[Senate Report 111-319]
[From the U.S. Government Publishing Office]
Calendar No. 605
111th Congress Report
SENATE
2d Session 111-319
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SUPPLY STAR ACT
_______
September 27, 2010.--Ordered to be printed
_______
Mr. Bingaman, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 3396]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 3396) to amend the Energy Policy and
Conservation Act to establish within the Department of Energy a
Supply Star program to identify and promote practices,
companies, and products that use highly efficient supply chains
in a manner that conserves energy, water, and other resources,
having considered the same, reports favorably thereon with
amendments and an amendment to the title and recommends that
the bill, as amended, do pass.
The amendments are as follows:
1. On page 2, line 8, insert ``recognize'' before
``companies''.
2. On page 2, line 9, insert ``recognize'' before
``products''.
3. On page 2, line 19, insert ``recognize'' before
``companies''.
4. On page 2, line 20, insert ``recognize'' before
``products''.
5. On page 3, lines 21 and 22, strike ``carried out by the
Secretary, the Secretary shall consider energy and resource''
and insert ``carried out by the Secretary with respect to a
specific product, the Secretary shall consider energy
consumption and resource''.
6. On page 4, between lines 19 and 20, insert the
following:
``(g) Effect of Impact on Climate Change.--For purposes of
this section, the impact on climate change shall not be a
factor in determining supply chain efficiency.
``(h) Effect of Outsourcing of American Jobs.--For purposes
of this section, the outsourcing of American jobs in the
production of a product shall not count as a positive factor in
determining supply chain efficiency.
7. On page 4, line 20, strike ``(g)'' and insert ``(i)''.
8. Amend the title so as to read: ``A bill to amend the
Energy Policy and Conservation Act to establish within the
Department of Energy a Supply Star program to identity and
promote practices, recognize companies, and recognize products
that use highly efficient supply chains in a manner that
conserves energy, water, and other resources.''.
Purpose
The purpose of S. 3396 is to establish within the
Department of Energy a Supply Star program to identify and
promote practices, recognize companies, and, as appropriate,
recognize products that use highly efficient supply chains in a
manner that conserves energy, water, and other resources.
Background and Need
Up to 90 percent of a company's energy use can come from
its product supply chains, encompassing the raw materials,
manufacturing, packaging, transport, use, and disposal of
goods. Therefore, improvements in supply chain energy
efficiency can be of significant importance in the transition
to a more energy efficient marketplace. However, efforts to
improve supply chain energy efficiency throughout the economy
face hurdles--especially in small companies--that may limit
their widespread implementation. These hurdles can include a
lack of information and analytical tools for parts of supply
chains often lying far upstream or downstream (and therefore
out of sight). A lack of leverage to drive global suppliers
toward more efficient practice is another challenge. Overcoming
these issues requires significant resources and access to
global information that is often not readily available.
There are existing federal programs which have initiatives
that touch on elements of the supply chain, however there
appears to be little or no coordinated or focused effort
amongst them.
Legislation is needed to help companies develop the generic
tools, information, and assistance they need to analyze and
improve the efficiency of their supply chains.
Legislative History
S. 3396 was introduced by Senator Bingaman on May 24, 2010,
and is cosponsored by Senators Lincoln, Pryor, and Bayh. The
Committee on Energy and Natural Resources Subcommittee on
Energy held a hearing on the bill on June 15, 2010. The
Committee on Energy and Natural Resources considered the bill,
agreed to amendments, and agreed to the bill as amended on July
21, 2010, but a sufficient quorum was not present to report the
bill. The Committee subsequently ordered S. 3396 favorably
reported with amendments on August 5, 2010.
Committee Recommendation
The Committee on Energy and Natural Resources, in an open
business session on August 5, 2010, by a voice vote of a quorum
present, recommends that the Senate pass S. 3396, if amended as
described herein.
Committee Amendments
During its consideration of S. 3396, the Committee adopted
eight amendments. The first four amendments make it clear that
the program is to recognize companies and products that use
highly efficient supply chains. The fifth amendment clarifies
the scope of supply chain efficiency evaluations carried out by
the Secretary. In addition, the Committee adopted two
amendments offered by Senator Barrasso that require that the
impact of climate change, and the outsourcing of American jobs
in the production of a product should not be factors in
determining supply chain efficiency. The final amendment is an
amendment to the bill's long title.
Section-by-Section Analysis
Section 1 sets forth the short title.
Section 2 amends the Energy Policy and Conservation Act by
adding a new Section 324B.
Section 324B(a) establishes within the Department of Energy
a Supply Star program to identify and promote practices,
recognize companies, and, as appropriate, recognize products
that use highly efficient supply chains in a manner that
conserves energy, water, and other resources.
Section 324B(b) directs the Secretary of Energy to
coordinate with the Energy Star program and with other
appropriate agencies.
Section 324B(c) directs the Secretary to: Promote practices
and recognize companies and products that comply with the
Supply Star Program; work to enhance industry and public
awareness of the Supply Star program; collect and disseminate
data on supply chain energy resource consumption; develop and
disseminate metrics, processes, and analytical tools (including
software) for evaluating supply chain energy resource use;
develop guidance at the sector level for improving supply chain
efficiency; work with domestic and international organizations
to harmonize approaches to analyzing supply chain efficiency;
and work with industry to improve supply chain efficiency
through activities that include developing and sharing best
practices and benchmarking.
Section 324B(d) directs the Secretary to consider energy
consumption and resource use throughout the entire lifecycle of
a product in evaluating supply chain efficiency.
Section 324B(e) gives the Secretary the authority to award
grants or other forms of incentives on a competitive basis for
studying supply chain efficiency and demonstrating reductions
in the energy consumption of supply chains.
Section 324B(f) directs the Secretary to use funds to
support professional training programs to develop and
communicate methods, practices, and tools for improving supply
chain efficiency.
Section 324B(g) authorizes appropriation of such sums as
are necessary to carry out the program.
Cost and Budgetary Considerations
The following estimate of costs of this measure has been
provided by the Congressional Budget.
S. 3396--Supply Star Act of 2010
Summary: S. 3396 would authorize the appropriation of
whatever sums are necessary for the Department of Energy (DOE)
to expand existing activities related to improving energy
efficiency in industrial applications. CBO estimates that
implementing the bill would cost $5 million in 2011 and $32
million over the 2011-2015 period, assuming appropriation of
the necessary amounts. Enacting S. 3396 would not affect direct
spending or revenues; therefore, pay-as-you-go procedures do
not apply.
S. 3396 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 3396 is shown in the following table.
The costs of this legislation fall within budget function 270
(energy).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------
2011 2012 2013 2014 2015 2011-2015
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level........................... 7 8 8 6 6 35
Estimated Outlays....................................... 5 8 8 6 6 32
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Basis of estimate: S. 3396 would authorize DOE to establish
a program to promote industrial energy efficiency. In
particular, the bill would authorize DOE to competitively award
grants and other incentives to entities for evaluating and
improving the efficiency of processes involved in the
production and distribution of products. The bill also would
authorize DOE to support professional training programs to
develop and communicate means of improving industrial energy
efficiency.
In 2010, DOE received $140 million for programs related to
industrial technologies. Based on information from DOE about
the anticipated cost of expanding the agency's level of effort
under S. 3396, CBO estimates that meeting the bill's
requirements would require an additional $35 million over the
2011-2015 period. Assuming appropriation of those amounts, CBO
estimates that resulting outlays would total $32 million over
the 2011-2015 period.
Pay-as-you-go considerations: None.
Intergovernmental and private-sector impact: S. 3396
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Estimate prepared by: Federal Costs: Megan Carroll; Impact
on State, Local, and Tribal Governments: Ryan Miller; Impact on
the Private Sector: Amy Petz.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Regulatory Impact Evaluation
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S. 3396.
The bill is not a regulatory measure in the sense of
imposing Government-established standards or significant
economic responsibilities on private individuals and
businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Some additional paperwork may result from the enactment of
S. 3396, as ordered reported, but the Committee does not expect
these additional paperwork burdens to be substantial in either
time or financial cost.
Congressionally Directed Spending
S. 3396, as ordered reported, does not contain any
congressionally directed spending items, limited tax benefits,
or limited tariff benefits as defined in rule XLIV of the
Standing Rules of the Senate.
Executive Communications
The testimony provided by the Department of Energy at the
June 15, 2010 Subcommittee on Energy hearing on S. 3396
follows:
Statement of Steven G. Chalk, Chief Operating Officer and Acting Deputy
Assistant Secretary for Renewable Energy, Office of Energy Efficiency
and Renewable Energy, Department of Energy
Madam Chairman, Ranking Member Risch, and Members of the
Subcommittee, thank you for the opportunity to appear before
you today to discuss proposed clean energy legislation.
The Department and the Subcommittee share common goals of
strengthening our economy, enhancing our national security, and
protecting our environment. As part of the Recovery Act, the
Office of Energy Efficiency and Renewable Energy (EERE),
oversees a total of $16.8 billion in investments. To date, EERE
has obligated 96 percent, or $16.07 billion, of its Recovery
Act funds. The funds are putting America to work laying the
foundation for our clean energy future. The Department also
appreciates the authorities you have provided in recent years
in the Energy Policy Act of 2005 (EPAct) (P.L. 109-58) and the
Energy Independence and Security Act of 2007 (EISA) (P.L. 110-
140). This year, the Committee has proposed further investment
and we thank you for all your hard work in reporting the
American Clean Energy Leadership Act (S. 1462).
Today, I am pleased to offer the Department's perspective
on five pending pieces of legislation related to energy
efficiency and renewable energy. Note that many of the
authorities outlined in the bills would simply reinforce
existing authorities, and may not be necessary for the
Department to carry out the activities in question. I will
discuss them in the order listed in the hearing invitation
letter I received from the Subcommittee. These include the 10
Million Solar Roofs Act of 2010 (S. 3460), the Supply Star Act
of 2010 (S. 3396), the Improving Energy Efficiency and
Renewable Energy Use By Federal Agencies Act of 2010 (S. 3251),
the Heavy Duty Hybrid Vehicle Research, Development, and
Demonstration Act (S. 679), the Gas Turbine Efficiency Act of
2009 (S. 2900).
s. 3460--10 million solar roofs act of 2010
We thank the subcommittee and the sponsor of this
legislation for your strong leadership on solar technologies
over the years. The Department's goals for solar electric
technologies are to be cost competitive in their respective
markets by 2015 and to reach a high penetration of solar
installations. The Department is investing $232 million in 2010
to support solar research across the development pipeline, from
basic photovoltaic (PV) cell technologies to manufacturing
scaleup to total system development. Within the $232 million,
DOE is investing up to $50 million in concentrated solar power
technology development and deployment related activities and
$23 million to understand how solar technologies can be better
integrated within existing electricity generation and
transmission systems. In solar hot water heating, DOE is
investing approximately an additional $6.5 million in 2010.
The proposed legislation incorporates several significant
features. We believe that rebates, loan programs, and
performance based incentives are all effective means of
stimulating demand. Allowing states to choose between these
incentives will enable the Act to expand existing state
programs that have been effective in promoting solar
installations. In addition, the states' matching funds
requirements will leverage available federal appropriations and
increase the resulting deployment of solar technologies, both
of which are high priorities for the Department.
To maximize the effectiveness of the proposed legislation,
we would recommend two changes. First, while we support the
state match requirement, we propose that the cost share be set
at 50 percent to increase the potential leverage of federal
funds. Second, the Secretary should be given the ability to
reduce this as necessary to increase the overall effectiveness
of the program. We also believe the program could be designed
in a creative way such as working with municipalities to
promote photovoltaic installations through innovative local
programs.
We note that by our estimates, the $250 million authorized
for FY 2012 would yield roughly 100,000 rooftop solar systems,
and may not be sufficient to put us on a trajectory to meet the
goal of 10 million solar roofs. With these changes, the
legislation could be an effective tool in increasing deployment
of solar electricity technologies Nationwide. We note that
existing authorities, such as the competitive portion of the
state energy program, would allow DOE to undertake such a
program already.
s. 3396--supply star act of 2010
Supply chain energy efforts can make an important
contribution to overall industrial efficiency and the
competitive position of domestic suppliers. Analysis suggests
that a large part of the carbon footprint for many consumer
products can be attributed to the supply chain--from raw
materials, transport, and packaging to the energy consumed in
manufacturing processes--on the order of 40 to 60 percent\1\.
---------------------------------------------------------------------------
\1\Source: Climate Change and Supply Chain Management, McKinsey
Quarterly, McKinsey & Company, July 2008.
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The Supply Star legislation seeks to build upon existing
best practices in the industrial community by establishing a
voluntary recognition program that supports and promotes
products and companies with highly energy- and resource-
efficient supply chains.
DOE and the Environmental Protection Agency (EPA) both have
existing initiatives that address supply chain efficiency, such
as Save Energy Now at DOE and the Smart Way
TransportTM program at EPA. The legislation should
coordinate with and leverage these programs as a structure
through which Supply Star activities could be conducted. For
example, through its national Save Energy Now initiative, DOE
encourages manufacturing companies to engage their supply
chains in energy and carbon management. Specifically, DOE
develops processes and resources to assist companies in
promoting energy management to their industrial suppliers and
customers. Save Energy Now LEADER Companies make a voluntary
commitment to reduce their energy intensity by 25 percent in 10
years. Many of these companies are interested in improving the
efficiency of their supply chains as well.
The Supply Star bill also builds upon Superior Energy
Performance (SEP), a voluntary certification program working to
provide industrial facilities with a roadmap for achieving
continual improvement in energy efficiency while maintaining
competitiveness. A central element of SEP is implementation of
the forthcoming International Organization for Standardization
(ISO) 50001 energy management standard, with additional
requirements to achieve and document energy intensity
improvements. DOE is working through SEP to bring ISO 50001 to
the U.S. Upon its expected publication in 2011 this American
National Standards Institute-accredited program will provide
companies with a framework for fostering energy-efficiency at
the plant level and a consistent methodology for measuring and
validating energy efficiency and intensity improvements. This
new framework will be an important tool to integrate into
supply chain efforts.
s. 3251--improving energy efficiency and renewable energy use by
federal agencies act of 2010
On October 5th, President Obama signed Executive Order
13514 requiring Federal agencies to set GHG emission reduction
targets, increase energy efficiency, reduce fleet petroleum
use, conserve water, reduce waste and promote environmentally-
responsible produce purchases by federal agencies. With this
action, the President directed agencies to demonstrate the
Federal government's commitment, over and above what is already
being done, to reducing emissions and saving money.
As a whole, the Federal government has made significant
progress in meeting the energy requirements of EISA 2007 and
EPAct 2005. Further progress on these efforts would be
bolstered by S. 3251. The Department is particularly supportive
of provisions clarifying the definition of allowable
``renewable'' energy sources, and authorizing the creation of a
revolving fund for Federal facility energy efficiency and
renewable energy projects.
The Department looks forward to working with the
Subcommittee on legislation that would provide agencies with
the flexibility to purchase renewable energy for appropriate
time periods, that do not exceed asset life, create appropriate
risk sharing between project developers and taxpayers, and that
recognize the importance of fiscal responsibility and
Congressional Budget Office scoring of contracts. This
authority would provide opportunities for more on-site
renewable power at Federal agencies and would provide strong
support for growing our domestic clean energy economy.
The Department's recommended definition of renewable energy
follows the definition in section 203 of EPAct 2005, with an
additional recommendation to allow for both electric energy and
thermal energy from renewable sources. It is very important to
allow thermal energy to count as renewable energy, particularly
because renewable thermal energy sources such as ground source
heat pumps are often the lowest-cost option for displacing
purchased energy and are already widely deployed. This approach
contrasts with the current definition which is limited only to
``renewable electricity,'' a definition that reduces incentives
for this valuable and cost-effective form of renewable power.
The Department fully supports the creation of a revolving
loan fund based on best practices and subject to appropriate
interest rates for Federal facility energy efficiency and
renewable energy projects. There is considerable experience and
success at the state and local level with using revolving loan
funds to assist innovative projects to improve energy
efficiency. In addition, there is Federal experience with a
similar concept within the General Services Administration
(GSA) that funds agency relocations, and agencies reimburse the
fund at slightly above costs to gradually increase the amount
of funds available for lending.
Federal agencies are already responding to the requirements
of EISA Section 432 to survey their facilities for potential
energy efficiency and renewable energy upgrades, as well as to
complete energy audits and to report on measures taken. The
Department recommends that the renewable energy facility
surveys called for in S. 3251 Section 5 should be included as a
modification of EISA Section 432.
DOE's Federal Energy Management Program is already at work
implementing provisions similar to the Federal energy
management and data collection standard called for in S. 3251
Section 7. As required under EISA Section 432, DOE will publish
overarching guidance for implementation of all Section 432
requirements in 2010. The Department is also developing a web-
based tracking system for facility-level energy data and
identified or implemented energy conservation measures per
EISA. Tasking the GSA to deploy a similar publicly-available
resource with facility-level energy data would create
redundancy as the Department's compliance tracking system will
be deployed for use by all agencies in July 2010.
s. 679--heavy duty hybrid vehicle research, development, and
demonstration act
The program authorized by S. 679 would complement several
of the Department's current activities focused on increasing
vehicle energy efficiency. One of those programs is the
SuperTruck Program, in which DOE is seeking to improve the
freight hauling efficiency of Class 8 trucks by 50 percent.
Other complementary efforts underway include: (1) the
development of hybrid school bus technology; (2) research,
development, and demonstration of medium-duty utility bucket
trucks and passenger shuttles using a plug-in hybrid electric
system; and (3) other medium and heavy duty truck deployment
activities supported by our Clean Cities program. S. 679 has
the potential to increase the fuel economy attainable by
vehicles in this sector.
There are several technical definitions and reporting
requirements about which we would like to seek clarification,
and the Department looks forward to working with the
subcommittee on those provisions.
s. 2900--gas turbine efficiency act of 2009
The Gas Turbine Efficiency Act would establish a research,
development, and technology demonstration program to improve
the efficiency of gas turbines used in combined cycle and
simple cycle power generation systems.
The Department believes that industry has economic
incentives to invest in research, development and demonstration
to increase the efficiency of gas turbines. To the extent that
the private sector underinvests in basic research, DOE has
sufficient authority and existing programs to improve high
temperature materials applicable to a range of energy
technologies.
The bill is similar to an existing successful program
within DOE. The Advanced Turbine Systems Program, a research,
development and demonstration collaborative between the
Department's Offices of Energy Efficiency and Renewable Energy
and Fossil Energy, successfully developed and deployed advanced
turbine material and coating leading to today's turbine
efficiencies.
The legislation outlines activities DOE already performs.
For example, through its Industries of the Future
(crosscutting) investments, DOE's Industrial Technology Program
(ITP) aids the development of advanced manufacturing processes
for the expanded use of lightweight materials such as titanium.
Those breakthroughs help to drive production cost down and
market impact up. In other efforts, ITP promoted advanced
alloys of steel to support many of the new clean energy
products being developed today. Nanocoating technologies are
still another group of innovations developed with the
assistance of ITP that now extend the life of tooling systems
and provide wear resistance to reduce the cost of manufacture
and extend the useful life of products. All of these efforts
support the overarching objective of reducing the energy
intensity of Industry to help advance the Administration's
energy security and environmental performance goals.
The Department is committed to continuing research of high
temperature materials which will help industry develop more
efficient energy technologies. Meanwhile, the private sector
has economic incentive to invest in the development and
demonstration of efficient gas turbines. Therefore, private
sector work on later stages of efficient natural gas turbine
development and demonstration will likely be conducted without
the need for additional funding authorizations beyond that
already in place.
In conclusion, the Department of Energy thanks the
Subcommittee for the opportunity to comment on these proposed
initiatives. We look forward to working with Congress to
develop strong, effective clean energy policy to ensure U.S.
leadership on these global issues and in the clean energy
economy.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill S. 3396, as ordered reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italic, existing law in
which no change is proposed is shown in roman):
ENERGY POLICY AND CONSERVATION ACT
AN ACT To increase domestic energy supplies and availability; to
restrain energy demand; to prepare for energy emergencies; and for
other purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, That this
Act may be cited as the ``Energy Policy and Conservation Act''.
* * * * * * *
TITLE III--IMPROVING ENERGY EFFICIENCY
PART A--AUTOMOTIVE FUEL ECONOMY
PART B--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS OTHER THAN
AUTOMOBILES
* * * * * * *
ENERGY STAR PROGRAM
Sec. 324A. (a) In General.--There is established within the
Department of Energy and the Environmental Protection Agency a
voluntary program to identify and promote energy-efficient
products and buildings in order to reduce energy consumption,
improve energy security, and reduce pollution through voluntary
labeling of, or other forms of communication about, products
and buildings that meet the highest energy conservation
standards.
* * * * * * *
SEC. 324B. SUPPLY STAR PROGRAM.
(a) In General.--There is established within the Department
of Energy a Supply Star program to identify and promote
practices, recognize companies, and, as appropriate, recognize
products that use highly efficient supply chains in a manner
that conserves energy, water, and other resources.
(b) Coordination.--In carrying out the program described in
subsection (a), the Secretary shall--
(1) consult with other appropriate agencies; and
(2) coordinate efforts with the Energy Star program
established under section 324A.
(c) Duties.--In carrying out the Supply Star program
described in subsection (a), the Secretary shall--
(1) promote practices, recognize companies, and, as
appropriate, recognize products that comply with the
Supply Star program as the preferred practices,
companies, and products in the marketplace for
maximizing supply chain efficiency;
(2) work to enhance industry and public awareness of
the Supply Star program;
(3) collect and disseminate data on supply chain
energy resource consumption;
(4) develop and disseminate metrics, processes, and
analytical tools (including software) for evaluating
supply chain energy resource use;
(5) develop guidance at the sector level for
improving supply chain efficiency;
(6) work with domestic and international
organizations to harmonize approaches to analyzing
supply chain efficiency, including the development of a
consistent set of tools, templates, calculators, and
databases; and
(7) work with industry, including small businesses,
to improve supply chain efficiency through activities
that include--
(A) developing and sharing best practices;
and
(B) providing opportunities to benchmark
supply chain efficiency.
(d) Evaluation.--In any evaluation of supply chain
efficiency carried out by the Secretary with respect to a
specific product, the Secretary shall consider energy
consumption and resource use throughout the entire lifecycle of
a product, including production, transport, packaging, use, and
disposal.
(e) Grants and Incentives.--
(1) In general.--The Secretary may award grants or
other forms of incentives on a competitive basis to
eligible entities, as determined by the Secretary, for
the purposes of--
(A) studying supply chain energy resource
efficiency; and
(B) demonstrating and achieving reductions in
the energy resource consumption of commercial
products through changes and improvements to
the production supply and distribution chain of
the products.
(2) Use of information.--Any information or data
generated as a result of the grants or incentives
described in paragraph (1) shall be used to inform the
development of the Supply Star Program.
(f) Training.--The Secretary shall use funds to support
professional training programs to develop and communicate
methods, practices, and tools for improving supply chain
efficiency.
(g) Effect of Impact on Climate Change.--For purposes of
this section, the impact on climate change shall not be a
factor in determining supply chain efficiency.
(h) Effect of Outsourcing of American Jobs.--For purposes
of this section, the outsourcing of American jobs in the
production of a product shall not count as a positive factor in
determining supply chain efficiency.
(i) Authorization of Appropriations.--There are authorized
to be appropriated to carry out this section such sums as are
necessary.
* * * * * * *