II 117th CONGRESS 2d Session S. 4144 IN THE SENATE OF THE UNITED STATES May 4, 2022 Mr. Markey (for himself, Ms. Warren , Mr. Sanders , Mr. Booker , and Ms. Smith ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Energy Policy Act of 2005 to establish an energy efficient appliance rebate program to provide rebates for the manufacturing, distribution, and shipment of certain building electrification products, and for other purposes.

1. Short title This Act may be cited as the Installing Clean Efficient Energy Hastens Our Transition Act of 2022 or the ICEE HOT Act of 2022 . 2. Findings Congress finds that— (1) additional measures are needed to further reduce United States and European dependence on Russia and other authoritarian petrostates while also saving money for people in the United States, protecting public health, and combating the climate crisis; (2) over the past 5 years, the United States has, on average, imported approximately 500,000 barrels of oil per day from Russia; (3) almost 40 percent, or 196,500 barrels per day, of Russian oil supplied to the United States can be replaced by swapping out the 5,300,000 residential oil heating devices in the United States with efficient electric heat pumps; (4) in 2020, 104,000 heat pump water heaters were installed in the United States; (5) in 2021, 3,900,000 air source heat pumps were installed in the United States; (6) through the modified energy efficient appliance rebate program of the Department of Energy, the United States could provide midstream incentives and upstream incentives that support and increase manufacturing capacity and supply chain security for technologies that reduce fossil fuel demand and fuel costs, such as electric heat pumps and efficient electric appliances; (7) $10,000,000,000 in midstream incentives and upstream incentives at $1,000 per unit for cold climate and $500 per unit for noncold climate would— (A) help the manufacture of an additional 7,500,000 heat pumps in the United States; and (B) lay the groundwork to bring down manufacturing and distribution costs in the medium and long term, thus transforming the heat pump marketplace; and (8) combined with climate justice and clean energy investment, generation, and domestic manufacturing incentives, the incentives described in paragraph (6) will provide additional support for national security, climate action, and consumer protection goals. 3. Energy efficient appliance rebate program (a) Definitions Section 124(a) of the Energy Policy Act of 2005 ( 42 U.S.C. 15821(a) ) is amended— (1) by redesignating paragraphs (1) through (5) as paragraphs (7), (8), (13), (15), and (16), respectively; (2) by inserting before paragraph (7) (as so redesignated) the following: (1) Disadvantaged business The term disadvantaged business means a distributor or original equipment manufacturer that is a small business participating in the minority small business and capital ownership development program of the Small Business Administration pursuant to section 8(a) of the Small Business Act ( 15 U.S.C. 637(a) ) (commonly known as the 8(a) program ). (2) Disadvantaged individual The term disadvantaged individual means— (A) a Black American, Hispanic American, Native American, Asian Pacific American, any other minority, or any other individual found to be disadvantaged by the Small Business Administration pursuant to section 8(a) of the Small Business Act ( 15 U.S.C. 637(a) ); and (B) a woman. (3) Distributor The term distributor means a person to which an eligible building electrification product is delivered or sold for purposes of distribution in commerce. (4) Electric residential cold climate heat pump The term electric residential cold climate heat pump means a heat pump that— (A) is certified under the Energy Star program; (B) is optimized for peak heating and part-load cooling performance; and (C) meets— (i) the cold climate air source heat pump specifications of the Northeast Energy Efficiency Partnerships; or (ii) the criteria for cold climate heat pumps under the Energy Star program. (5) Electric residential heat pump water heater The term electric residential heat pump water heater means an electric heat pump water heater for residential use that is certified under the Energy Star program. (6) Eligible building electrification product The term eligible building electrification product means any of the following United States-made products: (A) An electric residential heat pump water heater. (B) An electric residential air source heat pump. (C) An electric residential central geothermal heat pump. (D) An electric residential cold climate heat pump. (E) An induction or noninduction electric smooth stove, flat cooktop, range, or oven. (F) An electric heat pump clothes dryer that— (i) is certified under the Energy Star program; or (ii) meets a more stringent standard, as determined by the Secretary, if the Secretary determines a more stringent standard is appropriate. (G) A smart panel or a panel that is part of an electric load or service center upgrade. (H) Any other electric product, as determined by the Secretary. ; (3) by inserting after paragraph (8) (as so redesignated) the following: (9) Midstream rebate The term midstream rebate means a rebate provided by a State to a distributor under a State program described in subsection (b)(1)(B). (10) Original equipment manufacturer The term original equipment manufacturer means an entity that manufactures eligible building electrification products. (11) Residential air source heat pump The term residential air source heat pump means a heat pump or central air conditioner (as defined in section 321(21) of the Energy Policy and Conservation Act ( 42 U.S.C. 6291(21) )) that— (A) notwithstanding subparagraph (E) of that section, is a heating and cooling unit; and (B) is certified under the Energy Star program. (12) Residential central geothermal heat pump The term residential central geothermal heat pump has the meaning given the term qualified geothermal heat pump property in section 25D(d)(5)(B) of the Internal Revenue Code of 1986. ; (4) by inserting after paragraph (13) (as so redesignated) the following: (14) Smart panel The term smart panel means an electrical power distribution panel with an integrated communications and energy management system capable of— (A) interoperability with electric utility distribution networks; and (B) monitoring and controlling individual circuits to ensure that the total load on the electrical service does not exceed a programmed set-point. ; and (5) by adding at the end the following: (17) United States-made The term United States-made , with respect to an eligible building electrification product, means that not less than 55 percent of the components of the eligible building electrification product are mined, produced, or manufactured, as applicable, in the United States, as determined by the Secretary. (18) Upstream rebate The term upstream rebate means a rebate provided by a State to a distributor or original equipment manufacturer under a State program described in subsection (b)(1)(B). . (b) Program Section 124 of the Energy Policy Act of 2005 ( 42 U.S.C. 15821 ) is amended— (1) in subsection (b)(1)— (A) by striking program to provide and inserting the following: program— (A) to provide ; (B) in subparagraph (A) (as so designated), by adding or at the end after the semicolon; and (C) by adding at the end the following: (B) to provide midstream rebates and upstream rebates to original equipment manufacturers and distributors, as applicable, for the manufacturing, distribution, or shipment of eligible building electrification products; ; (2) in subsection (d)— (A) by striking The allocation and inserting the following: (1) In general The allocation ; and (B) by adding at the end the following: (2) Disadvantaged businesses and individuals Of the amount used by a State to carry out a State program described in subsection (b)(1)(B), not less than 40 percent shall be used to provide midstream rebates and upstream rebates— (A) to disadvantaged businesses; or (B) to original equipment manufacturers or distributors that employ disadvantaged individuals. (3) Union facilities Of the amount used by a State to carry out a State program described in subsection (b)(1)(B), not less than 40 percent shall be used to provide midstream rebates and upstream rebates to distributors and original equipment manufacturers, as applicable, that own or operate facilities operating under a collective bargaining agreement negotiated by a labor organization (as defined in section 2 of the National Labor Relations Act ( 29 U.S.C. 152 )) in accordance with the requirements of section 9 of the National Labor Relations Act ( 29 U.S.C. 159 ). ; (3) in subsection (e)— (A) by redesignating paragraphs (1) through (3) as subparagraphs (A), (C), and (D), respectively, and indenting appropriately; (B) in the matter preceding subparagraph (A) (as so redesignated), by striking Rebates in the first sentence and all that follows through The amount in the second sentence and inserting the following: (1) In general Rebates may be provided to— (A) residential consumers that meet the requirements of the State program described in subsection (b)(1)(A); and (B) original equipment manufacturers and distributors of eligible building electrification products that meet the requirements of the State program described in subsection (b)(1)(B). (2) Amount The amount ; and (C) in paragraph (2) (as so designated)— (i) in the matter preceding subparagraph (A) (as so redesignated), by striking consideration— and inserting consideration, as applicable— ; and (ii) by inserting after subparagraph (A) (as so redesignated) the following: (B) the amount of any Federal or State tax incentive available for the manufacturing or distribution of eligible building electrification products; ; and (4) by striking subsection (f) and inserting the following: (f) Administrative requirements for recipients of midstream and upstream rebates (1) Pass-through (A) In general As a condition of receipt of a midstream rebate or upstream rebate, a distributor or original equipment manufacturer shall pass through not less than 90 percent of the value of the midstream rebate or upstream rebate, as applicable, to a distributor or other customer in the form of a reduced price for the purchase of an eligible building electrification product. (B) Use of remainder After carrying out subparagraph (A), a distributor or original equipment manufacturer may retain not more than 10 percent of the remainder of the applicable midstream rebate or upstream rebate as a processing fee. (2) Coordination with existing programs An entity that receives a midstream rebate or upstream rebate is encouraged to coordinate with Federal and State agencies, electric utilities, natural gas utilities, nonprofit organizations, and other entities carrying out other relevant Federal or State rebate programs. (3) No multiple midstream and upstream rebates An entity that receives a midstream rebate or upstream rebate for an eligible building electrification product may not receive— (A) an upstream rebate or midstream rebate, respectively, for the same eligible building electrification product; or (B) a second midstream rebate or upstream rebate, respectively, for the same eligible building electrification product. (4) Taxation A midstream rebate or upstream rebate shall not be considered to be gross income of the recipient of the rebate for purposes of the Internal Revenue Code of 1986. (g) Authorization of appropriations There is authorized to be appropriated to the Secretary to carry out this section to provide allocations only to States that have established a State program described in subsection (b)(1)(B) $10,000,000,000 for the period of fiscal years 2023 through 2030. .