A bill to amend the Energy Policy and Conservation Act to modify the definition of water heater under energy conservation standards, and for other purposes.
Bill: S.4061 | Sponsor: Sen. Stabenow, Debbie (D-MI)
Policy area: Energy

Summary:
This bill modifies the definition of water heater, otherwise revises energy conservation standards, and sets forth labeling requirements for water heaters. In addition, it directs the Department of Energy to determine whether electric storage water heaters should possess demand response capabilities.

To amend the Energy Policy and Conservation Act to modify the 
definition of water heater under energy conservation standards, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. WATER HEATERS.

    (a) Definition of Water Heater.--Section 321 of the Energy Policy 
and Conservation Act (42 U.S.C. 6291) is amended by striking paragraph 
(27) and inserting the following:
            ``(27) Water heater.--
                    ``(A) In general.--The term `water heater' means a 
                product that utilizes oil, gas, or electricity to heat 
                potable water for use outside the heater on demand, 
                including--
                            ``(i) storage type units that heat and 
                        store water at a thermostatically controlled 
                        temperature, including--
                                    ``(I) gas storage water heaters 
                                with an input of 75,000 Btu per hour or 
                                less, including heat pump type units 
                                that meet the current and voltage 
                                limits described in clause (iii);
                                    ``(II) oil storage water heaters 
                                with an input of 105,000 Btu per hour 
                                or less; and
                                    ``(III) electric storage water 
                                heaters with an input of 12 kilowatts 
                                or less, including heat pump type units 
                                that meet the current and voltage 
                                limits described in clause (iii);
                            ``(ii)(I) instantaneous type units that 
                        heat water but contain not more than 1 gallon 
                        of water per 4,000 Btu per hour of input; and
                            ``(II) in the case of--
                                    ``(aa) gas instantaneous water 
                                heaters, have an input of 200,000 Btu 
                                per hour or less and are designed and 
                                marketed to provide outlet hot water at 
                                a thermostatically controlled 
                                temperature of less than 180 degrees 
                                Fahrenheit;
                                    ``(bb) oil instantaneous water 
                                heaters, have an input of 210,000 Btu 
                                per hour or less; and
                                    ``(cc) electric instantaneous water 
                                heaters, have an input of 12 kilowatts 
                                or less;
                            ``(iii) heat pump type units (including 
                        add-on heat pumps, integrated heat pumps with 
                        storage, split-system heat pumps that consist 
                        of a separate heat pump and storage tank that 
                        are designed and marketed to operate together, 
                        and all ancillary equipment, such as fans, 
                        storage tanks, pumps, electric resistance 
                        heating elements, or controls necessary for the 
                        device to perform its function) that--
                                    ``(I) have a maximum current rating 
                                of 24 amperes at a voltage not greater 
                                than 250 volts; and
                                    ``(II) are designed to transfer 
                                thermal energy from 1 temperature level 
                                to a different temperature level for 
                                the purpose of heating water;
                            ``(iv) solar thermal-assisted electric 
                        storage units; and
                            ``(v) solar thermal-assisted fossil fuel 
                        storage units.
                    ``(B) Exclusions.--Except as provided by the 
                Secretary in accordance with section 325(e)(7)(B), the 
                term `water heater' does not include--
                            ``(i) electric storage type units described 
                        in subparagraph (A)(i)(III) that--
                                    ``(I) are designed and marketed 
                                exclusively for commercial building 
                                applications; and
                                    ``(II)(aa) are designed, 
                                constructed, inspected, tested, and 
                                stamped in accordance with the most 
                                current Section IV, Part HLW, or 
                                Section X of the Boiler and Pressure 
                                Vessel Code promulgated by the American 
                                Society of Mechanical Engineers;
                                    ``(bb) exclusively use 3-phase 
                                electricity, are designed and marketed 
                                to provide outlet hot water at a 
                                thermostatically controlled temperature 
                                of 180 degrees Fahrenheit or greater, 
                                and operate only at rated voltages of 
                                not less than 208 volts; or
                                    ``(cc) exclusively use single-phase 
                                electricity, are designed and marketed 
                                to provide outlet hot water at a 
                                thermostatically controlled temperature 
                                of 180 degrees Fahrenheit or greater, 
                                and operate only at a rated voltage of 
                                277 volts; or
                            ``(ii) gas storage type units described in 
                        subparagraph (A)(i)(I) that--
                                    ``(I) are designed and marketed 
                                exclusively for commercial building 
                                applications; and
                                    ``(II) are designed, constructed, 
                                inspected, tested, and stamped in 
                                accordance with the most current 
                                Section IV, Part HLW, of the Boiler and 
                                Pressure Vessel Code promulgated by the 
                                American Society of Mechanical 
                                Engineers.
                    ``(C) Multi-input electric storage water heater.--
                The term `multi-input electric storage water heater' 
                means a product that--
                            ``(i) is not a heat pump type unit 
                        described in subparagraph (A)(iii); and
                            ``(ii) is designed, marketed, or shipped 
                        from the manufacturer with a capability of 
                        operating or being configured to operate at 
                        inputs greater than, equal to, or below 12 
                        kilowatts.
                    ``(D) Solar thermal-assisted electric storage 
                unit.--The term `solar thermal-assisted electric 
                storage unit' means a unit that--
                            ``(i) has an input of 12 kilowatts or less;
                            ``(ii) has at least 2 dedicated ports in 
                        addition to the ports used for introduction and 
                        delivery of potable water for the supply and 
                        return of water or a heat transfer fluid heated 
                        externally by solar collector or solar thermal 
                        collector;
                            ``(iii) does not have electric resistance 
                        heating elements located in the lower half of 
                        the storage tank;
                            ``(iv) has the temperature sensing device 
                        that controls the auxiliary electric heat 
                        source located in the upper half of the storage 
                        tank; and
                            ``(v) has a ratio of less than 0.70 for the 
                        proportion that the certified first hour rating 
                        bears to the nominal volume of the storage tank 
                        tested without solar energy input.''.
    (b) Test Procedures.--Section 323(b)(3) of the Energy Policy and 
Conservation Act (42 U.S.C. 6293(b)(3)) is amended--
            (1) by striking ``(3) Any test'' and inserting the 
        following:
            ``(3) Design of test procedures.--
                    ``(A) In general.--Any test''; and
            (2) by adding at the end the following:
                    ``(B) Electric storage water heaters demand 
                response capabilities requirements.--Any test 
                procedures prescribed or amended under this section for 
                electric storage water heaters for which the Secretary 
                has established requirements for demand response 
                capabilities under section 325A shall be designed to 
                assess compliance with those requirements in addition 
                to producing the test results described in subparagraph 
                (A).''.
    (c) Standards for Water Heaters.--Section 325(e) of the Energy 
Policy and Conservation Act (42 U.S.C. 6295(e)) is amended by adding at 
the end the following:
            ``(7) Exempted water heaters.--
                    ``(A) Definition of exempted water heater.--In this 
                paragraph, the term `exempted water heater' means a 
                water heater described in section 321(27)(B).
                    ``(B) Monitoring of shipments.--
                            ``(i) Submission of data.--Not later than 
                        90 days after the date of enactment of this 
                        paragraph, and not later than May 1 of each 
                        year thereafter, the Secretary shall require 
                        each manufacturer of water heaters to report to 
                        the Secretary the quantity of exempted water 
                        heaters, in each category of exempted water 
                        heaters, that the manufacturer shipped in the 
                        preceding calendar year.
                            ``(ii) Confidentiality requirements.--The 
                        Secretary shall treat shipment data reported by 
                        manufacturers under clause (i) as confidential 
                        business information subject to appropriate 
                        confidential data safeguards.
                            ``(iii) Publication.--
                                    ``(I) Baseline shipment data.--Not 
                                later than 120 days after the date of 
                                enactment of this paragraph, the 
                                Secretary shall publish an analysis of 
                                the data collected under clause (i) for 
                                public comment, subject to applicable 
                                confidentiality safeguards, which shall 
                                serve as the baseline data for the 
                                analysis described in subclause 
                                (II)(bb).
                                    ``(II) Percentage growth from 
                                baseline.--Not later than June 1 of 
                                each year after the year in which the 
                                Secretary publishes data under 
                                subclause (I), the Secretary shall 
                                publish--
                                            ``(aa) an analysis of the 
                                        data collected under clause (i) 
                                        for public comment, subject to 
                                        applicable confidentiality 
                                        safeguards;
                                            ``(bb) the percentage 
                                        growth in the number of 
                                        shipments within each category 
                                        of exempted water heater 
                                        relative to the baseline data 
                                        described in subclause (I); and
                                            ``(cc) the determination of 
                                        the Secretary as to whether the 
                                        number of shipments for any 
                                        category of exempted water 
                                        heater have increased by more 
                                        than 25 percent compared to the 
                                        baseline data for that 
                                        category.
                    ``(C) Inclusion of exempted water heaters.--
                            ``(i) In general.--If the Secretary makes 
                        an affirmative determination under subparagraph 
                        (B)(iii)(II)(cc) for a category of exempted 
                        water heater--
                                    ``(I) the Secretary, by regulation, 
                                shall provide that, for purposes of 
                                this part, the term `water heater' 
                                includes that category of exempted 
                                water heater; and
                                    ``(II) beginning on the effective 
                                date of the regulation described in 
                                subclause (I), the exclusion described 
                                in section 321(27)(B) shall not apply 
                                to that category of exempted water 
                                heater.
                            ``(ii) Energy conservation standards.--Any 
                        category of exempted water heater included in 
                        the definition of water heater under clause (i) 
                        shall be required to meet the energy 
                        conservation standards applicable to an 
                        electric or gas storage type water heater under 
                        this part.
                            ``(iii) Effective date.--For any category 
                        of exempted water heater, the Secretary shall 
                        carry out clause (i), and require compliance 
                        under clause (ii), not later than 1 year after 
                        the date on which the Secretary makes the 
                        affirmative determination described in clause 
                        (i) for that category.
            ``(8) Standards for multi-input electric storage water 
        heaters.--A multi-input electric storage water heater shall be 
        subject to the test procedures, energy conservation standards, 
        labeling (if applicable), and certification requirements--
                    ``(A) for electric storage water heaters under this 
                part; and
                    ``(B) for storage water heaters under part C.''.
    (d) Water Heater Demand Response Capabilities Requirements.--
            (1) In general.--Part B of title III of the Energy Policy 
        and Conservation Act (42 U.S.C. 6291 et seq.) is amended by 
        inserting after section 325 the following:

``SEC. 325A. WATER HEATER DEMAND RESPONSE CAPABILITIES REQUIREMENTS.

    ``(a) Definitions.--In this section:
            ``(1) Demand response.--The term `demand response' means 
        changes in electricity usage by demand-side resources from the 
        normal consumption patterns of those demand-side resources in 
        response to--
                    ``(A) changes in the price of electricity over 
                time; or
                    ``(B) incentive payments designed to induce lower 
                electricity use--
                            ``(i) at times of high wholesale market 
                        prices; or
                            ``(ii) during periods in which system 
                        reliability is jeopardized.
            ``(2) Demand response capabilities.--The term `demand 
        response capabilities' means the hardware or software, 
        including any combination of hardware and software, that is 
        necessary to participate in a demand response program, as 
        determined by the Secretary.
    ``(b) Requirements.--
            ``(1) Initial requirements.--
                    ``(A) In general.--The Secretary shall--
                            ``(i) determine, in accordance with 
                        subparagraph (D), whether to require that 
                        electric storage water heaters possess demand 
                        response capabilities; and
                            ``(ii) not later than December 31, 2024--
                                    ``(I) promulgate a final rule with 
                                the requirement described in clause 
                                (i); or
                                    ``(II) issue a public notice of a 
                                negative determination under that 
                                clause.
                    ``(B) Storage capacities.--The Secretary may make 
                separate determinations under subparagraph (A) for 
                water heaters of different storage capacities.
                    ``(C) Effect of negative determination.--If the 
                Secretary makes a negative determination under 
                subparagraph (A)(i), nothing in this paragraph shall 
                prohibit the Secretary from completing the rulemaking 
                described in subclause (I) of subparagraph (A)(ii) 
                after the date described in that subparagraph if the 
                Secretary later determines that such rulemaking is 
                necessary.
                    ``(D) Determination.--
                            ``(i) In general.--In carrying out 
                        subparagraph (A)(i), the Secretary shall make 
                        an affirmative determination under that 
                        subparagraph if the Secretary determines that--
                                    ``(I) the requirement is needed to 
                                promote participation in demand 
                                response programs; and
                                    ``(II) the demand response 
                                capabilities are--
                                            ``(aa) technologically 
                                        feasible; and
                                            ``(bb) economically 
                                        justified.
                            ``(ii) Economically justified.--In 
                        considering whether demand response 
                        capabilities are economically justified under 
                        clause (i)(II)(bb), the Secretary shall 
                        consider--
                                    ``(I) the factors described in 
                                subclauses (I), (II), (IV), (V), (VI), 
                                and (VII) of section 325(o)(2)(B)(i); 
                                and
                                    ``(II) in the case of the factor 
                                described in subclause (II) of that 
                                section, the projected financial impact 
                                on consumers participating in demand 
                                response programs.
                    ``(E) Requirement.--Any rule promulgated 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 establishing 
                requirements for demand response capabilities under a 
                rule promulgated under subparagraph (A)(ii)(I), the 
                Secretary shall consider industry consensus standards 
                developed or recognized by the Air-Conditioning, 
                Heating, and Refrigeration Institute.
            ``(2) Revisions.--
                    ``(A) In general.--The Secretary may revise 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 programs; and
                            ``(ii) the demand response capabilities to 
                        be required under the revised requirements 
                        are--
                                    ``(I) technologically feasible; and
                                    ``(II) economically justified.
                    ``(B) Requirement.--Any revision under this 
                paragraph shall be subject to the requirements of 
                subparagraphs (C) through (E) of paragraph (1).
    ``(c) Preemption.--
            ``(1) In general.--Except as provided in paragraph (2), 
        effective on the date on which a final rule 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 described in 
                        subparagraph (A) if the amendment 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 finalized, 
                                respectively; or
                                    ``(II) in the case of any 
                                subsequent 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 described in 
                        subparagraph (A) solely to incorporate a more 
                        recent version of a voluntary 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 section shall be--
            ``(1) considered to be a violation of section 332; and
            ``(2) subject to the enforcement provisions of sections 333 
        and 334.
    ``(e) Savings Provision.--Nothing in this section alters the 
authority of the Secretary to establish product classes for electric 
storage water heaters designed to participate in demand response 
programs.''.
            (2) Clerical amendment.--The table of contents 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 amended--
                            (i) in subsection (b)--
                                    (I) in paragraph (3)(A)--
                                            (aa) by inserting ``or a 
                                        requirement established under 
                                        section 325A'' after ``section 
                                        325''; and
                                            (bb) by inserting ``or 
                                        requirement'' after ``that 
                                        standard''; and
                                    (II) in paragraph (5), by striking 
                                ``or 325'' and inserting ``325, or 
                                325A''; and
                            (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 
                                        efficiency'' and all that 
                                        follows through ``standard, 
                                        as'' and inserting ``the 
                                        matters described in 
                                        subparagraph (B), as''; and
                                            (bb) by striking ``and 
                                        energy conservation standards'' 
                                        and inserting ``energy 
                                        conservation standards, and 
                                        requirements for water heater 
                                        demand response capabilities 
                                        (as defined in section 
                                        325A(a))'';
                                    (III) by striking ``(1) For 
                                purposes'' and inserting the following:
            ``(1) Information and reports.--
                    ``(A) In general.--For purposes''; and
                                    (IV) by inserting after 
                                subparagraph (A) (as so designated) the 
                                following:
                    ``(B) Matters described.--The matters referred to 
                in subparagraph (A) are, with respect to a covered 
                product described in that subparagraph--
                            ``(i) energy efficiency;
                            ``(ii) energy use;
                            ``(iii) in the case of showerheads, 
                        faucets, water closets, and urinals, the water 
                        use of that covered product;
                            ``(iv) the economic impact of any proposed 
                        energy conservation standard; and
                            ``(v) in the case of electric storage water 
                        heaters--
                                    ``(I) water heater demand response 
                                capabilities (as defined in section 
                                325A(a)); and
                                    ``(II) the economic impact of any 
                                proposed requirement for water heater 
                                demand response capabilities (as 
                                defined in that section).''.
                    (B) Section 335 of the Energy Policy and 
                Conservation Act (42 U.S.C. 6305) is amended by 
                inserting ``or 325A'' after ``section 325'' each place 
                it appears.
                    (C) Section 336 of the Energy Policy and 
                Conservation Act (42 U.S.C. 6306) is amended--
                            (i) in subsection (a)--
                                    (I) in paragraph (1), by inserting 
                                ``325A,'' after ``325,''; and
                                    (II) in paragraph (2), by inserting 
                                ``or 325A'' after ``325''; and
                            (ii) in subsection (b) by striking ``or 
                        325'' each place it appears and inserting 
                        ``325, or 325A''.
    (e) Definition of Commercial Water Heater.--Section 340 of the 
Energy Policy and Conservation Act (42 U.S.C. 6311) is amended by 
striking paragraph (12) and inserting the following:
            ``(12)(A) Storage water heater.--
                    ``(i) In general.--The term `storage water heater' 
                means a water heater that--
                            ``(I) heats and stores water within an 
                        appliance at a thermostatically controlled 
                        temperature for delivery on demand; and
                            ``(II) is not a water heater described in 
                        section 321(27)(A).
                    ``(ii) Exclusion.--The term `storage water heater' 
                does not include a unit with an input rating of 4,000 
                Btu per hour or more per gallon of stored water.
            ``(B) Instantaneous water heater.--The term `instantaneous 
        water heater' means a water heater that--
                    ``(i) has an input rating of at least 4,000 Btu per 
                hour per gallon of stored water; and
                    ``(ii) is not a water heater described in section 
                321(27)(A).
            ``(C) Unfired hot water storage tank.--The term `unfired 
        hot water storage tank' means a tank used to store water that 
        is heated externally.''.
    (f) Labeling Requirements.--Section 344 of the Energy Policy and 
Conservation Act (42 U.S.C. 6315) is amended by adding at the end the 
following:
    ``(l) Labels for Certain Commercial Water Heaters.--
            ``(1) In general.--Notwithstanding any other provision of 
        this section, water heaters described in section 321(27)(B) 
        shall be required to bear a permanent label, applied at the 
        point of manufacture, that, subject to paragraph (3), satisfies 
        the requirements described in paragraph (2).
            ``(2) Requirements.--A label required under paragraph (1) 
        shall--
                    ``(A) be made of material not adversely affected by 
                water;
                    ``(B) be attached by means of nonwater-soluble 
                adhesive; and
                    ``(C) bear the following notice printed in 16.5 
                point Arial Narrow Bold font: `IMPORTANT INFORMATION: 
                Exclusively intended for commercial installations. This 
                model is not certified by the manufacturer to the U.S. 
                Department of Energy as a residential water heater. 
                This model does not have a certified First Hour or UEF 
                rating.'.
            ``(3) Revision upon petition.--On receipt of a petition by 
        an interested party, the Secretary may conduct a rulemaking to 
        revise the scope and requirements of the label required under 
        paragraph (1).''.
    (g) Effective Date.--This section and the amendments made by this 
section shall take effect on the date that is 180 days after the date 
of enactment of this Act.
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