
2035........................................................ 11.2 36.0 54.2 109.7
2040........................................................ 12.7 39.2 58.4 119.3
2045........................................................ 14.2 42.1 61.7 127.8
2050........................................................ 15.7 44.9 65.0 136.2
----------------------------------------------------------------------------------------------------------------

It is important to recognize that a number of key uncertainties
remain, and that current SCC estimates should be treated as provisional
and revisable since they will evolve with improved scientific and
economic understanding. The interagency group also recognizes that the
existing models are imperfect and incomplete. The National Research
Council report mentioned above points out that there is tension between
the goal of producing quantified estimates of the economic damages from
an incremental ton of carbon and the limits of existing efforts to
model these effects. There are a number of concerns and problems that
should be addressed by the research community, including research
programs housed in many of the agencies participating in the
interagency process to estimate the SCC.
DOE recognizes the uncertainties embedded in the estimates of the
SCC used for cost-benefit analyses. As such, DOE and others in the U.S.
Government intend to periodically review and reconsider those estimates
to reflect increasing knowledge of the science and economics of climate
impacts, as well as improvements in modeling. In this context,
statements recognizing the limitations of the analysis and calling for
further research take on exceptional significance.
In summary, in considering the potential global benefits resulting
from reduced CO2 emissions, DOE used the most recent values
identified by the interagency process, adjusted to 2010$ using the GDP
price deflator. For each of the four cases specified, the values used
for emissions in 2010 were $4.9, $22.3, $36.5, and $67.6 per metric ton
avoided (values expressed in 2010$).\39\ To monetize the CO2
emissions reductions expected to result from amended standards for
dishwashers, DOE used the values identified in Table A1 of the ``Social
Cost of Carbon for Regulatory Impact Analysis Under Executive Order
12866,'' which is reprinted in appendix 16-A of the direct final rule
TSD, appropriately adjusted to 2010$. To calculate a present value of
the stream of monetary values, DOE discounted the values in each of the
four cases using the specific discount rate that had been used to
obtain the SCC values in each case.
---------------------------------------------------------------------------

\39\ Table A1 presents SCC values through 2050. For DOE's
calculation, it derived values after 2050 using the 3-percent per
year escalation rate used by the interagency group.
---------------------------------------------------------------------------

2. Valuation of Other Emissions Reductions
DOE investigated the potential monetary benefit of reduced
NOX emissions from the TSLs it considered. As noted above,
amended energy conservation standards would reduce NOX
emissions in those 22 States that are not affected by the CAIR, in
addition to the reduction in site NOX emissions nationwide.
DOE estimated the monetized value of NOX emissions
reductions resulting from each of the TSLs considered for today's
direct final rule based on environmental damage estimates from the
literature. Available estimates suggest a very wide range of monetary
values, ranging from $370 per ton to $3,800 per ton of NOX
from stationary sources, measured in 2001$ (equivalent to a range of
$450 to $4,623 per ton in 2010$).\40\ In accordance with OMB guidance,
DOE conducted two calculations of the monetary benefits derived using
each of the economic values used for NOX, one using a real
discount rate of 3 percent and another using a real discount rate of 7
percent.\41\
---------------------------------------------------------------------------

\40\ For additional information, refer to U.S. Office of
Management and Budget, Office of Information and Regulatory Affairs.
2006 Report to Congress on the Costs and Benefits of Federal
Regulations and Unfunded Mandates on State, Local, and Tribal
Entities. 2006. Washington, DC.
\41\ OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
---------------------------------------------------------------------------

DOE is aware of multiple agency efforts to determine the
appropriate range of values used in evaluating the potential economic
benefits of reduced Hg emissions. DOE has decided to await further
guidance regarding consistent valuation and reporting of Hg emissions
before it monetizes Hg in its rulemakings.

V. Analytical Results

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

A. Trial Standard Levels

DOE analyzed the benefits and burdens of four TSLs for residential
dishwashers. These TSLs were developed using combinations of efficiency
levels for the standard and compact product classes analyzed by DOE.
DOE presents the results for those TSLs in today's final rule. DOE
presents the results for all efficiency levels that it analyzed in the
direct final rule TSD. Table V.1 presents the TSLs and the
corresponding efficiency levels for dishwashers. TSL 4 represents the
maximum technologically feasible (``max-tech'') improvements in energy
efficiency for residential dishwashers. TSL 3 consists of the next
efficiency level below the max-tech level for standard dishwashers, and
the max-tech level for compacts. The efficiency levels in TSL 2
correspond to the recommended levels in the Joint Petition. TSL 1
consists of the first

[[Page 31946]]

efficiency levels considered above the baseline.

Table V.1--Trial Standard Levels for Residential Dishwashers
----------------------------------------------------------------------------------------------------------------
Standard Compact
---------------------------------------------------------------------------
TSL Annual energy use
CSL (KwH) CSL Annual energy use (kWh)
----------------------------------------------------------------------------------------------------------------
1................................... 1 324 1 222
2................................... 2 307 1 222
3................................... 4 234 2 154
4................................... 5 180 2 154
----------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
Consumers affected by new or amended standards usually experience
higher purchase prices and lower operating costs. Generally, the
impacts on individual consumers are best captured by changes in LCC and
by the PBP. Therefore, DOE calculated the LCC and PBP analyses for the
potential standard levels considered in this rulemaking. DOE's LCC and
PBP analyses provided key outputs for each TSL, which are reported by
dishwasher product class in Table V.2 and Table V.3. The LCC and its
components refer to the average values at each efficiency level. The
average LCC savings (averaged over all sample consumers), as well as
the fraction of product consumers for which the LCC will decrease (net
benefit), increase (net cost), or exhibit no change (no impact), are
relative to the base-case efficiency distribution. The last column in
the tables is the median PBP for the consumer purchasing a design that
complies with the TSL. DOE presents the median PBP because it is the
most statistically robust measure of the PBP. The results for each
potential standard level are relative to the efficiency distribution in
the base case (no amended standards). DOE based the LCC and PBP
analyses on the range of energy consumption under conditions of actual
product use.

Table V.2--LCC and PBP Results for Standard Dishwashers
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost (2010$) LCC savings Payback
------------------------------------------------------------------------------------------- period
TSL Efficiency level (kWh/yr) Discounted Average Percent of households that experience (years)
Installed operating LCC savings ---------------------------------------------------
cost cost (2010$) Net cost No impact Net benefit Median
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1 324............................................................... $656 $445 $1,101 $1 2 96 2 5.9
2 307............................................................... 674 411 1,086 3 19 64 17 11.8
3 234............................................................... 734 318 1,052 41 30 20 50 6.6
4 180............................................................... 745 232 977 108 23 9 68 4.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Table V.3--LCC and PBP Results for Compact Dishwashers
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Life-cycle cost (2010$) LCC savings Payback
------------------------------------------------------------------------------------------- period
TSL Efficiency level (kWh/yr) Discounted Average Percent of households that experience (years)
Installed operating LCC savings ---------------------------------------------------
cost cost (2010$) Net cost No impact Net benefit Median
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1, 2 222............................................................... $623 $297 $920 $12 7 76 18 0.3
3, 4 154............................................................... 638 206 844 52 5 50 44 2.1
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For standard-sized dishwashers, DOE also considered an alternative
base-case efficiency distribution that uses a different set of
historical data. LCC and PBP results using this distribution are
described in appendix 8-F of the direct final rule TSD.
b. Consumer Subgroup Analysis
As described in section IV.H, DOE determined the impact of the
considered TSLs on low-income households and senior-only
households.\42\ Table V.4 compares the average LCC savings at each
efficiency level for the two consumer subgroups, along with the average
LCC savings for the entire sample for each product class for
dishwashers. For today's standards, the average LCC savings for low-
income households and senior-only households at the considered
efficiency levels are not substantially different from the average for
all households. At higher efficiency levels the average LCC savings for
these subgroups are somewhat lower than the average for all households.
Chapter 11 of the direct final rule TSD presents the complete LCC and
PBP results for the two subgroups.
---------------------------------------------------------------------------

\42\ DOE did not analyze subgroup impacts for compact
dishwashers because the saturation of these products is extremely
small.

[[Page 31947]]

Table V.4--Standard Dishwashers: Comparison of Average LCC Savings for Consumer Subgroups and All Households
----------------------------------------------------------------------------------------------------------------
Low-income Senior-only
TSL households households All households
----------------------------------------------------------------------------------------------------------------
2010$
-----------------------------------------------------
1......................................................... $0 $0 $1
2......................................................... 3 2 3
3......................................................... 26 24 41
4......................................................... 84 78 108
----------------------------------------------------------------------------------------------------------------

c. Rebuttable Presumption Payback
As discussed above, EPCA provides 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
the considered standard levels, DOE used discrete values rather than
distributions for input values, and, as required by EPCA, based the
energy use calculation on the DOE test procedures for residential
dishwashers. As a result, DOE calculated a single rebuttable
presumption payback value, and not a distribution of payback periods,
for each efficiency level.
Table V.5 presents the average rebuttable presumption payback
periods for the considered TSLs. While DOE examined the rebuttable-
presumption criterion, it considered whether the standard levels
considered for today's 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). The results of that analysis serve as the
basis for DOE to evaluate the economic justification for a potential
standard level (thereby supporting or rebutting the results of any
preliminary determination of economic justification).

Table V.5--Dishwashers: Rebuttable PBPs
----------------------------------------------------------------------------------------------------------------
Trial standard level
---------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Standard (years)............................................ 5.40 5.51 5.57 4.00
Compact (years)............................................. 0.23 0.23 1.02 1.02
----------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of amended energy
conservation standards on manufacturers of residential dishwashers. The
section below describes the expected impacts on manufacturers at each
TSL. Chapter 12 of the direct final rule TSD explains the analysis in
further detail.
a. Industry Cash Flow Analysis Results
DOE modeled two scenarios using different markup assumptions. Each
scenario results in a unique set of cash flows and corresponding
industry value at each TSL. These assumptions correspond to the bounds
of a range of market responses that DOE anticipates could occur in the
standards case. The tables below depict the financial impacts on
manufacturers (represented by changes in INPV) and the conversion costs
DOE estimates manufacturers would incur at each TSL. The first table
corresponds to the flat markup scenario and reflects the lower (less
severe) bound of impacts whereas the second table corresponds to the
preservation of operating profit scenario and reflects the upper bound
of impacts.
The INPV results refer to the difference in industry value between
the base case and the standards case, which DOE calculated by summing
the discounted industry cash flows from the base year (2012) through
the end of the analysis period. The discussion also notes the
difference in cash flow between the base case and the standards case in
the year before the compliance date of potential amended energy
conservation standards. This figure provides an estimate of the
required conversion costs relative to the cash flow generated by the
industry in the base case.

Table V.6--Manufacturer Impact Analysis for Residential Dishwashers--Flat Markup Scenario
----------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ---------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
INPV......................... (2010$ millions) 637.5 593.2 563.6 508.6 491.9
Change in INPV............... (2010$ millions) ........... (44.3) (73.9) (128.9) (145.6)
(%)............. ........... -7.0% -11.6% -20.2% -22.8%
Product Conversion Costs..... (2010$ millions) ........... 27.8 34.9 66.5 76.7
Capital Conversion Costs..... (2010$ millions) ........... 45.5 59.1 195.4 226.3
----------------------------------------------------------------
Total Conversion Costs... (2010$ millions) ........... 73.2 94.0 261.9 303.0
----------------------------------------------------------------------------------------------------------------

[[Page 31948]]

Table V.7--Manufacturer Impact Analysis for Residential Dishwashers--Tiered Markup Scenario
----------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ---------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
INPV......................... (2010$ millions) 637.5 592.2 552.9 463.1 434.8
Change in INPV............... (2010$ millions) ........... (45.3) (84.6) (174.4) (202.7)
(%)............. ........... -7.1% -13.3% -27.4% -31.8%
Product Conversion Costs..... (2010$ millions) ........... 27.8 34.9 66.5 76.7
Capital Conversion Costs..... (2010$ millions) ........... 45.5 59.1 195.4 226.3
----------------------------------------------------------------
Total Conversion Costs... (2010$ millions) ........... 73.2 94.0 261.9 303.0
----------------------------------------------------------------------------------------------------------------

Because standard dishwashers represent over 99 percent of shipments
in the year leading up to amended standards, changes to this product
class contribute the majority of impacts to INPV across all TSLs
analyzed in this rulemaking.
At TSL 1, DOE estimates impacts on INPV to range from -$44.3
million to -$45.3 million, or a change in INPV of -7.0 percent to -7.1
percent. At this level, industry free cash flow is estimated to
decrease by approximately 56.5 percent to $21.9 million, compared to
the base-case value of $50.5 million in the year leading up to the
amended energy conservation standards. As TSL 1 corresponds to current
ENERGY STAR standards, and these products represent over 96 percent of
shipments in the year leading up to amended standards, only a very
small fraction of the market is affected at this efficiency level. In
either markup scenario, the impact to INPV at TSL 1 stems from the
conversion costs required to switch production lines from manufacturing
baseline units to those meeting the standards set at EL 1 for both
product classes.
As a large fraction of the energy used in dishwashing is associated
with heating the wash water, the design options proposed to meet this
efficiency level relate primarily to minimizing the amount of wash
water through spray-arm optimization and enabling greater control over
the wash water temperature. Both of these practices are in common use
in higher efficiency platforms across the industry and contribute to an
MPC of $209.25 for standard dishwashers. Because the industry already
produces a substantial number of products at this efficiency level,
product and capital conversion costs are limited to 73.2 million, which
accounts for switching production lines from baseline products to
existing higher efficiency platforms.
TSL 2 represents the efficiency level set forth in the Joint
Petition, and establishes a compliance date of 2013 as compared the
2018 compliance date for the other TSLs. At TSL 2, DOE estimates
impacts on INPV to range from -$73.9 million to -$84.6 million, or a
change in INPV of -11.6 percent to -13.3 percent. At this level,
industry free cash flow is estimated to decrease by approximately 192.2
percent to -$39.2 million, compared to the base-case value of $42.5
million in the year leading up to the amended energy conservation
standards. As with TSL 1, the impact to INPV at TSL 2 stems from the
conversion costs required to switch production lines from manufacturing
baseline units to those meeting the standards set at EL 2 for both
product classes. At TSL 2, these impacts grow as the number of products
requiring changes grows from 3.8 percent of shipments in the year
leading up to amended standards to 36.1 percent.
As a large fraction of the energy used in dishwashing is associated
with heating wash water, the design options proposed to meet this
efficiency level relate primarily to minimizing the amount of wash
water through additional optimization of the water lines as well as
upgrades to higher efficiency pumps and electronic controls.
Incorporating these design options leads to an estimated MPC of $222.80
for standard products. While a significant fraction of dishwashers
currently employ these energy and water saving measures, the product
and capital conversion costs rise to $94.0 million (as compared to
$73.2 million for TSL 1), to account for the additional switching of
production lines to higher efficiency platforms.
At TSL 3, DOE estimates impacts on INPV to range from -$128.9
million to -$174.4 million, or a change in INPV of -20.2 percent to -
27.4 percent. At this level, industry free cash flow is estimated to
decrease by approximately 212.6 percent to -$56.8 million, compared to
the base-case value of $50.5 million in the year leading up to the
amended energy conservation standards. While TSL 3 returns the
compliance date to 2018 (5 years after the compliance date for TSL 2)
the impact to INPV is more severe as less than 20 percent of shipments
in the year leading up to amended standards meet or exceed this
efficiency level. As such, the capital and product conversion costs
required to bring these products into compliance rise significantly to
a total of $261.9 million, $167.9 million more than at TSL 2. These
conversion costs stem from both the research programs needed to develop
such optimized products and the capital investment required to change
over the majority of production lines to produce these high efficiency
products.
The design options proposed to meet efficiency standards at TSL 3
include exchanging a heated drying system for a condensation drying
system, further optimizing the hydraulic system (extending to a
redesign of both the sump and water lines), and incorporating a flow
meter, temperature control, and a humidity sensor to finely tune water
consumption, temperature, and the drying cycle. Beyond component
exchanges alone, the design options proposed at TSL 3 extend to include
control strategies that would reduce the wash and rinse water
temperatures. The component changes required to enable these
improvements contribute to an MPC of $266.16 for standard dishwashers,
$43.37 above that at TSL 2.
At TSL 4, DOE estimates impacts on INPV to range from -$145.6
million to -$202.7 million, or a change in INPV of -22.8 percent to -
31.8 percent. At this level, industry free cash flow is estimated to
decrease by approximately -246.0 percent to -$73.7 million, compared to
the base-case value of $50.5 million in the year leading up to the
amended energy conservation standards. TSL 4 represents the max-tech
efficiency level for all dishwashers. The effects on INPV result from
similar sources as TSL 3, but the fraction of products in the market
that currently meet this standard is reduced to less than 9 percent in
the year leading up to amended standards. As such, standards at TSL 4
would affect nearly all platforms and will result in substantial

[[Page 31949]]

capital conversion costs associated with improvements to nearly all
production facilities. Because so few products exist at this level
today, nearly all manufacturers would face complete redesigns for
products to meet this standard. Accordingly, the product conversion
costs increase to reflect this substantial research effort. The total
conversion cost required to meet standards at TSL 5 is approximately
$303.0 million--a $41.1 million increase from TSL 4.
The design options proposed to meet the efficiency levels specified
at TSL 4 start with those at TSL 3, but replace the in-line flow-
through water heater with one that is integrated with the pump and
eliminate the fan used to circulate air during drying. Where these
design options have little impact on the product MPC, contributing to
only a $7.77 increase over that at TSL 3, they significantly impact
INPV because of the large conversion costs associated with developing
and producing these highly optimized products.
b. Impacts on Employment
DOE used the GRIM to estimate the domestic labor expenditures and
number of domestic production workers in the base case and at each TSL
from 2012 to 2047. DOE used the labor content of each product and the
manufacturing production costs from the engineering analysis to
estimate the total annual labor expenditures associated with
residential dishwashers sold in the United States. Using statistical
data from the most recent U.S. Census Bureau's 2009 ``Annual Survey of
Manufactures'' and interviews with manufacturers, DOE estimates that 95
percent of residential dishwashers sold in the United States are
manufactured domestically and hence that portion of total labor
expenditures is attributable to domestic labor. Labor expenditures for
the manufacture of a product are a function of the labor intensity of
the product, the sales volume, and an assumption that wages in real
terms remain constant.
Using the GRIM, DOE forecasts the domestic labor expenditure for
residential dishwasher production labor in 2018 will be approximately
$248.7 million. Using the $27.03 hourly wage rate including fringe
benefits and 2,003 production hours per year per employee found in the
2009 ASM, DOE estimates there will be approximately 4,593 domestic
production workers involved in manufacturing residential dishwashers in
2018, the year in which amended standards would go into effect for TSL
1, TSL 3, and TSL 4. In addition, DOE estimates that 1,120 non-
production employees in the United States will support residential
dishwasher production.\43\ The employment spreadsheet of the
residential dishwasher GRIM shows the annual domestic employment
impacts in further detail.
The production worker estimates in this section cover workers only
up to the line-supervisor level who are directly involved in
fabricating and assembling dishwashers within an Original Equipment
Manufacturer (OEM) facility. Workers performing services that are
closely associated with production operations, such as material
handling with a forklift, are also included as production labor.
Additionally, the employment impacts shown are independent of the
employment impacts from the broader U.S. economy, which are documented
in chapter 13 of the direct final rule TSD.
Table V.8 depicts the potential levels of production employment
that could result following amended energy conservation standards as
calculated by the GRIM. The employment levels shown reflect the
scenario in which manufacturers continue to produce the same scope of
covered products in domestic facilities and domestic production is not
shifted to lower-labor-cost countries. If all existing production were
moved outside of the United States, the expected impact to domestic
manufacturing employment would be a loss of 4,593 jobs, the equivalent
of the total base case employment. Because there is a risk of
manufacturers evaluating sourcing decisions in response to amended
energy conservation standards, the expected impact to domestic
production employment falls between the potential increases as shown in
Table V.8, and the levels of job loss associated with all domestic
dishwasher manufacturing moving outside of the United States. The
discussion below includes a qualitative evaluation of the likelihood of
negative domestic production employment impacts at the various TSLs.

Table V.8--Total Number of Domestic Residential Dishwasher Production Workers in 2018 *
----------------------------------------------------------------------------------------------------------------
Trial standard level
Base case -------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production 4,593 4,601 4,679 4,658 4,799
Workers in 2018 (without changes in
production locations)....................
----------------------------------------------------------------------------------------------------------------
* The compliance date for residential dishwashers at TSL 1, TSL 3, and TSL 4 is 2018. At TSL 2, the compliance
date is 2013 as specified by the Joint Petition.

All examined TSLs show relatively minor impacts on domestic
employment levels relative to total industry employment. At all TSLs,
most of the design options analyzed by DOE do not greatly alter the
labor content of the final product. For example, longer or more complex
wash cycles or improved sump designs involve one-time changes to the
final product but do not significantly change the number of steps
required for the final assembly of the dishwasher (which would add
labor). Because many manufacturers have recently introduced high
efficiency products in the United States that meet or exceed the
standards in today's final rule, it is unlikely today's direct final
rule would greatly impact the sourcing decisions of these
manufacturers. However, at higher TSLs, some of the design options
analyzed greatly impact the ability of manufacturers to make product
changes within existing platforms. The very large upfront capital costs
at these levels could influence the decision of some manufacturers to
relocate some or all of their domestic production of dishwashers to
lower labor cost countries.
c. Impacts on Manufacturing Capacity
Nearly 64 percent of shipments of residential dishwashers already
comply with the amended energy conservation standards as agreed upon in
the Joint Petition and established in this rulemaking. Every
manufacturer that ships standard dishwashers offers products that meet
these amended energy conservation standards. Because manufacturers
would need to make only minor platform changes and/or increase

[[Page 31950]]

the production of existing products by the 2013 compliance date, the
experience of multiple manufacturers that already produce standards-
compliant dishwashers would allow the industry to meet the amended
energy conservation standards proposed in the Joint Petition without
any significant impact to manufacturing capacity in the interim.
d. Impacts on Sub-Groups of Manufacturers
Using average cost assumptions to develop an industry cash-flow
estimate may not be adequate for assessing differential impacts among
manufacturer subgroups. Small manufacturers, niche equipment
manufacturers, and manufacturers exhibiting a cost structure
substantially different from the industry average could be affected
disproportionately. DOE analyzed the impacts to small business, as
discussed in section VI.B. DOE did not identify any other subgroups for
residential dishwashers for this rulemaking.
e. Cumulative Regulatory Burden
While any one regulation may not impose a significant burden on
manufacturers, the combined effects of several impending regulations
may have serious consequences for some manufacturers, groups of
manufacturers, or an entire industry. Assessing the impact of a single
regulation may overlook this cumulative regulatory burden. In addition
to energy conservation standards, other regulations can significantly
affect manufacturers' financial operations. Multiple regulations
affecting the same manufacturer can strain profits and can 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.
Manufacturers provided comment on some of these regulations during
interviews. DOE summarizes and addresses these comments in section
IV.I.3. For the cumulative regulatory burden, DOE attempts to quantify
or describe the impacts of other Federal regulations that have a
compliance date within approximately 3 years of the compliance date of
this rulemaking. Most of the major regulations identified by DOE that
meet this criterion are other energy conservation standards for
products and equipment made by manufacturers of residential
dishwashers. See chapter 12 of the direct final rule TSD for the
results of DOE's analysis of the cumulative regulatory burden.
3. National Impact Analysis
a. Significance of Energy Savings
To estimate the energy savings attributable to potential standards
for dishwashers, DOE compared the energy consumption of those products
under the base case to their anticipated energy consumption under each
TSL. Table V.9 presents DOE's projections of the national energy
savings and national water savings for each TSL considered for
dishwashers.\44\ The savings were calculated using the approach
described in section IV.G.\45\ For standard-sized dishwashers, DOE also
considered an alternative base-case efficiency trend that was estimated
using a different set of historical data. Results calculated using this
trend are described in appendix 10-D of the direct final rule TSD.
---------------------------------------------------------------------------

\44\ National energy and water savings are cumulative over a 30-
year period. Any savings for products entering the housing stock in
this 30-year period which occur beyond the 30-year time limit are
not reported in the national totals.
\45\ Chapter 10 of the direct final rule TSD presents tables
that also show the magnitude of the energy savings if the savings
are discounted at rates of 7 percent and 3 percent. Discounted
energy savings represent a policy perspective in which energy
savings realized farther in the future are less significant than
energy savings realized in the nearer term.

Table V.9--Dishwashers: Cumulative National Energy and Water Savings (2018-2047) *
----------------------------------------------------------------------------------------------------------------
Trial standard level
---------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Energy (quads).............................................. 0.02 0.07 0.94 1.59
Water (trillion gallons).................................... 0.01 0.14 0.56 1.71
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the impacts are counted for 2013-2047.

b. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV to the nation of the total costs
and savings for consumers that would result from particular standard
levels for dishwashers. In accordance with the OMB's guidelines on
regulatory analysis (OMB Circular A-4, section E, September 17, 2003),
DOE calculated NPV using both a 7-percent and a 3-percent real discount
rate. The 7-percent rate is an estimate of the average before-tax rate
of return to private capital in the U.S. economy, and reflects the
returns to real estate and small business capital as well as corporate
capital. DOE used this discount rate to approximate the opportunity
cost of capital in the private sector, since recent OMB analysis has
found the average rate of return to capital to be near this rate. In
addition, DOE used the 3-percent rate to capture the potential effects
of standards on private consumption (e.g., through higher prices for
products and the purchase of reduced amounts of energy). This rate
represents the rate at which society discounts future consumption flows
to their present value. This rate can be approximated by the real rate
of return on long-term government debt (i.e., yield on Treasury notes
minus annual rate of change in the Consumer Price Index), which has
averaged about 3 percent on a pre-tax basis for the last 30 years.
Table V.10 shows the consumer NPV results for each TSL DOE
considered for dishwashers, using a 3-percent and a 7-percent discount
rate. The impacts are counted over the lifetime of products purchased
in 2018-2047 for TSLs 1, 3 and 4, and in 2013-2047 for TSL 2.

[[Page 31951]]

Table V.10--Dishwashers: Cumulative Net Present Value of Consumer Benefits for Products Shipped in 2018-2047 *
----------------------------------------------------------------------------------------------------------------
Trial standard level
Discount rate ---------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Billion 2010$
---------------------------------------------------
3 percent................................................... 0.12 0.46 6.51 17.45
7 percent................................................... 0.03 0.08 1.96 5.88
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the impacts are counted over the lifetime of products shipped in 2013-2047.

The NPV results presented in Table V.10 are based on the default
product price trend. As discussed in section IV.G.3, DOE developed
several sensitivity cases with alternative forecasts of future prices
of dishwashers. The impact of these alternative forecasts on the NPV
results is presented in appendix 10-C of the direct final rule TSD.
For standard-sized dishwashers, DOE also considered an alternative
base-case efficiency trend that was estimated using a different set of
historical data. NPV results calculated using this trend are described
in appendix 10-D of the direct final rule TSD.
Circular A-4 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. DOE believes its standard 30-year
analysis is fully compliant with Circular A-4. For this rulemaking, DOE
undertook an additional sensitivity analysis of its standard 30-year
analysis, in compliance with Circular A-4, using a 9-year analytical
period. The choice of a 9-year period is a proxy for the timeline in
EPCA for the review of the energy conservation standard established in
this direct final rule and potential revision of and compliance with a
new standard for dishwashers.\46\ The timeframe established in EPCA may
not be statistically relevant with regard to the product lifetime,
product manufacturing cycles or other factors specific to dishwashers.
DOE notes that the review timeframe established in EPCA generally does
not overlap with the product lifetime, product manufacturing cycles or
other factors specific to dishwashers. Thus, this information is
presented for informational purposes only and is not indicative of any
change in DOE's analytical methodology.
---------------------------------------------------------------------------

\46\ EPCA requires DOE to review its standards at least once
every 6 years, and requires, for certain products including
dishwashers, 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
standards established in this direct final rule. 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 does not reflect the variability
that may occur in the timing of standards reviews and the fact that
for some consumer products, the compliance period is 5 years rather
than 3 years.
---------------------------------------------------------------------------

The sensitivity analysis results based on a 9-year analytical
period are presented below. Table IV.11 presents DOE's forecasts of the
national energy savings and national water savings for each TSL for
dishwashers.\47\ Table IV.12 shows the consumer NPV results for each
TSL DOE considered for dishwashers, using a 3-percent and a 7-percent
discount rate. For determination of the NPV, the impacts are counted
over the lifetime of products purchased in 2018-2026 for TSLs 1, 3 and
4, and in 2013-2021 for TSL 2 (note that the NPV estimate incorporates
all of the operating cost savings of dishwashers purchased in the 9
year analytical period).
---------------------------------------------------------------------------

\47\ National energy and water savings are cumulative over the
9-year period. Any savings for products entering the housing stock
in this 9-year period which occur beyond the 9-year time limit are
not reported in the national totals. In contrast, the social benefit
and cost estimates include the benefits and costs that are incurred
over the lifetime of the dishwashers irrespective of when they are
purchased.

Table V.11--Dishwashers: Cumulative National Energy and Water Savings, Nine-Year Analysis Period (2018-2026) *
----------------------------------------------------------------------------------------------------------------
Trial standard level
---------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Energy (quads).............................................. 0.00 0.01 0.13 0.22
Water (trillion gallons).................................... 0.00 0.02 0.08 0.24
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the impacts are counted for 2013-2021.

Table V.12--Dishwashers: Cumulative Net Present Value of Consumer Benefits for Products Shipped in 2018-2026,
Nine-Year Analysis Period *
----------------------------------------------------------------------------------------------------------------
Trial standard level
Discount rate ---------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Billion 2010$
---------------------------------------------------
3 percent................................................... 0.04 0.07 2.15 6.01
7 percent................................................... 0.02 0.00 0.93 2.89
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the impacts are counted over the lifetime of products shipped in 2013-2021.

[[Page 31952]]

c. Impacts on Employment
DOE develops estimates of the indirect employment impacts of
potential standards on the economy in general. As discussed above, DOE
expects energy conservation standards for dishwashers to reduce energy
bills for consumers of those products, and the resulting net savings to
be 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.J, DOE used an input/output model of
the U.S. economy to estimate indirect employment impacts of the TSLs
that DOE considered in this rulemaking. DOE understands that there are
uncertainties involved in projecting employment impacts, especially
changes in the later years of the analysis. Therefore, DOE generated
results for near-term timeframes, where these uncertainties are
reduced.
The results suggest that today's standards are likely to have
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 13 of the direct final rule TSD presents detailed
results.
4. Impact on Utility or Performance of Products
As presented in section III.D.1.d of this notice, DOE concluded
that the TSL adopted in this direct final rule would not reduce the
utility or performance of the dishwashers under consideration in this
rulemaking. Manufacturers of these products currently offer units that
meet or exceed today's standards. (42 U.S.C. 6295(o)(2)(B)(i)(IV))
5. Impact of Any Lessening of Competition
DOE has also considered any lessening of competition that is likely
to result from amended standards. The Attorney General determines the
impact, if any, of any lessening of competition likely to result from a
proposed standard, and transmits such determination to DOE, together
with an analysis of the nature and extent of such impact. (42 U.S.C.
6295(o)(2)(B)(i)(V) and (B)(ii))
DOE published a NOPR containing energy conservation standards
identical to those set forth in today's direct final rule and
transmitted a copy of today's direct final rule and the accompanying
TSD to the Attorney General, requesting that the DOJ provide its
determination on this issue. DOE will consider DOJ's comments on the
rule in determining whether to proceed with the direct final rule. DOE
will also publish and respond to DOJ's comments in the Federal Register
in a separate notice.
6. Need of the Nation To Conserve Energy
An improvement in the energy efficiency of the products subject to
today's rule is likely to improve the security of the nation's energy
system by reducing overall demand for energy. Reduced electricity
demand may also improve the reliability of the electricity system.
Energy savings from amended standards for residential dishwashers
are expected to produce environmental benefits in the form of reduced
emissions of air pollutants and greenhouse gases associated with
electricity production. Table V.13 provides DOE's estimate of
cumulative CO2, NOX, and Hg emissions reductions
that would be expected to result from the TSLs considered in this
rulemaking. In the environmental assessment (chapter 15 of the direct
final rule TSD), DOE reports annual CO2, NOX, and
Hg emissions reductions for each TSL.
As discussed in section IV.L, DOE has not reported SO2
emissions reductions from power plants because the NEMS-BT modeling
system that DOE uses to forecast emissions reductions currently
indicates that no physical reductions in power sector emissions would
occur for SO2. DOE also did not include NOX
emissions reduction from power plants in States subject to emissions
caps because in such a case an energy conservation standard would
likely not affect the overall level of NOX emissions in
those States.\48\
---------------------------------------------------------------------------

\48\ EPA issued the final Cross-State Air Pollution Rule on July
6, 2011 (www.epa.gov/crossstaterule/ rule/). The Cross-State Air
Pollution Rule will replace CAIR. In the emissions analysis for
today's amended energy conservation standards, DOE's discussion and
conclusions about NOX emissions assume the implementation
of CAIR. In future rulemakings, DOE will adjust its relevant models
to assume the implementation of the Cross-State Air Pollution Rule.

Table V.13--Emissions Reduction Estimated for Dishwasher Trial Standard Levels
[Cumulative in 2018-2047] *
----------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)............... 1.15 4.06 65.02 98.62
NOX (thousand tons)..................... 0.96 3.54 54.27 83.31
Hg (tons)............................... 0.004 0.000 0.274 0.304
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the impacts are counted for 2013-2047.

DOE also estimated monetary benefits likely to result from the
reduced emissions of CO2 and NOX that DOE
estimated for each of the TSLs considered for dishwashers. As discussed
in section IV.M, DOE used values for the SCC developed by an
interagency process. The four values for CO2 emissions
reductions in 2010 resulting from that process (expressed in 2010$) are
$4.9/ton (the average value from a distribution that uses a 5-percent
discount rate), $22.3/ton (the average value from a distribution that
uses a 3-percent discount rate), $36.5/ton (the average value from a
distribution that uses a 2.5-percent discount rate), and $67.6/ton (the
95th-percentile value from a distribution that uses a 3-percent
discount rate). The values for later years are higher due to increasing
damages as the magnitude of climate change increases. For each of the
four cases, DOE calculated a present value of the stream of annual
values using the same discount rate as used in the studies upon which
the dollar-per-ton values are based. Table V.14 presents the global
values of CO2 emissions reductions at each TSL. DOE
calculated domestic values as a range from 7 percent to 23 percent of
the global values. Those results are presented in Table V.15.

[[Page 31953]]

Table V.14--Estimates of Global Present Value of CO2 Emissions Reductions Under Dishwasher Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
Million 2010$
-----------------------------------------------------------------------
TSL 3% Discount
5% Discount 3% Discount 2.5% Discount rate, 95th
rate, average * rate, average * rate, average * percentile *
----------------------------------------------------------------------------------------------------------------
1....................................... 4.88 25.9 44.2 78.9
2....................................... 16.1 79.5 133 242
3....................................... 278 1484 2534 4515
4....................................... 427 2284 3904 6951
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
from a different part of the distribution.

Table V.15--Estimates of Domestic Present Value of CO2 Emissions Reductions Under Dishwasher Trial Standard
Levels
----------------------------------------------------------------------------------------------------------------
Million 2010$
--------------------------------------------------------------------------------------
TSL 5% Discount rate, 3% Discount rate, 2.5% Discount rate, 3% Discount rate,
average * average * average * 95th percentile *
----------------------------------------------------------------------------------------------------------------
1........................ 0 to 1.............. 2 to 6.............. 3 to 10............. 6 to 18.
2........................ 1 to 4.............. 6 to 18............. 9 to 31............. 17 to 56.
3........................ 19 to 64............ 104 to 341.......... 177 to 583.......... 316 to 1039.
4........................ 30 to 98............ 160 to 525.......... 273 to 898.......... 487 to 1599.
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
from a different part of the distribution.

DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other GHG emissions to changes in
the future global climate and the potential resulting damages to the
world economy continues to evolve rapidly. Thus, any value placed in
this rulemaking on reducing CO2 emissions is subject to
change. DOE, together with other Federal agencies, will continue to
review various methodologies for estimating the social 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. However, consistent with DOE's
legal obligations, and taking into account the uncertainty involved
with this particular issue, DOE has included in this final rule the
most recent values and analyses resulting from the ongoing interagency
review process.
DOE also estimated a range for the cumulative monetary value of the
economic benefits associated with NOX emissions reductions
anticipated to result from amended standards for residential
dishwashers. The dollar-per-ton values that DOE used are discussed in
section IV.M. Table V.16 presents the cumulative present values for
each TSL calculated using 3-percent and 7-percent discount rates.

Table V.16--Estimates of Present Value of NOX Emissions Reductions Under
Dishwasher Trial Standard Levels
------------------------------------------------------------------------
3% Discount rate 7% Discount rate
TSL (million 2010$) (million 2010$)
------------------------------------------------------------------------
1................... 0 to 3.................. 0 to 1.
2................... 1 to 10................. 0 to 5.
3................... 14 to 148............... 6 to 59.
4................... 22 to 230............... 9 to 91.
------------------------------------------------------------------------

The NPV of the monetized benefits associated with emissions
reductions can be viewed as a complement to the NPV of the consumer
savings calculated for each TSL considered in this rulemaking. Table
V.17 and Table V.18 present the NPV values that result from adding the
estimates of the potential economic benefits resulting from reduced
CO2 and NOX emissions in each of four valuation
scenarios to the NPV of consumer savings calculated for each TSL
considered in this rulemaking, at both a 7-percent and a 3-percent
discount rate. The CO2 values used in the columns of each
table correspond to the four scenarios for the valuation of
CO2 emission reductions presented in section IV.M.

Table V.17--Results of Adding Net Present Value of Consumer Savings (at 7-Percent Discount Rate) to Net Present
Value of Monetized Benefits From CO2 and NOX Emissions Reductions Under Dishwasher Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 7% discount rate added with:
---------------------------------------------------------------------------
SCC Value of $4.9/ SCC Value of SCC Value of SCC Value of
TSL metric ton CO2 * $22.3/metric ton $36.5/metric ton $67.6/metric ton
and low value for CO2 * and medium CO2 * and medium CO2 * and high
NOX ** (billion value for NOX ** value for NOX ** value for NOX **
2010$) (billion 2010$) (billion 2010$) (billion 2010$)
----------------------------------------------------------------------------------------------------------------
1................................... 0.04 0.06 0.08 0.11

[[Page 31954]]

2................................... 0.10 0.16 0.21 0.33
3................................... 2.24 3.48 4.53 6.53
4................................... 6.31 8.21 9.83 12.92
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC of CO2 in 2010, in 2010$. Their present values have been
calculated with scenario-consistent discount rates.
** Low Value corresponds to $450 per ton of NOX emissions. Medium Value corresponds to $2,537 per ton of NOX
emissions. High Value corresponds to $4,623 per ton of NOX emissions.

Table V.18--Results of Adding Net Present Value of Consumer Savings (at 3-Percent Discount Rate) to Net Present
Value of Monetized Benefits From CO2 and NOX Emissions Reductions Under Dishwasher Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 3% discount rate added with:
---------------------------------------------------------------------------
SCC Value of $4.9/ SCC Value of SCC Value of SCC Value of
TSL metric ton CO2 * $22.3/metric ton $36.5/metric ton $67.6/metric ton
and low value for CO2 * and medium CO2* and medium CO2 * and high
NOX ** (billion value for NOX ** value for NOX ** value for NOX **
2010$) (billion 2010$) (billion 2010$) (billion 2010$)
----------------------------------------------------------------------------------------------------------------
1................................... 0.13 0.15 0.17 0.20
2................................... 0.48 0.54 0.60 0.71
3................................... 6.80 8.07 9.12 11.17
4................................... 17.90 19.86 21.48 24.63
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC of CO2 in 2010, in 2010$. Their present values have been
calculated with scenario-consistent discount rates.
** Low Value corresponds to $450 per ton of NOX emissions. Medium Value corresponds to $2,537 per ton of NOX
emissions. High Value corresponds to $4,623 per ton of NOX emissions.

Although adding the value of consumer savings to the values of
emission reductions provides a valuable perspective, two issues should
be considered. First, the national operating cost savings are domestic
U.S. consumer monetary savings that occur as a result of market
transactions, while the value of CO2 reductions is based on
a global value. Second, the assessments of operating cost savings and
CO2 savings are performed with different methods that use
quite different time frames for analysis. The national operating cost
savings is measured for the lifetime of products shipped in 2013-2047.
The SCC values, on the other hand, reflect the present value of all
future climate-related impacts resulting from the emission of one ton
of carbon dioxide in each year. These impacts continue well beyond
2100.
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)(VI))) In
developing the direct final rule, DOE has also considered the Joint
Petition submitted to DOE. DOE recognizes the value of consensus
agreements submitted by parties in accordance with 42 U.S.C. 6295(p)(4)
and has weighed the value of such consensus in establishing the
standards set forth in today's final rule. DOE has encouraged the
submission of consensus agreements as a way to get diverse interested
parties together, to develop an independent and probative analysis
useful in DOE standard setting, and to expedite the rulemaking process.
DOE also believes that standard levels recommended in the consensus
agreement may increase the likelihood for regulatory compliance, while
decreasing the risk of litigation.

C. Conclusion

When considering proposed standards, the new or amended energy
conservation standard that DOE adopts for any type (or class) of
covered product shall 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,
considering to the greatest extent practicable 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))
The Department considered the impacts of standards at each TSL,
beginning with 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 trial standard level, tables present a summary of the results of
DOE's quantitative analysis for each TSL. In addition to the
quantitative results

[[Page 31955]]

presented in the tables, DOE also considers other burdens and benefits
that affect economic justification. Those include the impacts on
identifiable subgroups of consumers, such as low-income households and
seniors, who may be disproportionately affected by a national standard.
Section V.B.1 presents the estimated impacts of each TSL for these
subgroups.
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. This undervaluation suggests that
regulation that promotes energy efficiency can produce significant net
private gains (as well as producing social gains by, for example,
reducing pollution). There is evidence that consumers undervalue future
energy savings as a result of (1) a lack of information; (2) a lack of
sufficient salience of the long-term or aggregate benefits; (3) a lack
of sufficient savings to warrant delaying or altering purchases (for
example, an inefficient ventilation fan in a new building or the
delayed replacement of a water pump); (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 (that is, renter
versus owner; builder versus purchaser). Other literature indicates
that with less than perfect foresight and a high degree of uncertainty
about the future, consumers may trade off these types of investments at
a higher than expected rate between current consumption and uncertain
future energy cost savings.
In DOE's current regulatory analysis, potential changes in the
benefits and costs of a regulation due to changes in consumer purchase
decisions are included in two ways: First, if consumers forego a
purchase of a product in the standards case, this decreases sales for
product manufacturers and the cost to manufacturers is included in the
MIA. Second, DOE accounts for energy savings attributable only to
products actually used by consumers in the standards case; if a
regulatory option decreases the number of products used by consumers,
this decreases the potential energy savings from an energy conservation
standard. DOE provides detailed 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 (Reiss and White, 2005).\49\
---------------------------------------------------------------------------

\49\ P.C. Reiss and M.W. White. Household Electricity Demand,
Revisited. Review of Economic Studies (2005) 72, 853-883.
---------------------------------------------------------------------------

While DOE is not prepared at present to provide a fuller
quantifiable framework for estimating the benefits and costs of changes
in consumer purchase decisions due to an energy conservation standard,
DOE is committed to developing a framework that can support empirical
quantitative tools for improved assessment of the consumer welfare
impacts of appliance standards. DOE has posted a paper that discusses
the issue of consumer welfare impacts of appliance energy efficiency
standards, and potential enhancements to the methodology by which these
impacts are defined and estimated in the regulatory process.\50\ DOE
welcomes comments on how to more fully assess the potential impact of
energy conservation standards on consumer choice and how to quantify
this impact in its regulatory analysis in future rulemakings.
---------------------------------------------------------------------------

\50\ Alan Sanstad, Notes on the Economics of Household Energy
Consumption and Technology Choice. Lawrence Berkeley National
Laboratory. 2010. Available online at: www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf
---------------------------------------------------------------------------

1. Benefits and Burdens of TSLs Considered for Residential Dishwashers
Table V.19 and Table V.20 summarize the quantitative impacts
estimated for each TSL for residential dishwashers. The efficiency
levels contained in each TSL are described in section V.A.

Table V.19--Summary of Results for Residential Dishwasher Trial Standard Levels: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Energy Savings (quads)..... 0.02....................... 0.07....................... 0.94....................... 1.59.
National Water Savings (trillion 0.01....................... 0.14....................... 0.56....................... 1.71.
gal.).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Present Value (2010$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate.................... 0.12....................... 0.46....................... 0.51....................... 17.45.
--------------------------------------------------------------------------------------------------------------------------------------------------------
7% discount rate.................... 0.03....................... 0.08....................... 1.96....................... 5.88.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)........... 1.15....................... 4.06....................... 65.02...................... 98.62.
NOX (thousand tons)................. 0.96....................... 3.54....................... 54.27...................... 83.31.
Hg (tons)........................... 0.004...................... 0.000...................... 0.274...................... 0.304.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Value of Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2010$ million) *............... 5 to 79.................... 16 to 242.................. 278 to 4515................ 427 to 6951.
NOX--3% discount rate (2010$ 0 to 3..................... 1 to 10.................... 14 to 148.................. 22 to 230.
million).
NOX--7% discount rate (2010$ 0 to 1..................... 0 to 5..................... 6 to 59.................... 9 to 91.
million).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
** Values are for 2047.

[[Page 31956]]

Table V.20--Summary of Results for Residential Dishwasher Trial Standard Levels: Consumer and Manufacturer
Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Impact to Industry NPV (2010$ (44.3)-(45.3) (73.9)-(84.6) (128.9)-(174.4) (145.6)-(202.7)
million, 8.5% discount rate).......
Industry NPV (% change)............. (7.0)-(7.1) (11.6)-(13.3) (20.2)-(27.4) (22.8)-(31.8)
----------------------------------------------------------------------------------------------------------------
Consumer Mean LCC Savings (2010$)
----------------------------------------------------------------------------------------------------------------
Standard Dishwasher................. 1 3 41 108
Compact Dishwasher.................. 13 12 52 52
----------------------------------------------------------------------------------------------------------------
Consumer Median PBP (Years)
----------------------------------------------------------------------------------------------------------------
Standard Dishwasher................. 5.9 11.8 6.6 4.5
Compact Dishwasher.................. 0.3 0.3 2.1 2.1
----------------------------------------------------------------------------------------------------------------
Distribution of Consumer LCC Impacts
----------------------------------------------------------------------------------------------------------------
Standard Dishwasher:
Net Cost (%).................... 1.9 18.7 29.7 22.9
No Impact (%)................... 96.3 64.1 20.0 9.0
Net Benefit (%)................. 1.7 17.2 50.4 68.1
----------------------------------------------------------------------------------------------------------------
Compact Dishwasher:
Net Cost (%).................... 6.4 6.5 5.4 5.4
No Impact (%)................... 75.6 75.6 50.2 50.2
Net Benefit (%)................. 18.0 17.9 44.4 44.4
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.

DOE first considered TSL 4, which represents the max-tech
efficiency levels. TSL 4 would save 1.59 quads of energy and 1.71
trillion gallons of water, amounts DOE considers significant. Under TSL
4, the NPV of consumer benefit would be $5.88 billion, using a discount
rate of 7 percent, and $17.45 billion, using a discount rate of 3
percent.
The cumulative emissions reductions at TSL 4 are 99 Mt of
CO2, 83 thousand tons of NOX, and 0.304 tons of
Hg. The estimated monetary value of the CO2 emissions
reductions at TSL 4 ranges from $427 million to $6,951 million.
At TSL 4, the average LCC impact is a savings of $108 for standard
dishwashers and a savings of $52 for compact dishwashers. The median
payback period is 4.5 years for standard dishwashers and 2.1 years for
compact dishwashers. The fraction of consumers experiencing an LCC
benefit is 68.1 percent for standard dishwashers and 44.4 percent for
compact dishwashers. However, 22.9 percent of standard dishwasher
consumers and 5.4 percent of compact dishwasher consumers experience an
LCC net cost. In addition, DOE is concerned that reducing energy and
water use at TSL 4 without implementing significantly higher-cost
technologies could result in the loss of certain consumer utility.
Specifically, a substantially longer cycle time could be required to
maintain cleaning performance. Therefore, DOE is concerned that TSL 4
may result in a loss of consumer utility.
At TSL 4, the projected change in INPV ranges from a decrease of
$145.6 million to a decrease of $202.7 million, equivalent to 22.8
percent and 31.8 percent, respectively. Products that meet the
efficiency standards specified by this TSL are forecast to represent
less than 9 percent of shipments in the year leading up to amended
standards. As such, manufacturers would have to redesign nearly all
products by the 2018 compliance date to meet demand. Redesigning all
units to meet the current max-tech efficiency levels would require
considerable capital and product conversion expenditures. At TSL 4, the
capital conversion costs total $226.3 million, 2.2 times the industry
annual capital expenditure in the year leading up to amended standards.
DOE estimates that complete platform redesigns would cost the industry
$76.7 million in product conversion costs. These conversion costs
largely relate to the research programs required to develop new
products that meet the efficiency standards set forth by TSL 4. These
costs are equivalent to 1.6 times the industry annual budget for
research and development. As such, the conversion costs associated with
the changes in products and manufacturing facilities required at TSL 4
would require significant use of manufacturers' financial reserves
(manufacturer capital pools), impacting other areas of business that
compete for these resources and significantly reducing INPV. In
addition, manufacturers could face a substantial impact on
profitability at TSL 4. Because manufacturers are more likely to reduce
their margins to maintain a price-competitive product at higher TSLs,
DOE expects that TSL 4 would yield impacts closer to the high end of
the range of INPV impacts. If the high end of the range of impacts is
reached, as DOE expects, TSL 4 could result in a net loss of 31.8
percent in INPV to dishwasher manufacturers.
The Secretary concludes that at TSL 4 for residential dishwashers,
the benefits of energy savings, water savings, positive NPV of consumer
benefits, emission reductions, and the estimated monetary value of the
CO2 emissions reductions would be outweighed by the economic
burden on some consumers, the potential burden on all consumers from
loss of product utility, and the impacts on manufacturers, including
the conversion costs and profit margin impacts that could result in a
large reduction in INPV. Consequently, the Secretary has concluded that
TSL 4 is not economically justified.
DOE then considered TSL 3. TSL 3 would save 0.94 quads of energy
and 0.56 trillion gallons of water, amounts DOE considers significant.
Under TSL 3,

[[Page 31957]]

the NPV of consumer benefit would be $1.96 billion, using a discount
rate of 7 percent, and $6.51 billion, using a discount rate of 3
percent.
The cumulative emissions reductions at TSL 3 are 65 Mt of
CO2, 54 thousand tons of NOX, and 0.274 ton of
Hg. The estimated monetary value of the CO2 emissions
reductions at TSL 3 ranges from $278 million to $4,515 million.
At TSL 3, the average LCC impact is a savings of $41 for standard
dishwashers and a savings of $52 for compact dishwashers. The median
payback period is 6.6 years for standard dishwashers and 2.1 years for
compact dishwashers. The fraction of consumers experiencing an LCC
benefit is 50.4 percent for standard dishwashers and 44.4 percent for
compact dishwashers. However, 29.7 percent of standard dishwasher
consumers and 5.4 percent of compact dishwasher consumers experience an
LCC net cost. In addition, DOE is concerned that reducing energy and
water use at TSL 3 without implementing significantly higher-cost
technologies could result in the loss of certain consumer utility.
Specifically, a substantially longer cycle time could be required to
maintain cleaning performance. Therefore, DOE is concerned that TSL 3
may result in significant loss of consumer utility.
At TSL 3, the projected change in INPV ranges from a decrease of
$128.9 million to a decrease of $174.4 million, decreases of 20.2
percent and 27.4 percent, respectively. Products that meet the
efficiency standards specified by this TSL represent less than 20
percent of shipments in the year leading up to amended standards. As
such, manufacturers would have to overhaul a significant fraction of
products by the 2018 compliance date to meet demand. Redesigning
significant component systems or developing entirely new platforms to
meet the efficiency levels specified by this TSL would require
considerable capital and product conversion expenditures. At TSL 3, the
estimated capital conversion costs total $195.4 million, which is 1.9
times the industry annual capital expenditure in the year leading up to
amended standards. DOE estimates that the redesigns necessary to meet
these standards would cost the industry $66.5 million in product
conversion costs. These conversion costs largely relate to the research
programs required to develop products that meet the efficiency
standards set forth by TSL 3, and are 1.4 times the industry annual
budget for research and development in the year leading up to amended
standards. As such, the conversion costs associated with the changes in
products and manufacturing facilities required at TSL 3 would require
significant use of manufacturers' financial reserves (manufacturer
capital pools), impacting other areas of business that compete for
these resources and significantly reducing INPV. Because manufacturers
are more likely to reduce their margins to maintain a price-competitive
product at higher TSLs, DOE expects that TSL 3 would yield impacts
closer to the high end of the range of INPV impacts as indicated by the
preservation of operating profit markup scenario. If the high end of
the range of impacts is reached, as DOE expects, TSL 3 could result in
a net loss of 27.4 percent in INPV to dishwasher manufacturers.
The Secretary concludes that at TSL 3 for residential dishwashers,
the benefits of energy savings, water savings, positive NPV of consumer
benefits, emission reductions, and the estimated monetary value of the
CO2 emissions reductions would be outweighed by the economic
burden on some consumers, the potential burden on all consumers from
loss of product utility, and the impacts on manufacturers, including
the conversion costs and profit margin impacts that could result in a
large reduction in INPV. Consequently, the Secretary has concluded that
TSL 3 is not economically justified.
DOE then considered TSL 2. TSL 2 would save 0.07 quads of energy
and 0.14 trillion gallons of water, amounts DOE considers significant.
Under TSL 2, the NPV of consumer benefit would be $0.08 billion, using
a discount rate of 7 percent, and $0.46 billion, using a discount rate
of 3 percent.
The cumulative emissions reductions at TSL 2 are 4.06 Mt of
CO2, 3.54 thousand tons of NOX, and 0.000 ton of
Hg. The estimated monetary value of the CO2 emissions
reductions at TSL 2 ranges from $16 million to $242 million.
At TSL 2, the average LCC impact is a savings of $3 for standard
dishwashers and a savings of $12 for compact dishwashers. The median
payback period is 11.8 years for standard dishwashers and 0.3 years for
compact dishwashers. While some consumers experience an LCC increase,
this increase is very small in most cases.
At TSL 2, the projected change in INPV ranges from a decrease of
$73.9 million to a decrease of $84.6 million, decreases of 11.6 percent
and 13.3 percent, respectively. All dishwasher manufacturers currently
produce products that meet the efficiency levels specified at TSL 2. As
such, this level corresponds more to incremental product conversions
rather than the platform redesigns expected for TSL 3 and TSL 4.
Products at or above the efficiency levels of TSL 2 represent nearly 64
percent of shipments in the year leading up to amended standards. As
such, DOE believes that the scope of the redesigns necessary to meet
TSL 2 by the 2013 compliance date greatly mitigates concerns over
manufacturers' ability to redesign products and switch over the bulk of
production in time to meet the amended standards by the compliance date
(operational risk). DOE estimates that the improvements to
manufacturing facilities necessary to meet these standards would cost
the industry $59.1 million in capital conversion costs, over $130
million less than those incurred at TSL 3, and only 56 percent of the
industry budget for capital expenditure in the year leading up to
amended standards. TSL 2 will require an estimated 34.9 million in
product conversion costs primarily relating to the research and
development programs needed to improve upon existing platforms to meet
the specified efficiency levels. This represents 72 percent of the
industry budget for research and development in the year leading up to
amended standards. The substantial reduction in conversion costs over
those incurred at higher TSLs, coupled with the fact that many products
currently meet the efficiency standards set forth by TSL 2, greatly
mitigate the operational risk and impact on INPV.
The Secretary concludes that at TSL 2 for residential dishwashers,
the benefits of energy savings, water savings, positive NPV of consumer
benefits, emission reductions, and the estimated monetary value of the
CO2 emissions reductions would outweigh the impacts on
manufacturers, including the conversion costs that could result in a
reduction in INPV for manufacturers.
In addition, the efficiency levels in TSL 2 correspond to the
recommended levels in the Joint Petition, which DOE believes sets forth
a statement by interested persons that are fairly representative of
relevant points of view (including representatives of manufacturers of
covered products, States, and efficiency advocates) and contains
recommendations with respect to an energy conservation standard that
are in accordance with 42 U.S.C. 6295(o). Moreover, DOE has encouraged
the submission of consensus agreements as a way for diverse interested
parties to develop an independent and probative analysis useful in DOE
standard setting and to expedite the rulemaking process. DOE also
believes that the standard levels recommended in the consensus
agreement may increase the likelihood

[[Page 31958]]

for regulatory compliance, while decreasing the risk of litigation.
After considering the analysis and the benefits and burdens of TSL
2, the Secretary concludes that this TSL will offer the maximum
improvement in efficiency that is technologically feasible and
economically justified, and will result in the significant conservation
of energy. Therefore, DOE today adopts TSL 2 for residential
dishwashers. The amended energy conservation standards for residential
dishwashers, which are a maximum allowable annual energy use and
maximum allowable per-cycle water consumption, are shown in Table V.21.

Table V.21--Amended Energy Conservation Standards for Residential Dishwashers
----------------------------------------------------------------------------------------------------------------
Compliance date: May 30, 2013
Product class ------------------------------------------------------------------------------
Maximum annual energy use * Maximum per-cycle water consumption
----------------------------------------------------------------------------------------------------------------
1. Standard (>=8 place settings 307 kWh/year.......................... 5.0 gallons/cycle.
plus 6 serving pieces).
2. Compact (<8 place settings 222 kWh/year.......................... 3.5 gallons/cycle.
plus 6 serving pieces).
----------------------------------------------------------------------------------------------------------------
*Annual energy use, expressed in kilowatt-hours (kWh) per year, is calculated as: the sum of the annual standby
electrical energy in kWh and the product of (1) the representative average dishwasher use cycles per year and
(2) the sum of machine electrical energy consumption per cycle in kWh, the total water energy consumption per
cycle in kWh, and, for dishwashers having a truncated normal cycle, the drying energy consumption divided by 2
in kWh. A truncated normal cycle is defined as the normal cycle interrupted to eliminate the power-dry feature
after the termination of the last rinse option.

2. Summary of Benefits and Costs (Annualized) of the Standards
The benefits and costs of today's standards can also be expressed
in terms of annualized values. The annualized monetary values are the
sum of (1) the annualized national economic value, expressed in 2010$,
of the benefits from operating products that meet the proposed
standards (consisting primarily of operating cost savings from using
less energy and water, minus increases in product purchase costs, which
is another way of representing consumer NPV), and (2) the monetary
value of the benefits of emission reductions, including CO2
emission reductions.\51\ The value of the CO2 reductions,
otherwise known as the Social Cost of Carbon (SCC), is calculated using
a range of values per metric ton of CO2 developed by a
recent interagency process.
---------------------------------------------------------------------------

\51\ DOE used a two-step calculation process to convert the
time-series of costs and benefits into annualized values. First, DOE
calculated a present value in 2012, the year used for discounting
the NPV of total consumer costs and savings, for the time-series of
costs and benefits using discount rates of 3 and 7 percent for all
costs and benefits except for the value of CO2
reductions. For the latter, DOE used a range of discount rates, as
shown in Table V.22. From the present value, DOE then calculated the
fixed annual payment over a 30-year period, starting in 2013, that
yields the same present value. This payment includes benefits to
consumers which accrue after 2047 from the dishwashers purchased
from 2013 to 2047. Costs incurred by manufacturers, some of which
may be incurred prior to 2013 in preparation for the rule, are
indirectly included as part of incremental equipment costs. The
extent of these costs and benefits depends on the projected price
trends of dishwashers because consumer demand of dishwashers is a
function of dishwasher prices. The fixed annual payment is the
annualized value. Although DOE calculated annualized values, this
does not imply that the time-series of cost and benefits from which
the annualized values were determined is a steady stream of
payments.
---------------------------------------------------------------------------

Although combining the values of operating savings and
CO2 reductions provides a useful perspective, two issues
should be considered. First, the national operating savings are
domestic U.S. consumer monetary savings that occur as a result of
market transactions, while the value of CO2 reductions is
based on a global value. Second, the assessments of operating cost
savings and SCC are performed with different methods that use quite
different time frames for analysis. The national operating cost savings
is measured for the lifetime of products shipped in 2013-2047. The SCC
values, on the other hand, reflect the present value of all future
climate-related impacts resulting from the emission of one ton of
carbon dioxide in each year. These impacts continue well beyond 2100.
Table V.22 shows the annualized values for residential dishwashers
under TSL 2, expressed in 2010$. The results under the primary estimate
are as follows. Using a 7-percent discount rate for benefits and costs
other than CO2 reductions, for which DOE used a 3-percent
discount rate along with the SCC series corresponding to a value of
$22.3/ton in 2010 (in 2010$), the cost of the standards for dishwashers
in today's rule is $46 million per year in increased equipment costs,
while the annualized benefits are $53 million per year in reduced
equipment operating costs, $3.9 million in CO2 reductions,
and $0.24 million in reduced NOX emissions. In this case,
the net benefit amounts to $11 million per year. Using a 3-percent
discount rate for all benefits and costs and the SCC series
corresponding to a value of $22.3/ton in 2010 (in 2010$), the cost of
the standards for dishwashers in today's rule is $44 million per year
in increased equipment costs, while the benefits are $66 million per
year in reduced operating costs, $3.9 million in CO2
reductions, and $0.26 million in reduced NOX emissions. In
this case, the net benefit amounts to $27 million per year.

Table V.22--Annualized Benefits and Costs of Amended Standards (TSL 2) for Residential Dishwashers Sold in 2013-2047
--------------------------------------------------------------------------------------------------------------------------------------------------------
Monetized (million 2010$/year)
--------------------------------------------------------------------------------
Discount rate % Low net benefits estimate High net benefits
Primary estimate * * estimate *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Cost Savings............ 7.................................. 53....................... 48....................... 59.
3.................................. 66....................... 59....................... 75.

[[Page 31959]]

CO2 Reduction at $4.9/t **........ 5.................................. 1.1...................... 1.0...................... 1.3.
CO2 Reduction at $22.3/t **....... 3.................................. 3.9...................... 3.5...................... 4.7.
CO2 Reduction at $36.5/t **....... 2.5................................ 6.1...................... 5.4...................... 7.2.
CO2 Reduction at $67.6/t **....... 3.................................. 12.0..................... 10.8..................... 14.2.
NOX Reduction at $2,537/t **...... 7.................................. 0.24..................... 0.23..................... 0.27.
3.................................. 0.26..................... 0.24..................... 0.30.
Total[dagger]7.................... 7% plus CO2 range.................. 54 to 65................. 49 to 59................. 60 to 73.
7%................................. 57....................... 52....................... 64.
3% plus CO2 range.................. 68 to 78................. 60 to 70................. 76 to 89.
3.................................. 70....................... 63....................... 80.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Incremental Product Costs......... 7.................................. 46....................... 44....................... 43.
3.................................. 44....................... 41....................... 40.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger].................... 7% plus CO2 range.................. 8 to 19.................. 6 to 16.................. 17 to 30.
7.................................. 11....................... 8........................ 20.
3% plus CO2 range.................. 24 to 35................. 19 to 29................. 37 to 49.
3.................................. 27....................... 22....................... 40.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results include benefits to consumers which accrue after 2047 from the dishwashers purchased from 2013 through 2047. Costs incurred by
manufacturers, some of which may be incurred prior to 2013 in preparation for the rule, are not directly included, but are indirectly included as part
of incremental equipment costs. The extent of the costs and benefits will depend on the projected price trends of dishwashers, as the consumer demand
for dishwashers is a function of dishwasher prices. The Primary, Low Benefits, and High Benefits Estimates utilize forecasts of energy prices and
housing starts from the AEO2011 Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a medium
decline rate for projected product price trends in the Primary Estimate, a low decline rate for projected product price trends in the Low Benefits
Estimate, and a high decline rate for projected product price trends in the High Benefits Estimate. The methods used to derive projected price trends
are explained in section IV.G.3.
** The CO2 values represent global values (in 2010$) of the social cost of CO2 emissions in 2010 under several scenarios. The values of $4.9, $22.3, and
$36.5 per ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.6 per ton
represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The value for NOX (in 2010$) is the average of the low and
high values used in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate, which is $22.3/ton in 2010 (in
2010$). In the rows labeled as ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled
discount rate, and those values are added to the full range of CO2 values.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866 and Executive Order 13563

Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify
the problem that it intends to address, including, where applicable,
the failures of private markets or public institutions that warrant new
agency action, as well as to assess the significance of that problem.
The problems that today's standards address are as follows:
(1) There is a lack of consumer information and/or information
processing capability about energy efficiency opportunities in the home
appliance market.
(2) There is asymmetric information (one party to a transaction has
more and better information than the other) and/or high transactions
costs (costs of gathering information and effecting exchanges of goods
and services).
(3) There are external benefits resulting from improved energy
efficiency of residential dishwashers that are not captured by the
users of such equipment. These benefits include externalities related
to environmental protection and energy security that are not reflected
in energy prices, such as reduced emissions of greenhouse gases.
In addition, DOE has determined that today's regulatory action is
an ``economically significant regulatory action'' under section 3(f)(1)
of Executive Order 12866. Accordingly, section 6(a)(3) of the Executive
Order requires that DOE prepare a regulatory impact analysis (RIA) on
today's rule and that the Office of Information and Regulatory Affairs
(OIRA) in the Office of Management and Budget (OMB) review this rule.
DOE presented to OIRA for review the draft rule and other documents
prepared for this rulemaking, including the RIA, and included these
documents in the rulemaking record. The assessments prepared pursuant
to Executive Order 12866 can be found in the technical support document
for this rulemaking at http://www1.eere.energy.gov/buildings/appliance_standards/residential/dishwashers.html.
DOE has also reviewed this regulation pursuant to Executive Order
13563, issued on January 18, 2011 (76 FR 3281, Jan. 21, 2011). EO 13563
is supplemental to and explicitly reaffirms the principles, structures,
and definitions governing regulatory review established in Executive
Order 12866. To the extent permitted by law, agencies are required by
Executive Order 13563 to: (1) Propose or adopt a regulation only upon a
reasoned determination that its benefits justify its costs (recognizing
that some benefits and costs are difficult to quantify); (2) tailor
regulations to impose the least burden on society, consistent with
obtaining regulatory objectives, taking into

[[Page 31960]]

account, among other things, and to the extent practicable, the costs
of cumulative regulations; (3) select, in choosing among alternative
regulatory approaches, those approaches that maximize net benefits
(including potential economic, environmental, public health and safety,
and other advantages; distributive impacts; and equity); (4) to the
extent feasible, specify performance objectives, rather than specifying
the behavior or manner of compliance that regulated entities must
adopt; and (5) identify and assess available alternatives to direct
regulation, including providing economic incentives to encourage the
desired behavior, such as user fees or marketable permits, or providing
information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies
to use the best available techniques to quantify anticipated present
and future benefits and costs as accurately as possible. In its
guidance, the Office of Information and Regulatory Affairs has
emphasized that such techniques may include identifying changing future
compliance costs that might result from technological innovation or
anticipated behavioral changes. For the reasons stated in the preamble,
DOE believes that today's direct final rule is consistent with these
principles, including the requirement that, to the extent permitted by
law, benefits justify costs and that net benefits are maximized.

B. Review Under the Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA, 5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (IRFA) for
any rule that by law must be proposed for public comment, unless the
agency certifies that the rule, if promulgated, will not have a
significant economic impact on a substantial number of small entities.
As required by Executive Order 13272, ``Proper Consideration of Small
Entities in Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE
published procedures and policies on February 19, 2003, to ensure that
the potential impacts of its rules on small entities are properly
considered during the rulemaking process. 68 FR 7990. DOE has made its
procedures and policies available on the Office of the General
Counsel's Web site (www.gc.doe.gov).
DOE reviewed today's direct final rule and corresponding NOPR
pursuant to the RFA and the policies and procedures discussed above.
DOE certifies that the standards established in today's direct final
rule and proposed in the NOPR, published elsewhere in today's Federal
Register, will not have a significant impact on a substantial number of
small entities. The factual basis for this certification is set forth
below. DOE will consider any comments on the certification or economic
impacts of the rule in determining whether to proceed with the direct
final rule.
For manufacturers of residential dishwashers, the Small Business
Administration (SBA) has set a size threshold, which defines those
entities classified as ``small businesses'' for the purposes of the
statute. DOE used the SBA's small business size standards to determine
whether any small entities would be subject to the requirements of the
rule. 65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 53533,
53544 (Sept. 5, 2000) and codified at 13 CFR part 121.The size
standards are listed by North American Industry Classification System
(NAICS) code and industry description and are available at:
www.sba.gov/sites/default/files/Size_Standards_Table.pdf. Residential
dishwasher manufacturing is classified under NAICS 335228, ``Other
Major Household Appliance Manufacturing.'' The SBA sets a threshold of
500 employees or less for an entity to be considered as a small
business for this category.
To estimate the number of small businesses which could be impacted
by the amended energy conservation standards, DOE conducted a market
survey using all available public information to identify potential
small manufacturers. DOE's research included the AHAM membership
directory, product databases (CEE, CEC, and ENERGY STAR databases) and
individual company Web sites to find potential small business
manufacturers. DOE also asked interested parties and industry
representatives if they were aware of any other small business
manufacturers during manufacturer interviews and at previous DOE public
meetings. DOE reviewed all publicly available data and contacted
various companies, as necessary, to determine whether they met the
SBA's definition of a small business manufacturer of covered
residential dishwashers. DOE screened out companies that did not offer
products covered by this rulemaking, did not meet the definition of a
``small business,'' or are foreign owned and operated.
Almost half of residential dishwashers are currently manufactured
in the United States by one corporation that accounts for approximately
49 percent of the total market. Together, this manufacturer and 3 other
manufacturers that do not meet the definition of a small business
manufacturer comprise 99 percent of the residential dishwasher market.
The small portion of the remaining residential dishwasher market
(approximately 57,000 shipments) is supplied by a combination of
approximately 15 international and domestic companies, all of which
have small market shares. These companies are either foreign owned and
operated or exceed the SBA's employment threshold for consideration as
a small business under the appropriate NAICS code. Therefore, DOE did
not identify any small business manufacturers of dishwashers.
Based on the discussion above, DOE certifies that the standards for
residential dishwashers set forth in today's rule would not have a
significant economic impact on a substantial number of small entities.
Accordingly, DOE has not prepared a regulatory flexibility analysis for
this rulemaking. DOE will transmit this certification to the SBA as
required by 5 U.S.C. 605(b).

C. Review Under the Paperwork Reduction Act

Manufacturers of residential dishwashers must certify to DOE that
their products comply with any applicable energy conservation
standards. In certifying compliance, manufacturers must test their
products according to the DOE test procedures for dishwashers,
including any amendments adopted for those test procedures. DOE has
established regulations for the certification and recordkeeping
requirements for all covered consumer products and commercial
equipment, including residential dishwashers. (76 FR 12422 (March 7,
2011)). The collection-of-information requirement for the certification
and recordkeeping is subject to review and approval by OMB under the
Paperwork Reduction Act (PRA). This requirement has been approved by
OMB under OMB control number 1910-1400. Public reporting burden for the
certification is estimated to average 20 hours per response, including
the time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the collection of information.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless

[[Page 31961]]

that collection of information displays a currently valid OMB Control
Number.

D. Review Under the National Environmental Policy Act of 1969

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

E. Review Under Executive Order 13132

Executive Order 13132, ``Federalism.'' 64 FR 43255 (Aug. 10, 1999)
imposes certain requirements on Federal agencies formulating and
implementing policies or regulations that preempt State law or that
have Federalism implications. The Executive Order requires agencies to
examine the constitutional and statutory authority supporting any
action that would limit the policymaking discretion of the States and
to carefully assess the necessity for such actions. The Executive Order
also requires agencies to have an accountable process to ensure
meaningful and timely input by State and local officials in the
development of regulatory policies that have Federalism implications.
On March 14, 2000, DOE published a statement of policy describing the
intergovernmental consultation process it will follow in the
development of such regulations. 65 FR 13735. EPCA governs and
prescribes Federal preemption of State regulations as to energy
conservation for the products that are the subject of today's 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) No further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

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

G. Review Under the Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For an amended 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 small governments. 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.gc.doe.gov.
DOE has concluded that this direct final rule would likely require
expenditures of $100 million or more on the private sector. Such
expenditures may include: (1) Investment in research and development
and in capital expenditures by dishwasher 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 residential dishwashers, 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 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 the notice of direct final
rulemaking and the ``Regulatory Impact Analysis'' section of the TSD
for this direct final rule respond to those requirements.
Under section 205 of UMRA, the Department is obligated to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. (2 U.S.C. 1535(a)) DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the rule unless DOE publishes an
explanation for doing otherwise, or the selection of such an
alternative is inconsistent with law. As required by 42 U.S.C.
6295(g)(1) and (10), and (o), today's direct final rule would establish
energy conservation standards for residential dishwashers that are
designed to achieve the maximum improvement in energy efficiency that
DOE has determined to be both technologically feasible and economically
justified. A full discussion of the alternatives considered by DOE is
presented in the ``Regulatory Impact Analysis'' section of the TSD for
today's direct final rule.

[[Page 31962]]

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

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

I. Review Under Executive Order 12630

DOE has determined, under Executive Order 12630, ``Governmental
Actions and Interference with Constitutionally Protected Property
Rights'' 53 FR 8859 (March 18, 1988), that this regulation 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
guidelines established by each agency pursuant to general guidelines
issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22,
2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7,
2002). DOE has reviewed today's direct final rule under the OMB and DOE
guidelines and has concluded that it is consistent with applicable
policies in those guidelines.

K. Review Under Executive Order 13211

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

L. Review Under the Information Quality Bulletin for Peer Review

On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (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 2667.
In response to OMB's Bulletin, DOE conducted formal in-progress
peer reviews of the energy conservation standards development process
and analyses and has prepared a Peer Review Report pertaining to the
energy conservation standards rulemaking analyses. Generation of this
report involved a rigorous, formal, and documented evaluation using
objective criteria and qualified and independent reviewers to make a
judgment as to the technical/scientific/business merit, the actual or
anticipated results, and the productivity and management effectiveness
of programs and/or projects. The ``Energy Conservation Standards
Rulemaking Peer Review Report'' dated February 2007 has been
disseminated and is available at the following Web site:
www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.

M. Congressional Notification

As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. The report will
state that it has been determined that the rule is not a ``major rule''
as defined by 5 U.S.C. 804(2).

VII. Approval of the Office of the Secretary

The Secretary of Energy has approved publication of today's direct
final rule.

List of Subjects

10 CFR Part 429

Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, and Reporting
and recordkeeping requirements.

10 CFR Part 430

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

Issued in Washington, DC, on May 11, 2012.
David Danielson,
Assistant Secretary of Energy, Energy Efficiency and Renewable Energy.

For the reasons set forth in the preamble, DOE amends parts 429 and
430, of title 10 of the Code of Federal Regulations, to read as set
forth below:

PART 429--CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR CONSUMER
PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT

0
1. The authority citation for part 429 continues to read as follows:

Authority: 42 U.S.C. 6291-6317.

0
2. In Sec. 429.19 revise paragraph (b)(2) to read as follows:

Sec. 429.19 Dishwashers.

* * * * *
(b) * * *
(2) Pursuant to Sec. 429.12(b)(13), a certification report shall
include the following public product-specific information: The
estimated annual energy use in kilowatt hours per year (kWh/yr) and the
water consumption in gallons per cycle.
* * * * *

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

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

[[Page 31963]]

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

0
4. In Sec. 430.32 add paragraph (f)(3) to read as follows:

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

* * * * *
(f) * * *
(3) All dishwashers manufactured on or after May 30, 2013, shall
meet the following standard--
(i) Standard size dishwashers shall not exceed 307 kwh/year and 5.0
gallons per cycle.
(ii) Compact size dishwashers shall not exceed 222 kwh/year and 3.5
gallons per cycle.
* * * * *
[FR Doc. 2012-12340 Filed 5-29-12; 8:45 am]
BILLING CODE 6450-01-P