Energy Efficiency Cornerstone Act of 2005 - Amends the Energy Policy and Conservation Act (EPCA) to expand the scope of products encompassed within the Energy Conservation Program for Consumer Products Other Than Automobiles, including testing requirements and energy conservation standards for additional consumer and commercial products.
Amends the Energy Conservation and Production Act (ECPA) to set forth additional funding incentives for state building energy efficiency codes.
Amends the National Manufacturing Housing Construction and Safety Standards Act of 1974 to subject its energy conservation standards to the most recent version of the International Energy Conservation Code.
Amends the Cranston-Gonzalez National Affordable Housing Act to subject energy efficiency standards and a model energy code to the 2004 International Energy Conservation Code.
Amends EPCA to establish within the Department of Energy and the Environmental Protection Agency a voluntary program to identify and promote energy-efficient products and buildings through voluntary labeling of, or other forms of communication about, products and buildings that meet the highest energy efficiency standards.
Amends the ECPA to: (1) subject federal building performance standards to the 2004 International Energy Conservation Code; and (2) require all housing constructed under the military housing privatization initiative of the Department of Defense to be Energy Star qualified and equipped with Energy Star appliances and FEMP designated appliances, including Energy Star lighting.
Amends EPCA and the Energy Policy Act of 1992 to modify compliance requirements governing alternative fuel use by light duty federal vehicles.
Amends federal transportation law to modify standards for executive agency automobiles.
Directs the Secretary of Energy (Secretary) to enter into voluntary agreements with entities in industrial sectors that consume significant quantities of primary energy for each unit of physical output to reduce the energy intensity of their production activities.
Instructs the Secretary to establish a financial assistance pilot program for state implementation of pilot projects for energy efficiency programs and reduction of consumption of electricity or natural gas.
Amends the Public Utilities Regulatory Policy Act of 1978 to require a state regulatory authority or non-regulated utility to implement an energy efficiency resource program to reduce consumer electricity or gas consumption.
Amends the Internal Revenue Code to set forth business related credits for: (1) construction of new energy efficient homes; (2) energy efficiency improvements to existing homes; and (3) energy efficient appliances.
Allows as a deduction from gross income: (1) an amount equal to the cost of energy efficient commercial building property placed in service during the taxable year; and (2) certain energy efficient property used in business and residential rental property.
Establishes a tax credit for: (1) energy efficient building property expenditures; (2) installation of qualified fuel cells; and (3) qualified fuel cell motor vehicles and hybrid motor vehicle.
Revises requirements for the energy credit for combined heat and power system property.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3263 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 3263
To reduce the growth of energy use in the United States, to limit the
impact of growing energy use on the economy, environment, and national
security of the United States through reductions in energy demand, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 13, 2005
Mr. Wamp (for himself, Mr. Hall, Mr. Udall of Colorado, Mr. Markey, Mr.
Allen, Mr. Gonzalez, Mr. Gordon, Mr. Castle, Mr. Ehlers, Mr. Boehlert,
and Mr. Gilchrest) introduced the following bill; which was referred to
the Committee on Energy and Commerce, and in addition to the Committees
on Ways and Means and Financial Services, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
_______________________________________________________________________
A BILL
To reduce the growth of energy use in the United States, to limit the
impact of growing energy use on the economy, environment, and national
security of the United States through reductions in energy demand, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Energy Efficiency
Cornerstone Act of 2005''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Definition of Secretary.
TITLE I--RESIDENTIAL AND COMMERCIAL BUILDINGS
Subtitle A--Appliance and Equipment Standards
Sec. 101. Energy conservation standards for additional products.
Sec. 102. Energy conservation standards for commercial equipment.
Sec. 103. Energy labeling.
Sec. 104. Equipment standards and analysis program.
Subtitle B--Building Energy Codes
Sec. 111. State building energy efficiency codes incentives.
Sec. 112. Energy code applicable to manufactured housing.
Sec. 113. Energy efficiency standards.
Subtitle C--Energy Star
Sec. 121. Energy Star Program.
Subtitle D--Federal Buildings
Sec. 131. Federal building performance standards.
TITLE II--TRANSPORTATION
Sec. 201. Alternative compliance with fleet rules.
Sec. 202. Standards for Executive agency automobiles.
TITLE III--INDUSTRY
Sec. 301. Voluntary commitments to reduce industrial energy intensity.
TITLE IV--ELECTRICITY AND NATURAL GAS UTILITIES AND SUPPLIERS
Sec. 401. Energy efficient electric and natural gas utilities study.
Sec. 402. Energy efficiency pilot program.
Sec. 403. Energy efficiency resource programs.
TITLE V--TAX INCENTIVES
Sec. 500. Amendment of 1986 Code.
Subtitle A--Buildings and Equipment Incentives
Sec. 501. Credit for construction of new energy efficient homes.
Sec. 502. Credit for energy efficiency improvements to existing homes.
Sec. 503. Energy efficient commercial buildings deduction.
Sec. 504. Credit for residential energy efficient property.
Sec. 505. Credit for energy efficient appliances.
Sec. 506. Incentive for certain energy efficient property used in
business.
Sec. 507. Credit for business installation of qualified fuel cells.
Sec. 508. Credit for nonbusiness installation of qualified fuel cells
[new addition not updated].
Sec. 509. New nonrefundable personal credits allowed against regular
and minimum taxes.
Sec. 510. Certain business energy credits allowed against regular and
minimum taxes.
Subtitle B--Transportation Incentives
Sec. 511. Alternative motor vehicle credit.
Subtitle C--Industry Incentives
Sec. 521. Energy credit for combined heat and power system property.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--Congress finds that--
(1)(A) energy prices, especially the price of petroleum and
natural gas, have soared over the last few years due to demand
exceeding supply; and
(B) as both supply and demand are relatively inflexible,
even small reductions in United States demand for natural gas
and oil can result in significant reductions in gas and oil
prices;
(2) energy consumption in the United States is projected by
the Energy Information Administration to increase by
35,000,000,000,000,000 Btus over the next 2 decades, which is
equivalent to twice the energy consumed by all the cars
currently on the roads;
(3)(A) by 2025, the Energy Information Administration
projects that 80 percent of oil used in the United States will
be imported; and
(B) overall energy imports are expected to increase by 75
percent in the United States;
(4) energy efficiency improvements since the 1970s have
reduced current United States energy consumption by 40 percent,
or 40,000,000,000,000,000 Btus, making energy efficiency the
greatest energy resource of the United States;
(5) the United States has not nearly tapped the energy
efficiency resource of the United States in that energy
consumption could be reduced by 20 to 50 percent through cost-
effective improvements in the homes, buildings, cars, industry,
and utilities of the United States; and
(6) energy efficiency is generally the quickest, cheapest,
and cleanest way--
(A) to bring energy supply and demand in balance;
and
(B) to reduce the economic, environmental, and
energy security impacts associated with energy use.
(b) Purposes.--The purposes of this Act are--
(1) to reduce the growth of energy use in the United States
significantly, with cumulative energy savings through 2025 of
50,000,000,000,000,000 to 80,000,000,000,000,000 Btus; and
(2) to limit the impacts of growing energy use on the
economy, environment, and national security of the United
States through reductions in energy demand.
SEC. 3. DEFINITION OF SECRETARY.
In this Act, the term ``Secretary'' means the Secretary of Energy.
TITLE I--RESIDENTIAL AND COMMERCIAL BUILDINGS
Subtitle A--Appliance and Equipment Standards
SEC. 101. ENERGY CONSERVATION STANDARDS FOR ADDITIONAL PRODUCTS.
(a) Definitions.--Section 321 of the Energy Policy and Conservation
Act (42 U.S.C. 6291) is amended--
(1) in paragraph (29)--
(A) in subparagraph (D)--
(i) in clause (i), by striking ``C78.1-
1978(R1984)'' and inserting ``C78.81-2003 (Data
Sheet 7881-ANSI-1010-1)'';
(ii) in clause (ii), by striking ``C78.1-
1978(R1984)'' and inserting ``C78.81-2003 (Data
Sheet 7881-ANSI-3007-1)''; and
(iii) in clause (iii), by striking ``C78.1-
1978(R1984)'' and inserting ``C78.81-2003 (Data
Sheet 7881-ANSI-1019-1)''; and
(B) by adding at the end the following:
``(M) The term `F34T12 lamp' (also known as a `F40T12/ES
lamp') means a nominal 34 watt tubular fluorescent lamp that is
48 inches in length and 1\1/2\ inches in diameter, and conforms
to ANSI standard C78.81-2003 (Data Sheet 7881-ANSI-1006-1).
``(N) The term `F96T12/ES lamp' means a nominal 60 watt
tubular fluorescent lamp that is 96 inches in length and 1\1/2\
inches in diameter, and conforms to ANSI standard C78.81-2003
(Data Sheet 7881-ANSI-3006-1).
``(O) The term `F96T12HO/ES lamp' means a nominal 95 watt
tubular fluorescent lamp that is 96 inches in length and 1\1/2\
inches in diameter, and conforms to ANSI standard C78.81-2003
(Data Sheet 7881-ANSI-1017-1).
``(P) The term `replacement ballast' means a ballast that--
``(i) is designed for use to replace an existing
ballast in a previously installed luminaire;
``(ii) is marked `FOR REPLACEMENT USE ONLY';
``(iii) is shipped by the manufacturer in packages
containing not more than 10 ballasts; and
``(iv) has output leads that when fully extended
are a total length that is less than the length of the
lamp with which the ballast is intended to be
operated.'';
(2) in paragraph (30)(S)--
(A) by inserting ``(i)'' before ``The term''; and
(B) by adding at the end the following:
``(ii) The term `medium base compact fluorescent
lamp' does not include--
``(I) any lamp that is--
``(aa) specifically designed to be
used for special purpose applications;
and
``(bb) unlikely to be used in
general purpose applications, such as
the applications described in
subparagraph (D); or
``(II) any lamp not described in
subparagraph (D) that is excluded by the
Secretary, by rule, because the lamp is--
``(aa) designed for special
applications; and
``(bb) unlikely to be used in
general purpose applications.''; and
(3) by adding at the end the following:
``(32) The term `battery charger' means a device that
charges batteries for consumer products, including battery
chargers embedded in other consumer products.
``(33)(A) The term `commercial prerinse spray valve' means
a handheld device designed and marketed for use with commercial
dishwashing and ware washing equipment that sprays water on
dishes, flatware, and other food service items for the purpose
of removing food residue before cleaning the items.
``(B) The Secretary may modify the definition of
`commercial prerinse spray valve' by rule--
``(i) to include products--
``(I) that are extensively used in
conjunction with commercial dishwashing
and ware washing equipment;
``(II) the application of standards
to which would result in significant
energy savings; and
``(III) the application of
standards to which would meet the
criteria specified in section
325(o)(4); and
``(ii) to exclude products--
``(I) that are used for special
food service applications;
``(II) that are unlikely to be
widely used in conjunction with
commercial dishwashing and ware washing
equipment; and
``(III) the application of
standards to which would not result in
significant energy savings.
``(34) The term `dehumidifier' means a self-contained,
electrically operated, and mechanically encased assembly
consisting of--
``(A) a refrigerated surface (evaporator) that
condenses moisture from the atmosphere;
``(B) a refrigerating system, including an electric
motor;
``(C) an air-circulating fan; and
``(D) means for collecting or disposing of the
condensate.
``(35)(A) The term `distribution transformer' means a
transformer that--
``(i) has an input voltage of 34.5 kilovolts or
less;
``(ii) has an output voltage of 600 volts or less;
and
``(iii) is rated for operation at a frequency of 60
Hertz.
``(B) The term `distribution transformer' does not
include--
``(i) a transformer with multiple voltage
taps, the highest of which equals at least 20
percent more than the lowest;
``(ii) a transformer that is designed to be
used in a special purpose application and is
unlikely to be used in general purpose
applications, such as a drive transformer,
rectifier transformer, auto-transformer,
Uninterruptible Power System transformer,
impedance transformer, regulating transformer,
sealed and nonventilating transformer, machine
tool transformer, welding transformer,
grounding transformer, or testing transformer;
or
``(iii) any transformer not listed in
clause (ii) that is excluded by the Secretary
by rule because--
``(I) the transformer is designed
for a special application;
``(II) the transformer is unlikely
to be used in general purpose
applications; and
``(III) the application of
standards to the transformer would not
result in significant energy savings.
``(36) The term `external power supply' means an external
power supply circuit that is used to convert household electric
current into DC current or lower-voltage AC current to operate
a consumer product.
``(37) The term `illuminated exit sign' means a sign that--
``(A) is designed to be permanently fixed in place
to identify an exit; and
``(B) consists of an electrically powered integral
light source that--
``(i) illuminates the legend `EXIT' and any
directional indicators; and
``(ii) provides contrast between the
legend, any directional indicators, and the
background.
``(38) The term `low-voltage dry-type distribution
transformer' means a distribution transformer that--
``(A) has an input voltage of 600 volts or less;
``(B) is air-cooled; and
``(C) does not use oil as a coolant.
``(39) The term `pedestrian module' means a light signal
used to convey movement information to pedestrians.
``(40) The term `refrigerated bottled or canned beverage
vending machine' means a commercial refrigerator that cools
bottled or canned beverages and dispenses the bottled or canned
beverages on payment.
``(41) The term `standby mode' means the lowest power
consumption mode, as established on an individual product basis
by the Secretary, that--
``(A) cannot be switched off or influenced by the
user; and
``(B) may persist for an indefinite time when an
appliance is--
``(i) connected to the main electricity
supply; and
``(ii) used in accordance with the
instructions of the manufacturer.
``(42) The term `torchiere' means a portable electric lamp
with a reflector bowl that directs light upward to give
indirect illumination.
``(43) The term `traffic signal module' means a standard 8-
inch (200mm) or 12-inch (300mm) traffic signal indication
that--
``(A) consists of a light source, a lens, and all
other parts necessary for operation; and
``(B) communicates movement messages to drivers
through red, amber, and green colors.
``(44) The term `transformer' means a device consisting of
2 or more coils of insulated wire that transfers alternating
current by electromagnetic induction from 1 coil to another to
change the original voltage or current value.
``(45)(A) The term `unit heater' means a self-contained
fan-type heater designed to be installed within the heated
space.
``(B) The term `unit heater' does not include a warm air
furnace.
``(46)(A) The term `high intensity discharge lamp' means an
electric-discharge lamp in which--
``(i) the light-producing arc is stabilized by bulb
wall temperature; and
``(ii) the arc tube has a bulb wall loading in
excess of 3 Watts/cm<SUP>2</SUP>.
``(B) The term `high intensity discharge lamp' includes
mercury vapor, metal halide, and high-pressure sodium lamps
described in subparagraph (A).
``(47)(A) The term `mercury vapor lamp' means a high
intensity discharge lamp in which the major portion of the
light is produced by radiation from mercury operating at a
partial pressure in excess of 100,000 Pa (approximately 1 atm).
``(B) The term `mercury vapor lamp' includes clear,
phosphor-coated, and self-ballasted lamps described in
subparagraph (A).
``(48) The term `mercury vapor lamp ballast' means a device
that is designed and marketed to start and operate mercury
vapor lamps by providing the necessary voltage and current.''.
(b) Test Procedures.--Section 323 of the Energy Policy and
Conservation Act (42 U.S.C. 6293) is amended--
(1) in subsection (b), by adding at the end the following:
``(9) Test procedures for illuminated exit signs shall be based on
the test method used under version 2.0 of the Energy Star program of
the Environmental Protection Agency for illuminated exit signs.
``(10)(A) Test procedures for distribution transformers and low
voltage dry-type distribution transformers shall be based on the
`Standard Test Method for Measuring the Energy Consumption of
Distribution Transformers' prescribed by the National Electrical
Manufacturers Association (NEMA TP 2-1998).
``(B) The Secretary may review and revise the test procedures
established under subparagraph (A).
``(C) For purposes of section 346(a), the test procedures
established under subparagraph (A) shall be considered to be the
testing requirements prescribed by the Secretary under section
346(a)(1) for distribution transformers for which the Secretary makes a
determination that energy conservation standards would--
``(i) be technologically feasible and economically
justified; and
``(ii) result in significant energy savings.
``(11) Test procedures for traffic signal modules and pedestrian
modules shall be based on the test method used under the Energy Star
program of the Environmental Protection Agency for traffic signal
modules, as in effect on the date of enactment of this paragraph.
``(12)(A) Test procedures for medium base compact fluorescent lamps
shall be based on the test methods for compact fluorescent lamps used
under the August 9, 2001, version of the Energy Star program of the
Environmental Protection Agency and the Department of Energy.
``(B) Except as provided in subparagraph (C), medium base compact
fluorescent lamps shall meet all test requirements for regulated
parameters of section 325(cc).
``(C) Notwithstanding subparagraph (B), if manufacturers document
engineering predictions and analysis that support expected attainment
of lumen maintenance at 40 percent rated life and lamp lifetime, medium
base compact fluorescent lamps may be marketed before completion of the
testing of lamp life and lumen maintenance at 40 percent of rated life.
``(13) Test procedures for dehumidifiers shall be based on the test
criteria used under the Energy Star Program Requirements for
Dehumidifiers developed by the Environmental Protection Agency, as in
effect on the date of enactment of this paragraph unless revised by the
Secretary pursuant to this section.
``(14) The test procedure for measuring flow rate for commercial
prerinse spray valves shall be based on American Society for Testing
and Materials Standard F2324, entitled `Standard Test Method for Pre-
Rinse Spray Valves.'
``(15) The test procedure for refrigerated bottled or canned
beverage vending machines shall be based on American National Standards
Institute/American Society of Heating, Refrigerating and Air-
Conditioning Engineers Standard 32.1-2004, entitled `Methods of Testing
for Rating Vending Machines for Bottled, Canned or Other Sealed
Beverages'.''; and
(2) by adding at the end the following:
``(f) Additional Consumer and Commercial Products.--(1) Not later
than 2 years after the date of enactment of this subsection, the
Secretary shall prescribe testing requirements for--
``(A) suspended ceiling fans; and
``(B) refrigerated bottled or canned beverage vending
machines.
``(2) To the maximum extent practicable, the testing requirements
prescribed under paragraph (1) shall be based on existing test
procedures used in industry.''.
(c) Standard Setting Authority.--Section 325 of the Energy Policy
and Conservation Act (42 U.S.C. 6295) is amended--
(1) in subsection (f)(3), by adding at the end the
following:
``(D) Notwithstanding any other provision of this Act, if the
requirements of subsection (o) are met, the Secretary may consider and
prescribe energy conservation standards or energy use standards for
electricity used for purposes of circulating air through duct work.'';
(2) in subsection (g)--
(A) in paragraph (6)(B), by inserting ``and
labeled'' after ``designed''; and
(B) by adding at the end the following:
``(8)(A) Each fluorescent lamp ballast (other than replacement
ballasts or ballasts described in subparagraph (C))--
``(i)(I) manufactured on or after July 1, 2009;
``(II) sold by the manufacturer on or after October 1,
2009; or
``(III) incorporated into a luminaire by a luminaire
manufacturer on or after July 1, 2010; and
``(ii) designed--
``(I) to operate at nominal input voltages of 120
or 277 volts;
``(II) to operate with an input current frequency
of 60 Hertz; and
``(III) for use in connection with F34T12 lamps,
F96T12/ES lamps, or F96T12HO/ES lamps;
shall have a power factor of 0.90 or greater and shall have a
ballast efficacy factor of not less than the following:
``(B) The standards described in subparagraph (A) shall apply to
all ballasts covered by subparagraph (A)(ii) that are manufactured on
or after July 1, 2010, or sold by the manufacturer on or after October
1, 2010.
------------------------------------------------------------------------
``Application for operation for Ballast
operation of ballast input Total nominal efficienty
voltage lampwatts factor
------------------------------------------------------------------------
One F34T12 lamp.................. 120/277.............. 34
Two F34T12 lamps................. 120/277.............. 68
Two F96 T12/ES lamps............. 120/277.............. 120
Two F96 T12HO/ES lamps........... 120/277.............. 190
------------------------------------------------------------------------
``(C) The standards described in subparagraphs (A) and (B) do not
apply to--
``(i) a ballast that is designed for dimming to 50 percent
or less of the maximum output of the ballast;
``(ii) a ballast that is designed for use with 2 F96T12HO
lamps at ambient temperatures of 20 deg.F or less and for use
in an outdoor sign; or
``(iii) a ballast that has a power factor of less than 0.90
and is designed and labeled for use only in residential
applications.'';
(3) in subsection (o), by adding at the end the following:
``(5)(A) Notwithstanding any other provision in this
section, the Secretary may set 2 standards for space heating
and air conditioning equipment by dividing the United States
into 2 climate zones to achieve the maximum level of energy
savings that are technically feasible and economically
justified.
``(B) The climate zone boundaries described in subparagraph
(A)--
``(i) shall follow State borders; and
``(ii) shall include only contiguous States.
``(C) In determining whether to set 2 standards as
described in subparagraph (A), the Secretary shall consider all
factors described in paragraphs (1) through (4).
``(D) If the Secretary sets 2 standards as described in
subparagraph (A), it shall be illegal to transport noncomplying
products into a State for retail sale or installation in that
State.''.
(4) by adding at the end the following:
``(u) Battery Charger and External Power Supply Electric Energy
Consumption.--(1)(A) Not later than 18 months after the date of
enactment of this subsection, the Secretary shall, after providing
notice and an opportunity for comment, prescribe, by rule, definitions
and test procedures for the power use of battery chargers and external
power supplies.
``(B) In establishing the test procedures under subparagraph (A),
the Secretary shall--
``(i) consider existing definitions and test procedures
used for measuring energy consumption in standby mode and other
modes; and
``(ii) assess the current and projected future market for
battery chargers and external power supplies.
``(C) The assessment under subparagraph (B)(ii) shall include--
``(i) estimates of the significance of potential energy
savings from technical improvements to battery chargers and
external power supplies; and
``(ii) suggested product classes for energy conservation
standards.
``(D) Not later than 18 months after the date of enactment of this
subsection, the Secretary shall hold a scoping workshop to discuss and
receive comments on plans for developing energy conservation standards
for energy use for battery chargers and external power supplies.
``(E)(i) Not later than 3 years after the date of enactment of this
subsection, the Secretary shall issue a final rule that determines
whether energy conservation standards shall be issued for battery
chargers and external power supplies or classes of battery chargers and
external power supplies.
``(ii) For each product class, any energy conservation standards
issued under clause (i) shall be set at the lowest level of energy use
that--
``(I) meets the criteria and procedures of subsections (o),
(p), (q), (r), (s), and (t); and
``(II) would result in significant overall annual energy
savings, considering standby mode and other operating modes.
``(2) In determining under section 323 whether test procedures and
energy conservation standards under this section should be revised with
respect to covered products that are major sources of standby mode
energy consumption, the Secretary shall consider whether to incorporate
standby mode into the test procedures and energy conservation
standards, taking into account standby mode power consumption compared
to overall product energy consumption.
``(3) The Secretary shall not propose an energy conservation
standard under this section, unless the Secretary has issued applicable
test procedures for each product under section 323.
``(4) Any energy conservation standard issued under this subsection
shall be applicable to products manufactured or imported beginning on
the date that is 3 years after the date of issuance.
``(5) The Secretary and the Administrator shall collaborate and
develop programs (including programs under section 324A and other
voluntary industry agreements or codes of conduct) that are designed to
reduce standby mode energy use.
``(v) Suspended Ceiling Fans and Refrigerated Beverage Vending
Machines.--(1) Not later than 4 years after the date of enactment of
this subsection, the Secretary shall prescribe, by rule, energy
conservation standards for--
``(A) suspended ceiling fans; and
``(B) refrigerated bottled or canned beverage vending
machines.
``(2) In establishing energy conservation standards under this
subsection, the Secretary shall use the criteria and procedures
prescribed under subsections (o) and (p).
``(3) Any energy conservation standard prescribed under this
subsection shall apply to products manufactured 3 years after the date
of publication of a final rule establishing the energy conservation
standard.
``(w) Illuminated Exit Signs.--An illuminated exit sign
manufactured on or after January 1, 2006, shall meet the version 2.0
Energy Star Program performance requirements for illuminated exit signs
prescribed by the Environmental Protection Agency.
``(x) Torchieres.--A torchiere manufactured on or after January 1,
2006--
``(1) shall consume not more than 190 watts of power; and
``(2) shall not be capable of operating with lamps that
total more than 190 watts.
``(y) Low Voltage Dry-Type Distribution Transformers.--The
efficiency of a low voltage dry-type distribution transformer
manufactured on or after January 1, 2007, shall be the Class I
Efficiency Levels for distribution transformers specified in table 4-2
of the `Guide for Determining Energy Efficiency for Distribution
Transformers' published by the National Electrical Manufacturers
Association (NEMA TP-1-2002).
``(z) Traffic Signal Modules and Pedestrian Modules.--Any traffic
signal module or pedestrian module manufactured on or after January 1,
2006, shall--
``(1) meet the performance requirements used under the
Energy Star program of the Environmental Protection Agency for
traffic signals, as in effect on the date of enactment of this
subsection; and
``(2) be installed with compatible, electrically connected
signal control interface devices and conflict monitoring
systems.
``(aa) Unit Heaters.--A unit heater manufactured on or after the
date that is 3 years after the date of enactment of this subsection
shall--
``(1) be equipped with an intermittent ignition device; and
``(2) have power venting or an automatic flue damper.
``(bb) Medium Base Compact Fluorescent Lamps.--(1) A bare lamp and
covered lamp (no reflector) medium base compact fluorescent lamp
manufactured on or after January 1, 2006, shall meet the following
requirements prescribed by the August 9, 2001, version of the Energy
Star Program Requirements for Compact Fluorescent Lamps, Energy Star
Eligibility Criteria, Energy-Efficiency Specification issued by the
Environmental Protection Agency and Department of Energy:
``(A) Minimum initial efficacy.
``(B) Lumen maintenance at 1000 hours.
``(C) Lumen maintenance at 40 percent of rated life.
``(D) Rapid cycle stress test.
``(E) Lamp life.
``(2) The Secretary may, by rule, establish requirements for color
quality (CRI), power factor, operating frequency, and maximum allowable
start time based on the requirements prescribed by the August 9, 2001,
version of the Energy Star Program Requirements for Compact Fluorescent
Lamps.
``(3) The Secretary may, by rule--
``(A) revise the requirements established under paragraph
(2); or
``(B) establish other requirements, after considering
energy savings, cost effectiveness, and consumer satisfaction.
``(cc) Dehumidifiers.--(1) Dehumidifiers manufactured on or after
October 1, 2007, shall have an Energy Factor that meets or exceeds the
following values:
Minimum Energy Factor
``Product Capacity (pints/day): (Liters/kWh):
25.00 or less................................. 1.00
25.01 - 35.00................................. 1.20
35.01 - 54.00................................. 1.30
54.01 - 74.99................................. 1.50
75.00 or more................................. 2.25.
``(2)(A) Not later than October 1, 2009, the Secretary shall
publish a final rule in accordance with subsections (o) and (p), to
determine whether the energy conservation standards established under
paragraph (1) should be amended.
``(B) The final rule published under subparagraph (A) shall--
``(i) contain any amendment by the Secretary; and
``(ii) provide that the amendment applies to products
manufactured on or after October 1, 2012.
``(C) If the Secretary does not publish an amendment that takes
effect by October 1, 2012, dehumidifiers manufactured on or after
October 1, 2012, shall have an Energy Factor that meets or exceeds the
following values:
Minimum Energy Factor
``Product Capacity (pints/day): (Liters/kWh):
25.00 or less................................. 1.20
25.01 - 35.00................................. 1.30
35.01 - 45.00................................. 1.40
45.01 - 54.00................................. 1.50
54.01 - 74.99................................. 1.60
75.00 or more................................. 2.5.
``(dd) Commercial Prerinse Spray Valves.--Commercial prerinse spray
valves manufactured on or after January 1, 2006, shall have a flow rate
of not more than 1.6 gallons per minute.
``(ee) Mercury Vapor Lamp Ballasts.--Mercury vapor lamp ballasts
shall not be manufactured or imported after January 1, 2008.
``(ff) Application Date.--Section 327 applies--
``(1) to products for which energy conservation standards
are to be established under subsection (l), (u), or (v)
beginning on the date on which a final rule is issued by the
Secretary, except that any State or local standard prescribed
or enacted for the product before the date on which the final
rule is issued shall not be preempted until the energy
conservation standard established under subsection (l),(u), or
(v) for the product takes effect; and
``(2) to products for which energy conservation standards
are established under subsections (w) through (ee) on the date
of enactment of those subsections, except that any State or
local standard prescribed or enacted before the date of
enactment of those subsections shall not be preempted until the
energy conservation standards established under subsections (w)
through (ee) take effect.''.
(d) General Rule of Preemption.--Section 327(c) of the Energy
Policy and Conservation Act (42 U.S.C. 6297(c)) is amended--
(1) in paragraph (5), by striking ``or'' at the end;
(2) in paragraph (6), by striking the period at the end and
inserting ``; or''; and
(3) by adding at the end the following:
``(7)(A) is a regulation concerning standards for
commercial prerinse spray valves adopted by the California
Energy Commission before January 1, 2005; or
``(B) is an amendment to a regulation described in
subparagraph (A) that was developed to align California
regulations with changes in American Society for Testing and
Materials Standard F2324;
``(8)(A) is a regulation concerning standards for
pedestrian modules adopted by the California Energy Commission
before January 1, 2005; or
``(B) is an amendment to a regulation described in
subparagraph (A) that was developed to align California
regulations to changes in the Institute for Transportation
Engineers standards, entitled `Performance Specification:
Pedestrian Traffic Control Signal Indications'.''.
SEC. 102. ENERGY CONSERVATION STANDARDS FOR COMMERCIAL EQUIPMENT.
(a) Definitions.--Section 340 of the Energy Policy and Conservation
Act (42 U.S.C. 6311) is amended--
(1) in paragraph (1)--
(A) by redesignating subparagraphs (D) through (G)
as subparagraphs (H) through (K), respectively; and
(B) by inserting after subparagraph (C) the
following:
``(D) Very large commercial package air
conditioning and heating equipment.
``(E) Commercial refrigerators, freezers, and
refrigerator-freezers.
``(F) Automatic commercial ice makers.
``(G) Commercial clothes washers.'';
(2) in paragraph (2)(B), by striking ``small and large
commercial package air conditioning and heating equipment'' and
inserting ``commercial package air conditioning and heating
equipment, commercial refrigerators, freezers, and
refrigerator-freezers, automatic commercial ice makers,
commercial clothes washers'';
(3) by striking paragraphs (8) and (9) and inserting the
following:
``(8)(A) The term `commercial package air conditioning and
heating equipment' means air-cooled, water-cooled,
evaporatively-cooled, or water source (not including ground
water source) electrically operated, unitary central air
conditioners and central air conditioning heat pumps for
commercial application.
``(B) The term `small commercial package air conditioning
and heating equipment' means commercial package air
conditioning and heating equipment that is rated below 135,000
Btu per hour (cooling capacity).
``(C) The term `large commercial package air conditioning
and heating equipment' means commercial package air
conditioning and heating equipment that is rated--
``(i) at or above 135,000 Btu per hour; and
``(ii) below 240,000 Btu per hour (cooling
capacity).
``(D) The term `very large commercial package air
conditioning and heating equipment' means commercial package
air conditioning and heating equipment that is rated--
``(i) at or above 240,000 Btu per hour; and
``(ii) below 760,000 Btu per hour (cooling
capacity).
``(9)(A) The term `commercial refrigerator, freezer, and
refrigerator-freezer' means refrigeration equipment that--
``(i) is not a consumer product (as defined in
section 321);
``(ii) is not designed and marketed exclusively for
medical, scientific, or research purposes;
``(iii) operates at a chilled, frozen, combination
chilled and frozen, or variable temperature;
``(iv) displays or stores merchandise and other
perishable materials horizontally, semivertically, or
vertically;
``(v) has transparent or solid doors, sliding or
hinged doors, a combination of hinged, sliding,
transparent, or solid doors, or no doors;
``(vi) is designed for pull-down temperature
applications or holding temperature applications; and
``(vii) is connected to a self-contained condensing
unit or to a remote condensing unit.
``(B) The term `holding temperature application' means a
use of commercial refrigeration equipment other than a pull-
down temperature application, except a blast chiller or
freezer.
``(C) The term `integrated average temperature' means the
average temperature of all test package measurements taken
during the test.
``(D) The term `pull-down temperature application' means a
commercial refrigerator with doors that, when fully loaded with
12 ounce beverage cans at 90 degrees F, can cool those
beverages to an average stable temperature of 38 degrees F in
12 hours or less.
``(E) The term `remote condensing unit' means a factory-
made assembly of refrigerating components designed to compress
and liquefy a specific refrigerant that is remotely located
from the refrigerated equipment and consists of 1 or more
refrigerant compressors, refrigerant condensers, condenser fans
and motors, and factory supplied accessories.
``(F) The term `self-contained condensing unit' means a
factory-made assembly of refrigerating components designed to
compress and liquefy a specific refrigerant that is an integral
part of the refrigerated equipment and consists of 1 or more
refrigerant compressors, refrigerant condensers, condenser fans
and motors, and factory supplied accessories.''; and
(4) by adding at the end the following:
``(19) The term `automatic commercial ice maker' means a
factory-made assembly (not necessarily shipped in 1 package)
that--
``(A) consists of a condensing unit and ice-making
section operating as an integrated unit, with means for
making and harvesting ice; and
``(B) may include means for storing ice, dispensing
ice, or storing and dispensing ice.
``(20) The term `commercial clothes washer' means a soft-
mount front-loading or soft-mount top-loading clothes washer
that--
``(A) has a clothes container compartment that--
``(i) for horizontal-axis clothes washers,
is not more than 3.5 cubic feet ; and
``(ii) for vertical-axis clothes washers,
is not more than 4.0 cubic feet; and
``(B) is designed for use in--
``(i) applications in which the occupants
of more than 1 household will be using the
clothes washer, such as multi-family housing
common areas and coin laundries; or
``(ii) other commercial applications.
``(21) The term `harvest rate' means the amount of ice (at
32 degrees F) in pounds produced per 24 hours.''.
(b) Standards for Commercial Package Air Conditioning and Heating
Equipment.--Section 342(a) of the Energy Policy and Conservation Act
(42 U.S.C. 6313(a)) is amended--
(1) in the subsection heading, by striking ``Small and
Large'' and inserting ``Small, Large, and Very Large'';
(2) in paragraph (1), by inserting ``but before January 1,
2010,'' after ``January 1, 1994,'';
(3) in paragraph (2), by inserting ``but before January 1,
2010,'' after ``January 1, 1995,''; and
(4) in paragraph (6)--
(A) in subparagraph (A)--
(i) by inserting ``(i)'' after ``(A)'';
(ii) by striking ``the date of enactment of
the Energy Policy Act of 1992'' and inserting
``January 1, 2010'';
(iii) by inserting after ``large commercial
package air conditioning and heating
equipment,'' the following: ``and very large
commercial package air conditioning and heating
equipment, or if ASHRAE/IES Standard 90.1, as
in effect on October 24, 1992, is amended with
respect to any''; and
(iv) by adding at the end the following:
``(ii) If ASHRAE/IES Standard 90.1 is not amended with respect to
small commercial package air conditioning and heating equipment, large
commercial package air conditioning and heating equipment, and very
large commercial package air conditioning and heating equipment during
the 5-year period beginning on the effective date of a standard, the
Secretary may initiate a rulemaking to determine whether a more
stringent standard--
``(I) would result in significant additional conservation
of energy; and
``(II) is technologically feasible and economically
justified.''; and
(B) in subparagraph (C)(ii), by inserting ``and
very large commercial package air conditioning and
heating equipment'' after ``large commercial package
air conditioning and heating equipment''; and
(5) by adding at the end the following:
``(7) Small commercial package air conditioning and heating
equipment manufactured on or after January 1, 2010, shall meet the
following standards:
``(A) The minimum energy efficiency ratio of air-cooled
central air conditioners at or above 65,000 Btu per hour
(cooling capacity) and less than 135,000 Btu per hour (cooling
capacity) shall be--
``(i) 11.2 for equipment with no heating or
electric resistance heating; and
``(ii) 11.0 for equipment with all other heating
system types that are integrated into the equipment (at
a standard rating of 95 degrees F db).
``(B) The minimum energy efficiency ratio of air-cooled
central air conditioner heat pumps at or above 65,000 Btu per
hour (cooling capacity) and less than 135,000 Btu per hour
(cooling capacity) shall be--
``(i) 11.0 for equipment with no heating or
electric resistance heating; and
``(ii) 10.8 for equipment with all other heating
system types that are integrated into the equipment (at
a standard rating of 95 degrees F db).
``(C) The minimum coefficient of performance in the heating
mode of air-cooled central air conditioning heat pumps at or
above 65,000 Btu per hour (cooling capacity) and less than
135,000 Btu per hour (cooling capacity) shall be 3.3 (at a high
temperature rating of 47 degrees F db).
``(8) Large commercial package air conditioning and heating
equipment manufactured on or after January 1, 2010, shall meet the
following standards:
``(A) The minimum energy efficiency ratio of air-cooled
central air conditioners at or above 135,000 Btu per hour
(cooling capacity) and less than 240,000 Btu per hour (cooling
capacity) shall be--
``(i) 11.0 for equipment with no heating or
electric resistance heating; and
``(ii) 10.8 for equipment with all other heating
system types that are integrated into the equipment (at
a standard rating of 95 degrees F db).
``(B) The minimum energy efficiency ratio of air-cooled
central air conditioner heat pumps at or above 135,000 Btu per
hour (cooling capacity) and less than 240,000 Btu per hour
(cooling capacity) shall be--
``(i) 10.6 for equipment with no heating or
electric resistance heating; and
``(ii) 10.4 for equipment with all other heating
system types that are integrated into the equipment (at
a standard rating of 95 degrees F db).
``(C) The minimum coefficient of performance in the heating
mode of air-cooled central air conditioning heat pumps at or
above 135,000 Btu per hour (cooling capacity) and less than
240,000 Btu per hour (cooling capacity) shall be 3.2 (at a high
temperature rating of 47 degrees F db).
``(9) Very large commercial package air conditioning and heating
equipment manufactured on or after January 1, 2010, shall meet the
following standards:
``(A) The minimum energy efficiency ratio of air-cooled
central air conditioners at or above 240,000 Btu per hour
(cooling capacity) and less than 760,000 Btu per hour (cooling
capacity) shall be--
``(i) 10.0 for equipment with no heating or
electric resistance heating; and
``(ii) 9.8 for equipment with all other heating
system types that are integrated into the equipment (at
a standard rating of 95 degrees F db).
``(B) The minimum energy efficiency ratio of air-cooled
central air conditioner heat pumps at or above 240,000 Btu per
hour (cooling capacity) and less than 760,000 Btu per hour
(cooling capacity) shall be--
``(i) 9.5 for equipment with no heating or electric
resistance heating; and
``(ii) 9.3 for equipment with all other heating
system types that are integrated into the equipment (at
a standard rating of 95 degrees F db).
``(C) The minimum coefficient of performance in the heating
mode of air-cooled central air conditioning heat pumps at or
above 240,000 Btu per hour (cooling capacity) and less than
760,000 Btu per hour (cooling capacity) shall be 3.2 (at a high
temperature rating of 47 degrees F db).''.
(c) Standards for Commercial Refrigerators, Freezers, and
Refrigerator-Freezers.--Section 342 of the Energy Policy and
Conservation Act (42 U.S.C. 6313) is amended by adding at the end the
following:
``(c) Commercial Refrigerators, Freezers, and Refrigerator-
Freezers.--(1) In this subsection:
``(A) The term `AV' means the adjusted volume
(ft<SUP>3</SUP>) (defined as 1.63 x frozen temperature
compartment volume (ft<SUP>3</SUP>) + chilled temperature
compartment volume (ft<SUP>3</SUP>)) with compartment volumes
measured in accordance with the Association of Home Appliance
Manufacturers Standard HRF1-1979.
``(B) The term `V' means the chilled or frozen compartment
volume (ft<SUP>3</SUP>) (as defined in the Association of Home
Appliance Manufacturers Standard HRF1-1979).
``(C) Other terms have such meanings as may be established
by the Secretary, based on industry-accepted definitions and
practice.
``(2) Each commercial refrigerator, freezer, and refrigerator-
freezer with a self-contained condensing unit designed for holding
temperature applications manufactured on or after January 1, 2010,
shall have a daily energy consumption (in kilowatt hours per day) that
does not exceed the following:
``Refrigerators with solid doors.. 0.10 V + 2.04
Refrigerators with transparent 0.12 V + 3.34
doors.
Freezers with solid doors......... 0.40 V + 1.38
Freezers with transparent doors... 0.75 V + 4.10
Refrigerators/freezers with solid 0.27 AV - 0.71 or 0.70.
doors the greater of.
``(3) Each commercial refrigerator with a self-contained condensing
unit designed for pull-down temperature applications and transparent
doors manufactured on or after January 1, 2010, shall have a daily
energy consumption (in kilowatt hours per day) of not more than 0.126 V
+ 3.51.
``(4)(A) Not later than January 1, 2009, the Secretary shall issue,
by rule, standard levels for ice-cream freezers, self-contained
commercial refrigerators, freezers, and refrigerator-freezers without
doors, and remote condensing commercial refrigerators, freezers, and
refrigerator-freezers, with the standard levels effective for equipment
manufactured on or after January 1, 2012.
``(B) The Secretary may issue, by rule, standard levels for other
types of commercial refrigerators, freezers, and refrigerator-freezers
not covered by paragraph (2)(A) with the standard levels effective for
equipment manufactured 3 or more years after the date on which the
final rule is published.
``(5)(A) Not later than January 1, 2013, the Secretary shall issue
a final rule to determine whether the standards established under this
subsection should be amended.
``(B) Not later than 3 years after the effective date of any
amended standards under subparagraph (A) or the publication of a final
rule determining that the standards should not be amended, the
Secretary shall issue a final rule to determine whether the standards
established under this subsection or the amended standards, as
applicable, should be amended.
``(C) If the Secretary issues a final rule under subparagraph (A)
or (B) establishing amended standards, the final rule shall provide
that the amended standards apply to products manufactured on or after
the date that is--
``(i) 3 years after the date on which the final amended
standard is published; or
``(ii) if the Secretary determines, by rule, that 3 years
is inadequate, not later than 5 years after the date on which
the final rule is published.''.
(d) Standards for Automatic Commercial Ice Makers.--Section 342 of
the Energy Policy and Conservation Act (42 U.S.C. 6313) (as amended by
subsection (c)) is amended by adding at the end the following:
``(d) Automatic Commercial Ice Makers.--(1) Each automatic
commercial ice maker that produces cube type ice with capacities
between 50 and 2500 pounds per 24-hour period when tested according to
the test standard established in section 343(a)(7) and is manufactured
on or after January 1, 2010, shall meet the following standard levels:
----------------------------------------------------------------------------------------------------------------
Maximum
Harvest rate (lbs Maximum energy use condenser water
``Equipment type Type of cooling ice/24 hours) (kWh/100 lbs ice) use (gal/100 lbs
ice)
----------------------------------------------------------------------------------------------------------------
Ice Making Head Water <500 7.80-0.0055H 200-0.022H
> or = 500 and 5.58-0.0011H 200-0.022H
<1436
> or = 1436 4.0 200-0.022H
Ice making head Air <450 10.26-0.0086H Not applicable
> or = 450 6.89-0.0011H Not applicable
Remote Condensing (but not Air <1000 8.85-0.0038H Not applicable
remote compressor)
> or = 1000 5.10 Not applicable
Remote Condensing and Remote Air <934 8.85-0.0038H Not applicable
Compressor
> or = 934 5.3 Not applicable
----------------------------------------------------------------------------------------------------------------
``(2)(A) The Secretary may issue, by rule, standard levels for
types of automatic commercial ice makers that are not covered by
paragraph (1).
``(B) The standards established under subparagraph (A) shall apply
to products manufactured on or after the date that is--
``(i) 3 years after the date on which the rule is published
under subparagraph (A); or
``(ii) if the Secretary determines, by rule, that 3 years
is inadequate, not later than 5 years after the date on which
the final rule is published.
``(3)(A) Not later than January 1, 2015, with respect to the
standards established under paragraph (1), and, with respect to the
standards established under paragraph (2), not later than 5 years after
the date on which the standards take effect, the Secretary shall issue
a final rule to determine whether amending the applicable standards is
technologically feasible and economically justified.
``(B) Not later than 5 years after the effective date of any
amended standards under subparagraph (A) or the publication of a final
rule determining that amending the standards is not technologically
feasible or economically justified, the Secretary shall issue a final
rule to determine whether amending the standards established under
paragraph (1) or the amended standards, as applicable, is
technologically feasible or economically justified.
``(C) If the Secretary issues a final rule under subparagraph (A)
or (B) establishing amended standards, the final rule shall provide
that the amended standards apply to products manufactured on or after
the date that is--
``(i) 3 years after the date on which the final amended
standard is published; or
``(ii) if the Secretary determines, by rule, that 3 years
is inadequate, not later than 5 years after the date on which
the final amended standard is published.
``(4) A final rule issued under paragraph (2) or (3) shall
establish standards at the maximum level that is technically feasible
and economically justified, as provided in subsections (o) and (p) of
section 325.''.
(e) Standards for Commercial Clothes Washers.--Section 342 of the
Energy Policy and Conservation Act (42 U.S.C. 6313) (as amended by
subsection (d)) is amended by adding at the end the following:
``(e) Commercial Clothes Washers.--(1) Each commercial clothes
washer manufactured on or after January 1, 2007, shall have--
``(A) a Modified Energy Factor of at least 1.26; and
``(B) a Water Factor of not more than 9.5.
``(2)(A)(i) Not later than January 1, 2010, the Secretary shall
publish a final rule to determine whether the standards established
under paragraph (1) should be amended.
``(ii) The rule published under clause (i) shall provide that any
amended standard shall apply to products manufactured 3 years after the
date on which the final amended standard is published.
``(B)(i) Not later than January 1, 2015, the Secretary shall
publish a final rule to determine whether the standards established
under paragraph (1) should be amended.
``(ii) The rule published under clause (i) shall provide that any
amended standard shall apply to products manufactured 3 years after the
date on which the final amended standard is published.''.
(f) Test Procedures.--Section 343 of the Energy Policy and
Conservation Act (42 U.S.C. 6314) is amended--
(1) in subsection (a)--
(A) in paragraph (4)--
(i) in subparagraph (A), by inserting
``very large commercial package air
conditioning and heating equipment,'' after
``large commercial package air conditioning and
heating equipment,''; and
(ii) in subparagraph (B), by inserting
``very large commercial package air
conditioning and heating equipment,'' after
``large commercial package air conditioning and
heating equipment,''; and
(B) by adding at the end the following:
``(6)(A)(i) In the case of commercial refrigerators, freezers, and
refrigerator-freezers, the test procedures shall be--
``(I) the test procedures determined by the Secretary to be
generally accepted industry testing procedures; or
``(II) rating procedures developed or recognized by the
ASHRAE or by the American National Standards Institute.
``(ii) In the case of self-contained refrigerators, freezers, and
refrigerator-freezers to which standards are applicable under
paragraphs (2) and (3) of section 342(c), the initial test procedures
shall be the ASHRAE 117 test procedure that is in effect on January 1,
2005.
``(B) In the case of commercial refrigerators, freezers, and
refrigerators-freezers with doors covered by the standards adopted in
February 2002, by the California Energy Commission, the rating
temperatures shall be the integrated average temperature of 38 degrees
F (plus or minus 2 degrees F) for refrigerator compartments and 0
degrees F (plus or minus 2 degrees F) for freezer compartments.
``(C) The Secretary shall issue a rule in accordance with
paragraphs (2) and (3) to establish the appropriate rating temperatures
for the other products for which standards will be established under
subsection 342(c)(4).
``(D) In establishing the appropriate test temperatures under this
subparagraph, the Secretary shall follow the procedures and meet the
requirements under section 323(e).
``(E)(i) Not later than 180 days after the publication of the new
ASHRAE 117 test procedure, if the ASHRAE 117 test procedure for
commercial refrigerators, freezers, and refrigerator-freezers is
amended, the Secretary shall, by rule, amend the test procedure for the
product as necessary to ensure that the test procedure is consistent
with the amended ASHRAE 117 test procedure, unless the Secretary makes
a determination, by rule, and supported by clear and convincing
evidence, that to do so would not meet the requirements for test
procedures under paragraphs (2) and (3).
``(ii) If the Secretary determines that 180 days is an insufficient
period during which to review and adopt the amended test procedure or
rating procedure under clause (i), the Secretary shall publish a notice
in the Federal Register stating the intent of the Secretary to wait not
longer than 1 additional year before putting into effect an amended
test procedure or rating procedure.
``(F)(i) If a test procedure other than the ASHRAE 117 test
procedure is approved by the American National Standards Institute, the
Secretary shall, by rule--
``(I) review the relative strengths and weaknesses of the
new test procedure relative to the ASHRAE 117 test procedure;
and
``(II) based on that review, adopt 1 new test procedure for
use in the standards program.
``(ii) If a new test procedure is adopted under clause (i)--
``(I) section 323(e) shall apply; and
``(II) subparagraph (B) shall apply to the adopted test
procedure.
``(7)(A) In the case of automatic commercial ice makers, the test
procedures shall be the test procedures specified in Air-Conditioning
and Refrigeration Institute Standard 810-2003, as in effect on January
1, 2005.
``(B)(i) If Air-Conditioning and Refrigeration Institute Standard
810-2003 is amended, the Secretary shall amend the test procedures
established in subparagraph (A) as necessary to be consistent with the
amended Air-Conditioning and Refrigeration Institute Standard, unless
the Secretary determines, by rule, published in the Federal Register
and supported by clear and convincing evidence, that to do so would not
meet the requirements for test procedures under paragraphs (2) and (3).
``(ii) If the Secretary issues a rule under clause (i) containing a
determination described in clause (ii), the rule may establish an
amended test procedure for the product that meets the requirements of
paragraphs (2) and (3).
``(C) The Secretary shall comply with section 323(e) in
establishing any amended test procedure under this paragraph.
``(8) With respect to commercial clothes washers, the test
procedures shall be the same as the test procedures established by the
Secretary for residential clothes washers under section 325(g).''; and
(2) in subsection (d)(1), by inserting ``very large
commercial package air conditioning and heating equipment,
commercial refrigerators, freezers, and refrigerator-freezers,
automatic commercial ice makers, commercial clothes washers,''
after ``large commercial package air conditioning and heating
equipment,''.
(g) Labeling.--Section 344(e) of the Energy Policy and Conservation
Act (42 U.S.C. 6315(e)) is amended by inserting ``very large commercial
package air conditioning and heating equipment, commercial
refrigerators, freezers, and refrigerator-freezers, automatic
commercial ice makers, commercial clothes washers,'' after ``large
commercial package air conditioning and heating equipment,'' each place
it appears.
(h) Administration, Penalties, Enforcement, and Preemption.--
Section 345 of the Energy Policy and Conservation Act (42 U.S.C. 6316)
is amended--
(1) in subsection (a)--
(A) in paragraph (7), by striking ``and'' at the
end;
(B) in paragraph (8), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following:
``(9) in the case of commercial clothes washers, section
327(b)(1) shall be applied as if the National Appliance Energy
Conservation Act of 1987 was the Energy Policy Act of 2005.'';
(2) in the first sentence of subsection (b)(1), by striking
``part B'' and inserting ``part A''; and
(3) by adding at the end the following:
``(d)(1) Except as provided in paragraphs (2) and (3), section 327
shall apply with respect to very large commercial package air
conditioning and heating equipment to the same extent and in the same
manner as section 327 applies under part A on the date of enactment of
this subsection.
``(2) Any State or local standard issued before the date of
enactment of this subsection shall not be preempted until the standards
established under section 342(a)(9) take effect on January 1, 2010.
``(e)(1)(A) Subsections (a), (b), and (d) of section 326,
subsections (m) through (s) of section 325, and sections 328 through
336 shall apply with respect to commercial refrigerators, freezers, and
refrigerator-freezers to the same extent and in the same manner as
those provisions apply under part A.
``(B) In applying those provisions to commercial refrigerators,
freezers, and refrigerator-freezers, paragraphs (1), (2), (3), and (4)
of subsection (a) shall apply.
``(2)(A) Section 327 shall apply to commercial refrigerators,
freezers, and refrigerator-freezers for which standards are established
under paragraphs (2) and (3) of section 342(c) to the same extent and
in the same manner as those provisions apply under part A on the date
of enactment of this subsection, except that any State or local
standard issued before the date of enactment of this subsection shall
not be preempted until the standards established under paragraphs (2)
and (3) of section 342(c) take effect.
``(B) In applying section 327 in accordance with subparagraph (A),
paragraphs (1), (2), and (3) of subsection (a) shall apply.
``(3)(A) Section 327 shall apply to commercial refrigerators,
freezers, and refrigerator-freezers for which standards are established
under section 342(c)(4) to the same extent and in the same manner as
the provisions apply under part A on the date of publication of the
final rule by the Secretary, except that any State or local standard
issued before the date of publication of the final rule by the
Secretary shall not be preempted until the standards take effect.
``(B) In applying section 327 in accordance with subparagraph (A),
paragraphs (1), (2), and (3) of subsection (a) shall apply.
``(4)(A) If the Secretary does not issue a final rule for a
specific type of commercial refrigerator, freezer, or refrigerator-
freezer within the time frame specified in section 342(c)(5),
subsections (b) and (c) of section 327 shall not apply to that specific
type of refrigerator, freezer, or refrigerator-freezer for the period
beginning on the date that is 2 years after the scheduled date for a
final rule and ending on the date on which the Secretary publishes a
final rule covering the specific type of refrigerator, freezer, or
refrigerator-freezer.
``(B) Any State or local standard issued before the date of
publication of the final rule shall not be preempted until the final
rule takes effect.
``(5)(A) In the case of any commercial refrigerator, freezer, or
refrigerator-freezer to which standards are applicable under paragraphs
(2) and (3) of section 342(c), the Secretary shall require
manufacturers to certify, through an independent, nationally recognized
testing or certification program, that the commercial refrigerator,
freezer, or refrigerator-freezer meets the applicable standard.
``(B) The Secretary shall, to the maximum extent practicable,
encourage the establishment of at least 2 independent testing and
certification programs.
``(C) As part of certification, information on equipment energy use
and interior volume shall be made available to the Secretary.
``(e)(1)(A)(i) Except as provided in clause (ii), section 327 shall
apply to automatic commercial ice makers for which standards have been
established under section 342(d)(1) to the same extent and in the same
manner as the section applies under part A on the date of enactment of
this subsection.
``(ii) Any State standard issued before the date of enactment of
this subsection shall not be preempted until the standards established
under section 342(d)(1) take effect.
``(B) In applying section 327 to the equipment under subparagraph
(A), paragraphs (1), (2), and (3) of subsection (a) shall apply.
``(2)(A)(i) Except as provided in clause (ii), section 327 shall
apply to automatic commercial ice makers for which standards have been
established under section 342(d)(2) to the same extent and in the same
manner as the section applies under part A on the date of publication
of the final rule by the Secretary.
``(ii) Any State standard issued before the date of publication of
the final rule by the Secretary shall not be preempted until the
standards established under section 342(d)(2) take effect.
``(B) In applying section 327 in accordance with subparagraph (A),
paragraphs (1), (2), and (3) of subsection (a) shall apply.
``(3)(A) If the Secretary does not issue a final rule for a
specific type of automatic commercial ice maker within the time frame
specified in subsection 342(d), subsections (b) and (c) of section 327
shall no longer apply to the specific type of automatic commercial ice
maker for the period beginning on the day after the scheduled date for
a final rule and ending on the date on which the Secretary publishes a
final rule covering the specific type of automatic commercial ice
maker.
``(B) Any State standard issued before the publication of the final
rule shall not be preempted until the standards established in the
final rule take effect.
``(4)(A) The Secretary shall monitor whether manufacturers are
reducing harvest rates below tested values for the purpose of bringing
non-complying equipment into compliance.
``(B) If the Secretary finds that there has been a substantial
amount of manipulation with respect to harvest rates under subparagraph
(A), the Secretary shall take steps to minimize the manipulation, such
as requiring harvest rates to be within 5 percent of tested values.
``(g)(1)(A) If the Secretary does not issue a final rule for
commercial clothes washers within the timeframe specified in section
342(e)(2), subsections (b) and (c) of section 327 shall not apply to
commercial clothes washers for the period beginning on the day after
the scheduled date for a final rule and ending on the date on which the
Secretary publishes a final rule covering commercial clothes washers.
``(B) Any State or local standard issued before the date on which
the Secretary publishes a final rule shall not be preempted until the
standards established under section 342(e)(2) take effect.
``(2) The Secretary shall undertake an educational program to
inform owners of laundromats, multifamily housing, and other sites
where commercial clothes washers are located about the new standard,
including impacts on washer purchase costs and options for recovering
those costs through coin collection.''.
SEC. 103. ENERGY LABELING.
(a) Rulemaking on Effectiveness of Consumer Product Labeling.--
Section 324(a)(2) of the Energy Policy and Conservation Act (42 U.S.C.
6294(a)(2)) is amended by adding at the end the following:
``(F)(i) Not later than 90 days after the date of
enactment of this subparagraph, the Commission shall
initiate a rulemaking to consider--
``(I) the effectiveness of the consumer
products labeling program in assisting
consumers in making purchasing decisions and
improving energy efficiency; and
``(II) changes to the labeling rules
(including categorical labeling) that would
improve the effectiveness of consumer product
labels.
``(ii) Not later than 2 years after the date of
enactment of this subparagraph, the Commission shall
complete the rulemaking initiated under clause (i).''.
(b) Rulemaking on Labeling for Additional Products.--Section 324(a)
of the Energy Policy and Conservation Act (42 U.S.C. 6294(a)) is
amended by adding at the end the following:
``(5)(A) For covered products described in subsections (u)
through (ee) of section 325, after a test procedure has been
prescribed under section 323, the Secretary or the Commission,
as appropriate, may prescribe, by rule, under this section
labeling requirements for the products.
``(B) In the case of products to which TP-1 standards under
section 325(y) apply, labeling requirements shall be based on
the `Standard for the Labeling of Distribution Transformer
Efficiency' prescribed by the National Electrical Manufacturers
Association (NEMA TP-3) as in effect on the date of enactment
of this paragraph.
``(C) In the case of dehumidifiers covered under section
325(dd), the Commission shall not require an `Energy Guide'
label.''.
SEC. 104. EQUIPMENT STANDARDS AND ANALYSIS PROGRAM.
(a) In General.--Not later than 180 days after the date of
enactment of this Act, the Secretary shall submit to Congress a report
that--
(1) explains the reasons for the failure of the Secretary
to complete, by any applicable deadlines, required rulemakings
under the equipment standards and analysis program for issuance
of appliance and equipment standards; and
(2) provides plans and timetables for completion of each of
the rulemakings described in paragraph (1) that has not been
completed as of the date of enactment of this Act.
(b) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary to carry out the equipment standards and
analysis program of the Department of Energy--
(1) $20,000,000 for fiscal year 2006;
(2) $25,000,000 for fiscal year 2007;
(3) $30,000,000 for fiscal year 2008;
(4) $35,000,000 for fiscal year 2009; and
(5) $40,000,000 for fiscal year 2010.
Subtitle B--Building Energy Codes
SEC. 111. STATE BUILDING ENERGY EFFICIENCY CODES INCENTIVES.
Section 304 of the Energy Conservation and Production Act (42
U.S.C. 6833) is amended in subsection (e)--
(1) in paragraph (1) by inserting at the end of the first
sentence ``, including increasing and verifying compliance with
such codes''; and
(2) by striking paragraph (2) and inserting the following:
``(2) Additional funding shall be provided under this
subsection for implementations of a plan to achieve and
document at least 90 percent rate of compliance with
residential and commercial building energy efficiency codes,
based on energy performance--
``(A) to a State that has adopted and is
implementing, on a statewide basis--
``(i) a residential building energy
efficiency code that meets or exceeds the
requirements of the 2004 International Energy
Conservation Code, or any succeeding version of
this code that has received an affirmative
determination from the Secretary under
subsection (a)(5)(A) of this section; and
``(ii) a commercial building energy
efficiency code that meets or exceeds the
requirements of the ASHRAE Standard 90.1-2004,
or any succeeding version of this standard that
has received an affirmative determination from
the Secretary under subsection (b)(2)(A) of
this section; or
``(B) in States in which there is no statewide
energy code either for residential buildings or for
commercial buildings, to a local government that has
adopted and is implementing residential and commercial
building energy efficiency codes as described in
subparagraph (A).
``(3) Of the amounts made available under this part, the
Secretary may use $500,000 for each fiscal year to train State
and local officials.
``(4)(A) There is authorized to be appropriated to carry
out this subsection $25,000,000 for each of fiscal years 2006
through 2010, and such sums as may be necessary for each fiscal
year after 2010.
``(B) Funding to States under paragraph (2) in each fiscal
year shall not exceed half of the excess of funding under this
subsection over $5,000,000.''.
SEC. 112. ENERGY CODE APPLICABLE TO MANUFACTURED HOUSING.
Section 604 of the National Manufacturing Housing Construction and
Safety Standards Act of 1974 (42 U.S.C. 5403) is amended in subsection
(g) by striking paragraphs (2) and (3) and inserting the following:
``(2) The energy conservation standards established under
this subsection shall be based on the most recent version of
the International Energy Conservation Code (including
supplements) except where the Secretary finds that such code is
not cost-effective, or a more stringent standard would be more
cost-effective, based on total life-cycle construction and
operating costs.
``(3) The energy conservation standards established under
this subsection may--
``(A) take into consideration the design and
factory construction techniques of manufactured homes;
``(B) be based on the climate zones established by
the Department of Housing and Urban Development rather
than those under the International Energy Conservation
Code; and
``(C) provide for alternative practices that result
in net estimated energy consumption equal to or less
than the specified standards.''.
SEC. 113. ENERGY EFFICIENCY STANDARDS.
Section 109 of the Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. 12709) is amended--
(1) in subsection (a)--
(A) in paragraph (1)--
(i) by striking ``1 year after the date of
the enactment of the Energy Policy Act of
1992'' and inserting ``September 30, 2006'';
(ii) in subparagraph (A), by striking
``and'' at the end;
(iii) in subparagraph (B), by striking the
period at the end and inserting ``; and''; and
(iv) by adding at the end the following:
``(C) rehabilitation and new construction of public
and assisted housing funded by HOPE VI revitalization
grants under section 24 of the United States Housing
Act of 1937 (42 U.S.C. 1437v), where such standards are
determined to be cost effective by the Secretary of
Housing and Urban Development.''; and
(B) in paragraph (2), by striking ``Council of
American'' and all that follows through ``90.1-1989''
and inserting ``2004 International Energy Conservation
Code'';
(2) in subsection (b)--
(A) by striking ``within 1 year after the date of
the enactment of the Energy Policy Act of 1992'' and
inserting ``by September 30, 2006''; and
(B) by striking ``CABO'' and all that follows
through ``1989'' and inserting ``the 2004 International
Energy Conservation Code''; and
(3) in subsection (c)--
(A) in the heading, by striking ``model energy
code'' and inserting ``and the international energy
conservation code'' after ; and
(B) by striking ``CABO'' and alll that follows
through ``1989'' and inserting ``the 2004 International
Energy Conservation Code''.
(4) by adding at the end the following:
``(d) If the Secretaries have not, within 1 year after the
requirements of the 2004 International Energy Conservation Code are
revised, amended the standards or made a determination under subsection
(c) of this section, and if the Secretary of Energy has made a
determination under section 304 of the Energy Conservation and
Production Act (42 U.S.C. 6833) that the revised code would improve
energy efficiency, all new construction of housing specified in
subsection (a) shall meet the requirements of the revised International
Energy Conservation Code.''.
Subtitle C--Energy Star
SEC. 121. ENERGY STAR PROGRAM.
(a) In General.--The Energy Policy and Conservation Act is amended
by inserting after section 324 (42 U.S.C. 6294) the following:
``energy star program
``Sec. 324A. (a) In General.--There is established within the
Department of Energy and the Environmental Protection Agency a
voluntary program to identify and promote energy-efficient products and
buildings in order to reduce energy consumption, improve energy
security, and reduce pollution through voluntary labeling of, or other
forms of communication about, products and buildings that meet the
highest energy efficiency standards.
``(b) Division of Responsibilities.--Responsibilities under the
program shall be divided between the Department of Energy and the
Environmental Protection Agency in accordance with the terms of
applicable agreements between those agencies.
``(c) Duties.--The Administrator and the Secretary shall--
``(1) promote Energy Star compliant technologies as the
preferred technologies in the marketplace for--
``(A) achieving energy efficiency; and
``(B) reducing pollution;
``(2) work to enhance public awareness of the Energy Star
label, including by providing special outreach to small
businesses;
``(3) preserve the integrity of the Energy Star label by--
``(A) regularly updating Energy Star criteria; and
``(B) ensuring, in general, that--
``(i) not more than 25 percent of available
models in a product class receive the Energy
Star designation; and
``(ii) Energy Star designated products and
buildings are at least 10 percent more
efficient than--
``(I) appliance standards in effect
on the date of enactment of this
section; and
``(II) the most recent model energy
code;
``(4) solicit comments from interested parties prior to
establishing or revising an Energy Star product category,
specification, or criterion (or prior to effective dates for
any such product category, specification, or criterion);
``(5) on adoption of a new or revised product category,
specification, or criterion, provide reasonable notice to
interested parties of any changes (including effective dates)
in product categories, specifications, or criteria, along
with--
``(A) an explanation of the changes; and
``(B) as appropriate, responses to comments
submitted by interested parties; and
``(6) provide appropriate lead time (which shall be 270
days, unless the Agency or Department specifies otherwise)
prior to the applicable effective date for a new or a
significant revision to a product category, specification, or
criterion, taking into account the timing requirements of the
manufacturing, product marketing, and distribution process for
the specific product addressed.
``(d) Authorization of Appropriations.--There are authorized to be
appropriated to carry out this section--
``(1) $70,000,000 for fiscal year 2006;
``(2) $90,000,000 for fiscal year 2007;
``(3) $110,000,000 for fiscal year 2008;
``(4) $130,000,000 for fiscal year 2009; and
``(5) $150,000,000 for fiscal year 2010.''.
(b) Table of Contents Amendment.--The table of contents of the
Energy Policy and Conservation Act (42 U.S.C. prec. 6201) is amended by
inserting after the item relating to section 324 the following:
``324A. Energy Star program.''.
Subtitle D--Federal Buildings
SEC. 131. FEDERAL BUILDING PERFORMANCE STANDARDS.
Section 305(a) of the Energy Conservation and Production Act (42
U.S.C. 6834(a)) is amended--
(1) in paragraph (2)(A)--
(A) by striking ``CABO Model Energy Code, 1992''
and inserting ``the 2004 International Energy
Conservation Code''; and
(B) by striking ``90.1-1989'' and inserting ``90.1-
2004''; and
(2) by adding at the end the following:
``(3)(A)(i) Unless demonstrated not to be life-cycle cost-
effective, for each new and renovated Federal building--
``(I) such building be designed, constructed, commissioned,
and operated so as to achieve energy consumption levels at
least 30 percent below those of the version current as of the
date of enactment of this paragraph of the ASHRAE Standard or
the International Energy Conservation Code, as appropriate; and
``(II) sustainable design principles are applied to the
siting, design, construction, operation, and maintenance of all
new and replacement buildings; and
``(ii) where water is used to achieve energy efficiency, water
conservation technologies shall be applied to the extent they are life-
cycle cost effective.
``(B) Not later than 1 year after the date of approval of each
subsequent revision of the ASHRAE Standard or the International Energy
Conservation Code, as appropriate, the Secretary of Energy shall
determine (based on the cost-effectiveness of the requirements under
the amendments) whether the revised standards established under this
paragraph should be updated to reflect the amendments.
``(C) In the budget request of the Federal agency for each fiscal
year and each report submitted by the Federal agency under section
548(a) of the National Energy Conservation Policy Act (42 U.S.C.
8258(a)), the head of each Federal agency shall include--
``(i) a list of all new Federal buildings owned, operated,
or controlled by the Federal agency; and
``(ii) a statement concerning whether the Federal buildings
meet or exceed the revised standards established under this
paragraph.
``(4) All housing constructed under the military housing
privatization initiative of the Department of Defense shall, where such
designations and products are available--
``(A) be Energy Star qualified;
``(B) be equipped with Energy Star appliances and FEMP
designated appliances; and
``(C) include Energy Star lighting.''.
TITLE II--TRANSPORTATION
SEC. 201. ALTERNATIVE COMPLIANCE WITH FLEET RULES.
(a) Use of Alternative Fuels by Dual-Fueled Vehicles.--Section
400AA(a)(3)(E) of the Energy Policy and Conservation Act (42 U.S.C.
6374(a)(3)(E)) is amended to read as follows:
``(E)(i) Dual fueled vehicles acquired pursuant to this section
shall be operated on alternative fuels unless the Secretary determines
that an agency qualifies for a waiver of that requirement for vehicles
operated by the agency in a particular geographic area in which--
``(I) the alternative fuel otherwise required to be used in
the vehicle is not reasonably available to retail purchasers of
the fuel, as certified to the Secretary by the head of the
agency; or
``(II) the cost of the alternative fuel otherwise required
to be used in the vehicle is unreasonably more expensive
compared to gasoline, as certified to the Secretary by the head
of the agency.
``(ii) The Secretary shall monitor compliance with this
subparagraph by all agency fleets and shall submit annually to Congress
a report that--
``(I) describes the extent to which the requirements of
this subparagraph are being achieved; and
``(II) includes information on annual reductions achieved
from the use of petroleum-based fuels and the problems, if any,
encountered in acquiring alternative fuels.''.
(b) Alternative Compliance and Flexibility.--
(1) Alternative compliance.--Title V of the Energy Policy
Act of 1992 (42 U.S.C. 13251 et seq.) is amended--
(A) by redesignating section 514 as section 515;
and
(B) by inserting after section 513 the following:
``SEC. 514. ALTERNATIVE COMPLIANCE.
``(a) Application for Waiver.--Any head of a Federal agency
described in section 303(b)(3), any covered person subject to section
501, and any State subject to section 507(o) may petition the Secretary
for a waiver of the applicable requirements of section 303, 501, or
507(o).
``(b) Grant of Waiver.--The Secretary may grant a waiver of the
requirements of section 303, 501, or 507(o) upon a showing that the
fleet owned, operated, leased, or otherwise controlled by the Federal
agency, State, or covered person--
``(1) will achieve a reduction in its annual consumption of
petroleum fuels equal to the reduction in consumption of
petroleum that would result from 100 percent compliance with
fuel use requirements in section 501 or 303, as appropriate,
or, for entities covered under section 507(o), a reduction
equal to the covered State entity's consumption of alternative
fuels if all its alternative fuel vehicles given credit under
section 508 were to use alternative fuel 100 percent of the
time; and
``(2) is in compliance with all applicable vehicle emission
standards established by the Administrator under the Clean Air
Act (42 U.S.C. 7401 et seq.).
``(c) Revocation of Waiver.--The Secretary shall revoke any waiver
granted under this section if the Federal agency, State, or covered
person fails to comply with subsection (b).''.
(2) Table of contents amendment.--The table of contents of
the Energy Policy Act of 1992 (42 U.S.C. prec. 13201) is
amended by striking the item relating to section 514 and
inserting the following:
``514. Alternative compliance.
``515. Authorization of appropriations.''.
(c) Credits.--Section 508(a) of the Energy Policy Act of 1992 (42
U.S.C. 13258(a)) is amended--
(1) by striking ``The Secretary'' and inserting the
following:
``(1) The Secretary''; and
(2) by adding at the end the following:
``(2) Not later than January 31, 2007, the Secretary
shall--
``(A) allocate credit in an amount to be determined
by the Secretary for--
``(i) acquisition of--
``(I) a light-duty hybrid electric
vehicle;
``(II) a plug-in hybrid electric
vehicle;
``(III) a fuel cell electric
vehicle;
``(IV) a medium- or heavy-duty
hybrid electric vehicle;
``(V) a neighborhood electric
vehicle; or
``(VI) a medium- or heavy-duty
dedicated vehicle; and
``(ii) investment in qualified alternative
fuel infrastructure or nonroad equipment, as
determined by the Secretary; and
``(B) allocate more than 1, but not to exceed 5,
credits for investment in an emerging technology
relating to any vehicle described in subparagraph (A)
to encourage--
``(i) a reduction in petroleum demand;
``(ii) technological advancement; and
``(iii) environmental safety.''.
(d) Federal Fleet.--Section 303 of the Energy Policy Act of 1992
(42 U.S.C. 13212) is amended--
(1) by redesignating subsection (f) as subsection (g); and
(2) by inserting after subsection (e) the following:
``(f) Credit.--The Secretary shall allocate to a Federal fleet
credits toward meeting the requirements of subsection (b) of this
section under the same allocation as determined under subsection
(a)(2)of section 508.''.
SEC. 202. STANDARDS FOR EXECUTIVE AGENCY AUTOMOBILES.
Section 32917 of title 49, United States Code, is amended to read
as follows:
``Sec. 32917. Standards for Executive agency automobiles
``(a) Definitions.--In this section:
``(1) The term `automobile' does not include any vehicle
designed for combat-related missions, law enforcement work, or
emergency rescue work.
``(2) The term `executive agency' has the meaning given
that term in section 105 of title 5.
``(3) The term `new automobile', with respect to the fleet
of automobiles of an executive agency, means an automobile that
is leased for at least 60 consecutive days or bought, by or for
the agency, after September 30, 2004.''.
``(b) Baseline Average Fuel Economy.--
``(1) In general.--In accordance with guidance issued under
subsection (d), the head of each executive agency shall
calculate, for all automobiles in the agency's fleet of
automobiles that were leased or bought as a new vehicle in
fiscal year 2004, the average fuel economy for the automobiles.
``(2) Baseline.--In this section, the average fuel economy
as calculated in paragraph (1) shall be the baseline average
fuel economy for the agency's fleet of automobiles.
``(c) Increase of Average Fuel Economy.--The head of an executive
agency shall manage the procurement of automobiles for that agency so
that not later than September 30, 2008, the average fuel economy of the
new automobiles in the agency's fleet of automobiles is not less than 3
miles per gallon higher than the baseline average fuel economy
determined under subsection (b) for that fleet.
``(d) Calculation of Average Fuel Economy.--The Secretary of
Transportation shall issue guidance to carry out this section,
including guidance for the calculation of average fuel economy.''.
TITLE III--INDUSTRY
SEC. 301. VOLUNTARY COMMITMENTS TO REDUCE INDUSTRIAL ENERGY INTENSITY.
(a) Definitions.--In this section:
(1) Energy intensity.--The term ``energy intensity'' means
the primary energy consumed for each unit of physical output in
an industrial process.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Energy, acting in cooperation with the Administrator of the
Environmental Protection Agency.
(b) Voluntary Agreements.--The Secretary shall enter into voluntary
agreements with 1 or more entities in industrial sectors that consume
significant quantities of primary energy for each unit of physical
output to reduce the energy intensity of the production activities of
the entities.
(c) Goal.--Voluntary agreements under this section shall have as a
goal the reduction of energy intensity by not less than 2.5 percent
each year during the period of calendar years 2007 through 2016.
(d) Recognition.--The Secretary, in cooperation with other
appropriate Federal agencies, shall develop mechanisms to recognize and
publicize the achievements of participants in voluntary agreements
under this section.
(e) Technical Assistance.--An entity that enters into an agreement
under this section and continues to make a good faith effort to achieve
the energy efficiency goals specified in the agreement shall be
eligible to receive from the Secretary a grant or technical assistance,
as appropriate, to assist in the achievement of those goals.
(f) Report.--Not later than each of June 30, 2012, and June 30,
2016, the Secretary shall submit to Congress a report that--
(1) evaluates the success of the voluntary agreements under
this section;
(2) provides independent verification of any energy savings
achieved as a result of the voluntary agreements below a no-
commitment baseline for each participating firm; and
(3) identifies incentives and other measures needed to
assist industries in achieving energy intensity reductions.
(g) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this section $15,000,000 for each of fiscal
years 2006 through 2010, and such sums as may be necessary for each
fiscal year after 2010.
TITLE IV--ELECTRICITY AND NATURAL GAS UTILITIES AND SUPPLIERS
SEC. 401. ENERGY EFFICIENT ELECTRIC AND NATURAL GAS UTILITIES STUDY.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, the Secretary, in consultation with the National
Association of Regulatory Utility Commissioners and the National
Association of State Energy Officials, shall conduct a study of State
and regional policies that promote cost-effective programs to reduce
energy consumption (including energy efficiency programs) that are
carried out by--
(1) utilities that are subject to State regulation; and
(2) nonregulated utilities.
(b) Consideration.--In conducting the study under subsection (a),
the Secretary shall take into consideration--
(1) performance standards for achieving energy use and
demand reduction targets;
(2) funding sources, including rate surcharges;
(3) infrastructure planning approaches (including energy
efficiency programs) and infrastructure improvements;
(4) the costs and benefits of consumer education programs
conducted by State and local governments and local utilities to
increase consumer awareness of energy efficiency technologies
and measures; and
(5) methods of--
(A) removing disincentives for utilities to
implement energy efficiency programs;
(B) encouraging utilities to undertake voluntary
energy efficiency programs; and
(C) ensuring appropriate returns on energy
efficiency programs.
(c) Report.--Not later than 1 year after the date of enactment of
this Act, the Secretary shall submit to Congress a report that
includes--
(1) the findings of the study; and
(2) any recommendations of the Secretary, including
recommendations on model policies to promote energy efficiency
programs.
SEC. 402. ENERGY EFFICIENCY PILOT PROGRAM.
(a) In General.--The Secretary shall establish a pilot program
under which the Secretary provides financial assistance to at least 3,
but not more than 7, States to carry out pilot projects in the States
for--
(1) planning and adopting statewide programs that
encourage, for each year in which the pilot project is carried
out--
(A) energy efficiency; and
(B) reduction of consumption of electricity or
natural gas in the State by at least 0.75 percent, as
compared to a baseline determined by the Secretary for
the period preceding the implementation of the program;
or
(2) for any State that has adopted a statewide program as
of the date of enactment of this Act, activities that reduce
energy consumption in the State by expanding and improving the
program.
(b) Verification.--A State that receives financial assistance under
subsection (a)(1) shall submit to the Secretary independent
verification of any energy savings achieved through the statewide
program.
(c) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this section $5,000,000 for each of fiscal
years 2006 through 2010, to remain available until expended.
SEC. 403. ENERGY EFFICIENCY RESOURCE PROGRAMS.
(a) Electric Utility Programs.--Section 111 of the Public Utilities
Regulatory Policy Act of 1978 (16 U.S.C. 2621) is amended by adding at
the end the following:
``(e) Energy Efficiency Resource Programs.--
``(1) Definitions.--In this subsection:
``(A) Demand baseline.--The term `demand baseline'
means the baseline determined by the Secretary for an
appropriate period preceding the implementation of an
energy efficiency resource program.
``(B) Energy efficiency resource programs.--The
term `energy efficiency resource program' means an
energy efficiency or other demand reduction program
that is designed to reduce annual electricity
consumption or peak demand of consumers served by an
electric utility by a percentage of the demand baseline
of the utility that is equal to not less than 0.75
percent of the number of years during which the program
is in effect.
``(2) Public hearings; determinations.--
``(A) As soon as practicable after the date of
enactment of this subsection, but not later than 3
years after that date, each State regulatory authority
(with respect to each electric utility over which the
State has ratemaking authority) and each nonregulated
electric utility shall, after notice, conduct a public
hearing on the benefits and feasibility of implementing
an energy efficiency resource program.
``(B) A State regulatory authority or nonregulated
utility shall implement an energy efficiency resource
program if, on the basis of a hearing under
subparagraph (A), the State regulatory authority or
nonregulated utility determines that the program
would--
``(i) benefit end-use customers;
``(ii) be cost-effective based on total
resource cost;
``(iii) serve the public welfare; and
``(iv) be feasible to implement.
``(3) Implementation.--
``(A) State regulatory authorities.--If a State
regulatory authority makes a determination under
paragraph (2)(B), the State regulatory authority
shall--
``(i) require each electric utility over
which the State has ratemaking authority to
implement an energy efficiency resource
program; and
``(ii) allow such a utility to recover any
expenditures incurred by the utility in
implementing the energy efficiency resource
program.
``(B) Nonregulated electric utilities.--If a
nonregulated electric utility makes a determination
under paragraph (2)(B), the utility shall implement an
energy efficiency resource program.
``(4) Updating regulations.--A State regulatory authority
or nonregulated utility may update periodically a determination
under paragraph (2)(B) to determine whether an energy
efficiency resource program should be--
``(A) continued;,
``(B) modified; or
``(C) terminated.
``(5) Exception.--Paragraph (2) shall not apply to a State
regulatory authority (or any nonregulated electric utility
operating in the State) that demonstrates to the Secretary that
an energy efficiency resource program is in effect in the
State.''.
(b) Gas Utilities.--Section 303 of the Public Utilities Regulatory
Policy Act of 1978 (15 U.S.C. 3203) is amended by adding at the end the
following:
``(e) Energy Efficiency Resource Programs.--
``(1) Definitions.--In this subsection:
``(A) Demand baseline.--The term `demand baseline'
means the baseline determined by the Secretary for an
appropriate period preceding the implementation of an
energy efficiency resource program.
``(B) Energy efficiency resource programs.--The
term `energy efficiency resource program' means an
energy efficiency or other demand reduction program
that is designed to reduce annual gas consumption or
peak demand of consumers served by a gas utility by a
percentage of the demand baseline of the utility that
is equal to not less than 0.75 percent of the number of
years during which the program is in effect.
``(2) Public hearings; determinations.--
``(A) As soon as practicable after the date of
enactment of this subsection, but not later than 3
years after that date, each State regulatory authority
(with respect to each gas utility over which the State
has ratemaking authority) and each nonregulated gas
utility shall, after notice, conduct a public hearing
on the benefits and feasibility of implementing an
energy efficiency resource program.
``(B) A State regulatory authority or nonregulated
utility shall implement an energy efficiency resource
program if, on the basis of a hearing under
subparagraph (A), the State regulatory authority or
nonregulated utility determines that the program
would--
``(i) benefit end-use customers;
``(ii) be cost-effective based on total
resource cost;
``(iii) serve the public welfare; and
``(iv) be feasible to implement.
``(3) Implementation.--
``(A) State regulatory authorities.--If a State
regulatory authority makes a determination under
paragraph (2)(B), the State regulatory authority
shall--
``(i) require each gas utility over which
the State has ratemaking authority to implement
an energy efficiency resource program; and
``(ii) allow such a utility to recover any
expenditures incurred by the utility in
implementing the energy efficiency resource
program.
``(B) Nonregulated gas utilities.--If a
nonregulated gas utility makes a determination under
paragraph (2)(B), the utility shall implement an energy
efficiency resource program.
``(4) Updating regulations.--A State regulatory authority
or nonregulated utility may update periodically a determination
under paragraph (2)(B) to determine whether an energy
efficiency resource program should be--
``(A) continued;
``(B) modified; or
``(C) terminated.
``(5) Exception.--Paragraph (2) shall not apply to a State
regulatory authority (or any nonregulated gas utility operating
in the State) that demonstrates to the Secretary that an energy
efficiency resource program is in effect in the State.''.
TITLE V--TAX INCENTIVES
SEC. 500. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in this title an
amendment or repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be considered to
be made to a section or other provision of the Internal Revenue Code of
1986.
Subtitle A--Buildings and Equipment Incentives
SEC. 501. CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT HOMES.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
(relating to business related credits) is amended by adding at the end
the following new section:
``SEC. 45J. NEW ENERGY EFFICIENT HOME CREDIT.
``(a) In General.--For purposes of section 38, in the case of an
eligible contractor with respect to a qualified new energy efficient
home, the credit determined under this section for the taxable year
with respect to such home is an amount equal to the aggregate adjusted
bases of all energy efficient property installed in such home during
construction of such home.
``(b) Limitations.--
``(1) Maximum credit.--
``(A) In general.--The credit allowed by this
section with respect to a dwelling unit shall not
exceed--
``(i) in the case of a dwelling unit
described in clause (i) or (iii) of subsection
(c)(3)(C), $1,000, and
``(ii) in the case of a dwelling unit
described in clause (ii) or (iv) of subsection
(c)(3)(C), $2,000.
``(B) Prior credit amounts on same dwelling unit
taken into account.--If a credit was allowed under
subsection (a) with respect to a dwelling unit in 1 or
more prior taxable years, the amount of the credit
otherwise allowable for the taxable year with respect
to such dwelling unit shall be reduced by the sum of
the credits allowed under subsection (a) with respect
to the dwelling unit for all prior taxable years.
``(2) Coordination with certain credits.--For purposes of
this section--
``(A) the basis of any property referred to in
subsection (a) shall be reduced by that portion of the
basis of any property which is attributable to
qualified rehabilitation expenditures (as defined in
section 47(c)(2)) or to the energy percentage of energy
property (as determined under section 48(a)), and
``(B) expenditures taken into account under section
47 or 48(a) shall not be taken into account under this
section.
``(c) Definitions.--For purposes of this section--
``(1) Eligible contractor.--The term `eligible contractor'
means--
``(A) the person who constructed the qualified new
energy efficient home, or
``(B) in the case of a qualified new energy
efficient home which is a manufactured home, the
manufactured home producer of such home.
If more than 1 person is described in subparagraph (A) or (B)
with respect to any qualified new energy efficient home, such
term means the person designated as such by the owner of such
home.
``(2) Energy efficient property.--The term `energy
efficient property' means any energy efficient building
envelope component, and any energy efficient heating or cooling
equipment or system, which can, individually or in combination
with other components, result in a dwelling unit meeting the
requirements of this section.
``(3) Qualified new energy efficient home.--The term
`qualified new energy efficient home' means a dwelling unit--
``(A) located in the United States,
``(B) the construction of which is substantially
completed after the date of the enactment of this
section, and
``(C) which is--
``(i) certified to have a level of annual
heating and cooling energy consumption which is
at least 30 percent below the annual level of
heating and cooling energy consumption of a
comparable dwelling unit constructed in
accordance with the standards of chapter 4 of
the 2003 International Energy Conservation
Code, as such Code (including supplements) is
in effect on the date of the enactment of this
section, and for which the heating and cooling
equipment efficiencies correspond to the
minimum allowed under the regulations
established by the Department of Energy
pursuant to the National Appliance Energy
Conservation Act of 1987 and in effect at the
time of construction, and to have building
envelope component improvements account for at
least \1/3\ of such 30 percent,
``(ii) certified to have a level of annual
heating and cooling energy consumption which is
at least 50 percent below such annual level and
to have building envelope component
improvements account for at least \1/5\ of such
50 percent,
``(iii) a manufactured home which meets the
requirements of clause (i) and which conforms
to Federal Manufactured Home Construction and
Safety Standards (section 3280 of title 24,
Code of Federal Regulations), or
``(iv) a manufactured home which meets the
requirements of clause (ii) and which conforms
to Federal Manufactured Home Construction and
Safety Standards (section 3280 of title 24,
Code of Federal Regulations).
``(4) Construction.--The term `construction' includes
substantial reconstruction and rehabilitation.
``(5) Acquire.--The term `acquire' includes purchase and,
in the case of reconstruction and rehabilitation, such term
includes a binding written contract for such reconstruction or
rehabilitation.
``(6) Building envelope component.--The term `building
envelope component' means--
``(A) any sealant or insulation material or system
which is specifically and primarily designed to reduce
the heat loss or gain of a dwelling unit when installed
in or on such dwelling unit,
``(B) exterior windows (including skylights),
``(C) exterior doors, and
``(D) any metal roof installed on a dwelling unit,
but only if such roof has appropriate pigmented
coatings which--
``(i) are specifically and primarily
designed to reduce the heat gain of such
dwelling unit, and
``(ii) meet the Energy Star program
requirements.
``(d) Certification.--
``(1) Method of certification.--A certification described
in subsection (c)(3)(C) shall be determined in accordance with
guidance prescribed by the Secretary, after consultation with
the Secretary of Energy. Such guidance shall specify procedures
and methods for calculating energy and cost savings.
``(2) Form.--A certification described in subsection
(c)(3)(C) shall be made in writing in a manner which specifies
in readily verifiable fashion the energy efficient building
envelope components and energy efficient heating or cooling
equipment installed and their respective rated energy
efficiency performance.
``(e) Basis Adjustment.--For purposes of this subtitle, if a credit
is determined under this section for any expenditure with respect to
any property, the increase in the basis of such property which would
(but for this subsection) result from such expenditure shall be reduced
by the amount of the credit so determined.
``(f) Special Rule With Respect to Buildings With Energy Efficient
Property.--In any case in which a deduction under section 200 or a
credit under section 25C has been allowed with respect to property in
connection with a dwelling unit, the level of annual heating and
cooling energy consumption of the comparable dwelling unit referred to
in clauses (i) and (ii) of subsection (c)(3)(C) shall be determined
assuming such comparable dwelling unit contains the property for which
such deduction or credit has been allowed.
``(g) Application of Section.--
``(1) 50 percent homes.--In the case of any dwelling unit
described in clause (ii) or (iv) of subsection (c)(3)(C),
subsection (a) shall apply to qualified new energy efficient
homes acquired during the period beginning on the date of the
enactment of this section, and ending on December 31, 2009.
``(2) 30 percent homes.--In the case of any dwelling unit
described in clause (i) or (iii) of subsection (c)(3)(C),
subsection (a) shall apply to qualified new energy efficient
homes acquired during the period beginning on the date of the
enactment of this section, and ending on December 31, 2007.''.
(b) Credit Made Part of General Business Credit.--Section 38(b)
(relating to current year business credit) is amended by striking
``plus'' at the end of paragraph (18), by striking the period at the
end of paragraph (19) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(20) the new energy efficient home credit determined
under section 45J(a).''.
(c) Basis Adjustment.--Subsection (a) of section 1016, as amended
by section 101, is amended by striking ``and'' at the end of paragraph
(30), by striking the period at the end of paragraph (31) and inserting
``, and'', and by adding at the end the following new paragraph:
``(32) to the extent provided in section 45J(e), in the
case of amounts with respect to which a credit has been allowed
under section 45J.''.
(d) Deduction for Certain Unused Business Credits.--Section 196(c)
(defining qualified business credits) is amended by striking ``and'' at
the end of paragraph (11), by striking the period at the end of
paragraph (12) and inserting ``, and'', and by adding after paragraph
(12) the following new paragraph:
``(13) the new energy efficient home credit determined
under section 45J(a).''.
(e) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by adding at the end
the following new item:
``45J. New energy efficient home credit.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
SEC. 502. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.
(a) Allowance of Credit.--
(1) In general.--Subpart A of part IV of subchapter A of
chapter 1 (relating to nonrefundable personal credits) is
amended by inserting after section 25B the following new
section:
``SEC. 25C. ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.
``(a) Allowance of Credit.--
``(1) In general.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this
chapter for the taxable year an amount equal to so much of the
credit amount specified in paragraph (2) which does not exceed
the expenditures made by the taxpayer in connection with the
construction, reconstruction, erection, or rehabilitation of a
dwelling unit of the taxpayer which results in the unit being a
highly energy-efficient principal residence. Such expenditures
may include labor costs properly allocable to the onsite
preparation, assembly, or original installation of such
property.
``(2) Credit amount.--The credit amount with respect to a
highly energy-efficient principal residence is--
``(A) $2,000 in the case of a percentage reduction
of 50 percent as determined under subsection (b)(1)(C),
and
``(B) $4,000 times the percentage reduction in the
case of a percentage reduction of less than 50 percent
as determined under subsection (b)(1)(C).
``(b) Highly Energy-Efficient Principal Residence.--
``(1) In general.--Property is a highly energy-efficient
principal residence if--
``(A) such property is located in the United
States,
``(B) the property is used as a principal
residence, and
``(C) the projected heating and cooling energy
usage of such property, measured in terms of average
annual energy cost to taxpayer, is reduced by a
percentage certified according to paragraph (3) in
comparison to the energy cost of such property if
expenditures made by the taxpayer with respect to
energy efficient improvements to such property were not
made.
``(2) Principal residence.--
``(A) In general.--The term `principal residence'
has the same meaning as when used in section 121,
except that--
``(i) no ownership requirement shall be
imposed, and
``(ii) the period for which a building is
treated as used as a principal residence shall
also include the 60-day period ending on the
1st day on which it would (but for this
paragraph) first be treated as used as a
principal residence.
``(B) Manufactured housing.--The term `residence'
shall include a dwelling unit which is a manufactured
home conforming to Federal Manufactured Home
Construction and Safety Standards (24 C.F.R. 3280).
``(3) Certification procedures.--
``(A) In general.--For purposes of paragraph
(1)(C), energy usage shall be demonstrated by
performance-based compliance.
``(B) Performance-based compliance.--Performance-
based compliance shall be demonstrated if the percent
energy cost savings for heating and cooling is met with
respect to a dwelling unit when compared to the
original condition of the dwelling unit.
``(C) Computer software.--Computer software shall
be used in support of performance-based compliance
under subparagraph (B) and such software shall meet all
of the procedures and methods for calculating energy
savings reductions which are promulgated by the
Secretary of Energy. Such regulations on the
specifications for software and verification protocols
shall be based on the 2005 California Residential
Alternative Calculation Method Approval Manual.
``(D) Calculation requirements.--In calculating
tradeoffs and energy performance, the regulations shall
prescribe the costs per unit of energy and power, such
as kilowatt hour, kilowatt, gallon of fuel oil, and
cubic foot or Btu of natural gas, which may be
dependent on time of usage. If a State has developed
annual energy usage and cost calculation procedures
based on time of usage costs for use in the performance
standards of the State's building energy code before
the effective date of this section, the State may use
those annual energy usage and cost calculation
procedures in lieu of those adopted by the Secretary.
``(E) Approval of software submissions.--The
Secretary shall approve software submissions which
comply with the calculation requirements of
subparagraph (C).
``(F) Procedures for inspection and testing of
dwelling units.--The Secretary shall ensure that
procedures for the inspection and testing for
compliance comply with the calculation requirements
under subparagraph (C) and subsection (c)(2).
``(c) Special Rules.--For purposes of this section--
``(1) Determinations of compliance.--A determination of
compliance made for the purposes of this section shall be filed
with the Secretary within 1 year of the date of such
determination and shall include the TIN of the certifier, the
address of the building in compliance, and the identity of the
person for whom such determination was performed.
Determinations of compliance filed with the Secretary shall be
available for inspection by the Secretary of Energy.
``(2) Compliance.--
``(A) In general.--The Secretary, after
consultation with the Secretary of Energy shall
establish requirements for certification and compliance
procedures after examining the requirements for energy
consultants and home energy ratings providers specified
by the Mortgage Industry National Home Energy Rating
Standards.
``(B) Individuals qualified to determine
compliance.--The determination of compliance may be
provided by a local building regulatory authority, a
utility, a manufactured home production inspection
primary inspection agency (IPIA), a home inspector, or
an accredited home energy rating system provider. All
providers shall be accredited, or otherwise authorized
to use approved energy performance measurement methods,
by the Residential Energy Services Network (RESNET).
``(3) Dollar amounts in case of joint occupancy.--In the
case of any dwelling unit which if jointly occupied and used
during any calendar year as a principal residence by 2 or more
individuals the following rules shall apply:
``(A) The amount of the credit allowable under
subsection (a) by reason of expenditures made during
such calendar year by any of such individuals with
respect to such dwelling unit shall be determined by
treating all of such individuals as 1 taxpayer whose
taxable year is such calendar year.
``(B) There shall be allowable with respect to such
expenditures to each of such individuals, a credit
under subsection (a) for the taxable year in which such
calendar year ends in an amount which bears the same
ratio to the amount determined under subparagraph (A)
as the amount of such expenditures made by such
individual during such calendar year bears to the
aggregate of such expenditures made by all of such
individuals during such calendar year.
``(4) Tenant-stockholder in cooperative housing
corporation.--In the case of an individual who is a tenant-
stockholder (as defined in section 216) in a cooperative
housing corporation (as defined in such section), such
individual shall be treated as having made his tenant-
stockholder's proportionate share (as defined in section
216(b)(3)) of any expenditures of such corporation and such
credit shall be allocated pro rata to such individual.
``(5) Condominiums.--
``(A) In general.--In the case of an individual who
is a member of a condominium management association
with respect to a condominium which he owns, such
individual shall be treated as having made his
proportionate share of any expenditures of such
association and any credit shall be allocated
appropriately.
``(B) Condominium management association.--For
purposes of this paragraph, the term `condominium
management association' means an organization which
meets the requirements of paragraph (1) of section
528(c) (other than subparagraph (E) thereof) with
respect to a condominium project substantially all of
the units of which are used as principal residences.
``(6) Joint ownership of energy items.--
``(A) In general.--Any expenditure otherwise
qualifying as an expenditure under this section shall
not be treated as failing to so qualify merely because
such expenditure was made with respect to 2 or more
dwelling units.
``(B) Limits applied separately.--In the case of
any expenditure described in subparagraph (A), the
amount of the credit allowable under subsection (a)
shall (subject to paragraph (1)) be computed separately
with respect to the amount of the expenditure made for
each dwelling unit.
``(7) Allocation in certain cases.--If less than 80 percent
of the use of an item is for nonbusiness purposes, only that
portion of the expenditures for such item which is properly
allocable to use for nonbusiness purposes shall be taken into
account.
``(8) Coordination with other credits.--Property which
would, but for this paragraph, be eligible for credit under
more than one provision of this section shall be eligible only
under one such provision, the provision specified by the
taxpayer.
``(9) Year credit allowed.--The credit under subsection
(a)(2) shall be allowed in the taxable year in which the
percentage reduction with respect to the principal residence is
certified.
``(10) When expenditure made; amount of expenditure.--
``(A) In general.--Except as provided in
subparagraph (B), an expenditure with respect to an
item shall be treated as made when the original
installation of the item is completed.
``(B) Expenditures part of building construction.--
In the case of an expenditure in connection with the
construction of a structure, such expenditure shall be
treated as made when the original use of the
constructed structure by the taxpayer begins.
``(11) Property financed by subsidized energy financing.--
``(A) Reduction of expenditures.--
``(i) In general.--Except as provided in
subparagraph (C), for purposes of determining
the amount of expenditures made by any
individual with respect to any dwelling unit,
there shall not be taken into account
expenditures which are made from subsidized
energy financing.
``(ii) Subsidized energy financing.--For
purposes of clause (i), the term `subsidized
energy financing' has the same meaning given
such term in section 48(a)(4)(C).
``(B) Dollar limits reduced.--The dollar amounts in
the table contained in subsection (b)(3) with respect
to each property purchased for such dwelling unit for
any taxable year of such taxpayer shall be reduced
proportionately by an amount equal to the sum of--
``(i) the amount of the expenditures made
by the taxpayer during such taxable year with
respect to such dwelling unit and not taken
into account by reason of subparagraph (A), and
``(ii) the amount of any Federal, State, or
local grant received by the taxpayer during
such taxable year which is used to make
residential energy property expenditures with
respect to the dwelling unit and is not
included in the gross income of such taxpayer.
``(C) Exception for state programs.--Subparagraphs
(A) and (B) shall not apply to expenditures made with
respect to property for which the taxpayer has received
a loan, State tax credit, or grant under any State
energy program.
``(d) Basis Adjustments.--For purposes of this subtitle, if a
credit is allowed under this section for any expenditure with respect
to any property, the increase in the basis of such property which would
(but for this subsection) result from such expenditure shall be reduced
by the amount of the credit so allowed.
``(e) Regulations.--The Secretary shall promulgate such regulations
as necessary to take into account new technologies regarding energy
efficiency and renewable energy for purposes of determining energy
efficiency and savings under this section.
``(f) Termination.--This section shall not apply with respect to
any energy property placed in service after December 31, 2009.''.
(2) Conforming amendments.--
(A) Subsection (a) of section 1016, as amended by
section 601, is amended by striking ``and'' at the end
of paragraph (31), by striking the period at the end of
paragraph (32) and inserting ``, and'', and by adding
at the end the following new paragraph:
``(33) to the extent provided in section 25C(d), in the
case of amounts with respect to which a credit has been allowed
under section 25C.''.
(B) The table of sections for subpart A of part IV
of subchapter A of chapter 1 is amended by inserting
after the item relating to section 25B the following
new item:
``25C. Nonbusiness energy property.''.
(3) Effective dates.--The amendments made by this
subsection shall apply to expenditures made after December 31,
2005.
(b) Temporary Credit for Energy Efficiency Improvements to Existing
Homes.--
(1) Subpart A of part IV of subchapter A of chapter 1
(relating to nonrefundable personal credits), as amended by
this Act, is amended by inserting after section 25C the
following new section:
``SEC. 25D. ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to 20 percent of the amount paid
or incurred by the taxpayer for qualified energy efficiency
improvements installed during such taxable year.
``(b) Limitation.--The credit allowed by this section with respect
to a dwelling for any taxable year shall not exceed $300, reduced (but
not below zero) by the sum of--
``(1) the credits allowed under subsection (a) to the
taxpayer with respect to the dwelling for all preceding taxable
years, and
``(2) the credits allowed under section 25C to the taxpayer
with respect to the dwelling for such taxable year and all
preceding taxable years.
``(c) Carryforward of Unused Credit.--If the credit allowable under
subsection (a) exceeds the limitation imposed by section 26(a) for such
taxable year reduced by the sum of the credits allowable under this
subpart (other than this section) for such taxable year, such excess
shall be carried to the succeeding taxable year and added to the credit
allowable under subsection (a) for such succeeding taxable year.
``(d) Qualified Energy Efficiency Improvements.--For purposes of
this section, the term `qualified energy efficiency improvements' means
any energy efficient building envelope component which is certified to
meet or exceed the latest prescriptive criteria for such component in
the 2003 International Energy Conservation Code (with supplements) as
in effect on the date of the enactment of this subsection, if--
``(1) such component is installed in or on a dwelling
which--
``(A) is located in the United States,
``(B) has not been treated as a qualified new
energy efficient home for purposes of any credit
allowed under section 45J, and
``(C) is owned and used by the taxpayer as the
taxpayer's principal residence (within the meaning of
section 121),
``(2) the original use of such component commences with the
taxpayer, and
``(3) such component reasonably can be expected to remain
in use for at least 5 years.
``(e) Certification.--
``(1) Method of certification.--The certification described
in subsection (d) for any component described in such
subsection shall be determined on the basis of applicable
energy efficiency ratings (including product labeling
requirements) for affected building envelope components.
``(2) Provider.--A certification described in subsection
(d) shall be provided by a third party, such as a local
building regulatory authority, a utility, a manufactured home
primary inspection agency, or a home energy rating
organization.
``(3) Form.--A certification described in subsection (d)
shall be made in writing on forms which specify in readily
inspectable fashion the energy efficient components and their
respective efficiency ratings, and which include a permanent
label affixed to the electrical distribution panel of the
dwelling.
``(f) Definitions and Special Rules.--For purposes of this
section--
``(1) Dollar amounts in case of joint occupancy.--In the
case of any dwelling unit which is jointly occupied and used
during any calendar year as a residence by 2 or more
individuals the following rules shall apply:
``(A) The amount of the credit allowable under
subsection (a) by reason of expenditures for the
qualified energy efficiency improvements made during
such calendar year by any of such individuals with
respect to such dwelling unit shall be determined by
treating all of such individuals as 1 taxpayer whose
taxable year is such calendar year.
``(B) There shall be allowable, with respect to
such expenditures to each of such individuals, a credit
under subsection (a) for the taxable year in which such
calendar year ends in an amount which bears the same
ratio to the amount determined under subparagraph (A)
as the amount of such expenditures made by such
individual during such calendar year bears to the
aggregate of such expenditures made by all of such
individuals during such calendar year.
``(2) Tenant-stockholder in cooperative housing
corporation.--In the case of an individual who is a tenant-
stockholder (as defined in section 216) in a cooperative
housing corporation (as defined in such section), such
individual shall be treated as having paid his tenant-
stockholder's proportionate share (as defined in section
216(b)(3)) of the cost of qualified energy efficiency
improvements made by such corporation.
``(3) Condominiums.--
``(A) In general.--In the case of an individual who
is a member of a condominium management association
with respect to a condominium which the individual
owns, such individual shall be treated as having paid
the individual's proportionate share of the cost of
qualified energy efficiency improvements made by such
association.
``(B) Condominium management association.--For
purposes of this paragraph, the term `condominium
management association' means an organization which
meets the requirements of paragraph (1) of section
528(c) (other than subparagraph (E) thereof) with
respect to a condominium project substantially all of
the units of which are used as residences.
``(4) Building envelope component.--The term `building
envelope component' means--
``(A) any sealant or insulation material or system
which is specifically and primarily designed to reduce
the heat loss or gain or a dwelling when installed in
or on such dwelling,
``(B) exterior windows (including skylights), and
``(C) exterior doors.
``(5) Manufactured homes included.--For purposes of this
section, the term `dwelling' includes a manufactured home which
conforms to Federal Manufactured Home Construction and Safety
Standards (24 C.F.R. 3280).
``(g) Basis Adjustment.--For purposes of this subtitle, if a credit
is allowed under this section for any expenditure with respect to any
property, the increase in the basis of such property which would (but
for this subsection) result from such expenditure shall be reduced by
the amount of the credit so allowed.
``(h) Termination.--Subsection (a) shall not apply to qualified
energy efficiency improvements installed after December 31, 2006.''.
(2) Conforming amendments.--
(A) Section 1016(a), as amended by this Act, is
amended by striking ``and'' at the end of paragraph
(32), by striking the period at the end of paragraph
(33) and inserting ``; and'', and by adding at the end
the following new paragraph:
``(34) to the extent provided in section 25D(g), in the
case of amounts with respect to which a credit has been allowed
under section 25D.''.
(B) The table of sections for subpart A of part IV
of subchapter A of chapter 1, as amended by this Act,
is amended by inserting after the item relating to
section 25C the following new item:
``25D. Energy efficiency improvements to existing homes.''.
(3) Effective dates.--
(A) In general.--Except as provided by subparagraph
(B), the amendments made by this subsection shall apply
to property installed after December 31, 2005, in
taxable years ending after such date.
(B) Paragraph (2).--The amendments made by
paragraph (2) shall apply to taxable years ending after
December 31, 2005.
SEC. 503. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
(a) In General.--Part VI of subchapter B of chapter 1 (relating to
itemized deductions for individuals and corporations) is amended by
inserting after section 179B the following new section:
``SEC. 179C. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
``(a) In General.--There shall be allowed as a deduction an amount
equal to the cost of energy efficient commercial building property
placed in service during the taxable year.
``(b) Maximum Amount of Deduction.--The deduction under subsection
(a) with respect to any building for the taxable year and all prior
taxable years shall not exceed an amount equal to the product of--
``(1) $2.25, and
``(2) the square footage of the building.
``(c) Definitions.--For purposes of this section--
``(1) Energy efficient commercial building property.--The
term `energy efficient commercial building property' means
property--
``(A) which is installed on or in any building
located in the United States,
``(B) which is installed as part of--
``(i) the interior lighting systems,
``(ii) the heating, cooling, ventilation,
and hot water systems, or
``(iii) the building envelope, and
``(C) which is certified in accordance with
subsection (d)(6) as being installed as part of a plan
designed to reduce the total annual energy and power
costs with respect to the interior lighting systems,
heating, cooling, ventilation, and hot water systems of
the building by 50 percent or more in comparison to a
reference building which meets the minimum requirements
of Standard 90.1-2001 using methods of calculation
under subsection (d)(2).
A building described in subparagraph (A) may include any
residential rental property, including any low-rise multifamily
structure or single family housing property which is not within
the scope of Standard 90.1-2001, but shall not include any
qualified new energy efficient home (within the meaning of
section 45J(d)(3)) for which a credit under section 45J has
been allowed.
``(2) Standard 90.1-2001.--The term `Standard 90.1-2001'
means Standard 90.1-2001 of the American Society of Heating,
Refrigerating, and Air Conditioning Engineers and the
Illuminating Engineering Society of North America (as in effect
on April 2, 2003).
``(d) Special Rules.--
``(1) Partial allowance.--
``(A) In general.--Except as provided in subsection
(f), if--
``(i) the requirement of subsection
(c)(1)(C) is not met, but
``(ii) there is a certification in
accordance with paragraph (6) that any system
referred to in subsection (c)(1)(B) satisfies
the energy-savings targets established by the
Secretary under subparagraph (B) with respect
to such system, then the requirement of
subsection (c)(1)(C) shall be treated as met
with respect to such system, and the deduction
under subsection (a) shall be allowed with
respect to energy efficient commercial building
property installed as part of such system and
as part of a plan to meet such targets, except
that subsection (b) shall be applied to such
property by substituting `$.75' for `$2.25'.
``(B) Regulations.--The Secretary, after
consultation with the Secretary of Energy, shall
establish a target for each system described in
subsection (c)(1)(B) which, if such targets were met
for all such systems, the building would meet the
requirements of subsection (c)(1)(C).
``(2) Methods of calculation.--The Secretary, after
consultation with the Secretary of Energy, shall promulgate
regulations which describe in detail methods for calculating
and verifying energy and power consumption and cost, based on
the provisions of the 2005 California Nonresidential
Alternative Calculation Method Approval Manual or, in the case
of residential property, the 2005 California Residential
Alternative Calculation Method Approval Manual. These
regulations shall meet the following requirements:
``(A) In calculating tradeoffs and energy
performance, the regulations shall prescribe the costs
per unit of energy and power, such as kilowatt hour,
kilowatt, gallon of fuel oil, and cubic foot or Btu of
natural gas, which may be dependent on time of usage.
If a State has developed annual energy usage and cost
calculation procedures based on time of usage costs for
use in the performance standards of the State's
building energy code before the effective date of this
section, the State may use those annual energy usage
and cost calculation procedures in lieu of those
adopted by the Secretary.
``(B) The calculation methods under this paragraph
need not comply fully with section 11 of Standard 90.1-
2001.
``(C) The calculation methods shall be fuel
neutral, such that the same energy efficiency features
shall qualify a building for the deduction under this
section regardless of whether the heating source is a
gas or oil furnace or an electric heat pump. The
reference building for a proposed design which employs
electric resistance heating shall be modeled as using a
heat pump.
``(D) The calculation methods shall provide
appropriate calculated energy savings for design
methods and technologies not otherwise credited in
either Standard 90.1-2001 or in the 2005 California
Nonresidential Alternative Calculation Method Approval
Manual, including the following:
``(i) Natural ventilation.
``(ii) Evaporative cooling.
``(iii) Automatic lighting controls such as
occupancy sensors, photocells, and timeclocks.
``(iv) Daylighting.
``(v) Designs utilizing semi-conditioned
spaces which maintain adequate comfort
conditions without air conditioning or without
heating.
``(vi) Improved fan system efficiency,
including reductions in static pressure.
``(vii) Advanced unloading mechanisms for
mechanical cooling, such as multiple or
variable speed compressors.
``(viii) The calculation methods may take
into account the extent of commissioning in the
building, and allow the taxpayer to take into
account measured performance which exceeds
typical performance.
``(ix) On-site generation of electricity,
including combined heat and power systems, fuel
cells, and renewable energy generation such as
solar energy.
``(x) Wiring with lower energy losses than
wiring satisfying Standard 90.1-2001
requirements for building power distribution
systems.
``(3) Computer software.--
``(A) In general.--Any calculation under paragraph
(2) shall be prepared by qualified computer software.
``(B) Qualified computer software.--For purposes of
this paragraph, the term `qualified computer software'
means software--
``(i) for which the software designer has
certified that the software meets all
procedures and detailed methods for calculating
energy and power consumption and costs as
required by the Secretary,
``(ii) which provides such forms as
required to be filed by the Secretary in
connection with energy efficiency of property
and the deduction allowed under this section,
and
``(iii) which provides a notice form which
documents the energy efficiency features of the
building and its projected annual energy costs.
``(4) Allocation of deduction for public property.--In the
case of energy efficient commercial building property installed
on or in public property, the Secretary shall promulgate a
regulation to allow the allocation of the deduction to the
person primarily responsible for designing the property in lieu
of the public entity which is the owner of such property. Such
person shall be treated as the taxpayer for purposes of this
section.
``(5) Notice to owner.--Each certification required under
this section shall include an explanation to the building owner
regarding the energy efficiency features of the building and
its projected annual energy costs as provided in the notice
under paragraph (3)(B)(iii).
``(6) Certification.--
``(A) In general.--The Secretary shall prescribe
the manner and method for the making of certifications
under this section.
``(B) Procedures.--The Secretary shall include as
part of the certification process procedures for
inspection and testing by qualified individuals
described in subparagraph (C) to ensure compliance of
buildings with energy-savings plans and targets. Such
procedures shall be comparable, given the difference
between commercial and residential buildings, to the
requirements in the Mortgage Industry National
Accreditation Procedures for Home Energy Rating
Systems.
``(C) Qualified individuals.--Individuals qualified
to determine compliance shall be only those individuals
who are recognized by an organization certified by the
Secretary for such purposes.
``(e) Basis Reduction.--For purposes of this subtitle, if a
deduction is allowed under this section with respect to any energy
efficient commercial building property, the basis of such property
shall be reduced by the amount of the deduction so allowed.
``(f) Interim Rules for Lighting Systems.--Until such time as the
Secretary issues final regulations under subsection (d)(1)(B) with
respect to property which is part of a lighting system--
``(1) In general.--The lighting system target under
subsection (d)(1)(A)(ii) shall be a reduction in lighting power
density of 25 percent (50 percent in the case of a warehouse)
of the minimum requirements in Table 9.3.1.1 or Table 9.3.1.2
(not including additional interior lighting power allowances)
of Standard 90.1-2001.
``(2) Reduction in deduction if reduction less than 40
percent.--
``(A) In general.--If, with respect to the lighting
system of any building other than a warehouse, the
reduction in lighting power density of the lighting
system is not at least 40 percent, only the applicable
percentage of the amount of deduction otherwise
allowable under this section with respect to such
property shall be allowed.
``(B) Applicable percentage.--For purposes of
subparagraph (A), the applicable percentage is the
number of percentage points (not greater than 100)
equal to the sum of--
``(i) 50, and
``(ii) the amount which bears the same
ratio to 50 as the excess of the reduction of
lighting power density of the lighting system
over 25 percentage points bears to 15.
``(C) Exceptions.--This subsection shall not apply
to any system--
``(i) the controls and circuiting of which
do not comply fully with the mandatory and
prescriptive requirements of Standard 90.1-2001
and which do not include provision for bilevel
switching in all occupancies except hotel and
motel guest rooms, store rooms, restrooms, and
public lobbies, or
``(ii) which does not meet the minimum
requirements for calculated lighting levels as
set forth in the Illuminating Engineering
Society of North America Lighting Handbook,
Performance and Application, Ninth Edition,
2000.
``(g) Coordination With Other Tax Benefits.--
``(1) No double benefit.--No deduction shall be allowed
under subsection (a) with respect to any building for which a
credit under section 45J has been allowed.
``(2) Special rule with respect to buildings with energy
efficient property.--In any case in which a deduction under
section 200 or a credit under section 25C has been allowed with
respect to property in connection with a building, the annual
energy and power costs of the reference building referred to in
subsection (c)(1)(C) shall be determined assuming such
reference building contains the property for which such
deduction or credit has been allowed.
``(h) Regulations.--The Secretary shall promulgate such regulations
as necessary--
``(1) to take into account new technologies regarding
energy efficiency and renewable energy for purposes of
determining energy efficiency and savings under this section,
and
``(2) to provide for a recapture of the deduction allowed
under this section if the plan described in subsection
(c)(1)(C) or (d)(1)(A) is not fully implemented.
``(i) Termination.--This section shall not apply with respect to
property placed in service after December 31, 2010.''.
(b) Conforming Amendments.--
(1) Section 1016(a) is amended by striking ``and'' at the
end of paragraph (33), by striking the period at the end of
paragraph (34) and inserting ``, and'', and by adding at the
end the following new paragraph:
``(35) to the extent provided in section 179C(e).''.
(2) Section 1245(a) is amended by inserting ``179C,'' after
``179B,'' both places it appears in paragraphs (2)(C) and
(3)(C).
(3) Section 1250(b)(3) is amended by inserting before the
period at the end of the first sentence ``or by section 179C''.
(4) Section 263(a)(1) of such Code is amended by striking
``or'' at the end of subparagraph (H), by striking the period
at the end of subparagraph (I) and inserting ``, or'', and by
inserting after subparagraph (I) the following new
subparagraph:
``(J) expenditures for which a deduction is allowed
under section 179C.''.
(5) Section 312(k)(3)(B) is amended by striking ``section
179, 179A, or 179B'' each place it appears in the heading and
text and inserting ``section 179, 179A, 179B, or 179C''.
(c) Clerical Amendment.--The table of sections for part VI of
subchapter B of chapter 1 is amended by inserting after section 179B
the following new item:
``179C. Energy efficient commercial buildings deduction.''.
(d) Effective Date.--The amendments made by this section shall
apply to property placed in service after the date of the enactment of
this Act in taxable years ending after such date.
SEC. 504. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
(relating to nonrefundable personal credits) is amended by inserting
after section 25D the following new section:
``SEC. 25E. RESIDENTIAL ENERGY EFFICIENT PROPERTY.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the sum of the qualified Tier 1
and Tier 2 energy efficient building property expenditures made by the
taxpayer during such year.
``(b) Limitations.--
``(1) Maximum credit.--The credit allowed under subsection
(a) shall not exceed--
``(A) $300 for each Tier 2 electric heat pump water
heater,
``(B) $300 for each Tier 2 natural gas, oil or
propane furnace or hot water boiler installed in 2006
($250 for equipment installed in 2007, $200 for
equipment installed in 2008),
``(C) $200 for each Tier 1 natural gas, oil, or
propane furnace, or hot water boiler installed in 2006
($150 for equipment installed in 2007, $100 for
equipment installed in 2008),
``(D) $300 for each Tier 2 natural gas, oil, or
propane water heater,
``(E) $50 for each Tier 1 natural gas, oil, or
propane water heater,
``(F) $50 for a Tier 1advanced main air circulating
fan which is installed in a furnace with an Annual Fuel
Utilization Efficiency of less than 92 percent,
``(G) $300 for each Tier 2 combination space and
water heating system,
``(H) $50 for each Tier 1combination space and
water heating system,
``(I) $250 for each Tier 2 geothermal heat pump,
``(J) $300 for each Tier 2 central air conditioner
or central heat pump ($200 for equipment installed in
2008), and
``(K) $200 for each Tier 1central air conditioner
or central heat pump ($100 for equipment installed in
2008).
``(2) Safety certifications.--No credit shall be allowed
under this section for an item of property unless such property
meets the performance and quality standards, and the
certification requirements (if any), which--
``(A) have been prescribed by the Secretary by
regulations (after consultation with the Secretary of
Energy or the Administrator of the Environmental
Protection Agency, as appropriate),
``(B) in the case of the energy efficiency ratio
(EER) for property described in subsection
(d)(6)(B)(i), (J) and (K)--
``(i) require measurements to be based on
published data which is tested by manufacturers
at 95 degrees Fahrenheit,
``(ii) do not require ratings to be based
on certified data of the Air Conditioning and
Refrigeration Institute, and
``(iii) are in effect at the time of the
acquisition of the property.
``(c) Carryforward of Unused Credit.--If the credit allowable under
subsection (a) exceeds the limitation imposed by section 26(a) for such
taxable year reduced by the sum of the credits allowable under this
subpart (other than this section and section 25D), such excess shall be
carried to the succeeding taxable year and added to the credit
allowable under subsection (a) for such succeeding taxable year.
``(d) Definitions.--For purposes of this section--
``(1) Qualified energy efficient building property
expenditure.--The term `qualified energy efficient building
property expenditure' means an expenditure for any Tier 2 or
Tier 1 energy efficient building property.
``(2) Tier 2 energy efficient building property.--The term
`Tier 2 energy efficient building property' means--
``(A) an electric heat pump water heater which
yields an energy factor of at least 1.7 in the standard
Department of Energy test procedure,
``(B) a natural gas, oil, propane furnace, or hot
water boiler which achieves at least 95 percent annual
fuel utilization efficiency (AFUE) and which has an
advanced main air circulating fan,
``(C) a natural gas, oil, or propane water heater
(including a tankless water heater) which has an energy
factor of at least 0.80 in the standard Department of
Energy test procedure,
``(D) a combination space and water heating system
which has a combined energy factor of at least 0.80 and
a combined annual fuel utilization efficiency (AFUE) of
at least 78 percent in the standard Department of
Energy test procedure,
``(E) a geothermal heat pump which has water
heating capability by a desuperheater or full-
condensing option and which has an energy efficiency
ratio (EER) of at least 18 for ground-loop systems, at
least 21 for ground-water systems, and at least 17 for
direct GeoExchange systems; and
``(F) a central air conditioner or central heat
pump which meets--
``(i) the highest efficiency tier
established by the Consortium for Energy
Efficiency as in effect on Jan. 1, 2006; and
``(ii) for units installed after December
31, 2006, the Energy Star installation
specifications that take effect in 2007, as set
by the Environmental Protection Agency.
``(3) Tier 1 energy efficient building property.--The term
`Tier 1 energy efficient building property' means--
``(A) a natural gas, oil, propane furnace, or hot
water boiler which achieves at least 92 percent annual
fuel utilization efficiency (AFUE) and which has an
advanced main air circulating fan,
``(B) a natural gas, oil, or propane water heater
(including a tankless water heater) which has an energy
factor of at least 0.65 but less than 0.80 in the
standard Department of Energy test procedure,
``(C) an advanced main air circulating fan which
has an annual electricity use of no more than 2 percent
of the total annual energy use (as determined in the
standard Department of Energy test procedures) and
which is used in a new natural gas, propane, or oil-
fired furnace,
``(D) a combination space and water heating system
which has a combined energy factor of at least 0.65 but
less than 0.80 and a combined annual fuel utilization
efficiency (AFUE) of at least 78 percent in the
standard Department of Energy test procedure,
``(E) a central air conditioner or central heat
pump which meets the Energy Star specifications set by
the Environmental Protection Agency as follows--
``(i) equipment specifications that take
effect in 2006 (including for units installed
before the specifications take effect); and
``(ii) for units installed after December
31, 2006, installation specifications that take
effect in 2007.
``(4) Labor costs.--Expenditures for labor costs properly
allocable to the onsite preparation, assembly, or original
installation of the property and for piping or wiring to
interconnect such property to the dwelling unit shall be taken
into account for purposes of this section.
``(e) Special Rules.--For purposes of this section--
``(1) Dollar amounts in case of joint occupancy.--In the
case of any dwelling unit which is jointly occupied and used
during any calendar year as a residence by 2 or more
individuals the following rules shall apply:
``(A) The amount of the credit allowable, under
subsection (a) by reason of expenditures (as the case
may be) made during such calendar year by any of such
individuals with respect to such dwelling unit shall be
determined by treating all of such individuals as 1
taxpayer whose taxable year is such calendar year.
``(B) There shall be allowable, with respect to
such expenditures to each of such individuals, a credit
under subsection (a) for the taxable year in which such
calendar year ends in an amount which bears the same
ratio to the amount determined under subparagraph (A)
as the amount of such expenditures made by such
individual during such calendar year bears to the
aggregate of such expenditures made by all of such
individuals during such calendar year.
``(2) Tenant-stockholder in cooperative housing
corporation.--In the case of an individual who is a tenant-
stockholder (as defined in section 216) in a cooperative
housing corporation (as defined in such section), such
individual shall be treated as having made his tenant-
stockholder's proportionate share (as defined in section
216(b)(3)) of any expenditures of such corporation.
``(3) Condominiums.--
``(A) In general.--In the case of an individual who
is a member of a condominium management association
with respect to a condominium which the individual
owns, such individual shall be treated as having made
the individual's proportionate share of any
expenditures of such association.
``(B) Condominium management association.--For
purposes of this paragraph, the term `condominium
management association' means an organization which
meets the requirements of paragraph (1) of section
528(c) (other than subparagraph (E) thereof) with
respect to a condominium project substantially all of
the units of which are used as residences.
``(4) Allocation in certain cases.--Except in the case of
qualified wind energy property expenditures, if less than 80
percent of the use of an item is for nonbusiness purposes, only
that portion of the expenditures for such item which is
properly allocable to use for nonbusiness purposes shall be
taken into account.
``(5) When expenditure made; amount of expenditure.--
``(A) In general.--Except as provided in
subparagraph (B), an expenditure with respect to an
item shall be treated as made when the original
installation of the item is completed.
``(B) Expenditures part of building construction.--
In the case of an expenditure in connection with the
construction or reconstruction of a structure, such
expenditure shall be treated as made when the original
use of the constructed or reconstructed structure by
the taxpayer begins.
``(C) Amount.--The amount of any expenditure shall
be the cost thereof.
``(6) Property financed by subsidized energy financing.--
For purposes of determining the amount of expenditures made by
any individual with respect to any dwelling unit, there shall
not be taken into account expenditures which are made from
subsidized energy financing (as defined in section
48(a)(5)(C)).
``(f) Basis Adjustments.--For purposes of this subtitle, if a
credit is allowed under this section for any expenditure with respect
to any property, the increase in the basis of such property which would
(but for this subsection) result from such expenditure shall be reduced
by the amount of the credit so allowed.
``(g) Termination.--The credit allowed under this section shall not
apply to expenditures after December 31, 2008.''.
(b) Conforming Amendments.--
(1) Section 1016(a), as amended by this Act, is amended by
striking ``and'' at the end of paragraph (34), by striking the
period at the end of paragraph (35) and inserting ``, and'',
and by adding at the end the following new paragraph:
``(36) to the extent provided in section 25E(f), in the
case of amounts with respect to which a credit has been allowed
under section 25E.''.
(2) The table of sections for subpart A of part IV of
subchapter A of chapter 1 is amended by inserting after the
item relating to section 25D the following new item:
``25E. Residential energy efficient property.''.
(c) Effective Dates.--
(1) In general.--Except as provided by paragraph (2), the
amendments made by this section shall apply to expenditures
after December 31, 2005, in taxable years ending after such
date.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to taxable years beginning after December 31, 2005.
SEC. 505. CREDIT FOR ENERGY EFFICIENT APPLIANCES.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
(relating to business-related credits) is amended by adding at the end
the following new section:
``SEC. 45K. ENERGY EFFICIENT APPLIANCE CREDIT.
``(a) General Rule.--
``(1) In general.--For purposes of section 38, the energy
efficient appliance credit determined under this section for
any taxable year is an amount equal to the sum of the credit
amounts determined under paragraph (2) for each type of
qualified energy efficient appliance produced by the taxpayer
during the calendar year ending with or within the taxable
year.
``(2) Credit amounts.--The credit amount determined for any
type of qualified energy efficient appliance is--
``(A) the applicable amount determined under
subsection (b) with respect to such type, multiplied by
``(B) the eligible production for such type.
``(b) Applicable Amount.--
``(1) In general.--For purposes of subsection (a)--
``(A) Dishwashers.--The applicable amount is the
energy savings amount in the case of a dishwasher
which--
``(i) is manufactured in calendar year 2006
or 2007, and
``(ii) meets the requirements of the Energy
Star program which are in effect for
dishwashers in 2007.
``(B) Clothes washers.--The applicable amount is--
``(i) $50, in the case of a clothes washer
which--
``(I) is manufactured in calendar
year 2005, and
``(II) has an MEF of at least 1.42,
``(ii) $100, in the case of a clothes
washer which--
``(I) is manufactured in calendar
year 2005, 2006, or 2007, and
``(II) meets the requirements of
the Energy Star program which are in
effect for clothes washers in 2007, and
``(iii) the energy and water savings
amount, in the case of a clothes washer which--
``(I) is manufactured in calendar
year 2008, 2009, or 2010, and
``(II) meets the requirements of
the Energy Star program which are in
effect for clothes washers in 2010.
``(C) Refrigerators.--
``(i) 15 percent savings.--The applicable
amount is $75 in the case of a refrigerator
which--
``(I) is manufactured in calendar
year 2005 or 2006, and
``(II) consumes at least 15 percent
but not more than 20 percent less
kilowatt hours per year than the 2001
energy conservation standard.
``(ii) 20 percent savings.--In the case of
a refrigerator which consumes at least 20
percent but not more than 25 percent less
kilowatt hours per year than the 2001 energy
conservation standards, the applicable amount
is--
``(I) $125 for a refrigerator which
is manufactured in calendar year 2005,
2006, or 2007, and
``(II) $100 for a refrigerator
which is manufactured in calendar year
2008.
``(iii) 25 percent savings.--In the case of
a refrigerator which consumes at least 25
percent less kilowatt hours per year than the
2001 energy conservation standards, the
applicable amount is--
``(I) $175 for a refrigerator which
is manufactured in calendar year 2005,
2006, or 2007, and
``(II) $150 for a refrigerator
which is manufactured in calendar year
2008, 2009, or 2010.
``(2) Energy savings amount.--For purposes of paragraph
(1)(A)--
``(A) In general.--The energy savings amount is the
lesser of--
``(i) the product of--
``(I) $3, and
``(II) 100 multiplied by the energy
savings percentage, or
``(ii) $100.
``(B) Energy savings percentage.--For purposes of
subparagraph (A), the energy savings percentage is the
ratio of--
``(i) the EF required by the Energy Star
program for dishwashers in 2007 minus the EF
required by the Energy Star program for
dishwashers in 2005, to
``(ii) the EF required by the Energy Star
program for dishwashers in 2007.
``(3) Energy and water savings amount.--For purposes of
paragraph (1)(B)(iii)--
``(A) In general.--The energy and water savings
amount is the lesser of--
``(i) the product of--
``(I) $10, and
``(II) 100 multiplied by the energy
and water savings percentage, or
``(ii) $200.
``(B) Energy and water savings percentage.--For
purposes of subparagraph (A), the energy and water
savings percentage is the average of the MEF savings
percentage and the WF savings percentage.
``(C) MEF savings percentage.--For purposes of this
paragraph, the MEF savings percentage is the ratio of--
``(i) the MEF required by the Energy Star
program for clothes washers in 2010 minus the
MEF required by the Energy Star program for
clothes washers in 2007, to
``(ii) the MEF required by the Energy Star
program for clothes washers in 2010.
``(D) WF savings percentage.--For purposes of this
paragraph, the WF savings percentage is the ratio of--
``(i) the WF required by the Energy Star
program for clothes washers in 2007 minus the
WF required by the Energy Star program for
clothes washers in 2010, to
``(ii) the WF required by the Energy Star
program for clothes washers in 2007.
``(c) Eligible Production.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), the eligible production in a calendar year with respect to
each type of energy efficient appliance is the excess of--
``(A) the number of appliances of such type which
are produced by the taxpayer in the United States
during such calendar year, over
``(B) the average number of appliances of such type
which were produced by the taxpayer (or any
predecessor) in the United States during the preceding
3-calendar year period.
``(2) Special rule for refrigerators.--The eligible
production in a calendar year with respect to each type of
refrigerator described in subsection (b)(1)(C) is the excess
of--
``(A) the number of appliances of such type which
are produced by the taxpayer in the United States
during such calendar year, over
``(B) 110 percent of the average number of
appliances of such type which were produced by the
taxpayer (or any predecessor) in the United States
during the preceding 3-calendar year period.
``(3) Special rule for 2005 production.--For purposes of
determining eligible production for calendar year 2005--
``(A) only production after the date of enactment
of this section shall be taken into account under
paragraphs (1)(A) and (2)(A), and
``(B) the amount taken into account under
paragraphs (1)(B) and (2)(B) shall be an amount which
bears the same ratio to the amount which would (but for
this paragraph) be taken into account under such
paragraph as--
``(i) the number of days in calendar year
2005 after the date of enactment of this
section, bears to
``(ii) 365.
``(d) Types of Energy Efficient Appliance.--For purposes of this
section, the types of energy efficient appliances are--
``(1) dishwashers described in subsection (b)(1)(A),
``(2) clothes washers described in subsection (b)(1)(B)(i),
``(3) clothes washers described in subsection
(b)(1)(B)(ii),
``(4) clothes washers described in subsection
(b)(1)(B)(iii),
``(5) refrigerators described in subsection (b)(1)(C)(i),
``(6) refrigerators described in subsection
(b)(1)(C)(ii)(I),
``(7) refrigerators described in subsection
(b)(1)(C)(ii)(II),
``(8) refrigerators described in subsection
(b)(1)(C)(iii)(I), and
``(9) refrigerators described in subsection
(b)(1)(C)(iii)(II).
``(e) Limitations.--
``(1) Aggregate credit amount allowed.--The aggregate
amount of credit allowed under subsection (a) with respect to a
taxpayer for any taxable year shall not exceed $75,000,000
reduced by the amount of the credit allowed under subsection
(a) to the taxpayer (or any predecessor) for all prior taxable
years.
``(2) Amount allowed for certain appliances.--
``(A) In general.--In the case of appliances
described in subparagraph (C), the aggregate amount of
the credit allowed under subsection (a) with respect to
a taxpayer for any taxable year shall not exceed
$20,000,000 reduced by the amount of the credit allowed
under subsection (a) to the taxpayer (or any
predecessor) for all prior taxable years with respect
to such appliances.
``(B) Election to increase allowable credit.--In
the case of any taxpayer who makes an election under
this subparagraph--
``(i) subparagraph (A) shall be applied by
substituting `$25,000,000' for `$20,000,000',
and
``(ii) the aggregate amount of the credit
allowed under subsection (a) with respect to
such taxpayer for any taxable year for
appliances described in subparagraph (C) and
the additional appliances described in
subparagraph (D) shall not exceed $50,000,000
reduced by the amount of the credit allowed
under subsection (a) to the taxpayer (or any
predecessor) for all prior taxable years with
respect to such appliances.
``(C) Appliances described.--The appliances
described in this subparagraph are--
``(i) clothes washers described in
subsection (b)(1)(B)(i), and
``(ii) refrigerators described in
subsection (b)(1)(C)(i).
``(D) Additional appliances.--The additional
appliances described in this subparagraph are--
``(i) refrigerators described in subsection
(b)(1)(C)(ii)(I), and
``(ii) refrigerators described in
subsection (b)(1)(C)(ii)(II).
``(3) Limitation based on gross receipts.--The credit
allowed under subsection (a) with respect to a taxpayer for the
taxable year shall not exceed an amount equal to 2 percent of
the average annual gross receipts of the taxpayer for the 3
taxable years preceding the taxable year in which the credit is
determined.
``(4) Gross receipts.--For purposes of this subsection, the
rules of paragraphs (2) and (3) of section 448(c) shall apply.
``(f) Definitions.--For purposes of this section--
``(1) Qualified energy efficient appliance.--The term
`qualified energy efficient appliance' means--
``(A) any dishwasher described in subsection
(b)(1)(A),
``(B) any clothes washer described in subsection
(b)(1)(B), and
``(C) any refrigerator described in subsection
(b)(1)(C).
``(2) Dishwasher.--The term `dishwasher' means a
residential dishwasher subject to the energy conservation
standards established by the Department of Energy.
``(3) Clothes washer.--The term `clothes washer' means a
residential model clothes washer, including a residential style
coin operated washer.
``(4) Refrigerator.--The term `refrigerator' means a
residential model automatic defrost refrigerator-freezer which
has an internal volume of at least 16.5 cubic feet.
``(5) MEF.--The term `MEF' means the modified energy factor
established by the Department of Energy for compliance with the
Federal energy conservation standards.
``(6) EF.--The term `EF' means the energy factor
established by the Department of Energy for compliance with the
Federal energy conservation standards.
``(7) WF.--The term `WF' means Water Factor (as determined
by the Secretary of Energy).
``(8) Produced.--The term `produced' includes manufactured.
``(9) 2001 energy conservation standard.--The term `2001
energy conservation standard' means the energy conservation
standards promulgated by the Department of Energy and effective
July 1, 2001.
``(g) Special Rules.--For purposes of this section--
``(1) In general.--Rules similar to the rules of
subsections (c), (d), and (e) of section 52 shall apply.
``(2) Controlled group.--
``(A) In general.--All persons treated as a single
employer under subsection (a) or (b) of section 52 or
subsection (m) or (o) of section 414 shall be treated
as a single producer.
``(B) Inclusion of foreign corporations.--For
purposes of subparagraph (A), in applying subsections
(a) and (b) of section 52 to this section, section 1563
shall be applied without regard to subsection (b)(2)(C)
thereof.
``(3) Verification.--No amount shall be allowed as a credit
under subsection (a) with respect to which the taxpayer has not
submitted such information or certification as the Secretary,
in consultation with the Secretary of Energy, determines
necessary.''.
(b) Conforming Amendment.--Section 38(b) (relating to general
business credit) is amended by striking ``plus'' at the end of
paragraph (19), by striking the period at the end of paragraph (20) and
inserting ``, plus'', and by adding at the end the following new
paragraph:
``(21) the energy efficient appliance credit determined
under section 45K(a).''.
(c) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by adding at the end
the following new item:
``45K. Energy efficient appliance credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to appliances produced after the date of the enactment of this
Act, in taxable years ending after such date.
SEC. 506. INCENTIVE FOR CERTAIN ENERGY EFFICIENT PROPERTY USED IN
BUSINESS.
(a) In General.--Part VI of subchapter B of chapter 1 is amended by
adding at the end the following new section:
``SEC. 200. ENERGY PROPERTY DEDUCTION.
``(a) In General.--There shall be allowed as a deduction for the
taxable year an amount equal to the sum of--
``(1) the amount determined under subsection (b) for each
energy property of the taxpayer placed in service during such
taxable year, and
``(2) the energy efficient residential rental building
property deduction determined under subsection (d).
``(b) Amount for Energy Property.--
``(1) In general.--The amount determined under this
subsection for the taxable year for each item of energy
property is--
``(A) $900 for each Tier 2 electric heat pump water
heater,
``(B) $900 for each Tier 2 natural gas, oil or
propane furnace or hot water boiler installed in 2006
($750 for equipment installed in 2007, $600 for
equipment installed in 2008),
``(C) $600 for each Tier 1 natural gas, oil, or
propane furnace, or hot water boiler installed in 2006
($450 for equipment installed in 2007, $300 for
equipment installed in 2008),
``(D) $900 for each Tier 2 natural gas, oil, or
propane water heater,
``(E) $150 for each Tier 1 natural gas, oil, or
propane water heater,
``(F) $150 for a Tier 1advanced main air
circulating fan which is installed in a furnace with an
Annual Fuel Utilization Efficiency of less than 92
percent,
``(G) $900 for each Tier 2 combination space and
water heating system,
``(H) $150 for each Tier 1combination space and
water heating system,
``(I) $750 for each Tier 2 geothermal heat pump,
``(J) $900 for each Tier 2 central air conditioner
or central heat pump ($600 for equipment installed in
2008), and
``(K) $600 for each Tier 1central air conditioner
or central heat pump ($300 for equipment installed in
2008).
``(2) Safety certifications.--A rule similar to the rule of
section 25E(b)(2) shall apply for purposes of this section.
``(c) Energy Property Defined.--For purposes of this part, the term
`energy property' means any property--
``(1) which is energy efficient building property (as
defined in section 25E(d),
``(2)(A) the construction, reconstruction, or erection of
which is completed by the taxpayer, or
``(B) which is acquired by the taxpayer if the original use
of such property commences with the taxpayer, and
``(3) with respect to which depreciation (or amortization
in lieu of depreciation) is allowable.
``(d) Energy Efficient Residential Rental Building Property
Deduction.--
``(1) Deduction allowed.--For purposes of subsection (a)--
``(A) In general.--The energy efficient residential
rental building property deduction determined under
this subsection is an amount equal to energy efficient
residential rental building property expenditures made
by a taxpayer for the taxable year.
``(B) Maximum amount of deduction.--The amount of
energy efficient residential rental building property
expenditures taken into account under subparagraph (A)
with respect to each dwelling unit shall not exceed--
``(i) $6,000 in the case of a percentage
reduction of 50 percent as determined under
paragraph (2)(B), and
``(ii) $12,000 times the percentage
reduction in the case of a percentage reduction
of less than 50 percent as determined under
paragraph (2)(B).
``(C) Year deduction allowed.--The deduction under
subparagraph (A) shall be allowed in the taxable year
in which the construction, reconstruction, erection, or
rehabilitation of the property is completed.
``(2) Energy efficient residential rental building property
expenditures.--For purposes of this subsection--
``(A) In general.--The term `energy efficient
residential rental building property expenditures'
means an amount paid or incurred in connection with
construction, reconstruction, erection, or
rehabilitation of energy efficient residential rental
building property--
``(i) for which depreciation is allowable
under section 167,
``(ii) which is located in the United
States, and
``(iii) the construction, reconstruction,
erection, or rehabilitation of which is
completed by the taxpayer.
Such term includes expenditures for labor costs
properly allocable to the onsite preparation, assembly,
or original installation of the property.
``(B) Energy efficient residential rental building
property.--
``(i) In general.--The term `energy
efficient residential rental building property'
means any property which reduces total annual
energy and power costs with respect to heating
and cooling of the building by a percentage
certified according to clause (ii).
``(ii) Procedures.--
``(I) In general.--For purposes of
clause (i), energy usage and costs
shall be demonstrated by performance-
based compliance.
``(II) Performance-based
compliance.--Performance-based
compliance shall be demonstrated by
calculating the percent energy cost
savings for heating and cooling, as
applicable, with respect to a dwelling
unit when compared to the original
condition of the dwelling unit.
``(III) Computer software.--
Computer software shall be used in
support of performance-based compliance
under subclause (II) and such software
shall meet all of the procedures and
methods for calculating energy savings
reductions which are promulgated by the
Secretary of Energy. Such regulations
on the specifications for software and
verification protocols shall be based
on the 2005 California Residential
Alternative Calculation Method Approval
Manual.
``(IV) Calculation requirements.--
In calculating tradeoffs and energy
performance, the regulations prescribed
under this clause shall prescribe for
the taxable year the costs per unit of
energy and power, such as kilowatt
hour, kilowatt, gallon of fuel oil, and
cubic foot or Btu of natural gas, which
may be dependent on time of usage.
Where a State has developed annual
energy usage and cost reduction
procedures based on time of usage costs
for use in the performance standards of
the State's building energy code prior
to the effective date of this section,
the State may use those annual energy
usage and cost reduction procedures in
lieu of those adopted by the Secretary.
``(V) Approval of software
submissions.--The Secretary shall
approve software submissions which
comply with the requirements of
subclause (III).
``(VI) Procedures for inspection
and testing of homes.--The Secretary
shall ensure that procedures for the
inspection and testing for compliance
comply with the calculation
requirements under subclause (IV) of
this clause and clause (iv).
``(iii) Determinations of compliance.--A
determination of compliance with respect to
energy efficient residential rental building
property made for the purposes of this
subparagraph shall be filed with the Secretary
not later than 1 year after the date of such
determination and shall include the TIN of the
certifier, the address of the building in
compliance, and the identity of the person for
whom such determination was performed.
Determinations of compliance filed with the
Secretary shall be available for inspection by
the Secretary of Energy.
``(iv) Compliance.--
``(I) In general.--The Secretary,
after consultation with the Secretary
of Energy, shall establish requirements
for certification and compliance
procedures after examining the
requirements for energy consultants and
home energy ratings providers specified
by the Mortgage Industry National Home
Energy Rating Standards.
``(II) Individuals qualified to
determine compliance.--The
determination of compliance may be
provided by a local building regulatory
authority, a utility, a manufactured
home production inspection primary
inspection agency (IPIA), a home
inspector, or an accredited home energy
rating system provider. All providers
shall be accredited, or otherwise
authorized to use approved energy
performance measurement methods, by the
Residential Energy Services Network
(RESNET).
``(C) Allocation of deduction for public
property.--In the case of energy efficient residential
rental building property which is public property, the
Secretary shall promulgate a regulation to allow the
allocation of the deduction to the person primarily
responsible for designing the improvements to the
property in lieu of the public entity which is the
owner of such property. Such person shall be treated as
the taxpayer for purposes of this subsection.
``(e) Special Rules.--For purposes of this section--
``(1) Basis reduction.--For purposes of this subtitle, if a
deduction is allowed under this section with respect to any
property, the basis of such property shall be reduced by the
amount of the deduction so allowed.
``(2) Double benefit.--Property which would, but for this
paragraph, be eligible for deduction under more than one
provision of this section shall be eligible only under one such
provision, the provision specified by the taxpayer.
``(f) Regulations.--The Secretary shall promulgate such regulations
as necessary to take into account new technologies regarding energy
efficiency and renewable energy for purposes of determining energy
efficiency and savings under this section.
``(g) Termination.--This section shall not apply with respect to--
``(1) any energy property placed in service after December
31, 2008, and
``(2) any energy efficient residential rental building
property expenditures in connection with property--
``(A) placed in service after December 31, 2009, or
``(B) the construction, reconstruction, erection,
or rehabilitation of which is not completed on or
before December 31, 2009.''.
(b) Conforming Amendments.--
(1) Section 48(a)(3)(A) is amended to read as follows:
``(A) which is equipment used to produce,
distribute, or use energy derived from a geothermal
deposit (within the meaning of section 613(e)(2)), but
only, in the case of electricity generated by
geothermal power, up to (but not including) the
electrical transmission stage,''.
(2) Subparagraph (B) of section 168(e)(3) is amended--
(A) in clause (vi)(I)--
(i) by striking ``section 48(a)(3)'' and
inserting ``section 200(d)(1)'', and
(ii) by striking ``clause (i)'' and
inserting ``such subparagraph (A)'', and
(B) in the last sentence, by striking ``section
48(a)(3)'' and inserting ``section 200(c)(3)''.
(3) Section 1016(a), as amended by this Act, is amended by
striking ``and'' at the end of paragraph (35), by striking the
period at the end of paragraph (36) and inserting ``, and'',
and by inserting the following new paragraph:
``(37) for amounts allowed as a deduction under section
200(a).''.
(c) Clerical Amendment.--The table of sections for part VI of
subchapter B of chapter 1 is amended by adding at the end the following
new item:
``200. Energy property deduction.''.
(d) Authorization of Appropriations.--There are authorized to be
appropriated to the Department of Energy out of amounts not already
appropriated such sums as necessary to carry out this section.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2005.
SEC. 507. CREDIT FOR BUSINESS INSTALLATION OF QUALIFIED FUEL CELLS.
(a) In General.--Section 48(a)(3)(A) of the Internal Revenue Code
of 1986 (defining energy property), as amended by section 301, is
amended by striking ``or'' at the end of clause (i), by adding ``or''
at the end of clause (ii), and by inserting after clause (ii) the
following new clause:
``(iii) qualified fuel cell property,''.
(b) Qualified Fuel Cell Property.--Section 48 of such Code
(relating to energy credit) is amended by adding at the end the
following new subsection:
``(c) Qualified Fuel Cell Property.--For purposes of subsection
(a)(3)(A)(iii)--
``(1) In general.--The term `qualified fuel cell property'
means a fuel cell power plant which generates at least 0.5
kilowatt of electricity using an electrochemical process.
``(2) Limitation.--The energy credit with respect to any
qualified fuel cell property shall not exceed an amount equal
to $500 for each 0.5 kilowatt of capacity of such property.
``(3) Fuel cell power plant.--The term `fuel cell power
plant' means an integrated system, comprised of a fuel cell
stack assembly and associated balance of plant components,
which converts a fuel into electricity using electrochemical
means.
``(4) Termination.--The term `qualified fuel cell property'
shall not include any property placed in service after December
31, 2009.''.
(c) Energy Percentage.--Subparagraph (A) of section 48(a)(2) of
such Code (relating to energy percentage) is amended to read as
follows:
``(A) In general.--The energy percentage is--
``(i) in the case of qualified fuel cell
property, 30 percent, and
``(ii) in the case of any other energy
property, 10 percent.''.
(d) Conforming Amendment.--Section 48(a)(1) of such Code is amended
by inserting ``except as provided in subsection (c)(2),'' before ``the
energy''.
(e) Effective Date.--The amendments made by this section shall
apply to periods after December 31, 2005, under rules similar to the
rules of section 48(m) of the Internal Revenue Code of 1986 (as in
effect on the day before the date of the enactment of the Revenue
Reconciliation Act of 1990).
SEC. 508. CREDIT FOR NONBUSINESS INSTALLATION OF QUALIFIED FUEL CELLS
[NEW ADDITION NOT UPDATED].
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to nonrefundable
personal credits) is amended by inserting after section 25B the
following new section:
``SEC. 25F. NONBUSINESS INSTALLATION OF QUALIFIED FUEL CELLS.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the sum of 30 percent of the
qualified fuel cell property expenditures made by the taxpayer during
such year.
``(b) Limitations.--
``(1) Maximum credit.--The credit allowed under subsection
(a) shall not exceed $500 for each 0.5 kilowatt of capacity of
qualified fuel cell property.
``(2) Property standards.--No credit shall be allowed under
this section for an item of property unless--
``(A) the original use of such property commences
with the taxpayer,
``(B) such property reasonably can be expected to
remain in use for at least 5 years,
``(C) such property is installed on or in
connection with a dwelling unit located in the United
States and used as a residence by the taxpayer,
``(D) such property meets the performance and
quality standards (if any) which have been prescribed
by the Secretary by regulations (after consultation
with the Secretary of Energy), and
``(E) such property meets appropriate fire and
electric code requirements.
``(c) Qualified Fuel Cell Property Expenditure.--For purposes of
this section, the term `qualified fuel cell property expenditure' means
an expenditure for any qualified fuel cell property (as defined in
section 48(c)(1)).
``(d) Special Rules.--For purposes of this section--
``(1) Dollar amounts in case of joint occupancy.--In the
case of any dwelling unit which is jointly occupied and used
during any calendar year as a residence by 2 or more
individuals, the following rules shall apply:
``(A) The amount of the credit allowable under
subsection (a) by reason of expenditures made during
such calendar year by any of such individuals with
respect to such dwelling unit shall be determined by
treating all of such individuals as 1 taxpayer whose
taxable year is such calendar year.
``(B) There shall be allowable, with respect to
such expenditures to each of such individuals, a credit
under subsection (a) for the taxable year in which such
calendar year ends in an amount which bears the same
ratio to the amount determined under subparagraph (A)
as the amount of such expenditures made by such
individual during such calendar year bears to the
aggregate of such expenditures made by all of such
individuals during such calendar year.
``(2) Tenant-stockholder in cooperative housing
corporation.--In the case of an individual who is a tenant-
stockholder (as defined in section 216) in a cooperative
housing corporation (as defined in such section), such
individual shall be treated as having made the individual's
tenant-stockholder's proportionate share (as defined in section
216(b)(3)) of any expenditures of such corporation.
``(3) Condominiums.--
``(A) In general.--In the case of an individual who
is a member of a condominium management association
with respect to a condominium which the individual
owns, such individual shall be treated as having made
the individual's proportionate share of any
expenditures of such association.
``(B) Condominium management association.--For
purposes of this paragraph, the term `condominium
management association' means an organization which
meets the requirements of paragraph (1) of section
528(c) (other than subparagraph (E) thereof) with
respect to a condominium project substantially all of
the units of which are used as residences.
``(4) Allocation in certain cases.--If less than 80 percent
of the use of an item is for nonbusiness purposes, only that
portion of the expenditures for such item which is properly
allocable to use for nonbusiness purposes shall be taken into
account.
``(5) When expenditure made; amount of expenditure.--
``(A) In general.--Except as provided in
subparagraph (B), an expenditure with respect to an
item shall be treated as made when the original
installation of the item is completed.
``(B) Expenditures part of building construction.--
In the case of an expenditure in connection with the
construction or reconstruction of a structure, such
expenditure shall be treated as made when the original
use of the constructed or reconstructed structure by
the taxpayer begins.
``(C) Amount.--The amount of any expenditure shall
be the cost thereof.
``(6) Property financed by subsidized energy financing.--
For purposes of determining the amount of expenditures made by
any individual with respect to any dwelling unit, there shall
not be taken into account expenditures which are made from
subsidized energy financing (as defined in section
48(a)(4)(C)).
``(e) Basis Adjustments.--For purposes of this subtitle, if a
credit is allowed under this section for any expenditure with respect
to any property, the increase in the basis of such property which would
(but for this subsection) result from such expenditure shall be reduced
by the amount of the credit so allowed.
``(f) Termination.--The credit allowed under this section shall not
apply to taxable years beginning after December 31, 2009.''.
(b) Conforming Amendments.--
(1) Section 1016(a) of such Code is amended by striking
``and'' at the end of paragraph (36), by striking the period at
the end of paragraph (37) and inserting ``, and'', and by
adding at the end the following new paragraph:
``(38) to the extent provided in section 25F(e), in the
case of amounts with respect to which a credit has been allowed
under section 25F.''.
(2) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of such Code is amended by adding at
the end the following new item:
``Sec. 25F. Nonbusiness installation of qualified fuel cells.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after December 31, 2005.
SEC. 509. NEW NONREFUNDABLE PERSONAL CREDITS ALLOWED AGAINST REGULAR
AND MINIMUM TAXES.
(a) In General.--
(1) Section 25c.--Section 25C(c), as added by this Act, is
amended by adding at the end the following new paragraph:
``(12) Limitation based on amount of tax.--The credit
allowed under subsection (a) for the taxable year shall not
exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section) and section 27 for
the taxable year.''.
(2) Section 25d.--Section 25D(f), as added by this Act, is
amended by adding at the end the following new paragraph:
``(6) Limitation based on amount of tax.--The credit
allowed under subsection (a) for the taxable year shall not
exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section) and section 27 for
the taxable year.''.
(3) Section 25e.--Section 25E(e), as added by this Act, is
amended by adding at the end the following new paragraph:
``(7) Limitation based on amount of tax.--The credit
allowed under subsection (a) for the taxable year shall not
exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section) and section 27 for
the taxable year.''.
(4) Section 25f.--Section 25F(b), as added by this Act, is
amended by adding at the end the following new paragraph:
``(3) Limitation based on amount of tax.--The credit
allowed under subsection (a) for the taxable year shall not
exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section) and section 27 for
the taxable year.''.
(b) Conforming Amendments.--
(1) Section 23(b)(4)(B) is amended by inserting ``and
sections 25C, 25D, 25E, and 25F'' after ``this section''.
(2) Section 24(b)(3)(B) is amended by striking ``and 25B''
and inserting ``, 25B, 25C, 25D, 25E, and 25F''.
(3) Section 25(e)(1)(C) is amended by inserting ``25C, 25D,
25E, and 25F'' after ``25B,''.
(4) Section 25B(g)(2) is amended by striking ``section 23''
and inserting ``sections 23, 25C, 25D, 25E, and 25F''.
(5) Section 26(a)(1) is amended by striking ``and 25B'' and
inserting ``25B, 25C, 25D, 25E, and 25F''.
(6) Section 904(i) is amended by striking ``and 25B'' and
inserting ``25B, 25C, 25D, 25E, and 25F''.
(7) Section 1400C(d) is amended by striking ``and 25B'' and
inserting ``25B, 25C, 25D, 25E, and 25F''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2005.
SEC. 510. CERTAIN BUSINESS ENERGY CREDITS ALLOWED AGAINST REGULAR AND
MINIMUM TAXES.
(a) In General.--Subparagraph (B) of section 38(c)(4) (relating to
specified credits) is amended by redesignating clause (ii) as clause
(iv) and by striking clause (i) and inserting the following new
clauses:
``(i) the credits determined under sections
40, 45H, 45I, 45J, and 45K,
``(ii) so much of the credit determined
under section 46 as is attributable to section
48(a)(3)(A)(iii),
``(iii) for taxable years beginning after
December 31, 2005, and before January 1, 2008,
the credit determined under section 43, and''.
(b) Effective Dates.--
(1) In general.--Except as provided by paragraph (2), the
amendment made by subsection (a) shall apply to credits
determined under the Internal Revenue Code of 1986 for taxable
years beginning after December 31, 2005.
(2) Fuel cells.--Clause (ii) of section 38(c)(4)(B) of the
Internal Revenue Code of 1986, as amended by subsection (a) of
this section, shall apply to credits determined under the
Internal Revenue Code of 1986 for taxable years ending after
April 11, 2005.
Subtitle B--Transportation Incentives
SEC. 511. ALTERNATIVE MOTOR VEHICLE CREDIT.
(a) In General.--Subpart B of part IV of subchapter A of chapter 1
(relating to foreign tax credit, etc.) is amended by adding at the end
the following new section:
``SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.
``(a) Allowance of Credit.--There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year an amount
equal to the sum of--
``(1) the new qualified fuel cell motor vehicle credit
determined under subsection (b), and
``(2) the new qualified hybrid motor vehicle credit
determined under subsection (c).
``(b) New Qualified Fuel Cell Motor Vehicle Credit.--
``(1) In general.--For purposes of subsection (a), the new
qualified fuel cell motor vehicle credit determined under this
subsection with respect to a new qualified fuel cell motor
vehicle placed in service by the taxpayer during the taxable
year is--
``(A) $8,000 ($4,000 in the case of vehicles placed
in service after December 31, 2009), if such vehicle
has a gross vehicle weight rating of not more than
8,500 pounds,
``(B) $10,000, if such vehicle has a gross vehicle
weight rating of more than 8,500 pounds but not more
than 14,000 pounds,
``(C) $20,000, if such vehicle has a gross vehicle
weight rating of more than 14,000 pounds but not more
than 26,000 pounds, and
``(D) $40,000, if such vehicle has a gross vehicle
weight rating of more than 26,000 pounds.
``(2) Increase for fuel efficiency.--
``(A) In general.--The amount determined under
paragraph (1)(A) with respect to a new qualified fuel
cell motor vehicle which is a passenger automobile or
light truck shall be increased by--
``(i) $1,000, if such vehicle achieves at
least 150 percent but less than 175 percent of
the 2002 model year city fuel economy,
``(ii) $1,500, if such vehicle achieves at
least 175 percent but less than 200 percent of
the 2002 model year city fuel economy,
``(iii) $2,000, if such vehicle achieves at
least 200 percent but less than 225 percent of
the 2002 model year city fuel economy,
``(iv) $2,500, if such vehicle achieves at
least 225 percent but less than 250 percent of
the 2002 model year city fuel economy,
``(v) $3,000, if such vehicle achieves at
least 250 percent but less than 275 percent of
the 2002 model year city fuel economy,
``(vi) $3,500, if such vehicle achieves at
least 275 percent but less than 300 percent of
the 2002 model year city fuel economy, and
``(vii) $4,000, if such vehicle achieves at
least 300 percent of the 2002 model year city
fuel economy.
``(B) 2002 model year city fuel economy.--For
purposes of subparagraph (A), the 2002 model year city
fuel economy with respect to a vehicle shall be
determined in accordance with the following tables:
``(i) In the case of a passenger
automobile:
``If vehicle inertia The 2002 model year city
weight class is: fuel economy is:
1,500 or 1,750 lbs............................ 45.2 mpg
2,000 lbs..................................... 39.6 mpg
2,250 lbs..................................... 35.2 mpg
2,500 lbs..................................... 31.7 mpg
2,750 lbs..................................... 28.8 mpg
3,000 lbs..................................... 26.4 mpg
3,500 lbs..................................... 22.6 mpg
4,000 lbs..................................... 19.8 mpg
4,500 lbs..................................... 17.6 mpg
5,000 lbs..................................... 15.9 mpg
5,500 lbs..................................... 14.4 mpg
6,000 lbs..................................... 13.2 mpg
6,500 lbs..................................... 12.2 mpg
7,000 to 8,500 lbs............................ 11.3 mpg.
``(ii) In the case of a light truck:
``If vehicle inertia The 2002 model year city
weight class is: fuel economy is:
1,500 or 1,750 lbs............................ 39.4 mpg
2,000 lbs..................................... 35.2 mpg
2,250 lbs..................................... 31.8 mpg
2,500 lbs..................................... 29.0 mpg
2,750 lbs..................................... 26.8 mpg
3,000 lbs..................................... 24.9 mpg
3,500 lbs..................................... 21.8 mpg
4,000 lbs..................................... 19.4 mpg
4,500 lbs..................................... 17.6 mpg
5,000 lbs..................................... 16.1 mpg
5,500 lbs..................................... 14.8 mpg
6,000 lbs..................................... 13.7 mpg
6,500 lbs..................................... 12.8 mpg
7,000 to 8,500 lbs............................ 12.1 mpg.
``(C) Vehicle inertia weight class.--For purposes
of subparagraph (B), the term `vehicle inertia weight
class' has the same meaning as when defined in
regulations prescribed by the Administrator of the
Environmental Protection Agency for purposes of the
administration of title II of the Clean Air Act (42
U.S.C. 7521 et seq.).
``(3) New qualified fuel cell motor vehicle.--For purposes
of this subsection, the term `new qualified fuel cell motor
vehicle' means a motor vehicle--
``(A) which is propelled by power derived from one
or more cells which convert chemical energy directly
into electricity by combining oxygen with hydrogen fuel
which is stored on board the vehicle in any form and
may or may not require reformation prior to use,
``(B) which, in the case of a passenger automobile
or light truck, has received a certificate that such
vehicle meets or exceeds the Bin 5 Tier II emission
level established in regulations prescribed by the
Administrator of the Environmental Protection Agency
under section 202(i) of the Clean Air Act for that make
and model year vehicle,
``(C) the original use of which commences with the
taxpayer,
``(D) which is acquired for use or lease by the
taxpayer and not for resale, and
``(E) which is made by a manufacturer.
``(c) New Qualified Hybrid Motor Vehicle Credit.--
``(1) In general.--For purposes of subsection (a), the new
qualified hybrid motor vehicle credit determined under this
subsection with respect to a new qualified hybrid motor vehicle
placed in service by the taxpayer during the taxable year is
the credit amount determined under paragraph (2).
``(2) Credit amount.--
``(A) In general.--The credit amount determined
under this paragraph shall be determined in accordance
with the following tables:
``(i) In the case of a new qualified hybrid
motor vehicle which is a passenger automobile,
medium duty passenger vehicle, or light truck
and which provides the following percentage of
the maximum available power:
``If percentage of the maximum
available power is: The credit amount is:
At least 5 percent but less than 10 percent... $250
At least 10 percent but less than 20 percent.. $500
At least 20 percent but less than 30 percent.. $750
At least 30 percent........................... $1,000.
``(ii) In the case of a new qualified
hybrid motor vehicle which is a heavy duty
hybrid motor vehicle and which provides the
following percentage of the maximum available
power:
``(I) If such vehicle has a gross
vehicle weight rating of not more than
14,000 pounds:
``If percentage of the maximum
available power is: The credit amount is:
At least 20 percent but less than 30 percent.. $1,000
At least 30 percent but less than 40 percent.. $1,750
At least 40 percent but less than 50 percent.. $2,000
At least 50 percent but less than 60 percent.. $2,250
At least 60 percent........................... $2,500.
``(II) If such vehicle has a gross
vehicle weight rating of more than
14,000 but not more than 26,000 pounds:
``If percentage of the maximum
available power is: The credit amount is:
At least 20 percent but less than 30 percent.. $4,000
At least 30 percent but less than 40 percent.. $4,500
At least 40 percent but less than 50 percent.. $5,000
At least 50 percent but less than 60 percent.. $5,500
At least 60 percent........................... $6,000.
``(III) If such vehicle has a gross
vehicle weight rating of more than
26,000 pounds:
``If percentage of the maximum
available power is: The credit amount is:
At least 20 percent but less than 30 percent.. $6,000
At least 30 percent but less than 40 percent.. $7,000
At least 40 percent but less than 50 percent.. $8,000
At least 50 percent but less than 60 percent.. $9,000
At least 60 percent........................... $10,000.
``(B) Increase for fuel efficiency.--
``(i) Amount.--The amount determined under
subparagraph (A)(i) with respect to a new
qualified hybrid motor vehicle which is a
passenger automobile or light truck shall be
increased by--
``(I) $500, if such vehicle
achieves at least 125 percent but less
than 150 percent of the 2002 model year
city fuel economy,
``(II) $1,000, if such vehicle
achieves at least 150 percent but less
than 175 percent of the 2002 model year
city fuel economy,
``(III) $1,500, if such vehicle
achieves at least 175 percent but less
than 200 percent of the 2002 model year
city fuel economy,
``(IV) $2,000, if such vehicle
achieves at least 200 percent but less
than 225 percent of the 2002 model year
city fuel economy,
``(V) $2,500, if such vehicle
achieves at least 225 percent but less
than 250 percent of the 2002 model year
city fuel economy, and
``(VI) $3,000, if such vehicle
achieves at least 250 percent of the
2002 model year city fuel economy.
``(ii) 2002 model year city fuel economy.--
For purposes of clause (i), the 2002 model year
city fuel economy with respect to a vehicle
shall be determined on a gasoline gallon
equivalent basis as determined by the
Administrator of the Environmental Protection
Agency using the tables provided in subsection
(b)(2)(B) with respect to such vehicle.
``(C) Increase for accelerated emissions
performance.--The amount determined under subparagraph
(A)(ii) with respect to an applicable heavy duty hybrid
motor vehicle shall be increased by the increased
credit amount determined in accordance with the
following tables:
``(i) In the case of a vehicle which has a
gross vehicle weight rating of not more than
14,000 pounds:
``If the model year is: The increased credit amount is:
2005.......................................... $2,000
2006.......................................... $1,500.
``(ii) In the case of a vehicle which has a
gross vehicle weight rating of more than 14,000
pounds but not more than 26,000 pounds:
``If the model year is: The increased credit amount is:
2005.......................................... $5,250
2006.......................................... $4,000.
``(iii) In the case of a vehicle which has
a gross vehicle weight rating of more than
26,000 pounds:
``If the model year is: The increased credit amount is:
2005.......................................... $8,000
2006.......................................... $6,000.
``(D) Definitions relating to credit amount.--
``(i) Applicable heavy duty hybrid motor
vehicle.--For purposes of subparagraph (C), the
term `applicable heavy duty hybrid motor
vehicle' means a heavy duty hybrid motor
vehicle which is powered by an internal
combustion or heat engine which is certified as
meeting the emission standards set in the
regulations prescribed by the Administrator of
the Environmental Protection Agency for 2007
and later model year diesel heavy duty engines,
or for 2008 and later model year ottocycle
heavy duty engines, as applicable.
``(ii) Maximum available power.--
``(I) Passenger automobile, medium
duty passenger vehicle, or light
truck.--For purposes of subparagraph
(A)(i), the term `maximum available
power' means the maximum power
available from the rechargeable energy
storage system, during a standard 10
second pulse power or equivalent test,
divided by such maximum power and the
SAE net power of the heat engine.
``(II) Heavy duty hybrid motor
vehicle.--For purposes of subparagraph
(A)(ii), the term `maximum available
power' means the maximum power
available from the rechargeable energy
storage system, during a standard 10
second pulse power or equivalent test,
divided by the vehicle's total traction
power. The term `total traction power'
means the sum of the peak power from
the rechargeable energy storage system
and the heat engine peak power of the
vehicle, except that if such storage
system is the sole means by which the
vehicle can be driven, the total
traction power is the peak power of
such storage system.
``(3) New qualified hybrid motor vehicle.--For purposes of
this subsection, the term `new qualified hybrid motor vehicle'
means a motor vehicle--
``(A) which draws propulsion energy from onboard
sources of stored energy which are both--
``(i) an internal combustion or heat engine
using combustible fuel, and
``(ii) a rechargeable energy storage
system,
``(B) which, in the case of a passenger automobile,
medium duty passenger vehicle, or light truck, has
received a certificate that such vehicle meets or
exceeds the Bin 5 Tier II emission level established in
regulations prescribed by the Administrator of the
Environmental Protection Agency under section 202(i) of
the Clean Air Act for that make and model year vehicle,
``(C) which, in the case of a heavy duty hybrid
motor vehicle, the internal combustion or heat engine
of which has received a certificate of conformity under
the Clean Air Act as meeting the emission standards set
in the regulations prescribed by the Administrator of
the Environmental Protection Agency for 2004 through
2007 model year diesel heavy duty engines or ottocycle
heavy duty engines, as applicable,
``(D) the original use of which commences with the
taxpayer,
``(E) which is acquired for use or lease by the
taxpayer and not for resale, and
``(F) which is made by a manufacturer.
``(4) Heavy duty hybrid motor vehicle.--For purposes of
this subsection, the term `heavy duty hybrid motor vehicle'
means a new qualified hybrid motor vehicle which has a gross
vehicle weight rating of more than 8,500 pounds. Such term does
not include a medium duty passenger vehicle.
``(d) Application With Other Credits.--The credit allowed under
subsection (a) for any taxable year shall not exceed the excess (if
any) of--
``(1) the regular tax for the taxable year reduced by the
sum of the credits allowable under subpart A and sections 27,
29, and 30, over
``(2) the tentative minimum tax for the taxable year.
``(e) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Consumable fuel.--The term `consumable fuel' means
any solid, liquid, or gaseous matter which releases energy when
consumed by an auxiliary power unit.
``(2) Motor vehicle.--The term `motor vehicle' has the
meaning given such term by section 30(c)(2).
``(3) City fuel economy.--The city fuel economy with
respect to any vehicle shall be measured in a manner which is
substantially similar to the manner city fuel economy is
measured in accordance with procedures under part 600 of
subchapter Q of chapter I of title 40, Code of Federal
Regulations, as in effect on the date of the enactment of this
section.
``(4) Other terms.--The terms `automobile', `passenger
automobile', `medium duty passenger vehicle', `light truck',
and `manufacturer' have the meanings given such terms in
regulations prescribed by the Administrator of the
Environmental Protection Agency for purposes of the
administration of title II of the Clean Air Act (42 U.S.C. 7521
et seq.).
``(5) Reduction in basis.--For purposes of this subtitle,
the basis of any property for which a credit is allowable under
subsection (a) shall be reduced by the amount of such credit so
allowed (determined without regard to subsection (e)).
``(6) No double benefit.--The amount of any deduction or
other credit allowable under this chapter--
``(A) for any incremental cost taken into account
in computing the amount of the credit determined under
subsection (d) shall be reduced by the amount of such
credit attributable to such cost, and
``(B) with respect to a vehicle described under
subsection (b) or (c), shall be reduced by the amount
of credit allowed under subsection (a) for such vehicle
for the taxable year.
``(7) Property used by tax-exempt entities.--In the case of
a credit amount which is allowable with respect to a motor
vehicle which is acquired by an entity exempt from tax under
this chapter, the person which sells or leases such vehicle to
the entity shall be treated as the taxpayer with respect to the
vehicle for purposes of this section and the credit shall be
allowed to such person, but only if the person clearly
discloses to the entity at the time of any sale or lease the
specific amount of any credit otherwise allowable to the entity
under this section.
``(8) Recapture.--The Secretary shall, by regulations,
provide for recapturing the benefit of any credit allowable
under subsection (a) with respect to any property which ceases
to be property eligible for such credit (including recapture in
the case of a lease period of less than the economic life of a
vehicle).
``(9) Property used outside united states, etc., not
qualified.--No credit shall be allowed under subsection (a)
with respect to any property referred to in section 50(b) or
with respect to the portion of the cost of any property taken
into account under section 179.
``(10) Election to not take credit.--No credit shall be
allowed under subsection (a) for any vehicle if the taxpayer
elects to not have this section apply to such vehicle.
``(11) Carryback and carryforward allowed.--
``(A) In general.--If the credit amount allowable
under subsection (a) for a taxable year exceeds the
amount of the limitation under subsection (e) for such
taxable year (in this paragraph referred to as the
`unused credit year'), such excess shall be allowed as
a credit carryback for each of the 3 taxable years
beginning after the date of the enactment of this
section, which precede the unused credit year and a
credit carryforward for each of the 20 taxable years
which succeed the unused credit year.
``(B) Rules.--Rules similar to the rules of section
39 shall apply with respect to the credit carryback and
credit carryforward under subparagraph (A).
``(12) Interaction with air quality and motor vehicle
safety standards.--Unless otherwise provided in this section, a
motor vehicle shall not be considered eligible for a credit
under this section unless such vehicle is in compliance with--
``(A) the applicable provisions of the Clean Air
Act for the applicable make and model year of the
vehicle (or applicable air quality provisions of State
law in the case of a State which has adopted such
provision under a waiver under section 209(b) of the
Clean Air Act), and
``(B) the motor vehicle safety provisions of
sections 30101 through 30169 of title 49, United States
Code.
``(f) Regulations.--
``(1) In general.--Except as provided in paragraph (2), the
Secretary shall promulgate such regulations as necessary to
carry out the provisions of this section.
``(2) Coordination in prescription of certain
regulations.--The Secretary of the Treasury, in coordination
with the Secretary of Transportation and the Administrator of
the Environmental Protection Agency, shall prescribe such
regulations as necessary to determine whether a motor vehicle
meets the requirements to be eligible for a credit under this
section.
``(g) Termination.--This section shall not apply to any property
purchased after--
``(1) in the case of a new qualified fuel cell motor
vehicle (as described in subsection (b)), December 31, 2014,
and
``(2) in the case of any other property, December 31,
2010.''.
(b) Conforming Amendments.--
(1) Section 1016(a) is amended by striking ``and'' at the
end of paragraph (37), by striking the period at the end of
paragraph (38) and inserting ``, and'', and by adding at the
end the following new paragraph:
``(39) to the extent provided in section 30B(e)(5).''.
(2) Section 55(c)(2) is amended by inserting ``30B(d),''
after ``30(b)(3)''.
(3) Section 6501(m) is amended by inserting ``30B(e)(10),''
after ``30(d)(4),''.
(4) The table of sections for subpart B of part IV of
subchapter A of chapter 1 is amended by inserting after the
item relating to section 30A the following new item:
``30B. Alternative motor vehicle credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after the date of the enactment of
this Act, in taxable years ending after such date.
Subtitle C--Industry Incentives
SEC. 521. ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM PROPERTY.
(a) In General.--Section 48(a)(3)(A) (defining energy property), as
amended by this Act, is amended to read as follows:
``(A) which is--
``(i) equipment used to produce,
distribute, or use energy derived from a
geothermal deposit (within the meaning of
section 613(e)(2)), but only, in the case of
electricity generated by geothermal power, up
to (but not including) the electrical
transmission stage, or
``(ii) combined heat and power system
property,''.
(b) Combined Heat and Power System Property.--Section 48 (relating
to energy credit) is amended by redesignating subsection (b) as
paragraph (5) of subsection (a), by moving such paragraph (5) two ems
to the right, and by adding at the end the following new subsection:
``(b) Combined Heat and Power System Property.--For purposes of
subsection (a)(3)(A)(ii)--
``(1) Combined heat and power system property.--The term
`combined heat and power system property' means property
comprising a system--
``(A) which uses the same energy source for the
simultaneous or sequential generation of electrical
power, mechanical shaft power, or both, in combination
with the generation of steam or other forms of useful
thermal energy (including heating and cooling
applications),
``(B) which has an electrical capacity of not more
than 15 megawatts or a mechanical energy capacity of
not more than 2,000 horsepower or an equivalent
combination of electrical and mechanical energy
capacities,
``(C) which produces--
``(i) at least 20 percent of its total
useful energy in the form of thermal energy
which is not used to produce electrical or
mechanical power (or combination thereof), and
``(ii) at least 20 percent of its total
useful energy in the form of electrical or
mechanical power (or combination thereof),
``(D) the energy efficiency percentage of which
exceeds 60 percent, and
``(E) which is placed in service before January 1,
2009.
``(2) Special rules.--
``(A) Energy efficiency percentage.--For purposes
of this subsection, the energy efficiency percentage of
a system is the fraction--
``(i) the numerator of which is the total
useful electrical, thermal, and mechanical
power produced by the system at normal
operating rates, and expected to be consumed in
its normal application, and
``(ii) the denominator of which is the
lower heating value of the fuel sources for the
system.
``(B) Determinations made on btu basis.--The energy
efficiency percentage and the percentages under
paragraph (1)(C) shall be determined on a Btu basis.
``(C) Input and output property not included.--The
term `combined heat and power system property' does not
include property used to transport the energy source to
the facility or to distribute energy produced by the
facility.
``(D) Public utility property.--
``(i) Accounting rule for public utility
property.--If the combined heat and power
system property is public utility property (as
defined in section 168(i)(10)), the taxpayer
may only claim the credit under subsection (a)
if, with respect to such property, the taxpayer
uses a normalization method of accounting.
``(ii) Certain exception not to apply.--The
matter in subsection (a)(3) which follows
subparagraph (D) thereof shall not apply to
combined heat and power system property.
``(E) Nonapplication of certain rules.--For
purposes of determining if the term `combined heat and
power system property' includes technologies which
generate electricity or mechanical power using back-
pressure steam turbines in place of existing pressure-
reducing valves or which make use of waste heat from
industrial processes such as by using organic rankine,
stirling, or kalina heat engine systems, paragraph (1)
shall be applied without regard to subparagraphs (A),
(C), and (D) thereof.''
``(3) Systems using bagasse.--If a system is designed to
use bagasse for at least 90 percent of the energy source--
``(A) paragraph (1)(D) shall not apply, but
``(B) the amount of credit determined under
subsection (a) with respect to such system shall not
exceed the amount which bears the same ratio to such
amount of credit (determined without regard to this
paragraph) as the energy efficiency percentage of such
system bears to 60 percent.''.
(c) Effective Date.--The amendments made by this subsection shall
apply to periods after December 31, 2005, in taxable years ending after
such date, under rules similar to the rules of section 48(m) of the
Internal Revenue Code of 1986 (as in effect on the day before the date
of the enactment of the Revenue Reconciliation Act of 1990).
<all>
Introduced in House
Introduced in House
Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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