‘‘(II) the demand response capa-
bilities are— 
‘‘(aa) 
technologically 
fea-
sible; and 
‘‘(bb) economically justified. 
‘‘(ii) ECONOMICALLY JUSTIFIED.—In 
considering whether demand response ca-
pabilities are economically justified under 
clause (i)(II)(bb), the Secretary shall con-
sider— 
‘‘(I) the factors described in sub-
clauses (I), (II), (IV), (V), (VI), and 
(VII) of section 325(o)(2)(B)(i); and 
‘‘(II) in the case of the factor de-
scribed in subclause (II) of that sec-
tion, the projected financial impact on 
consumers participating in demand re-
sponse programs. 
‘‘(E) REQUIREMENT.—Any rule promul-
gated by the Secretary under subparagraph 
(A)(ii)(I) shall not be used to justify a higher 
or lower energy conservation standard than 
would otherwise have been selected. 
‘‘(F) INDUSTRY
STANDARDS.—In estab-
lishing requirements for demand response capa-
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bilities under a rule promulgated under sub-
paragraph (A)(ii)(I), the Secretary shall con-
sider industry consensus standards developed or 
recognized by the Air-Conditioning, Heating, 
and Refrigeration Institute. 
‘‘(2) REVISIONS.— 
‘‘(A) IN GENERAL.—The Secretary may re-
vise any requirements established under a rule 
promulgated under paragraph (1)(A)(ii)(I) if, in 
the determination of the Secretary— 
‘‘(i) a revision is needed to promote 
participation in demand response pro-
grams; and 
‘‘(ii) the demand response capabilities 
to be required under the revised require-
ments are— 
‘‘(I) technologically feasible; and 
‘‘(II) economically justified. 
‘‘(B) REQUIREMENT.—Any revision under 
this paragraph shall be subject to the require-
ments of subparagraphs (C) through (E) of 
paragraph (1). 
‘‘(c) PREEMPTION.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), effective on the date on which a final rule 
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is issued by the Secretary under subsection 
(b)(1)(A)(ii)(I), no law or regulation of a State or 
political subdivision of a State requiring electric 
storage water heater demand response capabilities 
for water heaters subject to requirements established 
by the Secretary shall be effective. 
‘‘(2) EXCEPTION.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply to a law or regulation of a State or 
political subdivision of a State if the law was in 
effect, or the regulation was finalized, before 
the date on which the final rule described in 
that paragraph is issued. 
‘‘(B) AMENDMENT
OF
STATE
OR
LOCAL 
LAW.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), paragraph (1) shall not apply to the 
amendment of a law or regulation de-
scribed in subparagraph (A) if the amend-
ment is made— 
‘‘(I) in the case of the first 
amendment, not less than 5 years 
after the date on which the law or 
regulation became effective or was fi-
nalized, respectively; or 
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‘‘(II) in the case of any subse-
quent amendment, not less than 5 
years after the date of any previous 
amendment to that law or regulation. 
‘‘(ii) CONSENSUS
STANDARDS.—An 
amendment to a law or regulation de-
scribed in subparagraph (A) solely to in-
corporate a more recent version of a vol-
untary consensus standard (as defined in 
the document of the Office of Management 
and Budget entitled ‘Federal Participation 
in the Development and Use of Voluntary 
Consensus Standards and in Conformity 
Assessment Activities’ (OMB Circular A– 
119)) shall not be considered to be an 
amendment to that law or regulation for 
the purposes of this subparagraph. 
‘‘(d) ENFORCEMENT.—A failure to comply with any 
requirements established by the Secretary under this sec-
tion shall be— 
‘‘(1) considered to be a violation of section 332; 
and 
‘‘(2) subject to the enforcement provisions of 
sections 333 and 334. 
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‘‘(e) SAVINGS PROVISION.—Nothing in this section 
alters the authority of the Secretary to establish product 
classes for electric storage water heaters designed to par-
ticipate in demand response programs.’’. 
(2) CLERICAL AMENDMENT.—The table of con-
tents of the Energy Policy and Conservation Act 
(Public Law 94–163; 89 Stat. 872) is amended by 
inserting after the item relating to section 325 the 
following: 
‘‘Sec. 325A. Water heater demand response capabilities requirements.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Section 326 of the Energy Policy and 
Conservation Act (42 U.S.C. 6296) is amend-
ed— 
(i) in subsection (b)— 
(I) in paragraph (3)(A)— 
(aa) by inserting ‘‘or a re-
quirement established under sec-
tion 325A’’ after ‘‘section 325’’; 
and 
(bb) by inserting ‘‘or re-
quirement’’ after ‘‘that stand-
ard’’; and 
(II) in paragraph (5), by striking 
‘‘or 325’’ and inserting ‘‘325, or 
325A’’; and 
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(ii) in subsection (d)(1)— 
(I) in the second sentence, by 
striking ‘‘In making’’ and inserting 
the following: 
‘‘(C) REQUIREMENT.—In making’’; 
(II) in the first sentence— 
(aa) by striking ‘‘energy effi-
ciency’’ and all that follows 
through ‘‘standard, as’’ and in-
serting ‘‘the matters described in 
subparagraph (B), as’’; and 
(bb) by striking ‘‘and energy 
conservation standards’’ and in-
serting 
‘‘energy 
conservation 
standards, and requirements for 
water heater demand response 
capabilities (as defined in section 
325A(a))’’; 
(III) by striking ‘‘(1) For pur-
poses’’ and inserting the following: 
‘‘(1) INFORMATION AND REPORTS.— 
‘‘(A) IN GENERAL.—For purposes’’; and 
(IV) by inserting after subpara-
graph (A) (as so designated) the fol-
lowing: 
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