‘‘(1) a product 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 the product be-
fore the date on which the final rule is issued shall 
not be preempted until the standard established 
under subsection (u) or (v) for the product takes ef-
fect; and 
‘‘(2) a product for which standards are estab-
lished under subsections (w) through (ee) on the 
date of enactment of those subsections, except that 
any State or local standards prescribed or enacted 
before the date of enactment of those subsections 
shall not be preempted until the standards estab-
lished under subsections (w) through (ee) 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 at the end the 
following: 
‘‘(D) Notwithstanding any other provision of this Act, 
if the requirements of subsection (o) are met, the Sec-
retary may consider and prescribe energy efficiency or en-
ergy use standards for electricity used for purposes of cir-
culating air through duct work.’’. 
(e) GENERAL
RULE
OF
PREEMPTION.—Section 
327(c) of the Energy Policy and Conservation Act (42 
U.S.C. 6297(c)) is amended—
(1) in paragraph (5), by striking ‘‘or’’ at the 
end; 
(2) in paragraph (6), by striking the period at 
the end and inserting ‘‘; or’’; and 
(3) by adding at the end the following: 
‘‘(7) is a regulation concerning standards for 
commercial prerinse spray valves adopted by the 
California Energy Commission before January 1, 
2005, or is an amendment to such a regulation de-
veloped to align California regulations with changes 
in American Society for Testing and Materials Reg-
ulation F2324.’’. 
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)(i) Not later than 90 days after the date of en-
actment of this subparagraph, the Commission shall ini-
tiate a rulemaking to consider—
‘‘(I) the effectiveness of the consumer products 
labeling program in—
‘‘(aa) assisting consumers in making pur-
chasing decisions; and 
‘‘(bb) improving energy efficiency; and 
‘‘(II) changes to the labeling rules that would 
improve the effectiveness of consumer product labels. 
‘‘(ii) Not later than 2 years after the date of enact-
ment of this subparagraph, the Commission shall complete 
the rulemaking initiated under clause (i).’’. 
(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) After a test procedure has been prescribed 
under section 323, the Secretary or the Commission, as 
appropriate, may, for covered products referred to in sub-
sections (u) through (ee) of section 325, prescribe, by rule, 
under this section, labeling requirements for the products. 
‘‘(B) In the case of products to which TP–1 stand-
ards under section 325(y) apply, labeling requirements 
shall be based on the ‘Standard for the Labeling of Dis-
tribution Transformer Efficiency’ prescribed by the Na-
tional Electrical Manufacturers Association (NEMA TP–
3) as in effect on the date of enactment of this paragraph.
‘‘(C) In the case of dehumidifiers covered under sec-
tion 325(dd), the Commission shall not require an Energy 
Guide label. 
‘‘(6)(A) Not later than July 1, 2006, 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) The requirements shall be based on the test pro-
cedure and labeling requirements contained in the Energy 
Star Program Requirements for Residential Ceiling Fans, 
version 2.0, issued by the Environmental Protection Agen-
cy, except that third party testing and other non-labeling 
requirements shall not be promulgated unless the Commis-
sion determines the requirements are necessary to achieve 
compliance. 
‘‘(C) The rule shall apply to products manufactured 
after the later of—
‘‘(i) January 1, 2008; or 
‘‘(ii) the date that is 60 days after the final rule 
is prescribed.’’. 
SEC. 203. COMMERCIAL PACKAGE AIR CONDITIONING AND 
HEATING EQUIPMENT. 
(a) DEFINITIONS.—Section 340 of the Energy Policy 
and Conservation Act (42 U.S.C. 6311) is amended—
(1) in paragraph (1)—
(A) by redesignating subparagraphs (D) 
through (G) as subparagraphs (E) through (H), 
respectively; and 
(B) by inserting after subparagraph (C) 
the following: 
‘‘(D) Very large commercial package air 
conditioning and heating equipment.’’; 
(2) in paragraph (2)(B), by striking ‘‘small and 
large’’; and 
(3) by striking paragraphs (8) and (9) and in-
serting the following: 
‘‘(8)(A) The term ‘commercial package air con-
ditioning and heating equipment’ means air-cooled, 
water-cooled, evaporatively-cooled, or water source 
(not including ground water source) electrically oper-
ated, unitary central air conditioners and central air 
conditioning heat pumps for commercial application. 
‘‘(B) The term ‘small commercial package air 
conditioning and heating equipment’ means commer-
cial package air conditioning and heating equipment 
that is rated below 135,000 Btu per hour (cooling 
capacity). 
‘‘(C) The term ‘large commercial package air 
conditioning and heating equipment’ means commer-
cial package air conditioning and heating equipment
that is rated at or above 135,000 Btu per hour and 
below 240,000 Btu per hour (cooling capacity). 
‘‘(D) The term ‘very large commercial package 
air conditioning and heating equipment’ means com-
mercial package air conditioning and heating equip-
ment that is rated at or above 240,000 Btu per hour 
and below 760,000 Btu per hour (cooling capac-
ity).’’. 
(b) STANDARDS.—Section 342(a) of the Energy Pol-
icy and Conservation Act (42 U.S.C. 6313(a)) is amend-
ed—
(1) in the subsection heading, by striking 
‘‘Small and Large’’ and inserting ‘‘Small, Large, 
and Very Large’’; 
(2) in paragraph (1), by inserting ‘‘but before 
January 1, 2010,’’ after ‘‘January 1, 1994,’’; 
(3) in paragraph (2), by inserting ‘‘but before 
January 1, 2010,’’ after ‘‘January 1, 1995,’’; and 
(4) in paragraph (6)—
(A) in subparagraph (A)—
(i) by inserting ‘‘(i)’’ after ‘‘(A)’’; 
(ii) by striking ‘‘the date of enactment 
of the Energy Policy Act of 1992’’ and in-
serting ‘‘January 1, 2010’’;
(iii) by inserting after ‘‘large commer-
cial package air conditioning and heating 
equipment’’ the following: ‘‘and very large 
commercial package air conditioning and 
heating equipment, or if ASHRAE/IES 
Standard 90.1, as in effect on October 24, 
1992, is amended with respect to any’’; 
and 
(iv) by adding at the end the fol-
lowing: 
‘‘(ii) If ASHRAE/IES Standard 90.1 is not amended 
with respect to small commercial package air conditioning 
and heating equipment, large commercial package air con-
ditioning and heating equipment, and very large commer-
cial package air conditioning and heating equipment dur-
ing the 5-year period beginning on the effective date of 
a standard, the Secretary may initiate a rulemaking to 
determine whether a more stringent standard would result 
in significant additional conservation of energy and is 
technologically feasible and economically justified.’’; and 
(B) in subparagraph (C)(ii), by inserting 
‘‘and very large commercial package air condi-
tioning and heating equipment’’ after ‘‘large 
commercial package air conditioning and heat-
ing equipment’’; and
(5) by adding at the end the following: 
‘‘(7) Each small commercial package air conditioning 
and heating equipment manufactured on or after January 
1, 2010, shall meet the following standards: 
‘‘(A) The minimum energy efficiency ratio of 
air-cooled central air conditioners at or above 65,000 
Btu per hour (cooling capacity) and less than 
135,000 Btu per hour (cooling capacity) shall be—
‘‘(i) 11.2 for equipment with no heating or 
electric resistance heating; and 
‘‘(ii) 11.0 for equipment with all other 
heating system types that are integrated into 
the equipment (at a standard rating of 95 de-
grees F db). 
‘‘(B) The minimum energy efficiency ratio of 
air-cooled central air conditioner heat pumps at or 
above 65,000 Btu per hour (cooling capacity) and 
less than 135,000 Btu per hour (cooling capacity) 
shall be—
‘‘(i) 11.0 for equipment with no heating or 
electric resistance heating; and 
‘‘(ii) 10.8 for equipment with all other 
heating system types that are integrated into 
the equipment (at a standard rating of 95 de-
grees F db).
‘‘(C) The minimum coefficient of performance 
in the heating mode of air-cooled central air condi-
tioning heat pumps at or above 65,000 Btu per hour 
(cooling capacity) and less than 135,000 Btu per 
hour (cooling capacity) shall be 3.3 (at a high tem-
perature rating of 47 degrees F db). 
‘‘(8) Each large commercial package air conditioning 
and heating equipment manufactured on or after January 
1, 2010, shall meet the following standards: 
‘‘(A) The minimum energy efficiency ratio of 
air-cooled central air conditioners at or above 
135,000 Btu per hour (cooling capacity) and less 
than 240,000 Btu per hour (cooling capacity) shall 
be—
‘‘(i) 11.0 for equipment with no heating or 
electric resistance heating; and 
‘‘(ii) 10.8 for equipment with all other 
heating system types that are integrated into 
the equipment (at a standard rating of 95 de-
grees F db). 
‘‘(B) The minimum energy efficiency ratio of 
air-cooled central air conditioner heat pumps at or 
above 135,000 Btu per hour (cooling capacity) and 
less than 240,000 Btu per hour (cooling capacity) 
shall be—
‘‘(i) 10.6 for equipment with no heating or 
electric resistance heating; and 
‘‘(ii) 10.4 for equipment with all other 
heating system types that are integrated into 
the equipment (at a standard rating of 95 de-
grees F db). 
‘‘(C) The minimum coefficient of performance 
in the heating mode of air-cooled central air condi-
tioning heat pumps at or above 135,000 Btu per 
hour (cooling capacity) and less than 240,000 Btu 
per hour (cooling capacity) shall be 3.2 (at a high 
temperature rating of 47 degrees F db). 
‘‘(9) Each very large commercial package air condi-
tioning and heating equipment manufactured on or after 
January 1, 2010, shall meet the following standards: 
‘‘(A) The minimum energy efficiency ratio of 
air-cooled central air conditioners at or above 
240,000 Btu per hour (cooling capacity) and less 
than 760,000 Btu per hour (cooling capacity) shall 
be—
‘‘(i) 10.0 for equipment with no heating or 
electric resistance heating; and 
‘‘(ii) 9.8 for equipment with all other heat-
ing system types that are integrated into the
equipment (at a standard rating of 95 degrees 
F db). 
‘‘(B) The minimum energy efficiency ratio of 
air-cooled central air conditioner heat pumps at or 
above 240,000 Btu per hour (cooling capacity) and 
less than 760,000 Btu per hour (cooling capacity) 
shall be—
‘‘(i) 9.5 for equipment with no heating or 
electric resistance heating; and 
‘‘(ii) 9.3 for equipment with all other heat-
ing system types that are integrated into the 
equipment (at a standard rating of 95 degrees 
F db). 
‘‘(C) The minimum coefficient of performance 
in the heating mode of air-cooled central air condi-
tioning heat pumps at or above 240,000 Btu per 
hour (cooling capacity) and less than 760,000 Btu 
per hour (cooling capacity) shall be 3.2 (at a high 
temperature rating of 47 degrees F db).’’. 
(c) TEST PROCEDURES.—Section 343 of the Energy 
Policy and Conservation Act (42 U.S.C. 6314) is amended 
in subsections (a)(4) and (d)(1), by inserting ‘‘very large 
commercial package air conditioning and heating equip-
ment,’’ after ‘‘large commercial package air conditioning 
and heating equipment,’’ each place it appears.
(d) LABELING.—Section 344(e) of the Energy Policy 
and Conservation Act (42 U.S.C. 6315(e)) is amended in 
the first and second sentences, by inserting ‘‘very large 
commercial package air conditioning and heating equip-
ment,’’ after ‘‘large commercial package air conditioning 
and heating equipment,’’ each place it appears. 
(e) ADMINISTRATION, PENALTIES, ENFORCEMENT, 
AND PREEMPTION.—Section 345 of the Energy Policy and 
Conservation Act (42 U.S.C. 6316) is amended by adding 
at the end the following: 
‘‘(d)(1) Except as provided in paragraphs (2) and 
(3), section 327 shall apply with respect to the equipment 
specified in section 340(1)(D) to the same extent and in 
the same manner as section 327 applies under part B on 
the date of enactment of this subsection. 
‘‘(2) Any State or local standard prescribed or en-
acted prior to the date of enactment of this subsection 
shall not be preempted until the standards established 
under section 342(a)(9) take effect on January 1, 2010. 
‘‘(3) If the California Energy Commission adopts, not 
later than March 31, 2006, a regulation concerning the 
energy efficiency or energy use of the equipment specified 
in section 340(1)(D), the regulation shall be effective 
until, and shall no longer be effective after, the standards
established under section 342(a)(9) take effect on January 
1, 2010.’’. 
SEC. 204. COMMERCIAL REFRIGERATORS, FREEZERS, AND 
REFRIGERATOR-FREEZERS. 
(a) DEFINITIONS.—Section 340 of the Energy Policy 
and Conservation Act (42 U.S.C. 6311), as amended by 
section 203, is amended—
(1) in paragraph (1)—
(A) by redesignating subparagraph (H) as 
subparagraph (I); and 
(B) by inserting after subparagraph (G) 
the following: 
‘‘(H) commercial refrigerators, freezers, and re-
frigerator-freezers.’’; and 
(2) by adding at the end the following: 
‘‘(19)(A) The term ‘commercial refrigerator, 
freezer, and refrigerator-freezer’ means refrigeration 
equipment that—
‘‘(i) is not a consumer product (as defined 
in section 321); 
‘‘(ii) operates at a chilled, frozen, combina-
tion chilled and frozen, or variable temperature; 
‘‘(iii) displays or stores merchandise and 
other 
perishable 
materials 
horizontally, 
semivertically, or vertically;
‘‘(iv) has transparent or solid doors, sliding 
or hinged doors, a combination of hinged, slid-
ing, transparent, or solid doors, or no doors; 
‘‘(v) is designed for pull-down temperature 
applications or holding temperature applica-
tions; and 
‘‘(vi) is connected to a self-contained con-
densing unit or to a remote condensing unit. 
‘‘(B) The term ‘holding temperature applica-
tion’ means a use of commercial refrigeration equip-
ment other than a pull-down temperature applica-
tion, except a blast chiller or freezer. 
‘‘(C) The term ‘integrated average temperature’ 
means the average temperature of all test package 
measurements taken during the test. 
‘‘(D) The term ‘pull-down temperature applica-
tion’ means a commercial refrigerator with doors 
that, when fully loaded with 12 ounce beverage cans 
at 90 degrees F, can cool those beverages to an av-
erage stable temperature of 38 degrees F in 12 
hours or less. 
‘‘(E) The term ‘remote condensing unit’ means 
a factory-made assembly of refrigerating components 
designed to compress and liquefy a specific refrig-
erant that is remotely located from the refrigerated
equipment and consists of 1 or more refrigerant 
compressors, refrigerant condensers, condenser fans 
and motors, and factory supplied accessories. 
‘‘(F) The term ‘self-contained condensing unit’ 
means a factory-made assembly of refrigerating com-
ponents designed to compress and liquefy a specific 
refrigerant that is an integral part of the refrig-
erated equipment and consists of 1 or more refrig-
erant compressors, refrigerant condensers, condenser 
fans and motors, and factory supplied accessories.’’. 
(b) STANDARDS.—Section 342 of the Energy Policy 
and Conservation Act (42 U.S.C. 6313) is amended by 
adding at the end the following: 
‘‘(c) COMMERCIAL REFRIGERATORS, FREEZERS, AND 
REFRIGERATOR-FREEZERS.—(1) In this subsection: 
‘‘(A) The term ‘AV’ means the adjusted volume 
(ft3) (defined as 1.63 x frozen temperature compart-
ment volume (ft3) + chilled temperature compart-
ment volume (ft3)) with compartment volumes meas-
ured in accordance with the Association of Home 
Appliance Manufacturers Standard HRF1–1979. 
‘‘(B) The term ‘V’ means the chilled or frozen 
compartment volume (ft3) (as defined in the Asso-
ciation of Home Appliance Manufacturers Standard 
HRF1–1979).
‘‘(C) Other terms have the meanings estab-
lished by the Secretary, based on industry-accepted 
definitions and practice. 
‘‘(2) Each commercial refrigerator, freezer, and re-
frigerator-freezer with a self-contained condensing unit de-
signed for holding temperature applications manufactured 
on or after January 1, 2010, shall meet the following 
standard levels in kilowatt hours per day:
‘‘Refrigerators with solid doors ..............................
0.10 V + 2.04
Refrigerators with transparent doors .....................
0.12 V + 3.34
Freezers with solid doors .......................................
0.40 V + 1.38
Freezers with transparent doors ............................
0.75 V + 4.10
Refrigerators/freezers with solid doors the greater 
of.
0.27 AV – 0.71 or 
0.70. 
‘‘(3) Each commercial refrigerator with a self-con-
tained condensing unit designed for pull-down tempera-
ture applications manufactured on or after January 1, 
2010, shall meet the following standard levels in kilowatt 
hours per day: Refrigerators with transparent doors 0.126 
V + 3.51. 
‘‘(4)(A) Not later than January 1, 2009, the Sec-
retary of Energy shall prescribe, by rule, standard levels 
for ice-cream freezers, self-contained commercial refrig-
erators, freezers, and refrigerator-freezers without doors, 
and remote condensing commercial refrigerators, freezers, 
and refrigerator-freezers, with the standard levels effective 
for equipment manufactured on or after January 1, 2012.
‘‘(B) Not later than January 1, 2009, the Secretary 
shall prescribe, by rule, standard levels for other types of 
commercial refrigerators, freezers, and refrigerator-freez-
ers not covered by paragraphs (1), (2), and (3) and sub-
paragraph (A) with the standard levels effective for equip-
ment manufactured on or after January 1, 2012. 
‘‘(5)(A)(i) Not later than January 1, 2013, the Sec-
retary shall publish a final rule to determine if the stand-
ards established under paragraphs (1), (2), (3), and 
(4)(A) should be amended. 
‘‘(ii) The rule shall provide that any amended stand-
ards shall apply to products manufactured on or after the 
date that is 3 years after the final amended standard is 
published unless the Secretary determines, by rule, that 
3 years is inadequate, in which case the Secretary may 
establish an application date for products manufactured 
not later than 5 years after the final amended standard 
is published. 
‘‘(B)(i) Not later than 3 years after the amended 
final standard referred to in subparagraph (A) takes effect 
or after the Secretary publishes a final rule determining 
that the standard should not be amended, the Secretary 
shall publish a final rule to determine if the standards es-
tablished under paragraphs (1), (2), (3), and (4)(A) 
should be amended.
‘‘(ii) The rule shall provide that any amended stand-
ards shall apply to products manufactured on or after the 
date that is 3 years after the final amended standard is 
published unless the Secretary determines, by rule, that 
3 years is inadequate, in which case the Secretary may 
establish an application date for products manufactured 
not later than 5 years after the final amended standard 
is published.’’. 
(c) TEST PROCEDURES.—Section 343 of the Energy 
Policy and Conservation Act (42 U.S.C. 6314) is amend-
ed—
(1) in subsection (a), by adding at the end the 
following: 
‘‘(6)(A)(i) In the case of commercial refrigerators, 
freezers, and refrigerator-freezers, the test procedures 
shall be the test procedures determined by the Secretary 
to be generally accepted industry testing procedures or 
rating procedures developed or recognized by the 
ASHRAE or by the American National Standards Insti-
tute. 
‘‘(ii) In the case of self-contained refrigerators, freez-
ers, and refrigerator-freezers to which standards are appli-
cable under subsection 342(c)(1), the initial test proce-
dures shall be ASHRAE 117 that is in effect on January 
1, 2005.
100
‘‘(B) In the case of commercial refrigerators, freez-
ers, and refrigerators-freezers with doors covered by the 
standards adopted in February 2002, by the California 
Energy Commission, the rating temperatures shall be the 
integrated average temperature of 38 degrees F (+/– 2 
degrees F) for refrigerator compartments and 0 degrees 
F (+/– 2 degrees F) for freezer compartments. 
‘‘(C) The Secretary shall prescribe a rule, that meets 
the requirements of paragraphs (2) and (3), to establish 
the appropriate rating temperatures for the other products 
for which standards will be established under subsection 
342(c)(2). 
‘‘(D) In establishing the appropriate test tempera-
tures under this subparagraph, the Secretary shall follow 
the procedures and meet the requirements specified in sec-
tion 323(e). 
‘‘(E)(i) Not later than 180 days after the publication 
of the new ASHRAE 117 test procedure, if the ASHRAE 
117 test procedure for commercial refrigerators, freezers, 
and refrigerator-freezers is amended, the Secretary shall, 
by rule, amend the test procedure for the product as nec-
essary to be consistent with the amended ASHRAE 117 
test procedure unless the Secretary makes a determina-
tion, by rule, and supported by clear and convincing evi-
101
dence, that to do so would not meet the requirements for 
test procedures described in paragraphs (2) and (3). 
‘‘(ii) If the Secretary needs more than 180 days to 
review and adopt the amended test procedure or rating 
procedure, the Secretary shall publish a notice in the Fed-
eral Register stating the intent of the Secretary to take 
up to an additional 1 year before the amended test proce-
dure or rating procedure would become effective. 
‘‘(F)(i) If another test procedure besides ASHRAE 
117 is approved by the American National Standards In-
stitute, the Secretary shall, by rule—
‘‘(I) review the relative strengths and weak-
nesses of the new test procedure relative to 
ASHRAE 117; and 
‘‘(II) based on that review, adopt 1 of those test 
procedures for subsequent use in the standards pro-
gram. 
‘‘(ii) If a new test procedure is adopted—
‘‘(I) section 323(e) shall apply; and 
‘‘(II) subparagraph (B) shall apply to the 
adopted test procedure.’’; and 
(2) in subsection (d)(1), by striking ‘‘and 
unfired hot water storage tanks,’’ and inserting: 
‘‘unfired hot water storage tanks, and commercial 
refrigerators, freezers, and refrigerator-freezers,’’.
102
(d) LABELING.—Section 344(e) of the Energy Policy 
and Conservation Act (42 U.S.C. 6315(e)), as amended 
by section 203(d), is amended by striking ‘‘and unfired 
hot water storage tanks’’ each place it appears and insert-
ing ‘‘unfired hot water storage tanks, and commercial re-
frigerators, freezers, and refrigerator-freezers’’. 
(e) ADMINISTRATION, PENALTIES, ENFORCEMENT, 
AND PREEMPTION.—Section 345 of the Energy Policy and 
Conservation Act (42 U.S.C. 6316), as amended by sec-
tion 203(e), is amended by adding at the end the fol-
lowing: 
‘‘(e)(1)(A) The provisions of subsections (a), (b), and 
(d) of section 326, subsections (m) through (s) of section 
325, and sections 328 through 336 shall apply with re-
spect to equipment specified in section 340(1)(G) to the 
same extent and in the same manner as those provisions 
apply under part B. 
‘‘(B) In applying those provisions to that equipment, 
paragraphs (1), (2), (3), and (4) of subsection (a) shall 
apply. 
‘‘(2)(A)(i) The provisions of section 327 shall apply 
with respect to the equipment specified in section 
340(1)(G) that have standards established under section 
342(c)(2) to the same extent and in the same manner as 
those provisions apply under part B on the date of enact-
103
ment of this subsection, except that any State or local 
standard prescribed or enacted before the date of enact-
ment of this subsection shall not be preempted until the 
standards established under section 342(c) take effect. 
‘‘(ii) In applying those provisions to that equipment, 
paragraphs (1), (2), and (3) of subsection (a) shall apply. 
‘‘(B) Notwithstanding subparagraph (A), if the Cali-
fornia Energy Commission adopts, not later than March 
31, 2005, a regulation concerning the energy efficiency or 
energy use of the equipment specified in section 340(1)(G) 
that have standards established under section 342(c)(2), 
those standards shall be effective until, and shall no longer 
be effective after, the standards established under section 
342(c)(2) take effect on January 1, 2010. 
‘‘(3)(A) The provisions of section 327 shall apply 
with respect to the equipment specified in 340(1)(G) that 
have standards established under section 342(c)(3) to the 
same extent and in the same manner as they apply under 
part B on the date of publication of the final rule by the 
Secretary, except that any State or local standard pre-
scribed or enacted before the date of publication of the 
final rule by the Secretary shall not be preempted until 
the standards take effect.
104
‘‘(B) In applying those provisions for the purpose of 
that equipment, paragraphs (1), (2), and (3) of subsection 
(a) shall apply. 
‘‘(4) If the Secretary does not issue a final rule for 
a specific type of equipment specified in section 340(1)(G) 
within the time frame specified in section 342(c)(3), the 
provisions of subsections (b) and (c) of section 327 shall 
no longer apply to that specific type of equipment begin-
ning on the date that is 2 years after the scheduled date 
for a final rule and until the Secretary publishes a final 
rule covering the specific type of equipment, at which time 
those provisions shall apply to the specific type of equip-
ment. 
‘‘(5)(A) In the case of any commercial refrigerator, 
freezer, and refrigerator-freezer to which standards are 
applicable under section 342(c)(2), the Secretary shall re-
quire manufacturers to certify, through an independent 
testing or certification program nationally recognized in 
the United States, that the commercial refrigerator, freez-
er, and refrigerator-freezer meets the applicable standard. 
‘‘(B) The Secretary shall, to the maximum extent 
practicable, encourage the establishment of at least 2 such 
independent testing and certification programs.
105
‘‘(C) As part of certification, information on equip-
ment energy use and interior volume shall be made avail-
able to the Secretary.’’. 
TITLE III—ENERGY EFFICIENT 
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 is amended—
(1) by redesignating section 551 (42 U.S.C. 
8259) as section 552; and 
(2) by inserting after section 550 (42 U.S.C. 
8258b) the following: 
‘‘SEC. 551. FEDERAL PROCUREMENT OF ENERGY EFFI-
CIENT PRODUCTS. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) The term ‘Energy Star product’ means a 
product that is rated for energy efficiency under an 
Energy Star program. 
‘‘(2) The term ‘Energy Star program’ means 
the Energy Star program of the Environmental Pro-
tection Agency. 
‘‘(3) The term ‘executive agency’ has the mean-
ing given the term in section 4 of the Office of Fed-
eral Procurement Policy Act (41 U.S.C. 403).
106
‘‘(4) The term ‘FEMP designated product’ 
means a product that is designated under the Fed-
eral Energy Management Program of the Depart-
ment of Energy as being among the highest 25 per-
cent of equivalent products for energy efficiency. 
‘‘(b) PROCUREMENT OF ENERGY EFFICIENT PROD-
UCTS.—(1) Except as provided in paragraph (2), to meet 
the requirements of an executive agency for an energy con-
suming product, the head of the executive agency shall 
procure—
‘‘(A) an Energy Star product; or 
‘‘(B) a FEMP designated product. 
‘‘(2) The head of an executive agency shall not be 
required to comply with paragraph (1) if the head of the 
executive agency specifies in writing that—
‘‘(A) taking into account energy cost savings, 
an Energy Star product or FEMP designated prod-
uct is not cost-effective over the life of the product; 
or 
‘‘(B) no Energy Star product or FEMP des-
ignated product is reasonably available that meets 
the functional requirements of the executive agency. 
‘‘(3) The head of an executive agency shall incor-
porate criteria for energy efficiency that are consistent
107
with the criteria used for rating Energy Star products and 
FEMP designated products into—
‘‘(A) the specifications for any procurements in-
volving energy consuming products and systems, in-
cluding—
‘‘(i) guide specifications; 
‘‘(ii) project specifications; and 
‘‘(iii) construction, renovation, and services 
contracts that include the provision of energy 
consuming products and systems; and 
‘‘(B) the factors for the evaluation of offers re-
ceived for the procurement. 
‘‘(c) LISTING OF ENERGY EFFICIENT PRODUCTS IN 
FEDERAL CATALOGS.—(1) Any inventory or listing of 
products by the General Services Administration or the 
Defense Logistics Agency shall clearly identify and promi-
nently display Energy Star products and FEMP des-
ignated products. 
‘‘(2)(A) Except as provided in subparagraph (B), the 
General Services Administration or the Defense Logistics 
Agency shall supply only Energy Star products or FEMP 
designated products for all product categories covered by 
the Energy Star program or the Federal Energy Manage-
ment Program.
108
‘‘(B) Subparagraph (A) shall not apply if an agency 
ordering a product specifies in writing that—
‘‘(i) taking into account energy cost savings, no 
Energy Star product or FEMP designated product 
is cost-effective for the intended application over the 
life of the product; or 
‘‘(ii) no Energy Star product or FEMP des-
ignated product is available to meet the functional 
requirements of the ordering agency. 
‘‘(d) SPECIFIC PRODUCTS.—(1) In the case of an 
electric motor of 1 to 500 horsepower, an executive agency 
shall select only a premium efficient motor that meets the 
standard established by the Secretary under paragraph 
(2). 
‘‘(2) Not later than 120 days after the date of enact-
ment of this subsection and after considering the rec-
ommendations of associated electric motor manufacturers 
and energy efficiency groups, the Secretary shall establish 
a standard for premium efficient motors. 
‘‘(3)(A) Each Federal agency is encouraged to take 
actions (such as appropriate cleaning and maintenance) 
to maximize the efficiency of air conditioning and refrig-
eration equipment, including the use of a system treat-
ment or additive that—
109
‘‘(i) would reduce the electricity consumed by 
air conditioning and refrigeration equipment; and 
‘‘(ii) meets the criteria specified in subpara-
graph (B). 
‘‘(B) A system treatment or additive referred to in 
subparagraph (A) shall be—
‘‘(i) determined by the Secretary to be effective 
in increasing the efficiency of air conditioning and 
refrigeration equipment without having an adverse 
impact on—
‘‘(I) air conditioning and refrigeration per-
formance (including cooling capacity); or 
‘‘(II) the useful life of the equipment; 
‘‘(ii) determined by the Administrator of the 
Environmental Protection Agency to be environ-
mentally safe; and 
‘‘(iii) shown, in tests conducted by the National 
Institute of Standards and Technology, in accord-
ance with Department of Energy test procedures, to 
increase the seasonal energy efficiency ratio (SEER) 
or energy efficiency ratio (EER) without having any 
adverse impact on the system, system components, 
the refrigerant or lubricant, or other materials in the 
system.
110
‘‘(4) The results of the tests described in paragraph 
(3)(B)(iii) shall be published in the Federal Register for 
public review and comment. 
‘‘(5) For purposes of this subsection, a hardware de-
vice or primary refrigerant shall not be considered an ad-
ditive. 
‘‘(e) REGULATIONS.—Not later than 180 days after 
the date of 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—
(1) by redesignating the item relating to section 
551 as section 552; and 
(2) by inserting after the item relating to sec-
tion 550 the following:
‘‘551. Federal procurement of energy efficient products.’’.
SEC. 302. ENERGY SAVINGS PERFORMANCE CONTRACTS. 
(a) PERMANENT EXTENSION.—Effective September 
30, 2005, section 801 of the National Energy Conserva-
tion Policy Act (42 U.S.C. 8287) is amended by striking 
subsection (c). 
(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’’.
111
(c) ENERGY SAVINGS.—Section 804 of the National 
Energy Conservation Policy Act (42 U.S.C. 8287c) is 
amended by striking paragraph (2) and inserting the fol-
lowing: 
‘‘(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 1 or 
more existing federally owned buildings or other fed-
erally 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 interior or exterior applica-
tions.’’. 
(d) ENERGY SAVINGS CONTRACT.—Section 804 of 
the National Energy Conservation Policy Act (42 U.S.C. 
8287c) is amended by striking paragraph (3) and insert-
ing the following:
112
‘‘(3)(A) The terms ‘energy savings contract’ 
and ‘energy savings performance contract’ mean a 
contract that provides for the performance of serv-
ices for the design, acquisition, installation, testing, 
and, as appropriate, operation, maintenance, and re-
pair, of an identified energy or water conservation 
measure or series of measures at 1 or more loca-
tions. 
‘‘(B) With respect to an agency facility that is 
a public building (as defined in section 3301 of title 
40, United States Code), a contract described in 
subparagraph (A) shall be in compliance with the 
prospectus requirements 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 at a 
non-Federal hydroelectric facility that—
113
‘‘(i) improves the efficiency of water 
use; 
‘‘(ii) is life-cycle cost-effective; and 
‘‘(iii) involves—
‘‘(I) water conservation, recy-
cling, or reuse; 
‘‘(II) more efficient treatment of 
wastewater or stormwater; 
‘‘(III) improvements in operation 
or maintenance efficiencies; 
‘‘(IV) retrofit activities; or 
‘‘(V) other related activities.’’. 
(f) REVIEW.—
(1) IN
GENERAL.—Not later than 180 days 
after the date of enactment of this Act, the Sec-
retary of Energy shall complete a review of the en-
ergy savings performance contract program carried 
out under title VIII of the National Energy Con-
servation Policy Act (42 U.S.C. 8287 et seq.) to 
identify—
(A) statutory, regulatory, and administra-
tive obstacles that prevent Federal agencies 
from fully using the program; and 
(B) any areas for increasing program flexi-
bility and effectiveness, including—
114
(i) audit and measurement verification 
requirements; 
(ii) accounting for energy use in de-
termining savings; 
(iii) contracting requirements, includ-
ing the identification of additional qualified 
contractors; and 
(iv) energy efficiency services covered. 
(2) REPORT.—The Secretary shall—
(A) submit to Congress a report that de-
scribes the findings of the Secretary under 
paragraph (1); and 
(B) to the extent that the changes are con-
sistent with statutory authority, implement the 
identified administrative and regulatory changes 
to increase program flexibility and effectiveness. 
(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, 2004, and before the date 
of enactment of this Act, shall be deemed to have been 
entered into under that 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—
115
(1) in paragraph (2)(A), by striking ‘‘CABO 
Model Energy Code, 1992’’ and inserting ‘‘the 2003 
International Energy Conservation Code, as such 
Code (including supplements) is in effect on the date 
of the enactment of the Efficient Energy Through 
Certified Technologies and Electricity Reliability 
(EFFECTER) Act of 2005’’; and 
(2) by adding at the end the following: 
‘‘(3)(A) Not later than 1 year after the date of enact-
ment of this paragraph, there shall be establish, by rule, 
revised Federal building energy efficiency performance 
standards that require that—
‘‘(i) if life-cycle cost-effective for new Federal 
buildings—
‘‘(I) the buildings be designed to achieve 
energy consumption levels that are at least 30 
percent below the levels established in the 
version of the ASHRAE Standard or the Inter-
national Energy Conservation Code, as appro-
priate, that is in effect as of the date of enact-
ment of this paragraph; and 
‘‘(II) sustainable design principles are ap-
plied to the siting, design, and construction of 
all new and replacement buildings; and
116
‘‘(ii) if water is used to achieve energy effi-
ciency, water conservation technologies shall be ap-
plied to the extent that the technologies are life-cycle 
cost-effective. 
‘‘(B) Not later than 1 year after the date of approval 
of each subsequent revision of the ASHRAE Standard or 
the International Energy Conservation Code, as appro-
priate, the Secretary shall determine, based on the cost-
effectiveness of the requirements under the amendment, 
whether the revised standards established under this para-
graph should be updated to reflect the amendment. 
‘‘(C) In the budget request of the Federal agency for 
each fiscal year and each report submitted by the Federal 
agency under section 548(a) of the National Energy Con-
servation 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 specifying whether the Federal 
buildings meet or exceed the revised standards es-
tablished 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—
117
(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
118
(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—
119
(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 subtitle), un-
120
less the purchase of energy-efficient appliances is not cost-
effective 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)—
(i) by striking ‘‘1 year after the date 
of the enactment of the Energy Policy Act 
of 1992’’ and inserting ‘‘September 30, 
2005’’; 
(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
121
(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, as such 
Code (including supplements) is in effect on the 
date of the enactment of the Efficient Energy 
Through Certified Technologies and Electricity 
Reliability (EFFECTER) Act of 2005’’; 
(2) in subsection (b)—
(A) by striking ‘‘within 1 year after the 
date of the enactment of the Energy Policy Act 
of 1992’’ and inserting ‘‘by September 30, 
2005’’; and 
(B) by striking ‘‘CABO’’ and all that fol-
lows through ‘‘1989’’ and inserting ‘‘2003 
International Energy Conservation Code, as 
such Code (including supplements) is in effect 
on the date of the enactment of the Efficient 
Energy Through Certified Technologies and 
Electricity Reliability (EFFECTER) Act of 
2005’’; and 
(3) in subsection (c)—
(A) in the heading, by striking ‘‘Model En-
ergy Code’’ and inserting ‘‘The International 
Energy Conservation Code’’; and
122
(B) by striking ‘‘CABO’’ and all that fol-
lows through ‘‘1989’’ and inserting ‘‘the 2003 
International Energy Conservation Code, as 
such Code (including supplements) is in effect 
on the date of the enactment of the Efficient 
Energy Through Certified Technologies and 
Electricity Reliability (EFFECTER) Act of 
2005’’. 
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.—In this section: 
‘‘(1)(A) The term ‘bulk-power system’ means—
‘‘(i) facilities and control systems necessary 
for operating an interconnected electric energy 
transmission network (or any portion thereof); 
and 
‘‘(ii) electric energy from generation facili-
ties needed to maintain transmission system re-
liability.
123
‘‘(B) The term ‘bulk-power system’ does not in-
clude facilities used in the local distribution of elec-
tric 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 ‘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. 
‘‘(4) The term ‘regional entity’ means an entity 
having enforcement authority pursuant to subsection 
(e)(4). 
‘‘(5)(A) The term ‘reliability standard’ means a 
requirement, approved by the Commission under this 
section, to provide for reliable operation of the bulk-
power system. 
‘‘(B) The term ‘reliability standard’ includes re-
quirements for the operation of existing bulk-power
124
system facilities and the design of planned additions 
or modifications to those facilities to the extent nec-
essary to provide for reliable operation of the bulk-
power system. 
‘‘(C) The term ‘reliability standard’ does not in-
clude any requirement to enlarge a facility described 
in subparagraph (B) or to construct new trans-
mission capacity or generation capacity. 
‘‘(6) 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. 
‘‘(7) 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. 
‘‘(b) JURISDICTION
AND
APPLICABILITY.—(1)(A) 
The Commission shall have jurisdiction, within the United 
States, over the ERO certified by the Commission under 
subsection (c), any regional entities, and all users, owners
125
and operators of the bulk-power system, including the en-
tities described in section 201(f), for purposes of approv-
ing reliability standards established under this section and 
enforcing compliance with this section. 
‘‘(B) All users, owners, and operators of the bulk-
power system shall comply with reliability standards that 
take effect under this section. 
‘‘(2) Not later than 180 days after the date of enact-
ment of this section, the Commission shall issue a final 
rule to implement this section. 
‘‘(c) CERTIFICATION.—(1) Following the issuance of 
a Commission rule under subsection (b)(2), any person 
may submit an application to the Commission for certifi-
cation as the Electric Reliability Organization. 
‘‘(2) The Commission may certify an ERO described 
in paragraph (1) if the Commission determines that the 
ERO—
‘‘(A) 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 
‘‘(B) has established rules that—
‘‘(i) ensure the independence of the ERO 
from the users and owners and operators of the 
bulk-power system, while ensuring fair stake-
126
holder representation in the selection of direc-
tors of the ERO and balanced decisionmaking 
in any ERO committee or subordinate organiza-
tional structure; 
‘‘(ii) allocate equitably reasonable dues, 
fees, and other charges among end users for all 
activities under this section; 
‘‘(iii) 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); 
‘‘(iv) provide for reasonable notice and op-
portunity for public comment, due process, 
openness, and balance of interests in developing 
reliability standards and otherwise exercising 
the duties of the ERO; and 
‘‘(v) 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 the Electric
127
Reliability Organization proposes to be made effective 
under this section with the Commission. 
‘‘(2)(A) The Commission may approve, by rule or 
order, a proposed reliability standard or modification to 
a reliability standard if the Commission determines that 
the standard is just, reasonable, not unduly discriminatory 
or preferential, and in the public interest. 
‘‘(B) The Commission—
‘‘(i) shall give due weight to the technical exper-
tise of the Electric Reliability Organization with re-
spect to the content of a proposed standard or modi-
fication to a reliability standard and to the technical 
expertise of a regional entity organized on an inter-
connection-wide basis with respect to a reliability 
standard to be applicable within that interconnec-
tion; but 
‘‘(ii) shall not defer with respect to the effect of 
a standard on competition. 
‘‘(C) A proposed standard or modification shall take 
effect upon approval by the Commission. 
‘‘(3) The Electric Reliability Organization shall 
rebuttably presume that a proposal from a regional entity 
organized on an interconnection-wide basis for a reliability 
standard or modification to a reliability standard to be ap-
plicable on an interconnection-wide basis is just, reason-
128
able, and not unduly discriminatory or preferential, and 
in the public interest. 
‘‘(4) The Commission shall remand to the Electric 
Reliability Organization for further consideration a pro-
posed reliability standard or a modification to a reliability 
standard that the Commission disapproves in whole or in 
part. 
‘‘(5) The Commission, upon a motion of the Commis-
sion or upon complaint, may order the Electric Reliability 
Organization to submit to the Commission a proposed reli-
ability standard or a modification to a reliability standard 
that addresses a specific matter if the Commission con-
siders such a new or modified reliability standard appro-
priate to carry out this section. 
‘‘(6)(A) The final rule adopted under subsection 
(b)(2) shall include fair processes for the identification 
and timely resolution of any conflict between a reliability 
standard and any function, rule, order, tariff, rate sched-
ule, or agreement accepted, approved, or ordered by the 
Commission applicable to a transmission organization. 
‘‘(B) The transmission organization shall continue to 
comply with such function, rule, order, tariff, rate sched-
ule, or agreement as is accepted, approved, or ordered by 
the Commission until—
129
‘‘(i) the Commission finds a conflict exists be-
tween a reliability standard and any such provision; 
‘‘(ii) the Commission orders a change to the 
provision pursuant to section 206; and 
‘‘(iii) the ordered change becomes effective 
under this part. 
‘‘(C) If the Commission determines that a reliability 
standard needs to be changed as a result of such a con-
flict, the Commission shall order the ERO to develop and 
file with the Commission a modified reliability standard 
under paragraph (4) or (5). 
‘‘(e) ENFORCEMENT.—(1) Subject to paragraph (2), 
the ERO may impose a penalty on a user or owner or 
operator of the bulk-power system for a violation of a reli-
ability standard approved by the Commission under sub-
section (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) A penalty imposed under paragraph (1) may 
take effect not earlier than the 31st day after the date
130
on which the ERO files with the Commission notice of the 
penalty and the record of proceedings. 
‘‘(B) The penalty shall be subject to review by the 
Commission upon—
‘‘(i) a motion by the Commission; or 
‘‘(ii) application by the user, owner, or operator 
that is the subject of the penalty filed not later than 
30 days after the date on which the notice is filed 
with the Commission. 
‘‘(C) Application to the Commission for review, or the 
initiation of review by the Commission upon a motion of 
the Commission, shall not operate as a stay of the penalty 
unless the Commission orders otherwise upon a motion of 
the Commission or upon application by the user, owner, 
or operator that is the subject of the penalty. 
‘‘(D) In any proceeding to review a penalty imposed 
under paragraph (1), the Commission, after notice and op-
portunity 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 penalty), shall by order affirm, set aside, re-
instate, or modify the penalty, and, if appropriate, remand 
to the ERO for further proceedings. 
‘‘(E) The Commission shall implement expedited pro-
cedures for hearings described in subparagraph (D).
131
‘‘(3) Upon a motion of the Commission or upon com-
plaint, the Commission may order compliance with a reli-
ability standard and may impose a penalty against a user 
or owner or operator of the bulk-power system if the Com-
mission finds, after notice and opportunity for a hearing, 
that the user or owner or operator of the bulk-power sys-
tem has engaged or is about to engage in any act or prac-
tice that constitutes or will constitute a violation of a reli-
ability standard. 
‘‘(4)(A) The Commission shall issue regulations au-
thorizing the ERO to enter into an agreement to delegate 
authority to a regional entity for the purpose of proposing 
reliability standards to the ERO and enforcing reliability 
standards under paragraph (1) if—
‘‘(i) the regional entity is governed by an inde-
pendent board, a balanced stakeholder board, or a 
combination of an independent and balanced stake-
holder board; 
‘‘(ii) the regional entity otherwise meets the re-
quirements of paragraphs (1) and (2) of subsection 
(c); and 
‘‘(iii) the agreement promotes effective and effi-
cient administration of bulk-power system reliability. 
‘‘(B) The Commission may modify a delegation under 
this paragraph.
132
‘‘(C) The ERO and the Commission shall rebuttably 
presume that a proposal for delegation to a regional entity 
organized on an interconnection-wide basis promotes effec-
tive and efficient administration of bulk-power system reli-
ability and should be approved. 
‘‘(D) The regulations issued under this paragraph 
may provide that the Commission may assign the author-
ity of the ERO to enforce reliability standards under para-
graph (1) directly to a regional entity in accordance with 
this paragraph. 
‘‘(5) The Commission may take such action as the 
Commission determines to be appropriate against the 
ERO or a regional entity to ensure compliance with a reli-
ability standard or any Commission order affecting the 
ERO or a regional entity. 
‘‘(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 the 
user, owner, or operator to remedy the violation in a time-
ly manner. 
‘‘(f) CHANGES IN ELECTRIC RELIABILITY ORGANIZA-
TION RULES.—(1) The Electric Reliability Organization 
shall file with the Commission for approval any proposed 
rule or proposed rule change, accompanied by an expla-
133
nation of the basis and purpose of the rule and proposed 
rule change. 
‘‘(2) The Commission, upon a motion of the Commis-
sion or upon complaint, may propose a change to the rules 
of the ERO. 
‘‘(3) 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 meets 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 
the effectiveness of the ERO in the United States and 
Canada or Mexico. 
‘‘(i) SAVINGS PROVISIONS.—(1) The ERO may de-
velop and enforce compliance with reliability standards for 
only the bulk-power system. 
‘‘(2) Nothing in this section authorizes the ERO or 
the Commission to order the construction of additional
134
generation or transmission capacity or to set and enforce 
compliance with standards for adequacy or safety of elec-
tric facilities or services. 
‘‘(3) Nothing in this section preempts 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 inconsistent with any reliability 
standard. 
‘‘(4) Not later than 90 days after the date of applica-
tion of the Electric Reliability Organization or other af-
fected party, and after notice and opportunity for com-
ment, the Commission shall issue a final order deter-
mining whether a State action is inconsistent with a reli-
ability standard, taking into consideration any rec-
ommendation 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 issuance by the Com-
mission of a final order. 
‘‘(j) REGIONAL ADVISORY BODIES.—(1) The Com-
mission shall establish a regional advisory body on the pe-
tition of at least 2⁄3 of the States within a region that have 
more than 1⁄2 of the electric load of the States served with-
in the region. 
‘‘(2) A regional advisory body—
135
‘‘(A) shall be composed of 1 member from each 
participating State in the region, appointed by the 
Governor of the State; and 
‘‘(B) may include representatives of agencies, 
States, and provinces outside the United States. 
‘‘(3) A regional advisory body may provide advice to 
the Electric Reliability Organization, a regional entity, or 
the Commission regarding—
‘‘(A) the governance of an existing or proposed 
regional entity within the same region; 
‘‘(B) whether a standard proposed to apply 
within the region is just, reasonable, not unduly dis-
criminatory or preferential, and in the public inter-
est; 
‘‘(C) whether fees proposed to be assessed with-
in the region are just, reasonable, not unduly dis-
criminatory or preferential, and in the public inter-
est; and 
‘‘(D) any other responsibilities requested by the 
Commission. 
‘‘(4) The Commission may give deference to the ad-
vice of a regional advisory body if that body is organized 
on an interconnection-wide basis. 
‘‘(k) ALASKA AND HAWAII.—This section does not 
apply to Alaska or Hawaii.’’.
136
(b) STATUS OF ERO.—The Electric Reliability Orga-
nization certified by the Federal Energy Regulatory Com-
mission under section 215(c) of the Federal Power Act 
(as added by subsection (a)) and any regional entity dele-
gated enforcement authority pursuant to section 215(e)(4) 
of that Act (as so added) are not departments, agencies, 
or instrumentalities of the United States Government.
Æ