129 
plied toward the purchase or qualifying lease of 
a single new fuel efficient automobile. 
(D) CAP
ON
FUNDS
FOR
CATEGORY
TRUCKS.—Not more than 7.5 percent of the total 
funds made available for the Program shall be 
used for vouchers for the purchase or qualifying 
lease of category 3 trucks. 
(E) COMBINATION WITH OTHER INCENTIVES 
PERMITTED.—The availability or use of a Fed-
eral, State, or local incentive or a State-issued 
voucher for the purchase or lease of a new fuel 
efficient automobile shall not limit the value or 
issuance of a voucher under the Program to any 
person otherwise eligible to receive such a vouch-
er. 
(F) NO ADDITIONAL FEES.—A dealer par-
ticipating in the program may not charge a per-
son purchasing or leasing a new fuel efficient 
automobile any additional fees associated with 
the use of a voucher under the Program. 
(G) NUMBER
AND
AMOUNT.—The total 
number and value of vouchers issued under the 
Program may not exceed the amounts appro-
priated for such purpose. 
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130 
(2) DISPOSITION OF ELIGIBLE TRADE-IN VEHI-
CLES.— 
(A) IN GENERAL.—For each eligible trade- 
in vehicle, the title of which is transferred to a 
dealer under the Program, the dealer shall certify 
to the Secretary, in such manner as the Sec-
retary shall prescribe by rule, that the vehicle, 
including the engine and drive train— 
(i) will be crushed or shredded within 
such period and in such manner as the Sec-
retary prescribes, or will be transferred to 
an entity that will ensure that the vehicle 
will be crushed or shredded within such pe-
riod and in such manner as the Secretary 
prescribes; and 
(ii) has not been, and will not be, sold, 
leased, exchanged, or otherwise disposed of 
for use as an automobile in the United 
States or in any other country, or has been 
or will be transferred, in such manner as 
the Secretary prescribes, to an entity that 
will ensure that the vehicle has not been, 
and will not be, sold, leased, exchanged, or 
otherwise disposed of for use as an auto-
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131 
mobile in the United States or in any other 
country. 
(B) SAVINGS PROVISION.—Nothing in sub-
paragraph (A) may be construed to preclude a 
person who dismantles or disposes of the vehicle 
from— 
(i) selling any parts of the disposed ve-
hicle other than the engine block and drive 
train (unless the engine or drive train has 
been crushed or shredded); or 
(ii) retaining the proceeds from such 
sale. 
(C) COORDINATION.—The Secretary shall 
coordinate with the Attorney General to ensure 
that the National Motor Vehicle Title Informa-
tion System and other publicly accessible and 
commercially available systems are appro-
priately updated to reflect the crushing or shred-
ding of vehicles under this section and appro-
priate re-classification of the vehicles’ titles. 
(3) ELIGIBLE PURCHASES OR LEASES PRIOR TO 
DATE OF ENACTMENT.—A person who purchased or 
leased a new fuel efficient vehicle after March 30, 
2009, and before the date of enactment of this section 
is eligible for a cash rebate equivalent to the amount 
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132 
described in subsection (b)(1) if the person provides 
proof satisfactory to the Secretary that— 
(A) the person was the registered owner of 
an eligible trade-in vehicle; and 
(B) such vehicle has been disposed of in ac-
cordance with clauses (i) and (ii) of paragraph 
(2)(A). 
(d) REGULATIONS.—Notwithstanding the requirements 
of section 553 of title 5, United States Code, the Secretary 
shall promulgate final regulations to implement the Pro-
gram not later than 30 days after the date of the enactment 
of this section. Such regulations shall— 
(1) provide for a means of certifying dealers for 
participation in the program; 
(2) establish procedures for the reimbursement of 
dealers participating in the Program to be made 
through electronic transfer of funds for both the 
amount of the vouchers and any reasonable adminis-
trative costs incurred by the dealer as soon as prac-
ticable but no longer than 10 days after the submis-
sion of a voucher for the new fuel efficient automobile 
to the Secretary; 
(3) prohibit a dealer from using the voucher to 
offset any other rebate or discount offered by that 
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133 
dealer or the manufacturer of the new fuel efficient 
automobile; 
(4) require dealers to disclose to the person trad-
ing in an eligible trade in vehicle the best estimate of 
the scrappage value of such vehicle and to permit the 
dealer to retain $50 of any amounts paid to the deal-
er for scrappage of the automobile as payment for 
any administrative costs to the dealer associated with 
participation in the Program; 
(5) establish a process by which persons who 
qualify for a rebate under subsection (c)(3) may 
apply for such rebate; 
(6) consistent with subsection (c)(2), establish re-
quirements and procedures for the disposal of eligible 
trade-in vehicles and provide such information as 
may be necessary to entities engaged in such disposal 
to ensure that such vehicles are disposed of in accord-
ance with such requirements and procedures, includ-
ing— 
(A) requirements for the removal and ap-
propriate disposition of refrigerants, antifreeze, 
lead products, mercury switches, and such other 
toxic or hazardous vehicle components prior to 
the crushing or shredding of an eligible trade-in 
vehicle, in accordance with rules established by 
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134 
the Secretary in consultation with the Adminis-
trator, and in accordance with other applicable 
Federal or State requirements; and 
(B) a mechanism for dealers to certify to 
the Secretary that eligible trade-in vehicles are 
disposed of, or transferred to an entity that will 
ensure that the vehicle is disposed of, in accord-
ance with such requirements and procedures and 
to submit the vehicle identification numbers of 
the vehicles disposed of and the new fuel efficient 
automobile purchased with each voucher; 
(7) consistent with subsection (c)(2), establish re-
quirements and procedures for the disposal of eligible 
trade-in vehicles and provide such information as 
may be necessary to entities engaged in such disposal 
to ensure that such vehicles are disposed of in accord-
ance with such requirements and procedures; and 
(8) provide for the enforcement of the penalties 
described in subsection (e). 
(e) ANTI-FRAUD PROVISIONS.— 
(1) VIOLATION.—It shall be unlawful for any 
person to violate any provision under this section or 
any regulations issued pursuant to subsection (d). 
(2) PENALTIES.—Any person who commits a 
violation described in paragraph (1) shall be liable to 
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135 
the United States Government for a civil penalty of 
not more than $25,000 for each violation. 
(f) INFORMATION TO CONSUMERS AND DEALERS.—Not 
later than 30 days after the date of enactment of this sec-
tion, and promptly upon the update of any relevant infor-
mation, the Secretary shall make available on an Internet 
website and through other means determined by the Sec-
retary information about the Program, including— 
(1) how to determine if a vehicle is an eligible 
trade-in vehicle; 
(2) how to participate in the Program, including 
how to determine participating dealers; and 
(3) a comprehensive list, by make and model, of 
new fuel efficient automobiles meeting the require-
ments of the Program. 
Once such information is available, the Secretary shall con-
duct a public awareness campaign to inform consumers 
about the Program and where to obtain additional informa-
tion. 
(g) RECORDKEEPING AND REPORT.— 
(1) DATABASE.—The Secretary shall maintain a 
database of the vehicle identification numbers of all 
new fuel efficient vehicles purchased or leased and all 
eligible trade-in vehicles disposed of under the Pro-
gram. 
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136 
(2) REPORT.—Not later than June 30, 2010, the 
Secretary shall submit a report to the Committee on 
Energy and Commerce of the House of Representa-
tives and the Committee on Commerce, Science, and 
Transportation of the Senate describing the efficacy of 
the Program, including— 
(A) a description of program results, in-
cluding— 
(i) the total number and amount of 
vouchers issued for purchase or lease of new 
fuel efficient automobiles by manufacturer 
(including 
aggregate 
information 
con-
cerning the make, model, model year) and 
category of automobile; 
(ii) aggregate information regarding 
the make, model, model year, and manufac-
turing location of vehicles traded in under 
the Program; and 
(iii) the location of sale or lease; 
(B) an estimate of the overall increase in 
fuel efficiency in terms of miles per gallon, total 
annual oil savings, and total annual greenhouse 
gas reductions, as a result of the Program; and 
(C) an estimate of the overall economic and 
employment effects of the Program. 
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137 
(h) DEFINITIONS.—As used in this section— 
(1) the term ‘‘passenger automobile’’ means a 
passenger 
automobile, 
as 
defined 
in 
section 
32901(a)(18) of title 49, United States Code, that has 
a combined fuel economy value of at least 22 miles 
per gallon; 
(2) the term ‘‘category 1 truck’’ means a nonpas-
senger automobile, as defined in section 32901(a)(17) 
of title 49, United States Code, that has a combined 
fuel economy value of at least 18 miles per gallon, ex-
cept that such term does not include a category 2 
truck; 
(3) the term ‘‘category 2 truck’’ means a large 
van or a large pickup, as categorized by the Secretary 
using the method used by the Environmental Protec-
tion Agency and described in the report entitled 
‘‘Light-Duty Automotive Technology and Fuel Econ-
omy Trends: 1975 through 2008’’; 
(4) the term ‘‘category 3 truck’’ means a work 
truck, as defined in section 32901(a)(19) of title 49, 
United States Code; 
(5) the term ‘‘combined fuel economy value’’ 
means— 
(A) with respect to a new fuel efficient auto-
mobile, the number, expressed in miles per gal-
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138 
lon, centered below the words ‘‘Combined Fuel 
Economy’’ on the label required to be affixed or 
caused to be affixed on a new automobile pursu-
ant to subpart D of part 600 of title 40 Code of 
Federal Regulations; 
(B) with respect to an eligible trade-in vehi-
cle, the equivalent of the number described in 
subparagraph (A), and posted under the words 
‘‘Estimated New EPA MPG’’ and above the word 
‘‘Combined’’ for vehicles of model year 1984 
through 2007, or posted under the words ‘‘New 
EPA MPG’’ and above the word ‘‘Combined’’ for 
vehicles of model year 2008 or later on the 
fueleconomy.gov website of the Environmental 
Protection Agency for the make, model, and year 
of such vehicle; or 
(C) with respect to an eligible trade-in vehi-
cle manufactured between model years 1978 
through 1984, the equivalent of the number de-
scribed in subparagraph (A) as determined by 
the Secretary (and posted on the website of the 
National Highway Traffic Safety Administra-
tion) using data maintained by the Environ-
mental Protection Agency for the make, model, 
and year of such vehicle; 
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139 
(6) the term ‘‘dealer’’ means a person licensed by 
a State who engages in the sale of new automobiles 
to ultimate purchasers; 
(7) the term ‘‘eligible trade-in vehicle’’ means an 
automobile or a work truck (as such terms are defined 
in section 32901(a) of title 49, United States Code) 
that, at the time it is presented for trade-in under 
this section— 
(A) is in drivable condition; 
(B) has been continuously insured con-
sistent with the applicable State law and reg-
istered to the same owner for a period of not less 
than 1 year immediately prior to such trade-in; 
and 
(C) has a combined fuel economy value of 
18 miles per gallon or less; 
(8) the term ‘‘new fuel efficient automobile’’ 
means an automobile described in paragraph (1), (2), 
(3), or (4)— 
(A) the equitable or legal title of which has 
not been transferred to any person other than the 
ultimate purchaser; 
(B) that carries a manufacturer’s suggested 
retail price of $45,000 or less; 
(C) that— 
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140 
(i) for new fuel efficient automobiles 
weighing up to 8,500 pounds, is certified to 
applicable standards under section 86.1811- 
04 of title 40, Code of Federal Regulations; 
or 
(ii) for category 3 trucks, is certified to 
the applicable vehicle or engine standards 
under section 86.1816-08, 86-007-11, or 
86.008-10 of title 40, Code of Federal Regu-
lations; and 
(D) that has the combined fuel economy 
value of— 
(i) 22 miles per gallon for a passenger 
automobile; 
(ii) 18 miles per gallon for a category 
1 truck; and 
(iii) 15 miles per gallon for a category 
2 truck; 
(9) the term ‘‘Program’’ means the Cash for 
Clunkers Temporary Vehicle Trade-in Program estab-
lished by this section; 
(10) the term ‘‘qualifying lease’’ means a lease of 
an automobile for a period of not less than 5 years; 
(11) the term ‘‘scrappage value’’ means the 
amount received by the dealer for a vehicle upon 
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141 
transferring title of such vehicle to the person respon-
sible for ensuring the dismantling and destroying the 
vehicle; 
(12) the term ‘‘Secretary’’ means the Secretary of 
Transportation acting through the National Highway 
Traffic Safety Administration; 
(13) the term ‘‘ultimate purchaser’’ means, with 
respect to any new automobile, the first person who 
in good faith purchases such automobile for purposes 
other than resale; and 
(14) the term ‘‘vehicle identification number’’ 
means the 17 character number used by the auto-
mobile industry to identify individual automobiles. 
(i) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized 
to 
be 
appropriated 
to 
the 
Secretary 
$4,000,000,000 to carry out this section. 
SEC. 129. DIESEL EMISSIONS REDUCTION. 
Subtitle G of title VII of the Energy Policy Act of 2005 
(42 U.S.C. 16131 et seq.) is amended— 
(1) in the matter preceding clause (i) in section 
791(3)(B), by inserting ‘‘in any State’’ after ‘‘non-
profit organization or institution’’; 
(2) in section 791(9), by striking ‘‘The term 
‘State’ includes the District of Columbia.’’ and insert-
ing ‘‘The term ‘State’ includes the District of Colum-
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bia, American Samoa, Guam, the Commonwealth of 
the Northern Mariana Islands, Puerto Rico, and the 
Virgin Islands.’’; and 
(3) in section 793(c)— 
(A) in paragraph (2)(A), by striking ‘‘51 
States’’ and inserting ‘‘56 States’’; 
(B) in paragraph (2)(A), by striking ‘‘1.96 
percent’’ and inserting ‘‘1.785 percent’’; 
(C) in paragraph (2)(B), by striking ‘‘51 
States’’ and inserting ‘‘56 States’’; and 
(D) in paragraph (2)(B), by amending 
clause (ii) to read as follows: 
‘‘(ii) the amount of funds remaining 
after each State described in paragraph (1) 
receives the 1.785-percent allocation under 
this paragraph.’’. 
SEC. 130. LOAN GUARANTEES FOR PROJECTS TO CON-
STRUCT RENEWABLE FUEL PIPELINES. 
(a) DEFINITIONS.—Section 1701 of the Energy Policy 
Act of 2005 (42 U.S.C. 16511) is amended by adding at 
the end the following: 
‘‘(6) RENEWABLE FUEL.—The term ‘renewable 
fuel’ has the meaning given the term in section 
211(o)(1) of the Clean Air Act (42 U.S.C. 7545(o)(1)), 
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except that the term shall include all ethanol and bio-
diesel. 
‘‘(7) RENEWABLE
FUEL
PIPELINE.—The term 
‘renewable fuel pipeline’ means a common carrier 
pipeline for transporting renewable fuel.’’. 
(b) RENEWABLE FUEL PIPELINE ELIGIBILITY.—Sec-
tion 1703(b) the Energy Policy Act of 2005 (42 U.S.C. 
16513) is amended by adding at the end the following: 
‘‘(11) Renewable fuel pipelines.’’. 
Subtitle D—State Energy and 
Environment Development Accounts 
SEC. 131. ESTABLISHMENT OF SEED ACCOUNTS. 
(a) DEFINITIONS.—In this section: 
(1) SEED ACCOUNT.—The term ‘‘SEED Ac-
count’’ means a State Energy and Environment De-
velopment Account established pursuant to this sec-
tion. 
(2) STATE ENERGY OFFICE.—The term ‘‘State 
Energy Office’’ means a State entity eligible for 
grants under part D of title III of the Energy Policy 
and Conservation Act (42 U.S.C. 6321 et seq.). 
(b) ESTABLISHMENT
OF PROGRAM.—The Adminis-
trator shall establish a program under which a State, 
through its State Energy Office or other State agency des-
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144 
ignated by the State, may operate a State Energy and En-
vironment Development Account. 
(c) PURPOSE.—The purpose of each SEED Account is 
to serve as a common State-level repository for managing 
and accounting for emission allowances provided to States 
designated for renewable energy and energy efficiency pur-
poses. 
(d) REGULATIONS.—Not later than one year after the 
date of enactment of this Act, the Administrator shall pro-
mulgate regulations to carry out this section, including reg-
ulations— 
(1) to ensure that each State operates its SEED 
Account and any subaccounts thereof efficiently and 
in accordance with this Act and applicable State and 
Federal laws; 
(2) to prevent waste, fraud, and abuse; 
(3) to indicate the emission allowances that may 
be deposited in a State’s SEED Account pending dis-
tribution or use; 
(4) to indicate the programs and objectives au-
thorized by Federal law for which emission allow-
ances in a SEED Account may be distributed or 
used; 
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(5) to identify the forms of financial assistance 
and incentives that States may provide through dis-
tribution or use of SEED Accounts; and 
(6) to prescribe the form and content of reports 
that the States are required to submit under this sec-
tion on the use of SEED Accounts. 
(e) OPERATION.— 
(1) DEPOSITS.— 
(A) IN GENERAL.—In the allowance track-
ing system established pursuant to section 724(d) 
of the Clean Air Act, the Administrator shall es-
tablish a SEED Account for each State and 
place in it the allowances allocated pursuant to 
section 782(g) of the Clean Air Act to be distrib-
uted to States pursuant to sections 132 and 201 
of this Act. 
(B) FINANCIAL
ACCOUNT.—A State may 
create a financial account associated with its 
SEED Account to deposit, retain, and manage 
any proceeds of any sale of any allowance pro-
vided pursuant to this Act pending expenditure 
or disbursement of those proceeds for purposes 
permitted under this section. The funds in such 
an account shall not be commingled with other 
funds not derived from the sale of allowances 
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146 
provided to the State; however, loans made by 
the State from such funds pursuant to para-
graph (2)(C)(i) may be repaid into such a finan-
cial account, including any interest charged. 
(2) WITHDRAWALS.— 
(A) IN GENERAL.—All allowances distrib-
uted pursuant to sections 132 and 201, including 
the proceeds of any sale of such allowances, shall 
support renewable energy and energy efficiency 
programs authorized or approved by the Federal 
Government. 
(B) DEDICATED ALLOWANCES.—Allowances 
distributed pursuant to sections 132 and 201 
that are required by law to be used for specific 
purposes for a specified period shall be used ac-
cording to those requirements during that period. 
(C) UNDEDICATED
ALLOWANCES.—To the 
extent that allowances distributed pursuant to 
sections 132 and 201 are not required by law to 
be used for specific purposes for a specified pe-
riod as described in subparagraph (B), such al-
lowances or the proceeds of their sale may be 
used for any of the following purposes: 
(i) LOANS.—Loans of allowances, or 
the proceeds from the sale of allowances, 
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148 
thorizing or allocating allowances deposited 
in a SEED Account, not more than 5 per-
cent of the allowance value in a SEED Ac-
count in any year may be used to cover ad-
ministrative expenses of the SEED Account. 
(D) SUBACCOUNTS.—A State may request 
that the Administrator establish accounts for 
local governments that request such subaccounts 
to hold allowances distributed to local govern-
ments for renewable energy or energy efficiency 
programs authorized or approved by the Federal 
Government. 
(E) INTENDED USE PLANS.— 
(i) IN GENERAL.—After providing for 
public review and comment, each State ad-
ministering a SEED Account shall annu-
ally prepare a plan that identifies the in-
tended uses of the allowances or proceeds 
from the sale of allowances in its SEED Ac-
count. 
(ii) CONTENTS.—An intended use plan 
shall include— 
(I) a list of the projects or pro-
grams for which withdrawals from the 
SEED Account are intended in the 
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149 
next fiscal year that begins after the 
date of the plan, including a descrip-
tion of each project; 
(II) the relationship of each of the 
projects or programs to an identified 
Federal purpose authorized by this Act, 
or any other Federal statute; 
(III) the expected terms of use of 
allowance value to provide assistance; 
(IV) the criteria and methods es-
tablished for the distribution of allow-
ances or allowance value; 
(V) a description of the equivalent 
financial value and status of the 
SEED Account; and 
(VI) a statement of the mid-term 
and long-term goals of the State for use 
of its SEED Account. 
(3) ACCOUNTABILITY AND TRANSPARENCY.— 
(A) CONTROLS
AND
PROCEDURES.—Any 
State that has a SEED Account shall establish 
fiscal controls and recordkeeping and accounting 
procedures for the SEED Account sufficient to 
ensure proper accounting during appropriate ac-
counting periods for distributions into the 
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SEED Account, transfers from the SEED Ac-
count, and SEED Account balances, including 
any related financial accounts. Such controls 
and procedures shall conform to generally accept-
ed government accounting principles. Any State 
that has a SEED Account shall retain records 
for a period of at least 5 years. 
(B) AUDITS.—Any State that has a SEED 
Account shall have an annual audit conducted of 
the SEED Account by an independent public ac-
countant in accordance with generally accepted 
auditing standards, and shall transmit the re-
sults of that audit to the Administrator. 
(C) STATE
REPORT.—Each State admin-
istering a SEED Account shall make publicly 
available and submit to the Administrator a re-
port every 2 years on its activities related to its 
SEED Account. 
(D) PUBLIC INFORMATION.—Any— 
(i) controls and procedures established 
under subparagraph (A); and 
(ii) information obtained through au-
dits conducted under subparagraph (B), ex-
cept to the extent that it would be protected 
from disclosure, if it were information held 
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151 
by the Federal Government, under section 
552(b) of title 5, United States Code, 
shall be made publicly available. 
(E) OTHER PROTECTIONS.—The Adminis-
trator shall require such additional procedures 
and protections as are necessary to ensure that 
any State that has a SEED Account will operate 
the SEED Account in an accountable and trans-
parent manner. 
(f) REQUIREMENTS FOR ELIGIBILITY.—A State’s eligi-
bility to receive allowances in its SEED Account shall de-
pend on that State’s compliance with the requirements of 
this Act (and the amendments made by this Act). 
(g) AUTHORIZATION OF APPROPRIATIONS.—There are 
authorized to be appropriated to the Administrator such 
sums as may be necessary for SEED Account operations. 
SEC. 132. SUPPORT OF STATE RENEWABLE ENERGY AND 
ENERGY EFFICIENCY PROGRAMS. 
(a) DEFINITIONS.—For purposes of this section: 
(1) COST-EFFECTIVE.—The term ‘‘cost-effective’’, 
with respect to an energy efficiency program, means 
that the program meets the Total Resource Cost Test, 
which requires that the net present value of economic 
benefits over the life of the program or measure, in-
cluding avoided supply and delivery costs and de-
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ferred or avoided investments, is greater than the net 
present value of the economic costs over the life of the 
program, including program costs and incremental 
costs borne by the energy consumer. 
(2) RENEWABLE ENERGY RESOURCE.—The term 
‘‘renewable energy resource’’ shall have the meaning 
given that term in section 610 of the Public Utility 
Regulatory Policies Act of 1978 (as added by section 
101 of this Act). 
(b) DISTRIBUTION AMONG STATES.—For each vintage 
year from 2012 through 2050, the Administrator shall, in 
accordance with this section, distribute emission allowances 
allocated pursuant to section 782(g)(1) of the Clean Air Act 
not later than September 30 of the year preceding the vin-
tage year. The Administrator shall distribute the emission 
allowances to States for renewable energy and energy effi-
ciency programs to be deposited in and administered 
through the State Energy and Environment Development 
(SEED) Accounts established pursuant to section 131. The 
Administrator shall distribute allowances among the States 
under this section each year in accordance with the fol-
lowing formula: 
(1) One third of the allowances shall be divided 
equally among the States. 
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(2) One third of the allowances shall be distrib-
uted ratably among the States based on the popu-
lation of each State, as contained in the most recent 
reliable census data available from the Bureau of the 
Census, Department of Commerce, for all States at 
the time the Administrator calculates the formula for 
distribution. 
(3) One third of the allowances for shall be dis-
tributed ratably among the States on the basis of the 
energy consumption of each State as contained in the 
most recent State Energy Data Report available from 
the Energy Information Administration (or such al-
ternative reliable source as the Administrator may 
designate). 
(c) USES.—The allowances distributed to each State 
pursuant to this section shall be used exclusively for the 
purposes listed in this subsection, as set forth below: 
(1) Not less than 12.5 percent shall be distributed 
by the State to units of local government within such 
State to be used exclusively to support the energy effi-
ciency and renewable energy purposes listed in para-
graphs (2), (3), and (4). 
(2) Not less than 15 percent shall be used exclu-
sively for the following energy efficiency purposes: 
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(A) Implementation and enforcement of 
building codes adopted in compliance with sec-
tion 201. 
(B) Implementation of the energy efficient 
manufactured homes program established pursu-
ant to section 203. 
(C) Implementation of the building energy 
performance labeling program established pursu-
ant to section 204. 
(D) Enabling the development of a Smart 
Grid (as described in section 1301 of the Energy 
Independence and Security Act of 2007 (42 
U.S.C. 17381)) for State, local government, and 
other public buildings and facilities, including 
integration of renewable energy resources and 
distributed generation, demand response, de-
mand side management, and systems analysis. 
(E) Transportation planning pursuant to 
section 841 of the Clean Air Act. 
(F) Low-income community energy effi-
ciency programs that are consistent with the 
grant program established under section 264 of 
this Act. 
(G) Other cost-effective energy efficiency 
programs for end-use consumers of electricity, 
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155 
natural gas, home heating oil, or propane, in-
cluding, where appropriate, programs or mecha-
nisms administered by local governments and 
entities other than the State. 
(3) Not less than 5 percent shall be used exclu-
sively for implementation of the Retrofit for Energy 
and Environmental Performance (REEP) program 
established pursuant to section 202. 
(4) Not less than 20 percent shall be used exclu-
sively for capital grants, tax credits, production in-
centives, loans, loan guarantees, forgivable loans, and 
interest rate buy-downs for— 
(A) re-equipping, expanding, or establishing 
a manufacturing facility that receives certifi-
cation from the Secretary of Energy pursuant to 
section 1302 of the American Recovery and Re-
investment Act of 2009 for the production of— 
(i) property designed to be used to 
produce energy from renewable energy 
sources; and 
(ii) electricity storage systems; 
(B) deployment of technologies to generate 
electricity from renewable energy sources; and 
(C) deployment of facilities or equipment, 
such as solar panels, to generate electricity or 
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thermal energy from renewable energy resources 
in and on buildings in an urban environment. 
(5) The remaining 47.5 percent shall be used ex-
clusively for any of the purposes described in sub-
paragraphs (A) through (F) of paragraph (2) and in 
paragraphs (3) and (4), provided that each State re-
ceiving emission allowances under this section shall 
use not less than 1 percent of such allowances for the 
purpose described in paragraph (2)(F). 
(d) REPORTING.—Each State receiving emission al-
lowances under this section shall include in its biennial re-
ports required under section 131, in accordance with such 
requirements as the Administrator may prescribe— 
(1) a list of entities receiving allowances or al-
lowance value under this section; 
(2) the amount and nature of allowances or al-
lowance value received by each recipient; 
(3) the specific purposes for which such allow-
ances or allowance value was conveyed; 
(4) the amount of energy savings, emission re-
ductions, renewable energy deployment, or new or re-
tooled manufacturing capacity resulting from such al-
lowances or allowance value; and 
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(5) an assessment of the cost-effectiveness of any 
energy efficiency program supported under subsection 
(c)(2)(F). 
(e) ENFORCEMENT.—If the Administrator determines 
that a State is not in compliance with this section, the Ad-
ministrator may withhold up to twice the number of allow-
ances that the State failed to use in accordance with the 
requirements of this section, that such State would otherwise 
be eligible to receive under this section in later years. Allow-
ances withheld pursuant to this subsection shall be distrib-
uted among the remaining States in accordance with the 
requirements of subsection (b). 
Subtitle E—Smart Grid 
Advancement 
SEC. 141. DEFINITIONS. 
For purposes of this subtitle: 
(1) The term ‘‘applicable baseline’’ means the av-
erage of the highest three annual peak demands a 
load-serving entity has experienced during the 5 years 
immediately prior to the date of enactment of this 
Act. 
(2) The term ‘‘Commission’’ means Federal En-
ergy Regulatory Commission. 
(3) The term ‘‘load-serving entity’’ means an en-
tity that provides electricity directly to retail con-
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sumers with the responsibility to assure power quality 
and reliability, including such entities that are inves-
tor-owned, publicly owned, owned by rural electric co-
operatives, or other entities. 
(4) The term ‘‘peak demand’’ means the highest 
point of electricity demand, net of any distributed 
electricity generation or storage from sources on the 
load-serving entity’s customers’ premises, during any 
hour on the system of a load serving entity during a 
calendar year, expressed in Megawatts (MW), or more 
than one such high point as a function of seasonal de-
mand changes. 
(5) The term ‘‘peak demand reduction’’ means 
the reduction in annual peak demand as compared to 
a previous baseline year or period, expressed in 
Megawatts (MW), whether accomplished by dimin-
ishing the end-use requirements for electricity or by 
use of locally stored or generated electricity to meet 
those requirements from distributed resources on the 
load-serving entity’s customers’ premises and without 
use of high-voltage transmission. 
(6) The term ‘‘peak demand reduction plan’’ 
means a plan developed by or for a load-serving enti-
ty that it will implement to meet its peak demand re-
duction goals. 
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(7) The term ‘‘peak period’’ means the time pe-
riod on the system of a load-serving entity relative to 
peak demand that may warrant special measures or 
electricity resources to maintain system reliability 
while meeting peak demand. 
(8) The term ‘‘Secretary’’ means the Secretary of 
Energy. 
(9) The term ‘‘Smart Grid’’ has the meaning 
provided by section 1301 of the Energy Independence 
and Security Act of 2007 (15 U.S.C. 17381). 
SEC. 142. ASSESSMENT OF SMART GRID COST EFFECTIVE-
NESS IN PRODUCTS. 
(a) ASSESSMENT.—Within one year after the date of 
enactment of this Act, the Secretary and the Administrator 
shall each assess the potential for cost-effective integration 
of Smart Grid technologies and capabilities in all products 
that are reviewed by the Department of Energy and the En-
vironmental Protection Agency, respectively, for potential 
designation as Energy Star products. 
(b) ANALYSIS.—(1) Within 2 years after the date of 
enactment of this Act, the Secretary and the Administrator 
shall each prepare an analysis of the potential energy sav-
ings, greenhouse gas emission reductions, and electricity 
cost savings that could accrue for each of the products iden-
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tified by the assessment in subsection (a) in the following 
optimal circumstances: 
(A) The products possessed Smart Grid capa-
bility and interoperability that is tested and proven 
reliable. 
(B) The products were utilized in an electricity 
utility service area which had Smart Grid capability 
and offered customers rate or program incentives to 
use the products. 
(C) The utility’s rates reflected national average 
costs, including average peak and valley seasonal and 
daily electricity costs. 
(D) Consumers using such products took full ad-
vantage of such capability. 
(E) The utility avoided incremental investments 
and rate increases related to such savings. 
(2) The analysis under paragraph (1) shall be consid-
ered the ‘‘best case’’ Smart Grid analysis. On the basis of 
such an analysis for each product, the Secretary and the 
Administrator shall determine whether the installation of 
Smart Grid capability for such a product would be cost 
effective. For purposes of this paragraph, the term ‘‘cost ef-
fective’’ means that the cumulative savings from using the 
product under the best case Smart Grid circumstances for 
a period of one-half of the product’s expected useful life will 
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be greater than the incremental cost of the Smart Grid fea-
tures included in the product. 
(3) To the extent that including Smart Grid capability 
in any products analyzed under paragraph (2) is found to 
be cost effective in the best case, the Secretary and the Ad-
ministrator shall, not later than 3 years after the date of 
enactment of this Act take each of the following actions: 
(A) Inform the manufacturer of such product of 
such finding of cost effectiveness. 
(B) Assess the potential contributions the devel-
opment and use of products with Smart Grid tech-
nologies bring to reducing peak demand and pro-
moting grid stability. 
(C) Assess the potential national energy savings 
and electricity cost savings that could be realized if 
Smart Grid potential were installed in the relevant 
products reviewed by the Energy Star program. 
(D) Assess and identify options for providing 
consumers information on products with Smart Grid 
capabilities, including the necessary conditions for 
cost-effective savings. 
(E) Submit a report to Congress summarizing 
the results of the assessment for each class of products, 
and presenting the potential energy and greenhouse 
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gas savings that could result if Smart Grid capability 
were installed and utilized on such products. 
SEC. 143. INCLUSIONS OF SMART GRID CAPABILITY ON AP-
PLIANCE ENERGY GUIDE LABELS. 
Section 324(a)(2) of the Energy Policy and Conserva-
tion Act (42 U.S.C. 6294(a)(2)) is amended by adding the 
following at the end: 
‘‘(J)(i) Not later than 3 years after the date 
of enactment of this subparagraph, the Federal 
Trade Commission shall initiate a rulemaking to 
consider making a special note in a prominent 
manner on any ENERGY GUIDE label for any 
product actually including Smart Grid capa-
bility that— 
‘‘(I) Smart Grid capability is a feature 
of that product; 
‘‘(II) the use and value of that feature 
depended on the Smart Grid capability of 
the utility system in which the product was 
installed and the active utilization of that 
feature by the customer; and 
‘‘(III) on a utility system with Smart 
Grid capability, the use of the product’s 
Smart Grid capability could reduce the cus-
tomer’s cost of the product’s annual oper-
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ation by an estimated dollar amount range 
representing the result of incremental en-
ergy and electricity cost savings that would 
result from the customer taking full advan-
tage of such Smart Grid capability. 
‘‘(ii) Not later than 3 years after the date 
of enactment of this subparagraph, the Commis-
sion shall complete the rulemaking initiated 
under clause (i).’’. 
SEC. 144. SMART GRID PEAK DEMAND REDUCTION GOALS. 
(a) GOALS.—Not later than one year after the date of 
enactment of this Act, load-serving entities, or, at their op-
tion, States with respect to load-serving entities that they 
regulate, shall determine and publish peak demand reduc-
tion goals for any load-serving entities that have an appli-
cable baseline in excess of 250 megawatts. 
(b) BASELINES.—(1) The Commission, in consultation 
with the Secretary and the Administrator, shall develop and 
publish, after an opportunity for public comment, a meth-
odology to provide for adjustments or normalization to a 
load-serving entity’s applicable baseline over time to reflect 
changes in the number of customers served, weather condi-
tions, general economic conditions, and any other appro-
priate factors external to peak demand management, as de-
termined by the Commission. 
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(2) The Commission shall support load-serving entities 
(including any load-serving entities with an applicable 
baseline of less than 250 megawatts that volunteer to par-
ticipate in achieving the purposes of this section) in deter-
mining their applicable baselines, and in developing their 
peak demand reduction goals. 
(3) The Secretary, in consultation with the Commis-
sion, the Administrator, and the North American Electric 
Reliability Corporation, shall develop a system and rules 
for measurement and verification of demand reductions. 
(c) PEAK DEMAND REDUCTION GOALS.—(1) Peak de-
mand reduction goals may be established for an individual 
load-serving entity, or, at the determination of a State or 
regional entity, by that State or regional entity for a larger 
region that shares a common system peak demand and for 
which peak demand reduction measures would offer re-
gional benefit. 
(2) A State or regional entity establishing peak de-
mand reduction goals shall cooperate, as necessary and ap-
propriate, with the Commission, the Secretary, State regu-
latory commissions, State energy offices, the North Amer-
ican Electric Reliability Corporation, and other relevant 
authorities. 
(3) In determining the applicable peak demand reduc-
tion goals, States and other jurisdictional entities may uti-
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