relevant factors, standby mode power consumption 
compared to overall product energy consumption. 
‘‘(3) RULEMAKING.—The Secretary shall not 
propose a standard under this section unless the 
Secretary has issued applicable test procedures for 
each product pursuant to section 323. 
‘‘(4) EFFECTIVE DATE.—Any standard issued 
under this subsection shall be applicable to products 
manufactured or imported 3 years after the date of 
issuance. 
‘‘(5) VOLUNTARY
PROGRAMS.—The Secretary 
and the Administrator shall collaborate and develop 
programs, including programs pursuant to section 
324A (relating to Energy Star Programs) and other 
voluntary industry agreements or codes of conduct, 
that are designed to reduce standby mode energy 
use. 
‘‘(v) VENDING MACHINES, AND COMMERCIAL RE-
FRIGERATORS, FREEZERS, AND REFRIGERATOR-FREEZ-
ERS.—
‘‘(1) IN
GENERAL.—Not later than 3 years 
after the date on which testing requirements are 
prescribed by the Secretary pursuant to section 
323(f), the Secretary shall prescribe, by rule, energy 
conservation standards for refrigerated bottled or
canned beverage vending machines, and commercial 
refrigerators, freezers, and refrigerator-freezers. 
‘‘(2) CRITERIA
AND
PROCEDURES.—In estab-
lishing standards under this subsection, the Sec-
retary shall use the criteria and procedures con-
tained in subsections (o) and (p). 
‘‘(3) APPLICABILITY.—Any standard prescribed 
under this subsection shall apply to products manu-
factured 3 years after the date of publication of a 
final rule establishing the standard. 
‘‘(w) ILLUMINATED EXIT SIGNS.—Illuminated exit 
signs manufactured on or after January 1, 2005, shall 
meet the Version 2.0 Energy Star Program performance 
requirements for illuminated exit signs prescribed by the 
Environmental Protection Agency. 
‘‘(x) TORCHIERES.—Torchieres manufactured on or 
after January 1, 2005—
‘‘(1) shall consume not more than 190 watts of 
power; and 
‘‘(2) shall not be capable of operating with 
lamps that total more than 190 watts. 
‘‘(y) LOW
VOLTAGE
DRY-TYPE
DISTRIBUTION 
TRANSFORMERS.—The efficiency of low voltage dry-type 
distribution transformers manufactured on or after Janu-
ary 1, 2005, shall be the Class I Efficiency Levels for dis-
tribution transformers specified in Table 4–2 of the ‘Guide 
for Determining Energy Efficiency for Distribution Trans-
formers’ published by the National Electrical Manufactur-
ers Association (NEMA TP–1–2002). 
‘‘(z) TRAFFIC SIGNAL MODULES.—Traffic signal 
modules manufactured on or after January 1, 2006, shall 
meet the performance requirements used under the En-
ergy Star program of the Environmental Protection Agen-
cy for traffic signals, as in effect on the date of enactment 
of this subsection, and shall be installed with compatible, 
electrically connected signal control interface devices and 
conflict monitoring systems. 
‘‘(aa) UNIT HEATERS.—Unit heaters manufactured 
on or after the date that is 3 years after the date of enact-
ment of this subsection shall be equipped with an intermit-
tent ignition device and shall have either power venting 
or an automatic flue damper. 
‘‘(bb) MEDIUM
BASE
COMPACT
FLUORESCENT 
LAMPS.—Bare lamp and covered lamp (no reflector) me-
dium base compact fluorescent lamps manufactured on or 
after January 1, 2005, shall meet the following require-
ments prescribed by the August 9, 2001, version of the 
Energy Star Program Requirements for Compact Fluores-
cent Lamps, Energy Star Eligibility Criteria, Energy-Effi-
ciency Specification issued by the Environmental Protec-
tion Agency and Department of Energy: minimum initial 
efficacy; lumen maintenance at 1000 hours; lumen mainte-
nance at 40 percent of rated life; rapid cycle stress test; 
and lamp life. The Secretary may, by rule, establish re-
quirements for color quality (CRI); power factor; oper-
ating frequency; and maximum allowable start time based 
on the requirements prescribed by the October 30, 2003, 
version of the Energy Star Program Requirements for 
Compact Fluorescent Lamps. The Secretary may, by rule, 
revise these requirements or establish other requirements 
considering energy savings, cost effectiveness, and con-
sumer satisfaction. 
‘‘(cc) CEILING FANS
AND CEILING FAN LIGHT 
KITS.—
‘‘(1) CEILING FANS.—All ceiling fans manufac-
tured on or after January 1, 2007, shall have—
‘‘(A) lighting controls separate from fan 
speed controls; 
‘‘(B) adjustable speed controls (either 
more than 1 speed or variable speeds); and 
‘‘(C) the capability of reversible fan action, 
except (as determined by the Secretary by regu-
lation)—
‘‘(i) for fans sold for industrial appli-
cations;
‘‘(ii) for fans sold for outdoor applica-
tions; and 
‘‘(iii) where safety standards would be 
violated by the use of the reversible mode. 
‘‘(2) CEILING
FAN
LIGHT
KITS.—Ceiling fan 
light kits manufactured on or after January 1, 
2007, shall—
‘‘(A) meet the Energy Star Program Re-
quirements for Residential Light Fixtures 
(Version 3.1) issued by the Environmental Pro-
tection Agency and be packaged with lamps to 
fill all sockets; 
‘‘(B) be packaged with screw-based com-
pact fluorescent lamps to fill all sockets, with 
such lamps meeting the Energy Star Program 
Requirements for Compact Fluorescent Lamps 
(Version 3.0) issued by the Department of En-
ergy; or 
‘‘(C) use and be packaged with light 
sources, other than compact fluorescent lamps, 
that meet the minimum efficacy requirements 
(as measured in lumens per watt) of the Energy 
Star Program Requirements for Compact Fluo-
rescent Lamps (Version 3.0) issued by the De-
partment of Energy.
‘‘(3) ENERGY
EFFICIENCY
STANDARDS
FOR 
CEILING FANS.—
‘‘(A) IN GENERAL.—Notwithstanding any 
provision of this Act, the Secretary may con-
sider, and prescribe, if the requirements of sub-
sections (o) and (p) are met, energy efficiency 
or energy use standards (based on cubic feet 
per minute per watt or watts) for electricity 
used by ceiling fans to circulate air in a room. 
‘‘(B) EXEMPTIONS OR DIFFERENT STAND-
ARDS.—In prescribing the standards, the Sec-
retary shall consider—
‘‘(i) exempting or setting different 
standards for certain product classes for 
which the primary standards are not tech-
nically feasible or economically justified; 
and 
‘‘(ii) establishing separate exempted 
product classes for highly decorative fans 
for which air movement performance is a 
secondary design feature. 
‘‘(C) EFFECTIVE
DATE.—Any air move-
ment standard prescribed under this subsection 
shall apply to products manufactured on or
after the date that is 3 years after publication 
of a final rule establishing the standard. 
‘‘(dd) EFFECTIVE DATE.—Section 327 shall apply—
‘‘(1) to products for which standards are to be 
established under subsections (u) and (v) on the 
date on which a final rule is issued by the Depart-
ment of Energy, except that any State or local 
standards prescribed or enacted for any such prod-
uct prior to the date on which such final rule is 
issued shall not be preempted until the standard es-
tablished under subsection (u) or (v) for that prod-
uct takes effect; and 
‘‘(2) to products for which standards are estab-
lished under subsections (w) through (bb) on the 
date of enactment of those subsections, except that 
any State or local standards prescribed or enacted 
prior to the date of enactment of those subsections 
shall not be preempted until the standards estab-
lished under subsections (w) through (bb) take ef-
fect.’’. 
(d) 
RESIDENTIAL
FURNACE
FANS.—Section 
325(f)(3) of the Energy Policy and Conservation Act (42 
U.S.C. 6295(f)(3)) is amended by adding the following 
new subparagraph at the end:
‘‘(D) Notwithstanding any provision of this Act, the 
Secretary may consider, and prescribe, if the requirements 
of subsection (o) of this section are met, energy efficiency 
or energy use standards for electricity used for purposes 
of circulating air through duct work.’’. 
SEC. 202. ENERGY LABELING. 
(a) RULEMAKING ON EFFECTIVENESS OF CONSUMER 
PRODUCT LABELING.—Section 324(a)(2) of the Energy 
Policy and Conservation Act (42 U.S.C. 6294(a)(2)) is 
amended by adding at the end the following: 
‘‘(F) During the period beginning not later than 90 
days after the date of enactment of this subparagraph and 
ending not later than 2 years after the date of enactment 
of this subparagraph, the Commission shall initiate a rule-
making to consider—
‘‘(i) the effectiveness of the current consumer 
products labeling program in assisting consumers in 
making purchasing decisions and improving energy 
efficiency; and 
‘‘(ii) changes to the labeling rules that would 
improve the effectiveness of consumer product la-
bels.’’. 
(b) RULEMAKING ON LABELING FOR ADDITIONAL 
PRODUCTS.—Section 324(a) of the Energy Policy and
Conservation Act (42 U.S.C. 6294(a)) is amended by add-
ing at the end the following: 
‘‘(5)(A) The Secretary or the Commission, as appro-
priate, may, for covered products referred to in sub-
sections (u) through (aa) of section 325, prescribe, by rule, 
pursuant to this section, labeling requirements for the 
products, after a test procedure has been established pur-
suant to section 323. 
‘‘(B) In the case of products to which TP 1 standards 
under section 325(y) apply, labeling requirements shall be 
based on the ‘Standard for the Labeling of Distribution 
Transformer Efficiency’ prescribed by the National Elec-
trical Manufacturers Association (NEMA TP 3) as in ef-
fect on the date of enactment of this paragraph. 
‘‘(6)(A) Not later than July 1, 2005, the Commission 
shall prescribe by rule, pursuant to this section, labeling 
requirements for the electricity used by ceiling fans to cir-
culate air in a room. 
‘‘(B) Except as provided in subparagaph (C), the re-
quirements shall be based on the test procedure and label-
ing requirements contained in the Energy Star Program 
Requirements for Residential Ceiling Fans (Version 2.0) 
issued by the Environmental Protection Agency. 
‘‘(C) The Commission shall not promulgate rules cov-
ering third party testing and other nonlabeling require-
ments unless the Commission determines the requirements 
are necessary to achieve compliance. 
‘‘(D) The rule shall apply to products manufactured 
after the latter of—
‘‘(i) January 1, 2007; or 
‘‘(ii) the date that is 60 days after the date the 
final rule is promulgated.’’.
TITLE III—ENERGY EFFICIENCY 
FEDERAL PROGRAMS 
SEC. 301. PROCUREMENT OF ENERGY EFFICIENT PROD-
UCTS. 
(a) REQUIREMENTS.—Part 3 of title V of the Na-
tional Energy Conservation Policy Act (42 U.S.C. 8251 
et seq.) is amended by adding at the end the following: 
‘‘SEC. 552. FEDERAL PROCUREMENT OF ENERGY EFFI-
CIENT PRODUCTS. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) ENERGY STAR PRODUCT.—The term ‘En-
ergy Star product’ means a product that is rated for 
energy efficiency under an Energy Star program. 
‘‘(2) ENERGY STAR PROGRAM.—The term ‘En-
ergy Star program’ means the program established 
by section 324A of the Energy Policy and Conserva-
tion Act.
‘‘(3) EXECUTIVE AGENCY.—The term ‘executive 
agency’ has the meaning given the term in section 
4 of the Office of Federal Procurement Policy Act 
(41 U.S.C. 403). 
‘‘(4) FEMP DESIGNATED PRODUCT.—The term 
‘FEMP designated product’ means a product that is 
designated under the Federal Energy Management 
Program of the Department of Energy as being 
among the highest 25 percent of equivalent products 
for energy efficiency. 
‘‘(b) PROCUREMENT OF ENERGY EFFICIENT PROD-
UCTS.— 
‘‘(1) REQUIREMENT.—To meet the require-
ments of an executive agency for an energy con-
suming product, the head of the executive agency 
shall, except as provided in paragraph (2), procure—
‘‘(A) an Energy Star product; or 
‘‘(B) a FEMP designated product. 
‘‘(2) EXCEPTIONS.—The head of an executive 
agency is not required to procure an Energy Star 
product or FEMP designated product under para-
graph (1) if the head of the executive agency finds 
in writing that— 
‘‘(A) an Energy Star product or FEMP 
designated product is not cost-effective over the
life of the product taking energy cost savings 
into account; or 
‘‘(B) no Energy Star product or FEMP 
designated product is reasonably available that 
meets the functional requirements of the execu-
tive agency. 
‘‘(3) PROCUREMENT PLANNING.—The head of 
an executive agency shall incorporate into the speci-
fications for all procurements involving energy con-
suming products and systems, including guide speci-
fications, project specifications, and construction, 
renovation, and services contracts that include provi-
sion of energy consuming products and systems, and 
into the factors for the evaluation of offers received 
for the procurement, criteria for energy efficiency 
that are consistent with the criteria used for rating 
Energy Star products and for rating FEMP des-
ignated products. 
‘‘(c) LISTING OF ENERGY EFFICIENT PRODUCTS IN 
FEDERAL CATALOGS.—Energy Star products and FEMP 
designated products shall be clearly identified and promi-
nently displayed in any inventory or listing of products 
by the General Services Administration or the Defense Lo-
gistics Agency. The General Services Administration or 
the Defense Logistics Agency shall supply only Energy
Star products or FEMP designated products for all prod-
uct categories covered by the Energy Star program or the 
Federal Energy Management Program, except in cases 
where the agency ordering a product specifies in writing 
that no Energy Star product or FEMP designated product 
is available to meet the buyer’s functional requirements, 
or that no Energy Star product or FEMP designated 
product is cost-effective for the intended application over 
the life of the product, taking energy cost savings into ac-
count. 
‘‘(d) SPECIFIC PRODUCTS.—(1) In the case of elec-
tric motors of 1 to 500 horsepower, agencies shall select 
only premium efficient motors that meet a standard des-
ignated by the Secretary. The Secretary shall designate 
such a standard not later than 120 days after the date 
of the enactment of this section, after considering the rec-
ommendations of associated electric motor manufacturers 
and energy efficiency groups. 
‘‘(2) All Federal agencies are encouraged to take ac-
tions to maximize the efficiency of air conditioning and 
refrigeration equipment, including appropriate cleaning 
and maintenance, including the use of any system treat-
ment or additive that will reduce the electricity consumed 
by air conditioning and refrigeration equipment. Any such 
treatment or additive must be—
‘‘(A) determined by the Secretary to be effective 
in increasing the efficiency of air conditioning and 
refrigeration equipment without having an adverse 
impact on air conditioning performance (including 
cooling capacity) or equipment useful life; 
‘‘(B) determined by the Administrator of the 
Environmental Protection Agency to be environ-
mentally safe; and 
‘‘(C) shown to increase seasonal energy effi-
ciency ratio (SEER) or energy efficiency ratio 
(EER) when tested by the National Institute of 
Standards and Technology according to Department 
of Energy test procedures without causing any ad-
verse impact on the system, system components, the 
refrigerant or lubricant, or other materials in the 
system. 
Results of testing described in subparagraph (C) shall be 
published in the Federal Register for public review and 
comment. For purposes of this section, a hardware device 
or primary refrigerant shall not be considered an additive. 
‘‘(e) REGULATIONS.—Not later than 180 days after 
the date of the enactment of this section, the Secretary 
shall issue guidelines to carry out this section.’’. 
(b) CONFORMING AMENDMENT.—The table of con-
tents of the National Energy Conservation Policy Act is
amended by inserting after the item relating to section 
551 the following new item:
‘‘Sec. 552. Federal procurement of energy efficient products.’’.
SEC. 302. ENERGY SAVINGS PERFORMANCE CONTRACTS. 
(a) PERMANENT EXTENSION.—Effective September 
30, 2003, section 801(c) of the National Energy Conserva-
tion Policy Act (42 U.S.C. 8287(c)) is repealed. 
(b) PAYMENT OF COSTS.—Section 802 of the Na-
tional Energy Conservation Policy Act (42 U.S.C. 8287a) 
is amended by inserting ‘‘, water, or wastewater treat-
ment’’ after ‘‘payment of energy’’. 
(c) ENERGY SAVINGS.—Section 804(2) of the Na-
tional Energy Conservation Policy Act (42 U.S.C. 
8287c(2)) is amended to read as follows: 
‘‘(2) The term ‘energy savings’ means a reduc-
tion in the cost of energy, water, or wastewater 
treatment, from a base cost established through a 
methodology set forth in the contract, used in an ex-
isting federally owned building or buildings or other 
federally owned facilities as a result of—
‘‘(A) the lease or purchase of operating 
equipment, improvements, altered operation and 
maintenance, or technical services; 
‘‘(B) the increased efficient use of existing 
energy sources by cogeneration or heat recov-
ery, excluding any cogeneration process for
other than a federally owned building or build-
ings or other federally owned facilities; or 
‘‘(C) the increased efficient use of existing 
water sources in either interior or exterior ap-
plications.’’. 
(d) ENERGY SAVINGS CONTRACT.—Section 804(3) of 
the National Energy Conservation Policy Act (42 U.S.C. 
8287c(3)) is amended to read as follows: 
‘‘(3) The terms ‘energy savings contract’ and 
‘energy savings performance contract’ mean a con-
tract that provides for the performance of services 
for the design, acquisition, installation, testing, and, 
where appropriate, operation, maintenance, and re-
pair, of an identified energy or water conservation 
measure or series of measures at 1 or more loca-
tions. Such contracts shall, with respect to an agen-
cy facility that is a public building (as such term is 
defined in section 3301 of title 40, United States 
Code), be in compliance with the prospectus require-
ments and procedures of section 3307 of title 40, 
United States Code.’’. 
(e) ENERGY OR WATER CONSERVATION MEASURE.—
Section 804(4) of the National Energy Conservation Pol-
icy Act (42 U.S.C. 8287c(4)) is amended to read as fol-
lows:
‘‘(4) The term ‘energy or water conservation 
measure’ means—
‘‘(A) an energy conservation measure, as 
defined in section 551; or 
‘‘(B) a water conservation measure that 
improves the efficiency of water use, is life-cycle 
cost-effective, and involves water conservation, 
water recycling or reuse, more efficient treat-
ment of wastewater or stormwater, improve-
ments in operation or maintenance efficiencies, 
retrofit activities, or other related activities, not 
at a Federal hydroelectric facility.’’. 
(f) REVIEW.—Not later than 180 days after the date 
of the enactment of this Act, the Secretary of Energy shall 
complete a review of the Energy Savings Performance 
Contract program to identify statutory, regulatory, and 
administrative obstacles that prevent Federal agencies 
from fully utilizing the program. In addition, this review 
shall identify all areas for increasing program flexibility 
and effectiveness, including audit and measurement 
verification requirements, accounting for energy use in de-
termining savings, contracting requirements, including the 
identification of additional qualified contractors, and en-
ergy efficiency services covered. The Secretary shall report 
these findings to Congress and shall implement identified
administrative and regulatory changes to increase pro-
gram flexibility and effectiveness to the extent that such 
changes are consistent with statutory authority. 
(g) EXTENSION OF AUTHORITY.—Any energy sav-
ings performance contract entered into under section 801 
of the National Energy Conservation Policy Act (42 
U.S.C. 8287) after October 1, 2003, and before the date 
of enactment of this Act, shall be deemed to have been 
entered into pursuant to such section 801 as amended by 
subsection (a) of this section. 
SEC. 303. FEDERAL BUILDING PERFORMANCE STANDARDS. 
Section 305(a) of the Energy Conservation and Pro-
duction Act (42 U.S.C. 6834(a)) is amended—
(1) in paragraph (2)(A), by striking ‘‘CABO 
Model Energy Code, 1992’’ and inserting ‘‘the 2003 
International Energy Conservation Code’’; and 
(2) by adding at the end the following: 
‘‘(3) REVISED FEDERAL BUILDING ENERGY EFFI-
CIENCY PERFORMANCE STANDARDS.—
‘‘(A) IN GENERAL.—Not later than 1 year after 
the date of enactment of this paragraph, the Sec-
retary of Energy shall establish, by rule, revised 
Federal building energy efficiency performance 
standards that require that—
‘‘(i) if life-cycle cost-effective, for new Fed-
eral buildings—
‘‘(I) such buildings be designed so as 
to achieve energy consumption levels at 
least 30 percent below those of the version 
current as of the date of enactment of this 
paragraph of the ASHRAE Standard or 
the International Energy Conservation 
Code, as appropriate; and 
‘‘(II) sustainable design principles are 
applied to the siting, design, and construc-
tion of all new and replacement buildings; 
and 
‘‘(ii) where water is used to achieve energy 
efficiency, water conservation technologies shall 
be applied to the extent they are life-cycle cost 
effective. 
‘‘(B) ADDITIONAL REVISIONS.—Not later than 
1 year after the date of approval of each subsequent 
revision of the ASHRAE Standard or the Inter-
national Energy Conservation Code, as appropriate, 
the Secretary of Energy shall determine, based on 
the cost-effectiveness of the requirements under the 
amendments, whether the revised standards estab-
lished under this paragraph should be updated to re-
flect the amendments. 
‘‘(C) STATEMENT
ON
COMPLIANCE
OF
NEW 
BUILDINGS.—In the budget request of the Federal 
agency for each fiscal year and each report sub-
mitted by the Federal agency under section 548(a) 
of the National Energy Conservation Policy Act (42 
U.S.C. 8258(a)), the head of each Federal agency 
shall include—
‘‘(i) a list of all new Federal buildings 
owned, operated, or controlled by the Federal 
agency; and 
‘‘(ii) a statement concerning whether the 
Federal buildings meet or exceed the revised 
standards established under this paragraph.’’. 
TITLE IV—PUBLIC HOUSING 
SEC. 401. PUBLIC HOUSING CAPITAL FUND. 
Section 9 of the United States Housing Act of 1937 
(42 U.S.C. 1437g) is amended—
(1) in subsection (d)(1)—
(A) in subparagraph (I), by striking ‘‘and’’ 
at the end; 
(B) in subparagraph (J), by striking the 
period at the end and inserting a semicolon; 
and
(C) by adding at the end the following new 
subparagraphs: 
‘‘(K) improvement of energy and water-use 
efficiency by installing fixtures and fittings that 
conform to the American Society of Mechanical 
Engineers/American National Standards Insti-
tute 
standards 
A112.19.2–1998 
and 
A112.18.1–2000, or any revision thereto, appli-
cable at the time of installation, and by increas-
ing energy efficiency and water conservation by 
such other means as the Secretary determines 
are appropriate; and 
‘‘(L) integrated utility management and 
capital planning to maximize energy conserva-
tion and efficiency measures.’’; and 
(2) in subsection (e)(2)(C)—
(A) by striking ‘‘The’’ and inserting the 
following: 
‘‘(i) IN GENERAL.—The’’; and 
(B) by adding at the end the following: 
‘‘(ii) THIRD
PARTY
CONTRACTS.—
Contracts described in clause (i) may in-
clude contracts for equipment conversions 
to less costly utility sources, projects with 
resident-paid utilities, and adjustments to
frozen base year consumption, including 
systems repaired to meet applicable build-
ing and safety codes and adjustments for 
occupancy rates increased by rehabilita-
tion. 
‘‘(iii) TERM OF CONTRACT.—The total 
term of a contract described in clause (i) 
shall not exceed 20 years to allow longer 
payback periods for retrofits, including 
windows, heating system replacements, 
wall insulation, site-based generation, ad-
vanced energy savings technologies, includ-
ing renewable energy generation, and other 
such retrofits.’’. 
SEC. 402. GRANTS FOR ENERGY-CONSERVING IMPROVE-
MENTS FOR ASSISTED HOUSING. 
Section 251(b)(1) of the National Energy Conserva-
tion Policy Act (42 U.S.C. 8231(1)) is amended—
(1) by striking ‘‘financed with loans’’ and in-
serting ‘‘assisted’’; 
(2) by inserting after ‘‘1959,’’ the following: 
‘‘which are eligible multifamily housing projects (as 
such term is defined in section 512 of the Multi-
family Assisted Housing Reform and Affordability 
Act of 1997 (42 U.S.C. 1437f note)) and are subject
to mortgage restructuring and rental assistance suf-
ficiency plans under such Act,’’; and 
(3) by inserting after the period at the end of 
the first sentence the following new sentence: ‘‘Such 
improvements may also include the installation of 
energy and water conserving fixtures and fittings 
that conform to the American Society of Mechanical 
Engineers/American National Standards Institute 
standards A112.19.2–1998 and A112.18.1–2000, or 
any revision thereto, applicable at the time of instal-
lation.’’. 
SEC. 403. ENERGY-EFFICIENT APPLIANCES. 
In purchasing appliances, a public housing agency 
shall purchase energy-efficient appliances that are Energy 
Star products or FEMP-designated products, as such 
terms are defined in section 553 of the National Energy 
Conservation Policy Act (as amended by this title), unless 
the purchase of energy-efficient appliances is not cost-ef-
fective to the agency. 
SEC. 404. ENERGY EFFICIENCY STANDARDS. 
Section 109 of the Cranston-Gonzalez National Af-
fordable Housing Act (42 U.S.C. 12709) is amended—
(1) in subsection (a)—
(A) in paragraph (1)—
100
(i) by striking ‘‘1 year after the date 
of the enactment of the Energy Policy Act 
of 1992’’ and inserting ‘‘September 30, 
2004’’; 
(ii) in subparagraph (A), by striking 
‘‘and’’ at the end; 
(iii) in subparagraph (B), by striking 
the period at the end and inserting ‘‘; 
and’’; and 
(iv) by adding at the end the fol-
lowing: 
‘‘(C) rehabilitation and new construction of 
public and assisted housing funded by HOPE 
VI revitalization grants under section 24 of the 
United States Housing Act of 1937 (42 U.S.C. 
1437v), where such standards are determined 
to be cost effective by the Secretary of Housing 
and Urban Development.’’; and 
(B) in paragraph (2), by striking ‘‘Council 
of American’’ and all that follows through 
‘‘90.1–1989’)’’ and inserting ‘‘2003 Inter-
national Energy Conservation Code’’; 
(2) in subsection (b)—
(A) by striking ‘‘within 1 year after the 
date of the enactment of the Energy Policy Act
101
of 1992’’ and inserting ‘‘by September 30, 
2004’’; and 
(B) by striking ‘‘CABO’’ and all that fol-
lows through ‘‘1989’’ and inserting ‘‘the 2003 
International Energy Conservation Code’’; and 
(3) in subsection (c)—
(A) in the heading, by striking ‘‘MODEL 
ENERGY CODE’’ and inserting ‘‘THE INTER-
NATIONAL
ENERGY
CONSERVATION
CODE’’; 
and 
(B) by striking ‘‘CABO’’ and all that fol-
lows through ‘‘1989’’ and inserting ‘‘the 2003 
International Energy Conservation Code’’. 
TITLE V—RELIABILITY 
STANDARDS 
SEC. 501. ELECTRIC RELIABILITY STANDARDS. 
(a) IN GENERAL.—Part II of the Federal Power Act 
(16 U.S.C 824 et seq.) is amended by adding at the end 
the following: 
‘‘SEC. 215. ELECTRIC RELIABILITY. 
‘‘(a) DEFINITIONS.—For purposes of this section: 
‘‘(1) The term ‘bulk-power system’ means—
‘‘(A) facilities and control systems nec-
essary for operating an interconnected electric
102
energy transmission network (or any portion 
thereof); and 
‘‘(B) electric energy from generation facili-
ties needed to maintain transmission system re-
liability. 
The term does not include facilities used in the local 
distribution of electric energy. 
‘‘(2) The terms ‘Electric Reliability Organiza-
tion’ and ‘ERO’ mean the organization certified by 
the Commission under subsection (c) the purpose of 
which is to establish and enforce reliability stand-
ards for the bulk-power system, subject to Commis-
sion review. 
‘‘(3) The term ‘reliability standard’ means a re-
quirement, approved by the Commission under this 
section, to provide for reliable operation of the bulk-
power system. The term includes requirements for 
the operation of existing bulk-power system facilities 
and the design of planned additions or modifications 
to such facilities to the extent necessary to provide 
for reliable operation of the bulk-power system, but 
the term does not include any requirement to en-
large such facilities or to construct new transmission 
capacity or generation capacity.
103
‘‘(4) The term ‘reliable operation’ means oper-
ating the elements of the bulk-power system within 
equipment and electric system thermal, voltage, and 
stability limits so that instability, uncontrolled sepa-
ration, or cascading failures of such system will not 
occur as a result of a sudden disturbance or unan-
ticipated failure of system elements. 
‘‘(5) The term ‘Interconnection’ means a geo-
graphic area in which the operation of bulk-power 
system components is synchronized such that the 
failure of 1 or more of such components may ad-
versely affect the ability of the operators of other 
components within the system to maintain reliable 
operation of the facilities within their control. 
‘‘(6) The term ‘transmission organization’ 
means a Regional Transmission Organization, Inde-
pendent System Operator, independent transmission 
provider, or other transmission organization finally 
approved by the Commission for the operation of 
transmission facilities. 
‘‘(7) The term ‘regional entity’ means an entity 
having enforcement authority pursuant to subsection 
(e)(4). 
‘‘(b) JURISDICTION AND APPLICABILITY.—(1) The 
Commission shall have jurisdiction, within the United
104
States, over the ERO certified by the Commission under 
subsection (c), any regional entities, and all users, owners 
and operators of the bulk-power system, including but not 
limited to the entities described in section 201(f), for pur-
poses of approving reliability standards established under 
this section and enforcing compliance with this section. All 
users, owners and operators of the bulk-power system 
shall comply with reliability standards that take effect 
under this section. 
‘‘(2) The Commission shall issue a final rule to imple-
ment the requirements of this section not later than 180 
days after the date of enactment of this section. 
‘‘(c) CERTIFICATION.—Following the issuance of a 
Commission rule under subsection (b)(2), any person may 
submit an application to the Commission for certification 
as the Electric Reliability Organization. The Commission 
may certify 1 such ERO if the Commission determines 
that such ERO—
‘‘(1) has the ability to develop and enforce, sub-
ject to subsection (e)(2), reliability standards that 
provide for an adequate level of reliability of the 
bulk-power system; and 
‘‘(2) has established rules that—
‘‘(A) assure its independence of the users 
and owners and operators of the bulk-power
105
system, while assuring fair stakeholder rep-
resentation in the selection of its directors and 
balanced decisionmaking in any ERO com-
mittee or subordinate organizational structure; 
‘‘(B) allocate equitably reasonable dues, 
fees, and other charges among end users for all 
activities under this section; 
‘‘(C) provide fair and impartial procedures 
for enforcement of reliability standards through 
the imposition of penalties in accordance with 
subsection (e) (including limitations on activi-
ties, functions, or operations, or other appro-
priate sanctions); 
‘‘(D) provide for reasonable notice and op-
portunity for public comment, due process, 
openness, and balance of interests in developing 
reliability standards and otherwise exercising its 
duties; and 
‘‘(E) provide for taking, after certification, 
appropriate steps to gain recognition in Canada 
and Mexico. 
‘‘(d) RELIABILITY STANDARDS.—(1) The Electric 
Reliability Organization shall file each reliability standard 
or modification to a reliability standard that it proposes
107
posed reliability standard or a modification to a reliability 
standard that the Commission disapproves in whole or in 
part. 
‘‘(5) The Commission, upon its own motion or upon 
complaint, may order the Electric Reliability Organization 
to submit to the Commission a proposed reliability stand-
ard or a modification to a reliability standard that ad-
dresses a specific matter if the Commission considers such 
a new or modified reliability standard appropriate to carry 
out this section. 
‘‘(6) The final rule adopted under subsection (b)(2) 
shall include fair processes for the identification and time-
ly resolution of any conflict between a reliability standard 
and any function, rule, order, tariff, rate schedule, or 
agreement accepted, approved, or ordered by the Commis-
sion applicable to a transmission organization. Such trans-
mission organization shall continue to comply with such 
function, rule, order, tariff, rate schedule or agreement ac-
cepted approved, or ordered by the Commission until—
‘‘(A) the Commission finds a conflict exists be-
tween a reliability standard and any such provision; 
‘‘(B) the Commission orders a change to such 
provision pursuant to section 206 of this part; and 
‘‘(C) the ordered change becomes effective 
under this part.
108
If the Commission determines that a reliability standard 
needs to be changed as a result of such a conflict, it shall 
order the ERO to develop and file with the Commission 
a modified reliability standard under paragraph (4) or (5) 
of this subsection. 
‘‘(e) ENFORCEMENT.—(1) The ERO may impose, 
subject to paragraph (2), a penalty on a user or owner 
or operator of the bulk-power system for a violation of a 
reliability standard approved by the Commission under 
subsection (d) if the ERO, after notice and an opportunity 
for a hearing—
‘‘(A) finds that the user or owner or operator 
has violated a reliability standard approved by the 
Commission under subsection (d); and 
‘‘(B) files notice and the record of the pro-
ceeding with the Commission. 
‘‘(2) A penalty imposed under paragraph (1) may 
take effect not earlier than the 31st day after the ERO 
files with the Commission notice of the penalty and the 
record of proceedings. Such penalty shall be subject to re-
view by the Commission, on its own motion or upon appli-
cation by the user, owner or operator that is the subject 
of the penalty filed within 30 days after the date such 
notice is filed with the Commission. Application to the 
Commission for review, or the initiation of review by the
109
Commission on its own motion, shall not operate as a stay 
of such penalty unless the Commission otherwise orders 
upon its own motion or upon application by the user, 
owner or operator that is the subject of such penalty. In 
any proceeding to review a penalty imposed under para-
graph (1), the Commission, after notice and opportunity 
for hearing (which hearing may consist solely of the record 
before the ERO and opportunity for the presentation of 
supporting reasons to affirm, modify, or set aside the pen-
alty), shall by order affirm, set aside, reinstate, or modify 
the penalty, and, if appropriate, remand to the ERO for 
further proceedings. The Commission shall implement ex-
pedited procedures for such hearings. 
‘‘(3) On its own motion or upon complaint, the Com-
mission may order compliance with a reliability standard 
and may impose a penalty against a user or owner or oper-
ator of the bulk-power system if the Commission finds, 
after notice and opportunity for a hearing, that the user 
or owner or operator of the bulk-power system has en-
gaged or is about to engage in any acts or practices that 
constitute or will constitute a violation of a reliability 
standard. 
‘‘(4) The Commission shall issue regulations author-
izing the ERO to enter into an agreement to delegate au-
thority to a regional entity for the purpose of proposing
110
reliability standards to the ERO and enforcing reliability 
standards under paragraph (1) if—
‘‘(A) the regional entity is governed by—
‘‘(i) an independent board; 
‘‘(ii) a balanced stakeholder board; or 
‘‘(iii) a combination independent and bal-
anced stakeholder board; 
‘‘(B) the regional entity otherwise satisfies the 
provisions of subsection (c)(1) and (2); and 
‘‘(C) the agreement promotes effective and effi-
cient administration of bulk-power system reliability. 
The Commission may modify such delegation. The ERO 
and the Commission shall rebuttably presume that a pro-
posal for delegation to a regional entity organized on an 
Interconnection-wide basis promotes effective and efficient 
administration of bulk-power system reliability and should 
be approved. Such regulation may provide that the Com-
mission may assign the ERO’s authority to enforce reli-
ability standards under paragraph (1) directly to a re-
gional entity consistent with the requirements of this para-
graph. 
‘‘(5) The Commission may take such action as is nec-
essary or appropriate against the ERO or a regional entity 
to ensure compliance with a reliability standard or any 
Commission order affecting the ERO or a regional entity.
111
‘‘(6) Any penalty imposed under this section shall 
bear a reasonable relation to the seriousness of the viola-
tion and shall take into consideration the efforts of such 
user, owner, or operator to remedy the violation in a time-
ly manner. 
‘‘(f) CHANGES IN ELECTRIC RELIABILITY ORGANIZA-
TION RULES.—The Electric Reliability Organization shall 
file with the Commission for approval any proposed rule 
or proposed rule change, accompanied by an explanation 
of its basis and purpose. The Commission, upon its own 
motion or complaint, may propose a change to the rules 
of the ERO. A proposed rule or proposed rule change shall 
take effect upon a finding by the Commission, after notice 
and opportunity for comment, that the change is just, rea-
sonable, not unduly discriminatory or preferential, is in 
the public interest, and satisfies the requirements of sub-
section (c). 
‘‘(g) RELIABILITY REPORTS.—The ERO shall con-
duct periodic assessments of the reliability and adequacy 
of the bulk-power system in North America. 
‘‘(h) COORDINATION WITH CANADA AND MEXICO.—
The President is urged to negotiate international agree-
ments with the governments of Canada and Mexico to pro-
vide for effective compliance with reliability standards and
112
the effectiveness of the ERO in the United States and 
Canada or Mexico. 
‘‘(i) SAVINGS PROVISIONS.—(1) The ERO shall have 
authority to develop and enforce compliance with reli-
ability standards for only the bulk-power system. 
‘‘(2) This section does not authorize the ERO or the 
Commission to order the construction of additional gen-
eration or transmission capacity or to set and enforce com-
pliance with standards for adequacy or safety of electric 
facilities or services. 
‘‘(3) Nothing in this section shall be construed to pre-
empt any authority of any State to take action to ensure 
the safety, adequacy, and reliability of electric service 
within that State, as long as such action is not incon-
sistent with any reliability standard. 
‘‘(4) Within 90 days of the application of the Electric 
Reliability Organization or other affected party, and after 
notice and opportunity for comment, the Commission shall 
issue a final order determining whether a State action is 
inconsistent with a reliability standard, taking into consid-
eration any recommendation of the ERO. 
‘‘(5) The Commission, after consultation with the 
ERO and the State taking action, may stay the effective-
ness of any State action, pending the Commission’s 
issuance of a final order.
113
‘‘(j) REGIONAL ADVISORY BODIES.—The Commis-
sion shall establish a regional advisory body on the petition 
of at least 2⁄3 of the States within a region that have more 
than 1⁄2 of their electric load served within the region. A 
regional advisory body shall be composed of 1 member 
from each participating State in the region, appointed by 
the Governor of each State, and may include representa-
tives of agencies, States, and provinces outside the United 
States. A regional advisory body may provide advice to the 
Electric Reliability Organization, a regional entity, or the 
Commission regarding the governance of an existing or 
proposed regional entity within the same region, whether 
a standard proposed to apply within the region is just, 
reasonable, not unduly discriminatory or preferential, and 
in the public interest, whether fees proposed to be assessed 
within the region are just, reasonable, not unduly discrimi-
natory or preferential, and in the public interest and any 
other responsibilities requested by the Commission. The 
Commission may give deference to the advice of any such 
regional advisory body if that body is organized on an 
Interconnection-wide basis. 
‘‘(k) ALASKA AND HAWAII.—The provisions of this 
section do not apply to Alaska or Hawaii.’’. 
(b) STATUS OF ERO.—The Electric Reliability Orga-
nization certified by the Federal Energy Regulatory Com-