[Federal Register Volume 80, Number 131 (Thursday, July 9, 2015)]
[Proposed Rules]
[Pages 39486-39539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16336]
[[Page 39485]]
Vol. 80
Thursday,
No. 131
July 9, 2015
Part II
Department of Energy
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10 CFR Parts 429 and 431
Energy Conservation Program: Energy Conservation Standards for
Commercial Prerinse Spray Valves; Proposed Rule
Federal Register / Vol. 80 , No. 131 / Thursday, July 9, 2015 /
Proposed Rules
[[Page 39486]]
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DEPARTMENT OF ENERGY
10 CFR Parts 429 and 431
[Docket Number EERE-2014-BT-STD-0027]
RIN 1904-AD31
Energy Conservation Program: Energy Conservation Standards for
Commercial Prerinse Spray Valves
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notice of proposed rulemaking (NOPR) and announcement of public
meeting.
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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
commercial prerinse spray valves (CPSVs). EPCA also requires the U.S.
Department of Energy (DOE) to determine whether more-stringent, amended
standards would be technologically feasible and economically justified,
and would save a significant amount of energy. In this notice, DOE
proposes amended energy conservation standards for commercial prerinse
spray valves. The notice also announces a public meeting to receive
comment on these proposed standards and associated analyses and
results.
DATES:
Meeting: DOE will hold a public meeting on Tuesday, July 28, 2015.
The standards meeting will start immediately following the test
procedure meeting. The meeting will also be broadcast as a webinar. See
section VII ``Public Participation'' for webinar registration
information, participant instructions, and information about the
capabilities available to webinar participants.
Comments: DOE will accept comments, data, and information regarding
this NOPR before and after the public meeting, but no later than
September 8, 2015. See section VII ``Public Participation'' for
details.
ADDRESSES: The public meeting will be held at the U.S. Department of
Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW.,
Washington, DC 20585.
Instructions: Any comments submitted must identify the NOPR for
Energy Conservation Standards for commercial prerinse spray valves, and
provide docket number EERE-2014-BT-STD-0027 and/or regulatory
information number (RIN) number 1904-AD31. Comments may be submitted
using any of the following methods:
1. Federal eRulemaking Portal: www.regulations.gov. Follow the
instructions for submitting comments.
2. Email: [email protected]. Include the docket
number and/or RIN in the subject line of the message. Submit electronic
comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and
avoid the use of special characters or any form of encryption.
3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy,
Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue
SW., Washington, DC 20585-0121. If possible, please submit all items on
a CD, in which case it is not necessary to include printed copies.
4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of
Energy, Building Technologies Office, 950 L'Enfant Plaza SW., Suite
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible,
please submit all items on a CD, in which case it is not necessary to
include printed copies.
Written comments regarding the burden-hour estimates or other
aspects of the collection-of-information requirements contained in this
proposed rule may be submitted to Office of Energy Efficiency and
Renewable Energy through the methods listed previously and by email to
[email protected].
No faxes will be accepted. For detailed instructions on submitting
comments and additional information on the rulemaking process, see
section VII of this document (``Public Participation'').
Docket: The docket, which includes Federal Register notices, public
meeting attendee lists and transcripts, comments, and other supporting
documents/materials, is available for review at www.regulations.gov.
All documents in the docket are listed in the www.regulations.gov
index. However, some documents listed in the index, such as those
containing information that is exempt from public disclosure, may not
be publicly available.
A link to the docket Web page can be found at:
www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=100. This Web page will contain a link to the
docket for this notice on the www.regulations.gov site. The
www.regulations.gov Web page will contain simple instructions on how to
access all documents, including public comments, in the docket. See
section VII, ``Public Participation'' for further information on how to
submit comments through www.regulations.gov.
FOR FURTHER INFORMATION CONTACT:
Mr. James Raba, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Office, EE-5B,
1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone:
(202) 586-8654. Email: [email protected].
Mr. Peter Cochran, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 586-7935. Email: [email protected].
For further information on how to submit a comment, review other
public comments and the docket, or participate in the public meeting,
contact Ms. Brenda Edwards at (202) 586-2945 or by email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Proposed Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
II. Introduction
A. Authority
B. Background
III. General Discussion
A. Product Classes and Scope of Coverage
B. Test Procedure
C. Technological Feasibility
D. Energy Savings
1. Determination of Savings
2. Significance of Savings
E. Economic Justification
1. Economic Impact on Manufacturers and Consumers
2. Savings in Operating Costs Compared to Increase in Price
3. Energy Savings
4. Lessening of Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need for National Energy Conservation
7. Other Factors
F. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Market Assessment
2. Efficiency Metrics
3. Product Classes
4. Technology Assessment
1. Backflow Preventers
2. Specially Designed Spray Patterns
B. Screening Analysis
1. Addition of Flow Control Insert
2. Smaller Spray Hole Area
3. Aerators
4. Additional Valves
5. Changing Spray Hole Shape
6. Venturi Meter to Orifice Plate Nozzle Geometries
C. Engineering Analysis
[[Page 39487]]
1. Engineering Approach
2. Product Classes
3. Baseline and Max-Tech Models
4. Manufacturing Cost Analysis
D. Markups Analysis
E. Energy and Water Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy and Water Consumption
4. Energy Prices
5. Water and Wastewater Prices
6. Maintenance and Repair Costs
7. Product Lifetime
8. Discount Rates
9. No-New-Standards Case Efficiency Distribution
10. Payback Period Analysis
11. Rebuttable-Presumption Payback Period
G. Shipments
H. National Impact Analysis
1. National Energy and Water Savings
2. Forecasted Efficiency in the No-Standards Case and Standards
Cases
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model
3. Discussion of Comments
4. Manufacturer Interviews
K. Emissions Analysis
L. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
2. Valuation of Other Emissions Reductions
M. Utility Impact Analysis
N. Employment Impact Analysis
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. Summary of National Economic Impacts
8. Other Factors
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Commercial
Prerinse Spray Valves
2. Summary of Benefits and Costs (Annualized) of the Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
1. Description and Estimated Number of Small Entities Regulated
2. Description and Estimate of Compliance Requirements
3. Duplication, Overlap, and Conflict With Other Rules and
Regulations
4. Significant Alternatives to the Rule
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
A. Attendance at the Public Meeting
B. Procedure for Submitting Prepared General Statements For
Distribution
C. Conduct of the Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Synopsis of the Proposed Rule
Title III, Part B \1\ of the Energy Policy and Conservation Act of
1975 (EPCA), Public Law 94-163 (42 U.S.C. 6291-6309, as codified),
established the Energy Conservation Program for Consumer Products Other
Than Automobiles.\2\ These products include commercial prerinse spray
valves (CPSV), the subject of this document.\3\
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\1\ For editorial reasons, upon codification in the U.S. Code,
part B was redesignated part A.
\2\ All references to EPCA in this document refer to the statute
as amended through the Energy Efficiency Improvement Act of 2015,
Public Law 114-11 (Apr. 30, 2015).
\3\ Because Congress included commercial prerinse spray valves
in part A of Title III of EPCA, the consumer product provisions of
part A (not the industrial equipment provisions of part A-1) apply
to commercial prerinse spray valves. However, because commercial
prerinse spray valves are commonly considered to be commercial
equipment, as a matter of administrative convenience and to minimize
confusion among interested parties, DOE placed the requirements for
commercial prerinse spray valves into subpart O of 10 CFR part 431.
Part 431 contains DOE regulations for commercial and industrial
equipment.
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Pursuant to EPCA, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that is technologically feasible and economically justified.
(42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must
result in a significant conservation of energy. (42 U.S.C.
6295(o)(3)(B)) EPCA also provides that not later than 6 years after
issuance of any final rule establishing or amending a standard, DOE
must publish either a notice of determination that standards for the
product do not need to be amended, or a notice of proposed rulemaking
(NOPR) including new proposed energy conservation standards. (42 U.S.C.
6295(m)(1))
In accordance with these and other statutory provisions discussed
in this notice, DOE proposes amended energy conservation standards for
commercial prerinse spray valves. The proposed standards, which are
described in terms of the maximum water flow rate (in gallons per
minute, gpm) for each product class (defined by spray force in ounce-
force, ozf), are shown in Table I.1. The proposed standards, if
adopted, would apply to all products listed in Table I.1 and
manufactured in, or imported into, the United States on or after the
date 3 years after the publication of the final rule for this
rulemaking. For purposes of the analyses conducted in support of this
NOPR, DOE used 2015 as the expected year of publication of any final
standards and 2018 as the expected compliance year.\4\
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\4\ Because the anticipated compliance date is late in the year
2018, for analytical purposes, DOE conducted its analyses utilizing
shipments associated with the 2019-2048 period. The analytical
effect is equivalent to the use of a 2019 compliance year. In the
MIA, 2019 is referred to as the ``analysis compliance year.''
Table I.1--Proposed Energy Conservation Standards for Commercial
Prerinse Spray Valves (Compliance Starting 2018)
------------------------------------------------------------------------
Maximum water
Product class flow rate
(gpm)
------------------------------------------------------------------------
1. Light duty (<=5 ozf)................................. 0.65
2. Standard duty (>5 ozf and <=8 ozf)................... 0.97
3. Heavy duty (>8 ozf).................................. 1.24
------------------------------------------------------------------------
A. Benefits and Costs to Consumers
Table I.2 presents DOE's evaluation of the economic impacts of the
proposed amended standards on consumers of commercial prerinse spray
valves, as measured by the average life-cycle cost (LCC) savings and
the simple payback period (PBP).\5\ The average LCC savings are
positive for all product classes. The PBP for all product classes is
also less than the projected average CPSV lifetime of approximately 5
years.
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\5\ The average LCC savings are measured relative to the no-new-
standards case efficiency distribution, which depicts the CPSV
market in the compliance year (see section IV.F.9). The simple PBP,
which is designed to compare specific efficiency levels, is measured
relative to the baseline CPSV model (see section IV.C.1).
[[Page 39488]]
Table I.2--Impacts of Proposed Energy Conservation Standards on
Consumers of Commercial Prerinse Spray Valves
------------------------------------------------------------------------
Average LCC
Product class savings Simple payback
(2014$) period (years)
------------------------------------------------------------------------
1. Light duty (<=5 ozf)................. 211 0.0
2. Standard duty (>5 ozf and <=8 ozf)... 472 0.0
3. Heavy duty (>8 ozf).................. 667 0.0
------------------------------------------------------------------------
DOE's analysis of the impacts of the proposed standards on
consumers is described in section IV.F of this notice.
B. Impact on Manufacturers
The industry net present value (INPV) is the sum of the discounted
cash flows to the industry from the base year through the end of the
analysis period (2015 to 2048). Using a real discount rate of 6.9
percent,\6\ DOE estimates that the INPV for manufacturers of commercial
prerinse spray valves is $9.1 million in 2014$. Under the proposed
standards, DOE expects that manufacturers may lose up to 21.6 percent
of their INPV, which is approximately $2.0 million. Additionally, based
on its analysis of available information, DOE does not expect any plant
closings or significant loss of employment.
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\6\ The discount rate is an industry average discount rate,
which was estimated using publically available industry financial
data for companies that sell CPSVs in the U.S. Data sources are
listed in section IV.J.1.
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C. National Benefits and Costs 7
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\7\ All monetary values in this section are expressed in 2014
dollars and are discounted to 2015, unless otherwise noted.
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DOE's analyses indicate that the proposed standards would save a
significant amount of energy and water. The lifetime savings for
commercial prerinse spray valves purchased in the 30-year period (2019
to 2048) amount to 0.10 quadrillion Btu (quads) \8\ and 120.18 billion
gallons of water. This represents a savings of 9 percent relative to
the energy use of this product in the no-new-standards case.\9\ This
also represents a savings of 9 percent relative to the water use of
this product in the no-new-standards case.
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\8\ A quad is equal to 10\15\ British thermal units (Btu).
\9\ The no-new-standards case assumptions are described in
section IV.F.9. The no-new-standards case represents a projection of
energy consumption in the absence of amended mandatory efficiency
standards, and it considers market forces and policies that may
affect future demand for more efficient products.
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The cumulative net present value (NPV) of total consumer costs and
savings of the proposed standards for commercial prerinse spray valves
ranges from $0.71 billion (at a 7-percent discount rate) to $1.46
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 commercial prerinse spray valves
purchased in 2019-2048.
In addition, the proposed standards would have significant
environmental benefits.\10\ The described energy savings would result
in cumulative emission reductions (over the same period as for energy
savings) of 5.76 million metric tons (Mt) \11\ of carbon dioxide
(CO2), 46.94 thousand tons of methane (CH4), 2.43
thousand tons of sulfur dioxide (SO2), 13.22 thousand tons
of nitrogen oxides (NOX), 0.04 thousand tons of nitrous
oxide (N2O), and 0.01 tons of mercury (Hg).\12\ The
cumulative reduction in CO2 emissions through 2030 amounts
to 1.83 Mt, which is equivalent to the emissions resulting from the
annual electricity use of about 251,719 homes.
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\10\ The emission reductions calculated here result from the
energy savings only. The emission reductions from water savings are
not calculated as part of this analysis.
\11\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO2 are presented in short tons.
\12\ DOE calculated emissions reductions relative to the Annual
Energy Outlook 2014 (AEO2014) reference case, which generally
represents current legislation and environmental regulations for
which implementing regulations were available as of October 31,
2013.
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The value of the CO2 reduction 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 Federal
interagency process.\13\ The derivation of the SCC values is discussed
in section IV.L of this notice. Using discount rates appropriate for
each set of SCC values, DOE estimates the present monetary value of the
CO2 emissions reduction is between $0.04 billion and $0.61
billion. DOE also estimates the present monetary value of the
NOX emissions reduction is between $1.80 and $18.48 million
at a 7-percent discount rate and between $3.52 and $36.15 million at a
3-percent discount rate.\14\
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\13\ Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866, Interagency
Working Group on Social Cost of Carbon, United States Government
(May 2013; revised November 2013) (Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf).
\14\ DOE is currently investigating valuation of avoided Hg and
SO2 emissions.
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Table I.3 summarizes the national economic costs and benefits
expected to result from the proposed standards for commercial prerinse
spray valves.
Table I.3--Summary of National Economic Benefits and Costs of Proposed
Energy Conservation Standards for Commercial Prerinse Spray Valves *
------------------------------------------------------------------------
Present value
Category (million Discount rate
2014$) (%)
------------------------------------------------------------------------
Benefits
------------------------------------------------------------------------
Operating Cost Savings.................. 708 7
1,459 3
CO2 Reduction Monetized Value ($12.2/ 44 5
metric ton case) * *...................
CO2 Reduction Monetized Value ($41.1/ 196 3
metric ton case) * *...................
CO2 Reduction Monetized Value ($63.3/ 309 2.5
metric ton case) * *...................
CO2 Reduction Monetized Value ($121/ 606 3
metric ton case) * *...................
[[Page 39489]]
NOX Reduction Monetized Value (at $2,723/ 10 7
ton)...................................
20 3
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Total Benefits [dagger]............. 914 7
1,675 3
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Costs
------------------------------------------------------------------------
Manufacturer Conversion Costs [Dagger].. 2 to 3 N/A
------------------------------------------------------------------------
Total Net Benefits
------------------------------------------------------------------------
Including Emissions Reduction Monetized 914 7
Value [dagger].........................
1,675 3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with commercial
prerinse spray valves shipped in 2019-2048. These results include
benefits to consumers which accrue after 2048 from the products
purchased in 2019-2048. The results account for the incremental
variable and fixed costs incurred by manufacturers due to the proposed
standard, some of which may be incurred in preparation for the rule.
* * The CO2 values represent global monetized values of the SCC, in
2014$ per metric ton, in 2015 under several scenarios of the updated
SCC values. The first three cases use the averages of SCC
distributions calculated using 5 percent, 3 percent, and 2.5 percent
discount rates, respectively. The fourth case represents the 95th
percentile of the SCC distribution calculated using a 3 percent
discount rate.
[dagger] Total benefits for both the 3 percent and 7 percent cases are
derived using the series corresponding to average SCC with 3 percent
discount rate. Manufacturer Conversion Costs are not included in the
Total Net Benefits calculations.
[Dagger] The lower value of the range represents costs associated with
the Sourced Components conversion cost scenario. The upper value
represents costs associated with the Fabricated Components conversion
cost scenario. Manufacturer conversion cost estimates are based on the
engineering analysis and product teardowns conducted in 2014, and,
therefore, have not been discounted. In the GRIM, these values are
spread over the 3-year conversion period leading up to the compliance
year.
The benefits and costs of these proposed standards, for commercial
prerinse spray valves sold in 2019-2048, can also be expressed in terms
of annualized values. The annualized monetary values are the sum of:
(1) The annualized national economic value of the benefits from
consumer operation of products that meet the proposed standards
(consisting primarily of operating cost savings from using less energy
and water, minus increases in product purchase and installation costs,
which is another way of representing consumer NPV); and (2) the
annualized monetary value of the benefits of emission reductions,
including CO2 emission reductions.\15\
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\15\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2015, the year
used for discounting the NPV of total customer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2020 or 2030), and then discounted the present value from
each year to 2015. The calculation uses discount rates of 3 and 7
percent for all costs and benefits except for the value of
CO2 reductions, for which DOE used case-specific discount
rates, as shown in Table I.3. Using the present value, DOE then
calculated the fixed annual payment over a 30-year period, starting
in the first year of the analysis period, which yields the same
present value.
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Although combining the values of operating savings and
CO2 emission 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, whereas 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 different time frames for analysis. The national operating
cost savings is measured for the lifetime of commercial prerinse spray
valves shipped in 2019-2048. Because CO2 emissions have a
very long residence time in the atmosphere,\16\ the SCC values in
future years reflect future CO2-emissions impacts that
continue beyond 2100.
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\16\ The atmospheric lifetime of CO2 is estimated of
the order of 30-95 years. Jacobson, MZ, ``Correction to `Control of
fossil-fuel particulate black carbon and organic matter, possibly
the most effective method of slowing global warming,' '' J. Geophys.
Res. 110. pp. D14105 (2005).
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Estimates of annualized benefits and costs of the proposed
standards are shown in Table I.4. The results under the primary
estimate are as follows. Using a 7-percent discount rate for benefits
and costs other than CO2 reduction (for which DOE used a 3-
percent discount rate, along with the average SCC series that has a
value of $41.1 per metric ton in 2015), there are no increased product
costs associated with the standards proposed in this rule, while the
benefits are $69.90 million per year in reduced product operating
costs, $10.94 million per year in CO2 reductions, and $1.00
million per year in reduced NOX emissions. In this case, the
net benefit amounts to $81.85 million per year. Using a 3-percent
discount rate for all benefits and costs as well as the average SCC
series that has a value of $41.1 per metric ton in 2015, there are no
increased product costs associated with the standards proposed in this
rule, while the benefits are $81.32 million per year in reduced
operating costs, $10.94 million in CO2 reductions, and $1.11
million in reduced NOX emissions. In this case, the net
benefit amounts to $93.37 million per year.
[[Page 39490]]
Table I.4--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Commercial Prerinse Spray
Valves
----------------------------------------------------------------------------------------------------------------
Million 2014$/year
-----------------------------------------------------------
Discount rate (%) Low net benefits High net benefits
Primary estimate * estimate * estimate *
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings. 7................. 69.90............. 65.90............. 72.70
3................. 81.32............. 75.92............. 85.10
CO2 Reduction at $12.0/t * *.... 5................. 3.33.............. 3.33.............. 3.33
CO2 Reduction at $40.5/t * *.... 3................. 10.94............. 10.94............. 10.94
CO2 Reduction at $62.4/t * *.... 2.5............... 15.91............. 15.91............. 15.91
CO2 Reduction at $119/t * *..... 3................. 33.81............. 33.81............. 33.81
NOX Reduction at $2,723/ton..... 7................. 1.00.............. 1.00.............. 1.00
3................. 1.11.............. 1.11.............. 1.11
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Total[dagger]............... 7 plus CO2 range.. 74 to 105......... 70 to 101......... 77 to 108
7................. 81.85............. 77.84............. 84.64
3 plus CO2 range.. 86 to 116......... 80 to 111......... 90 to 120
3................. 93.37............. 87.96............. 97.15
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
Manufacturer Conversion Costs 7................. 0.16 to 0.24...... 0.16 to 0.24...... 0.16 to 0.24
[dagger].
3................. 0.10 to 0.15...... 0.10 to 0.15...... 0.10 to 0.15
----------------------------------------------------------------------------------------------------------------
Total Net Benefits
----------------------------------------------------------------------------------------------------------------
Total [Dagger].............. 7 plus CO2 range.. 74 to 105......... 70 to 101......... 77 to 108
7................. 81.85............. 77.84............. 84.64
3 plus CO2 range.. 86 to 116......... 80 to 111......... 90 to 120
3................. 93.37............. 87.96............. 97.15
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with commercial prerinse spray valves shipped
in 2019-2048. These results include benefits to consumers which accrue after 2048 from the products purchased
in 2019-2048. The results account for the incremental variable and fixed costs incurred by manufacturers due
to the proposed standard, some of which may be incurred in preparation for the rule. The primary, low
benefits, and high benefits estimates utilize projections of energy prices from the AEO2014 reference case,
low estimate, and high estimate, respectively.
* * The CO2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of
the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5
percent, 3 percent, and 2.5 percent discount rates, respectively. The fourth case represents the 95th
percentile of the SCC distribution calculated using a 3 percent discount rate.
[dagger] The lower value of the range represents costs associated with the Sourced Components conversion cost
scenario. The upper value represents costs for the Fabricated Components scenario.
[Dagger] Total benefits for both the 3 percent and 7 percent cases are derived using the series corresponding to
the average SCC with 3 percent discount rate. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2
range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values
are added to the full range of CO2 values. Manufacturer Conversion Costs are not included in the Net Benefits
calculations.
DOE has tentatively concluded that the proposed standards represent
the maximum improvement in energy efficiency that is technologically
feasible and economically justified, and would result in the
significant conservation of energy. DOE further notes that products
achieving these standard levels are already commercially available for
the product classes covered by this proposal. See chapter 8 of the NOPR
technical support document (TSD) for more discussion of the no-new-
standards case efficiency distribution. Based on DOE's analyses, DOE
has tentatively concluded that the benefits of the proposed standards
to the nation (energy savings, water savings, positive NPV of consumer
benefits, consumer LCC savings, and emission reductions) would outweigh
the burdens (loss of INPV for manufacturers).
DOE also considered both more and less stringent energy efficiency
levels (EL) as trial standard levels (TSL), and will continue to
consider them in this rulemaking. However, DOE has tentatively
concluded that the potential burdens of the more stringent energy
efficiency levels would outweigh the projected benefits. Based on
consideration of the public comments DOE receives in response to this
notice and related information collected and analyzed during the course
of this rulemaking effort, DOE may adopt energy efficiency levels
presented in this notice that are either higher or lower than the
proposed standards, or some combination of levels that incorporate the
proposed standards in part.
II. Introduction
The following section discusses the statutory authority underlying
this proposal, as well as some of the relevant historical background
related to the establishment of standards for commercial prerinse spray
valves.
A. Authority
Title III, Part B of the Energy Policy and Conservation Act of 1975
(EPCA), Public Law 94-163 (42 U.S.C. 6291-6309, as codified)
established the Energy Conservation Program for Consumer Products Other
Than Automobiles. As part of this program, EPCA prescribed energy
conservation standards for commercial prerinse spray valves. (42 U.S.C.
6295(dd)) Under 42 U.S.C. 6295(m), DOE must periodically review its
already established energy conservation standards for a covered
[[Page 39491]]
product. DOE is undertaking this rulemaking to meet this EPCA
requirement.
Pursuant to EPCA, DOE's energy conservation program for covered
products consists essentially of four parts: (1) Testing, (2) labeling,
(3) the establishment of Federal energy conservation standards, and (4)
certification and enforcement procedures. The Secretary or the Federal
Trade Commission, as appropriate, may prescribe labeling requirements
for commercial prerinse spray valves. (42 U.S.C. 6294(a)(5)(A)) Subject
to certain criteria and conditions, DOE is required to develop test
procedures to measure the energy efficiency, energy use, or estimated
annual operating cost of each covered product. (42 U.S.C. 6293(b)(3))
Manufacturers of covered products must use the prescribed DOE test
procedure as the basis for certifying to DOE that their products comply
with the applicable energy conservation standards adopted under EPCA
and when making representations to the public regarding the energy use
or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s))
Similarly, DOE must use these test procedures to determine whether the
products comply with standards adopted pursuant to EPCA. (42 U.S.C.
6295(s)) The DOE test procedure for commercial prerinse spray valves
currently appears at title 10 of the Code of Federal Regulations (CFR)
part 431, subpart O. DOE recently proposed updates to its CPSV test
procedure in a proposed rule issued for prepublication on June 05, 2015
(80 FR 35874).
DOE must follow specific statutory criteria for prescribing amended
standards for covered products. As indicated previously, 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)(B)) Moreover, DOE may not
prescribe a standard for certain products, including commercial
prerinse spray valves, if no test procedure has been established for
the product. (42 U.S.C. 6295(o)(3)(A))
In deciding whether a proposed standard is economically justified,
DOE must determine whether the benefits of the standard exceed its
burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination
after receiving comments on the proposed standard, and by considering,
to the greatest extent practicable, the following seven 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) through (VII))
EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing
any amended standard that either increases the maximum allowable energy
use or decreases the minimum required energy efficiency of a covered
product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe
an amended or new standard if interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States of any covered product type (or
class) of performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those generally available in the United States at the time of
the Secretary's finding. (42 U.S.C. 6295(o)(4))
Further, EPCA, as codified, establishes a rebuttable presumption
that a standard is economically justified if the Secretary finds that
the additional cost to the consumer of purchasing a product complying
with an energy conservation standard level will be less than three
times the value of the energy and water savings the consumer will
receive during the first year that the standard applies, as calculated
under the applicable test procedure. (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 products that
has two or more subcategories. DOE must specify a different standard
level than that which applies generally to such type or class of
products for any group of covered products that have the same function
or intended use if DOE determines that products within such group: (1)
Consume a different kind of energy from that consumed by other covered
products within such type (or class); or (2) have a capacity or other
performance-related feature which other products within such type (or
class) do not have and such feature justifies a higher or lower
standard. (42 U.S.C. 6294(q)(1)) In determining whether a performance-
related feature justifies a different standard for a group of products,
DOE shall consider such factors as the utility to the consumer of the
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) though (c)) California, however, has
a statutory exemption to preemption for commercial prerinse spray valve
standards adopted by the California Energy Commission before January 1,
2005. (42 U.S.C. 6297(c)(7)) As a result, while federal commercial
prerinse spray valve standards, including any amended standards that
may result from this rulemaking, apply in California, California's
commercial prerinse spray valve standards also apply as they are exempt
from preemption. DOE may also grant waivers of Federal preemption for
particular State laws or regulations, in accordance with the procedures
and other provisions set forth under EPCA. (42 U.S.C. 6297(d))
Finally, pursuant to the amendments contained in the Energy
Independence and Security Act of 2007 (EISA 2007), Public Law 110-140,
any final rule for new or amended energy conservation standards
promulgated after July 1, 2010, is required to address standby mode and
off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE
adopts a standard for a covered product after that date, it must, if
justified by the criteria for adoption of standards under EPCA (42
U.S.C. 6295(o)), incorporate standby mode and off mode energy use into
the standard, or, if that is not feasible, adopt a
[[Page 39492]]
separate standard for such energy use for that product. (42 U.S.C.
6295(gg)(3)(A) and (B)) DOE's current test procedures and standards for
commercial prerinse spray valves do not address standby mode and off
mode energy use, which are not applicable for this product. Similarly,
in this rulemaking, DOE only addresses active mode energy consumption
because commercial prerinse spray valves only consume energy and water
in active mode.
B. Background
In a final rule published on October 18, 2005 (``2005 CPSV final
rule''), DOE codified the current energy conservation standards for
commercial prerinse spray valves that were prescribed by the Energy
Policy Act of 2005, Public Law 109-58 (August 8, 2005). 70 FR 60407,
60410. The 2005 CPSV final rule established that all commercial
prerinse spray valves manufactured on or after January 1, 2006, must
have a flow rate of not more than 1.6 gpm.
DOE is conducting the current energy conservation standards
rulemaking pursuant to 42 U.S.C. 6295(m), which requires that within 6
years of issuing any final rule establishing or amending a standard,
DOE shall publish either a notice of determination that amended
standards are not needed or a NOPR proposing amended standards.
DOE initiated the current rulemaking on September 11, 2014, by
issuing an analytical Framework document, ``Rulemaking Framework for
Commercial Prerinse Spray Valves'' (``2014 Framework document''), which
described the procedural and analytical approaches DOE anticipated
using to evaluate energy conservation standards for commercial prerinse
spray valves. 79 FR 54213. DOE also announced a public meeting to
discuss the proposed analytical framework for the rulemaking and
invited written comments from the public. 79 FR 54213. The 2014
Framework document is available at: www.regulations.gov/#!documentDetail;D=EERE-2014-BT-STD-0027-0001.
The 2014 Framework document explained the issues, analyses, and
process that DOE anticipated using to develop energy conservation
standards for commercial prerinse spray valves. DOE held a public
meeting on September 30, 2014, to solicit comments from interested
parties regarding DOE's analytical approach. Comments received in
response to DOE's proposed analytical approach have helped DOE identify
and resolve issues relevant to energy conservation standards for
commercial prerinse spray valves, and have informed the analyses
presented in this notice. DOE discusses and responds to the comments
received in response to the 2014 Framework document in section IV.
III. General Discussion
A. Product Classes and Scope of Coverage
EPCA defines the term ``commercial prerinse spray valve'' as a
``handheld device designed and marketed for use with commercial
dishwashing and ware washing equipment that sprays water on dishes,
flatware, and other food service items for the purpose of removing food
residue before cleaning the items.'' (42 U.S.C. 6291(33)(A) In the 2015
CPSV test procedure NOPR, DOE is proposing to modify the CPSV
definition to redefine the scope of coverage, as authorized under 42
U.S.C. 6291(33)(B). For specific details on the proposed modifications
to the CPSV definition, including how to submit comments see the test
procedure NOPR (80 FR 35874).
When evaluating and establishing energy conservation standards, DOE
divides covered products into product classes by the type of energy
used, or by capacity or other performance-related features that justify
a different standard. In making a determination whether a performance-
related feature justifies a different standard, DOE considers such
factors as the utility of the feature to the consumer and other factors
DOE determines are appropriate. (42 U.S.C. 6295(q)) Different energy
conservation standards may apply to different product classes.
Currently, all covered commercial prerinse spray valves are
included in a single product class that is subject to a 1.6-gpm
standard for maximum flow rate. 10 CFR 431.266. In the 2014 Framework
document, DOE considered whether to retain a single product class for
all commercial prerinse spray valves, or to establish separate product
classes based on the statutory criteria in 42 U.S.C. 6295(q) and
comments from interested parties. See sections IV.A.2 and IV.C.2 for
more discussion on the product classes addressed in this NOPR.
B. Test Procedure
EPCA established the current maximum flow rate for commercial
prerinse spray valves and prescribed an industry test procedure,
American Society for Testing and Materials (ASTM) Standard F2324-03, to
measure the flow rate. (42 U.S.C. 6295(dd), 42 U.S.C. 6293(b)(14)) In a
final rule published December 8, 2006, DOE incorporated by reference
ASTM Standard F2324-03 under 10 CFR 431.263, and prescribed it as the
uniform test method to measure the flow rate of commercial prerinse
spray valves under 10 CFR 431.264. 71 FR 71340, 71374. In a final rule
published October 23, 2013, DOE incorporated by reference ASTM Standard
F2324-03 (2009) for testing commercial prerinse spray valves, which
updated the 2003 version. 78 FR 62970, 62980.
In 2013, ASTM amended Standard F2324-03 (2009) to replace the
cleanability test with a spray force test, based on research conducted
by the U.S. Environmental Protection Agency's (EPA) WaterSense[supreg]
program.\17\
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\17\ EPA WaterSense program, WaterSense Specification for
Commercial Prerinse Spray Valves Supporting Statement, Version 1.0
(Sept. 19, 2013) (Available at: http://www.epa.gov/watersense/partners/prsv_final.html).
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In the 2015 CPSV test procedure NOPR, DOE proposed to incorporate
by reference the amended ASTM Standard F2324-13. Additionally, DOE
proposed requiring spray force to be measured based on the procedure in
ASTM Standard F2324-13. For commercial prerinse spray valves with
multiple spray patterns, DOE proposed that both flow rate and spray
force be measured for each possible spray pattern.
C. Technological Feasibility
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and working prototype designs that could improve the
efficiency of the products 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 options are technologically feasible. DOE considers technologies
incorporated in commercially available products or in working
prototypes to be technologically feasible. 10 CFR part 430, subpart C,
appendix A, section 4(a)(4)(i).
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
Practicability to manufacture, install, and service; (2) adverse
impacts on product utility or availability; and (3) adverse impacts on
health or safety. 10 CFR part 430, subpart C, appendix A, section
4(a)(4)(ii) through (iv). Section IV.B of this notice discusses the
results of the screening analysis for commercial prerinse spray valves,
particularly the
[[Page 39493]]
technology options DOE considered, those it screened out, and those
that are the basis for the TSLs in this rulemaking. For further details
on the screening analysis for this rulemaking, see chapter 4 of the
NOPR Technical Support Document (TSD).
When DOE proposes to adopt an amended standard for a type or class
of covered products, it must determine the maximum improvement in
energy efficiency or maximum reduction in energy use that is
technologically feasible for such products. (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 commercial prerinse spray valves, using the design
parameters for the most efficient products available on the market or
in working prototypes. The max-tech levels that DOE determined for this
rulemaking are described in chapter 5 of the NOPR TSD.
D. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy savings from the commercial
prerinse spray valves purchased in the 30-year period that begins in
the expected year of compliance with any amended standards (2019-2048).
The savings are measured over the entire lifetime of commercial
prerinse spray valves purchased in the 30-year analysis period. DOE
quantified the energy savings attributable to each TSL as the
difference in energy consumption between each standards case and the
no-new-standards case. The no-new-standards case represents a
projection of energy consumption in the absence of amended mandatory
efficiency standards, and it considers market forces and policies that
may affect future demand for more efficient products.
DOE used its national impact analysis (NIA) spreadsheet model to
estimate energy savings from amended standards. The NIA spreadsheet
model (described in section IV.H of this notice) calculates energy
savings in site energy, which is the energy consumed by a product at
the location where it is used. For electricity, DOE calculates national
energy savings in terms of primary energy savings, which is the savings
in the energy that is used to generate and transmit the site
electricity. To calculate primary energy savings, DOE derived annual
conversion factors from the model used to prepare the Energy
Information Administration's (EIA) Annual Energy Outlook 2014
(AEO2014).\18\
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\18\ U.S. Department of Energy--Energy Information
Administration, Annual Energy Outlook 2014 with Projections to 2040
(Available at: www.eia.gov/forecasts/aeo/).
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For electricity and natural gas and oil, DOE also calculates full-
fuel-cycle (FFC) energy savings. As discussed in DOE's statement of
policy and notice of policy amendment, the FFC metric includes the
energy consumed in extracting, processing, and transporting primary
fuels (i.e., coal, natural gas, petroleum fuels), and thus presents a
more complete picture of the impacts of energy efficiency standards. 76
FR 51281 (August 18, 2011), as amended at 77 FR 49701 (August 17,
2012). For FFC energy savings, DOE's approach is based on the
calculation of an FFC multiplier for each of the energy types used by
covered products. For more information, see section IV.H.1 of this
notice.
2. Significance of Savings
To adopt more stringent standards for a covered product, DOE must
determine that such action would result in ``significant'' energy
savings. (42 U.S.C. 6295(o)(3)(B)) Although the term ``significant'' is
not defined in EPCA, the U.S. Court of Appeals for DC Circuit, in
Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373
(D.C. Cir. 1985), indicated that Congress intended ``significant''
energy savings in the context of EPCA to be savings that were not
``genuinely trivial.'' The energy savings for the proposed standards
(presented in section V.B.3.a of this notice) are nontrivial, and,
therefore, DOE considers them ``significant'' within the meaning of
section 325 of EPCA.
E. Economic Justification
EPCA provides seven factors to be evaluated in determining whether
a potential energy conservation standard is economically justified. (42
U.S.C. 6295(o)(2)(B)(i)) The following sections discuss how DOE has
addressed each of those seven factors in this rulemaking.
1. Economic Impact on Manufacturers and Consumers
In determining the impacts of a potential amended standard on
manufacturers, DOE conducts a manufacturer impact analysis (MIA), as
discussed in section IV.J. DOE first uses an annual cash-flow approach
to determine the quantitative impacts. This step includes both a short-
term assessment--based on the cost and capital requirements during the
period between when a regulation is issued and when entities must
comply with the regulation--and a long-term assessment over a 30-year
period. The industry-wide impacts analyzed include: (1) INPV, which
values the industry on the basis of expected future cash flows, (2)
cash flows by year, (3) changes in revenue and income, and (4) other
measures of impact, as appropriate. Second, DOE analyzes and reports
the impacts on different types of manufacturers, including impacts on
small manufacturers. Third, DOE considers the impact of standards on
domestic manufacturer employment and manufacturing capacity, as well as
the potential for standards to result in plant closures and loss of
capital investment. Finally, DOE takes into account cumulative impacts
of various DOE regulations and other regulatory requirements on
manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and PBP associated with new or amended standards. These
measures are discussed further in the following section. For consumers
in the aggregate, DOE also calculates the national net present value of
the economic impacts applicable to a particular rulemaking. DOE also
evaluates the LCC impacts of potential standards on identifiable
subgroups of consumers that may be affected disproportionately by a
national standard.
2. Savings in Operating Costs Compared to Increase in Price
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered product compared
to any increases in the price of the covered products that are likely
to result from the imposition of the standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP
analysis.
The LCC is the sum of the purchase price of a product (including
its installation) and the operating expense (including water, energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC and PBP analysis requires a variety of inputs,
such as product prices, product water and energy consumption, water and
sewer prices, energy prices, maintenance and repair costs, product
lifetime, and consumer discount rates. 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. For its analysis, DOE assumes that consumers will purchase
the covered
[[Page 39494]]
product in the first year of compliance with amended standards.\19\
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\19\ Because the anticipated compliance date is late in the
expected compliance year, 2018, for analytical purposes, DOE assumes
that customers will purchase the CPSV equipment that meets the
potential amended standards in 2019. In other words, the first year
of the analysis period is 2019.
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The LCC savings for the considered efficiency levels are calculated
relative to a no-new-standards case that reflects projected market
trends in the absence of amended standards. DOE identifies the
percentage of consumers estimated to receive LCC savings or experience
a LCC increase, in addition to the average LCC savings associated with
a particular standard level. DOE's LCC and PBP analysis is discussed in
further detail in section IV.F of this notice.
3. Energy Savings
EPCA requires DOE, in determining the economic justification of a
standard, to consider the total projected energy savings that are
expected to result directly from the standard. (42 U.S.C.
6295(o)(2)(B)(i)(III)) As discussed in section IV.H.1, DOE uses
spreadsheet models to project national energy savings.
4. Lessening of Utility or Performance of Products
In determining whether a proposed standard is economically
justified, DOE evaluates any lessening of the utility or performance of
the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data
available to DOE, the standards proposed in this notice would not
reduce the utility or performance of the products under consideration
in this rulemaking.
5. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General, that is
likely to result from a proposed standard. (42 U.S.C.
6295(o)(2)(B)(i)(V)) DOE will transmit a copy of this proposed rule to
the Attorney General with a request that the Department of Justice
(DOJ) provide its determination to the Secretary within 60 days of the
publication of a proposed rule, together with an analysis of the nature
and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)). DOE will
publish and respond to the Attorney General's determination in the
final rule.
6. Need for National Energy Conservation
DOE also considers the need for national energy conservation in
determining whether a new or amended standard is economically
justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the
proposed standards are likely to provide improvements to the security
and reliability of the nation's energy system. Reductions in the demand
for electricity may also result in reduced costs for maintaining the
reliability of the nation's electricity system. DOE conducts a utility
impact analysis to estimate how standards may affect the nation's
needed power generation capacity, as discussed in section IV.M.
The proposed standards also are likely to result in environmental
benefits in the form of reduced emissions of air pollutants and
greenhouse gases associated with energy production and use. DOE
conducts an emissions analysis to estimate how standards may affect
these emissions and reports the emissions impacts from each TSL it
considered in section V.B.6. DOE also reports estimates of the economic
value of emissions reductions resulting from the considered TSLs in
section IV.L.
7. Other Factors
EPCA allows the Secretary of Energy, in determining whether a
standard is economically justified, to consider any other factors that
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII))
To the extent that interested parties submit any relevant information
regarding economic justification that does not fit into the other
categories described in the previous sections, DOE could consider such
information under ``other factors.''
F. 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 effects that proposed
energy conservation standards would have on the PBP for consumers.
These analyses include, but are not limited to, the 3-year PBP
contemplated under the rebuttable-presumption test. The rebuttable
presumption payback calculation is discussed in section IV.F.11 of this
proposed rule.
IV. Methodology and Discussion of Related Comments
DOE used several spreadsheet tools to estimate the impact of the
proposed standards. One of these spreadsheet tools calculates LCCs and
PBPs of potential amended energy conservation standards. Another
provides shipments forecasts and then calculates impacts of potential
standards on national energy savings and net present value. The
Department also assessed manufacturer impacts, largely through the use
of the Government Regulatory Impact Model (GRIM) spreadsheet tool. The
spreadsheets are available online at: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=100.
Additionally, DOE estimated the impacts of amended standards for
commercial prerinse spray valves on utilities and the environment. DOE
used a version of EIA's National Energy Modeling System (NEMS) for the
utility and environmental analyses.\20\ 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. The version of NEMS used for appliance standards analysis,
which makes minor modifications to the AEO version, is called NEMS-
BT.\21\ NEMS-BT accounts for the interactions among the various energy
supply and demand sectors and the economy as a whole.
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\20\ For more information on NEMS, refer to the U.S. Department
of Energy, Energy Information Administration documentation. A useful
summary is National Energy Modeling System: An Overview 2009, DOE/
EIA-0581(2009) (October 2009) (Available at: http://www.eia.doe.gov/oiaf/aeo/overview/index.html).
\21\ 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
Office.)
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A. Market and Technology Assessment
DOE develops information in the market and technology assessment
that provides an overall picture of the market for the product
concerned, including the purpose of the product, the industry
structure, manufacturers, market characteristics, and technologies used
in the product. 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 commercial prerinse spray valves
[[Page 39495]]
rulemaking include: (1) Market assessment, (2) efficiency metrics, (3)
product classes, and (4) technology assessment. The key findings of
DOE's market assessment are summarized in the following sections. See
chapter 3 of the NOPR TSD for further discussion of the market and
technology assessment.
1. Market Assessment
As part of the market assessment, DOE examined manufacturers, trade
associations, and the quantities and types of products sold and offered
for sale. DOE reviewed relevant literature to develop an understanding
of the CPSV industry in the United States, including market research
data, government databases, retail listings, and industry publications
(e.g., manufacturer catalogs). Using this information, DOE assessed the
overall state of the industry, CPSV manufacturing and market shares,
shipments, general technical information on commercial prerinse spray
valves, and industry trends.
In the Framework document, DOE sought comments regarding the market
for commercial prerinse spray valves, and in particular on product
features, market shares, and trends. Additionally, DOE also sought
comments on which organizations had a vested interest in commercial
prerinse spray valves. DOE recognized Plumbing Manufacturers
International (PMI) and North American Association of Food Equipment
Manufacturers (NAFEM) in the Framework document as organizations that
have an interest in commercial prerinse spray valves. In addition to
these trade organizations, T&S Brass suggested including the National
Restaurant Association (NRA) as an organization that has an interest in
commercial prerinse spray valves. (T&S Brass, Public Meeting
Transcript, No. 6 at p. 30) \22\ Additionally, the International
Association of Plumbing and Mechanical Officials (IAMPO) commented that
it tests and certifies commercial prerinse spray valves to make sure
they meet mandated levels. Hence, IAMPO is also a body that has an
interest in commercial prerinse spray valves. (IAPMO, Public Meeting
Transcript, No. 6 at p. 30) Alliance for Water Efficiency (AWE)
recommended that DOE consider service companies, such as Ecolab, as a
subtype in its list of retailers. It stated that such companies provide
on-demand, on-site maintenance and other services to food service
operators, and have the most influence over the selection of commercial
prerinse spray valves at the restaurant site. (AWE, No. 8 at p. 2) DOE
acknowledges and appreciates the information provided by these
interested parties.
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\22\ A notation in this form provides a reference for
information that is in the docket of DOE's rulemaking to amend
energy conservation standards for commercial prerinse spray valves.
(Docket No. EERE-2014-BT-STD-0027, which is maintained at
www.regulations.gov) This particular notation refers to a comment:
(1) submitted by T&S Brass; (2) appearing in the Public Meeting
Transcript, which is document number 6 of the docket; and (3)
appearing on page 30 of that document.
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Commenting on the commercial prerinse spray valve industry in
general, T&S Brass stated that a small number of manufacturers control
the majority of the market because commercial prerinse spray valves are
a niche product. Two or three manufacturers have the majority of the
market share. Most of the manufacturers in the industry are family-
owned businesses. (T&S, Public Meeting Transcript, No. 6 at p. 58)
DOE also held phone conversations with representatives from the EPA
WaterSense[supreg] program regarding the market assessment.\23\ The
representatives commented that the industry comprises a small number of
CPSV manufacturers, most of which are private companies which do not
readily provide market information.
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\23\ Information on the WaterSense program for commercial
prerinse spray valves is available at www.epa.gov/WaterSense/products/prsv.html.
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DOE researched government databases for CPSV product listings,
including DOE's Compliance Certification Management System (CCMS), the
California Energy Commission (CEC) Appliance Database, and the
WaterSense database. Based on this research, DOE concluded that the
CPSV market includes 54 basic models from 13 different brands and 11
manufacturers. Chapter 3 provides more details on the CPSV market.
2. Efficiency Metrics
Currently, all covered commercial prerinse spray valves are
included in a single product class that is subject to a 1.6 gpm
standard for maximum flow rate. 10 CFR 431.266. As part of the 2014
Framework document, DOE considered adopting an alternative metric to
replace the existing flow rate (gpm) metric. DOE examined alternative
metrics that could achieve energy and water savings while also
preserving product functionality. In the 2014 Framework document, DOE
presented two alternate metrics. One alternative metric under
consideration was a performance metric that takes into account both
flow rate and spray force (measured in gpm divided by ozf). Another
metric considered was gallons per plate washed, which was calculated
using the flow rate and the cleanability time, which is defined in ASTM
Standard F2324-2003, as the ``effectiveness of the prerinse spray valve
to remove soil from the plate before it is placed in a dishwashing
machine.'' DOE requested comments from interested parties on these
suggested alternate metrics.
A joint comment submitted by the Alliance to Save Energy, the
Appliance Standards Awareness Project, and the Natural Resources
Defense Council (``Advocates'') supported the consideration of a metric
that incorporates both flow rate and spray force because this may allow
DOE to adopt an amended standard that ensures functionality, while
improving water and energy efficiency of commercial prerinse spray
valves. In addition, the Advocates pointed out that a widely used
industry standard, ASTM Standard F2324-13, already incorporates spray
force measurement, and so a metric accounting for both flow rate and
spray force would not cause additional burden to manufacturers listing
products to the industry standard. (Advocates, No. 11 at p. 1) However,
the Advocates also commented that product classes must be considered to
distinguish between commercial prerinse spray valves and DOE could
consider using spray force as one way to delineate separate product
classes. (Advocates, No. 11 at p. 2)
A joint comment submitted by Pacific Gas and Electric Company
(PG&E), Southern California Gas Company, San Diego Gas and Electric,
and Southern California Edison (CA IOUs) urged DOE to consider a metric
or a product classification structure that addresses product
performance in addition to water consumption. The CA IOUs stated that
if a single metric does not capture both performance and water
consumption, the standard should be structured to preserve the primary
function of the product while addressing water efficiency. (CA IOUs,
No. 14 at p. 1)
The CA IOUs also urged DOE to consider user satisfaction when
considering the metric, as some field surveys have shown that users
that are dissatisfied with efficient commercial prerinse spray valves
will substitute them with those that likely increase overall water
consumption. Therefore, CA IOUs suggested either incorporating spray
force into the metric, or alternatively, using spray force to establish
product classes as a way to account for differentiating products. (CA
IOUs, No. 14 at p. 1)
In terms of considering cleanability in the metric, the Advocates
commented that they opposed using gallons per
[[Page 39496]]
plate washed as a metric because of concerns about efficacy and
replicability of cleanability testing. (Advocates, No. 11 at p. 1) CA
IOUs also suggested that DOE consider not using the cleanability test
given the problems with repeatability and little correlation to user
satisfaction. (CA IOUs, No. 14 at p. 2) Additionally, AWE commented
that the cleanability test was an unreliable indicator of top-
performing products and was not easily repeatable in laboratories
across North America. (AWE, No. 8 at p. 1)
Although the purpose of the rulemaking is to achieve water savings,
DOE recognizes that the utility of commercial prerinse spray valves
must also be ensured. DOE agrees with interested parties that there are
specific applications for different commercial prerinse spray valves,
and to preserve utility, another measure besides flow rate must be
considered in the analysis. There was a consensus among interested
parties not to include cleanability in the test method metric because
of the issues regarding repeatability of test results. Additionally,
interested parties stated that cleanability had little correlation to
performance and user satisfaction. Therefore, DOE did not use
cleanability in the analysis.
However, a majority of the interested parties supported including
spray force in the analysis. Whereas some stakeholders suggested
incorporating spray force as part of the water consumption metric,
others commented that spray force can also be used as a characteristic
to distinguish product classes. Based on the comments received, DOE
proposes to retain flow rate (in gpm) as the efficiency metric, and to
incorporate spray force as a characteristic to distinguish product
classes. Because the industry currently uses flow rate as the
efficiency metric, DOE will continue using this industry-accepted
metric. However, to ensure that utility of the commercial prerinse
spray valves is maintained, DOE proposes to use spray force as a
characteristic to establish product classes. The following section
provides further discussion on incorporating spray force as a
characteristic to differentiate product classes.
3. Product Classes
As stated previously, all commercial prerinse spray valves are
included in a single product class. In the 2014 Framework document, DOE
also considered whether to establish separate product classes based on
the statutory criteria in 42 U.S.C. 6295(q), and requested comments
from interested parties.
The Advocates stated that separate product classes should be
established to distinguish among commercial prerinse spray valves that
fit different applications. The Advocates also stated that DOE should
consider establishing product classes for commercial prerinse spray
valves that would distinguish between valves designed and marketed for
light duty, standard duty, and heavy-duty applications. (Advocates, No.
11 at p. 2) The CA IOUs also suggested that DOE should examine what
applications do not require a higher flow rate for establishing product
classes. (CA IOUs, No. 14 at p. 2)
NAFEM suggested evaluating the impacts of the rule on other
applications where commercial prerinse spray valves are currently used.
(NAFEM, No. 9 at p. 2) Similarly, T&S Brass commented that the
applications of commercial prerinse spray valves could vary from
rinsing to cleaning baked-on food, and that the different applications
might require different spray forces. T&S Brass stated that it offers a
variety of prerinse spray valves that have different design features
based on end users' applications. (T&S Brass, Public Meeting
Transcript, No. 6 at p. 40) T&S Brass also commented that nozzle design
and spray pattern provide specific CPSV applications and performance
and that consumers choose a commercial prerinse spray valve based on
application by trying various designs and determining which commercial
prerinse spray valve works best for their specified application. (T&S,
No. 12 at p. 4) Additionally, T&S Brass commented that CPSV efficiency
depends on water pressure, water temperature, duration, flow rate,
spray patterns, and other factors, and that the end-user application
will dictate several of these variables. (T&S, No. 12 at p. 6)
DOE agrees with interested parties that there are different
applications of commercial prerinse spray valves, such as cleaning
baked-on food and light rinsing. Therefore, commercial prerinse spray
valves designed for heavy duty cleaning require a higher flow rate in
order to achieve satisfactory cleaning performance compared to products
designed for light rinsing. Therefore, to preserve consumer utility for
all CPSV applications, DOE proposes to establish separate product
classes for commercial prerinse spray valves.
To determine what criteria to use to establish the product classes,
DOE presented several different CPSV characteristics in the 2014
Framework document and requested input from interested parties. DOE
received input on whether cleanability, flow rate, and spray force are
criteria that should be used to establish product classes.
a. Cleanability
T&S Brass stated that because cleanability depends on subjective
features such as spray pattern, end-user's application, and duration,
this characteristic should not be used to establish product classes.
(T&S Brass, No. 12 at p. 4) AWE suggested that DOE develop a more
viable cleanability test method than that in ASTM F2324-2003 if
cleanability is to be used as the defining characteristic. (AWE, No. 8
at p. 2) CA IOUs suggested that DOE consider not using the cleanability
test given the problems with repeatability and little correlation to
user satisfaction. (CA IOUs, No. 14 at p. 2) T&S Brass commented that
ultra-low-flow commercial prerinse spray valves are designed for
applications that allow for minimum water consumption, and that
cleanability using an ultra-low-flow commercial prerinse spray valve is
not applicable to every CPSV application in the foodservice
environment. (T&S Brass, No. 12 at p. 4)
Based on these comments, as well as ASTM's update of the F2324
standard (ASTM Standard F2324-13), which replaces the cleanability test
with a spray force test, DOE is not considering using cleanability as a
characteristic to define product classes.
b. Flow Rate
T&S Brass stated that flow rate is a useful characteristic to
define product classes and that spray force is a related parameter that
can be altered with the nozzle design. (T&S Brass, Public Meeting
Transcript, No. 6 at p. 39) T&S Brass commented that the data for flow
rates for commercial prerinse spray valves are available and verifiable
because they are based upon consistent test methods of a national test
standard. (T&S Brass, No. 12 at p. 3) T&S Brass suggested using three
product classes: (1) An ultra low-flow commercial prerinse spray valve
with a maximum flow rate of 0.8 gpm; (2) a low-flow commercial prerinse
spray valve with flow rates of 0.8 to 1.28 gpm; and (3) a standard
commercial prerinse spray valve with flow rates of 1.28 to 1.6 gpm.
(T&S Brass, No. 12 at p. 3) T&S Brass stated that the 1.6 gpm class is
currently called the EPAct 2005 class. The 1.28 gpm class is based on
the WaterSense voluntary standard. The 0.80 gpm class represents a 50
percent reduction of the current DOE standard. (T&S Brass, Public
Meeting Transcript, No. 6 at p. 54) However, the Advocates commented
that if the metric is not changed from the current gpm, then including
flow
[[Page 39497]]
rate as a differentiator for product class would be inconsistent.
(Advocates, Public Meeting Transcript, No. 6 at p. 38)
Additionally, T&S Brass commented that the performance of the
maximum technologically feasible model (max-tech model) should not be
evaluated solely based on flow rate. (T&S Brass, Public Meeting
Transcript, No. 6 at p. 52) Also, as described in section IV.A.1,
interested parties commented that for DOE to maintain the utility of
the commercial prerinse spray valves, another measure besides flow rate
must be considered in the analysis.
In the 2014 Framework document, DOE noted that it would be
difficult to establish product classes based on flow rate if the flow
rate efficiency metric was retained. For this rulemaking, DOE proposes
to retain flow rate as the efficiency metric for commercial prerinse
spray valves. Therefore, DOE is not considering flow rate as a
characteristic to establish product classes.
c. Spray Force
As described in section IV.A.1, interested parties recommended that
DOE incorporate spray force in the analysis. Additionally, the
Northwest Energy Efficiency Alliance (NEEA) recommended that DOE
investigate whether spray force and flow rate are directly
proportional, and to investigate whether spray force is a good
characteristic to predict the performance of a commercial prerinse
spray valve. (NEEA, No. 13 at p. 2)
DOE investigated whether any relationship exists between spray
force and flow rate. DOE tested multiple spray valves for both flow
rate and spray force using the ASTM Standard F2324-13 test procedure.
The test results showed a direct linear relationship between flow rate
and spray force, such that higher flow rate corresponds to higher spray
force. Additionally, DOE found literature online that supported the
linear relationship between spray force and flow rate.\24\ Chapter 3 of
the NOPR TSD provides further discussion on this relationship.
---------------------------------------------------------------------------
\24\ Spraying Systems Co., ``Optimizing Your Spray System''
(2009) (Available at: www.spray.com/Literature_PDFs/TM410A_Optimizing_Your_Spray_System.pdf); PNR America, ``Some Uses
of Spray Nozzles'' (Available at: http://www.pnramerica.com/pdfs/p2_6.pdf).
---------------------------------------------------------------------------
Multiple interested parties also recommended the use of spray force
to establish product classes. The Advocates suggested that spray force
might be a suitable criterion to create product classes. (Advocates,
No. 11 at p. 2) T&S Brass commented that there are several applications
of commercial prerinse spray valves, and all might require different
spray forces. (T&S Brass, Public Meeting Transcript, No. 6 at p. 39)
AWE stated that spray force is a useful characteristic that could be
used to define product classes. (AWE, No. 8 at p. 2) CA IOUs suggested
using spray force to establish product classes as a way to account for
differentiating products.
However, NEEA stated that establishing product classes based on
spray force could overlook cleaning effectiveness. It stated that a
solid water jet and pattern jet could have the same flow rate and spray
force, but that the pattern jet would clean better than a solid jet,
despite both having the same spray force. (NEEA, No. 13 at p. 2)
A WaterSense field study found that low water pressure, or spray
force, is a source of user dissatisfaction. WaterSense evaluated 14
commercial prerinse spray valve models and collected 56 consumer
satisfaction reviews, of which 9 were unsatisfactory. Seven of the nine
unsatisfactory scores were attributed, among other factors, to the
water pressure, or the user-perceived force of the spray.\25\
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\25\ EPA WaterSense, Prerinse Spray Valves Field Study Report,
at 24-25 (Mar. 31, 2011) (Available at: www.epa.gov/watersense/docs/final_epa_prsv_study_report_033111v2_508.pdf).
---------------------------------------------------------------------------
Based on all comments from interested parties, DOE recognizes that
spray force is an important criterion for characterizing consumer
utility and is directly correlated with flow rate. Therefore, DOE is
proposing to use spray force as the criterion to establish product
classes. The 2015 CPSV test procedure NOPR proposes to incorporate by
reference ASTM Standard F2324-13, which includes a test method for
measuring spray force.
DOE is proposing three product classes based on ranges of spray
force: (1) light-duty (less than or equal to 5 ozf), (2) standard-duty
(greater than 5 ozf but less than or equal to 8 ozf), and (3) heavy-
duty (greater than than 8 ozf). The light-duty equipment class would be
suitable for light rinsing purposes, the standard-duty product class
would be suitable to clean wet foods, and the heavy-duty product class
would be suitable to clean baked-on foods. DOE testing of commercial
prerinse spray valves provided clear indication of three clusters of
commercial prerinse spray valves within these spray force ranges.
Chapter 3 of the NOPR TSD provides a detailed description of the
product classes that DOE is proposing in this rulemaking.
d. Impact of Product Classes on Compliance, Certification and
Enforcement
The procedures required for certification, determination, and
enforcement of compliance of covered products with the applicable
conservation standards are set forth in 10 CFR 429. The sampling plan
and certification requirements for commercial prerinse spray valves are
dictated in 10 CFR 429.51. DOE received comments from interested
parties regarding the impact of product classes on product compliance,
certification, and enforcement.
T&S Brass commented that the impact of assigning product classes
should be considered with regard to the regulation and certification
process. T&S Brass seeks clarification on how commercial prerinse spray
valves will be certified (e.g., through accredited third parties) in
the future, if product classes will create more burden on
manufacturers, and if it will be an additional requirement besides
WaterSense certification. (T&S Brass, No. 12 at p. 8) T&S Brass also
commented that there is a general lack of enforcement for manufacturers
to file with DOE and that many imported products do not follow the
federal regulations. (T&S, No. 12 at p. 8)
As described in this NOPR, DOE proposes to designate product
classes based on ranges of spray force. In the concurrent 2015 CPSV
test procedure NOPR, DOE is proposing that spray force be tested for
each spray pattern. Therefore, DOE proposes to revise the certification
reporting requirements under 10 CFR 429.51(b)(2) to include reporting
the average spray force in ozf, in addition to reporting the average
flow rate. The reported spray force will determine which product class
applies to each certified basic model. As DOE understands that spray
force is already a widely accepted and measured characteristic of
commercial prerinse spray valves, DOE believes that adding the
reporting requirement for spray force will not create significant
additional burden for CPSV manufacturers.
DOE further notes that the WaterSense prerinse spray valve program
is a voluntary program administered by EPA, and DOE's reporting and
certification requirements for commercial prerinse spray valves would
be separate from the requirements of the WaterSense program.
The Advocates noted that ASTM Standard F2324-13, which is being
incorporated by reference in the concurrent 2015 CPSV test procedure
[[Page 39498]]
NOPR (80 FR 35874), already incorporates spray force measurement, and
so accounting for both flow rate and spray force would not cause
additional burden to manufacturers listing products to the industry
standard. (Advocates, No. 11 at p. 1) However, the Advocates also noted
that it would be challenging to administer the separate product classes
when commercial prerinse spray valves in a commercial kitchen are
interchangeable, as many users have both heavy-duty and light-duty
cleaning to perform. (Advocates, No. 11 at p. 2) The Advocates
cautioned that enforcement issues should also be considered when
considering spray force. (Advocates, No. 11 at p. 2)
While DOE administers the certification, determination, and
enforcement of compliance of covered products, DOE does not administer
the end-use of the covered products by the consumers. Under DOE
enforcement activities, conservation standards cases deal with
manufacturers that have distributed products in the U.S. that DOE has
found do not meet the required energy standards. Compliance
certification cases deal with manufacturers that either have not
certified that the products that they manufacture and distribute in the
U.S. have been tested and meet the applicable energy conservation
standards or have submitted invalid compliance certifications. With
respect to products certified to EPA's ENERGY STAR program, DOE refers
to the EPA any products that DOE tests that do not meet the ENERGY STAR
specification. Any complaints regarding non-compliant products can be
sent to: [email protected].
4. Technology Assessment
In the technology assessment, DOE identifies technology options
that may decrease CPSV water consumption. This assessment provides the
technical background and structure on which DOE bases its screening and
engineering analyses. In the 2014 Framework Document, DOE suggested an
initial list of technology options that it would consider, which
included the following:
Addition of a flow control insert;
Smaller nozzle tip openings to increase pressure;
Incorporation of additional components including, but not
limited to backflow preventers, additional valves, or hoses; and
Specially designed spray patterns, such as the following:
fan spray pattern (single nozzle with a hollow cone stream); solid
stream pattern (single nozzle with single solid jet stream); triple-
action spray pattern (three nozzles with solid jet streams); knife-like
spray pattern (single nozzle with a flat stream); and rose spray
pattern (multiple nozzles resembling a common showerhead).
DOE received several comments regarding the feasibility and impact
of the technology options identified in the 2014 Framework document,
which are discussed in the screening and engineering analyses in
section IV.B and section IV.C, respectively. T&S Brass commented that
there should not be too many design restrictions, as commercial
prerinse spray valves are used in different applications, and, based on
the application, the incorporation of certain design options might be
required. (T&S Brass, Public Meeting Transcript, No. 6 at p. 44) T&S
Brass also commented that the rulemaking should not stifle innovation.
Id. AWE recommended that DOE not be design-restrictive, but focus on
cleaning performance, water consumption, and durability of commercial
prerinse spray valves for the rulemaking. (AWE, No. 8 at p. 2)
DOE notes that the proposed standard is a performance-based
standard, not a design-based standard.
After further research regarding the potential technology options
identified in the 2014 Framework document, DOE determined that several
of them do not affect CPSV efficiency and thus are not considered to be
technology options. The following subsections provide background on
these product features that DOE determined had no impact on CPSV
efficiency. The technology options that do affect CPSV efficiency are
discussed further in section IV.B.
1. Backflow Preventers
Backflow preventers prevent reverse flow of water. They are mainly
used in plumbing devices to protect water supplies from contamination
or pollution. DOE did not identify any means by which incorporating a
backflow preventers into a commercial prerinse spray valve could
improve its efficiency by limiting the water flow rate.
2. Specially Designed Spray Patterns
In the 2014 Framework document, DOE identified five different spray
patterns that are incorporated in commercial prerinse spray valves. DOE
performed several tests on various CPSV units with different spray
patterns using the ASTM Standard F2324-13 test procedure. While the
units provided different flow rate and spray force results, DOE
research showed no direct correlation between the type of spray pattern
and flow rate. Hence, DOE found no indication that a different spray
pattern can be used to reduce water consumption. Additionally, T&S
Brass commented that different nozzle designs and spray patterns have
been developed to meet the requirements for specific CPSV applications.
(T&S Brass, No. 12 at p. 4) Hence, the type of spray pattern is more
relevant to a specific CPSV application, rather than being a potential
design option to reduce water consumption in commercial prerinse spray
valves.
DOE did, however, identify additional CPSV technology options
beyond those in the 2014 Framework document which could improve CPSV
efficiency. The additional technology options analyzed include spray
hole eccentricity and orifice plate nozzle geometry, and are discussed
further in the section IV.B.
B. Screening Analysis
DOE uses the following four screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in working prototypes will not
be considered further.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production and reliable installation and servicing
of a technology in commercial products could not be achieved on the
scale necessary to serve the relevant market at the time of the
projected compliance date of the standard, then that technology will
not be considered further.
(3) Impacts on product utility or product availability. If it is
determined that a technology would have significant adverse impact on
the utility of the product to significant subgroups of consumers or
would result in the unavailability of any covered product type with
performance characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
generally available in the United States at the time, it will not be
considered further.
(4) Adverse impacts on health or safety. If it is determined that a
technology would have significant adverse impacts on health or safety,
it will not be considered further. 10 CFR part 430, subpart C, appendix
A, 4(a)(4) and 5(b)
In response to the technology options presented in the 2014
Framework document, T&S Brass stated that design and technology aspects
to improve
[[Page 39499]]
CPSV performance are considered proprietary information by
manufacturers. (T&S Brass, No. 12 at p. 5) The Natural Resources
Defense Council (NRDC) asked whether the spray patterns and associated
nozzles used in the engineering analysis would be non-proprietary
options. (NRDC, Public Meeting Transcript, No. 6 at p. 46).
In the engineering and economic analyses, DOE considered all design
options that are commercially available or present in a working
prototype, including proprietary designs that meet the screening
criteria. DOE will consider a proprietary design, however, only if it
does not represent a unique path to a given efficiency level. If the
proprietary design is the only approach available to achieve a given
efficiency level, then DOE will eliminate that efficiency level from
further analysis. However, if a given energy efficiency level can be
achieved by a number of design approaches, including a proprietary
design, DOE will examine the given efficiency level, despite the
proprietary nature of that one design.
Additionally, NAFEM stated that DOE's suggested design options in
the 2014 Framework document fail to satisfy the criteria as specified
in 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii) through
(iv). (NAFEM, No. 9 at p. 2) Sections 4(a)4(ii) through (iv) define
three of the four screening criteria described previously, which are:
Practicability to manufacture, install and service; adverse impacts on
product or equipment utility or availability; and adverse impacts on
health or safety. The technology options presented in the 2014
Framework document had not been screened using the four factors
discussed above. For the analysis in this notice, DOE evaluated the
technology options being considered in the engineering analysis based
on the four screening criteria. While a majority of the technology
options were not considered in the analysis because they failed to
satisfy the screening criteria, there are several technology options
that DOE believes satisfy the screening criteria, which are discussed
in the following sections. Those technology options not screened out by
the four criteria are called ``design options'' and are considered in
the engineering analysis as possible methods of improving efficiency.
The following sections describe which technology options were screened
out, and which were included as design options.
1. Addition of Flow Control Insert
A flow control insert is a component that can be installed within
certain plumbing products to limit the amount of water that flows out
of the product. Several faucets and showerheads on the market use flow
control inserts to reduce water consumption. Therefore, a flow control
insert could also be used in other water products, like commercial
prerinse spray valves, to control flow. However, T&S Brass commented
that the addition of a flow control insert should not be considered as
a design option. T&S reports that a flow control insert would hinder
CPSV performance, and can often be physically removed by the end user.
(T&S Brass, No. 12 at p. 5) Additionally, T&S Brass mentioned that the
nozzle itself is what regulates the flow rate in commercial prerinse
spray valves. (T&S Brass, No. 12 at p. 5)
Based on research, DOE did not identify any commercial prerinse
spray valves on the market that use flow control inserts to regulate
water flow. Therefore, because flow control inserts are not
incorporated in commercially available products or working prototypes,
DOE has screened out flow control inserts from its analysis because
they are not technologically feasible.
2. Smaller Spray Hole Area
The spray hole(s) are located at the exterior of the commercial
prerinse spray valve and allow water to flow out of the nozzle. The
total spray hole area is the sum of all the areas of the individual
spray holes. DOE determined that the flow rate and nozzle spray hole
area are directly related. Additional technical details regarding this
relationship are provided in chapter 5 of the TSD.
Given its relationship to flow rate, DOE identified nozzle spray
hole area as an important factor to consider in the engineering
analysis. Additionally, reducing the spray hole area is a relatively
simple design change that satisfies the 4 screening criteria discussed
above: (1) It is technologically feasible; (2) it would be practicable
to manufacture, install, and service; (3) it would not have adverse
impacts on product utility or availability; \26\ and (4) it would not
have adverse impacts on health and safety. Therefore, DOE will consider
smaller nozzle tip openings, or a smaller nozzle spray hole area, as a
design option in the engineering analysis.
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\26\ Although smaller spray hole area would result in lower flow
rates and thus a lower amount of force, DOE's proposed revised
product class structure would preserve product utility for heavy-
duty applications.
---------------------------------------------------------------------------
3. Aerators
An aerator is a device that can be used to mix air with water, to
reduce the flow of water from the device without reducing the water
pressure. DOE is aware of only one commercial prerinse spray valve that
incorporates an aerator. DOE tested this unit to determine how the
aerator reduces water consumption. DOE testing indicated that the
performance of this aerated unit differed substantially from the more
common non-aerated units: It exhibited a very low spray force, and did
not demonstrate the same linear relationship between flow rate and
spray force that is typical of most other commercial prerinse spray
valves that DOE tested. At the present time, DOE does not have enough
information to determine (1) whether the addition of an aerator
represents a technologically feasible design option for improving CPSV
efficiency, or (2) whether aerators can be applied more generally to
other CPSV designs. Therefore, DOE is tentatively screening out
aerators from the analysis. DOE requests comment about its approach to
screen out aerators in section V.E.14.
4. Additional Valves
Plumbing fixtures often use globe valves and butterfly valves to
regulate water flow. Globe valves are comprised of a movable disk-like
element and a stationary ring seated in a generally spherical body. The
most common application of a globe valve is in a standard water faucet,
such that when the handle is turned, a disc is lowered or raised.
Butterfly valves regulate flow by means of a disc that rotates on an
axis across the diameter of a pipe. Based on DOE's research to date,
however, there are no commercially available products or working
prototypes of commercial prerinse spray valves that use these
additional valves. Additionally, T&S Brass also commented that the
incorporation of additional components, such as backflow preventers,
additional valves, or hoses, should not be considered as a design
option because they are not necessarily aspects incorporated within the
commercial prerinse spray valve itself. (T&S Brass, No. 12 at p. 5).
DOE considers any component separate from the commercial prerinse spray
valve to not be part of the covered product, and therefore not subject
to evaluation as a design option. For these reasons, DOE has screened
out the incorporation of additional valves from its analysis.
5. Changing Spray Hole Shape
DOE found evidence that spray hole shape affects flow rate. DOE
found that commercial prerinse spray valves with circular holes have
higher flow rates than commercial prerinse spray valves
[[Page 39500]]
with oval-shaped spray holes, if all other design elements are
identical. Additionally, changing spray hole shape is a design change
that satisfies the 4 screening criteria discussed above: (1) It is
technologically feasible; (2) it would be practicable to manufacture,
install, and service; (3) it would not have adverse impacts on product
utility or availability; \27\ and (4) it would not have adverse impacts
on health and safety. Therefore, DOE will consider spray hole shape as
a design option in the engineering analysis. Chapter 5 of the TSD
provides further details on spray hole shape.
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\27\ Although smaller spray hole area would result in lower flow
rates and thus a lower amount of force, DOE's proposed revised
product class structure would preserve product utility for heavy-
duty applications.
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6. Venturi Meter to Orifice Plate Nozzle Geometries
DOE has observed that the nozzle geometry affects the flow rate of
commercial prerinse spray valves. Based on DOE testing, reverse-
engineering teardowns and information available in the literature, DOE
has determined that a ``venturi meter'' geometry allows water to pass
through the nozzle more easily than an ``orifice plate'' geometry.
Therefore, if all other design elements are identical, commercial
prerinse spray valves with an orifice plate geometry have a lower flow
rate than commercial prerinse spray valves with a venture meter
geometry. Additionally, changing spray nozzle geometry is a design
change that satisfies the 4 screening criteria discussed above: (1) It
is technologically feasible; (2) it would be practicable to
manufacture, install, and service; (3) it would not have adverse
impacts on product utility or availability; \28\ and (4) it would not
have adverse impacts on health and safety. Therefore, DOE will consider
spray nozzle geometry as a design option in the engineering analysis.
Chapter 5 of the TSD provides a more detailed discussion on this topic.
---------------------------------------------------------------------------
\28\ Although an orifice plate geometry would result in lower
flow rates and thus a lower amount of force, DOE's proposed revised
product class structure would preserve product utility for heavy-
duty applications.
---------------------------------------------------------------------------
C. Engineering Analysis
In the engineering analysis, DOE establishes the relationship
between the manufacturer production cost (MPC) and improved CPSV
efficiency. This relationship serves as the basis for cost-benefit
calculations for individual consumers, manufacturers, and the nation.
DOE typically structures the engineering analysis using one of three
approaches: (1) Design option, (2) efficiency level, or (3) reverse
engineering (or cost assessment). The design-option approach involves
adding the estimated cost and associated efficiency of various
efficiency-improving design changes to the baseline to model different
levels of efficiency. The efficiency-level approach uses estimates of
costs and efficiencies of products available on the market at distinct
efficiency levels to develop the cost-efficiency relationship. The
reverse-engineering approach involves testing products for efficiency
and determining cost from a detailed bill of materials (BOM) derived
from reverse engineering representative products.
For this analysis, DOE structured its engineering analysis for
commercial prerinse spray valves using a combination of the design-
option approach and the reverse-engineering approach. The analysis is
performed in terms of incremental decreases in water consumption due to
the implementation of selected design options, while the estimated MPCs
for each successive design option are based on product teardowns and a
bottom-up manufacturing cost assessment. Using this hybrid approach,
DOE developed the relationship between MPC and CPSV efficiency.
Chapter 5 of the NOPR TSD discusses the baseline efficiencies for
each product class (in terms of flow rate), the design options DOE
considered, the methodology used to develop manufacturing production
costs, and the cost-efficiency curves. The LCC and PBP analysis uses
the cost-efficiency relationships developed in the engineering
analysis.
1. Engineering Approach
For each of the three proposed product classes, DOE selected a
baseline efficiency (in terms of flow rate) as a reference point from
which to measure changes resulting from each design option. DOE then
developed separate cost-efficiency relationships for each product class
analyzed. The following is a summary of the method DOE used to
determine the cost-efficiency relationship for commercial prerinse
spray valves:
(1) Perform flow rate and spray force tests on a representative
sample of commercial prerinse spray valves in every product class.
(2) Develop a detailed BOM for the tested commercial prerinse spray
valves through product teardowns, and construct a commercial prerinse
spray valve cost model.
(3) Use the test data and cost model to calculate the incremental
increase in efficiency (i.e., decrease in flow rate) and cost increase
of adding specific design options to a baseline model.
In the 2014 Framework document, DOE presented plans for its
engineering analysis and sought comment on its approach to calculating
the cost-efficiency relationship for commercial prerinse spray valves.
T&S Brass stated that the range of efficiency levels should be
determined based on the performance of commercial prerinse spray valves
evaluated per ASTM Standard F2324-13. (T&S Brass, No. 12 at p. 5) DOE
agrees that ASTM Standard F2324-13 reflects the latest changes in the
industry and conducted all testing in support of this rulemaking using
ASTM Standard F2324-13.
The CA IOUs recommended that DOE look at DOE's CCMS and the CEC
appliance databases for available product data. The CA IOUs also
provided separate charts that showed the range of flow rates from these
databases; the ranges reported were from 0.65 to 1.48 gpm. (CA IOUs,
No. 14 at p. 3) For the analysis, DOE used CCMS and CEC databases to
incorporate product data for the analysis. Additionally, DOE looked at
the EPA WaterSense database and the Food Service Technology Center
(FSTC) commercial prerinse spray valves testing results to determine
the flow rates and spray forces.
2. Product Classes
DOE is proposing three product classes, defined by spray force
ranges, as shown in Table IV.1.
Table IV.1--Product Classes Definitions
------------------------------------------------------------------------
Product class Spray force range
------------------------------------------------------------------------
Light-duty........................... <= 5 ozf.
Standard-duty........................ > 5 ozf and <= 8 ozf.
Heavy-duty........................... > 8 ozf.
------------------------------------------------------------------------
Chapter 3 of the NOPR TSD includes a detailed discussion regarding
how the product classes were determined.
3. Baseline and Max-Tech Models
To analyze technology options for energy efficiency improvements,
DOE defined a baseline model for each commercial prerinse spray valve
product class. Typically, the baseline model is a model that just meets
current energy conservation standards.
For the heavy-duty product class (spray force greater than 8 ozf),
DOE determined that the baseline flow rate is the current commercial
prerinse spray valve energy conservation standard of 1.6 gpm. For the
standard-duty and
[[Page 39501]]
light-duty product classes, DOE established baseline flow rates that
correspond to upper spray force bounds of these two product classes.
DOE determined these baseline flow rates using the linear relationship
between flow rate and spray force. DOE determined a best-fit linear
equation that related flow rate and spray force using the test results
for all the commercial prerinse spray valves that DOE tested. DOE then
calculated the flow rates that corresponded to the spray force bounds
for the standard-duty and light-duty product classes using the best fit
linear equation. Chapter 5 of the NOPR TSD provides more detail on the
flow rate and spray force relationship.
T&S Brass cautioned against picking the highest efficiency level
(max-tech) solely based on flow rate. T&S Brass commented that there
are products on the market with a low flow rate that have an
unsatisfactory user rating. T&S Brass suggested also looking at spray
force when determining the max-tech model. According to T&S Brass, the
current definition of the max-tech model solely based on flow rate may
work in certain applications, but may work poorly for a standard market
application. (T&S Brass, Public Meeting Transcript, No. 6 at p. 51)
Additionally, T&S Brass also noted that the max-tech model in each
product class may not adequately perform for all commercial foodservice
applications. (T&S Brass, No. 12 at p. 6)
As described above, DOE proposes three product classes, defined by
spray force ranges, which correspond to three major categories of CPSV
usage (i.e. light-duty, standard-duty, and heavy-duty). Separating
commercial prerinse spray valves into three product classes will ensure
that consumer utility is maintained within each product class. DOE
believes that the max-tech level selected for each product class would
not reduce consumer utility for the applications associated with each
spray force range.
To develop the relationships between flow rate and the design
options for commercial prerinse spray valves, DOE used publicly
available data, including data from government databases, manufacturer
catalogs and Web sites, and selected product testing for commercial
prerinse spray valves. The engineering analysis focused on identifying
and evaluating commercially available prerinse spray valves that
incorporate design options that reduce flow rate. The analysis also
identified the lowest flow rate that is commercially available within
each product class (i.e., the max-tech model).
Additionally, DOE found that the spray nozzle geometry is a
variable that affects flow rate. The nozzle geometry is expressed in
terms of a discharge coefficient. DOE calculated the discharge
coefficient for the max-tech model in each product class and assumed a
constant discharge coefficient for each efficiency level within that
class. DOE requests comments on whether this approach is appropriate.
Chapter 5 of the NOPR TSD includes details on the baseline flow
rates and max-tech flow rates considered as part of the engineering
analysis.
4. Manufacturing Cost Analysis
DOE estimated the manufacturing costs using a reverse-engineering
approach, which involves a bottom-up manufacturing cost assessment
based on a detailed BOM derived from teardowns of the product being
analyzed. The detailed BOM includes labor costs, depreciation costs,
utilities, maintenance, tax, and insurance costs, in addition to the
individual component costs. These manufacturing costs are developed to
be an industry average and do not take into account how efficiently a
particular manufacturing facility operates.
To develop the relationship between cost and performance for
commercial prerinse spray valves, DOE used a reverse-engineering
analysis, or teardown analysis. DOE purchased off-the-shelf commercial
prerinse spray valves available on the market and dismantled them
component by component to determine what technologies and designs
manufacturers use to decrease commercial prerinse spray valve flow
rate. DOE then used independent costing methods, along with component-
supplier data, to estimate the costs of the components.
T&S Brass stated that materials and processes for metallic,
plastic, and rubber parts should be taken into consideration in the
reverse-engineering process. (T&S Brass, No. 12 at p. 5) T&S Brass also
commented that the costs for incremental efficiency improvements of
existing commercial prerinse spray valve are different among
manufacturers, or even among models from the same manufacturer.
Therefore, the costs to improve efficiency depend on the design of
commercial prerinse spray valve. (T&S Brass, No. 12 at p. 6)
DOE derived detailed manufacturing cost estimate data based on its
reverse engineering analysis, which included the cost of the product
components, labor, purchased parts and materials, and investment.
DOE tested three series of commercial prerinse spray valves from
three manufacturers. Through testing, DOE found that the flow rates of
the units within each series were different. However, based on the
reverse-engineering analysis, the manufacturing costs for the units
within each series were the same. Therefore, DOE concluded that there
is no manufacturing cost difference for incremental efficiency
improvements between models within the same series from the same
manufacturer.
DOE also tested and performed a teardown analysis on commercial
prerinse spray valves from additional manufacturers. These commercial
prerinse spray valves represented a range of baseline to max-tech
units. The testing and teardown results indicated that the
manufacturing costs between different units from different
manufacturers can vary based on the type of material, amount of
material, and/or process used. However, DOE determined that these
factors do not affect the efficiency of a commercial prerinse spray
valve. Therefore, DOE did not include these cost differences in the
engineering analysis. Chapter 5 of the NOPR TSD provides further
details on the teardown analysis, component costs, and costs that were
developed as part of the cost-efficiency curves.
D. Markups Analysis
The purpose of the markups analysis is to translate the MPC derived
from the engineering analysis into the final consumer purchase price by
applying the appropriate markups. The first step in this process is
converting the MPC into the MSP by applying the manufacturer markup.
The manufacturer markup includes sales, general and administrative,
research and development, other corporate expenses, and profit. As
described further in chapter 6 of the TSD, the manufacturer markup of
1.30 was calculated as the market share weighted average value for the
industry. DOE developed this manufacturer markup by examining several
major CPSV manufacturers' gross margin information from annual reports
and Securities and Exchange Commission 10-K reports. Because the 10-K
reports do not provide gross margin information at the subsidiary
level, the estimated markups represent the average markups that the
parent company applies over its entire range of equipment offerings,
and does not necessarily represent the manufacturer markup of the
subsidiary. Both the MPC and the MSP values are used in the MIA.
[[Page 39502]]
Next, DOE uses manufacturer-to-consumer markups to convert the MSP
estimates into consumer purchase prices, which are then used in the LCC
and PBP analysis, as well as the NIA. Consumer purchase prices are
necessary for the baseline efficiency level and all other efficiency
levels under consideration.
For the markups analysis, DOE identified the following distribution
channels (i.e. how the product is distributed from the manufacturer to
the consumer):
A. Manufacturer [rarr] Final Consumer (Direct Sales)
B. Manufacturer [rarr] Authorized Distributor [rarr] Final Consumer
C. Manufacturer [rarr] Retailer [rarr] Final Consumer
D. Manufacturer [rarr] Service Company [rarr] Final Consumer
During the Framework public meeting and public comment period,
three comments were received with regard to distribution channels. T&S
Brass commented that the trade associations did not maintain
information on the percentage allocations among the various
distribution channels. T&S Brass stated that such information was
proprietary. (T&S Brass, Public Meeting Transcript, No. 6 at pp. 71-72)
T&S Brass also noted that there were numerous combinations of entities
making up the potential distribution channels, and the three listed by
DOE (A through C, as listed above) are only but a subset of the
potential channels. (T&S Brass, Public Meeting Transcript, No. 6 at pp.
70-71) Additionally, AWE commented that the dominant CPSV sales outlet
is made up of service companies providing on-demand, on-site
maintenance and other services to food service operators. (AWE, No. 8
at p. 2) As such, DOE added a fourth distribution channel (Service
Company), in addition to the three discussed in the Framework document
(Direct Sales, Authorized Distributor, and Retail Merchant). Beyond
this, DOE did not attempt to incorporate additional channels or
investigate combinations of the existing channels, because of a lack of
specific information on distribution channels.
In the 2014 Framework document, DOE discussed both baseline and
incremental markups. Baseline markups are multipliers that convert the
MSP of products at the baseline efficiency level to consumer purchase
price. Incremental markups are multipliers that convert the incremental
increase in MSP for products at each higher efficiency level (compared
to the MSP at the baseline efficiency level) to corresponding
incremental increases in the consumer purchase price. In the analysis
in this notice, DOE used only baseline markups, as the engineering
analysis indicated that there is no price increase with improvements in
efficiency for commercial prerinse spray valves. Chapter 6 of the NOPR
TSD provides further details on the distribution channels and
calculated markups.
E. Energy and Water Use Analysis
The purpose of the energy and water use analysis is to establish
the annual energy and water consumption used by the product to assess
the associated energy and water savings potential of different product
efficiencies. To this end, DOE performed an energy and water use
analysis that calculated energy and water use of commercial prerinse
spray valves for each product class and efficiency level identified in
the engineering analysis. The energy and water use analysis provided
the basis for other analyses DOE performed, particularly the LCC and
PBP analysis and the NIA.
In the 2014 Framework document, DOE indicated the analysis
conducted for the NOPR is intended to capture and estimate water
savings as a result of reduced flow rate and the related energy savings
as a result of reduced hot water use. DOE calculated the energy and
water use by determining the representative daily operating time of the
product by major building types that contain commercial kitchens found
in the Commercial Building Energy Consumption Survey (CBECS).\29\ The
daily commercial prerinse spray valve operating time was annualized
based on operating schedules for each building type. Water use for each
product class was determined by multiplying the annual operating time
by the flow rate at an operating pressure of 60 pounds per square inch
(psi) for each efficiency level.\30\
---------------------------------------------------------------------------
\29\ Survey data available at www.eia.gov/consumption/commercial/data/2003/index.cfm.
\30\ DOE considered a range of operating pressures in the
analysis to account for the variations in water pressure supplied to
buildings across the country. Through a sensitivity analysis on the
impacts of water pressure on the flow rate of the prerinse spray
valve, DOE concluded that 60 psi is a representative water pressure
for prerinse spray valves. DOE used flow rates at a water pressure
of 60 psi for each efficiency level in the energy and water use
analysis, which is further discussed in the energy and water use TSD
chapter.
---------------------------------------------------------------------------
Energy use was calculated by multiplying the annual water use in
gallons by the energy required to heat each gallon of water to an end-
use temperature of 108 [deg]F.\31\ Cold water supply temperatures used
in this calculation were derived for the nine U.S. census regions based
on ambient air temperatures and hot water supply temperature was
assumed to be 140 [deg]F based on ASHRAE Standard 12-2000.\32\ The
proportion of buildings which used natural gas or electricity for water
heating found in the CBECS database were multiplied by the energy
consumption of each kind of water heater, taking into account the
efficiency level of the product, to obtain the total energy consumption
of each product class and efficiency level of commercial prerinse spray
valves.
---------------------------------------------------------------------------
\31\ End-use temperature was determined based on a review of
several field studies. See chapter 7 of the NOPR TSD for a list of
the field studies reviewed.
\32\ ASHRAE Standard 12-2000: Minimizing the Risk of
Legionellosis Associated with Building Water Systems, (February
2000).
---------------------------------------------------------------------------
In response to the 2014 Framework document, DOE received several
comments related to potential data sources for the energy and water use
analysis. IAPMO asked whether the rulemaking team had coordinated with
DOE's Water, Energy, and Technology team. (IAPMO, Public Meeting
Transcript, No. 6 at pp. 77-78) WaterSense asked how DOE planned to
collect data on CPSV operation. (WaterSense, Public Meeting Transcript,
No. 6 at pp. 78-79) T&S Brass noted that operation data might be
available through NAFEM and FSTC. (T&S Brass, Public Meeting
Transcript, No. 6 at p. 80) Finally, AWE commented that it had data
available on operating time and water temperature from California Urban
Water Conservation Council (CUWCC) studies. (AWE, No. 8 at p.3)
In response to these comments, and as discussed above, DOE
collected data from several end-use studies that measured operating
time of commercial prerinse spray valves in field applications, such as
restaurants and cafeteria settings. Data on water temperature measured
in the field studies were also utilized by DOE to determine the hot
water and end-use temperature.
Additionally, T&S Brass commented that operational patterns varied
widely across applications that use CPSV products. The different
operational patterns across applications are a result of such factors
as the volume of dishwashing or ware washing (i.e., number of pieces)
requiring prerinsing, the rate at which dishwashing or ware washing
needs to be done in order to return the commercial ware back into
service, the difficulty in cleaning debris from the commercial ware,
and operational patterns for product classes. T&S Brass added that
these operational
[[Page 39503]]
patterns will vary in duration of usage, as flow rates change within
each application. (T&S Brass, No. 12 at p. 6)
DOE acknowledges comments submitted by T&S Brass regarding varying
operational spray patterns and considered the varying operational
patterns across applications of commercial prerinse spray valves in the
analysis for this notice. As described in further detail in chapter 7
of the NOPR TSD, DOE determined operational time for the product based
on operational patterns of distinct building types that house
commercial prerinse spray valves, including educational facilities,
food retail, healthcare, lodging, and restaurants. Operational patterns
taken into consideration for each building category included operating
days per week, operating hours per day, and estimated daily number of
meals served. DOE assumed the same operating time for different flow
rates based on the conclusion of the EPA WaterSense field study that
determined the flow rate of a CPSV did not significantly impact the
operating time of the unit.\33\
---------------------------------------------------------------------------
\33\ EPA WaterSense, Prerinse Spray Valves Field Study Report,
(March 2011) (Available at: www.epa.gov/watersense/docs/final_epa_prsv_study_report_033111v2_508.pdf.).
---------------------------------------------------------------------------
T&S Brass also commented that potential energy savings due to a
lower flow rate might be offset by using a higher water temperature
that would create water savings, but not energy savings due to the
increase in water temperature. (T&S, No. 12 at p. 8)
In regards to the comment submitted by T&S Brass, DOE assumed an
end-use temperature of 108[emsp14][deg]F based on measured temperatures
in field studies for commercial prerinse spray valves of varying flow
rates. The field studies demonstrated that the end-use temperature did
not significantly vary with flow rate. Therefore, DOE tentatively
concludes this temperature is a reasonable representation of the
temperature used by the majority of CPSV consumers, regardless of the
flow rate of the unit.
In response to the 2014 Framework document, NEEA commented that it
had access to the data for utility programs in the Northwest. (NEEA,
No. 13 at p. 2)
DOE appreciates the comment from NEEA regarding their access to
regional utility program data. In the analysis for this NOPR, DOE
utilized field studies and data that approximated national potable
water supply temperatures and operational water temperatures.
F. Life-Cycle Cost and Payback Period Analysis
DOE conducted the LCC and PBP analysis to evaluate the economic
impacts on individual consumers of potential amended energy
conservation standards for commercial prerinse spray valves. The LCC is
the total consumer expense over the life of the product, consisting of
purchase and installation costs plus operating costs (expenses for
energy and water use, maintenance, and repair). To compute the
operating costs, DOE discounts future operating costs to the time of
purchase and sums them over the lifetime of the product. The PBP is the
estimated amount of time (in years) it takes consumers to recover the
potential increased purchase cost (including installation) of more
efficient products through lower operating costs. DOE calculates the
PBP by dividing the change in purchase cost at higher efficiency levels
by the change in annual operating cost for the year that new standards
are assumed to take effect.
For any given efficiency level, DOE measures the change in LCC
relative to an estimate of the no-new-standards case product efficiency
distribution. The no-new-standards case estimate reflects the market in
the absence of amended energy conservation standards, including the
market for products that exceeds the current energy conservation
standard. In contrast, the PBP is measured relative to the baseline
product.
Inputs to the calculation of total installed cost include the cost
of the product--which includes MSPs, distribution channel markups, and
sales taxes--and installation costs. Inputs to the calculation of
operating expenses include annual energy and water consumption, energy
prices and price projections, combined water prices (which include
water and wastewater prices) and price projections, repair and
maintenance costs, product lifetimes, discount rates. DOE created
distributions of values for product lifetime, discount rates, energy
and combined water prices, and sales taxes, with probabilities attached
to each value to account for their uncertainty and variability.
The computer model DOE used to calculate the LCC and PBP, which
incorporates Crystal BallTM (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 CPSV user samples. The model calculated the LCC and
PBP for products at each efficiency level for 10,000 CPSV users per
simulation run.
DOE calculated the LCC and PBP for all consumers as if each were to
purchase a new commercial prerinse spray valve in the first year of the
analysis period. For this rulemaking, DOE anticipates any amended
standards would apply to commercial prerinse spray valves manufactured
3 years after the date on which any final amended standard is
published. For this rulemaking, DOE anticipates publication of any
final standards in late 2015 and compliance in late 2018. However, for
the purposes of this analysis, DOE used 2019 instead of 2018 as the
beginning of the analysis period for the LCC and PBP analysis, due to
the anticipated compliance date being late in the year 2018.
Table IV.2 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 NOPR TSD.
Table IV.2--Summary of Inputs and Methods for the LCC and PBP Analysis *
----------------------------------------------------------------------------------------------------------------
Inputs Source/method
----------------------------------------------------------------------------------------------------------------
Product Cost........................................................ Derived by multiplying MSPs by
distribution channel markups and sales
tax, as appropriate.
Installation Costs.................................................. Baseline installation cost determined with
data from U.S. Department of Labor.
Assumed no change with efficiency level.
Annual Energy and Water Use......................................... Determined from the energy required to
heat a gallon of water used at the
prerinse spray valve multiplied by the
average annual operating time and flow
rate of each product class.
Variability: By census region
[[Page 39504]]
Energy, Water and Wastewater Prices................................. Energy: Based on EIA's Form 826 data for
2013. Variability: By State
Water: Based on 2012 AWWA Survey.
Variability: By State
Energy and Water Price Trends....................................... Energy: Forecasted using AEO2014 price
forecasts.
Water: Forecasted using BLS historic water
price index information.
Maintenance and Repair Costs........................................ Assumed no change with efficiency level.
Product Lifetime.................................................... DOE assumed an average lifetime of 5
years.
Variability: Characterized using modified
Weibull probability distributions.
Discount Rates...................................................... Estimated using the average cost of
capital to commercial prerinse spray
valve consumers. Cost of capital was
found using information from the federal
reserve and from Damodaran online data.
First Year of Analysis Period....................................... 2019
----------------------------------------------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided in the sections following the table or in
chapter 8 of the NOPR TSD.
1. Product Cost
To calculate consumer product costs, DOE multiplied the MSPs
developed in the engineering analysis by the distribution channel
markups described in section IV.D (along with sales taxes). As stated
earlier in this notice, DOE used baseline markups, but did not apply
incremental markups, because the engineering analysis indicated that
there is no price increase with improvements in efficiency for
commercial prerinse spray valves. Product costs are assumed to remain
constant over the analysis period.
2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the product. DOE received the
following comments to the 2014 Framework document regarding
installation costs of commercial prerinse spray valves.
T&S Brass commented that installation costs typically did not
increase with higher-efficiency prerinse spray valves due to this
process being a simple swap out. Under certain circumstances, depending
on the manufacturer, additional materials may be necessary. (T&S Brass,
Public Meeting Transcript, No. 6 at pp. 83-85) T&S Brass also commented
that depending upon the manufacturer, dealer, or installer, the initial
installation costs of new products may or may not change for higher-
efficiency models. The valve is typically a pre-assembled component of
a prerinse unit installed into new facilities, but is usually provided
separately for pre-existing installations. For retrofit applications
where an existing valve is replaced with a higher-efficiency valve, the
cost may increase depending upon the degree of design change required
to manufacture the commercial valve to the higher-efficiency
requirement. This may require additional components, or revised
upstream components, that are needed for proper installation and/or
performance. This again is dependent upon the various manufacturers,
dealers, or installers. (T&S Brass, No. 12 at p. 7)
DOE has not received any specific data or other comments regarding
installation cost as a function of product efficiency. Given the
relatively simple nature of installing spray valves, and because there
are no substantial differences in size, shape, or function of more
efficient units relative to baseline efficiency units, DOE assumes that
installation costs for more efficient units are the same as the costs
for baseline products.
3. Annual Energy and Water Consumption
Chapter 7 of the NOPR TSD details DOE's analysis of CPSV annual
energy and water use at various efficiency levels. For each sampled
building type, DOE determined the energy and water consumption for a
commercial prerinse spray valve at different efficiency levels using
the approach described in section IV.E of this notice.
4. Energy Prices
DOE derived energy prices from the EIA regional average energy
price data for the commercial sectors. DOE used projections of these
energy prices for commercial consumers to estimate future energy prices
in the LCC and PBP analysis. EIA's Annual Energy Outlook (AEO2014) was
used as the default source of projections for future energy prices.
DOE developed estimates of commercial electricity and natural gas
prices for each state and the District of Columbia (DC). DOE derived
average regional energy prices from data that are published annually
based on EIA Form 826. DOE then used EIA's AEO2014 price projections to
estimate commercial electricity and natural gas prices in future years.
EIA's AEO2014 price projections have an end year of 2040. To estimate
price trends after 2040, DOE used the average annual rate of change in
prices from 2030 to 2040. DOE assumed that 100 percent of installations
were in commercial locations. DOE did not receive any comments to the
2014 Framework document regarding its method for determining energy
prices.
5. Water and Wastewater Prices
In the 2014 Framework document, DOE indicated that it would
determine marginal water and wastewater rates in the U.S. that would be
used in the LCC and PBP analysis, as well as the NIA. It further stated
that it would investigate American Water Works Association's (AWWA's)
biannual water and wastewater rate survey when modeling water and
wastewater marginal pricing and projected future rate escalations. DOE
received the following comments regarding the determination of the
appropriate water prices for applicable analyses.
T&S Brass recommended using AWWA as a source for water prices. (T&S
Brass, Public Meeting Transcript, No. 6 at p. 88) T&S Brass also
commented that it recognized the relationship between wastewater
discharge and water usage. The impact of wastewater discharge is
dependent upon municipal wastewater charges, such as sewer rate.
Therefore, similar to the costs of municipal water, wastewater charges
are based upon the location across the nation. (T&S Brass, No. 12 at p.
7) T&S Brass suggested that DOE should contact AWWA to determine
marginal water and wastewater rates and methods to break out water and
wastewater rates across different pricing segments, such as regionally
or by state, as well as future trends in water and wastewater rate
escalations. (T&S Brass, Public Meeting Transcript, No. 6 at pp. 94-96)
In response to T&S Brass's comments, and consistent with the 2014
Framework document, DOE obtained
[[Page 39505]]
data on water and wastewater prices from the 2012 AWWA surveys for this
notice. For each state and DC, DOE combined all individual utility
observations within the state to develop one value for water and
wastewater service. Because water and wastewater charges are frequently
tied to the same metered commodity values, DOE combined the prices for
water and wastewater into one total dollar per thousand gallons figure.
This figure is referred to as the combined water price. DOE used the
consumer price index (CPI) data for water related consumption (1970-
2013) in developing a real growth rate for combined water price
forecasts.
Chapter 8 of the NOPR TSD provides more detail about DOE's approach
to developing water and wastewater prices.
6. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing components
that have failed in the product; maintenance costs are associated with
maintaining the operation of the product. Typically, small incremental
increases in product efficiency produce no changes, or only minor
changes, in repair and maintenance costs compared to baseline
efficiency product.
In the 2014 Framework document, DOE requested information as to
whether maintenance and repair costs are a function of efficiency level
and product class. T&S Brass commented that determining whether repair
costs may change for more efficient products, or whether commercial
prerinse spray valves were typically replaced upon failure or repaired,
depends on how the manufacturer markets their products. Some
manufacturers and distributors place a premium on their more efficient
products. Others view it as doing a service to the environment and to
consumers by offering the same price. (T&S Brass, Public Meeting
Transcript, No. 6 at pp. 94-96). T&S Brass also commented that some
manufacturers offer repair kits. Some manufacturers view commercial
prerinse spray valves as ``throwaway'' items, but T&S Brass does not,
and stated that it could document that some of its original spray
valves had been in use for over 60 years. (T&S Brass, Public Meeting
Transcript, No. 6 at p. 86) Additionally T&S Brass commented that
although its products can last longer than 5 years, end users decide
whether to replace the entire unit or repair the unit in the field.
(T&S Brass, Public Meeting Transcript, No. 6 at pp. 96-97) T&S Brass
also stated that it offers an array of repair kits for commercial
prerinse spray valves. (T&S Brass, No. 12 at pp. 7-8)
DOE acknowledges T&S Brass's comments. But, based on the lack of
data regarding repair rates in the industry, DOE assumed that consumers
would replace the commercial prerinse spray valve upon failure rather
than repairing the product. DOE assumed that there are no changes in
maintenance or repair costs between different efficiency levels.
7. Product Lifetime
Because product lifetime varies depending on utilization and other
factors, DOE developed a distribution of product lifetimes. In the 2014
Framework document, DOE assumed an average CPSV lifetime of 5 years.
T&S Brass commented that water temperature and pressure, as well as
frequency and duration of usage, were key considerations when
determining the life expectancy of a unit. (T&S Brass, No. 12 at p. 3)
T&S Brass also commented that they do not know of a correlation between
spray valve usage and life expectancy. (T&S Brass, No. 12 at p. 3) T&S
Brass pointed out that life-cycle testing for mechanical endurance is a
prerequisite for third-party certification of commercial prerinse spray
valves. (T&S Brass, No. 12 at p. 3)
DOE did not find sufficient data to support the use of factors such
as usage, or water temperature and pressure, as a way to determine the
distribution of lifetimes of commercial prerinse spray valves in the
analysis for this notice.
T&S Brass commented that lifetime values cannot be accurately
quantified because of the range and number of variables, as well as the
various end-user applications that must be considered. (T&S, No. 12 at
p. 3)
DOE developed a Weibull distribution with an average lifetime of 5
years and a maximum lifetime of 10 years. The use of a lifetime
distribution for this analysis helps account for the variability of
product lifetimes.
However, NEEA commented that it expected the actual lifetime to be
reduced due to an observed 10 percent attrition after 1 year because of
events such as businesses closing, the unit being replaced, or rinsing
stations being removed in Northwest utility programs. Additionally,
NEEA pointed out that SBW Consulting's evaluation report estimated that
CPSV lifetimes might be as low as 2 years based on reported sales
volume and the estimated population of commercial prerinse spray
valves. (NEEA, No. 13 at pp. 1-2)
In consideration of NEEA's comment regarding the lifetime
distributions used for commercial prerinse spray valves, in the NOPR
analysis DOE modified the Weibull distribution to reflect 10 percent of
commercial prerinse spray valves failing within the first year after
installation. See chapter 8 of the NOPR TSD for further details on the
method and sources DOE used to develop CPSV lifetimes.
8. Discount Rates
In the calculation of LCC, DOE developed discount rates by
estimating the average cost of capital to commercial prerinse spray
valve consumers. DOE applies discount rates to commercial consumers to
estimate the present value of future cash flows derived from a project
or investment. Most companies use both debt and equity capital to fund
investments, so the cost of capital is the weighted-average cost to the
firm of equity and debt financing. See chapter 8 in the NOPR TSD for
further details on the development of consumer discount rates.
9. No-New-Standards Case Efficiency Distribution
To accurately estimate the share of consumers that would be
affected by a potential energy conservation standard at a particular
efficiency level, DOE's LCC and PBP analysis considered the projected
distribution of product efficiencies that consumers purchase under the
no-new-standards case. DOE refers to this distribution of product
efficiencies as a no-new-standards case efficiency distribution.
To estimate the no-new-standards case efficiency distribution of
commercial prerinse spray valves in 2019 (the first year of the
analysis period), DOE relied on data from the Food Service Technology
Center and DOE's CCMS Database for commercial prerinse spray
valves.\34\ Additionally, DOE conducted general internet searches and
examined manufacturer literature to understand the characteristics of
the spray valves currently offered on the market. DOE assumed that the
no-standards case percentages in 2019 would stay the same through the
analysis period. The no-standards case efficiency distribution is
described in chapter 8 of the NOPR TSD.
---------------------------------------------------------------------------
\34\ The Food Service Technology Center test data for prerinse
spray valves is available at www.fishnick.com/equipment/sprayvalves/
. The DOE compliance certification data for commercial prerinse
spray valves is available at www.regulations.doe.gov/certification-data/.
---------------------------------------------------------------------------
The estimated shares for the no-standards case efficiency
distribution
[[Page 39506]]
for commercial prerinse spray valves are shown in Table IV.3.
Table IV.3--Commercial Prerinse Spray Valve No-Standards Case Efficiency Distribution by Product Class in 2019
----------------------------------------------------------------------------------------------------------------
Light duty (% of Standard duty (% Heavy duty (% of
Efficiency level shipments) of shipments) shipments)
----------------------------------------------------------------------------------------------------------------
Baseline............................................... 15 40 40
1...................................................... 35 50 50
2...................................................... 0 0 5
3...................................................... 50 10 5
----------------------------------------------------------------------------------------------------------------
10. 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 product, through energy and water 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
completely recovered in reduced operating expenses.
The inputs to the PBP calculation for each efficiency level are the
change in total installed cost of the product and the change in the
first-year annual operating expenditures relative to the baseline. The
PBP calculation uses the same inputs as the LCC analysis, except that
discount rates are not needed. As explained in the engineering analysis
of this notice (IV.C) there are no additional installed costs for more
efficient commercial prerinse spray valves, making the PBP zero.
11. Rebuttable-Presumption Payback Period
EPCA, as amended, establishes a rebuttable presumption that a
standard is economically justified if DOE finds that the additional
cost to the consumer of purchasing a product complying with an energy
conservation standard level will be less than three times the value of
the first year's energy (and, as applicable, water) savings resulting
from 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 combined water price forecast for the
year in which compliance with the amended standard would be required.
The results are summarized in section V.B.1.c of this notice.
G. Shipments
DOE uses projections of product shipments to calculate the national
impacts of potential amended energy conservation standards on energy
and water use, NPV, and future manufacturer cash flows. DOE develops
shipment projections based on historic economic figures and an analysis
of key market drivers for commercial prerinse spray valves. In DOE's
shipments model, CPSV shipments are driven by both 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 in-service product is a key input
to calculations of both the national energy savings (NES), national
water savings, 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 efficiency levels.
In the 2014 Framework document, DOE stated its intention to use
historical shipment data for commercial prerinse spray valves obtained
from trade organization surveys and commercial floor space growth data
to characterize CPSV shipments. In response, NEEA recommended including
a broader mix of building types beyond just restaurants, such as
grocery stores and institutional facilities, to estimate total
shipments. (NEEA, No. 13 at p. 1)
In the shipments analysis for this notice, DOE gathered information
pertaining to commercial prerinse spray valves for many building types
besides just restaurants from the National Restaurant Association,
Puget Sound Energy Program, EPA WaterSense Field Study, and other
industry reports.
DOE did not receive any shipments data from interested parties in
response to the 2014 Framework document. DOE based the retirement
function (the time at which the product fails and is replaced) on the
probability distribution for product lifetime that was developed in the
LCC and PBP analysis. The shipments model assumes that no units are
retired below a minimum product lifetime (one year of service) and that
all units are retired before exceeding a maximum product lifetime (ten
years of service).
In the 2014 Framework document, DOE indicated that it intended to
derive standards case shipments projections using the same data used in
the development of the base case projections. DOE assumed that any
potential amended energy conservation standards for commercial prerinse
spray valves would not impact the total volume of shipments over the
analysis period. Rather, in response to the proposed standards, product
shipments may move from one efficiency level to another, but the total
number of units shipped remains the same between the base and standards
cases.
DOE determined that a roll-up scenario is most appropriate to
establish the distribution of efficiencies for the year that compliance
with amended CPSV standards would be required. Under the ``roll-up''
scenario, DOE assumes: (1) Product efficiencies in the no-standards
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. The details of DOE's approach to forecast efficiency trends
are described in chapter 8 of the NOPR TSD.
The nature of the market for commercial prerinse spray valves makes
it possible that consumers may, under examined TSLs and product
classes, opt to switch product classes to a commercial prerinse spray
valve that consumes more water and energy than their current product.
In particular, if current choices of product correspond to consumers'
optimal product under
[[Page 39507]]
the current regulatory environment, it is probable that some consumers
would switch from the standard-duty product class to the heavy-duty
product class in response to proposed standards, given the lack of
restrictions on doing so. DOE implemented a mechanism in the shipments
model to estimate such consumer choices. The economics resulting from
product-class switching may result in lower optimal efficiency levels
and reduced estimates of water and energy savings, as compared to the
case without class switching. A detailed description of DOE's method to
model product-class switching is contained in chapter 9 of the NOPR
TSD.
H. National Impact Analysis
The NIA assesses the NES, national water savings, and NPV of total
consumer costs and savings that would be expected to result from
amended standards at specific efficiency levels. DOE calculates the
NES, national water savings, and NPV based on projections of annual
CPSV shipments, along with the annual energy and water consumption and
total installed cost data from the energy and water use analysis, as
well as the LCC and PBP analysis. DOE forecasted the energy and water
savings, operating cost savings, product costs, and NPV of consumer
benefits over the lifetime of products sold from 2019 through 2048.
DOE evaluates the impacts of new and amended standards by comparing
a base-case projection with standards-case projections. The base-case
projection characterizes energy and water use and consumer costs for
each product class in the absence of new or amended energy conservation
standards. For the base-case projection, DOE considers historical
trends in efficiency and various forces that are likely to affect the
mix of efficiencies over time. DOE compares the base-case projection
with projections characterizing the market for each product class if
DOE adopted new or amended standards at specific energy efficiency
levels (i.e., the TSLs or standards cases) for that class. For the
standards cases, DOE considers how a given standard would likely affect
the market shares of products with efficiencies greater than the
standard.
DOE uses a spreadsheet model to calculate the energy and water
savings, and the national consumer costs and savings for each TSL.
Chapter 10 of the NOPR TSD describes the models and how to use them;
interested parties can review DOE's analyses by changing various input
quantities within the spreadsheet. The NIA spreadsheet model uses
typical or weighted-average mean values (as opposed to probability
distributions) as inputs.
DOE used projections of energy and combined water prices as
described in section IV.F.4 and IV.F.5, as well as chapter 8 of the
NOPR TSD. As part of the NIA, DOE analyzed scenarios that used inputs
from the AEO2014 Low Economic Growth and High Economic Growth cases.
Those cases have higher and lower energy price trends compared to the
reference case. NIA results based on these cases are presented in
appendix 10A of the NOPR TSD.
Table IV.4 summarizes the inputs and methods DOE used for the NIA
analysis. Discussion of these inputs and methods follows the table. See
chapter 10 of the NOPR TSD for further details.
Table IV.4--Summary of Inputs and Methods for the National Impact Analysis
----------------------------------------------------------------------------------------------------------------
Inputs Method
----------------------------------------------------------------------------------------------------------------
Shipments........................................................... Annual shipments from shipments model.
First Year of Analysis Period....................................... 2019
No-Standards Case Forecasted Efficiencies........................... Efficiency distributions are forecasted
based on historical efficiency data.
Standards Case Forecasted Efficiencies.............................. Used a ``roll-up'' scenario.
Annual Energy and Water Consumption per Unit........................ Annual weighted-average values are a
function of energy and water use at each
TSL.
Total Installed Cost per Unit....................................... Annual weighted-average values are a
function of cost at each TSL.
Incorporates forecast of future product
prices based on historical data.
Annual Energy and Combined Water Cost per Unit...................... Annual weighted-average values as a
function of the annual energy and water
consumption per unit, and energy, and
combined water treatment prices.
Energy Prices....................................................... AEO2014 forecasts (to 2040) and
extrapolation through 2058.
Energy Site-to-Source Conversion Factors............................ Varies yearly and is generated by NEMS-BT.
Discount Rate....................................................... 3 and 7 percent real.
Present Year........................................................ Future expenses discounted to 2015, when
the NOPR will be published.
----------------------------------------------------------------------------------------------------------------
1. National Energy and Water Savings
The national energy and water savings analysis involves a
comparison of national energy and water consumption of the considered
product in each potential standards case (TSL) with consumption in the
no-standards case with no amended energy and water conservation
standards. DOE calculated the national energy and water consumption by
multiplying the number of units (stock) of each product unit (by
vintage or age) by the unit energy and water consumption (also by
vintage). Then, DOE calculated annual NES and national water savings
based on the difference in national energy and water consumption for
the no-standards case (without amended efficiency standards) and for
each higher efficiency standard. DOE estimated energy consumption and
savings based on site energy, and converted the electricity consumption
and savings to primary energy using annual conversion factors derived
from the AEO2014 version of NEMS. Cumulative energy and water savings
are the sum of the annual NES and national water savings for each year
over the timeframe of the analysis. DOE has historically presented NES
in terms of primary energy savings. In the case of electricity use and
savings, this quantity includes the energy consumed by power plants to
generate delivered (site) electricity.
In response to the recommendations of a committee on ``Point-of-Use
and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency
Standards'' appointed by the National Academy of Sciences, DOE
announced its intention to use FFC measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the
approaches discussed in the August 18, 2011 proposed statement of
policy, DOE published a statement of amended policy in the Federal
Register in which DOE explained its determination that NEMS is the most
appropriate tool for
[[Page 39508]]
its FFC analysis, as well as its intention to use NEMS for that
purpose. 77 FR 49701 (Aug. 17, 2012).
2. Forecasted Efficiency in the No-Standards Case and Standards Cases
A key component of the NIA is the trend in energy efficiency
projected for the no-standards case (without new or amended standards)
and the standards case. Section IV.F.9 of this notice describes how DOE
developed a no-standards 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.
3. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits
experienced by consumers are: (1) Total annual installed cost, (2)
total annual savings in operating costs, and (3) a discount factor to
calculate the present value of costs and savings. DOE calculates net
savings each year as the difference between the no-standards case and
each standards case in terms of total savings in operating costs versus
total increases in installed costs. DOE calculates operating cost
savings over the lifetime of each product unit shipped during the
forecast period. The operating cost savings are energy and combined
water cost savings.
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. DOE
estimated the NPV of consumer benefits using both a 3-percent and a 7-
percent real discount rate. DOE uses these discount rates in accordance
with guidance provided by the Office of Management and Budget (OMB) to
Federal agencies on the development of regulatory analysis.\35\ The
discount rates for the determination of NPV are in contrast to the
discount rates used in the LCC and PBP analysis, which are designed to
reflect an individual consumer's perspective. The 7-percent real value
is an estimate of the average before-tax rate of return to private
capital in the U.S. economy. The 3-percent real value represents the
``social rate of time preference,'' which is the rate at which society
discounts future consumption flows to their present value.
---------------------------------------------------------------------------
\35\ OMB Circular A-4, section E (Sept. 17, 2003) (Available at:
www.whitehouse.gov/omb/memoranda/m03-21.html.).
---------------------------------------------------------------------------
I. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended standards on
consumers, DOE evaluates the impact on identifiable subgroups of
consumers that may be disproportionately affected by an amended
national standard. DOE evaluated impacts on particular subgroups of
consumers by analyzing the LCC impacts and PBP for those particular
consumers from alternative standard levels. For this rulemaking, DOE
analyzed the impacts of the considered standard levels on single
entities and limited service establishment end users.
In general, the higher the cost of capital and the lower the cost
of energy and water, the more likely it is that an entity would be
disproportionately affected by the requirement to purchase higher
efficiency product. In this analysis, a single entity would be a small,
independent, or family-owned business that operates in a single
location. Compared to large corporations and franchises, these single
entities might be subjected to higher costs of capital. For the purpose
of the subgroup analysis, a limited service establishment is a consumer
that is likely to have a significantly lower operating time than the
average consumer. A lower operating time would lead to lower operating
cost savings over the lifetime of the product, making this subgroup of
consumers disproportionately affected by amended efficiency standards.
Chapter 11 in the NOPR TSD describes the consumer subgroup analysis in
greater detail.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the financial impacts of amended
energy conservation standards on manufacturers of commercial prerinse
spray valves and to estimate the potential impacts of such standards on
employment and manufacturing capacity. The MIA has both quantitative
and qualitative aspects and includes analyses of forecasted industry
cash flows, the INPV, investments in research and development (R&D) and
manufacturing capital, and domestic manufacturing employment.
Additionally, the MIA seeks to determine how amended energy
conservation standards might affect manufacturing employment, capacity,
and competition, as well as how standards contribute to overall
regulatory burden. Finally, the MIA serves to identify any
disproportionate impacts on manufacturer subgroups, including small
business manufacturers.
The quantitative elements of the MIA rely on the Government
Regulatory Impact Model (GRIM), an industry cash-flow model customized
for this rulemaking. See section IV.J.2 for details on the GRIM. The
qualitative parts of the MIA address factors such as product
characteristics, characteristics of particular firms, and market
trends. The complete MIA is discussed in chapter 12 of the NOPR TSD.
DOE conducted the MIA in the three phases.
In Phase 1 of the MIA, DOE prepared a profile of the commercial
prerinse spray valve manufacturing industry based on the market and
technology assessment, information on the present and past market
structure and characteristics of the industry, 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, Standard
& Poor's stock reports, and corporate annual reports released by
publicly held companies.\36\ DOE used this and other publicly available
information to derive preliminary financial inputs for the GRIM,
including an industry discount rate, manufacturer markup, cost of goods
sold and depreciation, selling, general, and administrative (SG&A)
expenses, and research and development (R&D) expenses.
---------------------------------------------------------------------------
\36\ SEC Form 10-K filings are available at www.sec.gov/edgar.shtml. Stock reports are available at
www.standardandpoors.com.
---------------------------------------------------------------------------
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) Create a need for increased investment, (2)
raise per-unit production costs, and (3) alter manufacturer revenue due
to possible changes in sales volumes and/or manufacturer's per-unit
gross margins. DOE used the GRIM to model these effects in a cash-flow
analysis of the commercial prerinse spray valve manufacturing industry.
In performing this analysis, DOE used the financial parameters
developed in Phase 1, the cost-efficiency curves from the engineering
analysis, and the shipment assumptions from the NIA.
In phase 3, DOE evaluated subgroups of manufacturers that may be
disproportionately impacted by standards or that may not be accurately
represented by the average cost assumptions used to develop the
industry cash-flow analysis. For example, small businesses,
manufacturers of niche products, or companies exhibiting a cost
structure that differs significantly from the
[[Page 39509]]
industry average could be more negatively affected. While DOE did not
identify any other subgroup of manufacturers of commercial prerinse
spray valves that would warrant a separate analysis, DOE specifically
investigated impacts on small business manufacturers. See section
V.B.2.d and section VI.B of this notice for more information.
The MIA also addresses the direct impact on employment tied to the
manufacturing of commercial prerinse spray valves. Using the GRIM and
census data, DOE estimated the domestic labor expenditures and number
of domestic production workers in the no-standards case and at each TSL
from 2015 to 2048. See section V.B.2.b of this notice and chapter 12 of
the NOPR TSD for more information on direct employment impacts.
2. Government Regulatory Impact Model
DOE uses the GRIM to quantify the changes in cash flow that result
in a higher or lower industry value due to energy conservation
standards. The GRIM is a standard, discounted cash-flow model that
incorporates manufacturer costs, markups, shipments, and industry
financial information as inputs, and models changes in manufacturing
costs, shipments, investments, and margins that may result from amended
energy conservation standards. The GRIM uses these inputs to arrive at
a series of annual cash flows, beginning with the base year of the
analysis, 2015, and continuing to 2048. DOE uses the industry-average
weighted average cost of capital (WACC) of 6.9 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 no-standards case with
INPV at each TSL (the standards case). The difference in INPV between
the base and standards cases represents the financial impact of the
amended standard on manufacturers. Additional details about the GRIM
can be found in chapter 12 of the NOPR TSD.
a. GRIM Key Inputs
Manufacturer Production Costs
Manufacturer production costs are the costs to the manufacturer to
produce a commercial prerinse spray valve. These costs include
materials, labor, overhead, and depreciation. Changes in the MPCs of
commercial prerinse spray valves can affect revenues, gross margins,
and cash flow of the industry, making product cost data key inputs for
DOE's analysis. DOE estimated the MPCs for the three commercial
prerinse spray valve product classes at the baseline and higher
efficiency levels, as described in section IV.C of this notice. The
cost model also disaggregated the MPCs into the cost of materials,
labor, overhead, and depreciation. DOE used the MPCs and cost
breakdowns as described in section IV.C of this notice, and further
detailed in chapter 5 of the NOPR TSD, for each efficiency level
analyzed in the GRIM.
No-Standards Case Shipments Forecast
The GRIM estimates manufacturer revenues in each year of the
forecast based in part on total unit shipments and the distribution of
these values by efficiency level and product class. Generally, changes
in the efficiency mix and total shipments at each standard level affect
manufacturer finances. The GRIM uses the NIA shipments forecasts from
2015 to 2048, the end of the analysis period.
To calculate shipments, DOE developed a shipments model for each
product class based on an analysis of key market drivers for commercial
prerinse spray valves. For greater detail on the shipments analysis,
see section IV.G of this notice and chapter 9 of the NOPR TSD.
Product and Capital Conversion Costs
Amended energy conservation standards may cause manufacturers to
incur conversion costs to make necessary changes to their production
facilities and bring 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 R&D, 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 contacted manufacturers of commercial prerinse spray valves for
the purpose of conducting interviews. However, no manufacturer agreed
to participate in an interview. In the absence of information from
manufacturers, DOE created estimates of capital and product conversion
costs using the engineering cost model and information gained during
product teardowns. DOE's estimates of the product and capital
conversion costs for the CPSV manufacturing industry can be found in
section IV.J.2 of this notice and in chapter 12 of the NOPR TSD. DOE
seeks information on capital and product conversion costs associated
with amended standards for commercial prerinse spray valves.
b. GRIM Scenarios
Standards Case Shipments Forecasts
The MIA results presented in section V.B.2 of this notice use
shipments from the NIA. For standards case shipments, DOE assumed that
commercial prerinse spray valve consumers would choose to buy the
commercial prerinse spray valve that has the flow rate that is closest
to the flow rate of the product they currently use and that complies
with the new standard (and, accordingly, manufacturers would choose to
produce products with the closest flow rate to those they currently
produce). Due to the structure of the product classes and efficiency
levels for this rule, in certain instances, product class switching is
predicted to occur, wherein consumers choose to buy the product with
the flow rate that is closest to their current product's flow rate even
if it has a higher spray force (putting those products into a different
product class). Where product class switching does not occur, no-
standards case shipments of products that did not meet the new standard
would roll up to meet the standard starting in the compliance year. See
section IV.G of this notice for a description of the standards case
efficiency distributions.
The NIA also 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, which assumes constant
pricing. See section IV.F.1 of this notice 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,
depreciation, and overhead estimated in DOE's MPCs) and all non-
production costs (i.e., SG&A, R&D, and interest), along with profit.
DOE used the baseline manufacturer markup of 1.30, developed during
Phase 1 and subsequently revised, for all products when modeling the
no-standards case in the GRIM. DOE requests comment on the use of 1.30
as an appropriate baseline markup for all commercial prerinse spray
valves.
For the standards case in the GRIM, DOE modeled two markup
scenarios to represent the uncertainty regarding the potential impacts
on prices and
[[Page 39510]]
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 is based on the
assumption that efficiency is not the primary factor influencing
purchasing decisions for commercial prerinse spray valve consumers. The
two standards case markup scenarios are (1) a preservation of gross
margin as a percentage of revenues markup scenario, and (2) a
preservation of per-unit earnings before interest and taxes (EBIT)
markup scenario.
The preservation of gross margin as a percentage of revenues markup
scenario assumes that the baseline markup of 1.30 is maintained for all
products in the standards case. Typically, this scenario represents the
upper bound of industry profitability, as manufacturers are able to
fully pass through additional costs due to amended standards to their
consumers under this scenario.
The preservation of per-unit EBIT markup scenario is similar to the
preservation of gross margin as a percentage of revenues markup
scenario, with the exception that in the standards case minimally
compliant products lose a fraction of the baseline markup. Typically,
this scenario represents the lower bound for profitability and a more
substantial impact on the industry as manufacturers accept a lower
margin in an attempt to offer price competitive entry level products
while maintaining the same level of EBIT, on a per-unit basis, that
they saw prior to amended standards.
For the commercial prerinse spray valve industry, there is no
difference between the preservation of gross margin as a percentage of
revenues and the preservation of per-unit EBIT markup scenarios
described previously. This is explained by the fact that manufacturing
production costs are estimated to be constant across all standard
efficiency levels (i.e., baseline, EL 1, EL 2, EL 3), total shipments
are constant across standards efficiency levels, and changes in
standard case shipments for certain product classes as a result of
product class switching (e.g., a decrease in Standard Duty commercial
prerinse spray valve shipments and an equivalent increase in Heavy Duty
commercial prerinse spray valve shipments at all TSLs) are controlled
for by using the per-unit EBIT in modeling the lower bound of industry
profitability. Because the preservation of gross margin as a percentage
of revenues and the preservation of per-unit EBIT markup scenarios
produce the same results in the GRIM, DOE does not break out the
results of each in the presentation of INPV impacts in section V.B.2.a
of this notice. DOE requests comment on the appropriateness of assuming
a constant manufacturer markup across all product classes and
efficiency levels.
Capital Conversion Cost Scenarios
In order to estimate an upper and lower bound of industry
profitability as a result of amended energy conservation standards for
commercial prerinse spray valves, DOE developed two model scenarios for
the capital conversion costs required to meet each TSL. The assumption
underlying both scenarios is that capital conversion costs associated
with increasing the efficiency of commercial prerinse spray valves are
exclusively related to the fabrication of plastic nozzles, as
manufacturers would have to redesign nozzle molds to produce a nozzle
with fewer or smaller spray holes. DOE does not believe there would be
capital conversion costs associated with the in-house fabrication of
metal nozzles. A more detailed discussion of capital conversion cost
assumptions is provided in chapter 12 of the NOPR TSD.
One capital conversion cost scenario, representing the upper bound
of industry profitability, assumes that the majority of commercial
prerinse spray valve manufacturers source components (including the
nozzle) from component suppliers and simply assemble the commercial
prerinse spray valves (i.e., Sourced Components Scenario). The second
scenario, representing the lower bound of industry profitability,
assumes that all of the commercial prerinse spray valve manufacturers
currently selling products with plastic spray nozzles fabricate these
nozzles in-house (i.e., Fabricated Components Scenario). More detail
regarding these capital conversion cost scenarios is provided in
chapter 12 of the NOPR TSD. Additionally, DOE requests comment on which
capital conversion cost scenario more accurately reflects the expected
capital conversion costs associated with amended standards for
commercial prerinse spray valves.
3. Discussion of Comments
During the public comment period following the 2014 Framework
public meeting, trade associations and a small business manufacturer of
commercial prerinse spray valves provided several comments on the
potential impact of amended energy conservation standards on
manufacturers.
PMI stated that manufacturers are required to comply with Federal,
state, and local regulations, and often strive to obtain additional
certifications under EPA's WaterSense program, IAPMO, and the Canadian
Standards Association (CSA). PMI stated that commercial prerinse spray
valve manufacturers are required to file their products with many
agencies, including the Federal Trade Commission (FTC), DOE, CEC, the
State of Texas, and the State of Massachusetts. Collectively, these
requirements impose a worrisome burden on manufacturers in terms of
time and cost. (PMI, No. 10 at p. 2) T&S Brass commented that
manufacturers of commercial prerinse spray valves are familiar with
industry standards such as ASME A112.18.1/CSA B125.1 and ASTM F2324-13,
and that manufacturers recognize the added burden of re-testing and
certification due to design and/or performance changes. (T&S, No. 12 at
p. 6)
DOE acknowledges the existence of Federal regulations, cleanability
standards established by the State of California,\37\ and third-party
certification programs impacting commercial prerinse spray valve
manufacturers. DOE investigates cumulative regulatory burden impacts
associated with this rulemaking in section V.B.2.e of this notice, and
in more detail in chapter 12 of the NOPR TSD. Additionally, DOE
requests comment on the recertification costs associated with complying
with industry standards that result from amended DOE standards for
commercial prerinse spray valves. DOE will consider any such additional
information when estimating product conversion costs for the final rule
(section VII.E. of this notice).
---------------------------------------------------------------------------
\37\ Commercial pre-rinse spray valves manufactured on or after
January 1, 2006, shall be capable of cleaning 60 plates in an
average time of not more than 30 seconds per plate. (http://www.energy.ca.gov/2014publications/CEC-400-2014-009/CEC-400-2014-009-CMF.pdf)
---------------------------------------------------------------------------
NAFEM commented that DOE failed to show how the considerable costs
of the regulation are economically justified. NAFEM also suggested that
the economic impact on manufacturers and consumers, particularly small
businesses, is considerable because the technology options suggested by
DOE in the Framework document are not technologically feasible. (NAFEM,
No. 9 at p. 2) Both T&S Brass and NAFEM agreed that small businesses
should be analyzed as a manufacturer subgroup in the manufacturer
impact analysis. (T&S, Public Meeting Transcript, No. 6 at p. 65 and
NAFEM, No. 9 at p. 2) Additionally, T&S Brass commented that small
businesses operate on strict budgets and operating costs. (T&S, No. 12
at p. 8)
[[Page 39511]]
The economic impact on manufacturers is presented in section V.B.2.
The economic impact on consumers is presented in section V.B.1. DOE
analyzes the impacts of the rulemaking on small business manufacturers
as a subgroup in section VI.B of this notice, and in section 12.6 of
the NOPR TSD.
T&S Brass suggested that DOE include importers of commercial
prerinse spray valves as a subgroup because the lack of enforcement by
government agencies on importers has adverse effects on other
commercial prerinse spray valve manufacturers who do follow the current
regulations. (T&S, No. 12 at p.8)
Energy conservation standards set by DOE apply to imported
commercial prerinse spray valves as well as commercial prerinse spray
valves assembled or manufactured domestically. Commercial prerinse
spray valves are subject to DOE's enforcement authority for energy
conservation standards, regardless of whether they are imported or
manufactured domestically. For this reason, DOE does not believe that
importers of commercial prerinse spray valves should be considered as a
manufacturing subgroup for this analysis.
4. Manufacturer Interviews
DOE contacted manufacturers representing an estimated 100 percent
of the U.S. commercial prerinse spray valve market for the purpose of
conducting interviews. However, no manufacturer agreed to participate
in an interview.
K. Emissions Analysis
In the emissions analysis, DOE estimated the reduction in power
sector emissions of CO2, NOX, SO2, and
Hg from potential energy conservation standards for commercial prerinse
spray valves. In addition to estimating impacts of standards on power
sector emissions, DOE estimated emissions impacts in production
activities (extracting, processing, and transporting fuels) that
provide the energy inputs to power plants. These are referred to as
``upstream'' emissions. Together, these emissions account for the FFC.
In accordance with DOE's FFC Statement of Policy (76 FR 51281 (Aug. 18,
2011) as amended at 77 FR 49701 (August 17, 2012)), the FFC analysis
also includes impacts on emissions of methane (CH4) and
nitrous oxide (N2O), both of which are recognized as
greenhouse gases.
DOE conducted the emissions analysis using emissions factors for
CO2 and most of the other gases derived from data in
AEO2014. Combustion emissions of CH4 and N2O were
estimated using emissions intensity factors published by the EPA in its
Greenhouse Gas (GHG) Emissions Factors Hub.\38\ DOE developed separate
emissions factors for power sector emissions and upstream emissions.
The method that DOE used to derive emissions factors is described in
chapter 13 of the NOPR TSD.
---------------------------------------------------------------------------
\38\ See EPA emission factors for GHG inventories available at
www.epa.gov/climateleadership/inventory/ghg-emissions.html.
---------------------------------------------------------------------------
For CH4 and N2O, DOE calculated emissions
reduction in tons and also in terms of units of carbon dioxide
equivalent (CO2eq). Gases are converted to CO2eq
by multiplying each ton of the greenhouse gas by the gas's global
warming potential (GWP) over a 100-year time horizon. Based on the
Fifth Assessment Report of the Intergovernmental Panel on Climate
Change,\39\ DOE used GWP values of 28 for CH4 and 265 for
N2O.
---------------------------------------------------------------------------
\39\ IPCC, Climate Change 2013: The Physical Science Basis.
Contribution of Working Group I to the Fifth Assessment Report of
the Intergovernmental Panel on Climate Change [Stocker, T.F., D.
Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels,
Y. Xia, V. Bex and P.M. Midgley (eds.)] Cambridge University Press,
Cambridge, United Kingdom and New York, NY, USA. Chapter 8 (2013).
---------------------------------------------------------------------------
EIA prepares the AEO using NEMS. Each annual version of NEMS
incorporates the projected impacts of existing air quality regulations
on emissions. AEO2014 generally represents current legislation and
environmental regulations, including recent government actions, for
which implementing regulations were available as of October 31, 2013.
SO2 emissions from affected electric generating units
(EGUs) are subject to nationwide and regional emissions cap-and-trade
programs. Title IV of the Clean Air Act sets an annual emissions cap on
SO2 for affected EGUs in the 48 contiguous States and DC.
SO2 emissions from 28 eastern States and DC were also
limited under the Clean Air Interstate Rule (CAIR). 70 FR 25162 (May
12, 2005).
CAIR created an allowance-based trading program that operates along
with the Title IV program. In 2008, CAIR was remanded to EPA by the
U.S. Court of Appeals for the District of Columbia Circuit, but it
remained in effect.\40\ In 2011, EPA issued a replacement for CAIR, the
Cross-State Air Pollution Rule (CSAPR). 76 FR 48208 (August 8, 2011).
On August 21, 2012, the DC Circuit issued a decision to vacate
CSAPR,\41\ and the court ordered EPA to continue administering CAIR. On
April 29, 2014, the U.S. Supreme Court reversed the judgment of the DC
Circuit and remanded the case for further proceedings consistent with
the Supreme Court's opinion.\42\ On October 23, 2014, the DC Circuit
lifted the stay of CSAPR.\43\ Pursuant to this action, CSAPR went into
effect (and CAIR ceased to be in effect) as of January 1, 2015.
---------------------------------------------------------------------------
\40\ See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008);
North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008).
\41\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38
(D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696,
81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).
\42\ See EPA v. EME Homer City Generation, 134 S.Ct. 1584, 1610
(U.S. 2014). The Supreme Court held in part that EPA's methodology
for quantifying emissions that must be eliminated in certain States
due to their impacts in other downwind States was based on a
permissible, workable, and equitable interpretation of the Clean Air
Act provision that provides statutory authority for CSAPR.
\43\ See Georgia v. EPA, Order (D.C. Cir. filed October 23,
2014) (No. 11-1302).
---------------------------------------------------------------------------
Because AEO2014 was prepared prior to the Supreme Court's opinion,
it assumed that CAIR remains a binding regulation through 2040. Thus,
DOE's analysis used emissions factors that assume that CAIR, not CSAPR,
is the regulation in force. However, the difference between CAIR and
CSAPR is not relevant for the purpose of DOE's analysis of emissions
impacts from energy conservation standards.
The attainment of emissions caps is typically flexible among EGUs
and is enforced through the use of emissions allowances and tradable
permits. Beginning in 2016, however, SO2 emissions will
decline significantly as a result of the Mercury and Air Toxics
Standards (MATS) for power plants. 77 FR 9304 (Feb. 16, 2012). In the
final MATS rule, EPA established a standard for hydrogen chloride as a
surrogate for acid gas hazardous air pollutants (HAP), and also
established a standard for SO2 (a non-HAP acid gas) as an
alternative equivalent surrogate standard for acid gas HAP. The same
controls are used to reduce HAP and non-HAP acid gas; thus,
SO2 emissions will be reduced as a result of the control
technologies installed on coal-fired power plants to comply with the
MATS requirements for acid gas. AEO2014 assumes that, in order to
continue operating, coal plants must have either flue gas
desulfurization or dry sorbent injection systems installed by 2016.
Both technologies, which are used to reduce acid gas emissions, also
reduce SO2 emissions. Under the MATS, emissions will be far
below the cap established by CAIR, so it is unlikely that excess
SO2 emissions allowances resulting from the lower
electricity demand would be
[[Page 39512]]
needed or used to permit offsetting increases in SO2
emissions by any regulated EGU. Therefore, DOE believes that energy
efficiency standards will reduce SO2 emissions in 2016 and
beyond.
CAIR established a cap on NOX emissions in 28 eastern
States and DC.\44\ Energy conservation standards are expected to have
little effect on NOX emissions in those States covered by
CAIR because excess NOX emissions allowances resulting from
the lower electricity demand could be used to permit offsetting
increases in NOX emissions. However, standards would be
expected to reduce NOX emissions in the States not affected
by the caps, so DOE estimated NOX emissions reductions from
the standards considered in this NOPR for these States.
---------------------------------------------------------------------------
\44\ CSAPR also applies to NOX, and it would
supersede the regulation of NOX under CAIR. As stated
previously, the current analysis assumes that CAIR, not CSAPR, is
the regulation in force. The difference between CAIR and CSAPR with
regard to DOE's analysis of NOX is slight.
---------------------------------------------------------------------------
The MATS limit mercury emissions from power plants, but they do not
include emissions caps. DOE estimated mercury emissions using emissions
factors based on AEO2014, which incorporates the MATS.
In the 2014 Framework document, DOE requested comment and
information on potential methods and data sources that can be used to
assess emissions reductions as a result of water savings. In response
to DOE's request, the Advocates commented that the analysis should take
into account the off-site energy embedded by public water suppliers,
private wells, and wastewater treatment systems serving locations with
covered products that use water. The Advocates further stated that they
intend to develop a more substantial recommendation regarding methods
and data sources for this docket at a later date. (Advocates, No. 11 at
pp. 2-3) DOE recognizes that there are emission reductions related to
reduction in water production and distribution. However, currently
there are no standardized models or tools that adequately account for
these reductions as a result of water savings, and DOE was not able to
analyze these potential emissions reductions.
L. Monetizing Carbon Dioxide and Other Emissions Impacts
As part of the development of this proposed rule, DOE considered
the estimated monetary benefits from the reduced emissions of
CO2 and NOX that are expected to result from each
of the TSLs considered. In order to make this calculation analogous to
the calculation of the NPV of consumer benefit, DOE considered the
reduced emissions expected to result over the lifetime of products
shipped in the forecast period for each TSL. This section summarizes
the basis for the monetary values used for each of these emissions and
presents the values considered in this notice.
For this notice, DOE relied on a set of values for the SCC that was
developed by a Federal interagency process. The basis for these values
is summarized in the following sections, and a more detailed
description of the methodologies used is provided as an appendix to
chapter 14 of the NOPR TSD.
1. Social Cost of Carbon
The SCC is an estimate of the monetized damages associated with an
incremental increase in carbon emissions in a given year. It is
intended to include (but is not limited to) changes in net agricultural
productivity, human health, property damages from increased flood risk,
and the value of ecosystem services. Estimates of the SCC are provided
in dollars per metric ton of CO2. A domestic SCC value is
meant to reflect the value of damages in the United States resulting
from a unit change in CO2 emissions, while a global SCC
value is meant to reflect the value of damages worldwide.
Under section 1(b) of Executive Order 12866, ``Regulatory Planning
and Review,'' 58 FR 51735 (Oct. 4, 1993), agencies must, to the extent
permitted by law, assess both the costs and the benefits of the
intended regulation and, recognizing that some costs and benefits are
difficult to quantify, propose or adopt a regulation only upon a
reasoned determination that the benefits of the intended regulation
justify its costs. The purpose of the SCC estimates presented here is
to allow agencies to incorporate the monetized social benefits of
reducing CO2 emissions into cost-benefit analyses of
regulatory actions. The estimates are presented with an acknowledgement
of the many uncertainties involved and with a clear understanding that
they should be updated over time to reflect increasing knowledge of the
science and economics of climate impacts.
As part of the interagency process that developed these SCC
estimates, technical experts from numerous agencies met on a regular
basis to consider public comments, explore the technical literature in
relevant fields, and discuss key model inputs and assumptions. The main
objective of this process was to develop a range of SCC values using a
defensible set of input assumptions grounded in the existing scientific
and economic literatures. In this way, key uncertainties and model
differences transparently and consistently inform the range of SCC
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
When attempting to assess the incremental economic impacts of
CO2 emissions, the analyst faces a number of challenges. A
report from the National Research Council \45\ points out that any
assessment will suffer from uncertainty, speculation, and lack of
information about: (1) Future emissions of GHGs, (2) the effects of
past and future emissions on the climate system, (3) the impact of
changes in climate on the physical and biological environment, and (4)
the translation of these environmental impacts into economic damages.
As a result, any effort to quantify and monetize the harms associated
with climate change will raise questions of science, economics, and
ethics, and should be viewed as provisional.
---------------------------------------------------------------------------
\45\ National Research Council. Hidden Costs of Energy: Unpriced
Consequences of Energy Production and Use. National Academies Press:
Washington, DC (2009).
---------------------------------------------------------------------------
Despite the limits of both quantification and monetization, SCC
estimates can be useful in estimating the social benefits of reducing
CO2 emissions. The agency can estimate the benefits from
reduced (or costs from increased) emissions in any future year by
multiplying the change in emissions in that year by the SCC values
appropriate for that year. The NPV of the benefits can then be
calculated by multiplying each of these future benefits by an
appropriate discount factor and summing across all affected years.
It is important to emphasize that the interagency process is
committed to updating these estimates as the science and economic
understanding of climate changes and its impacts on society improves
over time. In the meantime, the interagency group will continue to
explore the issues raised by this analysis and will consider public
comments as part of the ongoing interagency process.
b. Development of Social Cost of Carbon Values
In 2009, an interagency process was initiated to offer a
preliminary assessment of how best to quantify the benefits from
reducing carbon dioxide emissions. To ensure consistency in how
benefits are evaluated across Federal agencies, the Administration
sought to develop a transparent and defensible method, specifically
designed for the rulemaking process, to
[[Page 39513]]
quantify avoided climate change damages from reduced CO2
emissions. The interagency group did not undertake any original
analysis. Instead, it combined SCC estimates from the existing
literature to use as interim values until a more comprehensive analysis
could be conducted. The outcome of the preliminary assessment by the
interagency group was a set of five interim values: Global SCC
estimates for 2007 (in 2006$) of $55, $33, $19, $10, and $5 per metric
ton of CO2. These interim values represented the first
sustained interagency effort within the U.S. government to develop an
SCC for use in regulatory analysis. The results of this preliminary
effort were presented in several proposed and final rules.
c. Current Approach and Key Assumptions
After the release of the interim values, the interagency group
reconvened on a regular basis to generate improved SCC estimates.
Specifically, the group considered public comments and further explored
the technical literature in relevant fields. The interagency group
relied on three integrated assessment models commonly used to estimate
the SCC: the FUND, DICE, and PAGE models. These models are frequently
cited in the peer-reviewed literature and were used in the last
assessment of the Intergovernmental Panel on Climate Change (IPCC).
Each model was given equal weight in the SCC values that were
developed.
Each model takes a slightly different approach in modeling 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 sets of SCC values for use in
regulatory analyses. Three sets of values are based on the average SCC
from the three integrated assessment models, at discount rates of 2.5,
3, and 5 percent. The fourth set, which represents the 95th percentile
SCC estimate across all three models at a 3-percent discount rate, was
included to represent higher-than-expected impacts from temperature
change further out in the tails of the SCC distribution. The values
grow in real terms over time. Additionally, the interagency group
determined that a range of values from 7 percent to 23 percent should
be used to adjust the global SCC to calculate domestic effects,\46\
although preference is given to consideration of the global benefits of
reducing CO2 emissions. Table IV.5 presents the values in
the 2010 interagency group report,\47\ which is reproduced in appendix
14-A of the NOPR TSD.
---------------------------------------------------------------------------
\46\ 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.
\47\ Social Cost of Carbon for Regulatory Impact Analysis Under
Executive Order 12866. Interagency Working Group on Social Cost of
Carbon, United States Government (February 2010) (Available at:
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).
Table IV.5--Annual SCC Values From 2010 Interagency Report, 2010-2050
[2007$ per Metric Ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate
---------------------------------------------------------------
Year 3% 95th
5% Average 3% Average 2.5% Average percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 4.7 21.4 35.1 64.9
2015............................................ 5.7 23.8 38.4 72.8
2020............................................ 6.8 26.3 41.7 80.7
2025............................................ 8.2 29.6 45.9 90.4
2030............................................ 9.7 32.8 50.0 100.0
2035............................................ 11.2 36.0 54.2 109.7
2040............................................ 12.7 39.2 58.4 119.3
2045............................................ 14.2 42.1 61.7 127.8
2050............................................ 15.7 44.9 65.0 136.2
----------------------------------------------------------------------------------------------------------------
The SCC values used for this notice were generated using the most
recent versions of the three integrated assessment models that have
been published in the peer-reviewed literature.\48\
---------------------------------------------------------------------------
\48\ Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866, Interagency
Working Group on Social Cost of Carbon, United States Government
(May 2013; revised November 2013) (Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf).
---------------------------------------------------------------------------
Table IV.6 shows the updated sets of SCC estimates in 5-year
increments from 2010 to 2050. The full set of annual SCC estimates
between 2010 and 2050 is reported in appendix 14-B of the NOPR TSD. The
central value that emerges is the average SCC across models at the 3-
percent discount rate. However, for purposes of capturing the
uncertainties involved in regulatory impact analysis, the interagency
group emphasizes the importance of including all four sets of SCC
values.
[[Page 39514]]
Table IV.6--Annual SCC Values From 2013 Interagency Report, 2010-2050 (2007$ per Metric Ton CO2)
----------------------------------------------------------------------------------------------------------------
Discount rate
---------------------------------------------------------------
Year 3% 95th
5% Average 3% Average 2.5% Average percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 11 32 51 89
2015............................................ 11 37 57 109
2020............................................ 12 43 64 128
2025............................................ 14 47 69 143
2030............................................ 16 52 75 159
2035............................................ 19 56 80 175
2040............................................ 21 61 86 191
2045............................................ 24 66 92 206
2050............................................ 26 71 97 220
----------------------------------------------------------------------------------------------------------------
It is important to recognize that a number of key uncertainties
remain, and that current SCC estimates should be treated as provisional
and revisable because they will evolve with improved scientific and
economic understanding. The interagency group also recognizes that the
existing models are imperfect and incomplete. The 2009 National
Research Council report points out that there is tension between the
goal of producing quantified estimates of the economic damages from an
incremental ton of carbon and the limits of existing efforts to model
these effects. There are a number of analytical challenges that are
being addressed by the research community, including research programs
housed in many of the Federal agencies participating in the interagency
process to estimate the SCC. The interagency group intends to
periodically review and reconsider those estimates to reflect
increasing knowledge of the science and economics of climate impacts,
as well as improvements in modeling.
In summary, in considering the potential global benefits resulting
from reduced CO2 emissions, DOE used the values from the
2013 interagency report adjusted to 2014$ using the implicit price
deflator for GDP from the Bureau of Economic Analysis. For each of the
four sets of SCC values, the values for emissions in 2015 were $12.2,
$41.1, $63.3, and $121 per metric ton avoided (values expressed in
2014$). DOE derived values after 2050 using the relevant growth rates
for the 2040-2050 period in the interagency update.
DOE multiplied the CO2 emissions reduction estimated for
each year by the SCC value for that year in each of the four cases. To
calculate a present value of the stream of monetary values, DOE
discounted the values in each of the four cases using the specific
discount rate that had been used to obtain the SCC values in each case.
2. Valuation of Other Emissions Reductions
DOE has taken into account how amended energy conservation
standards would reduce site NOX emissions nationwide and
increase power sector NOX emissions in those 22 States not
affected by the CAIR. DOE estimated the monetized value of net
NOX emissions reductions resulting from each of the TSLs
considered for this notice based on estimates found in the relevant
scientific literature. Estimates of monetary value for reducing
NOX from stationary sources range from $483 to $4,964 per
short ton in 2014$.\49\ DOE calculated monetary benefits using a medium
value for NOX emissions of $2,723 per short ton (in 2014$),
and real discount rates of 3 percent and 7 percent.
---------------------------------------------------------------------------
\49\ 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) (Available at: www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/2006_cb/2006_cb_final_report.pdf.).
---------------------------------------------------------------------------
DOE is evaluating appropriate monetization of avoided
SO2 and Hg emissions in energy conservation standards
rulemakings. DOE has not included monetization of those emissions in
the current analysis.
M. Utility Impact Analysis
The utility impact analysis estimates several effects on the
electric power generation industry that would result from the adoption
of new or amended energy conservation standards. In the utility impact
analysis, DOE analyzes the changes in installed electrical capacity and
generation that would result for each TSL. The utility impact analysis
is based on published output from NEMS, which is a public domain,
multi-sectored, partial equilibrium model of the U.S. energy sector.
Each year, NEMS is updated to produce the AEO reference case, as well
as a number of side cases that estimate the economy-wide impacts of
changes to energy supply and demand. DOE uses published side cases that
incorporate efficiency-related policies to estimate the marginal
impacts of reduced energy demand on the utility sector. The output of
this analysis is a set of time-dependent coefficients that capture the
change in electricity generation, primary fuel consumption, installed
capacity, and power sector emissions due to a unit reduction in demand
for a given end use. These coefficients are multiplied by the stream of
energy savings calculated in the NIA to provide estimates of selected
utility impacts of new or amended energy conservation standards.
Chapter 15 of the NOPR TSD describes the utility impact analysis in
further detail.
N. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one
factor in selecting a proposed standard. Employment impacts include
both direct and indirect impacts. Direct employment impacts are any
changes in the number of employees of manufacturers of the product
subject to standards, their suppliers, and related service firms. The
direct employment impacts are addressed in the MIA. Indirect employment
impacts from standards consist of the net jobs created or eliminated in
the national economy, other than those in the manufacturing sector
being regulated, caused by: (1) Reduced spending by end users on energy
and water, (2) reduced spending on new energy supply by the utility
industry, (3) potential 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
[[Page 39515]]
Labor Statistics (BLS).\50\ The BLS regularly publishes its estimates
of the number of jobs per million dollars of economic activity in
different sectors of the economy, as well as the jobs created elsewhere
in the economy by this same economic activity. Data from BLS indicate
that expenditures in the utility sector generally create fewer jobs
(both directly and indirectly) than expenditures in other sectors of
the economy.\51\ 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 commercial prerinse spray valves.
---------------------------------------------------------------------------
\50\ Data on industry employment, hours, labor compensation,
value of production, and the implicit price deflator for output for
these industries are available upon request by calling the Division
of Industry Productivity Studies (202-691-5618) or by sending a
request by email to [email protected].
\51\ See Bureau of Economic Analysis, Regional Multipliers: A
User Handbook for the Regional Input-Output Modeling System (RIMS
II), U.S. Department of Commerce (1992).
---------------------------------------------------------------------------
For the amended standard levels considered in this notice, 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).\52\ 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.
---------------------------------------------------------------------------
\52\ 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 rulemaking. Because ImSET predicts
small job impacts resulting from this rulemaking, regardless of these
uncertainties, the actual job impacts are likely to be negligible in
the overall economy. For more details on the employment impact
analysis, see chapter 16 of the NOPR TSD.
V. Analytical Results
The following section addresses the results from DOE's analyses
with respect to potential amended energy conservation standards for
commercial prerinse spray valves. It addresses the TSLs examined by DOE
and the projected impacts of each of these levels if adopted as energy
conservation standards for commercial prerinse spray valves. Additional
details regarding DOE's analyses are contained in the NOPR TSD
supporting this notice.
A. Trial Standard Levels
DOE analyzed the benefits and burdens of four TSLs for commercial
prerinse spray valves. These TSLs were developed using combinations of
efficiency levels (ELs) for the product classes analyzed by DOE. DOE
presents the results for those TSLs in this notice. DOE presents the
results for all efficiency levels that were analyzed in the NOPR TSD.
Table V.1 presents the TSLs and the corresponding efficiency levels for
commercial prerinse spray valves. TSL 4 represents the maximum
technologically feasible (``max-tech'') improvements in energy and
water efficiency. TSL 3 is the combination of efficiency levels for
each product class that yields the maximum total NPV. TSL 2 consists of
the next efficiency level below the max-tech level for all product
classes. TSL 1 consists of the first efficiency level considered above
the baseline for all commercial prerinse spray valve product classes.
Table V.1--Trial Standard Levels for Commercial Prerinse Spray Valves
--------------------------------------------------------------------------------------------------------------------------------------------------------
Light duty (<=5 ozf) Standard duty (>5 ozf and <=8 Heavy duty (>8 ozf)
-------------------------------- ozf) -------------------------------
TSL --------------------------------
EL Flow rate Flow rate EL Flow rate
(gpm) EL (gpm) (gpm)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 1 0.72 1 1.10 1 1.44
2....................................................... 2 0.68 2 0.97 2 1.28
3....................................................... 3 0.65 2 0.97 3 1.24
4....................................................... 3 0.65 3 0.94 3 1.24
--------------------------------------------------------------------------------------------------------------------------------------------------------
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
DOE analyzed the economic impacts on commercial prerinse spray
valve consumers by looking at the effects potential amended standards
would have on the LCC and PBP. DOE also examined the impacts of
potential standards on consumer subgroups. These analyses are discussed
below.
a. Life-Cycle Cost and Payback Period
To evaluate the net economic impact of potential amended energy
conservation standards on consumers of commercial prerinse spray
valves, DOE conducted an LCC and PBP analysis for each TSL. In general,
higher-efficiency products would affect consumers in two ways: (1)
Purchase price would increase and (2) annual operating costs would
decrease. Because DOE did not find that the purchase price of
commercial prerinse spray valves increased with increasing efficiency,
the only effect of higher-efficiency products to consumers is decreased
operating costs. Inputs used for calculating the LCC and PBP include
total installed costs (i.e., product price plus installation costs) and
operating costs (i.e., energy, and combined water prices, energy and
combined water price trends). The LCC calculation also uses product
lifetime and a discount rate. Chapter 8 of the
[[Page 39516]]
NOPR TSD provides detailed information on the LCC and PBP analyses.
Table V.2 through Table V.7 show the LCC and PBP results for all
efficiency levels considered for commercial prerinse spray valves. In
the first of each pair of tables, the simple payback is measured
relative to the baseline product. In the second of each pair of tables,
the LCC savings are measured relative to the no-standards case
efficiency distribution in the first year of the analysis period (see
section IV.F.9 of this notice). No impacts occur when the no-standards
case efficiency for a specific consumer equals or exceeds the
efficiency at a given TSL as a standard would have no effect because
the product installed would be at or above that standard level without
amended standards. For commercial prerinse spray valves, DOE determined
that there was no increase in purchase price with increasing efficiency
level within each product class. Therefore, LCC and PBP results instead
reflect differences in operating costs due to decreased energy and
water use for each EL.
Table V.2--Average LCC and PBP Results by Efficiency Level for Light Duty (<=5 ozf) Commercial Prerinse Spray Valves
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple payback Average
TSL EL First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0 79 373 1,957 2,036 .............. 4.9
1.......................................... 1 79 353 1,854 1,933 0.0 4.9
2.......................................... 2 79 334 1,751 1,830 0.0 4.9
3, 4....................................... 3 79 319 1,674 1,753 0.0 4.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.3--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Light Duty (<=5
ozf) Commercial Prerinse Spray Valves
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
% of consumers
TSL EL that Average
experience savings *
(net cost) (2014$)
----------------------------------------------------------------------------------------------------------------
1............................................................... 1 0 103
2............................................................... 2 0 134
3, 4............................................................ 3 0 211
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).
Table V.4--Average LCC and PBP Results by Efficiency Level for Standard Duty (>5 ozf and <=8 ozf) Commercial Prerinse Spray Valves
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple payback Average
TSL EL First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0 79 599 3,141 3,220 .............. 4.9
1.......................................... 1 79 540 2,832 2,911 0.0 4.9
2, 3....................................... 2 79 476 2,498 2,577 0.0 4.9
4.......................................... 3 79 461 2,420 2,499 0.0 4.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.5--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Standard Duty
(>5 ozf and <=8 ozf) Commercial Prerinse Spray Valves
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
% of consumers
TSL EL that Average
experience savings *
(net cost) (2014$)
----------------------------------------------------------------------------------------------------------------
1............................................................... 1 0 309
2, 3............................................................ 2 0 472
[[Page 39517]]
4............................................................... 3 0 549
----------------------------------------------------------------------------------------------------------------
Note: The calculation includes consumers with zero LCC savings (no impact).
Table V.6--Average LCC and PBP Results by Efficiency Level for Heavy Duty (>8 ozf) Commercial Prerinse Spray Valves
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
---------------------------------------------------------------- Simple payback Average
TSL EL First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0 79 785 4,120 4,199 .............. 4.9
1....................................... 1 79 707 3,708 3,787 0.0 4.9
2....................................... 2 79 628 3,296 3,375 0.0 4.9
3, 4.................................... 3 79 609 3,193 3,272 0.0 4.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.7--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Heavy Duty (>8
ozf) Commercial Prerinse Spray Valves
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
% of consumers
TSL EL that Average
experience savings *
(net cost) (2014$)
----------------------------------------------------------------------------------------------------------------
1............................................................... 1 0 412
2............................................................... 2 0 595
3, 4............................................................ 3 0 667
----------------------------------------------------------------------------------------------------------------
Note: The calculation includes consumers with zero LCC savings (no impact).
b. Consumer Subgroup Analysis
As described in section IV.I of this notice, DOE determined the
impact of the considered TSLs on small businesses and limited service
establishments. Table V.8 through Table V.10 compare 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 commercial prerinse spray valves. The average LCC savings for
single entities and limited service establishments at the considered
efficiency levels are not substantially different from the average for
all consumers. Chapter 11 of the NOPR TSD presents the complete LCC and
PBP results for the two subgroups.
Table V.8--Light Duty (<=5 ozf) Commercial Prerinse Spray Valves: Comparison of Average LCC Savings for Consumer Subgroups and All Consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average life-cycle cost savings (2014$) Simple payback period (years)
-----------------------------------------------------------------------------------------------
TSL Limited Limited
Single service All consumers Single service All consumers
entities establishments entities establishments
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 97 82 103 0.0 0.0 0.0
2....................................................... 126 107 134 0.0 0.0 0.0
3....................................................... 198 169 211 0.0 0.0 0.0
4....................................................... 198 169 211 0.0 0.0 0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 39518]]
Table V.9--Standard Duty (<=5 ozf and 8 ozf) Commercial Prerinse Spray Valves: Comparison of Average LCC Savings for Consumer Subgroups and
All Consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average life-cycle cost savings (2014$) Simple payback period (years)
-----------------------------------------------------------------------------------------------
TSL Limited Limited
Single service All consumers Single service All consumers
entities establishments entities establishments
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 290 247 309 0.0 0.0 0.0
2....................................................... 444 378 472 0.0 0.0 0.0
3....................................................... 444 378 472 0.0 0.0 0.0
4....................................................... 516 439 549 0.0 0.0 0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.10--Heavy Duty (>8 ozf) Commercial Prerinse Spray Valves: Comparison of Average LCC Savings for Consumer Subgroups and All Consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average life-cycle cost savings (2014$) Simple payback period (years)
-----------------------------------------------------------------------------------------------
TSL Limited Limited
Single service All consumers Single service All consumers
entities establishments entities establishments
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 387 330 412 0.0 0.0 0.0
2....................................................... 559 476 595 0.0 0.0 0.0
3....................................................... 627 533 667 0.0 0.0 0.0
4....................................................... 627 533 667 0.0 0.0 0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
c. Rebuttable Presumption Payback
As discussed in section IV.F.11, EPCA provides a rebuttable
presumption that an energy conservation standard is economically
justified if the increased purchase cost for products that meets the
standard is less than three times the value of the first-year energy
and water 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 and water use
calculation on the DOE test procedures for commercial prerinse spray
valves. As a result, DOE calculated a single rebuttable presumption
payback value, and not a distribution of payback periods, for each
efficiency level. Table V.11 presents the rebuttable-presumption
payback periods for the considered TSLs. While DOE examined the
rebuttable-presumption criterion, it considered whether the standard
levels considered for this proposed 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). As indicated in the engineering analysis, there is no
increased purchase cost for products that meets the standard, so the
rebuttable PBP for each considered TSL is zero.
Table V.11--Commercial Prerinse Spray Valves: Rebuttable PBPs
----------------------------------------------------------------------------------------------------------------
Rebuttable payback period for trial standard level (years)
Product class ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Light Duty (<=5 ozf)............................ 0.0 0.0 0.0 0.0
Standard Duty (>5 ozf and <=8 ozf).............. 0.0 0.0 0.0 0.0
Heavy Duty (>8 ozf)............................. 0.0 0.0 0.0 0.0
----------------------------------------------------------------------------------------------------------------
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of amended energy
conservation standards on manufacturers of commercial prerinse spray
valves. Section V.B.2.a describes the expected impacts on manufacturers
at each TSL. Chapter 12 of the NOPR TSD explains the analysis in
further detail.
a. Industry Cash Flow Analysis Results
DOE modeled two scenarios using different markup assumptions and
two scenarios using different conversion cost assumptions, for a total
of four different scenarios, in order to evaluate the range of cash
flow impacts on the commercial prerinse spray valve manufacturing
industry of amended energy conservation standards. However, as
described in section IV.J.2, given constant manufacturing production
costs for all product classes and across all standard efficiency
levels, and constant total industry shipments, there is no difference
in INPV impacts between the two markup scenarios. Therefore, DOE
reports only the two capital conversion cost scenario's INPV results.
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 capital conversion costs that DOE anticipates
[[Page 39519]]
could occur in the standards case. The following tables illustrate the
financial impacts (represented by changes in INPV) of amended energy
conservation standards on manufacturers of commercial prerinse spray
valves, as well as the conversion costs that DOE estimates
manufacturers would incur for each product class at each TSL.
The INPV results refer to the difference in industry value between
the no-standards case and the standards case, which DOE calculated by
summing the discounted industry cash flows from the base year (2015)
through the end of the analysis period (2048). The discussion also
notes the difference in cash flow between the no-standards case and the
standards case in the year before the compliance date of potential
amended energy conservation standards.
Table V.12--Manufacturer Impact Analysis for Commercial Prerinse Spray Valves--With the Sourced Components Capital Conversion Costs Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units No-standards ---------------------------------------------------------------
case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................... 2014$ millions.............. 9.1 8.5 8.1 8.0 8.0
Change in INPV............................ 2014$ millions.............. .............. (0.6) (1.0) (1.1) (1.1)
%........................... .............. (7.0) (11.5) (12.1) (12.1)
Product Conversion Costs.................. 2014$ millions.............. .............. 1.1 1.7 1.8 1.8
Capital Conversion Costs.................. 2014$ millions.............. .............. 0.1 0.2 0.2 0.2
Total Conversion Costs.................... 2014$ millions.............. .............. 1.2 1.9 2.0 2.0
Free Cash Flow (2018)..................... 2014$ millions.............. 0.5 0.17 (0.04) (0.07) (0.07)
% Change.................... .............. (65.8) (108.2) (113.8) (113.8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
Table V.13--Manufacturer Impact Analysis for Commercial Prerinse Spray Valves--With the Fabricated Components Capital Conversion Costs Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units No-standards ---------------------------------------------------------------
case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................... 2014$ millions.............. 9.1 7.7 7.2 7.1 7.1
Change in INPV............................ 2014$ millions.............. .............. (1.4) (1.9) (2.0) (2.0)
%........................... .............. (15.0) (21.0) (21.6) (21.6)
Product Conversion Costs.................. 2014$ millions.............. .............. 1.1 1.7 1.8 1.8
Capital Conversion Costs.................. 2014$ millions.............. .............. 0.9 1.2 1.2 1.2
Total Conversion Costs.................... 2014$ millions.............. .............. 2.0 2.9 3.0 3.0
Free Cash Flow (2018)..................... 2014$ millions.............. 0.5 (0.2) (0.5) (0.5) (0.5)
% Change.................... .............. (142.8) (198.8) (204.4) (204.4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
At TSL 1, DOE estimates impacts on INPV to range from -$1.4 million
to -$0.6 million, or a change in INPV of -15.0 percent to -7.0 percent
for the Fabricated Components and Sourced Components Capital Conversion
Costs scenarios, respectively. At this level, industry free cash flow
is estimated to decrease by as much as 142.8 percent to -$0.2 million,
compared to the no-standards case value of $0.5 million in the year
leading up to the amended energy conservation standards. As DOE
forecasts that approximately 65 percent of commercial prerinse spray
valves in the no-standards case shipments scenario will meet TSL 1 in
the first year that standards are in effect (2019), 35 percent of the
market is affected at this standard level. The impact on INPV at TSL 1
stems exclusively from the conversion costs associated with the
conversion of baseline units to those meeting the standards set at TSL
1. At TSL 1, because the industry already produces a substantial number
of products at this efficiency level, product and capital conversion
costs are limited to approximately $1.2 million for the Sourced
Components Capital Conversion Costs scenario and $2.0 million for the
Fabricated Components Capital Conversion Costs scenario.
DOE notes that the shift of 20 percent of shipments from the
Standard Duty to Heavy Duty product class does not have a significant
impact on overall INPV because MPCs are the same across all product
classes. For this reason, and because per-unit product conversion costs
are the same for any product that has a change in flow rate and spray
force at each efficiency level, and because capital conversion costs
are a function of the material of the spray nozzle rather than the
spray force (i.e., product class), DOE does not believe product class
switching will have a detrimental impact on commercial prerinse spray
valve manufacturers beyond the impact felt in the absence of product
class switching.
At TSL 2, DOE estimates impacts on INPV to range from -$1.9 million
to -$1.0 million, or a change in INPV of -21.0 percent to -11.5 percent
for the Fabricated Components and Sourced Components Capital Conversion
Costs scenarios, respectively. At this level, industry free cash flow
is estimated to decrease by as much as 198.8 percent to -$0.5 million,
compared to the no-standards case value of $0.5 million in the year
leading up to the amended energy conservation standards. As it is
estimated that only approximately 20 percent of commercial prerinse
spray valves will meet the efficiency levels specified at TSL 2 in the
first year that standards are in effect (2019), a substantial fraction
of the market is affected at this standard level. As with TSL 1, the
impact on INPV at TSL 2 stems exclusively from the conversion costs
associated with the conversion of
[[Page 39520]]
lower efficiency units to those meeting the standards set at TSL 2. At
TSL 2, because the majority of commercial prerinse spray valves will
have to be updated to reach the standard level, product and capital
conversion costs are estimated to be approximately $1.9 million for the
Sourced Components Capital Conversion Costs scenario and $2.9 million
for the Fabricated Components Capital Conversion Costs scenario. Again,
DOE notes that the shift of 20 percent of shipments from the Standard
Duty to Heavy Duty product class, at this TSL does not have a
significant impact on overall INPV due to the fact that MPCs are
constant across all product classes and conversion costs are not a
function of product class.
At TSL 3, DOE estimates impacts on INPV to range from -$2.0 million
to -$1.1 million, or a change in INPV of -21.6 percent to -12.1 percent
for the Fabricated Components and Sourced Components Capital Conversion
Cost scenarios, respectively. At this level, industry free cash flow is
estimated to decrease by as much as 204.4 percent to -$0.5 million,
compared to the no-standards case value of $0.5 million in the year
leading up to the amended energy conservation standards. As it is
estimated that less than 20 percent of commercial prerinse spray valves
will meet the efficiency levels specified at TSL 3 in the first year
that standards are in effect (2019), a substantial fraction of the
market is affected at this standard level. Again, the impact on INPV at
TSL 3 stems exclusively from the conversion costs associated with the
conversion of lower efficiency units to those meeting the standards set
at TSL 3. At this TSL, because the majority of commercial prerinse
spray valves will have to be updated to reach the standard level,
product and capital conversion costs are estimated to be approximately
$2.0 million for the Sourced Components Capital Conversion Costs
scenario and $3.0 million for the Fabricated Components Capital
Conversion Costs model. Again, DOE notes that the shift of 20 percent
of shipments from the Standard Duty to Heavy Duty product class, at
this TSL does not have a significant impact on overall INPV due to the
fact that MPCs are constant across all product classes and conversion
costs are not a function of product class.
Finally, at TSL 4, DOE estimates impacts on INPV to range from -
$2.0 million to -$1.1 million, or a change in INPV of -21.6 percent to
-12.1 percent for the Fabricated Components and Sourced Components
Capital Conversion Cost scenarios, respectively. Impacts are the same
as at TSL 3 due to the fact that no Standard Duty commercial prerinse
spray valves at efficiency level 2 (greater than 0.94 gpm and less than
or equal to 0.97 gpm) are currently marketed. At this level, industry
free cash flow is estimated to decrease by as much as 204.4 percent to
-$0.5 million, compared to the no-standards case value of $0.5 million
in the year leading up to the amended energy conservation standards.
Again, the impact on INPV at TSL 4 stems exclusively from the
conversion costs associated with the conversion of lower efficiency
units to those meeting the standards set at TSL 4. At this TSL, because
the majority of commercial prerinse spray valves will have to be
updated to reach the standard level, product and capital conversion
costs are estimated to be approximately $2.0 million for the Sourced
Components Capital Conversion Costs scenario and $3.0 million for the
Fabricated Components Capital Conversion Costs scenario. DOE notes that
the shift of 45 percent of shipments from the Standard Duty to Heavy
Duty product class, at this TSL does not have a significant impact on
overall INPV due to the fact that MPCs are constant across all product
classes and conversion costs are not a function of product class.
b. Impacts on Employment
DOE used the GRIM to estimate the domestic labor expenditures and
number of domestic production workers in the no-standards case and at
each TSL from 2014 to 2048. DOE used the labor content of each product
and the MPCs from the engineering analysis to estimate the total annual
labor expenditures associated with commercial prerinse spray valves
sold in the United States. Using statistical data from the most recent
U.S. Census Bureau's 2011 ``Annual Survey of Manufactures'' (2011 ASM)
as well as market research, DOE estimates that 100 percent of
commercial prerinse spray valves sold in the United States are
assembled domestically, and hence that portion of total labor
expenditures is attributable to domestic labor. Labor expenditures for
the manufacturing of products 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
commercial prerinse spray valve production labor in 2019 will be
approximately $2.0 million. Using the $21.86 hourly wage rate including
fringe benefits and 2,039 production hours per year per employee found
in the 2011 ASM, DOE estimates there will be approximately 44 domestic
production workers involved in assembling and, to a lesser extent,
fabricating components for commercial prerinse spray valves in 2019,
the year in which any amended standards would go into effect. In
addition, DOE estimates that 22 non-production employees in the United
States will support commercial prerinse spray valve production. The
employment spreadsheet of the commercial prerinse spray valve 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 commercial prerinse spray valves 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 12 of the NOPR TSD.
Table V.14 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. The following discussion
includes a qualitative evaluation of the likelihood of negative
domestic production employment impacts at the various TSLs.
[[Page 39521]]
Table V.14--Total Number of Domestic Commercial Prerinse Spray Valve Production Workers in 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
No-standards -------------------------------------------------------------------
case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 2019 (without 44 44 44 44 44
changes in production locations)..................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
The design option specified for achieving greater efficiency levels
(i.e. changing the total spray hole area of the commercial prerinse
spray valve nozzle) does not increase the labor content (measured in
dollars) of commercial prerinse spray valves at any EL, nor does it
increase total MPC. Additionally, total industry shipments are
forecasted to be constant across TSLs. Therefore, DOE predicts no
change in domestic manufacturing employment levels provided
manufacturers do not relocate production facilities outside of the
United States.
c. Impacts on Manufacturing Capacity
Less than 20 percent of shipments of commercial prerinse spray
valves already comply with the amended energy conservation standards
proposed in this rulemaking. Not every manufacturer that ships
commercial prerinse spray valves offers products that meet these
amended energy conservation standards. However, because DOE believes
that manufacturers would not need to make substantial platform changes
by the 2019 compliance date in order to upgrade their products to meet
the amended energy conservation standards proposed in this rulemaking,
DOE does not foresee any impact on manufacturing capacity during the
period leading up to the compliance date. DOE seeks additional comment
on the impact to manufacturing capacity between the issuance date and
the compliance date of any amended energy conservation standards for
commercial prerinse spray valves.
d. Impacts on Subgroups 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 product
manufacturers, and manufacturers exhibiting a cost structure
substantially different from the industry average could be affected
disproportionately. DOE examined the potential for disproportionate
impacts on small business manufacturers, as discussed in section VI.B
of this notice. DOE did not identify any other manufacturer subgroups
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 energy
conservation standards rulemakings.
For the cumulative regulatory burden, DOE considers other DOE
regulations that could affect commercial prerinse spray valve
manufacturers that will take effect approximately 3 years before or
after the analysis compliance date of amended energy conservation
standards. The compliance years and expected industry conversion costs
of energy conservation standards that may also impact commercial
prerinse spray valve manufacturers are indicated in Table V.15
Table V.15--Compliance Dates and Expected Conversion Expenses of Federal
Energy Conservation Standards Affecting Commercial Prerinse Spray Valve
Manufacturers
------------------------------------------------------------------------
Estimated
Regulation Approximate conversion costs
compliance date (million)
------------------------------------------------------------------------
General Service Fluorescent 1/26/2018......... $38.6
Lamps; 80 FR 4041 (January 26,
2015).
Commercial Refrigerators, 3/27/2017......... 43.1
Freezers and Refrigerator-
Freezers; 79 FR 17725 (March
28, 2014).
External Power Supplies; 79 FR 2/10/2016......... 43.4
7846 (February 10, 2014).
------------------------------------------------------------------------
* Estimated compliance date.
In addition to DOE's energy conservation regulations for commercial
prerinse spray valves and other products also sold by commercial
prerinse spray valve manufacturers, several other existing and pending
regulations apply to commercial prerinse spray valves. In response to
the Framework document and public meeting for this rulemaking,
manufacturers and trade groups provided comments relating to regulatory
burdens associated with third-party and international industry
standards and certification programs (e.g., ASME A112.18.1/CSA B125.1,
ASTM F2324) and state water efficiency regulations (e.g. California,
Texas, and Massachusetts). DOE summarized these comments in section
IV.J.3 of this notice. See chapter 12 of the NOPR 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 and water savings attributable to potential
standards for commercial prerinse spray valves, DOE compared the energy
and water consumption of these product types under the no-standards
case to their anticipated energy and water consumption under each TSL.
Table V.16 through Table V.19 present DOE's
[[Page 39522]]
projections of the national energy savings and national water savings
for each TSL considered for commercial prerinse spray valves. The
savings were calculated using the approach described in section IV.H.1
of this notice.
Table V.16--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
in 2019-2048 for TSL 1
----------------------------------------------------------------------------------------------------------------
National energy savings
(quads) * National water
TSL Product class -------------------------------- savings
Primary FFC (billion gal)
----------------------------------------------------------------------------------------------------------------
1..................................... Light Duty (<=5 ozf).... 0.001 0.001 1.305
Standard Duty (>5 ozf 0.206 0.223 265.371
and <=8 ozf).
Heavy Duty (>8 ozf)..... (0.193) (0.209) (248.840)
-----------------------------------------------
TOTAL TSL 1............. 0.014 0.015 17.836
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.
Table V.17--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
in 2019-2048 for TSL 2
----------------------------------------------------------------------------------------------------------------
National energy savings
(quads) * National water
TSL Product class -------------------------------- savings
Primary FFC (billion gal)
----------------------------------------------------------------------------------------------------------------
2..................................... Light Duty (<=5 ozf).... 0.004 0.005 5.655
Standard Duty (>5 ozf 0.234 0.252 300.718
and <=8 ozf).
Heavy Duty (>8 ozf)..... (0.157) (0.169) (201.856)
-----------------------------------------------
TOTAL TSL 2............. 0.081 0.088 104.517
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.
Table V.18--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
in 2019-2048 for TSL 3
----------------------------------------------------------------------------------------------------------------
National energy savings
(quads) * National water
TSL Product class -------------------------------- savings
Primary FFC (billion gal)
----------------------------------------------------------------------------------------------------------------
3..................................... Light Duty (<=5 ozf).... 0.007 0.007 8.918
Standard Duty (>5 ozf 0.234 0.252 300.718
and <=8 ozf).
Heavy Duty (>8 ozf)..... (0.147) (0.159) (189.458)
-----------------------------------------------
TOTAL TSL 3............. 0.093 0.101 120.178
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.
Table V.19--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
in 2019-2048 for TSL 4
----------------------------------------------------------------------------------------------------------------
National energy savings
(quads) * National water
TSL Product class -------------------------------- savings
Primary FFC (billion gal)
----------------------------------------------------------------------------------------------------------------
4..................................... Light Duty (<=5 ozf).... 0.007 0.007 8.918
Standard Duty (>5 ozf 0.439 0.474 564.457
and <=8 ozf).
Heavy Duty (>8 ozf)..... (0.409) (0.442) (526.609)
-----------------------------------------------
TOTAL TSL 4............. 0.036 0.039 46.766
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.
OMB 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.\53\ Circular A-4 also
directs agencies to consider the variability of key elements underlying
the estimates of benefits and costs. For this rulemaking, DOE undertook
a sensitivity analysis using 9, rather than 30, years of product
shipments. The choice of a 9-year period is a proxy for the timeline in
EPCA for the review of certain energy conservation standards and
potential revision of and compliance with such
[[Page 39523]]
revised standards.\54\ The review timeframe established in EPCA is
generally not synchronized with the product lifetime, product
manufacturing cycles, or other factors specific to CPSV equipment.
Thus, such results are presented for informational purposes only, and
are not indicative of any change in DOE's analytical methodology. Table
V.20 through Table V.23 report cumulative national energy and water
savings associated with this shorter analysis period of 2019-2027. The
impacts are counted over the lifetime of products purchased during this
period.
---------------------------------------------------------------------------
\53\ U.S. Office of Management and Budget, ``Circular A-4:
Regulatory Analysis,'' section E, (Sept. 17, 2003) (Available at:
http://www.whitehouse.gov/omb/circulars_a004_a-4/).
\54\ EPCA requires DOE to review its standards at least once
every 6 years, and requires, for certain products, a 3-year period
after any new standard is promulgated before compliance is required,
except that in no case may any new standards be required within 6
years of the compliance date of the previous standards. (42 U.S.C.
6313(a)(6)(C)) While adding a 6-year review to the 3-year compliance
period adds up to 9 years, DOE notes that it may undertake reviews
at any time within the 6-year period and that the 3-year compliance
date may yield to the 6-year backstop. A 9-year analysis period may
not be appropriate given the variability that occurs in the timing
of standards reviews and the fact that for some consumer products,
the compliance period is 5 years rather than 3 years.
Table V.20--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
in 2019-2027 for TSL 1
----------------------------------------------------------------------------------------------------------------
National energy savings
(quads) * National water
TSL Equipment class -------------------------------- savings
Primary FFC (billion gal)
----------------------------------------------------------------------------------------------------------------
1..................................... Light Duty (<=5 ozf).... 0.000 0.000 0.352
Standard Duty (>5 ozf 0.057 0.062 71.472
and <=8 ozf).
Heavy Duty (>8 ozf)..... (0.054) (0.058) (67.019)
-----------------------------------------------
TOTAL TSL 1............. 0.004 0.004 4.804
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.
Table V.21--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
in 2019-2027 for TSL 2
----------------------------------------------------------------------------------------------------------------
National energy savings
(quads) * National water
TSL Equipment class -------------------------------- savings
Primary FFC (billion gal)
----------------------------------------------------------------------------------------------------------------
2..................................... Light Duty (<=5 ozf).... 0.001 0.001 1.523
Standard Duty (>5 ozf 0.065 0.070 80.992
and <=8 ozf).
Heavy Duty (>8 ozf)..... (0.044) (0.047) (54.365)
-----------------------------------------------
TOTAL TSL 2............. 0.023 0.024 28.149
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.
Table V.22--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
in 2019-2027 for TSL 3
----------------------------------------------------------------------------------------------------------------
National energy savings
(quads) * National water
TSL Equipment class -------------------------------- savings
Primary FFC (billion gal)
----------------------------------------------------------------------------------------------------------------
3..................................... Light Duty (<=5 ozf).... 0.002 0.002 2.402
Standard Duty (>5 ozf 0.065 0.070 80.992
and <=8 ozf).
Heavy Duty (>8 ozf)..... (0.041) (0.044) (51.026)
-----------------------------------------------
TOTAL TSL 3............. 0.026 0.028 32.367
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.
Table V.23--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
in 2019-2027 for TSL 4
----------------------------------------------------------------------------------------------------------------
National energy savings
(quads) * National water
TSL Equipment class -------------------------------- savings
Primary FFC (billion gal)
----------------------------------------------------------------------------------------------------------------
4..................................... Light Duty (<=5 ozf).... 0.002 0.002 2.402
Standard Duty (>5 ozf 0.122 0.131 152.024
and <=8 ozf).
Heavy Duty (>8 ozf)..... (0.114) (0.122) (141.830)
-----------------------------------------------
TOTAL TSL 4............. 0.010 0.011 12.595
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.
[[Page 39524]]
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 commercial prerinse spray valves. In accordance with OMB's
guidelines on regulatory analysis, DOE calculated NPV using both a 7-
percent and a 3-percent real discount rate.
Table V.24 through Table V.27 show the consumer NPV results for
each TSL DOE considered for commercial prerinse spray valves. The
impacts are counted over the lifetime of products purchased in 2019-
2048.
Table V.24--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Consumer Benefits for Product
Shipped in 2019-2048 for TSL 1
----------------------------------------------------------------------------------------------------------------
Net present value (billion
$2014)
TSL Product class -------------------------------
7-percent 3-percent
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
1............................................. Light Duty (<=5 ozf)............ $0.008 $0.016
Standard Duty (>5 ozf and <=8 1.604 3.295
ozf).
Heavy Duty (>8 ozf)............. (1.507) (3.095)
-------------------------------
TOTAL TSL 1..................... 0.105 0.216
----------------------------------------------------------------------------------------------------------------
Table V.25--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Consumer Benefits for Product
Shipped in 2019-2048 for TSL 2
----------------------------------------------------------------------------------------------------------------
Net present value (billion
$2014)
TSL Product class -------------------------------
7-percent 3-percent
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
2............................................. Light Duty (<=5 ozf)............ $0.033 $0.069
Standard Duty (>5 ozf and <=8 1.813 3.724
ozf).
Heavy Duty (>8 ozf)............. (1.230) (2.524)
-------------------------------
TOTAL TSL 2..................... 0.616 1.269
----------------------------------------------------------------------------------------------------------------
Table V.26--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Consumer Benefits for Product
Shipped in 2019-2048 for TSL 3
----------------------------------------------------------------------------------------------------------------
Net present value (billion
$2014)
TSL Product class -------------------------------
7-percent 3-percent
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
3............................................. Light Duty (<=5 ozf)............ $0.053 $0.108
Standard Duty (>5 ozf and <=8 1.813 3.724
ozf).
Heavy Duty (>8 ozf)............. (1.157) (2.374)
-------------------------------
TOTAL TSL 3..................... 0.708 1.459
----------------------------------------------------------------------------------------------------------------
Table V.27--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Consumer Benefits for Product
Shipped in 2019-2048 for TSL 4
----------------------------------------------------------------------------------------------------------------
Net present value (billion
$2014)
TSL Product class -------------------------------
7-percent 3-percent
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
4............................................. Light Duty (<=5 ozf)............ $0.053 $0.108
Standard Duty (>5 ozf and <=8 3.418 7.018
ozf).
Heavy Duty (>8 ozf)............. (3.195) (6.559)
-------------------------------
TOTAL TSL 4..................... 0.276 0.568
----------------------------------------------------------------------------------------------------------------
As described previously in the discussion of the energy and water
savings results, DOE also determined financial impacts for a
sensitivity case utilizing a 9-year analysis period. Table V.28 through
Table V.31 report NPV results associated with this shorter analysis
period. The impacts are counted over the lifetime of products purchased
in 2019-2027. As mentioned previously, this information is presented
for informational purposes
[[Page 39525]]
only, and is not indicative of any change in DOE's analytical
methodology or decision criteria.
Table V.28--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Customer Benefits for Equipment
Shipped in 2019-2027 for TSL 1
----------------------------------------------------------------------------------------------------------------
Net present value (billion
$2014)
TSL Equipment class -------------------------------
7-percent 3-percent
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
1............................................. Light Duty (<=5 ozf)............ $0.003 $0.005
Standard Duty (>5 ozf and <=8 0.708 1.034
ozf).
Heavy Duty (>8 ozf)............. (0.665) (0.971)
-------------------------------
TOTAL TSL 1..................... 0.046 0.068
----------------------------------------------------------------------------------------------------------------
Table V.29--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Customer Benefits for Equipment
Shipped in 2019-2027 for TSL 2
----------------------------------------------------------------------------------------------------------------
Net present value (billion
$2014)
TSL Equipment class -------------------------------
7-percent 3-percent
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
2............................................. Light Duty (<=5 ozf)............ $0.015 $0.021
Standard Duty (>5 ozf and <=8 0.800 1.168
ozf).
Heavy Duty (>8 ozf)............. (0.544) (0.793)
-------------------------------
TOTAL TSL 2..................... 0.271 0.397
----------------------------------------------------------------------------------------------------------------
Table V.30--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Customer Benefits for Equipment
Shipped in 2019-2027 for TSL 3
----------------------------------------------------------------------------------------------------------------
Net present value (billion
$2014)
TSL Equipment class -------------------------------
7-percent 3-percent
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
3............................................. Light Duty (<=5 ozf)............ $0.023 $0.034
Standard Duty (>5 ozf and <=8 0.800 1.168
ozf).
Heavy Duty (>8 ozf)............. (0.511) (0.746)
-------------------------------
TOTAL TSL 3..................... 0.312 0.456
----------------------------------------------------------------------------------------------------------------
Table V.31--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Customer Benefits for Equipment
Shipped in 2019-2027 for TSL 4
----------------------------------------------------------------------------------------------------------------
Net present value (billion
$2014)
TSL Equipment class -------------------------------
7-percent 3-percent
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
4............................................. Light Duty (<=5 ozf)............ $0.023 $0.034
Standard Duty (>5 ozf and <=8 1.509 2.203
ozf).
Heavy Duty (>8 ozf)............. (1.411) (2.059)
-------------------------------
TOTAL TSL 4..................... 0.121 0.177
----------------------------------------------------------------------------------------------------------------
c. Impacts on Employment
DOE develops estimates of the indirect employment impacts of
potential standards on the economy in general. As discussed previously,
DOE expects energy conservation standards for commercial prerinse spray
valves to reduce energy and water bills for product owners, 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. Thus, indirect employment impacts may
result from expenditures shifting between goods (the substitution
effect) and changes in income and overall expenditures (the income
effect) that could occur due to amended energy conservation standards.
As described in section IV.N of this notice, DOE used an
[[Page 39526]]
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
(2020-2025), where these uncertainties are reduced.
The results suggest that the proposed amended standards are likely
to have negligible impact on the net demand for labor in the economy.
All TSLs increase net demand for labor by fewer than 500 jobs. The net
change in jobs is so small that it would be imperceptible in national
labor statistics, and it might be offset by other, unanticipated
effects on employment. Chapter 16 of the NOPR TSD presents detailed
results regarding indirect employment impacts. As shown in Table V.32,
DOE estimates that net indirect employment impacts from a CPSV amended
standard are small relative to the national economy.
Table V.32--Net Short-Term Change In Employment (Jobs)
------------------------------------------------------------------------
Trial standard level 2020 2025
------------------------------------------------------------------------
1....................................... 16 45
2....................................... 95 266
3....................................... 109 306
4....................................... 43 119
------------------------------------------------------------------------
4. Impact on Utility or Performance of Products
Based on testing conducted in support of this proposed rule, and
discussed in section IV.C.1, DOE has tentatively concluded that the
standards proposed in this NOPR would not reduce the utility or
performance of the commercial prerinse spray valves under consideration
in this rulemaking. Manufacturers of these products currently offer
units that meet or exceed the proposed amended standards.
5. Impact of Any Lessening of Competition
DOE considers any lessening of competition that is likely to result
from amended standards. The Attorney General determines the impact, if
any, of any lessening of competition likely to result from a proposed
standard, and transmits such determination to DOE, together with an
analysis of the nature and extent of such impact. (42 U.S.C.
6295(o)(2)(B)(ii))
DOE will transmit a copy of this notice 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 proposed rule in
preparing the final rule, and DOE will publish and respond to DOJ's
comments in that document.
6. Need of the Nation To Conserve Energy
Enhanced energy efficiency, where economically justified, improves
the nation's energy security, strengthens the economy, and reduces the
environmental impacts of energy production. Reduced electricity demand
due to energy conservation standards is also likely to reduce the cost
of maintaining the reliability of the electricity system, particularly
during peak-load periods. As a measure of this reduced demand, chapter
15 in the NOPR TSD presents the estimated reduction in generating
capacity for the TSLs that DOE considered in this rulemaking.
Energy savings from amended standards for commercial prerinse spray
valves could also produce environmental benefits in the form of reduced
emissions of air pollutants and greenhouse gases associated with
electricity production. Table V.33 provides DOE's estimate of
cumulative emissions reductions to result from the TSLs considered in
this rulemaking. DOE reports annual CO2, NOX, and
Hg emissions reductions for each TSL in chapter 13 of the NOPR TSD.
Table V.33--Cumulative Emissions Reduction Estimated for Commercial Prerinse Spray Valves Trial Standard Levels
for Products Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
TSL
---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Power Sector and Site Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 0.78 4.58 5.27 2.05
NOX (thousand tons)............................. 0.85 4.99 5.73 2.23
Hg (tons)....................................... 0.0011 0.0064 0.0074 0.0029
N2O (thousand tons)............................. 0.0063 0.0371 0.0427 0.0166
CH4 (thousand tons)............................. 0.05 0.27 0.31 0.12
SO2 (thousand tons)............................. 0.36 2.09 2.40 0.93
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 0.07 0.43 0.49 0.19
NOX (thousand tons)............................. 1.11 6.51 7.49 2.91
Hg (tons)....................................... 0.00001 0.0001 0.0001 0.0000
N2O (thousand tons)............................. 0.00 0.00 0.00 0.00
CH4 (thousand tons)............................. 6.92 40.55 46.63 18.15
SO2 (thousand tons)............................. 0.00 0.02 0.03 0.01
----------------------------------------------------------------------------------------------------------------
Total Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 0.85 5.01 5.76 2.24
[[Page 39527]]
NOX (thousand tons)............................. 1.96 11.50 13.22 5.15
Hg (tons)....................................... 0.0011 0.0065 0.0074 0.0029
N2O (thousand tons)............................. 0.0066 0.0388 0.0446 0.0174
N2O (thousand tons CO2eq)....................... 1.75 10.28 11.82 4.60
CH4 (thousand tons)............................. 6.97 40.83 46.94 18.27
CH4 (thousand tons CO2eq))...................... 195.09 1143.16 1314.46 511.51
SO2 (thousand tons)............................. 0.36 2.11 2.43 0.94
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same GWP.
As part of the analysis for this proposed rule, DOE estimated
monetary benefits likely to result from the reduced emissions of
CO2 and NOX that DOE estimated for each of the
TSLs considered for commercial prerinse spray valves. As discussed in
section IV.L of this notice, for CO2, DOE used the most
recent values for the SCC developed by an interagency process. The four
sets of SCC values for CO2 emissions reductions in 2015
resulting from that process (expressed in 2014$) are represented by
$12.2 per metric ton (the average value from a distribution that uses a
5-percent discount rate), $41.1 per metric ton (the average value from
a distribution that uses a 3-percent discount rate), $63.3 per metric
ton (the average value from a distribution that uses a 2.5-percent
discount rate), and $121 per metric ton (the 95th-percentile value from
a distribution that uses a 3-percent discount rate). The values for
later years are higher due to increasing damages (emissions-related
costs) as the projected magnitude of climate change increases.
Table V.34 presents the global value of CO2 emissions
reductions at each TSL. For each of the four cases, DOE calculated a
present value of the stream of annual values using the same discount
rate as was used in the studies upon which the dollar-per-ton values
are based. DOE calculated domestic values as a range from 7 percent to
23 percent of the global values, and these results are presented in
chapter 14 of the NOPR TSD.
Table V.34--Estimates of Global Present Value of CO2 Emissions Reduction for Commercial Prerinse Spray Valve
Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
SCC Case * (million 2014$)
---------------------------------------------------------------
TSL 5% discount 3% discount 2.5% discount 3% discount
rate, average rate, average rate, average rate, 95th
* * * percentile *
----------------------------------------------------------------------------------------------------------------
Primary Energy Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 6.0 26.7 42.0 82.4
2............................................... 35.2 156.3 246.2 482.9
3............................................... 40.5 179.7 283.1 555.2
4............................................... 15.8 69.9 110.2 216.1
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 0.6 2.5 3.9 7.6
2............................................... 3.2 14.4 22.7 44.6
3............................................... 3.7 16.6 26.1 51.3
4............................................... 1.4 6.5 10.2 20.0
----------------------------------------------------------------------------------------------------------------
Total Emissions
----------------------------------------------------------------------------------------------------------------
1............................................... 6.6 29.1 45.9 90.0
2............................................... 38.5 170.7 268.9 527.5
3............................................... 44.2 196.3 309.2 606.5
4............................................... 17.2 76.4 120.3 236.0
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $41.1, $63.3, and $121
per metric ton (2014$).
DOE is well aware that scientific and economic knowledge regarding
the contribution of CO2 and other GHG emissions to changes
in the future global climate as well as the potential resulting damages
to the world economy continues to evolve rapidly. Thus, any value
placed on reducing CO2 emissions in this rulemaking is
subject to change. DOE, together with other Federal agencies, will
continue to review various methodologies for estimating the monetary
value of reductions in CO2 and other GHG emissions. This
ongoing review will consider the comments on 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 proposed rule the
[[Page 39528]]
most recent values and analyses resulting from the interagency process.
DOE also estimated the cumulative monetary value of the economic
benefits associated with NOX emissions reductions
anticipated to result from amended standards for commercial prerinse
spray valves. The dollar-per-ton values that DOE used are discussed in
section IV.L of this notice. Table V.35 presents the cumulative present
values for each TSL calculated using 7-percent and 3-percent discount
rates.
Table V.35--Estimates of Present Value of NOX Emissions Reduction Under
Commercial Prerinse Spray Valves Trial Standard Levels
[Million 2014$]
------------------------------------------------------------------------
TSL 3% discount rate 7% discount rate
------------------------------------------------------------------------
Power Sector Emissions
------------------------------------------------------------------------
1................................. 1.3 0.7
2................................. 7.6 3.9
3................................. 8.7 4.5
4................................. 3.4 1.8
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1................................. 1.7 0.8
2................................. 9.7 4.9
3................................. 11.1 5.6
4................................. 4.3 2.2
------------------------------------------------------------------------
Total Emissions
------------------------------------------------------------------------
1................................. 2.9 1.5
2................................. 17.2 8.8
3................................. 19.8 10.1
4................................. 7.7 3.9
------------------------------------------------------------------------
7. Summary of National Economic Impacts
The NPV of the monetized benefits associated with emissions
reductions can be viewed as a complement to the NPV of the consumer
savings calculated for each TSL considered in this rulemaking. Table
V.36 presents 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 sets of SCC values discussed in section V.B.6.
Table V.36--Present Value of Consumer Savings Combined with Present Value of Monetized Benefits from CO2 and NOX
Emissions Reductions
----------------------------------------------------------------------------------------------------------------
Billion 2014$
---------------------------------------------------------------------------
SCC value of SCC value of SCC value of SCC value of $121/
TSL $12.2/metric ton $41.1/metric ton $63.3/metric ton metric ton CO2*
CO2* and medium CO2* and medium CO2* and medium and medium value
value for NOX** value for NOX** value for NOX** for NOX**
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 3% Discount Rate
added with:
1............................... 0.226 0.249 0.265 0.309
2............................... 1.324 1.457 1.555 1.813
3............................... 1.523 1.675 1.788 2.085
4............................... 0.593 0.652 0.696 0.811
Consumer NPV at 7% Discount Rate
added with:
1............................... 0.113 0.136 0.152 0.197
2............................... 0.663 0.795 0.894 1.152
3............................... 0.762 0.914 1.027 1.325
4............................... 0.297 0.356 0.400 0.515
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $41.1, $63.3, and $121
per metric ton (2014$).
** The medium value for NOX is $2,723 per short ton (2014$).
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
the SCC are performed with different methods that use different time
frames for analysis. The national operating cost savings is measured
for the lifetime of products shipped in 2019 to 2048. Because
CO2 emissions have a very long residence
[[Page 39529]]
time in the atmosphere,\55\ the SCC values in future years reflect
future climate-related impacts resulting from the emission of
CO2 that continue beyond 2100.
---------------------------------------------------------------------------
\55\ The atmospheric lifetime of CO2 is estimated of
the order of 30-95 years. Jacobson, MZ, ``Correction to `Control of
fossil-fuel particulate black carbon and organic matter, possibly
the most effective method of slowing global warming,' '' J. Geophys.
Res. 110. pp. D14105 (2005).
---------------------------------------------------------------------------
8. 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)) DOE
did not consider any other factors in this analysis.
C. Conclusion
When considering proposed standards, the new or amended energy
conservation standard that DOE adopts for any type (or class) of
covered products must be designed to achieve the maximum improvement in
energy efficiency that the Secretary determines is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In
determining whether a standard is economically justified, the Secretary
must determine whether the benefits of the standard exceed its burdens,
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 a significant conservation of
energy. (42 U.S.C. 6295(o)(3)(B))
DOE considered the impacts of standards at each TSL, beginning with
a 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, Table V.37 and Table V.38 present a summary
of the results of DOE's quantitative analysis for each TSL. In addition
to the quantitative results presented in the tables, DOE also considers
other burdens and benefits that affect economic justification. Those
include the impacts on identifiable subgroups of consumers that may be
disproportionately affected by a national standard and impacts on
employment. Section V.B.1.b presents the estimated impacts of each TSL
for these subgroups. DOE discusses the impacts on direct employment in
CPSV manufacturing in section IV.J.4, and discusses the indirect
employment impacts in section IV.N.
1. Benefits and Burdens of TSLs Considered for Commercial Prerinse
Spray Valves
Table V.37 and Table V.38 summarize the quantitative impacts
estimated for each TSL for commercial prerinse spray valves. The
efficiency levels contained in each TSL are described in section V.A of
this notice.
Table V.37--Summary of Results for Commercial Prerinse Spray Valve Trial Standard Levels: National Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
Cumulative FFC Energy Savings (quads)
----------------------------------------------------------------------------------------------------------------
0.01 0.09 0.10 0.04
----------------------------------------------------------------------------------------------------------------
Cumulative Water Savings (billion gal)
----------------------------------------------------------------------------------------------------------------
17.84 104.52 120.18 46.77
----------------------------------------------------------------------------------------------------------------
NPV of Consumer Benefits (2014$ billion)
----------------------------------------------------------------------------------------------------------------
3% discount rate.................... 0.22 1.27 1.46 0.57
7% discount rate.................... 0.11 0.62 0.71 0.28
----------------------------------------------------------------------------------------------------------------
Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)........... 0.85 5.01 5.76 2.24
NOX (thousand tons)................. 1.96 11.50 13.22 5.15
Hg (tons)........................... 0.0011 0.0065 0.0074 0.0029
N2O (thousand tons)................. 0.0066 0.0388 0.0446 0.0174
N2O (thousand tons CO2eq *)......... 1.75 10.28 11.82 4.60
CH4 (thousand tons)................. 6.97 40.83 46.94 18.27
CH4 (thousand tons CO2eq *)......... 195.09 1143.16 1314.46 511.51
SO2 (thousand tons)................. 0.36 2.11 2.43 0.94
----------------------------------------------------------------------------------------------------------------
Value of Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (2014$ million) * *............. 6.6 to 90.0 38.5 to 527.5 44.2 to 606.5 17.2 to 236.0
NOX-3% discount rate (2014$ million) 2.94 17.25 19.83 7.72
NOX-7% discount rate (2014$ million) 1.50 8.82 10.14 3.95
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same GWP.
* * Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2
emissions.
[[Page 39530]]
Table V.38--Summary of Results for Commercial Prerinse Spray Valve Trial Standard Levels: Consumer and
Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 * TSL 3 * TSL 4 *
----------------------------------------------------------------------------------------------------------------
Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV Relative to a No- 7.7 to 8.5 7.2 to 8.1 7.1 to 8.0 7.1 to 8.0
Standards Case Value of 9.1 (2014$
million, 6.9% discount rate).......
Industry NPV (% change)............. (15.0) to (7.0) (21.0) to (11.5) (21.6) to (12.1) (21.6) to (12.1)
----------------------------------------------------------------------------------------------------------------
Direct Employment Impacts
----------------------------------------------------------------------------------------------------------------
Potential Increase in Domestic 0 0 0 0
Production Workers in 2019.........
----------------------------------------------------------------------------------------------------------------
Consumer Average LCC Savings (2014$)
----------------------------------------------------------------------------------------------------------------
Light Duty (<=5 ozf)................ 16 68 107 107
Standard Duty (>5 and <=8 ozf)...... 125 429 429 499
Heavy Duty (>8 ozf)................. 166 541 640 640
----------------------------------------------------------------------------------------------------------------
Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
Light Duty (<=5 ozf)................ 0.0 0.0 0.0 0.0
Standard Duty (>5 and <=8 ozf)...... 0.0 0.0 0.0 0.0
Heavy Duty (>8 ozf)................. 0.0 0.0 0.0 0.0
----------------------------------------------------------------------------------------------------------------
Distribution of Consumer LCC Impacts
----------------------------------------------------------------------------------------------------------------
Light Duty (<=5 ozf)................ ................. ................. ................. .................
Net Cost (%)........................ 0% 0% 0% 0%
Standard Duty (>5 and <=8 ozf)...... ................. ................. ................. .................
Net Cost (%)........................ 0% 0% 0% 0%
Heavy Duty (>8 ozf)................. ................. ................. ................. .................
Net Cost (%)........................ 0% 0% 0% 0%
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. The entry ``n.a.'' means not applicable because there is no change
in the standard at certain TSLs.
DOE first considered TSL 4, which represents the max-tech
efficiency levels. TSL 4 would save 0.04 quads of energy and 46.77
billion gallons of water. Under TSL 4, the NPV of consumer benefit
would be $0.28 billion using a discount rate of 7 percent, and $0.57
billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 2.24 Mt of
CO2, 5.15 thousand tons of NOX, 0.94 thousand
tons of SO2, 0.003 tons of Hg, 0.02 thousand tons of
N2O, and 18.27 thousand tons of CH4. The
estimated monetary value of the CO2 emissions reductions at
TSL 4 ranges from $17 million to $236 million.
At TSL 4, the average LCC impact is a savings of $107 for light
duty CPSV models, $499 for standard duty models, and $640 for heavy
duty models. The simple payback period is 0.0 years for all CPSV
models. The fraction of consumers experiencing an LCC net cost is 0
percent for all CPSV models.
At TSL 4, the projected change in INPV ranges from a decrease of
$2.0 million to a decrease of $1.1 million. If the lower bound of the
range of impacts is reached, TSL 4 could result in a net loss of up to
21.6 percent in INPV for manufacturers.
Although TSL 4 for commercial prerinse spray valves provides
positive LCC savings, and a positive total NPV of consumer benefits,
TSL 3 provides for greater energy savings at a similar burden to the
industry. Consequently, DOE has tentatively concluded that TSL 4 does
not provide the maximum reduction in energy use that is technologically
feasible. (42 U.S.C. 6295(p)(1)
Next DOE considered TSL 3, which saves an estimated total of 0.10
quads of energy, and 120.18 billion gallons of water. TSL 3 has an
estimated NPV of consumer benefit of $0.71 billion using a 7-percent
discount rate, and $1.46 billion using a 3-percent discount rate. TSL 3
provides the maximum total NPV, energy savings, and water savings.
The cumulative emissions reductions at TSL 3 are 5.76 Mt of
CO2, 13.22 thousand tons of NOX, 2.43 thousand
tons of SO2, 0.007 tons of Hg, and 46.94 thousand tons of
CH4. The estimated monetary value of the CO2
emissions reductions at TSL 3 ranges from $44 million to $606 million.
At TSL 3, the average LCC impact is a savings of $107 for light
duty CPSV models, $429 for standard duty models, and $640 for heavy
duty models. The simple payback period is 0.0 years for all CPSV
models. The fraction of consumers experiencing an LCC net cost is 0
percent for all CPSV models.
At TSL 3, the projected change in INPV ranges from a decrease of
$2.0 million to a decrease of $1.1 million. If the lower bound of the
range of impacts is reached, TSL 3 could result in a net loss of up to
21.6 percent in INPV for manufacturers.
DOE tentatively concludes that at TSL 3 for commercial prerinse
spray valves, the benefits of energy savings, water savings, positive
NPV of consumer benefits, emission reductions, and the estimated
monetary value of the CO2 emissions reductions would
outweigh the negative impacts on manufacturers, including the
conversion costs that could result in a reduction in INPV for
manufacturers.
After considering the analysis and the benefits and burdens of TSL
3, DOE tentatively concludes that this TSL will offer the maximum
improvement in efficiency that is technologically feasible and
economically justified, and will result in the significant conservation
of energy and water. Therefore, DOE proposes TSL 3 for commercial
prerinse spray valves. The proposed amended energy conservation
standards for commercial prerinse spray
[[Page 39531]]
valves, which are a maximum water flow rate, are shown in Table V.39.
Table V.39--Proposed Amended Energy Conservation Standards for
Commercial Prerinse Spray Valves
------------------------------------------------------------------------
Compliance
date: Month
Day, 2018
Product class ---------------
Maximum water
flow rate
(gpm)
------------------------------------------------------------------------
Light Duty (<=5 ozf).................................... 0.65
Standard Duty (>5 ozf and <=8 ozf)...................... 0.97
Heavy Duty (>8 ozf)..................................... 1.24
------------------------------------------------------------------------
2. Summary of Benefits and Costs (Annualized) of the Standards
The benefits and costs of the proposed standards can also be
expressed in terms of annualized values. The annualized monetary values
are the sum of (1) the annualized national economic value, expressed in
2014$, of the benefits from operating products that meets 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.\56\ The value of the CO2 reductions,
otherwise known as the SCC, is calculated using a range of values per
metric ton of CO2 developed by a recent interagency process.
---------------------------------------------------------------------------
\56\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2014, the year
used for discounting the NPV of total customer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(2020, 2030, etc.), and then discounted the present value from each
year to 2014. The calculation uses discount rates of 3 and 7 percent
for all costs and benefits except for the value of CO2
reductions, for which DOE used case-specific discount rates, as
shown in Table V.40. Using the present value, DOE then calculated
the fixed annual payment over a 30-year period, starting in the
compliance year, which yields the same present value.
---------------------------------------------------------------------------
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 different
time frames for analysis. The national operating cost savings is
measured for the lifetime of products shipped in 2019-2048. The SCC
values, on the other hand, reflect the present value of all future
climate-related impacts resulting from the emission of 1 ton of carbon
dioxide in each year. These impacts continue well beyond 2100.
Table V.40 shows the annualized values for commercial prerinse
spray valves under TSL 3, expressed in 2014$. 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 $41.1 per metric ton in 2015 (in 2014$), there are no
increased product costs associated with the standards in the proposed
rule, while the annualized benefits are $70.65 million per year in
reduced product operating costs, $10.94 million in CO2
reductions, and $1.00 million in reduced NOX emissions. In
this case, the net benefit amounts to $82.59 million per year. Using a
3-percent discount rate for all benefits and costs, and the SCC series
corresponding to a value of $41.1 per metric ton in 2015 (in 2014$),
there are no increased product costs associated with the standards in
this proposed rule, while the benefits are $82.20 million per year in
reduced operating costs, $10.94 million in CO2 reductions,
and $1.11 million in reduced NOX emissions. In this case,
the net benefit amounts to $94.25 million per year.
Table V.40--Annualized Benefits and Costs of Proposed Amended Standards (TSL 3) for Commercial Prerinse Spray
Valves Sold in 2019-2048
----------------------------------------------------------------------------------------------------------------
Million 2014$/year
-----------------------------------------------------------
Discount rate Low net benefits High net benefits
Primary estimate * estimate * estimate *
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings. 7%................ 69.90............. 65.90............. 72.70.
3%................ 81.32............. 75.92............. 85.10.
CO2 Reduction at $12.0/t * *.... 5%................ 3.33.............. 3.33.............. 3.33.
CO2 Reduction at $40.5/t * *.... 3%................ 10.94............. 10.94............. 10.94.
CO2 Reduction at $62.4/t * *.... 2.5%.............. 15.91............. 15.91............. 15.91.
CO2 Reduction at $119/t * *..... 3%................ 33.81............. 33.81............. 33.81.
NOX Reduction at $2,723/ton..... 7%................ 1.00.............. 1.00.............. 1.00.
3%................ 1.11.............. 1.11.............. 1.11.
----------------------------------------------------------------------------------------------------------------
Total [dagger].............. 7% plus CO2 range. 74 to 105......... 70 to 101......... 77 to 108.
7%................ 81.85............. 77.84............. 84.64.
3% plus CO2 range. 86 to 116......... 80 to 111......... 90 to 120.
3%................ 93.37............. 87.96............. 97.15.
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
Manufacturer Conversion Costs 7%................ 0.16 to 0.24...... 0.16 to 0.24...... 0.16 to 0.24.
[dagger].
3%................ 0.10 to 0.15...... 0.10 to 0.15...... 0.10 to 0.15.
----------------------------------------------------------------------------------------------------------------
Total Net Benefits
----------------------------------------------------------------------------------------------------------------
Total [Dagger].............. 7% plus CO2 range. 74 to 105......... 70 to 101......... 77 to 108.
7%................ 81.85............. 77.84............. 84.64.
3% plus CO2 range. 86 to 116......... 80 to 111......... 90 to 120.
[[Page 39532]]
3%................ 93.37............. 87.96............. 97.15.
----------------------------------------------------------------------------------------------------------------
* The results include benefits to consumers which accrue after 2048 from the commercial prerinse spray valves
purchased from 2019 through 2048. Costs incurred by manufacturers, some of which may be incurred in
preparation for the rule, are not directly included, but are indirectly included as part of incremental
product costs. The extent of the costs and benefits will depend on the projected CPSV price trends, as the
consumer demand for products is a function of CPSV prices. The Primary, Low Benefits, and High Benefits
Estimates utilize forecasts of energy prices and building starts from the AEO2014 Reference case, Low
Estimate, and High Estimate, respectively.
* * The CO2 values represent global values (in 2014$) of the social cost of CO2 emissions in 2015 under several
scenarios. The values of $12.2, $41.1, and $63.3 per metric ton are the averages of SCC distributions
calculated using 5 percent, 3 percent, and 2.5 percent discount rates, respectively. The value of $121 per ton
represents the 95th percentile of the SCC distribution calculated using a 3 percent discount rate.
[dagger] The lower value of the range represents costs associated with the Sourced Components conversion cost
scenario. The upper value represents costs for the Fabricated Components scenario.
[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 $41.1 per metric ton in 2015 (in 2014$). 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. Manufacturer Conversion Costs are
not included in the Net Benefits calculations.
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and
Review,'' 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. 58 FR 51735 (Oct. 4,
1993). The problems that the proposed standards address are as follows.
(1) Insufficient information and the high costs of gathering and
analyzing relevant information leads some consumers to miss
opportunities to make cost-effective investments in energy efficiency.
(2) In some cases, the benefits of more efficient products are not
realized because of misaligned incentives between purchasers and users.
An example of such a case is when the product purchase decision is made
by a building contractor or building owner who does not pay the energy
costs.
(3) There are external benefits resulting from improved energy
efficiency of commercial prerinse spray valves that are not captured by
the users of such products. These benefits include externalities
related to public health, environmental protection, and national
security that are not reflected in energy prices, such as reduced
emissions of air pollutants and greenhouse gases that impact human
health and global warming. DOE attempts to quantify some of the
external benefits through use of social cost of carbon values.
In addition, DOE has determined that the proposed regulatory action
is a ``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
this 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 has 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.
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, OIRA has emphasized that such techniques may include
identifying changing future compliance costs that might result from
technological innovation or anticipated behavioral changes. For the
reasons stated in the preamble, DOE believes that this NOPR is
consistent with these principles, including the requirement that, to
the extent permitted by law, benefits justify costs and that net
benefits are maximized.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (IRFA) for
any rule that by law must be proposed for public comment, 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 (Aug. 16, 2002), DOE
published procedures and policies on February 19, 2003, to ensure that
the potential impacts of its rules on small entities are properly
considered during the
[[Page 39533]]
rulemaking process. 68 FR 7990. DOE has made its procedures and
policies available on the Office of the General Counsel's Web site
(http://energy.gov/gc/office-general-counsel).
1. Description and Estimated Number of Small Entities Regulated
For manufacturers of commercial prerinse spray valves, 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/files/Size_Standards_Table.pdf.
Commercial prerinse spray valves manufacturing is classified under
NAICS 332919, ``Other metal valve and pipe fitting 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 that could be impacted
by the amended energy conservation standards, DOE conducted a market
survey using public information to identify potential small
manufacturers. DOE reviewed the DOE's Compliance Certification
Management System (CCMS), EPA's WaterSense program database, individual
company Web sites, and various marketing research tools (e.g., Hoovers
reports) to create a list of companies that import, assemble, or
otherwise manufacture commercial prerinse spray valves covered by this
rulemaking. DOE screened out companies that do not offer products
covered by this rulemaking, do not meet the definition of a ``small
business,'' or are foreign-owned and operated.
DOE identified 11 commercial spray valve manufacturers selling
commercial prerinse spray valves in the United States, 8 of which are
small businesses. DOE contacted all identified commercial prerinse
spray valve manufacturers for interviews. Ultimately, no manufacturers
agreed to participate in an interview.
2. Description and Estimate of Compliance Requirements
The eight small domestic commercial spray valve manufacturers
account for approximately 83 percent of commercial spray valve basic
models currently on the market. The remaining 17 percent of commercial
spray valve spray basic models currently on the market are offered by
three large manufacturers.
Using basic model counts, DOE estimated the distribution of
industry conversion costs between small manufacturers and large
manufacturers. Using its count of manufacturers, DOE calculated capital
conversion costs (under both capital conversion costs scenarios, Table
VI.1) and product conversion costs (Table VI.2) for an average small
manufacturer versus an average large manufacturer. To provide context
on the size of the conversion costs relative to the size of the
businesses, DOE presents the conversion costs relative to annual
revenue and annual operating profit under the proposed standard level
for the two capital conversion cost scenarios considered in the MIA, as
shown in Table VI.3 and Table VI.4. The current annual revenue and
annual operating profit estimates are derived from the GRIM's industry
revenue calculations and the market share breakdowns of small versus
large manufacturers. Due to the lack of direct market share data for
individual manufacturers, DOE used basic model counts as a percent of
total basic models currently available on the market as a proxy for
market share.
Table VI.1--Comparison of Typical Small and Large Manufacturer's Capital Conversion Costs *
----------------------------------------------------------------------------------------------------------------
Sourced components capital Fabricated components capital
conversion costs scenario conversion costs scenario
---------------------------------------------------------------------------
Capital Capital Capital Capital
Trial standard level conversion costs conversion costs conversion costs conversion costs
for typical small for typical large for typical small for typical large
manufacturer manufacturer manufacturer manufacturer
(2014$ millions) (2014$ millions) (2014$ millions) (2014$ millions)
----------------------------------------------------------------------------------------------------------------
TSL 1............................... $0.00 $0.00 $0.09 $0.06
TSL 2............................... 0.01 0.01 0.11 0.08
TSL 3............................... 0.01 0.01 0.11 0.08
TSL 4............................... 0.01 0.01 0.11 0.08
----------------------------------------------------------------------------------------------------------------
* Capital conversion costs are the capital investments made during the 3-year period between the publication of
the final rule and the analysis compliance year of the proposed standard.
Table VI.2--Comparison of Typical Small and Large Manufacturer's Product
Conversion Costs *
------------------------------------------------------------------------
Product Product
conversion costs conversion costs
Trial standard level for typical small for typical large
manufacturer manufacturer
(2014$ millions) (2014$ millions)
------------------------------------------------------------------------
TSL 1............................. $0.12 $0.06
TSL 2............................. 0.18 0.09
TSL 3............................. 0.19 0.10
TSL 4............................. 0.19 0.10
------------------------------------------------------------------------
* Product conversion costs are the R&D and other product development
investments made during the 3-year period between the publication of
the final rule and the analysis compliance year of the proposed
standard.
[[Page 39534]]
Table VI.3--Comparison of Conversion Costs for an Average Small and an Average Large Manufacturer at TSL 3--
Sourced Components Capital Conversion Costs Scenario
----------------------------------------------------------------------------------------------------------------
Conversion costs/ Conversion costs/
Capital Product conversion period conversion period
conversion cost conversion cost revenue * operating profit
(2014$ millions) (2014$ millions) (percent) * (percent)
----------------------------------------------------------------------------------------------------------------
Small Manufacturer.................. $0.01 $0.19 9 81
Large Manufacturer.................. 0.01 0.10 8 79
----------------------------------------------------------------------------------------------------------------
* The conversion period, the time between the final rule publication year and the analysis compliance year for
this rulemaking, is 3 years.
Table VI.4--Comparison of Conversion Costs for an Average Small and an Average Large Manufacturer at TSL 3--
Fabricated Components Capital Conversion Costs Scenario
----------------------------------------------------------------------------------------------------------------
Conversion costs/ Conversion costs/
Capital Product conversion period conversion period
conversion cost conversion cost revenue * operating profit
(2014$ millions) (2014$ millions) (percent) * (percent)
----------------------------------------------------------------------------------------------------------------
Small Manufacturer.................. $0.11 $0.19 13 120
Large Manufacturer.................. 0.08 0.10 14 129
----------------------------------------------------------------------------------------------------------------
* The conversion period, the time between the final rule publication year and the analysis compliance year for
this rulemaking, is 3 years.
At the proposed level, depending on the capital conversion cost
scenario, DOE estimates total conversion costs for an average small
manufacturer to range from $20,000 to $30,000 for the Sourced
Components Capital Conversion Costs scenario and the Fabricated
Components Capital Conversion Costs scenario, respectively. This
suggests that an average small manufacturer would need to reinvest
roughly 81 percent to 120 percent of its operating profit per year over
the conversion period to comply with standards. Depending on the
capital conversion cost scenario, the total conversion costs for an
average large manufacturer range from $11,000 to $18,000 for the
Sourced Components Capital Conversion Costs scenario and the Fabricated
Components Capital Conversion Costs scenario, respectively. This
suggests that an average large manufacturer would need to reinvest
roughly 79 percent to 129 percent of its commercial prerinse spray
valve-related operating profit per year over the 3-year conversion
period.
As noted earlier, because of a lack of data pertaining to true
market shares of individual manufacturers, DOE requests additional
information and data regarding the number and market share of domestic
small manufacturers of commercial prerinse spray valves, as well as
small business impacts related to the proposed energy conservation
standards. DOE will consider any such additional information when
formulating and selecting TSLs for the final rule (section VII.E. of
this notice).
3. Duplication, Overlap, and Conflict With Other Rules and Regulations
DOE is not aware of any rules or regulations that duplicate,
overlap, or conflict with the rule being proposed today.
4. Significant Alternatives to the Rule
The previous discussion analyzes impacts on small businesses that
would result from DOE's proposed rule. In addition to the other TSLs
being considered, a regulatory impact analysis (RIA) can be found in
the NOPR TSD chapter 17. For commercial prerinse spray valves, the RIA
discusses the following policy alternatives: (1) No change in standard,
(2) consumer rebates, (3) consumer tax credits, (4) voluntary energy
efficiency targets, and (5) bulk government purchases. Although these
alternatives may mitigate, to some extent, the economic impacts on
small entities compared to the standards, DOE determined that the
energy savings of these alternatives are significantly smaller than
those that would be expected to result from adoption of the proposed
standard levels. Accordingly, DOE is declining to adopt any of these
alternatives and is proposing the standards set forth in this
rulemaking. See chapter 17 of the NOPR TSD for further detail on the
policy alternatives DOE considered.
Additional compliance flexibilities may be available through other
means. For example, individual manufacturers may petition for a waiver
of the applicable test procedure. Further, EPCA provides that a
manufacturer whose annual gross revenue from all of its operations does
not exceed $8,000,000 may apply for an exemption from all or part of an
energy conservation standard for a period not longer than 24 months
after the compliance date of a final rule establishing the standard.
(42 U.S.C. 6295(t)) Additionally, Section 504 of the Department of
Energy Organization Act, 42 U.S.C. 7194, provides authority for the
Secretary to adjust a rule issued under EPCA in order to prevent
``special hardship, inequity, or unfair distribution of burdens'' that
may be imposed on that manufacturer as a result of such rule.
Manufacturers should refer to 10 CFR part 430, subpart E, and part 1003
for additional details.
C. Review Under the Paperwork Reduction Act
Manufacturers of commercial prerinse spray valves 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 commercial prerinse
spray valves, 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 products, including commercial prerinse spray valves. 76 FR
12422 (March 7, 2011); 80 FR 5099 (Jan. 30, 2015). The collection-of-
information requirement for the certification and recordkeeping is
subject to review and approval by OMB under the Paperwork Reduction Act
(PRA). This requirement has been approved by OMB under OMB control
number 1910-1400. Public reporting burden for the certification is
estimated to average 30 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the
[[Page 39535]]
data needed, and completing and reviewing the collection of
information.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act (NEPA) of 1969,
DOE has determined that the proposed 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,
appendix B, B5.1(b); 1021.410(b) and appendix B, B(1)-(5). The proposed
rule fits within the category of actions because it is a rulemaking
that establishes energy conservation standards for consumer products or
industrial product, 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 proposed rule.
DOE's CX determination for this proposed rule is available at http://cxnepa.energy.gov/.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism,'' imposes certain requirements
on Federal agencies formulating and implementing policies or
regulations that preempt State law or that have Federalism
implications. 64 FR 43255 (Aug. 10, 1999). The Executive Order requires
agencies to examine the constitutional and statutory authority
supporting any action that would limit the policymaking discretion of
the States and to carefully assess the necessity for such actions. The
Executive Order also requires agencies to have an accountable process
to ensure meaningful and timely input by State and local officials in
the development of regulatory policies that have Federalism
implications. On March 14, 2000, DOE published a statement of policy
describing the intergovernmental consultation process it will follow in
the development of such regulations. 65 FR 13735. DOE has examined this
proposed rule and has tentatively determined that it would not have a
substantial direct effect on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government. EPCA
governs and prescribes Federal preemption of State regulations as to
energy conservation for the products that are the subject of this
proposed 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, (3)
provide a clear legal standard for affected conduct rather than a
general standard, and (4) promote simplification and burden reduction.
61 FR 4729 (Feb. 7, 1996). 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 proposed rule meets the relevant standards of Executive Order
12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector (Pub. L. 104-4, sec. 201 codified at 2 U.S.C. 1531). For
a proposed 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 proposed ``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 http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
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 proposed rule. (2 U.S.C. 1532(c)) The content
requirements of section 202(b) of UMRA relevant to a private sector
mandate substantially overlap the economic analysis requirements that
apply under section 325(o) of EPCA and Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of this document and TSD chapter 17,
the ``Regulatory Impact Analysis,'' for this proposed 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 proposed 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(o)
and (dd), this proposed rule would amend energy conservation standards
for commercial prerinse spray valves 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'', chapter 17 of the TSD for this proposed
rule.
[[Page 39536]]
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This rule would not have any impact on the autonomy or integrity of the
family as an institution. Accordingly, DOE has concluded that it is not
necessary to prepare a Family Policymaking Assessment.
I. Review Under Executive Order 12630
Pursuant to Executive Order 12630, ``Governmental Actions and
Interference with Constitutionally Protected Property Rights,'' 53 FR
8859 (March 15, 1988), DOE has determined that this proposed rule would
not result in any takings that might require compensation under the
Fifth Amendment to the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act of 2001 (44 U.S.C. 3516, note) provides for Federal agencies to
review most disseminations of information to the public under
information quality guidelines established by each agency pursuant to
general guidelines issued by OMB. OMB's guidelines were published at 67
FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR
62446 (Oct. 7, 2002). DOE has reviewed this NOPR 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 proposed 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 proposed 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 tentatively concluded that this regulatory action, which
sets forth energy conservation standards for commercial prerinse spray
valves, is not a significant energy action because the proposed
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 proposed 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.'' Id. at 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.
VII. Public Participation
A. Attendance at the Public Meeting
The time, date, and location of the public meeting are listed in
the DATES and ADDRESSES sections at the beginning of this notice. If
you plan to attend the public meeting, please notify Ms. Brenda Edwards
at (202) 586-2945 or [email protected].
Please note that foreign nationals visiting DOE Headquarters are
subject to advance security screening procedures which require advance
notice prior to attendance at the public meeting. If a foreign national
wishes to participate in the public meeting, please inform DOE of this
fact as soon as possible by contacting Ms. Regina Washington at (202)
586-1214 or by email ([email protected]) so that the
necessary procedures can be completed.
DOE requires visitors to have laptops and other devices, such as
tablets, checked upon entry into the Forrestal Building. Any person
wishing to bring these devices into the building will be required to
obtain a property pass. Visitors should avoid bringing these devices,
or allow an extra 45 minutes to check in. Please report to the
visitor's desk to have devices checked before proceeding through
security.
Due to the REAL ID Act implemented by the Department of Homeland
Security (DHS), there have been recent changes regarding identification
(ID) requirements for individuals wishing to enter Federal buildings
from specific States and U.S. territories. As a result, driver's
licenses from several States or territories will not be accepted for
building entry, and instead, one of the alternate forms of ID listed
below will be required.
DHS has determined that regular driver's licenses (and ID cards)
from the following jurisdictions are not acceptable for entry into DOE
facilities: Alaska, American Samoa, Arizona, Louisiana, Maine,
Massachusetts, Minnesota, New York, Oklahoma, and Washington.
Acceptable alternate forms of Photo-ID include: U.S. Passport or
Passport Card; an Enhanced Driver's License or Enhanced ID-Card issued
by the States of Minnesota, New York or Washington (Enhanced licenses
issued by these States are clearly marked Enhanced or Enhanced Driver's
License); a military ID or other Federal government-issued Photo-ID
card.
In addition, you can attend the public meeting via webinar. Webinar
registration information, participant instructions, and information
about the capabilities available to webinar participants will be
published on DOE's
[[Page 39537]]
Web site at: www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/54. Participants are responsible for ensuring
their systems are compatible with the webinar software.
B. Procedure for Submitting Prepared General Statements for
Distribution
Any person who has plans to present a prepared general statement
may request that copies of his or her statement be made available at
the public meeting. Such persons may submit requests, along with an
advance electronic copy of their statement in PDF (preferred),
Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, to
the appropriate address shown in the ADDRESSES section at the beginning
of this notice. The request and advance copy of statements must be
received at least one week before the public meeting and may be
emailed, hand-delivered, or sent by mail. DOE prefers to receive
requests and advance copies via email. Please include a telephone
number to enable DOE staff to make follow-up contact, if needed.
C. Conduct of the Public Meeting
DOE will designate a DOE official to preside at the public meeting
and may also use a professional facilitator to aid discussion. The
meeting will not be a judicial or evidentiary-type public hearing, but
DOE will conduct it in accordance with section 336 of EPCA. (42 U.S.C.
6306) A court reporter will be present to record the proceedings and
prepare a transcript. DOE reserves the right to schedule the order of
presentations and to establish the procedures governing the conduct of
the public meeting. There shall not be discussion of proprietary
information, costs or prices, market share, or other commercial matters
regulated by U.S. anti-trust laws. After the public meeting, interested
parties may submit further comments on the proceedings as well as on
any aspect of the rulemaking until the end of the comment period.
The public meeting will be conducted in an informal, conference
style. DOE will present summaries of comments received before the
public meeting, allow time for prepared general statements by
participants, and encourage all interested parties to share their views
on issues affecting this rulemaking. Each participant will be allowed
to make a general statement (within time limits determined by DOE),
before the discussion of specific topics. DOE will allow, as time
permits, other participants to comment briefly on any general
statements.
At the end of all prepared statements on a topic, DOE will permit
participants to clarify their statements briefly and comment on
statements made by others. Participants should be prepared to answer
questions by DOE and by other participants concerning these issues. DOE
representatives may also ask questions of participants concerning other
matters relevant to this rulemaking. The official conducting the public
meeting will accept additional comments or questions from those
attending, as time permits. The presiding official will announce any
further procedural rules or modification of the above procedures that
may be needed for the proper conduct of the public meeting.
A transcript of the public meeting will be included in the docket,
which can be viewed as described in the Docket section at the beginning
of this notice and will be accessible on the DOE Web site. In addition,
any person may buy a copy of the transcript from the transcribing
reporter.
D. Submission of Comments
DOE will accept comments, data, and information regarding this
proposed rule before or after the public meeting, but no later than the
date provided in the DATES section at the beginning of this proposed
rule. Interested parties may submit comments, data, and other
information using any of the methods described in the ADDRESSES section
at the beginning of this notice.
Submitting comments via regulations.gov. The www.regulations.gov
Web page will require you to provide your name and contact information.
Your contact information will be viewable to DOE Building Technologies
staff only. Your contact information will not be publicly viewable
except for your first and last names, organization name (if any), and
submitter representative name (if any). If your comment is not
processed properly because of technical difficulties, DOE will use this
information to contact you. If DOE cannot read your comment due to
technical difficulties and cannot contact you for clarification, DOE
may not be able to consider your comment.
However, your contact information will be publicly viewable if you
include it in the comment itself or in any documents attached to your
comment. Any information that you do not want to be publicly viewable
should not be included in your comment, nor in any document attached to
your comment. Otherwise, persons viewing comments will see only first
and last names, organization names, correspondence containing comments,
and any documents submitted with the comments.
Do not submit to www.regulations.gov information for which
disclosure is restricted by statute, such as trade secrets and
commercial or financial information (hereinafter referred to as
Confidential Business Information (CBI)). Comments submitted through
www.regulations.gov cannot be claimed as CBI. Comments received through
the Web site will waive any CBI claims for the information submitted.
For information on submitting CBI, see the Confidential Business
Information section.
DOE processes submissions made through www.regulations.gov before
posting. Normally, comments will be posted within a few days of being
submitted. However, if large volumes of comments are being processed
simultaneously, your comment may not be viewable for up to several
weeks. Please keep the comment tracking number that www.regulations.gov
provides after you have successfully uploaded your comment.
Submitting comments via email, hand delivery/courier, or mail.
Comments and documents submitted via email, hand delivery/courier, or
mail also will be posted to www.regulations.gov. If you do not want
your personal contact information to be publicly viewable, do not
include it in your comment or any accompanying documents. Instead,
provide your contact information in a cover letter. Include your first
and last names, email address, telephone number, and optional mailing
address. The cover letter will not be publicly viewable as long as it
does not include any comments
Include contact information each time you submit comments, data,
documents, and other information to DOE. If you submit via mail or hand
delivery/courier, please provide all items on a CD, if feasible, in
which case it is not necessary to submit printed copies. No
telefacsimiles (faxes) will be accepted.
Comments, data, and other information submitted to DOE
electronically should be provided in PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file format. Provide documents that
are not secured, that are written in English, and that are free of any
defects or viruses. Documents should not contain special characters or
any form of encryption and, if possible, they should carry the
electronic signature of the author.
Campaign form letters. Please submit campaign form letters by the
originating organization in batches of between 50 to 500 form letters
per PDF or as one form
[[Page 39538]]
letter with a list of supporters' names compiled into one or more PDFs.
This reduces comment processing and posting time.
Confidential Business Information. Pursuant to 10 CFR 1004.11, any
person submitting information that he or she believes to be
confidential and exempt by law from public disclosure should submit via
email, postal mail, or hand delivery/courier two well-marked copies:
One copy of the document marked ``confidential'' including all the
information believed to be confidential, and one copy of the document
marked ``non-confidential'' with the information believed to be
confidential deleted. Submit these documents via email or on a CD, if
feasible. DOE will make its own determination about the confidential
status of the information and treat it according to its determination.
Factors of interest to DOE when evaluating requests to treat
submitted information as confidential include: (1) A description of the
items; (2) whether and why such items are customarily treated as
confidential within the industry; (3) whether the information is
generally known by or available from other sources; (4) whether the
information has previously been made available to others without
obligation concerning its confidentiality; (5) an explanation of the
competitive injury to the submitting person that would result from
public disclosure; (6) when such information might lose its
confidential character due to the passage of time; and (7) why
disclosure of the information would be contrary to the public interest.
It is DOE's policy that all comments may be included in the public
docket, without change and as received, including any personal
information provided in the comments (except information deemed to be
exempt from public disclosure).
E. Issues on Which DOE Seeks Comment
Although DOE welcomes comments on any aspect of this proposal, DOE
is particularly interested in receiving comments and views of
interested parties concerning the following issues:
1. DOE requests comment on the efficiency levels selected for its
analysis. Specifically, DOE requests feedback on whether cleaning
performance or any other consumer utility is affected at any of the
analyzed efficiency levels.
2. DOE requests comment on the recertification costs associated
with complying with industry standards, which result from amended DOE
standards for commercial prerinse spray valves.
3. DOE seeks additional information on industry capital and product
conversion costs of compliance associated with the amended standards
for commercial prerinse spray valves proposed in this notice.
4. DOE requests comment on which capital conversion cost scenario
more accurately reflects the expected capital conversion costs
associated with amended standards for commercial prerinse spray valves.
5. DOE requests additional information and data regarding the
number and market share of domestic small manufacturers of commercial
prerinse spray valves, as well as small business impacts related to the
proposed energy conservation standards.
6. DOE requests comment on the probability of consumers switching
product classes as a result of amended standards, as well as the
current methods to account for such switching in the shipments model.
7. DOE requests comment on the appropriateness of assuming a
constant manufacturer markup across all product classes and efficiency
levels.
8. DOE requests comment on any variation in installation costs of
commercial prerinse spray valves that is correlated to increases in
commercial prerinse spray valve efficiency.
9. DOE requests comment on the estimated MSPs for each of the
analyzed efficiency levels. DOE seeks input on what design options
manufacturers are likely to incorporate into commercial prerinse spray
valve at each of the analyzed efficiency levels, as well as their
associated costs.
10. DOE requests comment on what impact, if any, the proposed
energy conservation standards would have on domestic manufacturing
facilities and their associated employment. DOE requests information on
whether domestic manufacturers would move production overseas or source
an increased number of products from foreign OEMs under the proposed
standards.
11. DOE requests comment on the potential rebound effect from
setting the proposed energy conservation standards for commercial
prerinse spray valves. DOE requests comments on the potential
technology options identified by DOE for improving the efficiency of
commercial prerinse spray valves and its screening analysis used to
select the most viable options for consideration in setting the
proposed standards (see sections IV.A and IV.B of this notice).
12. DOE requests comment on its estimate that standards do not
affect a consumer's decision to replace or repair a failed commercial
prerinse spray valve. Specifically, DOE seeks any data that indicate
how commercial prerinse spray valve replace versus repair decisions are
impacted by increased total installed cost, increased repair cost, and
energy cost savings.
13. DOE requests comments on the electric water heater thermal
efficiency used in the analysis. DOE also requests additional data and
references to the potential increase in efficiency that commercial
electric and natural gas water heaters will achieve over time.
14. DOE requests comments on whether aerators represent a
technologically feasible design option that can be applied to all
commercial prerinse spray valves. Additionally DOE requests comment on
what kind of utility aerated commercial prerinse spray valves provide
to the consumer, and if it is any different from a commercial prerinse
spray valve without an aerator.
15. DOE requests comment on the approach to delineate product
classes by spray force. Specifically, DOE requests comment on whether
the spray force criteria is appropriate, or whether there are any other
characteristics that need to be incorporated to determine product
classes.
16. DOE requests comment on the proposed product classes, the spray
force bounds used to separate product classes, and the number of
product classes.
17. DOE requests comment on the approach taken to use the discharge
coefficient of the max-tech throughout all efficiency levels.
Furthermore, DOE requests information what design decisions
manufacturers make to adjust the discharge coefficients of their spray
nozzles.
18. DOE requests comment on the cost analysis methodology used to
create the MSP-efficiency relationship for each product class.
19. DOE requests comment on the use of 1.30 as an appropriate
baseline markup for all commercial prerinse spray valves.
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this notice of
proposed rulemaking.
List of Subjects
10 CFR Part 429
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Reporting and
recordkeeping requirements.
[[Page 39539]]
10 CFR Part 431
Administrative practice and procedure, Confidential business
information, Energy conservation test procedures, Incorporation by
reference, and Reporting and recordkeeping requirements.
Issued in Washington, DC, on June 17, 2015.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.
For the reasons stated in the preamble, DOE is proposing to amend
parts 429 and 431 of Chapter II of Title 10, Code of Federal
Regulations 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. Section 429.51(b) is revised to read as follows:
Sec. 429.51 Commercial prerinse spray valves.
* * * * *
(b) Certification reports. (1) The requirements of Sec. 429.12 are
applicable to commercial prerinse spray valves; and
(2) Pursuant to Sec. 429.12(b)(13), a certification report must
include the following public product-specific information: The maximum
flow rate in gallons per minute (gpm), rounded to the nearest 0.01
gallon, and the average spray force in ounce-force (ozf), rounded to
the nearest 0.1 ozf.
PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND
INDUSTRIAL EQUIPMENT
0
3. The authority citation for part 431 continues to read as follows:
Authority: 42 U.S.C. 6291-6317.
0
4. Section 431.266 is revised to read as follows:
Sec. 431.266 Energy conservation standards and their effective dates.
(a) Commercial prerinse spray valves manufactured on or after
January 1, 2006 and before [DATE 3 YEARS AFTER PUBLICATION OF THE FINAL
RULE ESTABLISHING AMENDED ENERGY CONSERVATION STANDARDS FOR COMMERCIAL
PRERINSE SPRAY VALVES IN THE FEDERAL REGISTER], shall have a flow rate
of not more than 1.6 gallons per minute.
(b) Commercial prerinse spray valves manufactured on or after [DATE
3 YEARS AFTER PUBLICATION OF THE FINAL RULE ESTABLISHING AMENDED ENERGY
CONSERVATION STANDARDS FOR COMMERCIAL PRERINSE SPRAY VALVES IN THE
FEDERAL REGISTER] shall have a flow rate that does not exceed the
following:
------------------------------------------------------------------------
Maximum flow
Product class (spray force in ounce-force) rate (gallons
per minute)
------------------------------------------------------------------------
Light Duty (<=5 ozf).................................... 0.65
Standard Duty (>5 ozf and <=8 ozf)...................... 0.97
Heavy Duty (>8 ozf)..................................... 1.24
------------------------------------------------------------------------
[FR Doc. 2015-16336 Filed 7-8-15; 8:45 am]
BILLING CODE 6450-01-P