I 

108TH CONGRESS 

1ST SESSION H. R. 1459

To amend the Internal Revenue Code of 1986 to provide tax credits for 

making energy efficiency improvements to existing homes and for constructing new energy efficient homes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 27, 2003

Mr. WELLER (for himself, Mr. CARDIN, and Mr. FOLEY) introduced the 

following bill; which was referred to the Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to provide 

tax credits for making energy efficiency improvements 

to existing homes and for constructing new energy efficient homes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Save America’s Valuable Energy Resources Act of 

6 2003’’. 

7 (b) AMENDMENT OF 1986 CODE.—Except as other8 wise expressly provided, whenever in this Act an amend-
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1 ment or repeal is expressed in terms of an amendment 

2 to, or repeal of, a section or other provision, the reference 

3 shall be considered to be made to a section or other provi4 sion of the Internal Revenue Code of 1986. 

5 SEC. 2. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS 

6 TO EXISTING HOMES. 

7 (a) IN GENERAL.—Subpart A of part IV of sub8 chapter A of chapter 1 (relating to nonrefundable personal 

9 credits) is amended by inserting after section 25B the fol10 lowing new section: 

11 ‘‘SEC. 25C. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST12 ING HOMES. 

13 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in14 dividual, there shall be allowed as a credit against the tax 

15 imposed by this chapter for the taxable year an amount 

16 equal to 20 percent of the amount paid or incurred by 

17 the taxpayer for qualified energy efficiency improvements 

18 installed during such taxable year. 

19 ‘‘(b) LIMITATIONS.—

20 ‘‘(1) MAXIMUM CREDIT.—The credit allowed by 

21 this section with respect to a dwelling shall not ex22 ceed $2,000. 

23 ‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER

24 ON SAME DWELLING TAKEN INTO ACCOUNT.—If a 

25 credit was allowed to the taxpayer under subsection 
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1 (a) with respect to a dwelling in 1 or more prior tax2 able years, the amount of the credit otherwise allow3 able for the taxable year with respect to that dwell4 ing shall not exceed the amount of $2,000 reduced 

5 by the sum of the credits allowed under subsection 

6 (a) to the taxpayer with respect to the dwelling for 

7 all prior taxable years. 

8 ‘‘(3) LIMITATION BASED ON AMOUNT OF

9 TAX.—The credit allowed under subsection (a) for 

10 the taxable year shall not exceed the excess of—

11 ‘‘(A) the sum of the regular tax liability 

12 (as defined in section 26(b)) plus the tax im13 posed by section 55, over 

14 ‘‘(B) the sum of the credits allowable 

15 under this subpart (other than this section and 

16 section 23) and section 27 for the taxable year. 

17 ‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the 

18 credit allowable under subsection (a) exceeds the limita19 tion imposed by subsection (b)(3) for such taxable year, 

20 such excess shall be carried to the succeeding taxable year 

21 and added to the credit allowable under subsection (a) for 

22 such succeeding taxable year. 

23 ‘‘(d) QUALIFIED ENERGY EFFICIENCY IMPROVE24 MENTS.—For purposes of this section, the term ‘qualified 

25 energy efficiency improvements’ means any energy effi-
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1 cient building envelope component which meets the pre2 scriptive criteria for such component established by the 

3 1998 International Energy Conservation Code, if—

4 ‘‘(1) such component is installed in or on a 

5 dwelling—

6 ‘‘(A) located in the United States, and 

7 ‘‘(B) owned and used by the taxpayer as 

8 the taxpayer’s principal residence (within the 

9 meaning of section 121), 

10 ‘‘(2) the original use of such component com11 mences with the taxpayer, and 

12 ‘‘(3) such component reasonably can be ex13 pected to remain in use for at least 5 years. 

14 If the aggregate cost of such components with respect to 

15 any dwelling exceeds $1,000, such components shall be 

16 treated as qualified energy efficiency improvements only 

17 if such components are also certified in accordance with 

18 subsection (e) as meeting such criteria. 

19 ‘‘(e) CERTIFICATION.—The certification described in 

20 subsection (d) shall be—

21 ‘‘(1) determined on the basis of the technical 

22 specifications or applicable ratings (including prod23 uct labeling requirements) for the measurement of 

24 energy efficiency, based upon energy use or building 
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1 envelope component performance, for the energy effi2 cient building envelope component, 

3 ‘‘(2) provided by a local building regulatory au4 thority, a utility, a manufactured home production 

5 inspection primary inspection agency (IPIA), or an 

6 accredited home energy rating system provider who 

7 is accredited by or otherwise authorized to use ap8 proved energy performance measurement methods by 

9 the Home Energy Ratings Systems Council or the 

10 National Association of State Energy Officials, and 

11 ‘‘(3) made in writing in a manner that specifies 

12 in readily verifiable fashion the energy efficient 

13 building envelope components installed and their re14 spective energy efficiency levels. 

15 ‘‘(f) DEFINITIONS AND SPECIAL RULES.—

16 ‘‘(1) TENANT-STOCKHOLDER IN COOPERATIVE

17 HOUSING CORPORATION.—In the case of an indi18 vidual who is a tenant-stockholder (as defined in sec19 tion 216) in a cooperative housing corporation (as

20 defined in such section), such individual shall be 

21 treated as having paid his tenant-stockholder’s pro22 portionate share (as defined in section 216(b)(3)) of 

23 the cost of qualified energy efficiency improvements 

24 made by such corporation. 

25 ‘‘(2) CONDOMINIUMS.—
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1 ‘‘(A) IN GENERAL.—In the case of an indi2 vidual who is a member of a condominium man3 agement association with respect to a condo4 minium which he owns, such individual shall be 

5 treated as having paid his proportionate share 

6 of the cost of qualified energy efficiency im7 provements made by such association. 

8 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO9 CIATION.—For purposes of this paragraph, the 

10 term ‘condominium management association’ 

11 means an organization which meets the require12 ments of paragraph (1) of section 528(c) (other 

13 than subparagraph (E) thereof) with respect to 

14 a condominium project substantially all of the 

15 units of which are used as residences. 

16 ‘‘(3) BUILDING ENVELOPE COMPONENT.—The 

17 term ‘building envelope component’ means insulation 

18 material or system which is specifically and pri19 marily designed to reduce the heat loss or gain of a 

20 dwelling when installed in or on such dwelling, exte21 rior windows (including skylights) and doors, and 

22 metal roofs with appropriate pigmented coatings 

23 which are specifically and primarily designed to re24 duce the heat gain of a dwelling when installed in 

25 or on such dwelling. 
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1 ‘‘(4) MANUFACTURED HOMES INCLUDED.—For 

2 purposes of this section, the term ‘dwelling’ includes 

3 a manufactured home which conforms to Federal 

4 Manufactured Home Construction and Safety Stand5 ards (24 CFR 3280). 

6 ‘‘(g) BASIS ADJUSTMENT.—For purposes of this sub7 title, if a credit is allowed under this section for any ex8 penditure with respect to any property, the increase in the 

9 basis of such property which would (but for this sub10 section) result from such expenditure shall be reduced by 

11 the amount of the credit so allowed. 

12 ‘‘(h) APPLICATION OF SECTION.—This section shall 

13 apply to qualified energy efficiency improvements installed 

14 after December 31, 2002 and before January 1, 2008.’’. 

15 (b) CONFORMING AMENDMENTS.—

16 (1) Subsection (a) of section 1016 is amended 

17 by striking ‘‘and’’ at the end of paragraph (27), by 

18 striking the period at the end of paragraph (28) and 

19 inserting ‘‘, and’’, and by adding at the end the fol20 lowing new paragraph: 

21 ‘‘(29) to the extent provided in section 25C(g), 

22 in the case of amounts with respect to which a credit 

23 has been allowed under section 25C.’’. 

24 (2) The table of sections for subpart A of part 

25 IV of subchapter A of chapter 1 is amended by in-
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1 serting after the item relating to section 25B the fol2 lowing new item:

‘‘Sec. 25C. Energy efficiency improvements to existing homes.’’.

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years ending after De5 cember 31, 2002. 

6 SEC. 3. BUSINESS CREDIT FOR CONSTRUCTION OF NEW EN7 ERGY EFFICIENT HOME. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 (relating to business related cred10 its) is amended by inserting after section 45F the fol11 lowing new section: 

12 ‘‘SEC. 45G. NEW ENERGY EFFICIENT HOME CREDIT. 

13 ‘‘(a) IN GENERAL.—For purposes of section 38, in 

14 the case of an eligible contractor, the credit determined 

15 under this section for the taxable year is an amount equal 

16 to the aggregate adjusted bases of all energy efficient 

17 property installed in a qualified new energy efficient home 

18 during construction of such home. 

19 ‘‘(b) LIMITATIONS.—

20 ‘‘(1) MAXIMUM CREDIT.—

21 ‘‘(A) IN GENERAL.—The credit allowed by 

22 this section with respect to a dwelling shall not 

23 exceed $2,000. 

24 ‘‘(B) PRIOR CREDIT AMOUNTS ON SAME

25 DWELLING TAKEN INTO ACCOUNT.—If a credit 
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1 was allowed under subsection (a) with respect 

2 to a dwelling in 1 or more prior taxable years, 

3 the amount of the credit otherwise allowable for 

4 the taxable year with respect to that dwelling 

5 shall not exceed the amount of $2,000 reduced 

6 by the sum of the credits allowed under sub7 section (a) with respect to the dwelling for all 

8 prior taxable years. 

9 ‘‘(2) COORDINATION WITH REHABILITATION

10 AND ENERGY CREDITS.—For purposes of this sec11 tion—

12 ‘‘(A) the basis of any property referred to 

13 in subsection (a) shall be reduced by that por14 tion of the basis of any property which is attrib15 utable to qualified rehabilitation expenditures 

16 (as defined in section 47(c)(2)) or to the energy 

17 percentage of energy property (as determined 

18 under section 48(a)), and

19 ‘‘(B) expenditures taken into account 

20 under either section 47 or 48(a) shall not be 

21 taken into account under this section. 

22 ‘‘(c) DEFINITIONS.—For purposes of this section—

23 ‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligi24 ble contractor’ means the person who constructed 

25 the new energy efficient home, or in the case of a 
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1 manufactured home which conforms to Federal 

2 Manufactured Home Construction and Safety Stand3 ards (24 CFR 3280), the manufactured home pro4 ducer of such home. 

5 ‘‘(2) ENERGY EFFICIENT PROPERTY.—The 

6 term ‘energy efficient property’ means any energy 

7 efficient building envelope component, and any en8 ergy efficient heating or cooling appliance. 

9 ‘‘(3) QUALIFIED NEW ENERGY EFFICIENT

10 HOME.—The term ‘qualified new energy efficient 

11 home’ means a dwelling—

12 ‘‘(A) located in the United States, 

13 ‘‘(B) the construction of which is substan14 tially completed after December 31, 2002, 

15 ‘‘(C) the original use of which is as a prin16 cipal residence (within the meaning of section 

17 121) which commences with the person who ac18 quires such dwelling from the eligible con19 tractor, and 

20 ‘‘(D) which is certified to have a level of 

21 annual heating and cooling energy consumption 

22 that is at least 30 percent below the annual 

23 level of heating and cooling energy consumption 

24 of a comparable dwelling constructed in accord25 ance with the standards of the 1998 Inter-
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1 national Energy Conservation Code and to have 

2 building envelope component improvements account for 1 3 ⁄3 of such 30 percent. 

4 ‘‘(4) CONSTRUCTION.—The term ‘construction’ 

5 includes reconstruction and rehabilitation. 

6 ‘‘(5) ACQUIRE.—The term ‘acquire’ includes 

7 purchase and, in the case of reconstruction and re8 habilitation, such term includes a binding written 

9 contract for such reconstruction or rehabilitation. 

10 ‘‘(6) BUILDING ENVELOPE COMPONENT.—The 

11 term ‘building envelope component’ means insulation 

12 material or system which is specifically and pri13 marily designed to reduce the heat loss or gain of a 

14 dwelling when installed in or on such dwelling, exte15 rior windows (including skylights) and doors, and 

16 metal roofs with appropriate pigmented coatings 

17 which are specifically and primarily designed to re18 duce the heat gain of a dwelling when installed in 

19 or on such dwelling. 

20 ‘‘(7) MANUFACTURED HOME INCLUDED.—The 

21 term ‘dwelling’ includes a manufactured home con22 forming to Federal Manufactured Home Construc23 tion and Safety Standards (24 CFR 3280). 

24 ‘‘(d) CERTIFICATION.—
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1 ‘‘(1) METHOD.—A certification described in 

2 subsection (c)(3)(D) shall be determined on the 

3 basis of one of the following methods: 

4 ‘‘(A) The technical specifications or appli5 cable ratings (including product labeling re6 quirements) for the measurement of energy effi7 ciency for the energy efficient building envelope 

8 component or energy efficient heating or cooling 

9 appliance, based upon energy use or building 

10 envelope component performance. 

11 ‘‘(B) An energy performance measurement 

12 method that utilizes computer software ap13 proved by organizations designated by the Sec14 retary. 

15 ‘‘(2) PROVIDER.—Such certification shall be 

16 provided by—

17 ‘‘(A) in the case of a method described in 

18 paragraph (1)(A), a local building regulatory 

19 authority, a utility, a manufactured home pro20 duction inspection primary inspection agency 

21 (IPIA), or an accredited home energy rating 

22 systems provider who is accredited by, or other23 wise authorized to use, approved energy per24 formance measurement methods by the Home 
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1 Energy Ratings Systems Council or the Na2 tional Association of State Energy Officials, or 

3 ‘‘(B) in the case of a method described in 

4 paragraph (1)(B), an individual recognized by 

5 an organization designated by the Secretary for 

6 such purposes. 

7 ‘‘(3) FORM.—Such certification shall be made 

8 in writing in a manner that specifies in readily 

9 verifiable fashion the energy efficient building enve10 lope components and energy efficient heating or 

11 cooling appliances installed and their respective en12 ergy efficiency levels, and in the case of a method 

13 described in subparagraph (B) of paragraph (1), ac14 companied by written analysis documenting the 

15 proper application of a permissible energy perform16 ance measurement method to the specific cir17 cumstances of such dwelling. 

18 ‘‘(4) REGULATIONS.—

19 ‘‘(A) IN GENERAL.—In prescribing regula20 tions under this subsection for energy perform21 ance measurement methods, the Secretary shall 

22 prescribe procedures for calculating annual en23 ergy costs for heating and cooling and cost sav24 ings and for the reporting of the results. Such 

25 regulations shall—
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1 ‘‘(i) be based on the National Home 

2 Energy Rating Technical Guidelines of the 

3 National Association of State Energy Offi4 cials, the Home Energy Rating Guidelines 

5 of the Home Energy Rating Systems 

6 Council, or the modified 1998 California 

7 Residential ACM manual, 

8 ‘‘(ii) provide that any calculation pro9 cedures be developed such that the same 

10 energy efficiency measures allow a home to 

11 qualify for the credit under this section re12 gardless of whether the house uses a gas 

13 or oil furnace or boiler or an electric heat 

14 pump, and 

15 ‘‘(iii) require that any computer soft16 ware allow for the printing of the Federal 

17 tax forms necessary for the credit under 

18 this section and explanations for the home19 buyer of the energy efficient features that 

20 were used to comply with the requirements 

21 of this section. 

22 ‘‘(B) PROVIDERS.—For purposes of para23 graph (2)(B), the Secretary shall establish re24 quirements for the designation of individuals 

25 based on the requirements for energy consult-
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1 ants and home energy raters specified by the 

2 National Association of State Energy Officials. 

3 ‘‘(e) BASIS ADJUSTMENT.—For purposes of this sub4 title, if a credit is allowed under this section for any ex5 penditure with respect to any property, the increase in the 

6 basis of such property which would (but for this sub7 section) result from such expenditure shall be reduced by 

8 the amount of the credit so allowed. 

9 ‘‘(f) APPLICATION OF SECTION.—Subsection (a) shall 

10 apply to dwellings purchased during the period beginning 

11 on January 1, 2003, and ending on December 31, 2007.’’. 

12 (b) CREDIT MADE PART OF GENERAL BUSINESS

13 CREDIT.—Subsection (b) of section 38 (relating to current 

14 year business credit) is amended by striking ‘‘plus’’ at the 

15 end of paragraph (14), by striking the period at the end 

16 of paragraph (15) and inserting ‘‘, plus’’, and by adding 

17 at the end thereof the following new paragraph: 

18 ‘‘(16) the new energy efficient home credit de19 termined under section 45G.’’. 

20 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C 

21 (relating to certain expenses for which credits are allow22 able) is amended by adding at the end thereof the fol23 lowing new subsection: 

24 ‘‘(d) NEW ENERGY EFFICIENT HOME EXPENSES.—

25 No deduction shall be allowed for that portion of expenses 
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1 for a new energy efficient home otherwise allowable as a 

2 deduction for the taxable year which is equal to the 

3 amount of the credit determined for such taxable year 

4 under section 45G.’’. 

5 (d) LIMITATION ON CARRYBACK.—Subsection (d) of 

6 section 39 is amended by adding at the end the following 

7 new paragraph: 

8 ‘‘(11) NO CARRYBACK OF NEW ENERGY EFFI9 CIENT HOME CREDIT BEFORE EFFECTIVE DATE.—

10 No portion of the unused business credit for any 

11 taxable year which is attributable to the credit deter12 mined under section 45G may be carried back to any 

13 taxable year ending before January 1, 2003.’’. 

14 (e) DEDUCTION FOR CERTAIN UNUSED BUSINESS

15 CREDITS.—Subsection (c) of section 196 is amended by 

16 striking ‘‘and’’ at the end of paragraph (9), by striking 

17 the period at the end of paragraph (10) and inserting ‘‘, 

18 and’’, and by adding after paragraph (10) the following 

19 new paragraph: 

20 ‘‘(11) the new energy efficient home credit de21 termined under section 45G.’’. 

22 (f) CLERICAL AMENDMENT.—The table of sections 

23 for subpart D of part IV of subchapter A of chapter 1 

24 is amended by inserting after the item relating to section 

25 45F the following new item:

‘‘Sec. 45G. New energy efficient home credit.’’.
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1 (g) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years ending after De3 cember 31, 2002. 

4 SEC. 4. ALLOWANCE OF DEDUCTION FOR ENERGY EFFI5 CIENT COMMERCIAL BUILDING PROPERTY. 

6 (a) IN GENERAL.—Part VI of subchapter B of chap7 ter 1 (relating to itemized deductions for individuals and 

8 corporations) is amended by inserting after section 179A 

9 the following new section: 

10 ‘‘SEC. 179B. DEDUCTION FOR ENERGY EFFICIENT COMMER11 CIAL BUILDING PROPERTY. 

12 ‘‘(a) ALLOWANCE OF DEDUCTION.—

13 ‘‘(1) IN GENERAL.—There shall be allowed as a 

14 deduction an amount equal to energy efficient com15 mercial building property expenditures made by a 

16 taxpayer for the taxable year.

17 ‘‘(2) MAXIMUM AMOUNT OF DEDUCTION.—The 

18 amount of energy efficient commercial building prop19 erty expenditures taken into account under para20 graph (1) shall not exceed an amount equal to the 

21 product of—

22 ‘‘(A) $2.25, and 

23 ‘‘(B) the square footage of the building 

24 with respect to which the expenditures are 

25 made. 
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1 ‘‘(3) YEAR DEDUCTION ALLOWED.—The deduc2 tion under paragraph (1) shall be allowed for the 

3 taxable year in which the building is placed in serv4 ice. 

5 ‘‘(b) ENERGY EFFICIENT COMMERCIAL BUILDING

6 PROPERTY EXPENDITURES.—For purposes of this sec7 tion, the term ‘energy efficient commercial building prop8 erty expenditures’ means an amount paid or incurred for 

9 energy efficient commercial building property installed on 

10 or in connection with new construction or reconstruction 

11 of property—

12 ‘‘(1) for which depreciation is allowable under 

13 section 167, 

14 ‘‘(2) which is located in the United States, and 

15 ‘‘(3) the construction or erection of which is 

16 completed by the taxpayer. 

17 Such property includes all residential rental property, in18 cluding low-rise multifamily structures and single family 

19 housing property which is not within the scope of Stand20 ard 90.1–1999 (described in subsection (c)). Such term 

21 includes expenditures for labor costs properly allocable to 

22 the onsite preparation, assembly, or original installation 

23 of the property. 

24 ‘‘(c) ENERGY EFFICIENT COMMERCIAL BUILDING

25 PROPERTY.—For purposes of subsection (b)—
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1 ‘‘(1) IN GENERAL.—The term ‘energy efficient 

2 commercial building property’ means any property 

3 which reduces total annual energy and power costs 

4 with respect to the lighting, heating, cooling, ventila5 tion, and hot water supply systems of the building 

6 by 50 percent or more in comparison to a reference 

7 building which meets the requirements of Standard 

8 90.1–1999 of the American Society of Heating, Re9 frigerating, and Air Conditioning Engineers and the 

10 Illuminating Engineering Society of North America 

11 using methods of calculation under paragraph (2) 

12 and certified by qualified professionals as provided 

13 under subsection (f). 

14 ‘‘(2) METHODS OF CALCULATION.—The Sec15 retary, in consultation with the Secretary of Energy, 

16 shall promulgate regulations which describe in detail 

17 methods for calculating and verifying energy and 

18 power consumption and cost, taking into consider19 ation the provisions of the 1998 California Nonresi20 dential ACM Manual. These procedures shall meet 

21 the following requirements: 

22 ‘‘(A) In calculating tradeoffs and energy 

23 performance, the regulations shall prescribe the 

24 costs per unit of energy and power, such as kil25 owatt hour, kilowatt, gallon of fuel oil, and 
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1 cubic foot or Btu of natural gas, which may be 

2 dependent on time of usage. 

3 ‘‘(B) The calculational methodology shall 

4 require that compliance be demonstrated for a 

5 whole building. If some systems of the building, 

6 such as lighting, are designed later than other 

7 systems of the building, the method shall pro8 vide that either—

9 ‘‘(i) the expenses taken into account 

10 under subsection (a) shall not occur until 

11 the date designs for all energy-using sys12 tems of the building are completed, 

13 ‘‘(ii) the energy performance of all 

14 systems and components not yet designed 

15 shall be assumed to comply minimally with 

16 the requirements of such Standard 90.1–

17 1999, or 

18 ‘‘(iii) the expenses taken into account 

19 under subsection (a) shall be a fraction of 

20 such expenses based on the performance of 

21 less than all energy-using systems in ac22 cordance with subparagraph (C). 

23 ‘‘(C) The expenditures in connection with 

24 the design of subsystems in the building, such 

25 as the envelope, the heating, ventilation, air 
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1 conditioning and water heating system, and the 

2 lighting system shall be allocated to the appro3 priate building subsystem based on system-spe4 cific energy cost savings targets in regulations 

5 promulgated by the Secretary of Energy which 

6 are equivalent, using the calculation method7 ology, to the whole building requirement of 50 

8 percent savings. 

9 ‘‘(D) The calculational methods under this 

10 subparagraph need not comply fully with sec11 tion 11 of such Standard 90.1–1999. 

12 ‘‘(E) The calculational methods shall be 

13 fuel neutral, such that the same energy effi14 ciency features shall qualify a building for the 

15 deduction under this subsection regardless of

16 whether the heating source is a gas or oil fur17 nace or an electric heat pump. 

18 ‘‘(F) The calculational methods shall pro19 vide appropriate calculated energy savings for 

20 design methods and technologies not otherwise 

21 credited in either such Standard 90.1–1999 or 

22 in the 1998 California Nonresidential ACM 

23 Manual, including the following: 

24 ‘‘(i) Natural ventilation. 

25 ‘‘(ii) Evaporative cooling. 
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1 ‘‘(iii) Automatic lighting controls such 

2 as occupancy sensors, photocells, and time3 clocks. 

4 ‘‘(iv) Daylighting. 

5 ‘‘(v) Designs utilizing semi-condi6 tioned spaces that maintain adequate com7 fort conditions without air conditioning or 

8 without heating. 

9 ‘‘(vi) Improved fan system efficiency, 

10 including reductions in static pressure. 

11 ‘‘(vii) Advanced unloading mecha12 nisms for mechanical cooling, such as mul13 tiple or variable speed compressors. 

14 ‘‘(viii) The calculational methods may 

15 take into account the extent of commis16 sioning in the building, and allow the tax17 payer to take into account measured per18 formance that exceeds typical performance. 

19 ‘‘(3) COMPUTER SOFTWARE.—

20 ‘‘(A) IN GENERAL.—Any calculation under 

21 this subsection shall be prepared by qualified 

22 computer software. 

23 ‘‘(B) QUALIFIED COMPUTER SOFTWARE.—

24 For purposes of this paragraph, the term 

25 ‘qualified computer software’ means software—
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1 ‘‘(i) for which the software designer 

2 has certified that the software meets all 

3 procedures and detailed methods for calcu4 lating energy and power consumption and 

5 costs as required by the Secretary, 

6 ‘‘(ii) which provides such forms as re7 quired to be filed by the Secretary in con8 nection with energy efficiency of property 

9 and the deduction allowed under this sec10 tion, and 

11 ‘‘(iii) which provides a notice form 

12 which summarizes the energy efficiency 

13 features of the building and its projected 

14 annual energy costs. 

15 ‘‘(d) ALLOCATION OF DEDUCTION FOR PUBLIC

16 PROPERTY.—In the case of energy efficient commercial 

17 building property installed on or in public property, the 

18 Secretary shall promulgate a regulation to allow the allo19 cation of the deduction to the person primarily responsible 

20 for designing the property in lieu of the public entity which 

21 is the owner of such property. Such person shall be treated 

22 as the taxpayer for purposes of this section. 

23 ‘‘(e) NOTICE TO OWNER.—The qualified individual 

24 shall provide an explanation to the owner of the building 

25 regarding the energy efficiency features of the building 
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1 and its projected annual energy costs as provided in the 

2 notice under subsection (c)(3)(B)(iii). 

3 ‘‘(f) CERTIFICATION.—The Secretary, in consultation 

4 with the Secretary of Energy, shall establish requirements 

5 for certification and compliance procedures similar to the 

6 procedures under section 45G(d). 

7 ‘‘(g) BASIS REDUCTION.—For purposes of this title, 

8 the basis of any property shall be reduced by the amount 

9 of the deduction with respect to such property which is 

10 allowed by subsection (a). 

11 ‘‘(h) TERMINATION.—This section shall not apply to 

12 property placed in service after December 31, 2007.’’. 

13 (b) CONFORMING AMENDMENTS.—

14 (1) Section 1016(a) is amended by striking 

15 ‘‘and’’ at the end of paragraph (28), by striking the 

16 period at the end of paragraph (29) and inserting ‘‘, 

17 and’’, and by inserting the following new paragraph: 

18 ‘‘(30) to the extent provided in section 

19 179B(g).’’. 

20 (2) Section 1245(a) is amended by inserting 

21 ‘‘179B,’’ after ‘‘179A,’’ both places it appears in 

22 paragraphs (2)(C) and (3)(C). 

23 (3) Section 1250(b)(3) is amended by inserting 

24 before the period at the end of the first sentence ‘‘or 

25 by section 179B’’. 
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1 (4) Section 263(a)(1) is amended by striking 

2 ‘‘or’’ at the end of subparagraph (G), by striking the 

3 period at the end of subparagraph (H) and inserting 

4 ‘‘, or’’, and by inserting after subparagraph (H) the 

5 following new subparagraph: 

6 ‘‘(I) expenditures for which a deduction is 

7 allowed under section 179B.’’. 

8 (5) Section 312(k)(3)(B) is amended by strik9 ing ‘‘or 179A’’ each place it appears in the heading 

10 and text and inserting ‘‘, 179A, or 179B’’. 

11 (c) CLERICAL AMENDMENT.—The table of sections 

12 for part VI of subchapter B of chapter 1 is amended by 

13 adding after section 179A the following new item:

‘‘Sec. 179B. Deduction for energy efficient commercial building 

property.’’.

14 (d) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2002.

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