To establish a Best-in-Class Appliances Deployment Program.

Summary: Establishes the Best-in-Class Appliances Deployment Program to reward retailers for increasing the sales of high-efficiency installed building equipment, consumer electronics, and household appliance models, with the goal of reducing life-cycle costs for consumers, encouraging innovation, and maximizing energy savings.

Requires that the program include: (1) bounties to retailers for replacing and recycling old, inefficient, and environmentally harmful appliances; and (2) bonuses to manufacturers for developing new Superefficient Best-in-Class Products.

Directs the Secretary of Energy to ensure that not more than one bonus payment is provided to distributors and retailers per unit of eligible models sold. Allows the Secretary to make distributors eligible to receive the incentive for sales that are not to end-users in addition to retailers if the Secretary determines that, for a particular product category, distributors are well situated to increase sales of Best-in-Class Products.

Makes any product that is eligible for an energy efficient appliance tax credit ineligible for a payment to a manufacturer under this Act.

Authorizes the Secretary to require that retailers and distributors disclose publicly and to consumers their participation in the program under this Act.

Directs the Secretary to make cost-effectiveness a top priority in designing and administering this Act, but allows the cost-effectiveness of the rewards to manufacturers, in aggregate, to be lower than that of the rewards to retailers and distributors. Defines "cost-effectiveness" as a measure of aggregate energy cost savings over the life of the product as a ratio to the cost of the rewards.

SECTION 1. BEST-IN-CLASS APPLIANCES DEPLOYMENT PROGRAM.

    (a) In General.--The Secretary of Energy shall, in consultation 
with the Administrator, establish and administer a program to be known 
as the ``Best-in-Class Appliances Deployment Program''.
    (b) Purpose.--The purpose of the Best-in-Class Appliances 
Deployment Program is to reward retailers with bonuses for increasing 
the sales of best-in-class high-efficiency installed building 
equipment, high-efficiency consumer electronics, and high-efficiency 
household appliance models, with the goal of reducing life-cycle costs 
for consumers, encouraging innovation, and maximizing energy savings 
and public benefit. The program shall include bounties under subsection 
(c) to retailers for the replacement and recycling of old, inefficient, 
and environmentally harmful appliances. The program shall also include 
bonuses under subsection (d) to manufacturers for developing new 
Superefficient Best-in-Class Products.
    (c) Incentives for Sales of Best-in-Class Product Models.--
            (1) Selection of best-in-class product models.--In 
        establishing the program, the Secretary of Energy shall use 
        broad product classes and select as qualifying Best-in-Class 
        Product models no more than the most efficient ten percent of 
        the commercially available product models in a class that 
        demonstrate, as a group, a distinctly greater energy efficiency 
        than the average energy efficiency of that class of appliances. 
        In selecting models, the Secretary shall--
                    (A) identify commercially available models in the 
                relevant class of products;
                    (B) identify the subgroup and percentage of those 
                models (not greater than 10 percent) that the Secretary 
                believes share the distinctly higher energy-efficiency 
                characteristics that warrant designation as best-in-
                class;
                    (C) specify the higher energy-efficiency 
                characteristic they share;
                    (D) announce the best-in-class designation and the 
                best-in-class bonus to be paid for each sale of an 
                eligible best-in-class model over a 3-year period 
                beginning on the date of the announcement;
                    (E) add other models in that class to the list of 
                best-in-class models eligible for the bonus as they 
                demonstrate their ability to meet the higher-efficiency 
                characteristics on which the designation was made; and
                    (F) make bonus payments for qualifying models sold 
                during the 3-year period.
            (2) Review of best-in-class standards.--The Secretary shall 
        review annually the product-specific criteria and the product 
        models that qualify as Best-in-Class Products and, after a 30-
        day comment period, make upwards adjustments in the efficiency 
        criteria as required to maintain an appropriate ratio of such 
        product models to the total number of product models in the 
        product class.
            (3) Upgrade of best-in-class product eligibility.--To the 
        extent that the Secretary determines to increase the energy 
        efficiency required to qualify for best-in-class designation 
        within any group of product models, the Secretary shall--
                    (A) consider any Superefficient Best-in-Class 
                Product models that have been designated pursuant to 
                subsection (d);
                    (B) specify and announce the new higher best-in-
                class standard;
                    (C) list those models that qualify as best-in-class 
                under the new higher standard;
                    (D) announce any change in the bonus payment 
                appropriate to increase the market share of such best-
                in-class models, which shall not be lower than any 
                ongoing bonus payment during the 3-year period for any 
                prior designation of best-in-class models;
                    (E) pay the new bonus payment for any models 
                already qualifying under the earlier best-in-class 
                standard that continue to qualify under the revised 
                standard for a new 3-year-period; and
                    (F) continue paying bonus payments at the original 
                level to any models that qualified at that level but do 
                not qualify at the new level for the remainder of the 
                3-year period announced with the original designation.
            (4) Size of individual bonus payments.--The size of each 
        bonus payment shall be the product of--
                    (A) an amount determined by the Secretary; and
                    (B) the difference in energy consumption as 
                determined by comparing the energy used by the 
                qualifying product and the energy used by the average 
                product in the product class.
        The Secretary shall determine the amount under subparagraph (A) 
        for each product type in consultation with State and utility 
        efficiency program administrators as well as the Administrator, 
        based on estimates of the amount of bonus payment that would 
        provide significant incentive to increase the market share of 
        Best-in-Class Products.
            (5) Eligible bonus recipient.--(A) The Secretary shall 
        ensure that not more than 1 bonus payment is provided to 
        distributors and retailers per unit of eligible models sold.
            (B) In this section--
                    (i) the term ``retailer'' means an individual, 
                organization, or company that sells products directly 
                to end-users; and
                    (ii) the term ``distributor'' mean an individual, 
                organization, or company that sells products in 
                multiple lots and not directly to individual end-users.
            (C) The Secretary may make distributors eligible to receive 
        the best-in-class incentive for sales that are not to the final 
        end-user in addition to retailers to the extent that the 
        Secretary determines that for a particular product category 
        distributors are well situated to increase sales of Best-in-
        Class Products.
    (d) Bounties for Replacement and Retirement of Existing Low-
Efficiency Products.--
            (1) The Secretary of Energy shall establish a program to 
        make a bounty payment for the recovery and recycling of older 
        operating low-efficiency appliances that might otherwise 
        continue in operation.
            (2) The Secretary shall offer a bounty as an additional 
        incentive for retailers based on documentation that the sales 
        of a Best-in-Class Product were accompanied by the retirement 
        and recycling of an existing inefficient but still-functioning 
        product by the consumer to whom the Best-in-Class Product was 
        sold.
            (3) The bounty payment shall be based on the difference 
        between the estimated energy use of the product replaced and 
        the energy use of an average new product in the product class, 
        discounted for the estimated remaining lifetime of the product 
        that was recycled.
            (4) The Secretary may specify that the availability of a 
        product bonus related to sale of a Best-in-Class Product is 
        linked to the recovery and recycling of an older working 
        appliance, and may limit the total payment to less than the sum 
        of the bonus and the bounty payments, if not doing so would 
        mean that the Nation's total energy use would otherwise 
        increase.
            (5) The Secretary shall ensure that no product for which a 
        bounty is paid is sold or returned to active service, but that 
        it is instead destroyed, and recycled to the extent feasible.
            (6) The Secretary shall establish standards for 
        environmentally responsible methods of recycling, especially 
        for products utilizing refrigerants.
    (e) Rewards to Manufacturers for Development of Superefficient 
Best-in-Class Products.--
            (1) In general.--(A) The Secretary of Energy shall 
        establish a program to reward manufacturers for the development 
        and production of Superefficient Best-in-Class Products.
            (B) In this section, the term ``Superefficient Best-in-
        Class Product'' means a product that--
                    (i) can be mass produced; and
                    (ii) achieves the highest level of efficiency that 
                the Secretary finds could be produced and sold 
                commercially to mass-market consumers.
            (C) The Secretary may establish a standard for a 
        Superefficient Best-in-Class Product even if no existing 
        product exists, if the Secretary has reasonable grounds to 
        conclude that a mass-producable product could be made to meet 
        that standard.
            (D) The Secretary may also establish a superefficient best-
        in-class level that is met by one or more existing Best-in-
        Class Product models if those product models have distinct 
        energy efficiency attributes and performance characteristics 
        that make them significantly better, in the judgment of the 
        Secretary, than those product models qualifying as best-in-
        class, but that represent not more than 10 percent of the 
        currently qualifying best-in-class models.
            (2) Reward.--
                    (A) The bonus payment provided to a manufacturer 
                for the development and production of a Superefficient 
                Best-in-Class Product shall be in addition to any bonus 
                payments made to retailers for best-in-class 
                qualification.
                    (B) The amount of the bonus paid per unit for 
                qualifying Superefficient Best-in-Class Product models 
                as sold to retailers or distributors shall be the 
                product of--
                            (i) an amount determined by the Secretary; 
                        and
                            (ii) the difference in energy consumption 
                        as determined by comparing the energy used by 
                        the qualifying product and the energy used by 
                        the average product in the product class.
                    (C) The Secretary shall determine the amount under 
                subparagraph (B)(i) for each product type by 
                considering the present value to the Nation of the 
                energy (and water or other resources or inputs) saved 
                over the useful life of the product, and may adjust 
                this value upward or downward after consultation with 
                State and utility efficiency program administrators as 
                well as the Administrator.
                    (D) The adjustment may also be made based on the 
                effect of the reward on the sales of products in 
                different classes that may be affected by this program.
                    (E) The incremental bonus payments shall be applied 
                to sales of any Superefficient Best-in-Class Product 
                for the first 3 years of its sale.
            (3) Coordination of incentives.--No product for which 
        Federal tax credit is received under section 45M of the 
        Internal Revenue Code of 1986 shall be eligible to receive 
        bonus payments pursuant to this subsection.
    (f) Reporting.--Each retailer, distributor, and manufacturer 
participating in the program under this section shall meet any 
reasonable request of the Secretary of Energy for documentation of 
sales reported for purpose of receiving bonuses or bounties, and shall 
report to the Secretary, on a confidential basis for program-design 
purposes--
            (1) for retailers and distributors, the number of units 
        sold within each product type and model-specific wholesale 
        purchase price on a monthly basis;
            (2) for manufacturers, model-specific energy consumption 
        data; and
            (3) for manufacturers, on an immediate basis, concerning 
        any product design or function changes that affect the energy 
        consumption of the unit.
    (g) Auditing Requirements.--The Secretary of Energy shall establish 
monitoring and verification protocols to ensure that energy consumption 
tests for each model are recorded correctly and that sales of energy-
efficient models are tabulated correctly by each claimant of bonus or 
bounty payments under this section. In addition, the Secretary may 
require reports from retailers on the methods used to increase the 
sales of qualifying products as a factor in determining the level and 
allocation of any such payments.
    (h) Disclosure.--The Secretary of Energy may require that retailers 
and distributors disclose publicly and to consumers their participation 
in the program under this section.
    (i) Cost-Effectiveness Requirement.--
            (1) Definitions.--In this subsection:
                    (A) Cost-effectiveness.--The term ``cost-
                effectiveness'' means a measure of aggregate savings in 
                the cost of energy over the lifetime of the product as 
                a ratio to the cost to the Secretary of Energy of the 
                rewards for the product.
                    (B) Savings.--The term ``savings'' means the 
                cumulative megawatt-hours of electricity or million 
                British thermal units of other fuels saved by a 
                product, in comparison to projected energy consumption 
                based on the efficiency performance of displaced new 
                product sales. The amount of savings is the product 
                of--
                            (i) the net number of best-in-class or 
                        superefficient best-in-class pieces of 
                        equipment, electronics, and appliances sold by 
                        a retailer, manufacturer, or distributor in a 
                        calendar year;
                            (ii) the savings during the projected 
                        useful life of the pieces of equipment, 
                        electronics, and appliances; and
                            (iii) the impact of any documented measures 
                        to retire and recycle low-performing devices at 
                        the time of purchase of highly-efficient 
                        substitutes.
            (2) Requirement.--The Secretary shall make cost-
        effectiveness a top priority in designing and administering 
        this section, except that the cost-effectiveness of the rewards 
        to manufacturers, in aggregate, may be lower by this measure 
        than that of the rewards to retailers and distributors.
    (j) Authorization.--There are authorized to be appropriated such 
sums as may be necessary for each of the fiscal years 2010 through 2014 
to the Secretary of Energy for purposes of this section, of which not 
more than 10 percent for any fiscal year may be expended on program 
administration.