[House Report 115-575]
[From the U.S. Government Publishing Office]


115th Congress     }                                         {   Report
                           HOUSE OF REPRESENTATIVES
 2d Session        }                                         {   115-575

======================================================================



 
     ENERGY SAVINGS THROUGH PUBLIC-PRIVATE PARTNERSHIPS ACT OF 2017

                                _______
                                

 February 23, 2018.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Walden, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 723]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 723) to amend the National Energy Conservation 
Policy Act to encourage the increased use of performance 
contracting in Federal facilities, and for other purposes, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     3
Background and Need for Legislation..............................     3
Committee Action.................................................     4
Committee Votes..................................................     4
Oversight Findings and Recommendations...........................     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     4
Congressional Budget Office Estimate.............................     4
Federal Mandates Statement.......................................    10
Statement of General Performance Goals and Objectives............    10
Duplication of Federal Programs..................................    11
Committee Cost Estimate..........................................    11
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......    11
Disclosure of Directed Rule Makings..............................    11
Advisory Committee Statement.....................................    11
Applicability to Legislative Branch..............................    11
Section-by-Section Analysis of the Legislation...................    11
Changes in Existing Law Made by the Bill, as Reported............    12

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Energy Savings Through Public-Private 
Partnerships Act of 2017''.

SEC. 2. USE OF ENERGY AND WATER EFFICIENCY MEASURES IN FEDERAL 
                    BUILDINGS.

  (a) Energy Management Requirements.--Section 543(f)(4) of the 
National Energy Conservation Policy Act (42 U.S.C. 8253(f)(4)) is 
amended by striking ``may'' and inserting ``shall''.
  (b) Reports.--Section 548(b) of the National Energy Conservation 
Policy Act (42 U.S.C. 8258(b)) is amended--
          (1) in paragraph (3), by striking ``and'' at the end;
          (2) in paragraph (4), by striking the period at the end and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(5)(A) the status of the energy savings performance 
        contracts and utility energy service contracts of each agency;
          ``(B) the investment value of the contracts;
          ``(C) the guaranteed energy savings for the previous year as 
        compared to the actual energy savings for the previous year;
          ``(D) the plan for entering into the contracts in the coming 
        year; and
          ``(E) information explaining why any previously submitted 
        plans for the contracts were not implemented.''.
  (c) Definition of Energy Conservation Measures.--Section 551(4) of 
the National Energy Conservation Policy Act (42 U.S.C. 8259(4)) is 
amended by striking ``or retrofit activities'' and inserting ``retrofit 
activities, or energy consuming devices and required support 
structures''.
  (d) Authority To Enter Into Contracts.--Section 801(a)(2)(F) of the 
National Energy Conservation Policy Act (42 U.S.C. 8287(a)(2)(F)) is 
amended--
          (1) in clause (i), by striking ``or'' at the end;
          (2) in clause (ii), by striking the period at the end and 
        inserting ``; or''; and
          (3) by adding at the end the following:
                          ``(iii) limit the recognition of operation 
                        and maintenance savings associated with systems 
                        modernized or replaced with the implementation 
                        of energy conservation measures, water 
                        conservation measures, or any combination of 
                        energy conservation measures and water 
                        conservation measures.''.
  (e) Miscellaneous Authority.--Section 801(a)(2) of the National 
Energy Conservation Policy Act (42 U.S.C. 8287(a)(2)) is amended by 
adding at the end the following:
                  ``(H) Miscellaneous authority.--Notwithstanding any 
                other provision of law, a Federal agency may sell or 
                transfer energy savings and apply the proceeds of the 
                sale or transfer to fund a contract under this 
                title.''.
  (f) Payment of Costs.--Section 802 of the National Energy 
Conservation Policy Act (42 U.S.C. 8287a) is amended by striking ``(and 
related operation and maintenance expenses)'' and inserting ``, 
including related operations and maintenance expenses''.
  (g) Definition of Federal Building.--Section 551(6) of the National 
Energy Conservation Policy Act (42 U.S.C. 8259(6)) is amended by 
striking the semicolon at the end and inserting ``; the term does not 
include a dam, reservoir, or hydropower facility owned or operated by a 
Federal agency;''.
  (h) Definition of Energy Savings.--Section 804(2) of the National 
Energy Conservation Policy Act (42 U.S.C. 8287c(2)) is amended--
          (1) in subparagraph (A), by striking ``federally owned 
        building or buildings or other federally owned facilities'' and 
        inserting ``Federal building (as defined in section 551)'' each 
        place it appears;
          (2) in subparagraph (C), by striking ``; and'' and inserting 
        a semicolon;
          (3) in subparagraph (D), by striking the period at the end 
        and inserting a semicolon; and
          (4) by adding at the end the following:
                  ``(E) the use, sale, or transfer of energy 
                incentives, rebates, or credits (including renewable 
                energy credits) from Federal, State, or local 
                governments or utilities; and
                  ``(F) any revenue generated from a reduction in 
                energy or water use, more efficient waste recycling, or 
                additional energy generated from more efficient 
                equipment.''.

                          Purpose and Summary

    H.R. 723 facilitates the use of energy savings performance 
contracts (ESPCs) and utility energy service contracts (UESCs) 
to utilize private sector investment to upgrade the energy and 
water efficiency of Federal facilities without any up-front 
cost to taxpayers. The bill helps to reduce Federal energy 
costs, while saving money, creating jobs, and reducing waste.

                  Background and Need for Legislation

    The Committee on Energy and Commerce has recognized the 
significant benefits of energy efficiency efforts in conserving 
domestic resources, saving American consumers money, 
strengthening economic competitiveness, and reducing 
environmental impacts. The energy efficiency ``resource'' plays 
an increasingly important role in the nation's energy strategy. 
The advancement of cost-effective efficiency programs and 
technologies can contribute to the nation's goal of energy 
independence by reducing demand and using supplies in a more 
effective manner. H.R. 723 seeks to increase energy efficiency 
and water conservation measures in the Federal Government.
    According to the Energy Information Administration, the 
Federal Government is the single largest energy consumer in the 
nation. Congress therefore expects the government to pursue its 
own energy efficiency efforts vigorously--not only to conserve 
energy resources and taxpayer dollars, but to lead by example. 
To that end, H.R. 723 further encourages the federal agencies 
to enter into energy savings performance contracts (ESPCs) and 
utility energy service contracts (UESCs).
    ESPCs and UESCs are proven methods by which Federal 
agencies can increase efficiency, thereby reducing energy 
costs. In both cases, an approved contractor designs and 
installs systems and equipment to reduce the energy consumption 
of a Federal facility and gets paid back through savings on 
utility bills that result from the project over a stipulated 
period of time. By law, and on a negotiated basis, the 
government never pays more than it would have paid for 
utilities if it had not entered into the contract. Using an 
ESPC or UESC in the Federal Government eliminates the need for 
appropriated dollars for equipment replacement and for 
operations and maintenance of such energy consuming equipment.
    For over 20 years, performance-based contracts for energy 
savings have provided upgrades to Federal buildings, including 
the House and Senate Office Buildings and the U.S. Capitol. 
According to the Federal Energy Management Program, 
approximately 650 performance contracts worth $8 billion have 
been awarded throughout 25 Federal agencies and in all 50 
States. These projects have resulted in energy savings valued 
at nearly $15 billion, of which approximately $11 billion went 
to repay project investments, accruing a net savings of $4 
billion to the Federal Government.
    Greater use of ESPCs has been impaired by administrative 
delay and process issues within Federal agencies, some of which 
are the result of ambiguity in the underlying law. H.R. 723 
seeks to eliminate administrative roadblocks by clarifying 
certain provisions of the law to reduce confusion resulting 
from statutory ambiguities. In addition, the legislation 
requires additional reporting requirements, thus ensuring 
improved transparency.

                            Committee Action

    The Committee on Energy and Commerce has not held hearings 
on the legislation.
    On June 7, 2017, the full Committee on Energy and Commerce 
met in open markup session and ordered H.R. 723, without 
amendment, favorably reported to the House by unanimous 
consent.

                            Committee Votes

    Clause 3(b) of rule XIII requires the Committee to list the 
record votes on the motion to report legislation and amendments 
thereto. There were no record votes taken in connection with 
ordering H.R. 723 reported.

                 Oversight Findings and Recommendations

    Pursuant to clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII, the Committee has not held hearings on this 
legislation.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    Pursuant to clause 3(c)(2) of rule XIII, the Committee 
finds that H.R. 723 would result in no new or increased budget 
authority, entitlement authority, or tax expenditures or 
revenues.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII, the following is 
the cost estimate provided by the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, February 16, 2018.
Hon. Greg Walden,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 723, the Energy 
Savings Through Public-Private Partnerships Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Megan 
Carroll.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 723--Energy Savings Through Public-Private Partnerships Act of 
        2017

    Summary: H.R. 723 would modify agencies' authority to enter 
into energy savings performance contracts (ESPCs), a specific 
type of long-term contract used to procure equipment and 
services to conserve energy in federal buildings. The bill also 
would specify new reporting requirements for federal agencies.
    In CBO's view, commitments under ESPCs create direct 
spending because agencies enter into such contracts without 
appropriations in advance to cover their full costs. On the 
basis of that view, CBO estimates that enacting H.R. 723 would 
increase direct spending by $441 million over the 2019-2027 
period. CBO also estimates that reductions in federal agencies' 
energy costs attributable to investments in energy-related 
services and equipment procured through contracts authorized 
under the bill would total $166 million over the 2019-2027 
period (and additional amounts after 2027). Over that period, 
CBO also estimates that discretionary spending for certain 
services related to those contracts would total $36 million.
    Because H.R. 723 would affect direct spending, pay-as-you-
go procedures apply. Enacting the bill would not affect 
revenues.
    CBO estimates that enacting H.R. 723 would not increase net 
direct spending or on-budget deficits by more than $2.5 billion 
in any of the four consecutive 10-year periods beginning in 
2028.
    For purposes of determining budget-related points of order 
for legislation considered by the House, section 5109 of H. 
Con. Res. 71, the Concurrent Resolution on the Budget for 
Fiscal Year 2018, specifies how CBO should prepare cost 
estimates for ESPCs. Specifically, that resolution requires CBO 
to estimate, on a net-present value basis, the lifetime net 
cost or savings attributable to projects financed by such 
contracts and to record that amount as an upfront change in 
direct spending. Using those procedures, CBO estimates that 
H.R. 723 would reduce direct spending by $27 million over the 
2019-2027 period. However, H. Con. Res. 71 also specifies that, 
in the House of Representatives, any estimated savings 
calculated on that basis may not be used as an offset for 
purposes of budget enforcement.
    H.R. 723 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 effects of this legislation are shown in the 
following table. Because the bill would affect energy-related 
spending by agencies throughout the federal government, the 
costs of this legislation would be spread across most budget 
functions.
    Background: Under current law, a variety of statutory 
provisions and executive orders direct federal agencies to meet 
certain goals to reduce the amount of energy used, increase the 
consumption of electricity that is generated from renewable 
sources, reduce emissions of greenhouse gases, and ensure that 
federal facilities meet certain standards related to the use of 
sustainable resources. To support investments in energy-
efficient and renewable technologies necessary to achieve those 
goals, federal agencies sometimes use ESPCs--specific types of 
long-term contracts that enable nonfederal vendors to finance 
energy-related investments on behalf of the government.
    Under such contracts, agencies agree to pay vendors for 
energy conservation measures and related financing costs over 
time on the basis of anticipated and realized reductions in 
energy costs. Typically, an ESPC vendor develops a baseline 
estimate of energy consumption that would occur in the absence 
of energy conservation measures and estimates the reductions in 
energy consumption and energy costs that would result from an 
ESPC-funded project. Those estimated reductions are used to set 
the annual payments to the vendor for the services and 
equipment provided under the ESPC. According to the Department 
of Energy, the typical term of those payments under an ESPC is 
at least 17 years--that is, it takes at least 17 years, on 
average, for the government to realize sufficient savings to 
cover the contractual payments due to the vendor. After the 
contract is fully repaid, additional savings generated by 
energy conservation measures accrue to the government.

               ESTIMATED BUDGETARY EFFECTS OF H.R. 723 AS REPORTED BY THE SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES ON MAY 24, 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2018   2019   2020   2021    2022    2023    2024    2025    2026    2027   2018-2022  2018-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              INCREASES IN DIRECT SPENDINGa
 
Federal Obligations Under ESPCsb
    Estimated Budget Authority.......................      0     55     55      55      55      55      55      55      55      55        220        495
    Estimated Outlays................................      0     17     39      55      55      55      55      55      55      55        166        441
 
                                            INCREASES OR DECREASES (-) IN SPENDING SUBJECT TO APPROPRIATIONa
 
Reductions in Energy and     Energy-Related Costs
 Attributable to ESPCs
    Estimated Authorization Level....................      0     -1     -4      -8     -13     -18     -23     -28     -33     -38        -26       -166
    Estimated Outlays................................      0     -1     -4      -8     -13     -18     -23     -28     -33     -38        -26       -166
Appropriations for ESPC-   Related Services
    Estimated Authorization Level....................      0      *      1       2       3       4       5       6       7       8          6         36
    Estimated Outlays................................      0      *      1       2       3       4       5       6       7       8          6         36
Total Changes in Spending Subject to Appropriation
    Estimated Authorization Level....................      0     -1     -3      -6     -10     -14     -18     -22     -26     -30        -20       -130
    Estimated Outlays................................      0     -1     -3      -6     -10     -14     -18     -22     -26     -30        -20       -130
--------------------------------------------------------------------------------------------------------------------------------------------------------
 Memorandum: Estimated Net Present Value of All Budgetary Effects related to ESPCs under H.R. 723, Following Procedures Specified in Section 5109 of H.
                                      Con. Res. 71, as passed by the House of Representatives on October 25, 2017.
 
                                         DECREASES IN DIRECT SPENDING AS ESTIMATED ON A NET-PRESENT-VALUE BASISc
 
Decreases in Direct Spending
    Estimated Budget Authority.......................      0     -3     -3      -3      -3      -3      -3      -3      -3      -3        -12        -27
    Estimated Outlays................................      0     -3     -3      -3      -3      -3      -3      -3      -3      -3        -12        -27
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESPCs = energy savings performance contracts. * = between zero and $500,000.
aThe estimates reflect CBO's view of how cash flows related to ESPCs should be recorded in the federal budget. Since ESPCs were first implemented in
  1998, however, the Administration has not recorded the full extent of federal obligations under ESPCs upfront when contracts were signed. Instead, the
  Administration records ongoing contract payments to vendors on a year-by-year basis as appropriations for such payments are provided. If the
  Administration was to continue following that practice for executing ESPCs under H.R. 723, agencies' total energy-related costs would be largely
  unchanged during the contract period, when estimated savings from reduced energy use would be paid to vendors under ESPC contracts. As a result, CBO
  estimates that there would be no significant reduction in appropriations from implementing H.R. 723 over the 10-year period covered by this estimate.
  If expected reductions in energy use continued beyond the contract period, budgetary savings would accrue to the federal government if annual
  appropriations for agencies' energy-related spending were reduced accordingly.
bEstimated budget authority reflects the value of energy conservation measures as installed plus the net present value of the portion of vendors'
  borrowing costs attributable to contract interest rates that would exceed U.S. Treasury interest rates. Estimated outlays stemming from such
  commitments are spread across the period during which the vendor is expected to construct, manufacture, or purchase energy conservation assets on
  behalf of the federal government.
cSection 5109 of H. Con. Res. 71, as passed by the House of Representatives on October 25, 2017, specifies an alternative method for estimating the
  budgetary effects of ESPCs and similar contracts. That methodology requires CBO to calculate, on a net-present-value basis, the lifetime net cost or
  savings attributable to projects financed by ESPCs and to record that amount as an upfront change in direct spending in the year when commitments are
  expected to be made. However, H. Con. Res. 71 also specifies that any estimating savings calculated on that basis may not be used as an offset for
  purposes of budget enforcement.

    CBO generally expects that implementing ESPCs will affect 
both direct spending and spending subject to appropriation. The 
rationale for CBO's longstanding budgetary treatment of ESPCs, 
and differences between CBO's view and the Administration's, 
are discussed in depth in a CBO report on that topic.\1\ In 
brief, upon entering into an ESPC, the government effectively 
commits to making payments to a vendor in future years before 
having appropriations to cover all of the resulting costs; in 
CBO's view, the authority to enter into such contractually 
binding agreements without appropriations is a form of direct 
spending. ESPCs permit agencies to pay vendors for energy 
conservation measures and related financing costs over time on 
the basis of anticipated and realized reductions in energy 
costs, which are generally paid from discretionary annual 
appropriations.
---------------------------------------------------------------------------
    \1\See Congressional Budget Office, Using ESPCs to Finance Federal 
Investments in Energy-Efficient Equipment, (February 2015), 
www.cbo.gov/publication/49869.
---------------------------------------------------------------------------
    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted by the start of fiscal year 2019.
    H.R. 723 would make a variety of changes to the ESPC 
statute. In particular, the bill would:
           Require agencies to implement energy 
        conservation measures identified as being cost-
        effective;
           Expand the definition of an energy 
        conservation measure to include the acquisition of 
        energy-consuming devices and support structures (such 
        as appliances located within federal buildings);
           Expand the definition of energy savings that 
        may be included in an ESPC to include the use, sale, or 
        transfer of energy incentives, rebates, or credits 
        (such as renewable energy certificates) as well as 
        savings from reductions in water or energy use, more 
        efficient waste recycling, or additional energy 
        generated from energy conservation measures;\2\
---------------------------------------------------------------------------
    \2\Renewable energy certificates represent the rights to the 
nonpower renewable and environmental attributes of electricity 
generated from renewable resources. Such certificates, and other 
similar incentives and rebates, can be sold separately from the 
underlying units of physical electricity.
---------------------------------------------------------------------------
           Authorize agencies to use, sell, or transfer 
        energy incentives, rebates, or credits as a means of 
        making payments to vendors under ESPCs;
           Require agencies to include anticipated 
        reductions in operation and maintenance (O&M) costs 
        when estimating the savings attributable to energy 
        conservation measures acquired through an ESPC; and
           Specify that ESPCs could not be used to 
        install energy conservation measures at dams, 
        reservoirs, or hydropower facilities that are owned or 
        operated by a federal agency.
    Taken as a whole, CBO expects that those changes would 
allow agencies to use ESPCs to pay for new energy-related 
projects that otherwise would not be undertaken under current 
law. In general, we expect that broadening the scope of effects 
that could be counted as energy savings in particular, by 
allowing agencies to include the full extent of anticipated 
reductions in O&M costs stemming from ESPC-financed investments 
would enable agencies to make investments that might not 
otherwise be justifiable within existing requirements. We also 
expect that permitting agencies to count incentives such as 
renewable energy credits as savings and use them to pay vendors 
would lead to greater investments in renewable technologies.
    CBO estimates that, under H.R. 723, agencies would use 
ESPCs to implement additional energy conservation measures with 
an underlying cost of about $40 million annually. That estimate 
represents a relatively modest incremental increase in 
anticipated spending for energy-related investments. By 
comparison, since 2012 overall spending by federal agencies for 
energy-related investments has averaged nearly $1.7 billion 
annually, with more than 40 percent of energy conservation 
measures or about $700 million annually acquired through ESPCs 
or similar contracts.
    CBO estimates that enacting H.R. 723 would increase direct 
spending for contractual obligations to pay for energy-related 
investments and, on net, reduce the need for discretionary 
spending to cover agencies' annual energy costs.
    Direct spending: Under H.R. 723, CBO estimates that direct 
spending for the upfront cost of contractual commitments to 
acquire additional energy conservation measures through ESPCs 
would total $55 million annually. CBO's estimate of direct 
spending reflects an amount equal to the annual cost of energy 
conservation measures as installed (about $40 million), plus 
the net present value of the portion of the contractor's 
borrowing costs that are attributable to interest rates that 
would exceed U.S. Treasury interest rates (about $15 
million).\3\ The portion of the borrowing costs that are 
equivalent to the amount of interest the Treasury would pay if 
projects were financed with appropriated funds are not included 
in our estimate because, for the enforcement of Congressional 
budget rules, changes in the amount of interest the Treasury 
pays are not reflected in cost estimates. CBO's estimate of 
spending reflects its judgment as to when equipment or services 
would be provided typically over a three-year period for 
equipment. On that basis, CBO estimates that direct spending 
under H.R. 723 would total $441 million over the 2019-2027 
period.
---------------------------------------------------------------------------
    \3\The methodology that CBO follows in preparing cost estimates for 
proposals involving ESPCs is consistent with scorekeeping guidelines 
set forth in the joint statement of managers that accompanied the 
conference reports on the Balanced Budget Act of 1997. See House 
Committee on the Budget, Conference Report to Accompany H.R. 2015, 
House Report 105-217 (July 30, 1997), pp. 1007-1014, http://go.usa.gov/
hb8Q (PDF, 3.1 MB). In particular, Rule 11 specifies scoring treatments 
for legislation that authorizes agencies to enter into capital leases 
and other third-party financing arrangements.
---------------------------------------------------------------------------
    Spending subject to appropriation: ESPCs permit federal 
agencies to pay vendors for energy conservation measures and 
related financing costs over time on the basis of anticipated 
and realized reductions in energy costs, which are generally 
paid from annual appropriations. CBO estimates that reductions 
in energy and related costs attributable to ESPCs entered into 
under H.R. 723 would occur gradually over the period of time 
covered by such contracts--up to 25 years. As a result, most 
anticipated savings attributable to projects financed by such 
contracts would occur beyond the period covered by this 
estimate.
    CBO anticipates that ESPC-funded projects under H.R. 723 
would, on average, have payback periods averaging about 19 
years. Based on an analysis of data related to existing ESPCs, 
CBO also estimates that annual reductions in energy and energy-
related costs would equal roughly 11 percent of the underlying 
cost of energy conservation measures. On that basis, CBO 
estimates that reductions in energy-related federal costs 
attributable to ESPCs entered into pursuant to H.R. 723 would 
total $166 million over the 2019-2027 period, with additional 
savings occurring in later years.
    Those estimated savings would be partially offset by 
increased spending for certain services related to ESPCs 
entered into under the bill. Typically, when using such a 
contract, an agency agrees to make payments for services 
related to the operation and maintenance of newly installed 
equipment. Such agreements include measurement and verification 
activities to confirm that projects reduce energy consumption 
as guaranteed by the contract. Because the government can opt 
out of those services at any time, such contract-related costs 
are considered discretionary. For this estimate, CBO projects 
that the cost of such services would total about 2.5 percent of 
the value of energy conservation measures acquired through 
ESPCs. Assuming appropriation of the necessary amounts, CBO 
estimates that discretionary spending for optional contract-
related services would total $36 million over the 2019-2027 
period and gradually increase as new contracts are entered into 
each year and payments on older contracts continue. Netting 
those costs against the projected savings in energy and related 
costs, CBO estimates discretionary savings of $130 million over 
the 2019-2027 period.
    Estimated budgetary effects attributable to ESPCs under H. 
Con. Res. 71: As previously mentioned, in preparing estimates 
for legislation related to ESPCs, section 5109 of H. Con. Res. 
71 requires CBO to estimate the net present value of all 
budgetary effects attributable to ESPC contracts as a change in 
direct spending. Specifically, that methodology requires CBO to 
calculate, on a net-present-value basis, the lifetime net cost 
or savings attributable to projects financed by ESPCs and to 
record that amount as an upfront change in direct spending in 
the year when commitments are expected to be made.
    Following that methodology, CBO estimates that one year's 
worth of projects pursued through ESPCs under H.R. 723 would 
involve payments to contractors totaling, on a nominal basis 
$89 million over nearly 20 years. Such payments include $40 
million for repayments of principal amounts borrowed by the 
contractors to finance projects, $28 million in interest costs, 
and $21 million in payments for optional contract-related 
services. We also estimate that nominal energy savings 
attributable to one year's worth of projects would total $101 
million over the anticipated useful life of equipment. 
Adjusting the discount rate for the market risk associated with 
the various cash flows, CBO estimates that one year's worth of 
projects would generate net savings, on a net-present-value 
basis, of $3 million--or $27 million for ESPCs entered into 
during the 2019-2027 period covered by this estimate.
    However, H. Con. Res. 71 also specifies that, in the House 
of Representatives, any savings estimated by CBO using those 
procedures shall not be counted as an offset for purposes of 
budget enforcement.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table. 
Section 5109 of H. Con. Res. 71 does not apply to estimates for 
the Statutory Pay-As-You-Go Act; thus, the amounts shown here 
reflect CBO's estimates of direct spending effects.

          CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 723, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON ENERGY AND COMMERCE ON JUNE 7, 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2018    2019    2020    2021    2022    2023    2024    2025    2026    2027   2018-2022  2018-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET INCREASE IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact....................       0      17      39      55      55      55      55      55      55      55        166        441
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long-term deficit and net direct spending: CBO 
estimates that enacting the legislation would not increase net 
on-budget deficits or net direct spending by $2.5 billion or 
more in any of the four consecutive 10-year periods beginning 
in 2027.
    Intergovernmental and private-sector impact: H.R. 723 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Previous CBO estimate: On February 16, 2018, CBO 
transmitted a revised cost estimate for S. 239, the Energy 
Savings Through Public-Private Partnerships Act of 2017, as 
reported by the Senate Committee on Energy and Natural 
Resources on May 24, 2017.
    H.R. 723 and S. 239 are virtually identical and CBO's 
estimates of the budgetary effects under the two bills are the 
same. However, under H. Con. Res. 71, our revised estimate of 
S. 239 would reflect one further difference. Specifically, the 
provision that prohibits any savings estimated by CBO to be 
considered as an offset for purposes of budget enforcement 
applies only to legislation considered by the House of 
Representatives, not the Senate. Thus, while H.R. 723 would 
have no effect on direct spending for purposes of budget 
enforcement in the House, S. 239 would be considered as 
reducing net direct spending in the Senate.
    Estimate prepared by: Federal Costs: Megan Carroll; Impact 
on State, Local, and Tribal Governments: Jon Sperl; Impact on 
the Private Sector: Amy Petz.
    Estimate approved by: H. Samuel Papenfuss, Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

         Statement of General Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII, the general 
performance goal or objective of this legislation is to 
facilitate the use of ESPCs and UESCs to utilize private sector 
investment to upgrade the energy and water efficiency of 
Federal facilities without any up-front cost to taxpayers. The 
bill helps to reduce Federal energy costs while saving money, 
creating jobs, and reducing waste.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII, no provision of 
H.R. 723 is known to be duplicative of another Federal program, 
including any program that was included in a report to Congress 
pursuant to section 21 of Public Law 111-139 or the most recent 
Catalog of Federal Domestic Assistance.

                        Committee Cost Estimate

    Pursuant to clause 3(d)(1) of rule XIII, the Committee 
adopts as its own the cost estimate prepared by the Director of 
the Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the 
Committee finds that H.R. 723 contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                  Disclosure of Directed Rule Makings

    Pursuant to section 3(i) of H. Res. 5, the Committee finds 
that H.R. 723 contains no directed rule makings.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 provides that the Act may be cited as the 
``Energy Savings Through Public-Private Partnerships Act of 
2017.''

Section 2. Use of energy and water efficiency measures in Federal 
        buildings

    Section 2 amends the National Energy Conservation Policy 
Act to encourage the increased use of performance contracting 
in Federal facilities and other purposes. Specifically, this 
section modifies language regarding energy management 
requirements, reports, the definition of energy conservation 
measures, the authority to enter into contracts, payment of 
costs, the definition of federal building, the definition of 
energy savings, and miscellaneous authorities.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                NATIONAL ENERGY CONSERVATION POLICY ACT




           *       *       *       *       *       *       *
TITLE V--FEDERAL ENERGY INITIATIVE

           *       *       *       *       *       *       *


PART 3--FEDERAL ENERGY MANAGEMENT

           *       *       *       *       *       *       *


SEC. 543. ENERGY MANAGEMENT REQUIREMENTS.

  (a) Energy Performance Requirement for Federal Buildings.--
(1) Subject to paragraph (2), each agency shall apply energy 
conservation measures to, and shall improve the design for the 
construction of, the Federal buildings of the agency (including 
each industrial or laboratory facility) so that the energy 
consumption per gross square foot of the Federal buildings of 
the agency in fiscal years 2006 through 2015 is reduced, as 
compared with the energy consumption per gross square foot of 
the Federal buildings of the agency in fiscal year 2003, by the 
percentage specified in the following table:

Fiscal Year                                         Percentage Reduction
    2006......................................................       2  
    2007......................................................       4  
    2008......................................................       9  
    2009......................................................      12  
    2010......................................................      15  
    2011......................................................      18  
    2012......................................................      21  
    2013......................................................      24  
    2014......................................................      27  
    2015......................................................       30.

  (2) An agency may exclude from the requirements of paragraph 
(1) any building, and the associated energy consumption and 
gross square footage, in which energy intensive activities are 
carried out. Each agency shall identify and list in each report 
made under section 548(a) the buildings designated by it for 
such exclusion.
  (3) Not later than December 31, 2014, the Secretary shall 
review the results of the implementation of the energy 
performance requirement established under paragraph (1) and 
submit to Congress recommendations concerning energy 
performance requirements for fiscal years 2016 through 2025.
  (b) Energy Management Requirement for Federal Agencies.--(1) 
Not later than January 1, 2005, each agency shall, to the 
maximum extent practicable, install in Federal buildings owned 
by the United States all energy and water conservation measures 
with payback periods of less than 10 years, as determined by 
using the methods and procedures developed pursuant to section 
544.
  (2) The Secretary may waive the requirements of this 
subsection for any agency for such periods as the Secretary may 
determine if the Secretary finds that the agency is taking all 
practicable steps to meet the requirements and that the 
requirements of this subsection will pose an unacceptable 
burden upon the agency. If the Secretary waives the 
requirements of this subsection, the Secretary shall, as part 
of the report required under section 548(b), notify the 
Congress in writing with an explanation and a justification of 
the reasons for such waiver.
  (3) This subsection shall not apply to an agency's facilities 
that generate or transmit electric energy or to the uranium 
enrichment facilities operated by the Department of Energy.
  (4) An agency may participate in the Environmental Protection 
Agency's ``Green Lights'' program for purposes of receiving 
technical assistance in complying with the requirements of this 
section.
  (c) Exclusions.--(1)(A) An agency may exclude, from the 
energy performance requirement for a fiscal year established 
under subsection (a) and the energy management requirement 
established under subsection (b), any Federal building or 
collection of Federal buildings, if the head of the agency 
finds that--
          (i) compliance with those requirements would be 
        impracticable;
          (ii) the agency has completed and submitted all 
        federally required energy management reports;
          (iii) the agency has achieved compliance with the 
        energy efficiency requirements of this Act, the Energy 
        Policy Act of 1992, Executive orders, and other Federal 
        law; and
          (iv) the agency has implemented all practicable, life 
        cycle cost-effective projects with respect to the 
        Federal building or collection of Federal buildings to 
        be excluded.
  (B) A finding of impracticability under subparagraph (A)(i) 
shall be based on--
          (i) the energy intensiveness of activities carried 
        out in the Federal building or collection of Federal 
        buildings; or
          (ii) the fact that the Federal building or collection 
        of Federal buildings is used in the performance of a 
        national security function.
  (2) Each agency shall identify and list, in each report made 
under section 548(a), the Federal buildings designated by it 
for such exclusion. The Secretary shall review such findings 
for consistency with the standards for exclusion set forth in 
paragraph (1), and may within 90 days after receipt of the 
findings, reverse the exclusion. In the case of any such 
reversal, the agency shall comply with the requirements of 
subsections (a) and (b)(1) for the building concerned.
  (3) Not later than 180 days after the date of enactment of 
this paragraph, the Secretary shall issue guidelines that 
establish criteria for exclusions under paragraph (1).
  (d) Implementation Steps.--The Secretary shall consult with 
the Secretary of Defense and the Administrator of General 
Services in developing guidelines for the implementation of 
this part. To meet the requirements of this section, each 
agency shall--
          (1) prepare and submit to the Secretary, not later 
        than December 31, 1993, a plan describing how the 
        agency intends to meet such requirements, including how 
        it will--
                  (A) designate personnel primarily responsible 
                for achieving such requirements;
                  (B) identify high priority projects through 
                calculation of payback periods;
                  (C) take maximum advantage of contracts 
                authorized under title VIII of this Act, of 
                financial incentives and other services 
                provided by utilities for efficiency 
                investment, and of other forms of financing to 
                reduce the direct costs to the Government; and
                  (D) otherwise implement this part;
          (2) perform energy surveys of its Federal buildings 
        to the extent necessary and update such surveys as 
        needed, incorporating any relevant information obtained 
        from the survey conducted pursuant to section 550;
          (3) using such surveys, determine the cost and 
        payback period of energy and water conservation 
        measures likely to achieve the requirements of this 
        section;
          (4) install energy and water conservation measures 
        that will achieve the requirements of this section 
        through the methods and procedures established pursuant 
        to section 544; and
          (5) ensure that the operation and maintenance 
        procedures applied under this section are continued.
  (e) Metering of Energy Use.--
          (1) Deadline.--By October 1, 2012, in accordance with 
        guidelines established by the Secretary under paragraph 
        (2), all Federal buildings shall, for the purposes of 
        efficient use of energy and reduction in the cost of 
        electricity used in such buildings, be metered. Each 
        agency shall use, to the maximum extent practicable, 
        advanced meters or advanced metering devices that 
        provide data at least daily and that measure at least 
        hourly consumption of electricity in the Federal 
        buildings of the agency. Not later than October 1, 
        2016, each agency shall provide for equivalent metering 
        of natural gas and steam, in accordance with guidelines 
        established by the Secretary under paragraph (2). Such 
        data shall be incorporated into existing Federal energy 
        tracking systems and made available to Federal facility 
        managers.
          (2) Guidelines.--
                  (A) In general.--Not later than 180 days 
                after the date of enactment of this subsection, 
                the Secretary, in consultation with the 
                Department of Defense, the General Services 
                Administration, representatives from the 
                metering industry, utility industry, energy 
                services industry, energy efficiency industry, 
                energy efficiency advocacy organizations, 
                national laboratories, universities, and 
                Federal facility managers, shall establish 
                guidelines for agencies to carry out paragraph 
                (1).
                  (B) Requirements for guidelines.--The 
                guidelines shall--
                          (i) take into consideration--
                                  (I) the cost of metering and 
                                the reduced cost of operation 
                                and maintenance expected to 
                                result from metering;
                                  (II) the extent to which 
                                metering is expected to result 
                                in increased potential for 
                                energy management, increased 
                                potential for energy savings 
                                and energy efficiency 
                                improvement, and cost and 
                                energy savings due to utility 
                                contract aggregation; and
                                  (III) the measurement and 
                                verification protocols of the 
                                Department of Energy;
                          (ii) include recommendations 
                        concerning the amount of funds and the 
                        number of trained personnel necessary 
                        to gather and use the metering 
                        information to track and reduce energy 
                        use;
                          (iii) establish priorities for types 
                        and locations of buildings to be 
                        metered based on cost-effectiveness and 
                        a schedule of one or more dates, not 
                        later than 1 year after the date of 
                        issuance of the guidelines, on which 
                        the requirements specified in paragraph 
                        (1) shall take effect; and
                          (iv) establish exclusions from the 
                        requirements specified in paragraph (1) 
                        based on the de minimis quantity of 
                        energy use of a Federal building, 
                        industrial process, or structure.
          (3) Plan.--Not later than 180 days after the date on 
        which guidelines are established under paragraph (2), 
        in a report submitted by the agency under section 
        548(a), each agency shall submit to the Secretary a 
        plan describing the manner in which the agency will 
        implement the requirements of paragraph (1), 
        including--
                  (A) how the agency will designate personnel 
                primarily responsible for achieving the 
                requirements; and
                  (B) a demonstration by the agency, complete 
                with documentation, of any finding that 
                advanced meters or advanced metering devices 
                (as those terms are used in paragraph (1)), are 
                not practicable.
          (4) Best practices report.--
                  (A) In general.--Not later than 180 days 
                after the date of enactment of this paragraph, 
                the Secretary of Energy, in consultation with 
                the Secretary of Defense and the Administrator 
                of General Services, shall develop, and issue a 
                report on, best practices for the use of 
                advanced metering of energy use in Federal 
                facilities, buildings, and equipment by Federal 
                agencies.
                  (B) Components.--The report shall include, at 
                a minimum--
                          (i) summaries and analysis of the 
                        reports by agencies under paragraph 
                        (3);
                          (ii) recommendations on standard 
                        requirements or guidelines for 
                        automated energy management systems, 
                        including--
                                  (I) potential common 
                                communications standards to 
                                allow data sharing and 
                                reporting;
                                  (II) means of facilitating 
                                continuous commissioning of 
                                buildings and evidence-based 
                                maintenance of buildings and 
                                building systems; and
                                  (III) standards for 
                                sufficient levels of security 
                                and protection against cyber 
                                threats to ensure systems 
                                cannot be controlled by 
                                unauthorized persons; and
                          (iii) an analysis of--
                                  (I) the types of advanced 
                                metering and monitoring systems 
                                being piloted, tested, or 
                                installed in Federal buildings; 
                                and
                                  (II) existing techniques used 
                                within the private sector or 
                                other non-Federal government 
                                buildings.
  (f) Use of Energy and Water Efficiency Measures in Federal 
Buildings.--
          (1) Definitions.--In this subsection:
                  (A) Commissioning.--The term 
                ``commissioning'', with respect to a facility, 
                means a systematic process--
                          (i) of ensuring, using appropriate 
                        verification and documentation, during 
                        the period beginning on the initial day 
                        of the design phase of the facility and 
                        ending not earlier than 1 year after 
                        the date of completion of construction 
                        of the facility, that all facility 
                        systems perform interactively in 
                        accordance with--
                                  (I) the design documentation 
                                and intent of the facility; and
                                  (II) the operational needs of 
                                the owner of the facility, 
                                including preparation of 
                                operation personnel; and
                          (ii) the primary goal of which is to 
                        ensure fully functional systems that 
                        can be properly operated and maintained 
                        during the useful life of the facility.
                  (B) Energy manager.--
                          (i) In general.--The term ``energy 
                        manager'', with respect to a facility, 
                        means the individual who is responsible 
                        for--
                                  (I) ensuring compliance with 
                                this subsection by the 
                                facility; and
                                  (II) reducing energy use at 
                                the facility.
                          (ii) Inclusions.--The term ``energy 
                        manager'' may include--
                                  (I) a contractor of a 
                                facility;
                                  (II) a part-time employee of 
                                a facility; and
                                  (III) an individual who is 
                                responsible for multiple 
                                facilities.
                  (C) Facility.--
                          (i) In general.--The term 
                        ``facility'' means any building, 
                        installation, structure, or other 
                        property (including any applicable 
                        fixtures) owned or operated by, or 
                        constructed or manufactured and leased 
                        to, the Federal Government.
                          (ii) Inclusions.--The term 
                        ``facility'' includes--
                                  (I) a group of facilities at 
                                a single location or multiple 
                                locations managed as an 
                                integrated operation; and
                                  (II) contractor-operated 
                                facilities owned by the Federal 
                                Government.
                          (iii) Exclusions.--The term 
                        ``facility'' does not include any land 
                        or site for which the cost of utilities 
                        is not paid by the Federal Government.
                  (D) Life cycle cost-effective.--The term 
                ``life cycle cost-effective'', with respect to 
                a measure, means a measure, the estimated 
                savings of which exceed the estimated costs 
                over the lifespan of the measure, as determined 
                in accordance with section 544.
                  (E) Payback period.--
                          (i) In general.--Subject to clause 
                        (ii), the term ``payback period'', with 
                        respect to a measure, means a value 
                        equal to the quotient obtained by 
                        dividing--
                                  (I) the estimated initial 
                                implementation cost of the 
                                measure (other than financing 
                                costs); by
                                  (II) the annual cost savings 
                                resulting from the measure, 
                                including--
                                          (aa) net savings in 
                                        estimated energy and 
                                        water costs; and
                                          (bb) operations, 
                                        maintenance, repair, 
                                        replacement, and other 
                                        direct costs.
                          (ii) Modifications and exceptions.--
                        The Secretary, in guidelines issued 
                        pursuant to paragraph (6), may make 
                        such modifications and provide such 
                        exceptions to the calculation of the 
                        payback period of a measure as the 
                        Secretary determines to be appropriate 
                        to achieve the purposes of this Act.
                  (F) Recommissioning.--The term 
                ``recommissioning'' means a process--
                          (i) of commissioning a facility or 
                        system beyond the project development 
                        and warranty phases of the facility or 
                        system; and
                          (ii) the primary goal of which is to 
                        ensure optimum performance of a 
                        facility, in accordance with design or 
                        current operating needs, over the 
                        useful life of the facility, while 
                        meeting building occupancy 
                        requirements.
                  (G) Retrocommissioning.--The term 
                ``retrocommissioning'' means a process of 
                commissioning a facility or system that was not 
                commissioned at the time of construction of the 
                facility or system.
          (2) Facility energy managers.--
                  (A) In general.--Each Federal agency shall 
                designate an energy manager responsible for 
                implementing this subsection and reducing 
                energy use at each facility that meets criteria 
                under subparagraph (B).
                  (B) Covered facilities.--The Secretary shall 
                develop criteria, after consultation with 
                affected agencies, energy efficiency advocates, 
                and energy and utility service providers, that 
                cover, at a minimum, Federal facilities, 
                including central utility plants and 
                distribution systems and other energy intensive 
                operations, that constitute at least 75 percent 
                of facility energy use at each agency.
          (3) Energy and water evaluations.--
                  (A) Evaluations.--Effective beginning on the 
                date that is 180 days after the date of 
                enactment of this subsection and annually 
                thereafter, energy managers shall complete, for 
                each calendar year, a comprehensive energy and 
                water evaluation for approximately 25 percent 
                of the facilities of each agency that meet the 
                criteria under paragraph (2)(B) in a manner 
                that ensures that an evaluation of each such 
                facility is completed at least once every 4 
                years.
                  (B) Recommissioning and retrocommissioning.--
                As part of the evaluation under subparagraph 
                (A), the energy manager shall identify and 
                assess recommissioning measures (or, if the 
                facility has never been commissioned, 
                retrocommissioning measures) for each such 
                facility.
          (4) Implementation of identified energy and water 
        efficiency measures.--Not later than 2 years after the 
        completion of each evaluation under paragraph (3), each 
        energy manager [may] shall--
                  (A) implement any energy- or water-saving 
                measure that the Federal agency identified in 
                the evaluation conducted under paragraph (3) 
                that is life cycle cost-effective; and
                  (B) bundle individual measures of varying 
                paybacks together into combined projects.
          (5) Follow-up on implemented measures.--For each 
        measure implemented under paragraph (4), each energy 
        manager shall ensure that--
                  (A) equipment, including building and 
                equipment controls, is fully commissioned at 
                acceptance to be operating at design 
                specifications;
                  (B) a plan for appropriate operations, 
                maintenance, and repair of the equipment is in 
                place at acceptance and is followed;
                  (C) equipment and system performance is 
                measured during its entire life to ensure 
                proper operations, maintenance, and repair; and
                  (D) energy and water savings are measured and 
                verified.
          (6) Guidelines.--
                  (A) In general.--The Secretary shall issue 
                guidelines and necessary criteria that each 
                Federal agency shall follow for implementation 
                of--
                          (i) paragraphs (2) and (3) not later 
                        than 180 days after the date of 
                        enactment of this subsection; and
                          (ii) paragraphs (4) and (5) not later 
                        than 1 year after the date of enactment 
                        of this subsection.
                  (B) Relationship to funding source.--The 
                guidelines issued by the Secretary under 
                subparagraph (A) shall be appropriate and 
                uniform for measures funded with each type of 
                funding made available under paragraph (10), 
                but may distinguish between different types of 
                measures project size, and other criteria the 
                Secretary determines are relevant.
          (7) Web-based certification.--
                  (A) In general.--For each facility that meets 
                the criteria established by the Secretary under 
                paragraph (2)(B), the energy manager shall use 
                the web-based tracking system under 
                subparagraph (B)--
                          (i) to certify compliance with the 
                        requirements for--
                                  (I) energy and water 
                                evaluations under paragraph 
                                (3);
                                  (II) implementation of 
                                identified energy and water 
                                measures under paragraph (4); 
                                and
                                  (III) follow-up on 
                                implemented measures under 
                                paragraph (5); and
                          (ii) to publish energy and water 
                        consumption data on an individual 
                        facility basis.
                  (B) Deployment.--
                          (i) In general.--Not later than 1 
                        year after the date of enactment of 
                        this subsection, the Secretary shall 
                        develop and deploy a web-based tracking 
                        system required under this paragraph in 
                        a manner that tracks, at a minimum--
                                  (I) the covered facilities;
                                  (II) the status of meeting 
                                the requirements specified in 
                                subparagraph (A);
                                  (III) the estimated cost and 
                                savings for measures required 
                                to be implemented in a 
                                facility;
                                  (IV) the measured savings and 
                                persistence of savings for 
                                implemented measures; and
                                  (V) the benchmarking 
                                information disclosed under 
                                paragraph (8)(C).
                          (ii) Ease of compliance.--The 
                        Secretary shall ensure that energy 
                        manager compliance with the 
                        requirements in this paragraph, to the 
                        maximum extent practicable--
                                  (I) can be accomplished with 
                                the use of streamlined 
                                procedures and templates that 
                                minimize the time demands on 
                                Federal employees; and
                                  (II) is coordinated with 
                                other applicable energy 
                                reporting requirements.
                  (C) Availability.--
                          (i) In general.--Subject to clause 
                        (ii), the Secretary shall make the web-
                        based tracking system required under 
                        this paragraph available to Congress, 
                        other Federal agencies, and the public 
                        through the Internet.
                          (ii) Exemptions.--At the request of a 
                        Federal agency, the Secretary may 
                        exempt specific data for specific 
                        facilities from disclosure under clause 
                        (i) for national security purposes.
          (8) Benchmarking of federal facilities.--
                  (A) In general.--The energy manager shall 
                enter energy use data for each metered building 
                that is (or is a part of) a facility that meets 
                the criteria established by the Secretary under 
                paragraph (2)(B) into a building energy use 
                benchmarking system, such as the Energy Star 
                Portfolio Manager.
                  (B) System and guidance.--Not later than 1 
                year after the date of enactment of this 
                subsection, the Secretary shall--
                          (i) select or develop the building 
                        energy use benchmarking system required 
                        under this paragraph for each type of 
                        building; and
                          (ii) issue guidance for use of the 
                        system.
                  (C) Public disclosure.--Each energy manager 
                shall post the information entered into, or 
                generated by, a benchmarking system under this 
                subsection, on the web-based tracking system 
                under paragraph (7)(B). The energy manager 
                shall update such information each year, and 
                shall include in such reporting previous years' 
                information to allow changes in building 
                performance to be tracked over time.
          (9) Federal agency scorecards.--
                  (A) In general.--The Director of the Office 
                of Management and Budget shall issue semiannual 
                scorecards for energy management activities 
                carried out by each Federal agency that 
                includes--
                          (i) summaries of the status of 
                        implementing the various requirements 
                        of the agency and its energy managers 
                        under this subsection; and
                          (ii) any other means of measuring 
                        performance that the Director considers 
                        appropriate.
                  (B) Availability.--The Director shall make 
                the scorecards required under this paragraph 
                available to Congress, other Federal agencies, 
                and the public through the Internet.
          (10) Funding and implementation.--
                  (A) Authorization of appropriations.--There 
                are authorized to be appropriated such sums as 
                are necessary to carry out this subsection.
                  (B) Funding options.--
                          (i) In general.--To carry out this 
                        subsection, a Federal agency may use 
                        any combination of--
                                  (I) appropriated funds made 
                                available under subparagraph 
                                (A); and
                                  (II) private financing 
                                otherwise authorized under 
                                Federal law, including 
                                financing available through 
                                energy savings performance 
                                contracts or utility energy 
                                service contracts.
                          (ii) Combined funding for same 
                        measure.--A Federal agency may use any 
                        combination of appropriated funds and 
                        private financing described in clause 
                        (i) to carry out the same measure under 
                        this subsection.
                  (C) Implementation.--Each Federal agency may 
                implement the requirements under this 
                subsection itself or may contract out 
                performance of some or all of the requirements.
          (11) Rule of construction.--This subsection shall not 
        be construed to require or to obviate any contractor 
        savings guarantees.
  (g) Large Capital Energy Investments.--
          (1) In general.--Each Federal agency shall ensure 
        that any large capital energy investment in an existing 
        building that is not a major renovation but involves 
        replacement of installed equipment (such as heating and 
        cooling systems), or involves renovation, 
        rehabilitation, expansion, or remodeling of existing 
        space, employs the most energy efficient designs, 
        systems, equipment, and controls that are life-cycle 
        cost effective.
          (2) Process for review of investment decisions.--Not 
        later than 180 days after the date of enactment of this 
        subsection, each Federal agency shall--
                  (A) develop a process for reviewing each 
                decision made on a large capital energy 
                investment described in paragraph (1) to ensure 
                that the requirements of this subsection are 
                met; and
                  (B) report to the Director of the Office of 
                Management and Budget on the process 
                established.
          (3) Compliance report.--Not later than 1 year after 
        the date of enactment of this subsection, the Director 
        of the Office of Management and Budget shall evaluate 
        and report to Congress on the compliance of each agency 
        with this subsection.
          * * * * * * *

SEC. 548. REPORTS.

  (a) Reports to the Secretary.--Each agency shall transmit a 
report to the Secretary, at times specified by the Secretary 
but at least annually, with complete information on its 
activities under this part, including information on--
          (1) the agency's progress in achieving the goals 
        established by section 543; and
          (2) the procedures being used by the agency pursuant 
        to section 546(a)(2), the number of contracts entered 
        into by such agency under title VIII of this Act, the 
        energy and cost savings that have resulted from such 
        contracts and any termination penalty exposure, the use 
        of such cost savings under section 546(c), and any 
        problem encountered in entering into such contracts and 
        otherwise implementing section 546.
  (b) Reports to the President and Congress.--The Secretary 
shall report, not later than April 2 of each year, with respect 
to each fiscal year beginning after the date of the enactment 
of this subsection, to the President and Congress--
          (1) on all activities carried out under this part and 
        on the progress made toward achievement of the 
        objectives of this part, including--
                  (A) a copy of the list of the exclusions made 
                under sections 543(a)(2) and 543(c)(3);
                  (B) the information required under section 
                543(b)(2); and
                  (C) a statement detailing the amount of funds 
                awarded to each agency under section 546(b), 
                the energy and water conservation measures 
                installed with such funds, the projected energy 
                and water savings to be realized from installed 
                measures, and, for each installed measure for 
                which the projected energy and water savings 
                reported in the previous year were not 
                realized, the percentage of such projected 
                savings that was not realized, the reasons such 
                savings were not realized, and proposals for, 
                and projected costs of, achieving such 
                projected savings in the future;
          (2) the number of contracts entered into by all 
        agencies under title VIII of this Act, the difficulties 
        (if any) encountered in attempting to enter into such 
        contracts, and proposed solutions to those 
        difficulties;
          (3) the extent and nature of interagency exchange of 
        information concerning the conservation and efficient 
        utilization of energy; [and]
          (4) the information required under section 161(d) of 
        the Energy Policy Act of 1992[.]; and
          (5)(A) the status of the energy savings performance 
        contracts and utility energy service contracts of each 
        agency;
          (B) the investment value of the contracts;
          (C) the guaranteed energy savings for the previous 
        year as compared to the actual energy savings for the 
        previous year;
          (D) the plan for entering into the contracts in the 
        coming year; and
          (E) information explaining why any previously 
        submitted plans for the contracts were not implemented.
  (c) Other Report.--The Secretary, in consultation with the 
Administrator of General Services, shall--
          (1) conduct a study and evaluate legal, 
        institutional, and other constraints to connecting 
        buildings owned or leased by the Federal Government to 
        district heating and district cooling systems; and
          (2) not later than 18 months after the date of the 
        enactment of this subsection, transmit to the Congress 
        a report containing the findings and conclusions of 
        such study, including recommendations for the 
        development of streamlined processes for the 
        consideration of connecting buildings owned or leased 
        by the Federal Government to district heating and 
        cooling systems.

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SEC. 551. DEFINITIONS.

   For the purposes of this part--
          (1) the term ``agency'' has the meaning given it in 
        section 551(1) of title 5, United States Code;
          (2) the term ``construction'' means new construction 
        or substantial rehabilitation of existing structures;
          (3) the term ``cogeneration facilities'' has the same 
        meaning given such term in section 3(18)(A) of the 
        Federal Power Act (16 U.S.C. 796(18)(A));
          (4) the term ``energy conservation measures'' means 
        measures that are applied to a Federal building that 
        improve energy efficiency and are life cycle cost 
        effective and that involve energy conservation, 
        cogeneration facilities, renewable energy sources, 
        improvements in operations and maintenance 
        efficiencies, [or retrofit activities] retrofit 
        activities, or energy consuming devices and required 
        support structures;
          (5) the term ``energy survey'' means a procedure used 
        to determine energy and cost savings likely to result 
        from the use of appropriate energy related maintenance 
        and operating procedures and modifications, including 
        the purchase and installation of particular energy-
        related equipment and the use of renewable energy 
        sources;
          (6) the term ``Federal building'' means any building, 
        structure, or facility, or part thereof, including the 
        associated energy consuming support systems, which is 
        constructed, renovated, leased, or purchased in whole 
        or in part for use by the Federal Government and which 
        consumes energy; such term also means a collection of 
        such buildings, structures, or facilities and the 
        energy consuming support systems for such 
        collection[;]; the term does not include a dam, 
        reservoir, or hydropower facility owned or operated by 
        a Federal agency;
          (7) the term ``life cycle cost'' means the total 
        costs of owning, operating, and maintaining a building 
        over its useful life (including such costs as fuel, 
        energy, labor, and replacement components) determined 
        on the basis of a systematic evaluation and comparison 
        of alternative building systems, except that in the 
        case of leased buildings, the life cycle costs shall be 
        calculated over the effective remaining term of the 
        lease;
          (8) the term ``renewable energy sources'' includes, 
        but is not limited to, sources such as agriculture and 
        urban waste, geothermal energy, solar energy, and wind 
        energy; and
          (9) the term ``Secretary'' means the Secretary of 
        Energy.

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            TITLE VIII--ENERGY SAVINGS PERFORMANCE CONTRACTS

SEC. 801. AUTHORITY TO ENTER INTO CONTRACTS.

  (a) In General.--(1) The head of a Federal agency may enter 
into contracts under this title solely for the purpose of 
achieving energy savings and benefits ancillary to that 
purpose. Each such contract may, notwithstanding any other 
provision of law, be for a period not to exceed 25 years. Such 
contract shall provide that the contractor shall incur costs of 
implementing energy savings measures, including at least the 
cost (if any) incurred in making energy audits, acquiring and 
installing equipment, and training personnel, in exchange for a 
share of any energy savings directly resulting from 
implementation of such measures during the term of the 
contract.
  (2)(A) Contracts under this title shall be energy savings 
performance contracts and shall require an annual energy audit 
and specify the terms and conditions of any Government payments 
and performance guarantees. Any such performance guarantee 
shall provide that the contractor is responsible for 
maintenance and repair services for any energy related 
equipment, including computer software systems.
  (B) Aggregate annual payments by an agency to both utilities 
and energy savings performance contractors, under an energy 
savings performance contract, may not exceed the amount that 
the agency would have paid for utilities without an energy 
savings performance contract (as estimated through the 
procedures developed pursuant to this section) during contract 
years. The contract shall provide for a guarantee of savings to 
the agency, and shall establish payment schedules reflecting 
such guarantee, taking into account any capital costs under the 
contract.
  (C) Federal agencies may incur obligations pursuant to such 
contracts to finance energy conservation measures provided 
guaranteed savings exceed the debt service requirements.
  (D) A Federal agency may enter into a multiyear contract 
under this title for a period not to exceed 25 years beginning 
on the date of the delivery order, without funding of 
cancellation charges before cancellation, if--
          (i) such contract was awarded in a competitive manner 
        pursuant to subsection (b)(2), using procedures and 
        methods established under this title;
          (ii) funds are available and adequate for payment of 
        the costs of such contract for the first fiscal year; 
        and
          (iii) such contract is governed by part 17.1 of the 
        Federal Acquisition Regulation promulgated under 
        section 25 of the Office of Federal Procurement Policy 
        Act (41 U.S.C. 421) or the applicable rules promulgated 
        under this title.
          (E) Funding options.--In carrying out a contract 
        under this title, a Federal agency may use any 
        combination of--
                  (i) appropriated funds; and
                  (ii) private financing under an energy 
                savings performance contract.
          (F) Promotion of contracts.--In carrying out this 
        section, a Federal agency shall not--
                  (i) establish a Federal agency policy that 
                limits the maximum contract term under 
                subparagraph (D) to a period shorter than 25 
                years; [or]
                  (ii) limit the total amount of obligations 
                under energy savings performance contracts or 
                other private financing of energy savings 
                measures[.]; or
                  (iii) limit the recognition of operation and 
                maintenance savings associated with systems 
                modernized or replaced with the implementation 
                of energy conservation measures, water 
                conservation measures, or any combination of 
                energy conservation measures and water 
                conservation measures.
          (G) Measurement and verification requirements for 
        private financing.--
                  (i) In general.--In the case of energy 
                savings performance contracts, the evaluations 
                and savings measurement and verification 
                required under paragraphs (2) and (4) of 
                section 543(f) shall be used by a Federal 
                agency to meet the requirements for the need 
                for energy audits, calculation of energy 
                savings, and any other evaluation of costs and 
                savings needed to implement the guarantee of 
                savings under this section.
                  (ii) Modification of existing contracts.--Not 
                later than 18 months after the date of 
                enactment of this subparagraph, each Federal 
                agency shall, to the maximum extent 
                practicable, modify any indefinite delivery and 
                indefinite quantity energy savings performance 
                contracts, and other indefinite delivery and 
                indefinite quantity contracts using private 
                financing, to conform to the amendments made by 
                subtitle B of title V of the Energy 
                Independence and Security Act of 2007.
          (H) Miscellaneous authority.--Notwithstanding any 
        other provision of law, a Federal agency may sell or 
        transfer energy savings and apply the proceeds of the 
        sale or transfer to fund a contract under this title.
  (b) Implementation.--(1)(A) The Secretary, with the 
concurrence of the Federal Acquisition Regulatory Council 
established under section 25(a) of the Office of Federal 
Procurement Policy Act, not later than 180 days after the date 
of the enactment of the Energy Policy Act of 1992, shall, by 
rule, establish appropriate procedures and methods for use by 
Federal agencies to select, monitor, and terminate contracts 
with energy service contractors in accordance with laws 
governing Federal procurement that will achieve the intent of 
this section in a cost-effective manner. In developing such 
procedures and methods, the Secretary, with the concurrence of 
the Federal Acquisition Regulatory Council, shall determine 
which existing regulations are inconsistent with the intent of 
this section and shall formulate substitute regulations 
consistent with laws governing Federal procurement.
  (B) The procedures and methods established pursuant to 
subparagraph (A) shall be the procedures and contracting 
methods for selection, by an agency, of a contractor to provide 
energy savings performance services. Such procedures and 
methods shall provide for the calculation of energy savings 
based on sound engineering and financial practices.
  (2) The procedures and methods established pursuant to 
paragraph (1)(A) shall--
          (A) allow the Secretary to--
                  (i) request statements of qualifications, 
                which shall, at a minimum, include prior 
                experience and capabilities of contractors to 
                perform the proposed types of energy savings 
                services and financial and performance 
                information, from firms engaged in providing 
                energy savings services; and
                  (ii) from the statements received, designate 
                and prepare a list, with an update at least 
                annually, of those firms that are qualified to 
                provide energy savings services;
          (B) require each agency to use the list prepared by 
        the Secretary pursuant to subparagraph (A)(ii) unless 
        the agency elects to develop an agency list of firms 
        qualified to provide energy savings performance 
        services using the same selection procedures and 
        methods as are required of the Secretary in preparing 
        such lists; and
          (C) allow the head of each agency to--
                  (i) select firms from the list prepared 
                pursuant to subparagraph (A)(ii) or the list 
                prepared by the agency pursuant to subparagraph 
                (B) to conduct discussions concerning a 
                particular proposed energy savings project, 
                including requesting a technical and price 
                proposal from such selected firms for such 
                project;
                  (ii) select from such firms the most 
                qualified firm to provide energy savings 
                services based on technical and price proposals 
                and any other relevant information;
                  (iii) permit receipt of unsolicited proposals 
                for energy savings performance contracting 
                services from a firm that such agency has 
                determined is qualified to provide such 
                services under the procedures established 
                pursuant to paragraph (1)(A), and require 
                agency facility managers to place a notice in 
                the Commerce Business Daily announcing they 
                have received such a proposal and invite other 
                similarly qualified firms to submit competing 
                proposals; and
                  (iv) enter into an energy savings performance 
                contract with a firm qualified under clause 
                (iii), consistent with the procedures and 
                methods established pursuant to paragraph 
                (1)(A).
  (3) A firm not designated as qualified to provide energy 
savings services under paragraph (2)(A)(i) or paragraph (2)(B) 
may request a review of such decision to be conducted in 
accordance with procedures to be developed by the board of 
contract appeals of the General Services Administration.
  (c) Task or Delivery Orders.--(1) The head of a Federal 
agency may issue a task or delivery order under an energy 
savings performance contract by--
          (A) notifying all contractors that have received an 
        award under such contract that the agency proposes to 
        discuss energy savings performance services for some or 
        all of its facilities and, following a reasonable 
        period of time to provide a proposal in response to the 
        notice, soliciting from such contractors the submission 
        of expressions of interest in, and contractor 
        qualifications for, performing site surveys or 
        investigations and feasibility designs and studies, and 
        including in the notice summary information concerning 
        energy use for any facilities that the agency has 
        specific interest in including in such task or delivery 
        order;
          (B) reviewing all expressions of interest and 
        qualifications submitted pursuant to the notice under 
        subparagraph (A);
          (C) selecting two or more contractors (from among 
        those reviewed under subparagraph (B)) to conduct 
        discussions concerning the contractors' respective 
        qualifications to implement potential energy 
        conservation measures, including--
                  (i) requesting references and specific 
                detailed examples with respect to similar 
                efforts and the resulting energy savings of 
                such similar efforts; and
                  (ii) requesting an explanation of how such 
                similar efforts relate to the scope and content 
                of the task or delivery order concerned;
          (D) selecting and authorizing--
                  (i) more than one contractor (from among 
                those selected under subparagraph (C)) to 
                conduct site surveys, investigations, 
                feasibility designs and studies, or similar 
                assessments for the energy savings performance 
                contract services (or for discrete portions of 
                such services), for the purpose of allowing 
                each such contractor to submit a firm, fixed-
                price proposal to implement specific energy 
                conservation measures; or
                  (ii) one contractor (from among those 
                selected under subparagraph (C)) to conduct a 
                site survey, investigation, feasibility design 
                and study, or similar assessment for the 
                purpose of allowing the contractor to submit a 
                firm, fixed-price proposal to implement 
                specific energy conservation measures;
          (E) providing a debriefing to any contractor not 
        selected under subparagraph (D);
          (F) negotiating a task or delivery order for energy 
        savings performance contracting services with the 
        contractor or contractors selected under subparagraph 
        (D) based on the energy conservation measures 
        identified; and
          (G) issuing a task or delivery order for energy 
        savings performance contracting services to such 
        contractor or contractors.
  (2) The issuance of a task or delivery order for energy 
savings performance contracting services pursuant to paragraph 
(1) is deemed to satisfy the task and delivery order 
competition requirements in section 2304c(d) of title 10, 
United States Code, and section 303J(d) of the Federal Property 
and Administrative Services Act of 1949 (41 U.S.C. 253j(d)).
  (3) The Secretary may issue guidance as necessary to agencies 
issuing task or delivery orders pursuant to paragraph (1).

SEC. 802. PAYMENT OF COSTS.

  Any amount paid by a Federal agency pursuant to any contract 
entered into under this title may be paid only from funds 
appropriated or otherwise made available to the agency for 
fiscal year 1986 or any fiscal year thereafter for the payment 
of energy, water, or wastewater treatment expenses [(and 
related operation and maintenance expenses)], including related 
operations and maintenance expenses.

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SEC. 804. DEFINITIONS.

   For purposes of this title, the following definitions apply:
          (1) The term ``Federal agency'' means each authority 
        of the Government of the United States, whether or not 
        it is within or subject to review by another agency.
          (2) The term ``energy savings'' means--
                  (A) a reduction in the cost of energy, water, 
                or wastewater treatment, from a base cost 
                established through a methodology set forth in 
                the contract, used in an existing [federally 
                owned building or buildings or other federally 
                owned facilities] Federal building (as defined 
                in section 551) as a result of--
                          (i) the lease or purchase of 
                        operating equipment, improvements, 
                        altered operation and maintenance, or 
                        technical services;
                          (ii) the increased efficient use of 
                        existing energy sources by cogeneration 
                        or heat recovery, excluding any 
                        cogeneration process for other than a 
                        [federally owned building or buildings 
                        or other federally owned facilities] 
                        Federal building (as defined in section 
                        551); or
                          (iii) the increased efficient use of 
                        existing water sources in either 
                        interior or exterior applications;
                  (B) the increased efficient use of an 
                existing energy source by cogeneration or heat 
                recovery;
                  (C) if otherwise authorized by Federal or 
                State law (including regulations), the sale or 
                transfer of electrical or thermal energy 
                generated on-site from renewable energy sources 
                or cogeneration, but in excess of Federal 
                needs, to utilities or non-Federal energy 
                users[; and];
                  (D) the increased efficient use of existing 
                water sources in interior or exterior 
                applications[.];
                  (E) the use, sale, or transfer of energy 
                incentives, rebates, or credits (including 
                renewable energy credits) from Federal, State, 
                or local governments or utilities; and
                  (F) any revenue generated from a reduction in 
                energy or water use, more efficient waste 
                recycling, or additional energy generated from 
                more efficient equipment.
          (3) The terms ``energy savings contract'' and 
        ``energy savings performance contract'' mean a contract 
        that provides for the performance of services for the 
        design, acquisition, installation, testing, and, where 
        appropriate, operation, maintenance, and repair, of an 
        identified energy or water conservation measure or 
        series of measures at 1 or more locations. Such 
        contracts shall, with respect to an agency facility 
        that is a public building (as such term is defined in 
        section 3301 of title 40, United States Code), be in 
        compliance with the prospectus requirements and 
        procedures of section 3307 of title 40, United States 
        Code.
          (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 that 
                improves the efficiency of water use, is life-
                cycle cost-effective, and involves water 
                conservation, water recycling or reuse, more 
                efficient treatment of wastewater or 
                stormwater, improvements in operation or 
                maintenance efficiencies, retrofit activities, 
                or other related activities, not at a Federal 
                hydroelectric facility.