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Title IV — Regulatory provisions

S. 2074 · 113th Congress · Feb 27, 2014 · Lineage

IV Regulatory provisions

A Third-Party certification under Energy Star program

Sec. 401 Third-party certification under Energy Star program

Section 324A of the Energy Policy and Conservation Act (42 U.S.C. 6294a) is amended by adding at the end the following:

“(e) Third-Party certification

“(1) In general—Subject to paragraph (2), not later than 180 days after the date of enactment of this subsection, the Administrator shall revise the certification requirements for the labeling of consumer, home, and office electronic products for program partners that have complied with all requirements of the Energy Star program for a period of at least 18 months.

“(2) Administration—In the case of a program partner described in paragraph (1), the new requirements under paragraph (1)—

“(A) shall not require third-party certification for a product to be listed; but

“(B) may require that test data and other product information be submitted to facilitate product listing and performance verification for a sample of products.

“(3) Third parties—Nothing in this subsection prevents the Administrator from using third parties in the course of the administration of the Energy Star program.

“(4) Termination

“(A) In general—Subject to subparagraph (B), an exemption from third-party certification provided to a program partner under paragraph (1) shall terminate if the program partner is found to have violated program requirements with respect to at least 2 separate models during a 2-year period.

“(B) Resumption—A termination for a program partner under subparagraph (A) shall cease if the program partner complies with all Energy Star program requirements for a period of at least 3 years.”

B Federal green buildings

Sec. 411 High-performance green Federal buildings

Section 436(h) of the Energy Independence and Security Act of 2007 (42 U.S.C. 17092(h)) is amended—
(1)
in the subsection heading, by striking “system” and inserting “systems”;
(2)
by striking paragraph (1) and inserting the following:

“(1) In general—Based on an ongoing review, the Federal Director shall identify and shall provide to the Secretary pursuant to section 305(a)(3)(D) of the Energy Conservation and Production Act (42 U.S.C. 6834(a)(3)(D)), a list of those certification systems that the Director identifies as the most likely to encourage a comprehensive and environmentally sound approach to certification of green buildings.”

(3)
in paragraph (2)—
(A)
in the matter preceding subparagraph (A), by striking “system” and inserting “systems”;
(B)
by striking subparagraph (A) and inserting the following:

“(A) an ongoing review provided to the Secretary pursuant to section 305(a)(3)(D) of the Energy Conservation and Production Act (42 U.S.C. 6834(a)(3)(D)), which shall—

“(i) be carried out by the Federal Director to compare and evaluate standards; and

“(ii) allow any developer or administrator of a rating system or certification system to be included in the review;”

(C)
in subparagraph (E)(v), by striking “and” after the semicolon at the end;
(D)
in subparagraph (F), by striking the period at the end and inserting a semicolon; and
(E)
by adding at the end the following:

“(G) a finding that, for all credits addressing grown, harvested, or mined materials, the system does not discriminate against the use of domestic products that have obtained certifications of responsible sourcing; and

“(H) a finding that the system incorporates life-cycle assessment as a credit pathway.”

C Water heaters

Sec. 421 Grid-enabled water heaters

Part B of title III of the Energy Policy and Conservation Act (42 U.S.C. 6291 et seq.) is amended—
(1)
in section 325(e), by adding at the end the following:

“(6) Additional standards for grid-enabled water heaters

“(A) Definitions—In this paragraph:

“(i) Activation key—The term activation key means a physical device or control directly on the water heater, a software code, or a digital communication means—

“(I) that must be activated to enable the product to operate continuously and at its designed specifications and capabilities; and

“(II) without which activation the product will provide not greater than 50 percent of the rated first hour delivery of hot water certified by the manufacturer.

“(ii) Grid-enabled water heater—The term grid-enabled water heater means an electric resistance water heater—

“(I) with a rated storage tank volume of more than 75 gallons;

“(II) manufactured on or after April 16, 2015;

“(III) that has—

“(aa) an energy factor of not less than 1.061 minus the product obtained by multiplying—

“(AA) the rated storage volume of the tank, expressed in gallons; and

“(BB) 0.00168; or

“(bb) an efficiency level equivalent to the energy factor under item (aa) and expressed as a uniform energy descriptor based on the revised test procedure for water heaters described in paragraph (5);

“(IV) equipped by the manufacturer with an activation key; and

“(V) that bears a permanent label applied by the manufacturer that—

“(aa) is made of material not adversely affected by water;

“(bb) is attached by means of non-water-soluble adhesive; and

“(cc) advises purchasers and end-users of the intended and appropriate use of the product with the following notice printed in 16.5 point Arial Narrow Bold font:

“(B) Requirement—The manufacturer or private labeler shall provide the activation key only to utilities or other companies operating electric thermal storage or demand response programs that use grid-enabled water heaters.

“(C) Reports

“(i) Manufacturers—The Secretary shall require each manufacturer of grid-enabled water heaters to report to the Secretary annually the number of grid-enabled water heaters that the manufacturer ships each year.

“(ii) Operators—The Secretary shall require utilities and other demand response and thermal storage program operators to report annually the number of grid-enabled water heaters activated for their programs using forms of the Energy Information Agency or using such other mechanism that the Secretary determines appropriate after an opportunity for notice and comment.

“(iii) Confidentiality requirements—The Secretary shall treat shipment data reported by manufacturers as confidential business information.

“(D) Publication of information

“(i) In general—In 2017 and 2019, the Secretary shall publish an analysis of the data collected under subparagraph (C) to assess the extent to which shipped products are put into use in demand response and thermal storage programs.

“(ii) Prevention of product diversion—If the Secretary determines that sales of grid-enabled water heaters exceed by 15 percent or greater the number of such products activated for use in demand response and thermal storage programs annually, the Secretary shall, after opportunity for notice and comment, establish procedures to prevent product diversion for non-program purposes.

“(E) Compliance

“(i) In general—Subparagraphs (A) through (D) shall remain in effect until the Secretary determines under this section that grid-enabled water heaters do not require a separate efficiency requirement.

“(ii) Effective date—If the Secretary exercises the authority described in clause (i) or amends the efficiency requirement for grid-enabled water heaters, that action will take effect on the date described in subsection (m)(4)(A)(ii).

“(iii) Consideration—In carrying out this section with respect to electric water heaters, the Secretary shall consider the impact on thermal storage and demand response programs, including the consequent impact on energy savings, electric bills, electric reliability, integration of renewable resources, and the environment.

“(iv) Requirements—In carrying out this subparagraph, the Secretary shall require that grid-enabled water heaters be equipped with communication capability to enable the grid-enabled water heaters to participate in ancillary services programs if the Secretary determines that the technology is available, practical, and cost-effective.”

(2)
in section 332—
(A)
in paragraph (5), by striking “or” at the end;
(B)
in the first paragraph (6), by striking the period at the end and inserting a semicolon;
(C)
by redesignating the second paragraph (6) as paragraph (7);
(D)
in subparagraph (B) of paragraph (7) (as so redesignated), by striking the period at the end and inserting “; or”; and
(E)
by adding at the end the following:

“(8) with respect to grid-enabled water heaters that are not used as part of an electric thermal storage or demand response program, for any person knowingly and repeatedly—

“(A) to distribute activation keys for those grid-enabled water heaters;

“(B) otherwise to enable the full operation of those grid-enabled water heaters; or

“(C) to remove or render illegible the labels of those grid-enabled water heaters.”

D Energy performance requirement for Federal buildings

Sec. 431 Energy performance requirement for Federal buildings

Section 543 of the National Energy Conservation Policy Act (42 U.S.C. 8253) is amended—
(1)
by striking subsection (a) and inserting the following:

“(a) Energy performance requirement for Federal buildings

“(1) Requirement—Subject to paragraph (2), each agency shall apply energy conservation measures to, and shall improve the design for the construction of, the Federal buildings of the agency (including each industrial or laboratory facility) so that the energy consumption per gross square foot of the Federal buildings of the agency in fiscal years 2006 through 2017 is reduced, as compared with the energy consumption per gross square foot of the Federal buildings of the agency in fiscal year 2003, by the percentage specified in the following table:

“(2) Exclusion for buildings with energy intensive activities

“(A) In general—An agency may exclude from the requirements of paragraph (1) any building (including the associated energy consumption and gross square footage) in which energy intensive activities are carried out.

“(B) Reports—Each agency shall identify and list in each report made under section 548(a) the buildings designated by the agency for exclusion under subparagraph (A).

“(3) Review—Not later than December 31, 2017, the Secretary shall—

“(A) review the results of the implementation of the energy performance requirements established under paragraph (1); and

“(B) based on the review conducted under subparagraph (A), submit to Congress a report that addresses the feasibility of requiring each agency to apply energy conservation measures to, and improve the design for the construction of, the Federal buildings of the agency (including each industrial or laboratory facility) so that the energy consumption per gross square foot of the Federal buildings of the agency in each of fiscal years 2018 through 2030 is reduced, as compared with the energy consumption per gross square foot of the Federal buildings of the agency in the prior fiscal year, by 3 percent.”

(2)
in subsection (f)—
(A)
in paragraph (1)—
(i)
by redesignating subparagraphs (E), (F), and (G) as subparagraphs (F), (G), and (H), respectively; and
(ii)
by inserting after subparagraph (D) the following:

“(E) Ongoing commissioning—The term ongoing commissioning means an ongoing process of commissioning using monitored data, the primary goal of which is to ensure continuous optimum performance of a facility, in accordance with design or operating needs, over the useful life of the facility, while meeting facility occupancy requirements.”

(B)
in paragraph (2), by adding at the end the following:

“(C) Energy management system—An energy manager designated under subparagraph (A) shall consider use of a system to manage energy use at the facility and certification of the facility in accordance with the International Organization for Standardization standard numbered 50001 and entitled “Energy Management Systems”.”

(C)
by striking paragraphs (3) and (4) and inserting the following:

“(3) Energy and water evaluations and commissioning

“(A) Evaluations—Except as provided in subparagraph (B), effective beginning on the date that is 180 days after the date of enactment of the Energy Savings and Industrial Competitiveness Act of 2014, and annually thereafter, each energy manager shall complete, for each calendar year, a comprehensive energy and water evaluation and recommissioning or retrocommissioning for approximately 25 percent of the facilities of each agency that meet the criteria under paragraph (2)(B) in a manner that ensures that an evaluation of each facility is completed at least once every 4 years.

“(B) Exceptions—An evaluation and recommissioning shall not be required under subparagraph (A) with respect to a facility that—

“(i) has had a comprehensive energy and water evaluation during the 8-year period preceding the date of the evaluation;

“(ii)

“(I) has been commissioned, recommissioned, or retrocommissioned during the 10-year period preceding the date of the evaluation; or

“(II) is under ongoing commissioning;

“(iii) has not had a major change in function or use since the previous evaluation and commissioning;

“(iv) has been benchmarked with public disclosure under paragraph (8) within the year preceding the evaluation; and

“(v)

“(I) based on the benchmarking, has achieved at a facility level the most recent cumulative energy savings target under subsection (a) compared to the earlier of—

“(aa) the date of the most recent evaluation; or

“(bb) the date—

“(AA) of the most recent commissioning, recommissioning, or retrocommissioning; or

“(BB) on which ongoing commissioning began; or

“(II) has a long-term contract in place guaranteeing energy savings at least as great as the energy savings target under subclause (I).

“(4) Implementation of identified energy and water efficiency measures

“(A) In general—Not later than 2 years after the date of completion of each evaluation under paragraph (3), each energy manager may—

“(i) implement any energy- or water-saving measure that the Federal agency identified in the evaluation conducted under paragraph (3) that is life-cycle cost effective; and

“(ii) bundle individual measures of varying paybacks together into combined projects.

“(B) Measures not implemented—The energy manager shall, as part of the certification system under paragraph (7), explain the reasons why any life-cycle cost effective measures were not implemented under subparagraph (A) using guidelines developed by the Secretary.”

(D)
in paragraph (7)(C), by adding at the end the following:

“(iii) Summary report—The Secretary shall make available a report that summarizes the information tracked under subparagraph (B)(i) by each agency and, as applicable, by each type of measure.”

Sec. 432 Federal building energy efficiency performance standards; certification system and level for green buildings

(a)
Definitions— Section 303 of the Energy Conservation and Production Act (42 U.S.C. 6832) (as amended by section 101(a)) is amended—
(1)
in paragraph (6), by striking “to be constructed” and inserting “constructed or altered”; and
(2)
by adding at the end the following:

“(19) Major renovation—The term major renovation means a modification of building energy systems sufficiently extensive that the whole building can meet energy standards for new buildings, based on criteria to be established by the Secretary through notice and comment rulemaking.”

(b)
Federal Building Efficiency Standards— Section 305 of the Energy Conservation and Production Act (42 U.S.C. 6834) is amended—
(1)
in subsection (a)(3)—
(A)
by striking “(3)(A) Not later than” and all that follows through subparagraph (B) and inserting the following:

“(3) Revised Federal building energy efficiency performance standards; certification for green buildings

“(A) Revised federal building energy efficiency performance standards

“(i) In general—Not later than 1 year after the date of enactment of the Energy Savings and Industrial Competitiveness Act of 2014, the Secretary shall establish, by rule, revised Federal building energy efficiency performance standards that require that—

“(I) new Federal buildings and alterations and additions to existing Federal buildings—

“(aa) meet or exceed the most recent revision of the International Energy Conservation Code (in the case of residential buildings) or ASHRAE Standard 90.1 (in the case of commercial buildings) as of the date of enactment of the Energy Savings and Industrial Competitiveness Act of 2014; and

“(bb) meet or exceed the energy provisions of State and local building codes applicable to the building, if the codes are more stringent than the International Energy Conservation Code or ASHRAE Standard 90.1, as applicable;

“(II) unless demonstrated not to be life-cycle cost effective for new Federal buildings and Federal buildings with major renovations—

“(aa) the buildings be designed to achieve energy consumption levels that are at least 30 percent below the levels established in the version of the ASHRAE Standard or the International Energy Conservation Code, as appropriate, that is applied under subclause (I)(aa), including updates under subparagraph (B); and

“(bb) sustainable design principles are applied to the location, siting, design, and construction of all new Federal buildings and replacement Federal buildings;

“(III) if water is used to achieve energy efficiency, water conservation technologies shall be applied to the extent that the technologies are life-cycle cost effective;

“(IV) if life-cycle cost effective, as compared to other reasonably available technologies, not less than 30 percent of the hot water demand for each new Federal building or Federal building undergoing a major renovation be met through the installation and use of solar hot water heaters; and

“(V) in addition to complying with the other requirements under this paragraph, unless found not to be life-cycle cost effective, new Federal buildings that are at least 5,000 square feet in size shall comply with the Guiding Principles for Sustainable New Construction and Major Renovations (as established in the document entitled High Performance and Sustainable Buildings Guidance (Final) and dated December 1, 2008).

“(ii) Limitation—Clause (i)(I) shall not apply to unaltered portions of existing Federal buildings and systems that have been added to or altered.

“(B) Updates—Not later than 1 year after the date of approval of each subsequent revision of the ASHRAE Standard or the International Energy Conservation Code, as appropriate, the Secretary shall determine whether the revised standards established under subparagraph (A) should be updated to reflect the revisions, based on the energy savings and life-cycle cost-effectiveness of the revisions.”

(B)
in subparagraph (C), by striking “(C) In the budget request” and inserting the following:

“(C) Budget request—In the budget request”

(C)
by striking subparagraph (D) and inserting the following:

“(D) Certification for green buildings

“(i) Sustainable design principles—Sustainable design principles shall be applied to the siting, design, and construction of buildings covered by this subparagraph.

“(ii) Selection of certification systems—The Secretary, after reviewing the findings of the Federal Director under section 436(h) of the Energy Independence and Security Act of 2007 (42 U.S.C. 17092(h)), in consultation with the Administrator of General Services, and in consultation with the Secretary of Defense relating to those facilities under the custody and control of the Department of Defense, shall determine those certification systems for green commercial and residential buildings that the Secretary determines to be the most likely to encourage a comprehensive and environmentally sound approach to certification of green buildings.

“(iii) Basis for selection—The determination of the certification systems under clause (ii) shall be based on ongoing review of the findings of the Federal Director under section 436(h) of the Energy Independence and Security Act of 2007 (42 U.S.C. 17092(h)) and the criteria described in clause (v).

“(iv) Administration—In determining certification systems under this subparagraph, the Secretary shall—

“(I) make a separate determination for all or part of each system;

“(II) confirm that the criteria used to support the selection of building products, materials, brands, and technologies are fair and neutral (meaning that such criteria are based on an objective assessment of relevant technical data), do not prohibit, disfavor, or discriminate against selection based on technically inadequate information to inform human or environmental risk, and are expressed to prefer performance measures whenever performance measures may reasonably be used in lieu of prescriptive measures; and

“(III) use environmental and health criteria that are based on risk assessment methodology that is generally accepted by the applicable scientific disciplines.

“(v) Considerations—In determining the green building certification systems under this subparagraph, the Secretary shall take into consideration—

“(I) the ability and availability of assessors and auditors to independently verify the criteria and measurement of metrics at the scale necessary to implement this subparagraph;

“(II) the ability of the applicable certification organization to collect and reflect public comment;

“(III) the ability of the standard to be developed and revised through a consensus-based process;

“(IV) an evaluation of the robustness of the criteria for a high-performance green building, which shall give credit for promoting—

“(aa) efficient and sustainable use of water, energy, and other natural resources;

“(bb) use of renewable energy sources;

“(cc) improved indoor environmental quality through enhanced indoor air quality, thermal comfort, acoustics, day lighting, pollutant source control, and use of low-emission materials and building system controls; and

“(dd) such other criteria as the Secretary determines to be appropriate; and

“(V) national recognition within the building industry.

“(vi) Review—The Secretary, in consultation with the Administrator of General Services and the Secretary of Defense, shall conduct an ongoing review to evaluate and compare private sector green building certification systems, taking into account—

“(I) the criteria described in clause (v); and

“(II) the identification made by the Federal Director under section 436(h) of the Energy Independence and Security Act of 2007 (42 U.S.C. 17092(h)).

“(vii) Exclusions

“(I) In general—Subject to subclause (II), if a certification system fails to meet the review requirements of clause (v), the Secretary shall—

“(aa) identify the portions of the system, whether prerequisites, credits, points, or otherwise, that meet the review criteria of clause (v);

“(bb) determine the portions of the system that are suitable for use; and

“(cc) exclude all other portions of the system from identification and use.

“(II) Entire systems—The Secretary shall exclude an entire system from use if an exclusion under subclause (I)—

“(aa) impedes the integrated use of the system;

“(bb) creates disparate review criteria or unequal point access for competing materials; or

“(cc) increases agency costs of the use.

“(viii) Internal certification processes—The Secretary may by rule allow Federal agencies to develop internal certification processes, using certified professionals, in lieu of certification by certification entities identified under clause (ii).

“(ix) Privatized military housing—With respect to privatized military housing, the Secretary of Defense, after consultation with the Secretary may, through rulemaking, develop alternative certification systems and levels than the systems and levels identified under clause (ii) that achieve an equivalent result in terms of energy savings, sustainable design, and green building performance.

“(x) Water conservation technologies—In addition to any use of water conservation technologies otherwise required by this section, water conservation technologies shall be applied to the extent that the technologies are life-cycle cost-effective.

“(xi) Effective date

“(I) Determinations made after December 31, 2015—The amendments made by section 432(b)(1)(C) of the Energy Savings and Industrial Competitiveness Act of 2014 shall apply to any determination made by a Federal agency after December 31, 2015.

“(II) Determinations made on or before December 31, 2015—This subparagraph (as in effect on the day before the date of enactment of the Energy Savings and Industrial Competitiveness Act of 2014) shall apply to any use of a certification system for green commercial and residential buildings by a Federal agency on or before December 31, 2015.”

(2)
by striking subsections (c) and (d) and inserting the following:

“(c) Periodic review—The Secretary shall—

“(1) once every 5 years, review the Federal building energy standards established under this section; and

“(2) on completion of a review under paragraph (1), if the Secretary determines that significant energy savings would result, upgrade the standards to include all new energy efficiency and renewable energy measures that are technologically feasible and economically justified.”

Sec. 433 Enhanced energy efficiency underwriting

(a)
Definitions— In this section:
(1)
Covered agency— The term covered agency—
(A)
means—
(i)
an executive agency, as that term is defined in section 102 of title 31, United States Code; and
(ii)
any other agency of the Federal Government; and
(B)
includes any enterprise, as that term is defined under section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502).
(2)
Covered loan— The term covered loan means a loan secured by a home that is issued, insured, purchased, or securitized by a covered agency.
(3)
Homeowner— The term homeowner means the mortgagor under a covered loan.
(4)
Mortgagee— The term mortgagee means—
(A)
an original lender under a covered loan or the holder of a covered loan at the time at which that mortgage transaction is consummated;
(B)
any affiliate, agent, subsidiary, successor, or assignee of an original lender under a covered loan or the holder of a covered loan at the time at which that mortgage transaction is consummated;
(C)
any servicer of a covered loan; and
(D)
any subsequent purchaser, trustee, or transferee of any covered loan issued by an original lender.
(5)
Secretary— The term Secretary means the Secretary of Housing and Urban Development.
(6)
Servicer— The term servicer means the person or entity responsible for the servicing of a covered loan, including the person or entity who makes or holds a covered loan if that person or entity also services the covered loan.
(7)
Servicing— The term servicing has the meaning given the term in section 6(i) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(i)).
(b)
Findings and purposes—
(1)
Findings— Congress finds that—
(A)
energy costs for homeowners are a significant and increasing portion of their household budgets;
(B)
household energy use can vary substantially depending on the efficiency and characteristics of the house;
(C)
expected energy cost savings are important to the value of the house;
(D)
the current test for loan affordability used by most covered agencies, commonly known as the debt-to-income test, is inadequate because it does not take into account the expected energy cost savings for the homeowner of an energy efficient home; and
(E)
another loan limitation, commonly known as the loan-to-value test, is tied to the appraisal, which often does not adjust for efficiency features of houses.
(2)
Purposes— The purposes of this section are to—
(A)
improve the accuracy of mortgage underwriting by Federal mortgage agencies by ensuring that energy cost savings are included in the underwriting process as described below, and thus to reduce the amount of energy consumed by homes and to facilitate the creation of energy efficiency retrofit and construction jobs;
(B)
require a covered agency to include the expected energy cost savings of a homeowner as a regular expense in the tests, such as the debt-to-income test, used to determine the ability of the loan applicant to afford the cost of homeownership for all loan programs; and
(C)
require a covered agency to include the value home buyers place on the energy efficiency of a house in tests used to compare the mortgage amount to home value, taking precautions to avoid double-counting and to support safe and sound lending.
(c)
Enhanced energy efficiency underwriting criteria—
(1)
In general— Not later than 1 year after the date of enactment of this Act, the Secretary shall, in consultation with the advisory group established in subsection (f)(2), develop and issue guidelines for a covered agency to implement enhanced loan eligibility requirements, for use when testing the ability of a loan applicant to repay a covered loan, that account for the expected energy cost savings for a loan applicant at a subject property, in the manner set forth in paragraphs (2) and (3).
(2)
Requirements To account for energy cost savings— The enhanced loan eligibility requirements under paragraph (1) shall require that, for all covered loans for which an energy efficiency report is voluntarily provided to the mortgagee by the mortgagor, the covered agency and the mortgagee shall take into consideration the estimated energy cost savings expected for the owner of the subject property in determining whether the loan applicant has sufficient income to service the mortgage debt plus other regular expenses. To the extent that a covered agency uses a test such as a debt-to-income test that includes certain regular expenses, such as hazard insurance and property taxes, the expected energy cost savings shall be included as an offset to these expenses. Energy costs to be assessed include the cost of electricity, natural gas, oil, and any other fuel regularly used to supply energy to the subject property.
(3)
Determination of estimated energy cost savings—
(A)
In general— The guidelines to be issued under paragraph (1) shall include instructions for the covered agency to calculate estimated energy cost savings using—
(i)
the energy efficiency report;
(ii)
an estimate of baseline average energy costs; and
(iii)
additional sources of information as determined by the Secretary.
(B)
Report requirements— For the purposes of subparagraph (A), an energy efficiency report shall—
(i)
estimate the expected energy cost savings specific to the subject property, based on specific information about the property;
(ii)
be prepared in accordance with the guidelines to be issued under paragraph (1); and
(iii)
be prepared—
(I)
in accordance with the Residential Energy Service Network’s Home Energy Rating System (commonly known as HERS) by an individual certified by the Residential Energy Service Network, unless the Secretary finds that the use of HERS does not further the purposes of this section; or
(II)
by other methods approved by the Secretary, in consultation with the Secretary of Energy and the advisory group established in subsection (f)(2), for use under this section, which shall include a third-party quality assurance procedure.
(C)
Use by appraiser— If an energy efficiency report is used under paragraph (2), the energy efficiency report shall be provided to the appraiser to estimate the energy efficiency of the subject property and for potential adjustments for energy efficiency.
(4)
Required disclosure to consumer for a home with an energy efficiency report— If an energy efficiency report is used under paragraph (2), the guidelines to be issued under paragraph (1) shall require the mortgagee to—
(A)
inform the loan applicant of the expected energy costs as estimated in the energy efficiency report, in a manner and at a time as prescribed by the Secretary, and if practicable, in the documents delivered at the time of loan application; and
(B)
include the energy efficiency report in the documentation for the loan provided to the borrower.
(5)
Required disclosure to consumer for a home without an energy efficiency report— If an energy efficiency report is not used under paragraph (2), the guidelines to be issued under paragraph (1) shall require the mortgagee to inform the loan applicant in a manner and at a time as prescribed by the Secretary, and if practicable, in the documents delivered at the time of loan application of—
(A)
typical energy cost savings that would be possible from a cost-effective energy upgrade of a home of the size and in the region of the subject property;
(B)
the impact the typical energy cost savings would have on monthly ownership costs of a typical home;
(C)
the impact on the size of a mortgage that could be obtained if the typical energy cost savings were reflected in an energy efficiency report; and
(D)
resources for improving the energy efficiency of a home.
(6)
Pricing of loans—
(A)
In general— A covered agency may price covered loans originated under the enhanced loan eligibility requirements required under this section in accordance with the estimated risk of the loans.
(B)
Imposition of certain material costs, impediments, or penalties— In the absence of a publicly disclosed analysis that demonstrates significant additional default risk or prepayment risk associated with the loans, a covered agency shall not impose material costs, impediments, or penalties on covered loans merely because the loan uses an energy efficiency report or the enhanced loan eligibility requirements required under this section.
(7)
Limitations—
(A)
In general— A covered agency may price covered loans originated under the enhanced loan eligibility requirements required under this section in accordance with the estimated risk of those loans.
(B)
Prohibited actions— A covered agency shall not—
(i)
modify existing underwriting criteria or adopt new underwriting criteria that intentionally negate or reduce the impact of the requirements or resulting benefits that are set forth or otherwise derived from the enhanced loan eligibility requirements required under this subsection; or
(ii)
impose greater buy back requirements, credit overlays, or insurance requirements, including private mortgage insurance, on covered loans merely because the loan uses an energy efficiency report or the enhanced loan eligibility requirements required under this subsection.
(8)
Applicability and implementation date— Not later than 3 years after the date of enactment of this Act, and before December 31, 2016, the enhanced loan eligibility requirements required under this subsection shall be implemented by each covered agency to—
(A)
apply to any covered loan for the sale, or refinancing of any loan for the sale, of any home;
(B)
be available on any residential real property (including individual units of condominiums and cooperatives) that qualifies for a covered loan; and
(C)
provide prospective mortgagees with sufficient guidance and applicable tools to implement the required underwriting methods.
(d)
Enhanced energy efficiency underwriting valuation guidelines—
(1)
In general— Not later than 1 year after the date of enactment of this Act, the Secretary shall—
(A)
in consultation with the Federal Financial Institutions Examination Council and the advisory group established in subsection (f)(2), develop and issue guidelines for a covered agency to determine the maximum permitted loan amount based on the value of the property for all covered loans made on properties with an energy efficiency report that meets the requirements of subsection (c)(3)(B); and
(B)
in consultation with the Secretary of Energy, issue guidelines for a covered agency to determine the estimated energy savings under paragraph (3) for properties with an energy efficiency report.
(2)
Requirements— The enhanced energy efficiency underwriting valuation guidelines required under paragraph (1) shall include—
(A)
a requirement that if an energy efficiency report that meets the requirements of subsection (c)(3)(B) is voluntarily provided to the mortgagee, such report shall be used by the mortgagee or covered agency to determine the estimated energy savings of the subject property; and
(B)
a requirement that the estimated energy savings of the subject property be added to the appraised value of the subject property by a mortgagee or covered agency for the purpose of determining the loan-to-value ratio of the subject property, unless the appraisal includes the value of the overall energy efficiency of the subject property, using methods to be established under the guidelines issued under paragraph (1).
(3)
Determination of estimated energy savings—
(A)
Amount of energy savings— The amount of estimated energy savings shall be determined by calculating the difference between the estimated energy costs for the average comparable houses, as determined in guidelines to be issued under paragraph (1), and the estimated energy costs for the subject property based upon the energy efficiency report.
(B)
Duration of energy savings— The duration of the estimated energy savings shall be based upon the estimated life of the applicable equipment, consistent with the rating system used to produce the energy efficiency report.
(C)
Present value of energy savings— The present value of the future savings shall be discounted using the average interest rate on conventional 30-year mortgages, in the manner directed by guidelines issued under paragraph (1).
(4)
Ensuring consideration of energy efficient features— Section 1110 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3339) is amended—
(A)
in paragraph (2), by striking “; and” and inserting a semicolon; and
(B)
in paragraph (3), by striking the period at the end and inserting “; and” and inserting after paragraph (3) the following:

“(4) that State certified and licensed appraisers have timely access, whenever practicable, to information from the property owner and the lender that may be relevant in developing an opinion of value regarding the energy- and water-saving improvements or features of a property, such as—

“(A) labels or ratings of buildings;

“(B) installed appliances, measures, systems or technologies;

“(C) blueprints;

“(D) construction costs;

“(E) financial or other incentives regarding energy- and water-efficient components and systems installed in a property;

“(F) utility bills;

“(G) energy consumption and benchmarking data; and

“(H) third-party verifications or representations of energy and water efficiency performance of a property, observing all financial privacy requirements adhered to by certified and licensed appraisers, including section 501 of the Gramm-Leach-Bliley Act (15 U.S.C. 6801).”

(5)
Transactions requiring state certified appraisers— Section 1113 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3342) is amended—
(A)
in paragraph (1), by inserting before the semicolon the following: “, or any real property on which the appraiser makes adjustments using an energy efficiency report”; and
(B)
in paragraph (2), by inserting after “atypical” the following: “, or an appraisal on which the appraiser makes adjustments using an energy efficiency report.”.
(6)
Protections—
(A)
Authority To impose limitations— The guidelines to be issued under paragraph (1) shall include such limitations and conditions as determined by the Secretary to be necessary to protect against meaningful under or over valuation of energy cost savings or duplicative counting of energy efficiency features or energy cost savings in the valuation of any subject property that is used to determine a loan amount.
(B)
Additional authority— At the end of the 7-year period following the implementation of enhanced eligibility and underwriting valuation requirements under this section, the Secretary may modify or apply additional exceptions to the approach described in paragraph (2), where the Secretary finds that the unadjusted appraisal will reflect an accurate market value of the efficiency of the subject property or that a modified approach will better reflect an accurate market value.
(7)
Applicability and implementation date— Not later than 3 years after the date of enactment of this Act, and before December 31, 2016, each covered agency shall implement the guidelines required under this subsection, which shall—
(A)
apply to any covered loan for the sale, or refinancing of any loan for the sale, of any home; and
(B)
be available on any residential real property, including individual units of condominiums and cooperatives, that qualifies for a covered loan.
(e)
Monitoring— Not later than 1 year after the date on which the enhanced eligibility and underwriting valuation requirements are implemented under this section, and every year thereafter, each covered agency with relevant activity shall issue and make available to the public a report that—
(1)
enumerates the number of covered loans of the agency for which there was an energy efficiency report, and that used energy efficiency appraisal guidelines and enhanced loan eligibility requirements;
(2)
includes the default rates and rates of foreclosures for each category of loans; and
(3)
describes the risk premium, if any, that the agency has priced into covered loans for which there was an energy efficiency report.
(f)
Rulemaking—
(1)
In general— The Secretary shall prescribe regulations to carry out this section, in consultation with the Secretary of Energy and the advisory group established in paragraph (2), which may contain such classifications, differentiations, or other provisions, and may provide for such proper implementation and appropriate treatment of different types of transactions, as the Secretary determines are necessary or proper to effectuate the purposes of this section, to prevent circumvention or evasion thereof, or to facilitate compliance therewith.
(2)
Advisory group— To assist in carrying out this section, the Secretary shall establish an advisory group, consisting of individuals representing the interests of—
(A)
mortgage lenders;
(B)
appraisers;
(C)
energy raters and residential energy consumption experts;
(D)
energy efficiency organizations;
(E)
real estate agents;
(F)
home builders and remodelers;
(G)
State energy officials; and
(H)
others as determined by the Secretary.
(g)
Additional study—
(1)
In general— Not later than 18 months after the date of enactment of this Act, the Secretary shall reconvene the advisory group established in subsection (f)(2), in addition to water and locational efficiency experts, to advise the Secretary on the implementation of the enhanced energy efficiency underwriting criteria established in subsections (c) and (d).
(2)
Recommendations— The advisory group established in subsection (f)(2) shall provide recommendations to the Secretary on any revisions or additions to the enhanced energy efficiency underwriting criteria deemed necessary by the group, which may include alternate methods to better account for home energy costs and additional factors to account for substantial and regular costs of homeownership such as location-based transportation costs and water costs. The Secretary shall forward any legislative recommendations from the advisory group to Congress for its consideration.

E Third-Party testing

Sec. 441 Voluntary certification programs for air conditioning, furnace, boiler, heat pump, and water heater products

Section 326(b) of the Energy Policy and Conservation Act (42 U.S.C. 6296(b)) is amended by adding at the end the following:

“(6) Voluntary certification programs for air conditioning, furnace, boiler, heat pump, and water heater products

“(A) Definition of basic model group—In this paragraph, the term basic model group means a set of models—

“(i) that share characteristics that allow the performance of 1 model to be generally representative of the performance of other models within the group; and

“(ii) in which the group of products does not necessarily have to share discrete performance.

“(B) Reliance on voluntary certification programs—For the purpose of testing to verify the performance rating of, or receiving test reports from manufacturers certifying compliance with energy conservation standards and Energy Star specifications established under sections 324A, 325, and 342, the covered products described in paragraphs (3), (4), (5), (9), and (11) of section 322(a) and covered equipment described in subparagraphs (B), (C), (D), (F), (I), (J), and (K) of section 340(1), the Secretary and Administrator shall rely on voluntary certification programs that—

“(i) are nationally recognized;

“(ii) maintain a publicly available list of all certified products and equipment;

“(iii) as determined by the Secretary, annually test not less than 10 percent and not more than 30 percent of the basic model group of a program participant;

“(iv) require the changing of the performance rating or removal of the product or equipment from the program, if verification testing determines that the performance rating does not meet the levels the manufacturer has certified to the Secretary;

“(v) require the qualification of new participants in the program through testing and production of test reports;

“(vi) allow for challenge testing of products and equipment within the scope of the program;

“(vii) require program participants to certify the performance rating of all covered products and equipment within the scope of the program;

“(viii) are conducted by a certification body that is accredited under International Organization for Standardization/International Electrotechnical Commission (ISO/IEC) Standard 17065;

“(ix) provide to the Secretary—

“(I) an annual report of all test results;

“(II) prompt notification when program testing results in—

“(aa) the rerating of the performance rating of a product or equipment; or

“(bb) the delisting of a product or equipment; and

“(III) test reports, on the request of the Secretary or the Administrator, for Energy Star compliant products, which shall be treated as confidential business information as provided for under section 552(b)(4) of title 5, United States Code (commonly known as the “Freedom of Information Act”);

“(x) use verification testing that—

“(I) is conducted by an independent test laboratory that is accredited under International Organization for Standardization/International Electrotechnical Commission (ISO/IEC) Standard 17025 with a scope covering the tested products or equipment;

“(II) follows the test procedures established under this title; and

“(III) notes in each test report any instructions specified by the manufacturer or the representative of the manufacturer for the purpose of conducting the verification testing; and

“(xi) satisfy such other requirements as the Secretary has determined—

“(I) are essential to ensure standards compliance; or

“(II) have consensus support achieved through a negotiated rulemaking process.

“(C) Administration

“(i) In general—The Secretary shall not require—

“(I) manufacturers to participate in a voluntary certification program described in subparagraph (B); or

“(II) participating manufacturers to provide information that can be obtained through a voluntary certification program described in subparagraph (B).

“(ii) List of covered products—The Secretary or the Administrator may maintain a publicly available list of covered products and equipment certified under a program described in subparagraph (B) that distinguishes between—

“(I) covered products and equipment verified by the program; and

“(II) products not verified by the program.

“(iii) Reduction of requirements—Any rules promulgated by the Secretary that require testing of products or equipment for certification of performance ratings shall on average reduce requirements and burdens for manufacturers participating in a voluntary certification program described in subparagraph (B) for the products or equipment relative to other manufacturers.

“(iv) Periodic testing by program nonparticipants—In addition to certification requirements, the Secretary shall require a manufacturer that does not participate in a voluntary certification program described in subparagraph (B)—

“(I) to verify the accuracy of the performance rating of the product or equipment through periodic testing using the testing methods described in clause (iii) or (x) of subparagraph (B); and

“(II) to provide to the Secretary test results and, on request, test reports verifying the certified performance for each basic model group of the manufacturer.

“(v) Restrictions on test laboratories

“(I) In general—Subject to subclause (II), with respect to covered products and equipment, a voluntary certification program described in subparagraph (B) shall not be a test laboratory that conducts the testing on products or equipment within the scope of the program.

“(II) Limitation—Subclause (I) shall not apply to Energy Star specifications established under section 324A.

“(vi) Effect on other authority—Nothing in this paragraph limits the authority of the Secretary or the Administrator to test products or equipment or to enforce compliance with any law (including regulations).”