H.R. 5019 (111^th): Home Star Energy Retrofit Act of 2010

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Library of Congress Summary

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.

House Republican Conference Summary

The summary below was written by the House Republican Conference, which is the caucus of Republicans in the House of Representatives.

This summary can be found at http://www.gop.gov/bill/111/1/hr5019.

Background

Last year, the "stimulus" law (P.L. 111-5) provided very large sums of funding for energy efficiency in homes. Specifically, it provided $5 billion for weatherization programs, $2.3 billion for the modernization and renovation of low-income housing, and $1 billion for improving energy efficiency in public housing.  The "stimulus" also extended and increased the dollar limits for tax credits for energy efficiency in new and existing homes.

The bill's sponsor, Rep. Peter Welch, (D-VT) argues that this bill, in addition to increasing energy efficiency in homes, would create jobs in the home construction industry.  During committee consideration, Republican Members criticized the high authorization level of $6 billion.  The committee rejected an amendment offered by Ranking Member Barton that would have reduced the authorization level to $3 billion.

Member Concerns:  Members may have several possible concerns with this legislation:

Cost:  Members may be concerned that this bill authorizes a new $6.6 billion federal program.  For a point of comparison, last year's "Cash-for-Clunkers" legislation (H.R 2751) initially authorized $4 billion, $2 billion less than this new energy retrofit program.  At full committee markup, Rep. Bob Latta (R-OH) withdrew his deficit neutrality amendment after Chairman Henry Waxman (D-CA) promised that he would find a pay-for before moving the legislation forward.  However, no pay-for has yet to be included in the bill.

Implementation:  Members may have concerns regarding DOE's ability to implement this program under the tight deadlines required under this legislation.  DOE's Inspector General recently issued a report concluding that, as of February 2010, of the $4.7 billion DOE has awarded in grants to states under the "stimulus" weatherization program, only $368 million (less than 10 percent) had been used by states for weatherization purposes and only 30,297 homes have actually been weatherized.  Of the 10 states receiving the most money under the $4.7 billion allocated for the weatherization program only two had weatherized more than 2 percent of the homes covered by the program; the eight other states weatherized fewer than 400 homes each.  Because the $4.7 billion weatherization program has been incredibly slow to implement, Members may be concerned that this $6.6 billion program could suffer similar implementation problems.

Picking Winners and Losers:  Members may be concerned that this legislation is not technology neutral-it picks winners and losers in the private sector.  The Silver Star Home Energy Retrofit Program lists 13 energy savings measures that qualify for rebates.  There are many energy efficient products that were left off of this list or will not qualify because the technical requirements are too onerous.  Members may be concerned that it is not the federal government's role to pick winners and losers in the private sector.

Summary

H.R. 5019 would authorize a total of $6.6 billion, primarily for a new Home Star Retrofit Rebate Program to be run by the Department of Energy (DOE) that would provide rebates to contractors for energy-efficient remodeling on existing homes.  Contractors would give discounts to consumers for the retrofits and the contractors would be reimbursed by the federal government via rebates.  There would be two categories of rebates-"Silver Star" and "Gold Star".  The rebates could not be claimed in combination with other tax credits for energy efficiency renovations.  The program would expire on December 31, 2012.

Silver Star Rebates:  The Silver Star Program would provide rebates, in varying amounts up to $3,000 per home, awarded to participating contractors and vendors who perform qualifying energy savings measures that meet efficiency and installation targets and standards, and includes an arbitrary list of specific products eligible for the program (such as new ductwork, window replacements or new heating and cooling systems.)  The bill specifies that the contractor would have to pass the full value of the rebates on to the homeowner.

Gold Star Rebates:  The Gold Star Program would provide rebates up to $8,000 to contractors and vendors for retrofits that achieve home energy savings determined by a comparison of the simulated energy consumption of the home before and after the retrofit.  Rather than being issued based on specific projects or purchases, Gold Star rebates would be calculated based on the net overall energy-use reduction in a home.  The bill requires that net energy consumption be documented through the use of simulation software. 

Do-It-Yourself Projects:  H.R. 5019 would provide rebates for certain products that are purchased and installed by homeowners, including insulation, sealing products, weather-stripping and caulk.  For these products, a vendor would have to assert that these products were used for a specific home and then submit a rebate application for these products.  The do-it-yourself rebates could not be used in combination with rebates used for home renovations conducted by contractors.  These rebates would total 50 percent of the cost of the eligible products, up to a maximum of $250 per home.

Administration of Rebates:  The bill requires DOE to create a federal rebate processing system and a website that includes information on the new Home Star rebate programs.  The bill directs DOE to develop a network of Home Star program rebate "aggregators," which would be created to facilitate rebates to contractors and vendors.  In all cases, applicants to become rebate aggregators would have to demonstrate that they have the ability to process the necessary volume of contracting jobs performed, the capability to provide data to DOE, and a financial system capable of tracking the rebates distributed to contractors.

Under H.R. 5019, qualified contractors could enter an agreement with a Home Star rebate aggregator that would allow them to participate in the program.  The bill defines a qualified contractor as a contractor that meets state contractor licensing requirements, has insurance coverage of at least $1 million for general liability, and agrees to provide warranties to homeowners for work performed through the Home Star program.  In order to ensure that the rebates are passed onto consumers, contractors would have to provide homeowners with a notice of the amount of the rebate that the contractor intends to seek from the federal government, and how the contractor will pass the rebate amount on to the homeowner.

Enforcement and Penalties:  The bill requires random audits of contractors for energy efficiency retrofit work performed through the Silver Star and Gold Star rebate programs.  For both programs, in the case of contractors that have a "certified workforce"-a firm in which all employers are certified in job skills set by an independent third party-the bill requires less frequent random audits of work performed through the rebate program.  If contractors are found to be in violation of the requirements of the rebate program, the bill authorizes DOE to require a higher percentage of audits for those particular contractors.  

In addition, the bill directs DOE to review information submitted to the federal rebate processing system to determine if rebates were properly administered.  In the case of payments that were not properly made, DOE could recoup the amount of an improper payment or require that a vendor pass the cost of the rebate onto the customer.

The bill creates civil penalties for any person who violates the requirements of the rebate programs of up to $15,000 for each violation, or three times the value of a rebate, whichever is greater.

Loans:  The bill would create a Home Star Energy Efficiency Loan Program to make funds available to states to provide funds to qualified financing entities for the installation of qualifying energy savings measure or whole-home energy savings.  This program is authorized for at least $324 million.

Authorization of Appropriations:  The bill would authorize $6 billion for DOE to administer the rebate and loan programs in fiscal years 2010 and 2011, and makes the funds available until expended. The bill specifies that the authorized funding would supplement, and not replace, any other federal or state funding that was previously planned for energy efficiency programs.  Of all the funding available, the measure requires the department to allocate 25 percent of funds to states through a formula used to provide funding for state conservation plans.  The bill requires DOE to allocate the remaining 75 percent of funding in a way that best supports the goals of achieving energy efficiency and hiring unemployed or underemployed workers.

The bill would limit the amount paid to rebate aggregators for Silver Star rebates to $25 per rebate review and $150 for quality assurance audits.  For Gold Star rebates, the limit would be $35 per rebate review and $300 for quality assurance audits for Gold Star rebates.  

H.R. 5109 would require that any unused funds for the Silver Star rebates that have not been expended one year after enactment be transferred to the Gold Star rebates.  Any funds for the Gold Star rebates that have not be expended two years after enactment would be transferred back to the Treasury.

Manufactured Homes:  The bill also authorizes $600 million for the purchase of replacement Energy Star-rated manufactured homes.  A homeowner can receive $7,500 for the replacement of a manufactured home if income limits are met (80 percent of the area's median income).  A homeowner could also receive an additional $2,500 for the destruction of the replaced manufactured home.

Sunset:  H.R. 5019 would set a sunset date of December 31, 2012, for the Home Star rebate program and the energy efficiency loan program.

Cost

The Congressional Budget Office (CBO) estimates that implementing H.R. 5019 would cost $6.6 billion over five years.

House Democratic Caucus Summary

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