I 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

3 ‘‘Energy Efficiency Cornerstone Act of 2005’’. 

4 (b) TABLE OF CONTENTS.—The table of contents of 

5 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 
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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. 

1 SEC. 2. FINDINGS AND PURPOSES. 

2 (a) FINDINGS.—Congress finds that— 

3 (1)(A) energy prices, especially the price of pe4 troleum and natural gas, have soared over the last 

5 few years due to demand exceeding supply; and 

6 (B) as both supply and demand are relatively 

7 inflexible, even small reductions in United States de8 mand for natural gas and oil can result in signifi9 cant reductions in gas and oil prices; 

10 (2) energy consumption in the United States is 

11 projected by the Energy Information Administration 

12 to increase by 35,000,000,000,000,000 Btus over 

13 the next 2 decades, which is equivalent to twice the 

14 energy consumed by all the cars currently on the 

15 roads; 
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1 (3)(A) by 2025, the Energy Information Ad2 ministration projects that 80 percent of oil used in 

3 the United States will be imported; and 

4 (B) overall energy imports are expected to in5 crease by 75 percent in the United States; 

6 (4) energy efficiency improvements since the 

7 1970s have reduced current United States energy 

8 consumption by 40 percent, or 

9 40,000,000,000,000,000 Btus, making energy effi10 ciency the greatest energy resource of the United 

11 States; 

12 (5) the United States has not nearly tapped the 

13 energy efficiency resource of the United States in 

14 that energy consumption could be reduced by 20 to 

15 50 percent through cost-effective improvements in 

16 the homes, buildings, cars, industry, and utilities of 

17 the United States; and 

18 (6) energy efficiency is generally the quickest, 

19 cheapest, and cleanest way— 

20 (A) to bring energy supply and demand in 

21 balance; and 

22 (B) to reduce the economic, environmental, 

23 and energy security impacts associated with en24 ergy use. 

25 (b) PURPOSES.—The purposes of this Act are— 
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1 (1) to reduce the growth of energy use in the 

2 United States significantly, with cumulative energy 

3 savings through 2025 of 50,000,000,000,000,000 to 

4 80,000,000,000,000,000 Btus; and 

5 (2) to limit the impacts of growing energy use 

6 on the economy, environment, and national security 

7 of the United States through reductions in energy 

8 demand. 

9 SEC. 3. DEFINITION OF SECRETARY. 

10 In this Act, the term ‘‘Secretary’’ means the Sec11 retary of Energy. 

12 TITLE I—RESIDENTIAL AND 

13 COMMERCIAL BUILDINGS 

14 Subtitle A—Appliance and 

15 Equipment Standards 

16 SEC. 101. ENERGY CONSERVATION STANDARDS FOR ADDI17 TIONAL PRODUCTS. 

18 (a) DEFINITIONS.—Section 321 of the Energy Policy 

19 and Conservation Act (42 U.S.C. 6291) is amended— 

20 (1) in paragraph (29)— 

21 (A) in subparagraph (D)— 

22 (i) in clause (i), by striking ‘‘C78.1– 

23 1978(R1984)’’ and inserting ‘‘C78.81– 

24 2003 (Data Sheet 7881–ANSI–1010–1)’’; 
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1 (ii) in clause (ii), by striking ‘‘C78.1– 

2 1978(R1984)’’ and inserting ‘‘C78.81– 

3 2003 (Data Sheet 7881–ANSI–3007–1)’’; 

4 and 

5 (iii) in clause (iii), by striking 

6 ‘‘C78.1–1978(R1984)’’ and inserting 

7 ‘‘C78.81–2003 (Data Sheet 7881–ANSI– 

8 1019–1)’’; and 

9 (B) by adding at the end the following: 

10 ‘‘(M) The term ‘F34T12 lamp’ (also known as 

11 a ‘F40T12/ES lamp’) means a nominal 34 watt tu12 bular fluorescent lamp that is 48 inches in length 

and 11 13 ⁄2 inches in diameter, and conforms to ANSI 

14 standard C78.81–2003 (Data Sheet 7881–ANSI– 

15 1006–1). 

16 ‘‘(N) The term ‘F96T12/ES lamp’ means a 

17 nominal 60 watt tubular fluorescent lamp that is 96 

inches in length and 11 18 ⁄2 inches in diameter, and 

19 conforms to ANSI standard C78.81–2003 (Data 

20 Sheet 7881–ANSI–3006–1). 

21 ‘‘(O) The term ‘F96T12HO/ES lamp’ means a 

22 nominal 95 watt tubular fluorescent lamp that is 96 

inches in length and 11 23 ⁄2 inches in diameter, and 

24 conforms to ANSI standard C78.81–2003 (Data 

25 Sheet 7881–ANSI–1017–1). 
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1 ‘‘(P) The term ‘replacement ballast’ means a 

2 ballast that— 

3 ‘‘(i) is designed for use to replace an exist4 ing ballast in a previously installed luminaire; 

5 ‘‘(ii) is marked ‘FOR REPLACEMENT 

6 USE ONLY’; 

7 ‘‘(iii) is shipped by the manufacturer in 

8 packages containing not more than 10 ballasts; 

9 and 

10 ‘‘(iv) has output leads that when fully ex11 tended are a total length that is less than the 

12 length of the lamp with which the ballast is in13 tended to be operated.’’; 

14 (2) in paragraph (30)(S)— 

15 (A) by inserting ‘‘(i)’’ before ‘‘The term’’; 

16 and 

17 (B) by adding at the end the following: 

18 ‘‘(ii) The term ‘medium base compact fluo19 rescent lamp’ does not include— 

20 ‘‘(I) any lamp that is— 

21 ‘‘(aa) specifically designed to be 

22 used for special purpose applications; 

23 and 

24 ‘‘(bb) unlikely to be used in gen25 eral purpose applications, such as the 
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1 applications described in subpara2 graph (D); or 

3 ‘‘(II) any lamp not described in sub4 paragraph (D) that is excluded by the Sec5 retary, by rule, because the lamp is— 

6 ‘‘(aa) designed for special appli7 cations; and 

8 ‘‘(bb) unlikely to be used in gen9 eral purpose applications.’’; and 

10 (3) by adding at the end the following: 

11 ‘‘(32) The term ‘battery charger’ means a de12 vice that charges batteries for consumer products, 

13 including battery chargers embedded in other con14 sumer products. 

15 ‘‘(33)(A) The term ‘commercial prerinse spray 

16 valve’ means a handheld device designed and mar17 keted for use with commercial dishwashing and ware 

18 washing equipment that sprays water on dishes, flat19 ware, and other food service items for the purpose 

20 of removing food residue before cleaning the items. 

21 ‘‘(B) The Secretary may modify the definition 

22 of ‘commercial prerinse spray valve’ by rule— 

23 ‘‘(i) to include products— 
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1 ‘‘(I) that are extensively used in 

2 conjunction with commercial dish3 washing and ware washing equipment; 

4 ‘‘(II) the application of standards 

5 to which would result in significant 

6 energy savings; and 

7 ‘‘(III) the application of stand8 ards to which would meet the criteria 

9 specified in section 325(o)(4); and 

10 ‘‘(ii) to exclude products— 

11 ‘‘(I) that are used for special 

12 food service applications; 

13 ‘‘(II) that are unlikely to be 

14 widely used in conjunction with com15 mercial dishwashing and ware wash16 ing equipment; and 

17 ‘‘(III) the application of stand18 ards to which would not result in sig19 nificant energy savings. 

20 ‘‘(34) The term ‘dehumidifier’ means a self-con21 tained, electrically operated, and mechanically en22 cased assembly consisting of— 

23 ‘‘(A) a refrigerated surface (evaporator) 

24 that condenses moisture from the atmosphere; 
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1 ‘‘(B) a refrigerating system, including an 

2 electric motor; 

3 ‘‘(C) an air-circulating fan; and 

4 ‘‘(D) means for collecting or disposing of 

5 the condensate. 

6 ‘‘(35)(A) The term ‘distribution transformer’ 

7 means a transformer that— 

8 ‘‘(i) has an input voltage of 34.5 kilovolts 

9 or less; 

10 ‘‘(ii) has an output voltage of 600 volts or 

11 less; and 

12 ‘‘(iii) is rated for operation at a frequency 

13 of 60 Hertz. 

14 ‘‘(B) The term ‘distribution transformer’ does 

15 not include— 

16 ‘‘(i) a transformer with multiple volt17 age taps, the highest of which equals at 

18 least 20 percent more than the lowest; 

19 ‘‘(ii) a transformer that is designed to 

20 be used in a special purpose application 

21 and is unlikely to be used in general pur22 pose applications, such as a drive trans23 former, rectifier transformer, auto-trans24 former, Uninterruptible Power System 

25 transformer, impedance transformer, regu-
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1 lating transformer, sealed and nonven2 tilating transformer, machine tool trans3 former, welding transformer, grounding 

4 transformer, or testing transformer; or 

5 ‘‘(iii) any transformer not listed in 

6 clause (ii) that is excluded by the Sec7 retary by rule because— 

8 ‘‘(I) the transformer is designed 

9 for a special application; 

10 ‘‘(II) the transformer is unlikely 

11 to be used in general purpose applica12 tions; and 

13 ‘‘(III) the application of stand14 ards to the transformer would not re15 sult in significant energy savings. 

16 ‘‘(36) The term ‘external power supply’ means 

17 an external power supply circuit that is used to con18 vert household electric current into DC current or 

19 lower-voltage AC current to operate a consumer 

20 product. 

21 ‘‘(37) The term ‘illuminated exit sign’ means a 

22 sign that— 

23 ‘‘(A) is designed to be permanently fixed in 

24 place to identify an exit; and 
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1 ‘‘(B) consists of an electrically powered in2 tegral light source that— 

3 ‘‘(i) illuminates the legend ‘EXIT’ 

4 and any directional indicators; and 

5 ‘‘(ii) provides contrast between the 

6 legend, any directional indicators, and the 

7 background. 

8 ‘‘(38) The term ‘low-voltage dry-type distribu9 tion transformer’ means a distribution transformer 

10 that— 

11 ‘‘(A) has an input voltage of 600 volts or 

12 less; 

13 ‘‘(B) is air-cooled; and 

14 ‘‘(C) does not use oil as a coolant. 

15 ‘‘(39) The term ‘pedestrian module’ means a 

16 light signal used to convey movement information to 

17 pedestrians. 

18 ‘‘(40) The term ‘refrigerated bottled or canned 

19 beverage vending machine’ means a commercial re20 frigerator that cools bottled or canned beverages and 

21 dispenses the bottled or canned beverages on pay22 ment. 

23 ‘‘(41) The term ‘standby mode’ means the low24 est power consumption mode, as established on an 

25 individual product basis by the Secretary, that— 
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1 ‘‘(A) cannot be switched off or influenced 

2 by the user; and 

3 ‘‘(B) may persist for an indefinite time 

4 when an appliance is— 

5 ‘‘(i) connected to the main electricity 

6 supply; and 

7 ‘‘(ii) used in accordance with the in8 structions of the manufacturer. 

9 ‘‘(42) The term ‘torchiere’ means a portable 

10 electric lamp with a reflector bowl that directs light 

11 upward to give indirect illumination. 

12 ‘‘(43) The term ‘traffic signal module’ means a 

13 standard 8-inch (200mm) or 12-inch (300mm) traf14 fic signal indication that— 

15 ‘‘(A) consists of a light source, a lens, and 

16 all other parts necessary for operation; and 

17 ‘‘(B) communicates movement messages to 

18 drivers through red, amber, and green colors. 

19 ‘‘(44) The term ‘transformer’ means a device 

20 consisting of 2 or more coils of insulated wire that 

21 transfers alternating current by electromagnetic in22 duction from 1 coil to another to change the original 

23 voltage or current value. 
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1 ‘‘(45)(A) The term ‘unit heater’ means a self2 contained fan-type heater designed to be installed 

3 within the heated space. 

4 ‘‘(B) The term ‘unit heater’ does not include a 

5 warm air furnace. 

6 ‘‘(46)(A) The term ‘high intensity discharge 

7 lamp’ means an electric-discharge lamp in which— 

8 ‘‘(i) the light-producing arc is stabilized by 

9 bulb wall temperature; and 

10 ‘‘(ii) the arc tube has a bulb wall loading 

in excess of 3 Watts/cm2 11 . 

12 ‘‘(B) The term ‘high intensity discharge lamp’ 

13 includes mercury vapor, metal halide, and high-pres14 sure sodium lamps described in subparagraph (A). 

15 ‘‘(47)(A) The term ‘mercury vapor lamp’ means 

16 a high intensity discharge lamp in which the major 

17 portion of the light is produced by radiation from 

18 mercury operating at a partial pressure in excess of 

19 100,000 Pa (approximately 1 atm). 

20 ‘‘(B) The term ‘mercury vapor lamp’ includes 

21 clear, phosphor-coated, and self-ballasted lamps de22 scribed in subparagraph (A). 

23 ‘‘(48) The term ‘mercury vapor lamp ballast’ 

24 means a device that is designed and marketed to 
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1 start and operate mercury vapor lamps by providing 

2 the necessary voltage and current.’’. 

3 (b) TEST PROCEDURES.—Section 323 of the Energy 

4 Policy and Conservation Act (42 U.S.C. 6293) is amend5 ed— 

6 (1) in subsection (b), by adding at the end the 

7 following: 

8 ‘‘(9) Test procedures for illuminated exit signs shall 

9 be based on the test method used under version 2.0 of 

10 the Energy Star program of the Environmental Protection 

11 Agency for illuminated exit signs. 

12 ‘‘(10)(A) Test procedures for distribution trans13 formers and low voltage dry-type distribution transformers 

14 shall be based on the ‘Standard Test Method for Meas15 uring the Energy Consumption of Distribution Trans16 formers’ prescribed by the National Electrical Manufac17 turers Association (NEMA TP 2–1998). 

18 ‘‘(B) The Secretary may review and revise the test 

19 procedures established under subparagraph (A). 

20 ‘‘(C) For purposes of section 346(a), the test proce21 dures established under subparagraph (A) shall be consid22 ered to be the testing requirements prescribed by the Sec23 retary under section 346(a)(1) for distribution trans24 formers for which the Secretary makes a determination 

25 that energy conservation standards would— 
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1 ‘‘(i) be technologically feasible and economically 

2 justified; and 

3 ‘‘(ii) result in significant energy savings. 

4 ‘‘(11) Test procedures for traffic signal modules and 

5 pedestrian modules shall be based on the test method used 

6 under the Energy Star program of the Environmental 

7 Protection Agency for traffic signal modules, as in effect 

8 on the date of enactment of this paragraph. 

9 ‘‘(12)(A) Test procedures for medium base compact 

10 fluorescent lamps shall be based on the test methods for 

11 compact fluorescent lamps used under the August 9, 2001, 

12 version of the Energy Star program of the Environmental 

13 Protection Agency and the Department of Energy. 

14 ‘‘(B) Except as provided in subparagraph (C), me15 dium base compact fluorescent lamps shall meet all test 

16 requirements for regulated parameters of section 325(cc). 

17 ‘‘(C) Notwithstanding subparagraph (B), if manufac18 turers document engineering predictions and analysis that 

19 support expected attainment of lumen maintenance at 40 

20 percent rated life and lamp lifetime, medium base compact 

21 fluorescent lamps may be marketed before completion of 

22 the testing of lamp life and lumen maintenance at 40 per23 cent of rated life. 

24 ‘‘(13) Test procedures for dehumidifiers shall be 

25 based on the test criteria used under the Energy Star Pro-
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1 gram Requirements for Dehumidifiers developed by the 

2 Environmental Protection Agency, as in effect on the date 

3 of enactment of this paragraph unless revised by the Sec4 retary pursuant to this section. 

5 ‘‘(14) The test procedure for measuring flow rate for 

6 commercial prerinse spray valves shall be based on Amer7 ican Society for Testing and Materials Standard F2324, 

8 entitled ‘Standard Test Method for Pre-Rinse Spray 

9 Valves.’ 

10 ‘‘(15) The test procedure for refrigerated bottled or 

11 canned beverage vending machines shall be based on 

12 American National Standards Institute/American Society 

13 of Heating, Refrigerating and Air-Conditioning Engineers 

14 Standard 32.1–2004, entitled ‘Methods of Testing for 

15 Rating Vending Machines for Bottled, Canned or Other 

16 Sealed Beverages’.’’; and 

17 (2) by adding at the end the following: 

18 ‘‘(f) ADDITIONAL CONSUMER AND COMMERCIAL

19 PRODUCTS.—(1) Not later than 2 years after the date of 

20 enactment of this subsection, the Secretary shall prescribe 

21 testing requirements for— 

22 ‘‘(A) suspended ceiling fans; and 

23 ‘‘(B) refrigerated bottled or canned beverage 

24 vending machines. 
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1 ‘‘(2) To the maximum extent practicable, the testing 

2 requirements prescribed under paragraph (1) shall be 

3 based on existing test procedures used in industry.’’. 

4 (c) STANDARD SETTING AUTHORITY.—Section 325 

5 of the Energy Policy and Conservation Act (42 U.S.C. 

6 6295) is amended— 

7 (1) in subsection (f)(3), by adding at the end 

8 the following: 

9 ‘‘(D) Notwithstanding any other provision of this Act, 

10 if the requirements of subsection (o) are met, the Sec11 retary may consider and prescribe energy conservation 

12 standards or energy use standards for electricity used for 

13 purposes of circulating air through duct work.’’; 

14 (2) in subsection (g)— 

15 (A) in paragraph (6)(B), by inserting ‘‘and 

16 labeled’’ after ‘‘designed’’; and 

17 (B) by adding at the end the following: 

18 ‘‘(8)(A) Each fluorescent lamp ballast (other than re19 placement ballasts or ballasts described in subparagraph 

20 (C))— 

21 ‘‘(i)(I) manufactured on or after July 1, 2009; 

22 ‘‘(II) sold by the manufacturer on or after Oc23 tober 1, 2009; or 

24 ‘‘(III) incorporated into a luminaire by a lumi25 naire manufacturer on or after July 1, 2010; and 
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1 ‘‘(ii) designed— 

2 ‘‘(I) to operate at nominal input voltages 

3 of 120 or 277 volts; 

4 ‘‘(II) to operate with an input current fre5 quency of 60 Hertz; and 

6 ‘‘(III) for use in connection with F34T12 

7 lamps, F96T12/ES lamps, or F96T12HO/ES 

8 lamps; 

9 shall have a power factor of 0.90 or greater and 

10 shall have a ballast efficacy factor of not less than 

11 the following: 

12 ‘‘(B) The standards described in subparagraph (A) 

13 shall apply to all ballasts covered by subparagraph (A)(ii) 

14 that are manufactured on or after July 1, 2010, or sold 

15 by the manufacturer on or after October 1, 2010. 

‘‘Application for operation for operation of ballast input voltage Total nominal 

lampwatts 

Ballast 

efficienty 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 

16 ‘‘(C) The standards described in subparagraphs (A) 

17 and (B) do not apply to— 

18 ‘‘(i) a ballast that is designed for dimming to 

19 50 percent or less of the maximum output of the 

20 ballast; 
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1 ‘‘(ii) a ballast that is designed for use with 2 

2 F96T12HO lamps at ambient temperatures of 20°F 

3 or less and for use in an outdoor sign; or 

4 ‘‘(iii) a ballast that has a power factor of less 

5 than 0.90 and is designed and labeled for use only 

6 in residential applications.’’; 

7 (3) in subsection (o), by adding at the end the 

8 following: 

9 ‘‘(5)(A) Notwithstanding any other provision in 

10 this section, the Secretary may set 2 standards for 

11 space heating and air conditioning equipment by di12 viding the United States into 2 climate zones to 

13 achieve the maximum level of energy savings that 

14 are technically feasible and economically justified. 

15 ‘‘(B) The climate zone boundaries described in 

16 subparagraph (A)— 

17 ‘‘(i) shall follow State borders; and 

18 ‘‘(ii) shall include only contiguous States. 

19 ‘‘(C) In determining whether to set 2 standards 

20 as described in subparagraph (A), the Secretary 

21 shall consider all factors described in paragraphs (1) 

22 through (4). 

23 ‘‘(D) If the Secretary sets 2 standards as de24 scribed in subparagraph (A), it shall be illegal to 
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1 transport noncomplying products into a State for re2 tail sale or installation in that State.’’. 

3 (4) by adding at the end the following: 

4 ‘‘(u) BATTERY CHARGER AND EXTERNAL POWER

5 SUPPLY ELECTRIC ENERGY CONSUMPTION.—(1)(A) Not 

6 later than 18 months after the date of enactment of this 

7 subsection, the Secretary shall, after providing notice and 

8 an opportunity for comment, prescribe, by rule, definitions 

9 and test procedures for the power use of battery chargers 

10 and external power supplies. 

11 ‘‘(B) In establishing the test procedures under sub12 paragraph (A), the Secretary shall— 

13 ‘‘(i) consider existing definitions and test proce14 dures used for measuring energy consumption in 

15 standby mode and other modes; and 

16 ‘‘(ii) assess the current and projected future 

17 market for battery chargers and external power sup18 plies. 

19 ‘‘(C) The assessment under subparagraph (B)(ii) 

20 shall include— 

21 ‘‘(i) estimates of the significance of potential 

22 energy savings from technical improvements to bat23 tery chargers and external power supplies; and 

24 ‘‘(ii) suggested product classes for energy con25 servation standards. 
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1 ‘‘(D) Not later than 18 months after the date of en2 actment of this subsection, the Secretary shall hold a 

3 scoping workshop to discuss and receive comments on 

4 plans for developing energy conservation standards for en5 ergy use for battery chargers and external power supplies. 

6 ‘‘(E)(i) Not later than 3 years after the date of enact7 ment of this subsection, the Secretary shall issue a final 

8 rule that determines whether energy conservation stand9 ards shall be issued for battery chargers and external 

10 power supplies or classes of battery chargers and external 

11 power supplies. 

12 ‘‘(ii) For each product class, any energy conservation 

13 standards issued under clause (i) shall be set at the lowest 

14 level of energy use that— 

15 ‘‘(I) meets the criteria and procedures of sub16 sections (o), (p), (q), (r), (s), and (t); and 

17 ‘‘(II) would result in significant overall annual 

18 energy savings, considering standby mode and other 

19 operating modes. 

20 ‘‘(2) In determining under section 323 whether test 

21 procedures and energy conservation standards under this 

22 section should be revised with respect to covered products 

23 that are major sources of standby mode energy consump24 tion, the Secretary shall consider whether to incorporate 

25 standby mode into the test procedures and energy con-
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1 servation standards, taking into account standby mode 

2 power consumption compared to overall product energy 

3 consumption. 

4 ‘‘(3) The Secretary shall not propose an energy con5 servation standard under this section, unless the Secretary 

6 has issued applicable test procedures for each product 

7 under section 323. 

8 ‘‘(4) Any energy conservation standard issued under 

9 this subsection shall be applicable to products manufac10 tured or imported beginning on the date that is 3 years 

11 after the date of issuance. 

12 ‘‘(5) The Secretary and the Administrator shall col13 laborate and develop programs (including programs under 

14 section 324A and other voluntary industry agreements or 

15 codes of conduct) that are designed to reduce standby 

16 mode energy use. 

17 ‘‘(v) SUSPENDED CEILING FANS AND REFRIG18 ERATED BEVERAGE VENDING MACHINES.—(1) Not later 

19 than 4 years after the date of enactment of this sub20 section, the Secretary shall prescribe, by rule, energy con21 servation standards for— 

22 ‘‘(A) suspended ceiling fans; and 

23 ‘‘(B) refrigerated bottled or canned beverage 

24 vending machines. 
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1 ‘‘(2) In establishing energy conservation standards 

2 under this subsection, the Secretary shall use the criteria 

3 and procedures prescribed under subsections (o) and (p). 

4 ‘‘(3) Any energy conservation standard prescribed 

5 under this subsection shall apply to products manufac6 tured 3 years after the date of publication of a final rule 

7 establishing the energy conservation standard. 

8 ‘‘(w) ILLUMINATED EXIT SIGNS.—An illuminated 

9 exit sign manufactured on or after January 1, 2006, shall 

10 meet the version 2.0 Energy Star Program performance 

11 requirements for illuminated exit signs prescribed by the 

12 Environmental Protection Agency. 

13 ‘‘(x) TORCHIERES.—A torchiere manufactured on or 

14 after January 1, 2006— 

15 ‘‘(1) shall consume not more than 190 watts of 

16 power; and 

17 ‘‘(2) shall not be capable of operating with 

18 lamps that total more than 190 watts. 

19 ‘‘(y) LOW VOLTAGE DRY-TYPE DISTRIBUTION

20 TRANSFORMERS.—The efficiency of a low voltage dry-type 

21 distribution transformer manufactured on or after Janu22 ary 1, 2007, shall be the Class I Efficiency Levels for dis23 tribution transformers specified in table 4–2 of the ‘Guide 

24 for Determining Energy Efficiency for Distribution Trans-
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1 formers’ published by the National Electrical Manufactur2 ers Association (NEMA TP–1–2002). 

3 ‘‘(z) TRAFFIC SIGNAL MODULES AND PEDESTRIAN

4 MODULES.—Any traffic signal module or pedestrian mod5 ule manufactured on or after January 1, 2006, shall— 

6 ‘‘(1) meet the performance requirements used 

7 under the Energy Star program of the Environ8 mental Protection Agency for traffic signals, as in 

9 effect on the date of enactment of this subsection; 

10 and 

11 ‘‘(2) be installed with compatible, electrically 

12 connected signal control interface devices and con13 flict monitoring systems. 

14 ‘‘(aa) UNIT HEATERS.—A unit heater manufactured 

15 on or after the date that is 3 years after the date of enact16 ment of this subsection shall— 

17 ‘‘(1) be equipped with an intermittent ignition 

18 device; and 

19 ‘‘(2) have power venting or an automatic flue 

20 damper. 

21 ‘‘(bb) MEDIUM BASE COMPACT FLUORESCENT

22 LAMPS.—(1) A bare lamp and covered lamp (no reflector) 

23 medium base compact fluorescent lamp manufactured on 

24 or after January 1, 2006, shall meet the following require25 ments prescribed by the August 9, 2001, version of the 
26 

•HR 3263 IH 

1 Energy Star Program Requirements for Compact Fluores2 cent Lamps, Energy Star Eligibility Criteria, Energy-Effi3 ciency Specification issued by the Environmental Protec4 tion Agency and Department of Energy: 

5 ‘‘(A) Minimum initial efficacy. 

6 ‘‘(B) Lumen maintenance at 1000 hours. 

7 ‘‘(C) Lumen maintenance at 40 percent of 

8 rated life. 

9 ‘‘(D) Rapid cycle stress test. 

10 ‘‘(E) Lamp life. 

11 ‘‘(2) The Secretary may, by rule, establish require12 ments for color quality (CRI), power factor, operating fre13 quency, and maximum allowable start time based on the 

14 requirements prescribed by the August 9, 2001, version 

15 of the Energy Star Program Requirements for Compact 

16 Fluorescent Lamps. 

17 ‘‘(3) The Secretary may, by rule— 

18 ‘‘(A) revise the requirements established under 

19 paragraph (2); or 

20 ‘‘(B) establish other requirements, after consid21 ering energy savings, cost effectiveness, and con22 sumer satisfaction. 

23 ‘‘(cc) DEHUMIDIFIERS.—(1) Dehumidifiers manufac24 tured on or after October 1, 2007, shall have an Energy 

25 Factor that meets or exceeds the following values: 
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•HR 3263 IH 

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. 

1 ‘‘(2)(A) Not later than October 1, 2009, the Sec2 retary shall publish a final rule in accordance with sub3 sections (o) and (p), to determine whether the energy con4 servation standards established under paragraph (1) 

5 should be amended. 

6 ‘‘(B) The final rule published under subparagraph 

7 (A) shall— 

8 ‘‘(i) contain any amendment by the Secretary; 

9 and 

10 ‘‘(ii) provide that the amendment applies to 

11 products manufactured on or after October 1, 2012. 

12 ‘‘(C) If the Secretary does not publish an amendment 

13 that takes effect by October 1, 2012, dehumidifiers manu14 factured on or after October 1, 2012, shall have an Energy 

15 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. 

16 ‘‘(dd) COMMERCIAL PRERINSE SPRAY VALVES.— 

17 Commercial prerinse spray valves manufactured on or 
28 

•HR 3263 IH 

1 after January 1, 2006, shall have a flow rate of not more 

2 than 1.6 gallons per minute. 

3 ‘‘(ee) MERCURY VAPOR LAMP BALLASTS.—Mercury 

4 vapor lamp ballasts shall not be manufactured or imported 

5 after January 1, 2008. 

6 ‘‘(ff) APPLICATION DATE.—Section 327 applies— 

7 ‘‘(1) to products for which energy conservation 

8 standards are to be established under subsection (l), 

9 (u), or (v) beginning on the date on which a final 

10 rule is issued by the Secretary, except that any State 

11 or local standard prescribed or enacted for the prod12 uct before the date on which the final rule is issued 

13 shall not be preempted until the energy conservation 

14 standard established under subsection (l),(u), or (v) 

15 for the product takes effect; and 

16 ‘‘(2) to products for which energy conservation 

17 standards are established under subsections (w) 

18 through (ee) on the date of enactment of those sub19 sections, except that any State or local standard pre20 scribed or enacted before the date of enactment of 

21 those subsections shall not be preempted until the 

22 energy conservation standards established under 

23 subsections (w) through (ee) take effect.’’. 
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•HR 3263 IH 

1 (d) GENERAL RULE OF PREEMPTION.—Section 

2 327(c) of the Energy Policy and Conservation Act (42 

3 U.S.C. 6297(c)) is amended— 

4 (1) in paragraph (5), by striking ‘‘or’’ at the 

5 end; 

6 (2) in paragraph (6), by striking the period at 

7 the end and inserting ‘‘; or’’; and 

8 (3) by adding at the end the following: 

9 ‘‘(7)(A) is a regulation concerning standards for 

10 commercial prerinse spray valves adopted by the 

11 California Energy Commission before January 1, 

12 2005; or 

13 ‘‘(B) is an amendment to a regulation described 

14 in subparagraph (A) that was developed to align 

15 California regulations with changes in American So16 ciety for Testing and Materials Standard F2324; 

17 ‘‘(8)(A) is a regulation concerning standards for 

18 pedestrian modules adopted by the California En19 ergy Commission before January 1, 2005; or 

20 ‘‘(B) is an amendment to a regulation described 

21 in subparagraph (A) that was developed to align 

22 California regulations to changes in the Institute for 

23 Transportation Engineers standards, entitled ‘Per24 formance Specification: Pedestrian Traffic Control 

25 Signal Indications’.’’. 
30 

•HR 3263 IH 

1 SEC. 102. ENERGY CONSERVATION STANDARDS FOR COM2 MERCIAL EQUIPMENT. 

3 (a) DEFINITIONS.—Section 340 of the Energy Policy 

4 and Conservation Act (42 U.S.C. 6311) is amended— 

5 (1) in paragraph (1)— 

6 (A) by redesignating subparagraphs (D) 

7 through (G) as subparagraphs (H) through 

8 (K), respectively; and 

9 (B) by inserting after subparagraph (C) 

10 the following: 

11 ‘‘(D) Very large commercial package air 

12 conditioning and heating equipment. 

13 ‘‘(E) Commercial refrigerators, freezers, 

14 and refrigerator-freezers. 

15 ‘‘(F) Automatic commercial ice makers. 

16 ‘‘(G) Commercial clothes washers.’’; 

17 (2) in paragraph (2)(B), by striking ‘‘small and 

18 large commercial package air conditioning and heat19 ing equipment’’ and inserting ‘‘commercial package 

20 air conditioning and heating equipment, commercial 

21 refrigerators, freezers, and refrigerator-freezers, 

22 automatic commercial ice makers, commercial 

23 clothes washers’’; 

24 (3) by striking paragraphs (8) and (9) and in25 serting the following: 
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•HR 3263 IH 

1 ‘‘(8)(A) The term ‘commercial package air con2 ditioning and heating equipment’ means air-cooled, 

3 water-cooled, evaporatively-cooled, or water source 

4 (not including ground water source) electrically oper5 ated, unitary central air conditioners and central air 

6 conditioning heat pumps for commercial application. 

7 ‘‘(B) The term ‘small commercial package air 

8 conditioning and heating equipment’ means commer9 cial package air conditioning and heating equipment 

10 that is rated below 135,000 Btu per hour (cooling 

11 capacity). 

12 ‘‘(C) The term ‘large commercial package air 

13 conditioning and heating equipment’ means commer14 cial package air conditioning and heating equipment 

15 that is rated— 

16 ‘‘(i) at or above 135,000 Btu per hour; 

17 and 

18 ‘‘(ii) below 240,000 Btu per hour (cooling 

19 capacity). 

20 ‘‘(D) The term ‘very large commercial package 

21 air conditioning and heating equipment’ means com22 mercial package air conditioning and heating equip23 ment that is rated— 

24 ‘‘(i) at or above 240,000 Btu per hour; 

25 and 
32 

•HR 3263 IH 

1 ‘‘(ii) below 760,000 Btu per hour (cooling 

2 capacity). 

3 ‘‘(9)(A) The term ‘commercial refrigerator, 

4 freezer, and refrigerator-freezer’ means refrigeration 

5 equipment that— 

6 ‘‘(i) is not a consumer product (as defined 

7 in section 321); 

8 ‘‘(ii) is not designed and marketed exclu9 sively for medical, scientific, or research pur10 poses; 

11 ‘‘(iii) operates at a chilled, frozen, com12 bination chilled and frozen, or variable tempera13 ture; 

14 ‘‘(iv) displays or stores merchandise and 

15 other perishable materials horizontally, 

16 semivertically, or vertically; 

17 ‘‘(v) has transparent or solid doors, sliding 

18 or hinged doors, a combination of hinged, slid19 ing, transparent, or solid doors, or no doors; 

20 ‘‘(vi) is designed for pull-down temperature 

21 applications or holding temperature applica22 tions; and 

23 ‘‘(vii) is connected to a self-contained con24 densing unit or to a remote condensing unit. 
33 

•HR 3263 IH 

1 ‘‘(B) The term ‘holding temperature applica2 tion’ means a use of commercial refrigeration equip3 ment other than a pull-down temperature applica4 tion, except a blast chiller or freezer. 

5 ‘‘(C) The term ‘integrated average temperature’ 

6 means the average temperature of all test package 

7 measurements taken during the test. 

8 ‘‘(D) The term ‘pull-down temperature applica9 tion’ means a commercial refrigerator with doors 

10 that, when fully loaded with 12 ounce beverage cans 

11 at 90 degrees F, can cool those beverages to an av12 erage stable temperature of 38 degrees F in 12 

13 hours or less. 

14 ‘‘(E) The term ‘remote condensing unit’ means 

15 a factory-made assembly of refrigerating components 

16 designed to compress and liquefy a specific refrig17 erant that is remotely located from the refrigerated 

18 equipment and consists of 1 or more refrigerant 

19 compressors, refrigerant condensers, condenser fans 

20 and motors, and factory supplied accessories. 

21 ‘‘(F) The term ‘self-contained condensing unit’ 

22 means a factory-made assembly of refrigerating com23 ponents designed to compress and liquefy a specific 

24 refrigerant that is an integral part of the refrig25 erated equipment and consists of 1 or more refrig-
34 

•HR 3263 IH 

1 erant compressors, refrigerant condensers, condenser 

2 fans and motors, and factory supplied accessories.’’; 

3 and 

4 (4) by adding at the end the following: 

5 ‘‘(19) The term ‘automatic commercial ice 

6 maker’ means a factory-made assembly (not nec7 essarily shipped in 1 package) that— 

8 ‘‘(A) consists of a condensing unit and ice9 making section operating as an integrated unit, 

10 with means for making and harvesting ice; and 

11 ‘‘(B) may include means for storing ice, 

12 dispensing ice, or storing and dispensing ice. 

13 ‘‘(20) The term ‘commercial clothes washer’ 

14 means a soft-mount front-loading or soft-mount top15 loading clothes washer that— 

16 ‘‘(A) has a clothes container compartment 

17 that— 

18 ‘‘(i) for horizontal-axis clothes wash19 ers, is not more than 3.5 cubic feet ; and 

20 ‘‘(ii) for vertical-axis clothes washers, 

21 is not more than 4.0 cubic feet; and 

22 ‘‘(B) is designed for use in— 

23 ‘‘(i) applications in which the occu24 pants of more than 1 household will be 

25 using the clothes washer, such as multi- 
35 

•HR 3263 IH 

1 family housing common areas and coin 

2 laundries; or 

3 ‘‘(ii) other commercial applications. 

4 ‘‘(21) The term ‘harvest rate’ means the 

5 amount of ice (at 32 degrees F) in pounds produced 

6 per 24 hours.’’. 

7 (b) STANDARDS FOR COMMERCIAL PACKAGE AIR

8 CONDITIONING AND HEATING EQUIPMENT.—Section 

9 342(a) of the Energy Policy and Conservation Act (42 

10 U.S.C. 6313(a)) is amended— 

11 (1) in the subsection heading, by striking 

12 ‘‘SMALL AND LARGE’’ and inserting ‘‘SMALL, 

13 LARGE, AND VERY LARGE’’; 

14 (2) in paragraph (1), by inserting ‘‘but before 

15 January 1, 2010,’’ after ‘‘January 1, 1994,’’; 

16 (3) in paragraph (2), by inserting ‘‘but before 

17 January 1, 2010,’’ after ‘‘January 1, 1995,’’; and 

18 (4) in paragraph (6)— 

19 (A) in subparagraph (A)— 

20 (i) by inserting ‘‘(i)’’ after ‘‘(A)’’; 

21 (ii) by striking ‘‘the date of enactment 

22 of the Energy Policy Act of 1992’’ and in23 serting ‘‘January 1, 2010’’; 

24 (iii) by inserting after ‘‘large commer25 cial package air conditioning and heating 
36 

•HR 3263 IH 

1 equipment,’’ the following: ‘‘and very large 

2 commercial package air conditioning and 

3 heating equipment, or if ASHRAE/IES 

4 Standard 90.1, as in effect on October 24, 

5 1992, is amended with respect to any’’; 

6 and 

7 (iv) by adding at the end the fol8 lowing: 

9 ‘‘(ii) If ASHRAE/IES Standard 90.1 is not amended 

10 with respect to small commercial package air conditioning 

11 and heating equipment, large commercial package air con12 ditioning and heating equipment, and very large commer13 cial package air conditioning and heating equipment dur14 ing the 5-year period beginning on the effective date of 

15 a standard, the Secretary may initiate a rulemaking to 

16 determine whether a more stringent standard— 

17 ‘‘(I) would result in significant additional con18 servation of energy; and 

19 ‘‘(II) is technologically feasible and economi20 cally justified.’’; and 

21 (B) in subparagraph (C)(ii), by inserting 

22 ‘‘and very large commercial package air condi23 tioning and heating equipment’’ after ‘‘large 

24 commercial package air conditioning and heat25 ing equipment’’; and 
37 

•HR 3263 IH 

1 (5) by adding at the end the following: 

2 ‘‘(7) Small commercial package air conditioning and 

3 heating equipment manufactured on or after January 1, 

4 2010, shall meet the following standards: 

5 ‘‘(A) The minimum energy efficiency ratio of 

6 air-cooled central air conditioners at or above 65,000 

7 Btu per hour (cooling capacity) and less than 

8 135,000 Btu per hour (cooling capacity) shall be— 

9 ‘‘(i) 11.2 for equipment with no heating or 

10 electric resistance heating; and 

11 ‘‘(ii) 11.0 for equipment with all other 

12 heating system types that are integrated into 

13 the equipment (at a standard rating of 95 de14 grees F db). 

15 ‘‘(B) The minimum energy efficiency ratio of 

16 air-cooled central air conditioner heat pumps at or 

17 above 65,000 Btu per hour (cooling capacity) and 

18 less than 135,000 Btu per hour (cooling capacity) 

19 shall be— 

20 ‘‘(i) 11.0 for equipment with no heating or 

21 electric resistance heating; and 

22 ‘‘(ii) 10.8 for equipment with all other 

23 heating system types that are integrated into 

24 the equipment (at a standard rating of 95 de25 grees F db). 
38 

•HR 3263 IH 

1 ‘‘(C) The minimum coefficient of performance 

2 in the heating mode of air-cooled central air condi3 tioning heat pumps at or above 65,000 Btu per hour 

4 (cooling capacity) and less than 135,000 Btu per 

5 hour (cooling capacity) shall be 3.3 (at a high tem6 perature rating of 47 degrees F db). 

7 ‘‘(8) Large commercial package air conditioning and 

8 heating equipment manufactured on or after January 1, 

9 2010, shall meet the following standards: 

10 ‘‘(A) The minimum energy efficiency ratio of 

11 air-cooled central air conditioners at or above 

12 135,000 Btu per hour (cooling capacity) and less 

13 than 240,000 Btu per hour (cooling capacity) shall 

14 be— 

15 ‘‘(i) 11.0 for equipment with no heating or 

16 electric resistance heating; and 

17 ‘‘(ii) 10.8 for equipment with all other 

18 heating system types that are integrated into 

19 the equipment (at a standard rating of 95 de20 grees F db). 

21 ‘‘(B) The minimum energy efficiency ratio of 

22 air-cooled central air conditioner heat pumps at or 

23 above 135,000 Btu per hour (cooling capacity) and 

24 less than 240,000 Btu per hour (cooling capacity) 

25 shall be— 
39 

•HR 3263 IH 

1 ‘‘(i) 10.6 for equipment with no heating or 

2 electric resistance heating; and 

3 ‘‘(ii) 10.4 for equipment with all other 

4 heating system types that are integrated into 

5 the equipment (at a standard rating of 95 de6 grees F db). 

7 ‘‘(C) The minimum coefficient of performance 

8 in the heating mode of air-cooled central air condi9 tioning heat pumps at or above 135,000 Btu per 

10 hour (cooling capacity) and less than 240,000 Btu 

11 per hour (cooling capacity) shall be 3.2 (at a high 

12 temperature rating of 47 degrees F db). 

13 ‘‘(9) Very large commercial package air conditioning 

14 and heating equipment manufactured on or after January 

15 1, 2010, shall meet the following standards: 

16 ‘‘(A) The minimum energy efficiency ratio of 

17 air-cooled central air conditioners at or above 

18 240,000 Btu per hour (cooling capacity) and less 

19 than 760,000 Btu per hour (cooling capacity) shall 

20 be— 

21 ‘‘(i) 10.0 for equipment with no heating or 

22 electric resistance heating; and 

23 ‘‘(ii) 9.8 for equipment with all other heat24 ing system types that are integrated into the 
40 

•HR 3263 IH 

1 equipment (at a standard rating of 95 degrees 

2 F db). 

3 ‘‘(B) The minimum energy efficiency ratio of 

4 air-cooled central air conditioner heat pumps at or 

5 above 240,000 Btu per hour (cooling capacity) and 

6 less than 760,000 Btu per hour (cooling capacity) 

7 shall be— 

8 ‘‘(i) 9.5 for equipment with no heating or 

9 electric resistance heating; and 

10 ‘‘(ii) 9.3 for equipment with all other heat11 ing system types that are integrated into the 

12 equipment (at a standard rating of 95 degrees 

13 F db). 

14 ‘‘(C) The minimum coefficient of performance 

15 in the heating mode of air-cooled central air condi16 tioning heat pumps at or above 240,000 Btu per 

17 hour (cooling capacity) and less than 760,000 Btu 

18 per hour (cooling capacity) shall be 3.2 (at a high 

19 temperature rating of 47 degrees F db).’’. 

20 (c) STANDARDS FOR COMMERCIAL REFRIGERATORS, 

21 FREEZERS, AND REFRIGERATOR-FREEZERS.—Section 

22 342 of the Energy Policy and Conservation Act (42 U.S.C. 

23 6313) is amended by adding at the end the following: 

24 ‘‘(c) COMMERCIAL REFRIGERATORS, FREEZERS, AND

25 REFRIGERATOR-FREEZERS.—(1) In this subsection: 
41 

•HR 3263 IH 

1 ‘‘(A) The term ‘AV’ means the adjusted volume 

(ft3 2 ) (defined as 1.63 x frozen temperature compartment volume (ft3 3 ) + chilled temperature compartment volume (ft3 4 )) with compartment volumes meas5 ured in accordance with the Association of Home 

6 Appliance Manufacturers Standard HRF1–1979. 

7 ‘‘(B) The term ‘V’ means the chilled or frozen 

compartment volume (ft3 8 ) (as defined in the Asso9 ciation of Home Appliance Manufacturers Standard 

10 HRF1–1979). 

11 ‘‘(C) Other terms have such meanings as may 

12 be established by the Secretary, based on industry13 accepted definitions and practice. 

14 ‘‘(2) Each commercial refrigerator, freezer, and re15 frigerator-freezer with a self-contained condensing unit de16 signed for holding temperature applications manufactured 

17 on or after January 1, 2010, shall have a daily energy 

18 consumption (in kilowatt hours per day) that does not ex19 ceed the following: 

‘‘Refrigerators with solid doors ...................................... 0.10 V + 2.04

Refrigerators with transparent doors ............................ 0.12 V + 3.34

Freezers with solid doors ............................................... 0.40 V + 1.38

Freezers with transparent doors .................................... 0.75 V + 4.10

Refrigerators/freezers with solid doors the greater of ... 0.27 AV – 0.71 or 

0.70. 

20 ‘‘(3) Each commercial refrigerator with a self-con21 tained condensing unit designed for pull-down tempera22 ture applications and transparent doors manufactured on 
42 

•HR 3263 IH 

1 or after January 1, 2010, shall have a daily energy con2 sumption (in kilowatt hours per day) of not more than 

3 0.126 V + 3.51. 

4 ‘‘(4)(A) Not later than January 1, 2009, the Sec5 retary shall issue, by rule, standard levels for ice-cream 

6 freezers, self-contained commercial refrigerators, freezers, 

7 and refrigerator-freezers without doors, and remote con8 densing commercial refrigerators, freezers, and refrig9 erator-freezers, with the standard levels effective for 

10 equipment manufactured on or after January 1, 2012. 

11 ‘‘(B) The Secretary may issue, by rule, standard lev12 els for other types of commercial refrigerators, freezers, 

13 and refrigerator-freezers not covered by paragraph (2)(A) 

14 with the standard levels effective for equipment manufac15 tured 3 or more years after the date on which the final 

16 rule is published. 

17 ‘‘(5)(A) Not later than January 1, 2013, the Sec18 retary shall issue a final rule to determine whether the 

19 standards established under this subsection should be 

20 amended. 

21 ‘‘(B) Not later than 3 years after the effective date 

22 of any amended standards under subparagraph (A) or the 

23 publication of a final rule determining that the standards 

24 should not be amended, the Secretary shall issue a final 

25 rule to determine whether the standards established under 
43 

•HR 3263 IH 

1 this subsection or the amended standards, as applicable, 

2 should be amended. 

3 ‘‘(C) If the Secretary issues a final rule under sub4 paragraph (A) or (B) establishing amended standards, the 

5 final rule shall provide that the amended standards apply 

6 to products manufactured on or after the date that is— 

7 ‘‘(i) 3 years after the date on which the final 

8 amended standard is published; or 

9 ‘‘(ii) if the Secretary determines, by rule, that 

10 3 years is inadequate, not later than 5 years after 

11 the date on which the final rule is published.’’. 

12 (d) STANDARDS FOR AUTOMATIC COMMERCIAL ICE

13 MAKERS.—Section 342 of the Energy Policy and Con14 servation Act (42 U.S.C. 6313) (as amended by subsection 

15 (c)) is amended by adding at the end the following: 

16 ‘‘(d) AUTOMATIC COMMERCIAL ICE MAKERS.—(1) 

17 Each automatic commercial ice maker that produces cube 

18 type ice with capacities between 50 and 2500 pounds per 

19 24-hour period when tested according to the test standard 

20 established in section 343(a)(7) and is manufactured on 

21 or after January 1, 2010, shall meet the following stand22 ard levels: 
44 

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‘‘Equipment 

type 

Type 

of 

cooling 

Harvest rate 

(lbs ice/24 

hours) 

Maximum energy use 

(kWh/100 lbs 

ice) 

Maximum condenser water use 

(gal/100 lbs ice) 

Ice Making 

Head 

Water <500 7.80–0.0055H 200–0.022H 

> or = 500 

and <1436 

5.58–0.0011H 200–0.022H 

> 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 remote compressor) 

Air <1000 8.85–0.0038H Not applicable 

> or = 1000 5.10 Not applicable 

Remote Condensing and 

Remote 

Compressor 

Air <934 8.85–0.0038H Not applicable 

> or = 934 5.3 Not applicable 

1 ‘‘(2)(A) The Secretary may issue, by rule, standard 

2 levels for types of automatic commercial ice makers that 

3 are not covered by paragraph (1). 

4 ‘‘(B) The standards established under subparagraph 

5 (A) shall apply to products manufactured on or after the 

6 date that is— 

7 ‘‘(i) 3 years after the date on which the rule is 

8 published under subparagraph (A); or 

9 ‘‘(ii) if the Secretary determines, by rule, that 

10 3 years is inadequate, not later than 5 years after 

11 the date on which the final rule is published. 

12 ‘‘(3)(A) Not later than January 1, 2015, with respect 

13 to the standards established under paragraph (1), and, 

14 with respect to the standards established under paragraph 

15 (2), not later than 5 years after the date on which the 
45 

•HR 3263 IH 

1 standards take effect, the Secretary shall issue a final rule 

2 to determine whether amending the applicable standards 

3 is technologically feasible and economically justified. 

4 ‘‘(B) Not later than 5 years after the effective date 

5 of any amended standards under subparagraph (A) or the 

6 publication of a final rule determining that amending the 

7 standards is not technologically feasible or economically 

8 justified, the Secretary shall issue a final rule to determine 

9 whether amending the standards established under para10 graph (1) or the amended standards, as applicable, is tech11 nologically feasible or economically justified. 

12 ‘‘(C) If the Secretary issues a final rule under sub13 paragraph (A) or (B) establishing amended standards, the 

14 final rule shall provide that the amended standards apply 

15 to products manufactured on or after the date that is— 

16 ‘‘(i) 3 years after the date on which the final 

17 amended standard is published; or 

18 ‘‘(ii) if the Secretary determines, by rule, that 

19 3 years is inadequate, not later than 5 years after 

20 the date on which the final amended standard is 

21 published. 

22 ‘‘(4) A final rule issued under paragraph (2) or (3) 

23 shall establish standards at the maximum level that is 

24 technically feasible and economically justified, as provided 

25 in subsections (o) and (p) of section 325.’’. 
46 

•HR 3263 IH 

1 (e) STANDARDS FOR COMMERCIAL CLOTHES WASH2 ERS.—Section 342 of the Energy Policy and Conservation 

3 Act (42 U.S.C. 6313) (as amended by subsection (d)) is 

4 amended by adding at the end the following: 

5 ‘‘(e) COMMERCIAL CLOTHES WASHERS.—(1) Each 

6 commercial clothes washer manufactured on or after Jan7 uary 1, 2007, shall have— 

8 ‘‘(A) a Modified Energy Factor of at least 1.26; 

9 and 

10 ‘‘(B) a Water Factor of not more than 9.5. 

11 ‘‘(2)(A)(i) Not later than January 1, 2010, the Sec12 retary shall publish a final rule to determine whether the 

13 standards established under paragraph (1) should be 

14 amended. 

15 ‘‘(ii) The rule published under clause (i) shall provide 

16 that any amended standard shall apply to products manu17 factured 3 years after the date on which the final amended 

18 standard is published. 

19 ‘‘(B)(i) Not later than January 1, 2015, the Sec20 retary shall publish a final rule to determine whether the 

21 standards established under paragraph (1) should be 

22 amended. 

23 ‘‘(ii) The rule published under clause (i) shall provide 

24 that any amended standard shall apply to products manu-
47 

•HR 3263 IH 

1 factured 3 years after the date on which the final amended 

2 standard is published.’’. 

3 (f) TEST PROCEDURES.—Section 343 of the Energy 

4 Policy and Conservation Act (42 U.S.C. 6314) is amend5 ed— 

6 (1) in subsection (a)— 

7 (A) in paragraph (4)— 

8 (i) in subparagraph (A), by inserting 

9 ‘‘very large commercial package air condi10 tioning and heating equipment,’’ after 

11 ‘‘large commercial package air conditioning 

12 and heating equipment,’’; and 

13 (ii) in subparagraph (B), by inserting 

14 ‘‘very large commercial package air condi15 tioning and heating equipment,’’ after 

16 ‘‘large commercial package air conditioning 

17 and heating equipment,’’; and 

18 (B) by adding at the end the following: 

19 ‘‘(6)(A)(i) In the case of commercial refrigerators, 

20 freezers, and refrigerator-freezers, the test procedures 

21 shall be— 

22 ‘‘(I) the test procedures determined by the Sec23 retary to be generally accepted industry testing pro24 cedures; or 
48 

•HR 3263 IH 

1 ‘‘(II) rating procedures developed or recognized 

2 by the ASHRAE or by the American National 

3 Standards Institute. 

4 ‘‘(ii) In the case of self-contained refrigerators, freez5 ers, and refrigerator-freezers to which standards are appli6 cable under paragraphs (2) and (3) of section 342(c), the 

7 initial test procedures shall be the ASHRAE 117 test pro8 cedure that is in effect on January 1, 2005. 

9 ‘‘(B) In the case of commercial refrigerators, freez10 ers, and refrigerators-freezers with doors covered by the 

11 standards adopted in February 2002, by the California 

12 Energy Commission, the rating temperatures shall be the 

13 integrated average temperature of 38 degrees F (plus or 

14 minus 2 degrees F) for refrigerator compartments and 0 

15 degrees F (plus or minus 2 degrees F) for freezer com16 partments. 

17 ‘‘(C) The Secretary shall issue a rule in accordance 

18 with paragraphs (2) and (3) to establish the appropriate 

19 rating temperatures for the other products for which 

20 standards will be established under subsection 342(c)(4). 

21 ‘‘(D) In establishing the appropriate test tempera22 tures under this subparagraph, the Secretary shall follow 

23 the procedures and meet the requirements under section 

24 323(e). 
49 

•HR 3263 IH 

1 ‘‘(E)(i) Not later than 180 days after the publication 

2 of the new ASHRAE 117 test procedure, if the ASHRAE 

3 117 test procedure for commercial refrigerators, freezers, 

4 and refrigerator-freezers is amended, the Secretary shall, 

5 by rule, amend the test procedure for the product as nec6 essary to ensure that the test procedure is consistent with 

7 the amended ASHRAE 117 test procedure, unless the 

8 Secretary makes a determination, by rule, and supported 

9 by clear and convincing evidence, that to do so would not 

10 meet the requirements for test procedures under para11 graphs (2) and (3). 

12 ‘‘(ii) If the Secretary determines that 180 days is an 

13 insufficient period during which to review and adopt the 

14 amended test procedure or rating procedure under clause 

15 (i), the Secretary shall publish a notice in the Federal 

16 Register stating the intent of the Secretary to wait not 

17 longer than 1 additional year before putting into effect 

18 an amended test procedure or rating procedure. 

19 ‘‘(F)(i) If a test procedure other than the ASHRAE 

20 117 test procedure is approved by the American National 

21 Standards Institute, the Secretary shall, by rule— 

22 ‘‘(I) review the relative strengths and weak23 nesses of the new test procedure relative to the 

24 ASHRAE 117 test procedure; and 
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1 ‘‘(II) based on that review, adopt 1 new test 

2 procedure for use in the standards program. 

3 ‘‘(ii) If a new test procedure is adopted under clause 

4 (i)— 

5 ‘‘(I) section 323(e) shall apply; and 

6 ‘‘(II) subparagraph (B) shall apply to the 

7 adopted test procedure. 

8 ‘‘(7)(A) In the case of automatic commercial ice mak9 ers, the test procedures shall be the test procedures speci10 fied in Air-Conditioning and Refrigeration Institute 

11 Standard 810–2003, as in effect on January 1, 2005. 

12 ‘‘(B)(i) If Air-Conditioning and Refrigeration Insti13 tute Standard 810–2003 is amended, the Secretary shall 

14 amend the test procedures established in subparagraph 

15 (A) as necessary to be consistent with the amended Air16 Conditioning and Refrigeration Institute Standard, unless 

17 the Secretary determines, by rule, published in the Federal 

18 Register and supported by clear and convincing evidence, 

19 that to do so would not meet the requirements for test 

20 procedures under paragraphs (2) and (3). 

21 ‘‘(ii) If the Secretary issues a rule under clause (i) 

22 containing a determination described in clause (ii), the 

23 rule may establish an amended test procedure for the 

24 product that meets the requirements of paragraphs (2) 

25 and (3). 
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1 ‘‘(C) The Secretary shall comply with section 323(e) 

2 in establishing any amended test procedure under this 

3 paragraph. 

4 ‘‘(8) With respect to commercial clothes washers, the 

5 test procedures shall be the same as the test procedures 

6 established by the Secretary for residential clothes wash7 ers under section 325(g).’’; and 

8 (2) in subsection (d)(1), by inserting ‘‘very 

9 large commercial package air conditioning and heat10 ing equipment, commercial refrigerators, freezers, 

11 and refrigerator-freezers, automatic commercial ice 

12 makers, commercial clothes washers,’’ after ‘‘large 

13 commercial package air conditioning and heating 

14 equipment,’’. 

15 (g) LABELING.—Section 344(e) of the Energy Policy 

16 and Conservation Act (42 U.S.C. 6315(e)) is amended by 

17 inserting ‘‘very large commercial package air conditioning 

18 and heating equipment, commercial refrigerators, freezers, 

19 and refrigerator-freezers, automatic commercial ice mak20 ers, commercial clothes washers,’’ after ‘‘large commercial 

21 package air conditioning and heating equipment,’’ each 

22 place it appears. 

23 (h) ADMINISTRATION, PENALTIES, ENFORCEMENT, 

24 AND PREEMPTION.—Section 345 of the Energy Policy and 

25 Conservation Act (42 U.S.C. 6316) is amended— 
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1 (1) in subsection (a)— 

2 (A) in paragraph (7), by striking ‘‘and’’ at 

3 the end; 

4 (B) in paragraph (8), by striking the pe5 riod at the end and inserting ‘‘; and’’; and 

6 (C) by adding at the end the following: 

7 ‘‘(9) in the case of commercial clothes washers, 

8 section 327(b)(1) shall be applied as if the National 

9 Appliance Energy Conservation Act of 1987 was the 

10 Energy Policy Act of 2005.’’; 

11 (2) in the first sentence of subsection (b)(1), by 

12 striking ‘‘part B’’ and inserting ‘‘part A’’; and 

13 (3) by adding at the end the following: 

14 ‘‘(d)(1) Except as provided in paragraphs (2) and 

15 (3), section 327 shall apply with respect to very large com16 mercial package air conditioning and heating equipment 

17 to the same extent and in the same manner as section 

18 327 applies under part A on the date of enactment of this 

19 subsection. 

20 ‘‘(2) Any State or local standard issued before the 

21 date of enactment of this subsection shall not be pre22 empted until the standards established under section 

23 342(a)(9) take effect on January 1, 2010. 

24 ‘‘(e)(1)(A) Subsections (a), (b), and (d) of section 

25 326, subsections (m) through (s) of section 325, and sec-
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1 tions 328 through 336 shall apply with respect to commer2 cial refrigerators, freezers, and refrigerator-freezers to the 

3 same extent and in the same manner as those provisions 

4 apply under part A. 

5 ‘‘(B) In applying those provisions to commercial re6 frigerators, freezers, and refrigerator-freezers, paragraphs 

7 (1), (2), (3), and (4) of subsection (a) shall apply. 

8 ‘‘(2)(A) Section 327 shall apply to commercial refrig9 erators, freezers, and refrigerator-freezers for which 

10 standards are established under paragraphs (2) and (3) 

11 of section 342(c) to the same extent and in the same man12 ner as those provisions apply under part A on the date 

13 of enactment of this subsection, except that any State or 

14 local standard issued before the date of enactment of this 

15 subsection shall not be preempted until the standards es16 tablished under paragraphs (2) and (3) of section 342(c) 

17 take effect. 

18 ‘‘(B) In applying section 327 in accordance with sub19 paragraph (A), paragraphs (1), (2), and (3) of subsection 

20 (a) shall apply. 

21 ‘‘(3)(A) Section 327 shall apply to commercial refrig22 erators, freezers, and refrigerator-freezers for which 

23 standards are established under section 342(c)(4) to the 

24 same extent and in the same manner as the provisions 

25 apply under part A on the date of publication of the final 
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1 rule by the Secretary, except that any State or local stand2 ard issued before the date of publication of the final rule 

3 by the Secretary shall not be preempted until the stand4 ards take effect. 

5 ‘‘(B) In applying section 327 in accordance with sub6 paragraph (A), paragraphs (1), (2), and (3) of subsection 

7 (a) shall apply. 

8 ‘‘(4)(A) If the Secretary does not issue a final rule 

9 for a specific type of commercial refrigerator, freezer, or 

10 refrigerator-freezer within the time frame specified in sec11 tion 342(c)(5), subsections (b) and (c) of section 327 shall 

12 not apply to that specific type of refrigerator, freezer, or 

13 refrigerator-freezer for the period beginning on the date 

14 that is 2 years after the scheduled date for a final rule 

15 and ending on the date on which the Secretary publishes 

16 a final rule covering the specific type of refrigerator, freez17 er, or refrigerator-freezer. 

18 ‘‘(B) Any State or local standard issued before the 

19 date of publication of the final rule shall not be preempted 

20 until the final rule takes effect. 

21 ‘‘(5)(A) In the case of any commercial refrigerator, 

22 freezer, or refrigerator-freezer to which standards are ap23 plicable under paragraphs (2) and (3) of section 342(c), 

24 the Secretary shall require manufacturers to certify, 

25 through an independent, nationally recognized testing or 
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1 certification program, that the commercial refrigerator, 

2 freezer, or refrigerator-freezer meets the applicable stand3 ard. 

4 ‘‘(B) The Secretary shall, to the maximum extent 

5 practicable, encourage the establishment of at least 2 inde6 pendent testing and certification programs. 

7 ‘‘(C) As part of certification, information on equip8 ment energy use and interior volume shall be made avail9 able to the Secretary. 

10 ‘‘(e)(1)(A)(i) Except as provided in clause (ii), section 

11 327 shall apply to automatic commercial ice makers for 

12 which standards have been established under section 

13 342(d)(1) to the same extent and in the same manner as 

14 the section applies under part A on the date of enactment 

15 of this subsection. 

16 ‘‘(ii) Any State standard issued before the date of en17 actment of this subsection shall not be preempted until 

18 the standards established under section 342(d)(1) take ef19 fect. 

20 ‘‘(B) In applying section 327 to the equipment under 

21 subparagraph (A), paragraphs (1), (2), and (3) of sub22 section (a) shall apply. 

23 ‘‘(2)(A)(i) Except as provided in clause (ii), section 

24 327 shall apply to automatic commercial ice makers for 

25 which standards have been established under section 
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1 342(d)(2) to the same extent and in the same manner as 

2 the section applies under part A on the date of publication 

3 of the final rule by the Secretary. 

4 ‘‘(ii) Any State standard issued before the date of 

5 publication of the final rule by the Secretary shall not be 

6 preempted until the standards established under section 

7 342(d)(2) take effect. 

8 ‘‘(B) In applying section 327 in accordance with sub9 paragraph (A), paragraphs (1), (2), and (3) of subsection 

10 (a) shall apply. 

11 ‘‘(3)(A) If the Secretary does not issue a final rule 

12 for a specific type of automatic commercial ice maker 

13 within the time frame specified in subsection 342(d), sub14 sections (b) and (c) of section 327 shall no longer apply 

15 to the specific type of automatic commercial ice maker for 

16 the period beginning on the day after the scheduled date 

17 for a final rule and ending on the date on which the Sec18 retary publishes a final rule covering the specific type of 

19 automatic commercial ice maker. 

20 ‘‘(B) Any State standard issued before the publica21 tion of the final rule shall not be preempted until the 

22 standards established in the final rule take effect. 

23 ‘‘(4)(A) The Secretary shall monitor whether manu24 facturers are reducing harvest rates below tested values 
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1 for the purpose of bringing non-complying equipment into 

2 compliance. 

3 ‘‘(B) If the Secretary finds that there has been a sub4 stantial amount of manipulation with respect to harvest 

5 rates under subparagraph (A), the Secretary shall take 

6 steps to minimize the manipulation, such as requiring har7 vest rates to be within 5 percent of tested values. 

8 ‘‘(g)(1)(A) If the Secretary does not issue a final rule 

9 for commercial clothes washers within the timeframe spec10 ified in section 342(e)(2), subsections (b) and (c) of sec11 tion 327 shall not apply to commercial clothes washers for 

12 the period beginning on the day after the scheduled date 

13 for a final rule and ending on the date on which the Sec14 retary publishes a final rule covering commercial clothes 

15 washers. 

16 ‘‘(B) Any State or local standard issued before the 

17 date on which the Secretary publishes a final rule shall 

18 not be preempted until the standards established under 

19 section 342(e)(2) take effect. 

20 ‘‘(2) The Secretary shall undertake an educational 

21 program to inform owners of laundromats, multifamily 

22 housing, and other sites where commercial clothes washers 

23 are located about the new standard, including impacts on 

24 washer purchase costs and options for recovering those 

25 costs through coin collection.’’. 
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1 SEC. 103. ENERGY LABELING. 

2 (a) RULEMAKING ON EFFECTIVENESS OF CONSUMER

3 PRODUCT LABELING.—Section 324(a)(2) of the Energy 

4 Policy and Conservation Act (42 U.S.C. 6294(a)(2)) is 

5 amended by adding at the end the following: 

6 ‘‘(F)(i) Not later than 90 days after the 

7 date of enactment of this subparagraph, the 

8 Commission shall initiate a rulemaking to con9 sider— 

10 ‘‘(I) the effectiveness of the consumer 

11 products labeling program in assisting con12 sumers in making purchasing decisions 

13 and improving energy efficiency; and 

14 ‘‘(II) changes to the labeling rules (in15 cluding categorical labeling) that would im16 prove the effectiveness of consumer prod17 uct labels. 

18 ‘‘(ii) Not later than 2 years after the date 

19 of enactment of this subparagraph, the Com20 mission shall complete the rulemaking initiated 

21 under clause (i).’’. 

22 (b) RULEMAKING ON LABELING FOR ADDITIONAL

23 PRODUCTS.—Section 324(a) of the Energy Policy and 

24 Conservation Act (42 U.S.C. 6294(a)) is amended by add25 ing at the end the following: 
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1 ‘‘(5)(A) For covered products described in sub2 sections (u) through (ee) of section 325, after a test 

3 procedure has been prescribed under section 323, 

4 the Secretary or the Commission, as appropriate, 

5 may prescribe, by rule, under this section labeling 

6 requirements for the products. 

7 ‘‘(B) In the case of products to which TP–1 

8 standards under section 325(y) apply, labeling re9 quirements shall be based on the ‘Standard for the 

10 Labeling of Distribution Transformer Efficiency’ 

11 prescribed by the National Electrical Manufacturers 

12 Association (NEMA TP–3) as in effect on the date 

13 of enactment of this paragraph. 

14 ‘‘(C) In the case of dehumidifiers covered under 

15 section 325(dd), the Commission shall not require 

16 an ‘Energy Guide’ label.’’. 

17 SEC. 104. EQUIPMENT STANDARDS AND ANALYSIS PRO18 GRAM. 

19 (a) IN GENERAL.—Not later than 180 days after the 

20 date of enactment of this Act, the Secretary shall submit 

21 to Congress a report that— 

22 (1) explains the reasons for the failure of the 

23 Secretary to complete, by any applicable deadlines, 

24 required rulemakings under the equipment stand-
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1 ards and analysis program for issuance of appliance 

2 and equipment standards; and 

3 (2) provides plans and timetables for comple4 tion of each of the rulemakings described in para5 graph (1) that has not been completed as of the date 

6 of enactment of this Act. 

7 (b) AUTHORIZATION OF APPROPRIATIONS.—There 

8 are authorized to be appropriated to the Secretary to carry 

9 out the equipment standards and analysis program of the 

10 Department of Energy— 

11 (1) $20,000,000 for fiscal year 2006; 

12 (2) $25,000,000 for fiscal year 2007; 

13 (3) $30,000,000 for fiscal year 2008; 

14 (4) $35,000,000 for fiscal year 2009; and 

15 (5) $40,000,000 for fiscal year 2010. 

16 Subtitle B—Building Energy Codes 

17 SEC. 111. STATE BUILDING ENERGY EFFICIENCY CODES IN18 CENTIVES. 

19 Section 304 of the Energy Conservation and Produc20 tion Act (42 U.S.C. 6833) is amended in subsection (e)— 

21 (1) in paragraph (1) by inserting at the end of 

22 the first sentence ‘‘, including increasing and 

23 verifying compliance with such codes’’; and 

24 (2) by striking paragraph (2) and inserting the 

25 following: 
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1 ‘‘(2) Additional funding shall be provided under 

2 this subsection for implementations of a plan to 

3 achieve and document at least 90 percent rate of 

4 compliance with residential and commercial building 

5 energy efficiency codes, based on energy perform6 ance— 

7 ‘‘(A) to a State that has adopted and is 

8 implementing, on a statewide basis— 

9 ‘‘(i) a residential building energy effi10 ciency code that meets or exceeds the re11 quirements of the 2004 International En12 ergy Conservation Code, or any succeeding 

13 version of this code that has received an 

14 affirmative determination from the Sec15 retary under subsection (a)(5)(A) of this 

16 section; and 

17 ‘‘(ii) a commercial building energy ef18 ficiency code that meets or exceeds the re19 quirements of the ASHRAE Standard 

20 90.1–2004, or any succeeding version of 

21 this standard that has received an affirma22 tive determination from the Secretary 

23 under subsection (b)(2)(A) of this section; 

24 or 
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1 ‘‘(B) in States in which there is no state2 wide energy code either for residential buildings 

3 or for commercial buildings, to a local govern4 ment that has adopted and is implementing res5 idential and commercial building energy effi6 ciency codes as described in subparagraph (A). 

7 ‘‘(3) Of the amounts made available under this 

8 part, the Secretary may use $500,000 for each fiscal 

9 year to train State and local officials. 

10 ‘‘(4)(A) There is authorized to be appropriated 

11 to carry out this subsection $25,000,000 for each of 

12 fiscal years 2006 through 2010, and such sums as 

13 may be necessary for each fiscal year after 2010. 

14 ‘‘(B) Funding to States under paragraph (2) in 

15 each fiscal year shall not exceed half of the excess 

16 of funding under this subsection over $5,000,000.’’. 

17 SEC. 112. ENERGY CODE APPLICABLE TO MANUFACTURED 

18 HOUSING. 

19 Section 604 of the National Manufacturing Housing 

20 Construction and Safety Standards Act of 1974 (42 

21 U.S.C. 5403) is amended in subsection (g) by striking 

22 paragraphs (2) and (3) and inserting the following: 

23 ‘‘(2) The energy conservation standards estab24 lished under this subsection shall be based on the 

25 most recent version of the International Energy 
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1 Conservation Code (including supplements) except 

2 where the Secretary finds that such code is not cost3 effective, or a more stringent standard would be 

4 more cost-effective, based on total life-cycle con5 struction and operating costs. 

6 ‘‘(3) The energy conservation standards estab7 lished under this subsection may— 

8 ‘‘(A) take into consideration the design 

9 and factory construction techniques of manufac10 tured homes; 

11 ‘‘(B) be based on the climate zones estab12 lished by the Department of Housing and 

13 Urban Development rather than those under 

14 the International Energy Conservation Code; 

15 and 

16 ‘‘(C) provide for alternative practices that 

17 result in net estimated energy consumption 

18 equal to or less than the specified standards.’’. 

19 SEC. 113. ENERGY EFFICIENCY STANDARDS. 

20 Section 109 of the Cranston-Gonzalez National Af21 fordable Housing Act (42 U.S.C. 12709) is amended— 

22 (1) in subsection (a)— 

23 (A) in paragraph (1)— 

24 (i) by striking ‘‘1 year after the date 

25 of the enactment of the Energy Policy Act 
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1 of 1992’’ and inserting ‘‘September 30, 

2 2006’’; 

3 (ii) in subparagraph (A), by striking 

4 ‘‘and’’ at the end; 

5 (iii) in subparagraph (B), by striking 

6 the period at the end and inserting ‘‘; 

7 and’’; and 

8 (iv) by adding at the end the fol9 lowing: 

10 ‘‘(C) rehabilitation and new construction of 

11 public and assisted housing funded by HOPE 

12 VI revitalization grants under section 24 of the 

13 United States Housing Act of 1937 (42 U.S.C. 

14 1437v), where such standards are determined 

15 to be cost effective by the Secretary of Housing 

16 and Urban Development.’’; and 

17 (B) in paragraph (2), by striking ‘‘Council 

18 of American’’ and all that follows through 

19 ‘‘90.1–1989’’ and inserting ‘‘2004 International 

20 Energy Conservation Code’’; 

21 (2) in subsection (b)— 

22 (A) by striking ‘‘within 1 year after the 

23 date of the enactment of the Energy Policy Act 

24 of 1992’’ and inserting ‘‘by September 30, 

25 2006’’; and 
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1 (B) by striking ‘‘CABO’’ and all that fol2 lows through ‘‘1989’’ and inserting ‘‘the 2004 

3 International Energy Conservation Code’’; and 

4 (3) in subsection (c)— 

5 (A) in the heading, by striking ‘‘MODEL

6 ENERGY CODE’’ and inserting ‘‘and the 

7 INTERNATIONAL ENERGY CONSERVATION

8 CODE’’ after ; and 

9 (B) by striking ‘‘CABO’’ and alll that fol10 lows through ‘‘1989’’ and inserting ‘‘the 2004 

11 International Energy Conservation Code’’. 

12 (4) by adding at the end the following: 

13 ‘‘(d) If the Secretaries have not, within 1 year after 

14 the requirements of the 2004 International Energy Con15 servation Code are revised, amended the standards or 

16 made a determination under subsection (c) of this section, 

17 and if the Secretary of Energy has made a determination 

18 under section 304 of the Energy Conservation and Pro19 duction Act (42 U.S.C. 6833) that the revised code would 

20 improve energy efficiency, all new construction of housing 

21 specified in subsection (a) shall meet the requirements of 

22 the revised International Energy Conservation Code.’’. 
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1 Subtitle C—Energy Star 

2 SEC. 121. ENERGY STAR PROGRAM. 

3 (a) IN GENERAL.—The Energy Policy and Conserva4 tion Act is amended by inserting after section 324 (42 

5 U.S.C. 6294) the following: 

6 ‘‘ENERGY STAR PROGRAM

7 ‘‘SEC. 324A. (a) IN GENERAL.—There is established 

8 within the Department of Energy and the Environmental 

9 Protection Agency a voluntary program to identify and 

10 promote energy-efficient products and buildings in order 

11 to reduce energy consumption, improve energy security, 

12 and reduce pollution through voluntary labeling of, or 

13 other forms of communication about, products and build14 ings that meet the highest energy efficiency standards. 

15 ‘‘(b) DIVISION OF RESPONSIBILITIES.—Responsibil16 ities under the program shall be divided between the De17 partment of Energy and the Environmental Protection 

18 Agency in accordance with the terms of applicable agree19 ments between those agencies. 

20 ‘‘(c) DUTIES.—The Administrator and the Secretary 

21 shall— 

22 ‘‘(1) promote Energy Star compliant tech23 nologies as the preferred technologies in the market24 place for— 

25 ‘‘(A) achieving energy efficiency; and 
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1 ‘‘(B) reducing pollution; 

2 ‘‘(2) work to enhance public awareness of the 

3 Energy Star label, including by providing special 

4 outreach to small businesses; 

5 ‘‘(3) preserve the integrity of the Energy Star 

6 label by— 

7 ‘‘(A) regularly updating Energy Star cri8 teria; and 

9 ‘‘(B) ensuring, in general, that— 

10 ‘‘(i) not more than 25 percent of 

11 available models in a product class receive 

12 the Energy Star designation; and 

13 ‘‘(ii) Energy Star designated products 

14 and buildings are at least 10 percent more 

15 efficient than— 

16 ‘‘(I) appliance standards in effect 

17 on the date of enactment of this sec18 tion; and 

19 ‘‘(II) the most recent model en20 ergy code; 

21 ‘‘(4) solicit comments from interested parties 

22 prior to establishing or revising an Energy Star 

23 product category, specification, or criterion (or prior 

24 to effective dates for any such product category, 

25 specification, or criterion); 
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1 ‘‘(5) on adoption of a new or revised product 

2 category, specification, or criterion, provide reason3 able notice to interested parties of any changes (in4 cluding effective dates) in product categories, speci5 fications, or criteria, along with— 

6 ‘‘(A) an explanation of the changes; and 

7 ‘‘(B) as appropriate, responses to com8 ments submitted by interested parties; and 

9 ‘‘(6) provide appropriate lead time (which shall 

10 be 270 days, unless the Agency or Department 

11 specifies otherwise) prior to the applicable effective 

12 date for a new or a significant revision to a product 

13 category, specification, or criterion, taking into ac14 count the timing requirements of the manufacturing, 

15 product marketing, and distribution process for the 

16 specific product addressed. 

17 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There 

18 are authorized to be appropriated to carry out this sec19 tion— 

20 ‘‘(1) $70,000,000 for fiscal year 2006; 

21 ‘‘(2) $90,000,000 for fiscal year 2007; 

22 ‘‘(3) $110,000,000 for fiscal year 2008; 

23 ‘‘(4) $130,000,000 for fiscal year 2009; and 

24 ‘‘(5) $150,000,000 for fiscal year 2010.’’. 
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1 (b) TABLE OF CONTENTS AMENDMENT.—The table 

2 of contents of the Energy Policy and Conservation Act (42 

3 U.S.C. prec. 6201) is amended by inserting after the item 

4 relating to section 324 the following: 

‘‘324A. Energy Star program.’’. 

5 Subtitle D—Federal Buildings 

6 SEC. 131. FEDERAL BUILDING PERFORMANCE STANDARDS. 

7 Section 305(a) of the Energy Conservation and Pro8 duction Act (42 U.S.C. 6834(a)) is amended— 

9 (1) in paragraph (2)(A)— 

10 (A) by striking ‘‘CABO Model Energy 

11 Code, 1992’’ and inserting ‘‘the 2004 Inter12 national Energy Conservation Code’’; and 

13 (B) by striking ‘‘90.1–1989’’ and inserting 

14 ‘‘90.1–2004’’; and 

15 (2) by adding at the end the following: 

16 ‘‘(3)(A)(i) Unless demonstrated not to be life-cycle 

17 cost-effective, for each new and renovated Federal build18 ing— 

19 ‘‘(I) such building be designed, constructed, 

20 commissioned, and operated so as to achieve energy 

21 consumption levels at least 30 percent below those of 

22 the version current as of the date of enactment of 

23 this paragraph of the ASHRAE Standard or the 

24 International Energy Conservation Code, as appro25 priate; and 
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1 ‘‘(II) sustainable design principles are applied 

2 to the siting, design, construction, operation, and 

3 maintenance of all new and replacement buildings; 

4 and 

5 ‘‘(ii) where water is used to achieve energy efficiency, 

6 water conservation technologies shall be applied to the ex7 tent they are life-cycle cost effective. 

8 ‘‘(B) Not later than 1 year after the date of approval 

9 of each subsequent revision of the ASHRAE Standard or 

10 the International Energy Conservation Code, as appro11 priate, the Secretary of Energy shall determine (based on 

12 the cost-effectiveness of the requirements under the 

13 amendments) whether the revised standards established 

14 under this paragraph should be updated to reflect the 

15 amendments. 

16 ‘‘(C) In the budget request of the Federal agency for 

17 each fiscal year and each report submitted by the Federal 

18 agency under section 548(a) of the National Energy Con19 servation Policy Act (42 U.S.C. 8258(a)), the head of each 

20 Federal agency shall include— 

21 ‘‘(i) a list of all new Federal buildings owned, 

22 operated, or controlled by the Federal agency; and 

23 ‘‘(ii) a statement concerning whether the Fed24 eral buildings meet or exceed the revised standards 

25 established under this paragraph. 
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1 ‘‘(4) All housing constructed under the military hous2 ing privatization initiative of the Department of Defense 

3 shall, where such designations and products are avail4 able— 

5 ‘‘(A) be Energy Star qualified; 

6 ‘‘(B) be equipped with Energy Star appliances 

7 and FEMP designated appliances; and 

8 ‘‘(C) include Energy Star lighting.’’. 

9 TITLE II—TRANSPORTATION 

10 SEC. 201. ALTERNATIVE COMPLIANCE WITH FLEET RULES. 

11 (a) USE OF ALTERNATIVE FUELS BY DUAL-FUELED

12 VEHICLES.—Section 400AA(a)(3)(E) of the Energy Pol13 icy and Conservation Act (42 U.S.C. 6374(a)(3)(E)) is 

14 amended to read as follows: 

15 ‘‘(E)(i) Dual fueled vehicles acquired pursuant to this 

16 section shall be operated on alternative fuels unless the 

17 Secretary determines that an agency qualifies for a waiver 

18 of that requirement for vehicles operated by the agency 

19 in a particular geographic area in which— 

20 ‘‘(I) the alternative fuel otherwise required to 

21 be used in the vehicle is not reasonably available to 

22 retail purchasers of the fuel, as certified to the Sec23 retary by the head of the agency; or 

24 ‘‘(II) the cost of the alternative fuel otherwise 

25 required to be used in the vehicle is unreasonably 
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1 more expensive compared to gasoline, as certified to 

2 the Secretary by the head of the agency. 

3 ‘‘(ii) The Secretary shall monitor compliance with 

4 this subparagraph by all agency fleets and shall submit 

5 annually to Congress a report that— 

6 ‘‘(I) describes the extent to which the require7 ments of this subparagraph are being achieved; and 

8 ‘‘(II) includes information on annual reductions 

9 achieved from the use of petroleum-based fuels and 

10 the problems, if any, encountered in acquiring alter11 native fuels.’’. 

12 (b) ALTERNATIVE COMPLIANCE AND FLEXIBILITY.— 

13 (1) ALTERNATIVE COMPLIANCE.—Title V of the 

14 Energy Policy Act of 1992 (42 U.S.C. 13251 et 

15 seq.) is amended— 

16 (A) by redesignating section 514 as section 

17 515; and 

18 (B) by inserting after section 513 the fol19 lowing: 

20 ‘‘SEC. 514. ALTERNATIVE COMPLIANCE. 

21 ‘‘(a) APPLICATION FOR WAIVER.—Any head of a 

22 Federal agency described in section 303(b)(3), any cov23 ered person subject to section 501, and any State subject 

24 to section 507(o) may petition the Secretary for a waiver 
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1 of the applicable requirements of section 303, 501, or 

2 507(o). 

3 ‘‘(b) GRANT OF WAIVER.—The Secretary may grant 

4 a waiver of the requirements of section 303, 501, or 

5 507(o) upon a showing that the fleet owned, operated, 

6 leased, or otherwise controlled by the Federal agency, 

7 State, or covered person— 

8 ‘‘(1) will achieve a reduction in its annual con9 sumption of petroleum fuels equal to the reduction 

10 in consumption of petroleum that would result from 

11 100 percent compliance with fuel use requirements 

12 in section 501 or 303, as appropriate, or, for entities 

13 covered under section 507(o), a reduction equal to 

14 the covered State entity’s consumption of alternative 

15 fuels if all its alternative fuel vehicles given credit 

16 under section 508 were to use alternative fuel 100 

17 percent of the time; and 

18 ‘‘(2) is in compliance with all applicable vehicle 

19 emission standards established by the Administrator 

20 under the Clean Air Act (42 U.S.C. 7401 et seq.). 

21 ‘‘(c) REVOCATION OF WAIVER.—The Secretary shall 

22 revoke any waiver granted under this section if the Fed23 eral agency, State, or covered person fails to comply with 

24 subsection (b).’’. 
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1 (2) TABLE OF CONTENTS AMENDMENT.—The 

2 table of contents of the Energy Policy Act of 1992 

3 (42 U.S.C. prec. 13201) is amended by striking the 

4 item relating to section 514 and inserting the fol5 lowing: 

‘‘514. Alternative compliance. 

‘‘515. Authorization of appropriations.’’. 

6 (c) CREDITS.—Section 508(a) of the Energy Policy 

7 Act of 1992 (42 U.S.C. 13258(a)) is amended— 

8 (1) by striking ‘‘The Secretary’’ and inserting 

9 the following: 

10 ‘‘(1) The Secretary’’; and 

11 (2) by adding at the end the following: 

12 ‘‘(2) Not later than January 31, 2007, the Sec13 retary shall— 

14 ‘‘(A) allocate credit in an amount to be de15 termined by the Secretary for— 

16 ‘‘(i) acquisition of— 

17 ‘‘(I) a light-duty hybrid electric 

18 vehicle; 

19 ‘‘(II) a plug-in hybrid electric ve20 hicle; 

21 ‘‘(III) a fuel cell electric vehicle; 

22 ‘‘(IV) a medium- or heavy-duty 

23 hybrid electric vehicle; 
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1 ‘‘(V) a neighborhood electric ve2 hicle; or 

3 ‘‘(VI) a medium- or heavy-duty 

4 dedicated vehicle; and 

5 ‘‘(ii) investment in qualified alter6 native fuel infrastructure or nonroad 

7 equipment, as determined by the Sec8 retary; and 

9 ‘‘(B) allocate more than 1, but not to ex10 ceed 5, credits for investment in an emerging 

11 technology relating to any vehicle described in 

12 subparagraph (A) to encourage— 

13 ‘‘(i) a reduction in petroleum demand; 

14 ‘‘(ii) technological advancement; and 

15 ‘‘(iii) environmental safety.’’. 

16 (d) FEDERAL FLEET.—Section 303 of the Energy 

17 Policy Act of 1992 (42 U.S.C. 13212) is amended— 

18 (1) by redesignating subsection (f) as sub19 section (g); and 

20 (2) by inserting after subsection (e) the fol21 lowing: 

22 ‘‘(f) CREDIT.—The Secretary shall allocate to a Fed23 eral fleet credits toward meeting the requirements of sub24 section (b) of this section under the same allocation as 

25 determined under subsection (a)(2)of section 508.’’. 
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1 SEC. 202. STANDARDS FOR EXECUTIVE AGENCY AUTO2 MOBILES. 

3 Section 32917 of title 49, United States Code, is 

4 amended to read as follows: 

5 ‘‘§ 32917. Standards for Executive agency automobiles 

6 ‘‘(a) DEFINITIONS.—In this section: 

7 ‘‘(1) The term ‘automobile’ does not include 

8 any vehicle designed for combat-related missions, 

9 law enforcement work, or emergency rescue work. 

10 ‘‘(2) The term ‘executive agency’ has the mean11 ing given that term in section 105 of title 5. 

12 ‘‘(3) The term ‘new automobile’, with respect to 

13 the fleet of automobiles of an executive agency, 

14 means an automobile that is leased for at least 60 

15 consecutive days or bought, by or for the agency, 

16 after September 30, 2004.’’. 

17 ‘‘(b) BASELINE AVERAGE FUEL ECONOMY.— 

18 ‘‘(1) IN GENERAL.—In accordance with guid19 ance issued under subsection (d), the head of each 

20 executive agency shall calculate, for all automobiles 

21 in the agency’s fleet of automobiles that were leased 

22 or bought as a new vehicle in fiscal year 2004, the 

23 average fuel economy for the automobiles. 

24 ‘‘(2) BASELINE.—In this section, the average 

25 fuel economy as calculated in paragraph (1) shall be 
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1 the baseline average fuel economy for the agency’s 

2 fleet of automobiles. 

3 ‘‘(c) INCREASE OF AVERAGE FUEL ECONOMY.—The 

4 head of an executive agency shall manage the procurement 

5 of automobiles for that agency so that not later than Sep6 tember 30, 2008, the average fuel economy of the new 

7 automobiles in the agency’s fleet of automobiles is not less 

8 than 3 miles per gallon higher than the baseline average 

9 fuel economy determined under subsection (b) for that 

10 fleet. 

11 ‘‘(d) CALCULATION OF AVERAGE FUEL ECONOMY.— 

12 The Secretary of Transportation shall issue guidance to 

13 carry out this section, including guidance for the calcula14 tion of average fuel economy.’’. 

15 TITLE III—INDUSTRY 

16 SEC. 301. VOLUNTARY COMMITMENTS TO REDUCE INDUS17 TRIAL ENERGY INTENSITY. 

18 (a) DEFINITIONS.—In this section: 

19 (1) ENERGY INTENSITY.—The term ‘‘energy in20 tensity’’ means the primary energy consumed for 

21 each unit of physical output in an industrial process. 

22 (2) SECRETARY.—The term ‘‘Secretary’’ means 

23 the Secretary of Energy, acting in cooperation with 

24 the Administrator of the Environmental Protection 

25 Agency. 
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1 (b) VOLUNTARY AGREEMENTS.—The Secretary shall 

2 enter into voluntary agreements with 1 or more entities 

3 in industrial sectors that consume significant quantities 

4 of primary energy for each unit of physical output to re5 duce the energy intensity of the production activities of 

6 the entities. 

7 (c) GOAL.—Voluntary agreements under this section 

8 shall have as a goal the reduction of energy intensity by 

9 not less than 2.5 percent each year during the period of 

10 calendar years 2007 through 2016. 

11 (d) RECOGNITION.—The Secretary, in cooperation 

12 with other appropriate Federal agencies, shall develop 

13 mechanisms to recognize and publicize the achievements 

14 of participants in voluntary agreements under this section. 

15 (e) TECHNICAL ASSISTANCE.—An entity that enters 

16 into an agreement under this section and continues to 

17 make a good faith effort to achieve the energy efficiency 

18 goals specified in the agreement shall be eligible to receive 

19 from the Secretary a grant or technical assistance, as ap20 propriate, to assist in the achievement of those goals. 

21 (f) REPORT.—Not later than each of June 30, 2012, 

22 and June 30, 2016, the Secretary shall submit to Con23 gress a report that— 

24 (1) evaluates the success of the voluntary agree25 ments under this section; 
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1 (2) provides independent verification of any en2 ergy savings achieved as a result of the voluntary 

3 agreements below a no-commitment baseline for each 

4 participating firm; and 

5 (3) identifies incentives and other measures 

6 needed to assist industries in achieving energy inten7 sity reductions. 

8 (g) AUTHORIZATION OF APPROPRIATIONS.—There is 

9 authorized to be appropriated to carry out this section 

10 $15,000,000 for each of fiscal years 2006 through 2010, 

11 and such sums as may be necessary for each fiscal year 

12 after 2010. 

13 TITLE IV—ELECTRICITY AND 

14 NATURAL GAS UTILITIES AND 

15 SUPPLIERS 

16 SEC. 401. ENERGY EFFICIENT ELECTRIC AND NATURAL GAS 

17 UTILITIES STUDY. 

18 (a) IN GENERAL.—Not later than 1 year after the 

19 date of enactment of this Act, the Secretary, in consulta20 tion with the National Association of Regulatory Utility 

21 Commissioners and the National Association of State En22 ergy Officials, shall conduct a study of State and regional 

23 policies that promote cost-effective programs to reduce en24 ergy consumption (including energy efficiency programs) 

25 that are carried out by— 
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1 (1) utilities that are subject to State regulation; 

2 and 

3 (2) nonregulated utilities. 

4 (b) CONSIDERATION.—In conducting the study under 

5 subsection (a), the Secretary shall take into consider6 ation— 

7 (1) performance standards for achieving energy 

8 use and demand reduction targets; 

9 (2) funding sources, including rate surcharges; 

10 (3) infrastructure planning approaches (includ11 ing energy efficiency programs) and infrastructure 

12 improvements; 

13 (4) the costs and benefits of consumer edu14 cation programs conducted by State and local gov15 ernments and local utilities to increase consumer 

16 awareness of energy efficiency technologies and 

17 measures; and 

18 (5) methods of— 

19 (A) removing disincentives for utilities to 

20 implement energy efficiency programs; 

21 (B) encouraging utilities to undertake vol22 untary energy efficiency programs; and 

23 (C) ensuring appropriate returns on energy 

24 efficiency programs. 
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1 (c) REPORT.—Not later than 1 year after the date 

2 of enactment of this Act, the Secretary shall submit to 

3 Congress a report that includes— 

4 (1) the findings of the study; and 

5 (2) any recommendations of the Secretary, in6 cluding recommendations on model policies to pro7 mote energy efficiency programs. 

8 SEC. 402. ENERGY EFFICIENCY PILOT PROGRAM. 

9 (a) IN GENERAL.—The Secretary shall establish a 

10 pilot program under which the Secretary provides financial 

11 assistance to at least 3, but not more than 7, States to 

12 carry out pilot projects in the States for— 

13 (1) planning and adopting statewide programs 

14 that encourage, for each year in which the pilot 

15 project is carried out— 

16 (A) energy efficiency; and 

17 (B) reduction of consumption of electricity 

18 or natural gas in the State by at least 0.75 per19 cent, as compared to a baseline determined by 

20 the Secretary for the period preceding the im21 plementation of the program; or 

22 (2) for any State that has adopted a statewide 

23 program as of the date of enactment of this Act, ac24 tivities that reduce energy consumption in the State 

25 by expanding and improving the program. 
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1 (b) VERIFICATION.—A State that receives financial 

2 assistance under subsection (a)(1) shall submit to the Sec3 retary independent verification of any energy savings 

4 achieved through the statewide program. 

5 (c) AUTHORIZATION OF APPROPRIATIONS.—There is 

6 authorized to be appropriated to carry out this section 

7 $5,000,000 for each of fiscal years 2006 through 2010, 

8 to remain available until expended. 

9 SEC. 403. ENERGY EFFICIENCY RESOURCE PROGRAMS. 

10 (a) ELECTRIC UTILITY PROGRAMS.—Section 111 of 

11 the Public Utilities Regulatory Policy Act of 1978 (16 

12 U.S.C. 2621) is amended by adding at the end the fol13 lowing: 

14 ‘‘(e) ENERGY EFFICIENCY RESOURCE PROGRAMS.— 

15 ‘‘(1) DEFINITIONS.—In this subsection: 

16 ‘‘(A) DEMAND BASELINE.—The term ‘de17 mand baseline’ means the baseline determined 

18 by the Secretary for an appropriate period pre19 ceding the implementation of an energy effi20 ciency resource program. 

21 ‘‘(B) ENERGY EFFICIENCY RESOURCE PRO22 GRAMS.—The term ‘energy efficiency resource 

23 program’ means an energy efficiency or other 

24 demand reduction program that is designed to 

25 reduce annual electricity consumption or peak 
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1 demand of consumers served by an electric util2 ity by a percentage of the demand baseline of 

3 the utility that is equal to not less than 0.75 

4 percent of the number of years during which 

5 the program is in effect. 

6 ‘‘(2) PUBLIC HEARINGS; DETERMINATIONS.— 

7 ‘‘(A) As soon as practicable after the date 

8 of enactment of this subsection, but not later 

9 than 3 years after that date, each State regu10 latory authority (with respect to each electric 

11 utility over which the State has ratemaking au12 thority) and each nonregulated electric utility 

13 shall, after notice, conduct a public hearing on 

14 the benefits and feasibility of implementing an 

15 energy efficiency resource program. 

16 ‘‘(B) A State regulatory authority or non17 regulated utility shall implement an energy effi18 ciency resource program if, on the basis of a 

19 hearing under subparagraph (A), the State reg20 ulatory authority or nonregulated utility deter21 mines that the program would— 

22 ‘‘(i) benefit end-use customers; 

23 ‘‘(ii) be cost-effective based on total 

24 resource cost; 

25 ‘‘(iii) serve the public welfare; and 
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1 ‘‘(iv) be feasible to implement. 

2 ‘‘(3) IMPLEMENTATION.— 

3 ‘‘(A) STATE REGULATORY AUTHORITIES.— 

4 If a State regulatory authority makes a deter5 mination under paragraph (2)(B), the State 

6 regulatory authority shall— 

7 ‘‘(i) require each electric utility over 

8 which the State has ratemaking authority 

9 to implement an energy efficiency resource 

10 program; and 

11 ‘‘(ii) allow such a utility to recover 

12 any expenditures incurred by the utility in 

13 implementing the energy efficiency re14 source program. 

15 ‘‘(B) NONREGULATED ELECTRIC UTILI16 TIES.—If a nonregulated electric utility makes 

17 a determination under paragraph (2)(B), the 

18 utility shall implement an energy efficiency re19 source program. 

20 ‘‘(4) UPDATING REGULATIONS.—A State regu21 latory authority or nonregulated utility may update 

22 periodically a determination under paragraph (2)(B) 

23 to determine whether an energy efficiency resource 

24 program should be— 

25 ‘‘(A) continued;, 
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1 ‘‘(B) modified; or 

2 ‘‘(C) terminated. 

3 ‘‘(5) EXCEPTION.—Paragraph (2) shall not 

4 apply to a State regulatory authority (or any non5 regulated electric utility operating in the State) that 

6 demonstrates to the Secretary that an energy effi7 ciency resource program is in effect in the State.’’. 

8 (b) GAS UTILITIES.—Section 303 of the Public Utili9 ties Regulatory Policy Act of 1978 (15 U.S.C. 3203) is 

10 amended by adding at the end the following: 

11 ‘‘(e) ENERGY EFFICIENCY RESOURCE PROGRAMS.— 

12 ‘‘(1) DEFINITIONS.—In this subsection: 

13 ‘‘(A) DEMAND BASELINE.—The term ‘de14 mand baseline’ means the baseline determined 

15 by the Secretary for an appropriate period pre16 ceding the implementation of an energy effi17 ciency resource program. 

18 ‘‘(B) ENERGY EFFICIENCY RESOURCE PRO19 GRAMS.—The term ‘energy efficiency resource 

20 program’ means an energy efficiency or other 

21 demand reduction program that is designed to 

22 reduce annual gas consumption or peak demand 

23 of consumers served by a gas utility by a per24 centage of the demand baseline of the utility 

25 that is equal to not less than 0.75 percent of 
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1 the number of years during which the program 

2 is in effect. 

3 ‘‘(2) PUBLIC HEARINGS; DETERMINATIONS.— 

4 ‘‘(A) As soon as practicable after the date 

5 of enactment of this subsection, but not later 

6 than 3 years after that date, each State regu7 latory authority (with respect to each gas utility 

8 over which the State has ratemaking authority) 

9 and each nonregulated gas utility shall, after 

10 notice, conduct a public hearing on the benefits 

11 and feasibility of implementing an energy effi12 ciency resource program. 

13 ‘‘(B) A State regulatory authority or non14 regulated utility shall implement an energy effi15 ciency resource program if, on the basis of a 

16 hearing under subparagraph (A), the State reg17 ulatory authority or nonregulated utility deter18 mines that the program would— 

19 ‘‘(i) benefit end-use customers; 

20 ‘‘(ii) be cost-effective based on total 

21 resource cost; 

22 ‘‘(iii) serve the public welfare; and 

23 ‘‘(iv) be feasible to implement. 

24 ‘‘(3) IMPLEMENTATION.— 
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1 ‘‘(A) STATE REGULATORY AUTHORITIES.— 

2 If a State regulatory authority makes a deter3 mination under paragraph (2)(B), the State 

4 regulatory authority shall— 

5 ‘‘(i) require each gas utility over 

6 which the State has ratemaking authority 

7 to implement an energy efficiency resource 

8 program; and 

9 ‘‘(ii) allow such a utility to recover 

10 any expenditures incurred by the utility in 

11 implementing the energy efficiency re12 source program. 

13 ‘‘(B) NONREGULATED GAS UTILITIES.—If 

14 a nonregulated gas utility makes a determina15 tion under paragraph (2)(B), the utility shall 

16 implement an energy efficiency resource pro17 gram. 

18 ‘‘(4) UPDATING REGULATIONS.—A State regu19 latory authority or nonregulated utility may update 

20 periodically a determination under paragraph (2)(B) 

21 to determine whether an energy efficiency resource 

22 program should be— 

23 ‘‘(A) continued; 

24 ‘‘(B) modified; or 

25 ‘‘(C) terminated. 
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1 ‘‘(5) EXCEPTION.—Paragraph (2) shall not 

2 apply to a State regulatory authority (or any non3 regulated gas utility operating in the State) that 

4 demonstrates to the Secretary that an energy effi5 ciency resource program is in effect in the State.’’. 

6 TITLE V—TAX INCENTIVES 

7 SEC. 500. AMENDMENT OF 1986 CODE. 

8 Except as otherwise expressly provided, whenever in 

9 this title an amendment or repeal is expressed in terms 

10 of an amendment to, or repeal of, a section or other provi11 sion, the reference shall be considered to be made to a 

12 section or other provision of the Internal Revenue Code 

13 of 1986. 

14 Subtitle A—Buildings and 

15 Equipment Incentives 

16 SEC. 501. CREDIT FOR CONSTRUCTION OF NEW ENERGY EF17 FICIENT HOMES. 

18 (a) IN GENERAL.—Subpart D of part IV of sub19 chapter A of chapter 1 (relating to business related cred20 its) is amended by adding at the end the following new 

21 section: 

22 ‘‘SEC. 45J. NEW ENERGY EFFICIENT HOME CREDIT. 

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

24 the case of an eligible contractor with respect to a quali25 fied new energy efficient home, the credit determined 
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1 under this section for the taxable year with respect to such 

2 home is an amount equal to the aggregate adjusted bases 

3 of all energy efficient property installed in such home dur4 ing construction of such home. 

5 ‘‘(b) LIMITATIONS.— 

6 ‘‘(1) MAXIMUM CREDIT.— 

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

8 this section with respect to a dwelling unit shall 

9 not exceed— 

10 ‘‘(i) in the case of a dwelling unit de11 scribed in clause (i) or (iii) of subsection 

12 (c)(3)(C), $1,000, and 

13 ‘‘(ii) in the case of a dwelling unit de14 scribed in clause (ii) or (iv) of subsection 

15 (c)(3)(C), $2,000. 

16 ‘‘(B) PRIOR CREDIT AMOUNTS ON SAME

17 DWELLING UNIT TAKEN INTO ACCOUNT.—If a 

18 credit was allowed under subsection (a) with re19 spect to a dwelling unit in 1 or more prior tax20 able years, the amount of the credit otherwise 

21 allowable for the taxable year with respect to 

22 such dwelling unit shall be reduced by the sum 

23 of the credits allowed under subsection (a) with 

24 respect to the dwelling unit for all prior taxable 

25 years. 
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1 ‘‘(2) COORDINATION WITH CERTAIN CREDITS.— 

2 For purposes of this section— 

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

4 in subsection (a) shall be reduced by that por5 tion of the basis of any property which is attrib6 utable to qualified rehabilitation expenditures 

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

8 percentage of energy property (as determined 

9 under section 48(a)), and 

10 ‘‘(B) expenditures taken into account 

11 under section 47 or 48(a) shall not be taken 

12 into account under this section. 

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

14 ‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligi15 ble contractor’ means— 

16 ‘‘(A) the person who constructed the quali17 fied new energy efficient home, or 

18 ‘‘(B) in the case of a qualified new energy 

19 efficient home which is a manufactured home, 

20 the manufactured home producer of such home. 

21 If more than 1 person is described in subparagraph 

22 (A) or (B) with respect to any qualified new energy 

23 efficient home, such term means the person des24 ignated as such by the owner of such home. 
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1 ‘‘(2) ENERGY EFFICIENT PROPERTY.—The 

2 term ‘energy efficient property’ means any energy 

3 efficient building envelope component, and any en4 ergy efficient heating or cooling equipment or sys5 tem, which can, individually or in combination with 

6 other components, result in a dwelling unit meeting 

7 the requirements of this section. 

8 ‘‘(3) QUALIFIED NEW ENERGY EFFICIENT

9 HOME.—The term ‘qualified new energy efficient 

10 home’ means a dwelling unit— 

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

12 ‘‘(B) the construction of which is substan13 tially completed after the date of the enactment 

14 of this section, and 

15 ‘‘(C) which is— 

16 ‘‘(i) certified to have a level of annual 

17 heating and cooling energy consumption 

18 which is at least 30 percent below the an19 nual level of heating and cooling energy 

20 consumption of a comparable dwelling unit 

21 constructed in accordance with the stand22 ards of chapter 4 of the 2003 International 

23 Energy Conservation Code, as such Code 

24 (including supplements) is in effect on the 

25 date of the enactment of this section, and 
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1 for which the heating and cooling equip2 ment efficiencies correspond to the min3 imum allowed under the regulations estab4 lished by the Department of Energy pursu5 ant to the National Appliance Energy Con6 servation Act of 1987 and in effect at the 

7 time of construction, and to have building 

8 envelope component improvements account 

for at least 1 9 ⁄3 of such 30 percent, 

10 ‘‘(ii) certified to have a level of annual 

11 heating and cooling energy consumption 

12 which is at least 50 percent below such an13 nual level and to have building envelope 

14 component improvements account for at 

least 1 15 ⁄5 of such 50 percent, 

16 ‘‘(iii) a manufactured home which 

17 meets the requirements of clause (i) and 

18 which conforms to Federal Manufactured 

19 Home Construction and Safety Standards 

20 (section 3280 of title 24, Code of Federal 

21 Regulations), or 

22 ‘‘(iv) a manufactured home which 

23 meets the requirements of clause (ii) and 

24 which conforms to Federal Manufactured 

25 Home Construction and Safety Standards 
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1 (section 3280 of title 24, Code of Federal 

2 Regulations). 

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

4 includes substantial reconstruction and rehabilita5 tion. 

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— 

12 ‘‘(A) any sealant or insulation material or 

13 system which is specifically and primarily de14 signed to reduce the heat loss or gain of a 

15 dwelling unit when installed in or on such 

16 dwelling unit, 

17 ‘‘(B) exterior windows (including sky18 lights), 

19 ‘‘(C) exterior doors, and 

20 ‘‘(D) any metal roof installed on a dwelling 

21 unit, but only if such roof has appropriate pig22 mented coatings which— 

23 ‘‘(i) are specifically and primarily de24 signed to reduce the heat gain of such 

25 dwelling unit, and 
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1 ‘‘(ii) meet the Energy Star program 

2 requirements. 

3 ‘‘(d) CERTIFICATION.— 

4 ‘‘(1) METHOD OF CERTIFICATION.—A certifi5 cation described in subsection (c)(3)(C) shall be de6 termined in accordance with guidance prescribed by 

7 the Secretary, after consultation with the Secretary 

8 of Energy. Such guidance shall specify procedures 

9 and methods for calculating energy and cost savings. 

10 ‘‘(2) FORM.—A certification described in sub11 section (c)(3)(C) shall be made in writing in a man12 ner which specifies in readily verifiable fashion the 

13 energy efficient building envelope components and 

14 energy efficient heating or cooling equipment in15 stalled and their respective rated energy efficiency 

16 performance. 

17 ‘‘(e) BASIS ADJUSTMENT.—For purposes of this sub18 title, if a credit is determined under this section for any 

19 expenditure with respect to any property, the increase in 

20 the basis of such property which would (but for this sub21 section) result from such expenditure shall be reduced by 

22 the amount of the credit so determined. 

23 ‘‘(f) SPECIAL RULE WITH RESPECT TO BUILDINGS

24 WITH ENERGY EFFICIENT PROPERTY.—In any case in 

25 which a deduction under section 200 or a credit under sec-
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1 tion 25C has been allowed with respect to property in con2 nection with a dwelling unit, the level of annual heating 

3 and cooling energy consumption of the comparable dwell4 ing unit referred to in clauses (i) and (ii) of subsection 

5 (c)(3)(C) shall be determined assuming such comparable 

6 dwelling unit contains the property for which such deduc7 tion or credit has been allowed. 

8 ‘‘(g) APPLICATION OF SECTION.— 

9 ‘‘(1) 50 PERCENT HOMES.—In the case of any 

10 dwelling unit described in clause (ii) or (iv) of sub11 section (c)(3)(C), subsection (a) shall apply to quali12 fied new energy efficient homes acquired during the 

13 period beginning on the date of the enactment of 

14 this section, and ending on December 31, 2009. 

15 ‘‘(2) 30 PERCENT HOMES.—In the case of any 

16 dwelling unit described in clause (i) or (iii) of sub17 section (c)(3)(C), subsection (a) shall apply to quali18 fied new energy efficient homes acquired during the 

19 period beginning on the date of the enactment of 

20 this section, and ending on December 31, 2007.’’. 

21 (b) CREDIT MADE PART OF GENERAL BUSINESS

22 CREDIT.—Section 38(b) (relating to current year business 

23 credit) is amended by striking ‘‘plus’’ at the end of para24 graph (18), by striking the period at the end of paragraph 
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1 (19) and inserting ‘‘, plus’’, and by adding at the end the 

2 following new paragraph: 

3 ‘‘(20) the new energy efficient home credit de4 termined under section 45J(a).’’. 

5 (c) BASIS ADJUSTMENT.—Subsection (a) of section 

6 1016, as amended by section 101, is amended by striking 

7 ‘‘and’’ at the end of paragraph (30), by striking the period 

8 at the end of paragraph (31) and inserting ‘‘, and’’, and 

9 by adding at the end the following new paragraph: 

10 ‘‘(32) to the extent provided in section 45J(e), 

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

12 has been allowed under section 45J.’’. 

13 (d) DEDUCTION FOR CERTAIN UNUSED BUSINESS

14 CREDITS.—Section 196(c) (defining qualified business 

15 credits) is amended by striking ‘‘and’’ at the end of para16 graph (11), by striking the period at the end of paragraph 

17 (12) and inserting ‘‘, and’’, and by adding after paragraph 

18 (12) the following new paragraph: 

19 ‘‘(13) the new energy efficient home credit de20 termined under section 45J(a).’’. 

21 (e) CLERICAL AMENDMENT.—The table of sections 

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

23 is amended by adding at the end the following new item: 

‘‘45J. New energy efficient home credit.’’. 
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1 (f) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years ending after the 

3 date of the enactment of this Act. 

4 SEC. 502. CREDIT FOR ENERGY EFFICIENCY IMPROVE5 MENTS TO EXISTING HOMES. 

6 (a) ALLOWANCE OF CREDIT.— 

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

9 personal credits) is amended by inserting after sec10 tion 25B the following new section: 

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

13 ‘‘(a) ALLOWANCE OF CREDIT.— 

14 ‘‘(1) IN GENERAL.—In the case of an indi15 vidual, there shall be allowed as a credit against the 

16 tax imposed by this chapter for the taxable year an 

17 amount equal to so much of the credit amount speci18 fied in paragraph (2) which does not exceed the ex19 penditures made by the taxpayer in connection with 

20 the construction, reconstruction, erection, or reha21 bilitation of a dwelling unit of the taxpayer which re22 sults in the unit being a highly energy-efficient prin23 cipal residence. Such expenditures may include labor 

24 costs properly allocable to the onsite preparation, as25 sembly, or original installation of such property. 
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1 ‘‘(2) CREDIT AMOUNT.—The credit amount 

2 with respect to a highly energy-efficient principal 

3 residence is— 

4 ‘‘(A) $2,000 in the case of a percentage re5 duction of 50 percent as determined under sub6 section (b)(1)(C), and 

7 ‘‘(B) $4,000 times the percentage reduc8 tion in the case of a percentage reduction of 

9 less than 50 percent as determined under sub10 section (b)(1)(C). 

11 ‘‘(b) HIGHLY ENERGY-EFFICIENT PRINCIPAL RESI12 DENCE.— 

13 ‘‘(1) IN GENERAL.—Property is a highly en14 ergy-efficient principal residence if— 

15 ‘‘(A) such property is located in the United 

16 States, 

17 ‘‘(B) the property is used as a principal 

18 residence, and 

19 ‘‘(C) the projected heating and cooling en20 ergy usage of such property, measured in terms 

21 of average annual energy cost to taxpayer, is 

22 reduced by a percentage certified according to 

23 paragraph (3) in comparison to the energy cost 

24 of such property if expenditures made by the 
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1 taxpayer with respect to energy efficient im2 provements to such property were not made. 

3 ‘‘(2) PRINCIPAL RESIDENCE.— 

4 ‘‘(A) IN GENERAL.—The term ‘principal 

5 residence’ has the same meaning as when used 

6 in section 121, except that— 

7 ‘‘(i) no ownership requirement shall 

8 be imposed, and 

9 ‘‘(ii) the period for which a building is 

10 treated as used as a principal residence 

11 shall also include the 60-day period ending 

12 on the 1st day on which it would (but for 

13 this paragraph) first be treated as used as 

14 a principal residence. 

15 ‘‘(B) MANUFACTURED HOUSING.—The 

16 term ‘residence’ shall include a dwelling unit 

17 which is a manufactured home conforming to 

18 Federal Manufactured Home Construction and 

19 Safety Standards (24 C.F.R. 3280). 

20 ‘‘(3) CERTIFICATION PROCEDURES.— 

21 ‘‘(A) IN GENERAL.—For purposes of para22 graph (1)(C), energy usage shall be dem23 onstrated by performance-based compliance. 

24 ‘‘(B) PERFORMANCE-BASED COMPLI25 ANCE.—Performance-based compliance shall be 
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1 demonstrated if the percent energy cost savings 

2 for heating and cooling is met with respect to 

3 a dwelling unit when compared to the original 

4 condition of the dwelling unit. 

5 ‘‘(C) COMPUTER SOFTWARE.—Computer 

6 software shall be used in support of perform7 ance-based compliance under subparagraph (B) 

8 and such software shall meet all of the proce9 dures and methods for calculating energy sav10 ings reductions which are promulgated by the 

11 Secretary of Energy. Such regulations on the 

12 specifications for software and verification pro13 tocols shall be based on the 2005 California 

14 Residential Alternative Calculation Method Ap15 proval Manual. 

16 ‘‘(D) CALCULATION REQUIREMENTS.—In 

17 calculating tradeoffs and energy performance, 

18 the regulations shall prescribe the costs per unit 

19 of energy and power, such as kilowatt hour, kil20 owatt, gallon of fuel oil, and cubic foot or Btu 

21 of natural gas, which may be dependent on time 

22 of usage. If a State has developed annual en23 ergy usage and cost calculation procedures 

24 based on time of usage costs for use in the per25 formance standards of the State’s building en-
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1 ergy code before the effective date of this sec2 tion, the State may use those annual energy 

3 usage and cost calculation procedures in lieu of 

4 those adopted by the Secretary. 

5 ‘‘(E) APPROVAL OF SOFTWARE SUBMIS6 SIONS.—The Secretary shall approve software 

7 submissions which comply with the calculation 

8 requirements of subparagraph (C). 

9 ‘‘(F) PROCEDURES FOR INSPECTION AND

10 TESTING OF DWELLING UNITS.—The Secretary 

11 shall ensure that procedures for the inspection 

12 and testing for compliance comply with the cal13 culation requirements under subparagraph (C) 

14 and subsection (c)(2). 

15 ‘‘(c) SPECIAL RULES.—For purposes of this sec16 tion— 

17 ‘‘(1) DETERMINATIONS OF COMPLIANCE.—A 

18 determination of compliance made for the purposes 

19 of this section shall be filed with the Secretary with20 in 1 year of the date of such determination and shall 

21 include the TIN of the certifier, the address of the 

22 building in compliance, and the identity of the per23 son for whom such determination was performed. 

24 Determinations of compliance filed with the Sec-
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1 retary shall be available for inspection by the Sec2 retary of Energy. 

3 ‘‘(2) COMPLIANCE.— 

4 ‘‘(A) IN GENERAL.—The Secretary, after 

5 consultation with the Secretary of Energy shall 

6 establish requirements for certification and 

7 compliance procedures after examining the re8 quirements for energy consultants and home en9 ergy ratings providers specified by the Mort10 gage Industry National Home Energy Rating 

11 Standards. 

12 ‘‘(B) INDIVIDUALS QUALIFIED TO DETER13 MINE COMPLIANCE.—The determination of 

14 compliance may be provided by a local building 

15 regulatory authority, a utility, a manufactured 

16 home production inspection primary inspection 

17 agency (IPIA), a home inspector, or an accred18 ited home energy rating system provider. All 

19 providers shall be accredited, or otherwise au20 thorized to use approved energy performance 

21 measurement methods, by the Residential En22 ergy Services Network (RESNET). 

23 ‘‘(3) DOLLAR AMOUNTS IN CASE OF JOINT OC24 CUPANCY.—In the case of any dwelling unit which if 

25 jointly occupied and used during any calendar year 
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1 as a principal residence by 2 or more individuals the 

2 following rules shall apply: 

3 ‘‘(A) The amount of the credit allowable 

4 under subsection (a) by reason of expenditures 

5 made during such calendar year by any of such 

6 individuals with respect to such dwelling unit 

7 shall be determined by treating all of such indi8 viduals as 1 taxpayer whose taxable year is 

9 such calendar year. 

10 ‘‘(B) There shall be allowable with respect 

11 to such expenditures to each of such individ12 uals, a credit under subsection (a) for the tax13 able year in which such calendar year ends in 

14 an amount which bears the same ratio to the 

15 amount determined under subparagraph (A) as 

16 the amount of such expenditures made by such 

17 individual during such calendar year bears to 

18 the aggregate of such expenditures made by all 

19 of such individuals during such calendar year. 

20 ‘‘(4) TENANT-STOCKHOLDER IN COOPERATIVE

21 HOUSING CORPORATION.—In the case of an indi22 vidual who is a tenant-stockholder (as defined in sec23 tion 216) in a cooperative housing corporation (as 

24 defined in such section), such individual shall be 

25 treated as having made his tenant-stockholder’s pro-
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1 portionate share (as defined in section 216(b)(3)) of 

2 any expenditures of such corporation and such credit 

3 shall be allocated pro rata to such individual. 

4 ‘‘(5) CONDOMINIUMS.— 

5 ‘‘(A) IN GENERAL.—In the case of an indi6 vidual who is a member of a condominium man7 agement association with respect to a condo8 minium which he owns, such individual shall be 

9 treated as having made his proportionate share 

10 of any expenditures of such association and any 

11 credit shall be allocated appropriately. 

12 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO13 CIATION.—For purposes of this paragraph, the 

14 term ‘condominium management association’ 

15 means an organization which meets the require16 ments of paragraph (1) of section 528(c) (other 

17 than subparagraph (E) thereof) with respect to 

18 a condominium project substantially all of the 

19 units of which are used as principal residences. 

20 ‘‘(6) JOINT OWNERSHIP OF ENERGY ITEMS.— 

21 ‘‘(A) IN GENERAL.—Any expenditure oth22 erwise qualifying as an expenditure under this 

23 section shall not be treated as failing to so 

24 qualify merely because such expenditure was 

25 made with respect to 2 or more dwelling units. 
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1 ‘‘(B) LIMITS APPLIED SEPARATELY.—In 

2 the case of any expenditure described in sub3 paragraph (A), the amount of the credit allow4 able under subsection (a) shall (subject to para5 graph (1)) be computed separately with respect 

6 to the amount of the expenditure made for each 

7 dwelling unit. 

8 ‘‘(7) ALLOCATION IN CERTAIN CASES.—If less 

9 than 80 percent of the use of an item is for nonbusi10 ness purposes, only that portion of the expenditures 

11 for such item which is properly allocable to use for 

12 nonbusiness purposes shall be taken into account. 

13 ‘‘(8) COORDINATION WITH OTHER CREDITS.— 

14 Property which would, but for this paragraph, be eli15 gible for credit under more than one provision of 

16 this section shall be eligible only under one such pro17 vision, the provision specified by the taxpayer. 

18 ‘‘(9) YEAR CREDIT ALLOWED.—The credit 

19 under subsection (a)(2) shall be allowed in the tax20 able year in which the percentage reduction with re21 spect to the principal residence is certified. 

22 ‘‘(10) WHEN EXPENDITURE MADE; AMOUNT OF

23 EXPENDITURE.— 

24 ‘‘(A) IN GENERAL.—Except as provided in 

25 subparagraph (B), an expenditure with respect 
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1 to an item shall be treated as made when the 

2 original installation of the item is completed. 

3 ‘‘(B) EXPENDITURES PART OF BUILDING

4 CONSTRUCTION.—In the case of an expenditure 

5 in connection with the construction of a struc6 ture, such expenditure shall be treated as made 

7 when the original use of the constructed struc8 ture by the taxpayer begins. 

9 ‘‘(11) PROPERTY FINANCED BY SUBSIDIZED

10 ENERGY FINANCING.— 

11 ‘‘(A) REDUCTION OF EXPENDITURES.— 

12 ‘‘(i) IN GENERAL.—Except as pro13 vided in subparagraph (C), for purposes of 

14 determining the amount of expenditures 

15 made by any individual with respect to any 

16 dwelling unit, there shall not be taken into 

17 account expenditures which are made from 

18 subsidized energy financing. 

19 ‘‘(ii) SUBSIDIZED ENERGY FINANC20 ING.—For purposes of clause (i), the term 

21 ‘subsidized energy financing’ has the same 

22 meaning given such term in section 

23 48(a)(4)(C). 

24 ‘‘(B) DOLLAR LIMITS REDUCED.—The dol25 lar amounts in the table contained in subsection 
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1 (b)(3) with respect to each property purchased 

2 for such dwelling unit for any taxable year of 

3 such taxpayer shall be reduced proportionately 

4 by an amount equal to the sum of— 

5 ‘‘(i) the amount of the expenditures 

6 made by the taxpayer during such taxable 

7 year with respect to such dwelling unit and 

8 not taken into account by reason of sub9 paragraph (A), and 

10 ‘‘(ii) the amount of any Federal, 

11 State, or local grant received by the tax12 payer during such taxable year which is 

13 used to make residential energy property 

14 expenditures with respect to the dwelling 

15 unit and is not included in the gross in16 come of such taxpayer. 

17 ‘‘(C) EXCEPTION FOR STATE PROGRAMS.— 

18 Subparagraphs (A) and (B) shall not apply to 

19 expenditures made with respect to property for 

20 which the taxpayer has received a loan, State 

21 tax credit, or grant under any State energy pro22 gram. 

23 ‘‘(d) BASIS ADJUSTMENTS.—For purposes of this 

24 subtitle, if a credit is allowed under this section for any 

25 expenditure with respect to any property, the increase in 
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1 the basis of such property which would (but for this sub2 section) result from such expenditure shall be reduced by 

3 the amount of the credit so allowed. 

4 ‘‘(e) REGULATIONS.—The Secretary shall promulgate 

5 such regulations as necessary to take into account new 

6 technologies regarding energy efficiency and renewable en7 ergy for purposes of determining energy efficiency and 

8 savings under this section. 

9 ‘‘(f) TERMINATION.—This section shall not apply 

10 with respect to any energy property placed in service after 

11 December 31, 2009.’’. 

12 (2) CONFORMING AMENDMENTS.— 

13 (A) Subsection (a) of section 1016, as 

14 amended by section 601, is amended by striking 

15 ‘‘and’’ at the end of paragraph (31), by striking 

16 the period at the end of paragraph (32) and in17 serting ‘‘, and’’, and by adding at the end the 

18 following new paragraph: 

19 ‘‘(33) to the extent provided in section 25C(d), 

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

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

22 (B) The table of sections for subpart A of 

23 part IV of subchapter A of chapter 1 is amend24 ed by inserting after the item relating to section 

25 25B the following new item: 

‘‘25C. Nonbusiness energy property.’’. 
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1 (3) EFFECTIVE DATES.—The amendments 

2 made by this subsection shall apply to expenditures 

3 made after December 31, 2005. 

4 (b) TEMPORARY CREDIT FOR ENERGY EFFICIENCY

5 IMPROVEMENTS TO EXISTING HOMES.— 

6 (1) Subpart A of part IV of subchapter A of 

7 chapter 1 (relating to nonrefundable personal cred8 its), as amended by this Act, is amended by insert9 ing after section 25C the following new section: 

10 ‘‘SEC. 25D. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST11 ING HOMES. 

12 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in13 dividual, there shall be allowed as a credit against the tax 

14 imposed by this chapter for the taxable year an amount 

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

16 the taxpayer for qualified energy efficiency improvements 

17 installed during such taxable year. 

18 ‘‘(b) LIMITATION.—The credit allowed by this section 

19 with respect to a dwelling for any taxable year shall not 

20 exceed $300, reduced (but not below zero) by the sum of— 

21 ‘‘(1) the credits allowed under subsection (a) to 

22 the taxpayer with respect to the dwelling for all pre23 ceding taxable years, and 
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1 ‘‘(2) the credits allowed under section 25C to 

2 the taxpayer with respect to the dwelling for such 

3 taxable year and all preceding taxable years. 

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

5 credit allowable under subsection (a) exceeds the limita6 tion imposed by section 26(a) for such taxable year re7 duced by the sum of the credits allowable under this sub8 part (other than this section) for such taxable year, such 

9 excess shall be carried to the succeeding taxable year and 

10 added to the credit allowable under subsection (a) for such 

11 succeeding taxable year. 

12 ‘‘(d) QUALIFIED ENERGY EFFICIENCY IMPROVE13 MENTS.—For purposes of this section, the term ‘qualified 

14 energy efficiency improvements’ means any energy effi15 cient building envelope component which is certified to 

16 meet or exceed the latest prescriptive criteria for such 

17 component in the 2003 International Energy Conservation 

18 Code (with supplements) as in effect on the date of the 

19 enactment of this subsection, if— 

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

21 dwelling which— 

22 ‘‘(A) is located in the United States, 

23 ‘‘(B) has not been treated as a qualified 

24 new energy efficient home for purposes of any 

25 credit allowed under section 45J, and 
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1 ‘‘(C) is owned and used by the taxpayer as 

2 the taxpayer’s principal residence (within the 

3 meaning of section 121), 

4 ‘‘(2) the original use of such component com5 mences with the taxpayer, and 

6 ‘‘(3) such component reasonably can be ex7 pected to remain in use for at least 5 years. 

8 ‘‘(e) CERTIFICATION.— 

9 ‘‘(1) METHOD OF CERTIFICATION.—The certifi10 cation described in subsection (d) for any component 

11 described in such subsection shall be determined on 

12 the basis of applicable energy efficiency ratings (in13 cluding product labeling requirements) for affected 

14 building envelope components. 

15 ‘‘(2) PROVIDER.—A certification described in 

16 subsection (d) shall be provided by a third party, 

17 such as a local building regulatory authority, a util18 ity, a manufactured home primary inspection agen19 cy, or a home energy rating organization. 

20 ‘‘(3) FORM.—A certification described in sub21 section (d) shall be made in writing on forms which 

22 specify in readily inspectable fashion the energy effi23 cient components and their respective efficiency rat24 ings, and which include a permanent label affixed to 

25 the electrical distribution panel of the dwelling. 
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1 ‘‘(f) DEFINITIONS AND SPECIAL RULES.—For pur2 poses of this section— 

3 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC4 CUPANCY.—In the case of any dwelling unit which is 

5 jointly occupied and used during any calendar year 

6 as a residence by 2 or more individuals the following 

7 rules shall apply: 

8 ‘‘(A) The amount of the credit allowable 

9 under subsection (a) by reason of expenditures 

10 for the qualified energy efficiency improvements 

11 made during such calendar year by any of such 

12 individuals with respect to such dwelling unit 

13 shall be determined by treating all of such indi14 viduals as 1 taxpayer whose taxable year is 

15 such calendar year. 

16 ‘‘(B) There shall be allowable, with respect 

17 to such expenditures to each of such individ18 uals, a credit under subsection (a) for the tax19 able year in which such calendar year ends in 

20 an amount which bears the same ratio to the 

21 amount determined under subparagraph (A) as 

22 the amount of such expenditures made by such 

23 individual during such calendar year bears to 

24 the aggregate of such expenditures made by all 

25 of such individuals during such calendar year. 
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1 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

2 HOUSING CORPORATION.—In the case of an indi3 vidual who is a tenant-stockholder (as defined in sec4 tion 216) in a cooperative housing corporation (as 

5 defined in such section), such individual shall be 

6 treated as having paid his tenant-stockholder’s pro7 portionate share (as defined in section 216(b)(3)) of 

8 the cost of qualified energy efficiency improvements 

9 made by such corporation. 

10 ‘‘(3) CONDOMINIUMS.— 

11 ‘‘(A) IN GENERAL.—In the case of an indi12 vidual who is a member of a condominium man13 agement association with respect to a condo14 minium which the individual owns, such indi15 vidual shall be treated as having paid the indi16 vidual’s proportionate share of the cost of quali17 fied energy efficiency improvements made by 

18 such association. 

19 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO20 CIATION.—For purposes of this paragraph, the 

21 term ‘condominium management association’ 

22 means an organization which meets the require23 ments of paragraph (1) of section 528(c) (other 

24 than subparagraph (E) thereof) with respect to 
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1 a condominium project substantially all of the 

2 units of which are used as residences. 

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

4 term ‘building envelope component’ means— 

5 ‘‘(A) any sealant or insulation material or 

6 system which is specifically and primarily de7 signed to reduce the heat loss or gain or a 

8 dwelling when installed in or on such dwelling, 

9 ‘‘(B) exterior windows (including sky10 lights), and 

11 ‘‘(C) exterior doors. 

12 ‘‘(5) MANUFACTURED HOMES INCLUDED.—For 

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

14 a manufactured home which conforms to Federal 

15 Manufactured Home Construction and Safety Stand16 ards (24 C.F.R. 3280). 

17 ‘‘(g) BASIS ADJUSTMENT.—For purposes of this sub18 title, if a credit is allowed under this section for any ex19 penditure with respect to any property, the increase in the 

20 basis of such property which would (but for this sub21 section) result from such expenditure shall be reduced by 

22 the amount of the credit so allowed. 

23 ‘‘(h) TERMINATION.—Subsection (a) shall not apply 

24 to qualified energy efficiency improvements installed after 

25 December 31, 2006.’’. 
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1 (2) CONFORMING AMENDMENTS.— 

2 (A) Section 1016(a), as amended by this 

3 Act, is amended by striking ‘‘and’’ at the end 

4 of paragraph (32), by striking the period at the 

5 end of paragraph (33) and inserting ‘‘; and’’, 

6 and by adding at the end the following new 

7 paragraph: 

8 ‘‘(34) to the extent provided in section 25D(g), 

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

10 has been allowed under section 25D.’’. 

11 (B) The table of sections for subpart A of 

12 part IV of subchapter A of chapter 1, as 

13 amended by this Act, is amended by inserting 

14 after the item relating to section 25C the fol15 lowing new item: 

‘‘25D. Energy efficiency improvements to existing homes.’’. 

16 (3) EFFECTIVE DATES.— 

17 (A) IN GENERAL.—Except as provided by 

18 subparagraph (B), the amendments made by 

19 this subsection shall apply to property installed 

20 after December 31, 2005, in taxable years end21 ing after such date. 

22 (B) PARAGRAPH (2).—The amendments 

23 made by paragraph (2) shall apply to taxable 

24 years ending after December 31, 2005. 
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1 SEC. 503. ENERGY EFFICIENT COMMERCIAL BUILDINGS DE2 DUCTION. 

3 (a) IN GENERAL.—Part VI of subchapter B of chap4 ter 1 (relating to itemized deductions for individuals and 

5 corporations) is amended by inserting after section 179B 

6 the following new section: 

7 ‘‘SEC. 179C. ENERGY EFFICIENT COMMERCIAL BUILDINGS 

8 DEDUCTION. 

9 ‘‘(a) IN GENERAL.—There shall be allowed as a de10 duction an amount equal to the cost of energy efficient 

11 commercial building property placed in service during the 

12 taxable year. 

13 ‘‘(b) MAXIMUM AMOUNT OF DEDUCTION.—The de14 duction under subsection (a) with respect to any building 

15 for the taxable year and all prior taxable years shall not 

16 exceed an amount equal to the product of— 

17 ‘‘(1) $2.25, and 

18 ‘‘(2) the square footage of the building. 

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

20 ‘‘(1) ENERGY EFFICIENT COMMERCIAL BUILD21 ING PROPERTY.—The term ‘energy efficient commer22 cial building property’ means property— 

23 ‘‘(A) which is installed on or in any build24 ing located in the United States, 

25 ‘‘(B) which is installed as part of— 

26 ‘‘(i) the interior lighting systems, 
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1 ‘‘(ii) the heating, cooling, ventilation, 

2 and hot water systems, or 

3 ‘‘(iii) the building envelope, and 

4 ‘‘(C) which is certified in accordance with 

5 subsection (d)(6) as being installed as part of 

6 a plan designed to reduce the total annual en7 ergy and power costs with respect to the inte8 rior lighting systems, heating, cooling, ventila9 tion, and hot water systems of the building by 

10 50 percent or more in comparison to a ref11 erence building which meets the minimum re12 quirements of Standard 90.1–2001 using meth13 ods of calculation under subsection (d)(2). 

14 A building described in subparagraph (A) may in15 clude any residential rental property, including any 

16 low-rise multifamily structure or single family hous17 ing property which is not within the scope of Stand18 ard 90.1–2001, but shall not include any qualified 

19 new energy efficient home (within the meaning of 

20 section 45J(d)(3)) for which a credit under section 

21 45J has been allowed. 

22 ‘‘(2) STANDARD 90.1–2001.—The term ‘Stand23 ard 90.1–2001’ means Standard 90.1–2001 of the 

24 American Society of Heating, Refrigerating, and Air 

25 Conditioning Engineers and the Illuminating Engi-
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1 neering Society of North America (as in effect on 

2 April 2, 2003). 

3 ‘‘(d) SPECIAL RULES.— 

4 ‘‘(1) PARTIAL ALLOWANCE.— 

5 ‘‘(A) IN GENERAL.—Except as provided in 

6 subsection (f), if— 

7 ‘‘(i) the requirement of subsection 

8 (c)(1)(C) is not met, but 

9 ‘‘(ii) there is a certification in accord10 ance with paragraph (6) that any system 

11 referred to in subsection (c)(1)(B) satisfies 

12 the energy-savings targets established by 

13 the Secretary under subparagraph (B) 

14 with respect to such system, then the re15 quirement of subsection (c)(1)(C) shall be 

16 treated as met with respect to such system, 

17 and the deduction under subsection (a) 

18 shall be allowed with respect to energy effi19 cient commercial building property in20 stalled as part of such system and as part 

21 of a plan to meet such targets, except that 

22 subsection (b) shall be applied to such 

23 property by substituting ‘$.75’ for ‘$2.25’. 

24 ‘‘(B) REGULATIONS.—The Secretary, after 

25 consultation with the Secretary of Energy, shall 
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1 establish a target for each system described in 

2 subsection (c)(1)(B) which, if such targets were 

3 met for all such systems, the building would 

4 meet the requirements of subsection (c)(1)(C). 

5 ‘‘(2) METHODS OF CALCULATION.—The Sec6 retary, after consultation with the Secretary of En7 ergy, shall promulgate regulations which describe in 

8 detail methods for calculating and verifying energy 

9 and power consumption and cost, based on the pro10 visions of the 2005 California Nonresidential Alter11 native Calculation Method Approval Manual or, in 

12 the case of residential property, the 2005 California 

13 Residential Alternative Calculation Method Approval 

14 Manual. These regulations shall meet the following 

15 requirements: 

16 ‘‘(A) In calculating tradeoffs and energy 

17 performance, the regulations shall prescribe the 

18 costs per unit of energy and power, such as kil19 owatt hour, kilowatt, gallon of fuel oil, and 

20 cubic foot or Btu of natural gas, which may be 

21 dependent on time of usage. If a State has de22 veloped annual energy usage and cost calcula23 tion procedures based on time of usage costs for 

24 use in the performance standards of the State’s 

25 building energy code before the effective date of 
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1 this section, the State may use those annual en2 ergy usage and cost calculation procedures in 

3 lieu of those adopted by the Secretary. 

4 ‘‘(B) The calculation methods under this 

5 paragraph need not comply fully with section 

6 11 of Standard 90.1–2001. 

7 ‘‘(C) The calculation methods shall be fuel 

8 neutral, such that the same energy efficiency 

9 features shall qualify a building for the deduc10 tion under this section regardless of whether 

11 the heating source is a gas or oil furnace or an 

12 electric heat pump. The reference building for 

13 a proposed design which employs electric resist14 ance heating shall be modeled as using a heat 

15 pump. 

16 ‘‘(D) The calculation methods shall provide 

17 appropriate calculated energy savings for design 

18 methods and technologies not otherwise credited 

19 in either Standard 90.1–2001 or in the 2005 

20 California Nonresidential Alternative Calcula21 tion Method Approval Manual, including the 

22 following: 

23 ‘‘(i) Natural ventilation. 

24 ‘‘(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 which maintain adequate 

7 comfort conditions without air conditioning 

8 or 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 calculation 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 which exceeds typical perform19 ance. 

20 ‘‘(ix) On-site generation of electricity, 

21 including combined heat and power sys22 tems, fuel cells, and renewable energy gen23 eration such as solar energy. 

24 ‘‘(x) Wiring with lower energy losses 

25 than wiring satisfying Standard 90.1–2001 
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1 requirements for building power distribu2 tion systems. 

3 ‘‘(3) COMPUTER SOFTWARE.— 

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

5 paragraph (2) shall be prepared by qualified 

6 computer software. 

7 ‘‘(B) QUALIFIED COMPUTER SOFTWARE.— 

8 For purposes of this paragraph, the term 

9 ‘qualified computer software’ means software— 

10 ‘‘(i) for which the software designer 

11 has certified that the software meets all 

12 procedures and detailed methods for calcu13 lating energy and power consumption and 

14 costs as required by the Secretary, 

15 ‘‘(ii) which provides such forms as re16 quired to be filed by the Secretary in con17 nection with energy efficiency of property 

18 and the deduction allowed under this sec19 tion, and 

20 ‘‘(iii) which provides a notice form 

21 which documents the energy efficiency fea22 tures of the building and its projected an23 nual energy costs. 

24 ‘‘(4) ALLOCATION OF DEDUCTION FOR PUBLIC

25 PROPERTY.—In the case of energy efficient commer-
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1 cial building property installed on or in public prop2 erty, the Secretary shall promulgate a regulation to 

3 allow the allocation of the deduction to the person 

4 primarily responsible for designing the property in 

5 lieu of the public entity which is the owner of such 

6 property. Such person shall be treated as the tax7 payer for purposes of this section. 

8 ‘‘(5) NOTICE TO OWNER.—Each certification 

9 required under this section shall include an expla10 nation to the building owner regarding the energy 

11 efficiency features of the building and its projected 

12 annual energy costs as provided in the notice under 

13 paragraph (3)(B)(iii). 

14 ‘‘(6) CERTIFICATION.— 

15 ‘‘(A) IN GENERAL.—The Secretary shall 

16 prescribe the manner and method for the mak17 ing of certifications under this section. 

18 ‘‘(B) PROCEDURES.—The Secretary shall 

19 include as part of the certification process pro20 cedures for inspection and testing by qualified 

21 individuals described in subparagraph (C) to 

22 ensure compliance of buildings with energy-sav23 ings plans and targets. Such procedures shall 

24 be comparable, given the difference between 

25 commercial and residential buildings, to the re-
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1 quirements in the Mortgage Industry National 

2 Accreditation Procedures for Home Energy 

3 Rating Systems. 

4 ‘‘(C) QUALIFIED INDIVIDUALS.—Individ5 uals qualified to determine compliance shall be 

6 only those individuals who are recognized by an 

7 organization certified by the Secretary for such 

8 purposes. 

9 ‘‘(e) BASIS REDUCTION.—For purposes of this sub10 title, if a deduction is allowed under this section with re11 spect to any energy efficient commercial building property, 

12 the basis of such property shall be reduced by the amount 

13 of the deduction so allowed. 

14 ‘‘(f) INTERIM RULES FOR LIGHTING SYSTEMS.— 

15 Until such time as the Secretary issues final regulations 

16 under subsection (d)(1)(B) with respect to property which 

17 is part of a lighting system— 

18 ‘‘(1) IN GENERAL.—The lighting system target 

19 under subsection (d)(1)(A)(ii) shall be a reduction in 

20 lighting power density of 25 percent (50 percent in 

21 the case of a warehouse) of the minimum require22 ments in Table 9.3.1.1 or Table 9.3.1.2 (not includ23 ing additional interior lighting power allowances) of 

24 Standard 90.1–2001. 
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1 ‘‘(2) REDUCTION IN DEDUCTION IF REDUCTION

2 LESS THAN 40 PERCENT.— 

3 ‘‘(A) IN GENERAL.—If, with respect to the 

4 lighting system of any building other than a 

5 warehouse, the reduction in lighting power den6 sity of the lighting system is not at least 40 

7 percent, only the applicable percentage of the 

8 amount of deduction otherwise allowable under 

9 this section with respect to such property shall 

10 be allowed. 

11 ‘‘(B) APPLICABLE PERCENTAGE.—For 

12 purposes of subparagraph (A), the applicable 

13 percentage is the number of percentage points 

14 (not greater than 100) equal to the sum of— 

15 ‘‘(i) 50, and 

16 ‘‘(ii) the amount which bears the same 

17 ratio to 50 as the excess of the reduction 

18 of lighting power density of the lighting 

19 system over 25 percentage points bears to 

20 15. 

21 ‘‘(C) EXCEPTIONS.—This subsection shall 

22 not apply to any system— 

23 ‘‘(i) the controls and circuiting of 

24 which do not comply fully with the manda25 tory and prescriptive requirements of 
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1 Standard 90.1–2001 and which do not in2 clude provision for bilevel switching in all 

3 occupancies except hotel and motel guest 

4 rooms, store rooms, restrooms, and public 

5 lobbies, or 

6 ‘‘(ii) which does not meet the min7 imum requirements for calculated lighting 

8 levels as set forth in the Illuminating Engi9 neering Society of North America Lighting 

10 Handbook, Performance and Application, 

11 Ninth Edition, 2000. 

12 ‘‘(g) COORDINATION WITH OTHER TAX BENE13 FITS.— 

14 ‘‘(1) NO DOUBLE BENEFIT.—No deduction 

15 shall be allowed under subsection (a) with respect to 

16 any building for which a credit under section 45J 

17 has been allowed. 

18 ‘‘(2) SPECIAL RULE WITH RESPECT TO BUILD19 INGS WITH ENERGY EFFICIENT PROPERTY.—In any 

20 case in which a deduction under section 200 or a 

21 credit under section 25C has been allowed with re22 spect to property in connection with a building, the 

23 annual energy and power costs of the reference 

24 building referred to in subsection (c)(1)(C) shall be 

25 determined assuming such reference building con-
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1 tains the property for which such deduction or credit 

2 has been allowed. 

3 ‘‘(h) REGULATIONS.—The Secretary shall promul4 gate such regulations as necessary— 

5 ‘‘(1) to take into account new technologies re6 garding energy efficiency and renewable energy for 

7 purposes of determining energy efficiency and sav8 ings under this section, and 

9 ‘‘(2) to provide for a recapture of the deduction 

10 allowed under this section if the plan described in 

11 subsection (c)(1)(C) or (d)(1)(A) is not fully imple12 mented. 

13 ‘‘(i) TERMINATION.—This section shall not apply 

14 with respect to property placed in service after December 

15 31, 2010.’’. 

16 (b) CONFORMING AMENDMENTS.— 

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

18 ‘‘and’’ at the end of paragraph (33), by striking the 

19 period at the end of paragraph (34) and inserting ‘‘, 

20 and’’, and by adding at the end the following new 

21 paragraph: 

22 ‘‘(35) to the extent provided in section 

23 179C(e).’’. 
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1 (2) Section 1245(a) is amended by inserting 

2 ‘‘179C,’’ after ‘‘179B,’’ both places it appears in 

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

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

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

6 by section 179C’’. 

7 (4) Section 263(a)(1) of such Code is amended 

8 by striking ‘‘or’’ at the end of subparagraph (H), by 

9 striking the period at the end of subparagraph (I) 

10 and inserting ‘‘, or’’, and by inserting after subpara11 graph (I) the following new subparagraph: 

12 ‘‘(J) expenditures for which a deduction is 

13 allowed under section 179C.’’. 

14 (5) Section 312(k)(3)(B) is amended by strik15 ing ‘‘section 179, 179A, or 179B’’ each place it ap16 pears in the heading and text and inserting ‘‘section 

17 179, 179A, 179B, or 179C’’. 

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

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

20 inserting after section 179B the following new item: 

‘‘179C. Energy efficient commercial buildings deduction.’’. 

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

22 this section shall apply to property placed in service after 

23 the date of the enactment of this Act in taxable years end24 ing after such date. 
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1 SEC. 504. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT 

2 PROPERTY. 

3 (a) IN GENERAL.—Subpart A of part IV of sub4 chapter A of chapter 1 (relating to nonrefundable personal 

5 credits) is amended by inserting after section 25D the fol6 lowing new section: 

7 ‘‘SEC. 25E. RESIDENTIAL ENERGY EFFICIENT PROPERTY. 

8 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in9 dividual, there shall be allowed as a credit against the tax 

10 imposed by this chapter for the taxable year an amount 

11 equal to the sum of the qualified Tier 1 and Tier 2 energy 

12 efficient building property expenditures made by the tax13 payer during such year. 

14 ‘‘(b) LIMITATIONS.— 

15 ‘‘(1) MAXIMUM CREDIT.—The credit allowed 

16 under subsection (a) shall not exceed— 

17 ‘‘(A) $300 for each Tier 2 electric heat 

18 pump water heater, 

19 ‘‘(B) $300 for each Tier 2 natural gas, oil 

20 or propane furnace or hot water boiler installed 

21 in 2006 ($250 for equipment installed in 2007, 

22 $200 for equipment installed in 2008), 

23 ‘‘(C) $200 for each Tier 1 natural gas, oil, 

24 or propane furnace, or hot water boiler installed 

25 in 2006 ($150 for equipment installed in 2007, 

26 $100 for equipment installed in 2008), 
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1 ‘‘(D) $300 for each Tier 2 natural gas, oil, 

2 or propane water heater, 

3 ‘‘(E) $50 for each Tier 1 natural gas, oil, 

4 or propane water heater, 

5 ‘‘(F) $50 for a Tier 1advanced main air 

6 circulating fan which is installed in a furnace 

7 with an Annual Fuel Utilization Efficiency of 

8 less than 92 percent, 

9 ‘‘(G) $300 for each Tier 2 combination 

10 space and water heating system, 

11 ‘‘(H) $50 for each Tier 1combination 

12 space and water heating system, 

13 ‘‘(I) $250 for each Tier 2 geothermal heat 

14 pump, 

15 ‘‘(J) $300 for each Tier 2 central air con16 ditioner or central heat pump ($200 for equip17 ment installed in 2008), and 

18 ‘‘(K) $200 for each Tier 1central air con19 ditioner or central heat pump ($100 for equip20 ment installed in 2008). 

21 ‘‘(2) SAFETY CERTIFICATIONS.—No credit shall 

22 be allowed under this section for an item of property 

23 unless such property meets the performance and 

24 quality standards, and the certification requirements 

25 (if any), which— 
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1 ‘‘(A) have been prescribed by the Secretary 

2 by regulations (after consultation with the Sec3 retary of Energy or the Administrator of the 

4 Environmental Protection Agency, as appro5 priate), 

6 ‘‘(B) in the case of the energy efficiency 

7 ratio (EER) for property described in sub8 section (d)(6)(B)(i), (J) and (K)— 

9 ‘‘(i) require measurements to be based 

10 on published data which is tested by manu11 facturers at 95 degrees Fahrenheit, 

12 ‘‘(ii) do not require ratings to be 

13 based on certified data of the Air Condi14 tioning and Refrigeration Institute, and 

15 ‘‘(iii) are in effect at the time of the 

16 acquisition of the property. 

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

18 credit allowable under subsection (a) exceeds the limita19 tion imposed by section 26(a) for such taxable year re20 duced by the sum of the credits allowable under this sub21 part (other than this section and section 25D), such excess 

22 shall be carried to the succeeding taxable year and added 

23 to the credit allowable under subsection (a) for such suc24 ceeding taxable year. 

25 ‘‘(d) DEFINITIONS.—For purposes of this section— 
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1 ‘‘(1) QUALIFIED ENERGY EFFICIENT BUILDING

2 PROPERTY EXPENDITURE.—The term ‘qualified en3 ergy efficient building property expenditure’ means 

4 an expenditure for any Tier 2 or Tier 1 energy effi5 cient building property. 

6 ‘‘(2) TIER 2 ENERGY EFFICIENT BUILDING

7 PROPERTY.—The term ‘Tier 2 energy efficient build8 ing property’ means— 

9 ‘‘(A) an electric heat pump water heater 

10 which yields an energy factor of at least 1.7 in 

11 the standard Department of Energy test proce12 dure, 

13 ‘‘(B) a natural gas, oil, propane furnace, 

14 or hot water boiler which achieves at least 95 

15 percent annual fuel utilization efficiency 

16 (AFUE) and which has an advanced main air 

17 circulating fan, 

18 ‘‘(C) a natural gas, oil, or propane water 

19 heater (including a tankless water heater) 

20 which has an energy factor of at least 0.80 in 

21 the standard Department of Energy test proce22 dure, 

23 ‘‘(D) a combination space and water heat24 ing system which has a combined energy factor 

25 of at least 0.80 and a combined annual fuel uti-
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1 lization efficiency (AFUE) of at least 78 per2 cent in the standard Department of Energy test 

3 procedure, 

4 ‘‘(E) a geothermal heat pump which has 

5 water heating capability by a desuperheater or 

6 full-condensing option and which has an energy 

7 efficiency ratio (EER) of at least 18 for 

8 ground-loop systems, at least 21 for ground9 water systems, and at least 17 for direct 

10 GeoExchange systems; and 

11 ‘‘(F) a central air conditioner or central 

12 heat pump which meets— 

13 ‘‘(i) the highest efficiency tier estab14 lished by the Consortium for Energy Effi15 ciency as in effect on Jan. 1, 2006; and 

16 ‘‘(ii) for units installed after Decem17 ber 31, 2006, the Energy Star installation 

18 specifications that take effect in 2007, as 

19 set by the Environmental Protection Agen20 cy. 

21 ‘‘(3) TIER 1 ENERGY EFFICIENT BUILDING

22 PROPERTY.—The term ‘Tier 1 energy efficient build23 ing property’ means— 

24 ‘‘(A) a natural gas, oil, propane furnace, or 

25 hot water boiler which achieves at least 92 per-
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1 cent annual fuel utilization efficiency (AFUE) 

2 and which has an advanced main air circulating 

3 fan, 

4 ‘‘(B) a natural gas, oil, or propane water 

5 heater (including a tankless water heater) 

6 which has an energy factor of at least 0.65 but 

7 less than 0.80 in the standard Department of 

8 Energy test procedure, 

9 ‘‘(C) an advanced main air circulating fan 

10 which has an annual electricity use of no more 

11 than 2 percent of the total annual energy use 

12 (as determined in the standard Department of 

13 Energy test procedures) and which is used in a 

14 new natural gas, propane, or oil-fired furnace, 

15 ‘‘(D) a combination space and water heat16 ing system which has a combined energy factor 

17 of at least 0.65 but less than 0.80 and a com18 bined annual fuel utilization efficiency (AFUE) 

19 of at least 78 percent in the standard Depart20 ment of Energy test procedure, 

21 ‘‘(E) a central air conditioner or central 

22 heat pump which meets the Energy Star speci23 fications set by the Environmental Protection 

24 Agency as follows— 
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1 ‘‘(i) equipment specifications that take 

2 effect in 2006 (including for units installed 

3 before the specifications take effect); and 

4 ‘‘(ii) for units installed after Decem5 ber 31, 2006, installation specifications 

6 that take effect in 2007. 

7 ‘‘(4) LABOR COSTS.—Expenditures for labor 

8 costs properly allocable to the onsite preparation, as9 sembly, or original installation of the property and 

10 for piping or wiring to interconnect such property to 

11 the dwelling unit shall be taken into account for pur12 poses of this section. 

13 ‘‘(e) SPECIAL RULES.—For purposes of this sec14 tion— 

15 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC16 CUPANCY.—In the case of any dwelling unit which is 

17 jointly occupied and used during any calendar year 

18 as a residence by 2 or more individuals the following 

19 rules shall apply: 

20 ‘‘(A) The amount of the credit allowable, 

21 under subsection (a) by reason of expenditures 

22 (as the case may be) made during such cal23 endar year by any of such individuals with re24 spect to such dwelling unit shall be determined 
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1 by treating all of such individuals as 1 taxpayer 

2 whose taxable year is such calendar year. 

3 ‘‘(B) There shall be allowable, with respect 

4 to such expenditures to each of such individ5 uals, a credit under subsection (a) for the tax6 able year in which such calendar year ends in 

7 an amount which bears the same ratio to the 

8 amount determined under subparagraph (A) as 

9 the amount of such expenditures made by such 

10 individual during such calendar year bears to 

11 the aggregate of such expenditures made by all 

12 of such individuals during such calendar year. 

13 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

14 HOUSING CORPORATION.—In the case of an indi15 vidual who is a tenant-stockholder (as defined in sec16 tion 216) in a cooperative housing corporation (as 

17 defined in such section), such individual shall be 

18 treated as having made his tenant-stockholder’s pro19 portionate share (as defined in section 216(b)(3)) of 

20 any expenditures of such corporation. 

21 ‘‘(3) CONDOMINIUMS.— 

22 ‘‘(A) IN GENERAL.—In the case of an indi23 vidual who is a member of a condominium man24 agement association with respect to a condo25 minium which the individual owns, such indi-
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1 vidual shall be treated as having made the indi2 vidual’s proportionate share of any expenditures 

3 of such association. 

4 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO5 CIATION.—For purposes of this paragraph, the 

6 term ‘condominium management association’ 

7 means an organization which meets the require8 ments of paragraph (1) of section 528(c) (other 

9 than subparagraph (E) thereof) with respect to 

10 a condominium project substantially all of the 

11 units of which are used as residences. 

12 ‘‘(4) ALLOCATION IN CERTAIN CASES.—Except 

13 in the case of qualified wind energy property expend14 itures, if less than 80 percent of the use of an item 

15 is for nonbusiness purposes, only that portion of the 

16 expenditures for such item which is properly allo17 cable to use for nonbusiness purposes shall be taken 

18 into account. 

19 ‘‘(5) WHEN EXPENDITURE MADE; AMOUNT OF

20 EXPENDITURE.— 

21 ‘‘(A) IN GENERAL.—Except as provided in 

22 subparagraph (B), an expenditure with respect 

23 to an item shall be treated as made when the 

24 original installation of the item is completed. 
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1 ‘‘(B) EXPENDITURES PART OF BUILDING

2 CONSTRUCTION.—In the case of an expenditure 

3 in connection with the construction or recon4 struction of a structure, such expenditure shall 

5 be treated as made when the original use of the 

6 constructed or reconstructed structure by the 

7 taxpayer begins. 

8 ‘‘(C) AMOUNT.—The amount of any ex9 penditure shall be the cost thereof. 

10 ‘‘(6) PROPERTY FINANCED BY SUBSIDIZED EN11 ERGY FINANCING.—For purposes of determining the 

12 amount of expenditures made by any individual with 

13 respect to any dwelling unit, there shall not be taken 

14 into account expenditures which are made from sub15 sidized energy financing (as defined in section 

16 48(a)(5)(C)). 

17 ‘‘(f) BASIS ADJUSTMENTS.—For purposes of this 

18 subtitle, if a credit is allowed under this section for any 

19 expenditure with respect to any property, the increase in 

20 the basis of such property which would (but for this sub21 section) result from such expenditure shall be reduced by 

22 the amount of the credit so allowed. 

23 ‘‘(g) TERMINATION.—The credit allowed under this 

24 section shall not apply to expenditures after December 31, 

25 2008.’’. 
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1 (b) CONFORMING AMENDMENTS.— 

2 (1) Section 1016(a), as amended by this Act, is 

3 amended by striking ‘‘and’’ at the end of paragraph 

4 (34), by striking the period at the end of paragraph 

5 (35) and inserting ‘‘, and’’, and by adding at the 

6 end the following new paragraph: 

7 ‘‘(36) to the extent provided in section 25E(f), 

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

9 has been allowed under section 25E.’’. 

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

11 IV of subchapter A of chapter 1 is amended by in12 serting after the item relating to section 25D the 

13 following new item: 

‘‘25E. Residential energy efficient property.’’. 

14 (c) EFFECTIVE DATES.— 

15 (1) IN GENERAL.—Except as provided by para16 graph (2), the amendments made by this section 

17 shall apply to expenditures after December 31, 

18 2005, in taxable years ending after such date. 

19 (2) SUBSECTION (b).—The amendments made 

20 by subsection (b) shall apply to taxable years begin21 ning after December 31, 2005. 

22 SEC. 505. CREDIT FOR ENERGY EFFICIENT APPLIANCES. 

23 (a) IN GENERAL.—Subpart D of part IV of sub24 chapter A of chapter 1 (relating to business-related cred-
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1 its) is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 45K. ENERGY EFFICIENT APPLIANCE CREDIT. 

4 ‘‘(a) GENERAL RULE.— 

5 ‘‘(1) IN GENERAL.—For purposes of section 38, 

6 the energy efficient appliance credit determined 

7 under this section for any taxable year is an amount 

8 equal to the sum of the credit amounts determined 

9 under paragraph (2) for each type of qualified en10 ergy efficient appliance produced by the taxpayer 

11 during the calendar year ending with or within the 

12 taxable year. 

13 ‘‘(2) CREDIT AMOUNTS.—The credit amount 

14 determined for any type of qualified energy efficient 

15 appliance is— 

16 ‘‘(A) the applicable amount determined 

17 under subsection (b) with respect to such type, 

18 multiplied by 

19 ‘‘(B) the eligible production for such type. 

20 ‘‘(b) APPLICABLE AMOUNT.— 

21 ‘‘(1) IN GENERAL.—For purposes of subsection 

22 (a)— 

23 ‘‘(A) DISHWASHERS.—The applicable 

24 amount is the energy savings amount in the 

25 case of a dishwasher which— 
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1 ‘‘(i) is manufactured in calendar year 

2 2006 or 2007, and 

3 ‘‘(ii) meets the requirements of the 

4 Energy Star program which are in effect 

5 for dishwashers in 2007. 

6 ‘‘(B) CLOTHES WASHERS.—The applicable 

7 amount is— 

8 ‘‘(i) $50, in the case of a clothes 

9 washer which— 

10 ‘‘(I) is manufactured in calendar 

11 year 2005, and 

12 ‘‘(II) has an MEF of at least 

13 1.42, 

14 ‘‘(ii) $100, in the case of a clothes 

15 washer which— 

16 ‘‘(I) is manufactured in calendar 

17 year 2005, 2006, or 2007, and 

18 ‘‘(II) meets the requirements of 

19 the Energy Star program which are in 

20 effect for clothes washers in 2007, 

21 and 

22 ‘‘(iii) the energy and water savings 

23 amount, in the case of a clothes washer 

24 which— 
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1 ‘‘(I) is manufactured in calendar 

2 year 2008, 2009, or 2010, and 

3 ‘‘(II) meets the requirements of 

4 the Energy Star program which are in 

5 effect for clothes washers in 2010. 

6 ‘‘(C) REFRIGERATORS.— 

7 ‘‘(i) 15 PERCENT SAVINGS.—The ap8 plicable amount is $75 in the case of a re9 frigerator which— 

10 ‘‘(I) is manufactured in calendar 

11 year 2005 or 2006, and 

12 ‘‘(II) consumes at least 15 per13 cent but not more than 20 percent 

14 less kilowatt hours per year than the 

15 2001 energy conservation standard. 

16 ‘‘(ii) 20 PERCENT SAVINGS.—In the 

17 case of a refrigerator which consumes at 

18 least 20 percent but not more than 25 per19 cent less kilowatt hours per year than the 

20 2001 energy conservation standards, the 

21 applicable amount is— 

22 ‘‘(I) $125 for a refrigerator 

23 which is manufactured in calendar 

24 year 2005, 2006, or 2007, and 
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1 ‘‘(II) $100 for a refrigerator 

2 which is manufactured in calendar 

3 year 2008. 

4 ‘‘(iii) 25 PERCENT SAVINGS.—In the 

5 case of a refrigerator which consumes at 

6 least 25 percent less kilowatt hours per 

7 year than the 2001 energy conservation 

8 standards, the applicable amount is— 

9 ‘‘(I) $175 for a refrigerator 

10 which is manufactured in calendar 

11 year 2005, 2006, or 2007, and 

12 ‘‘(II) $150 for a refrigerator 

13 which is manufactured in calendar 

14 year 2008, 2009, or 2010. 

15 ‘‘(2) ENERGY SAVINGS AMOUNT.—For purposes 

16 of paragraph (1)(A)— 

17 ‘‘(A) IN GENERAL.—The energy savings 

18 amount is the lesser of— 

19 ‘‘(i) the product of— 

20 ‘‘(I) $3, and 

21 ‘‘(II) 100 multiplied by the en22 ergy savings percentage, or 

23 ‘‘(ii) $100. 
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1 ‘‘(B) ENERGY SAVINGS PERCENTAGE.— 

2 For purposes of subparagraph (A), the energy 

3 savings percentage is the ratio of— 

4 ‘‘(i) the EF required by the Energy 

5 Star program for dishwashers in 2007 

6 minus the EF required by the Energy Star 

7 program for dishwashers in 2005, to 

8 ‘‘(ii) the EF required by the Energy 

9 Star program for dishwashers in 2007. 

10 ‘‘(3) ENERGY AND WATER SAVINGS AMOUNT.— 

11 For purposes of paragraph (1)(B)(iii)— 

12 ‘‘(A) IN GENERAL.—The energy and water 

13 savings amount is the lesser of— 

14 ‘‘(i) the product of— 

15 ‘‘(I) $10, and 

16 ‘‘(II) 100 multiplied by the en17 ergy and water savings percentage, or 

18 ‘‘(ii) $200. 

19 ‘‘(B) ENERGY AND WATER SAVINGS PER20 CENTAGE.—For purposes of subparagraph (A), 

21 the energy and water savings percentage is the 

22 average of the MEF savings percentage and the 

23 WF savings percentage. 
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1 ‘‘(C) MEF SAVINGS PERCENTAGE.—For 

2 purposes of this paragraph, the MEF savings 

3 percentage is the ratio of— 

4 ‘‘(i) the MEF required by the Energy 

5 Star program for clothes washers in 2010 

6 minus the MEF required by the Energy 

7 Star program for clothes washers in 2007, 

8 to 

9 ‘‘(ii) the MEF required by the Energy 

10 Star program for clothes washers in 2010. 

11 ‘‘(D) WF SAVINGS PERCENTAGE.—For 

12 purposes of this paragraph, the WF savings 

13 percentage is the ratio of— 

14 ‘‘(i) the WF required by the Energy 

15 Star program for clothes washers in 2007 

16 minus the WF required by the Energy 

17 Star program for clothes washers in 2010, 

18 to 

19 ‘‘(ii) the WF required by the Energy 

20 Star program for clothes washers in 2007. 

21 ‘‘(c) ELIGIBLE PRODUCTION.— 

22 ‘‘(1) IN GENERAL.—Except as provided in para23 graphs (2) and (3), the eligible production in a cal24 endar year with respect to each type of energy effi25 cient appliance is the excess of— 
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1 ‘‘(A) the number of appliances of such type 

2 which are produced by the taxpayer in the 

3 United States during such calendar year, over 

4 ‘‘(B) the average number of appliances of 

5 such type which were produced by the taxpayer 

6 (or any predecessor) in the United States dur7 ing the preceding 3-calendar year period. 

8 ‘‘(2) SPECIAL RULE FOR REFRIGERATORS.— 

9 The eligible production in a calendar year with re10 spect to each type of refrigerator described in sub11 section (b)(1)(C) is the excess of— 

12 ‘‘(A) the number of appliances of such type 

13 which are produced by the taxpayer in the 

14 United States during such calendar year, over 

15 ‘‘(B) 110 percent of the average number of 

16 appliances of such type which were produced by 

17 the taxpayer (or any predecessor) in the United 

18 States during the preceding 3-calendar year pe19 riod. 

20 ‘‘(3) SPECIAL RULE FOR 2005 PRODUCTION.— 

21 For purposes of determining eligible production for 

22 calendar year 2005— 

23 ‘‘(A) only production after the date of en24 actment of this section shall be taken into ac25 count under paragraphs (1)(A) and (2)(A), and 
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1 ‘‘(B) the amount taken into account under 

2 paragraphs (1)(B) and (2)(B) shall be an 

3 amount which bears the same ratio to the 

4 amount which would (but for this paragraph) 

5 be taken into account under such paragraph 

6 as— 

7 ‘‘(i) the number of days in calendar 

8 year 2005 after the date of enactment of 

9 this section, bears to 

10 ‘‘(ii) 365. 

11 ‘‘(d) TYPES OF ENERGY EFFICIENT APPLIANCE.— 

12 For purposes of this section, the types of energy efficient 

13 appliances are— 

14 ‘‘(1) dishwashers described in subsection 

15 (b)(1)(A), 

16 ‘‘(2) clothes washers described in subsection 

17 (b)(1)(B)(i), 

18 ‘‘(3) clothes washers described in subsection 

19 (b)(1)(B)(ii), 

20 ‘‘(4) clothes washers described in subsection 

21 (b)(1)(B)(iii), 

22 ‘‘(5) refrigerators described in subsection 

23 (b)(1)(C)(i), 

24 ‘‘(6) refrigerators described in subsection 

25 (b)(1)(C)(ii)(I), 
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1 ‘‘(7) refrigerators described in subsection 

2 (b)(1)(C)(ii)(II), 

3 ‘‘(8) refrigerators described in subsection 

4 (b)(1)(C)(iii)(I), and 

5 ‘‘(9) refrigerators described in subsection 

6 (b)(1)(C)(iii)(II). 

7 ‘‘(e) LIMITATIONS.— 

8 ‘‘(1) AGGREGATE CREDIT AMOUNT ALLOWED.— 

9 The aggregate amount of credit allowed under sub10 section (a) with respect to a taxpayer for any tax11 able year shall not exceed $75,000,000 reduced by 

12 the amount of the credit allowed under subsection 

13 (a) to the taxpayer (or any predecessor) for all prior 

14 taxable years. 

15 ‘‘(2) AMOUNT ALLOWED FOR CERTAIN APPLI16 ANCES.— 

17 ‘‘(A) IN GENERAL.—In the case of appli18 ances described in subparagraph (C), the aggre19 gate amount of the credit allowed under sub20 section (a) with respect to a taxpayer for any 

21 taxable year shall not exceed $20,000,000 re22 duced by the amount of the credit allowed 

23 under subsection (a) to the taxpayer (or any 

24 predecessor) for all prior taxable years with re25 spect to such appliances. 
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1 ‘‘(B) ELECTION TO INCREASE ALLOWABLE

2 CREDIT.—In the case of any taxpayer who 

3 makes an election under this subparagraph— 

4 ‘‘(i) subparagraph (A) shall be applied 

5 by substituting ‘$25,000,000’ for 

6 ‘$20,000,000’, and 

7 ‘‘(ii) the aggregate amount of the 

8 credit allowed under subsection (a) with re9 spect to such taxpayer for any taxable year 

10 for appliances described in subparagraph 

11 (C) and the additional appliances described 

12 in subparagraph (D) shall not exceed 

13 $50,000,000 reduced by the amount of the 

14 credit allowed under subsection (a) to the 

15 taxpayer (or any predecessor) for all prior 

16 taxable years with respect to such appli17 ances. 

18 ‘‘(C) APPLIANCES DESCRIBED.—The appli19 ances described in this subparagraph are— 

20 ‘‘(i) clothes washers described in sub21 section (b)(1)(B)(i), and 

22 ‘‘(ii) refrigerators described in sub23 section (b)(1)(C)(i). 
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1 ‘‘(D) ADDITIONAL APPLIANCES.—The ad2 ditional appliances described in this subpara3 graph are— 

4 ‘‘(i) refrigerators described in sub5 section (b)(1)(C)(ii)(I), and 

6 ‘‘(ii) refrigerators described in sub7 section (b)(1)(C)(ii)(II). 

8 ‘‘(3) LIMITATION BASED ON GROSS RE9 CEIPTS.—The credit allowed under subsection (a) 

10 with respect to a taxpayer for the taxable year shall 

11 not exceed an amount equal to 2 percent of the aver12 age annual gross receipts of the taxpayer for the 3 

13 taxable years preceding the taxable year in which 

14 the credit is determined. 

15 ‘‘(4) GROSS RECEIPTS.—For purposes of this 

16 subsection, the rules of paragraphs (2) and (3) of 

17 section 448(c) shall apply. 

18 ‘‘(f) DEFINITIONS.—For purposes of this section— 

19 ‘‘(1) QUALIFIED ENERGY EFFICIENT APPLI20 ANCE.—The term ‘qualified energy efficient appli21 ance’ means— 

22 ‘‘(A) any dishwasher described in sub23 section (b)(1)(A), 

24 ‘‘(B) any clothes washer described in sub25 section (b)(1)(B), and 
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1 ‘‘(C) any refrigerator described in sub2 section (b)(1)(C). 

3 ‘‘(2) DISHWASHER.—The term ‘dishwasher’ 

4 means a residential dishwasher subject to the energy 

5 conservation standards established by the Depart6 ment of Energy. 

7 ‘‘(3) CLOTHES WASHER.—The term ‘clothes 

8 washer’ means a residential model clothes washer, 

9 including a residential style coin operated washer. 

10 ‘‘(4) REFRIGERATOR.—The term ‘refrigerator’ 

11 means a residential model automatic defrost refrig12 erator-freezer which has an internal volume of at 

13 least 16.5 cubic feet. 

14 ‘‘(5) MEF.—The term ‘MEF’ means the modi15 fied energy factor established by the Department of 

16 Energy for compliance with the Federal energy con17 servation standards. 

18 ‘‘(6) EF.—The term ‘EF’ means the energy 

19 factor established by the Department of Energy for 

20 compliance with the Federal energy conservation 

21 standards. 

22 ‘‘(7) WF.—The term ‘WF’ means Water Fac23 tor (as determined by the Secretary of Energy). 

24 ‘‘(8) PRODUCED.—The term ‘produced’ in25 cludes manufactured. 
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1 ‘‘(9) 2001 ENERGY CONSERVATION STAND2 ARD.—The term ‘2001 energy conservation stand3 ard’ means the energy conservation standards pro4 mulgated by the Department of Energy and effective 

5 July 1, 2001. 

6 ‘‘(g) SPECIAL RULES.—For purposes of this sec7 tion— 

8 ‘‘(1) IN GENERAL.—Rules similar to the rules 

9 of subsections (c), (d), and (e) of section 52 shall 

10 apply. 

11 ‘‘(2) CONTROLLED GROUP.— 

12 ‘‘(A) IN GENERAL.—All persons treated as 

13 a single employer under subsection (a) or (b) of 

14 section 52 or subsection (m) or (o) of section 

15 414 shall be treated as a single producer. 

16 ‘‘(B) INCLUSION OF FOREIGN CORPORA17 TIONS.—For purposes of subparagraph (A), in 

18 applying subsections (a) and (b) of section 52 

19 to this section, section 1563 shall be applied 

20 without regard to subsection (b)(2)(C) thereof. 

21 ‘‘(3) VERIFICATION.—No amount shall be al22 lowed as a credit under subsection (a) with respect 

23 to which the taxpayer has not submitted such infor24 mation or certification as the Secretary, in consulta-
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1 tion with the Secretary of Energy, determines nec2 essary.’’. 

3 (b) CONFORMING AMENDMENT.—Section 38(b) (re4 lating to general business credit) is amended by striking 

5 ‘‘plus’’ at the end of paragraph (19), by striking the period 

6 at the end of paragraph (20) and inserting ‘‘, plus’’, and 

7 by adding at the end the following new paragraph: 

8 ‘‘(21) the energy efficient appliance credit de9 termined under section 45K(a).’’. 

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

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

12 is amended by adding at the end the following new item: 

‘‘45K. Energy efficient appliance credit.’’. 

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

14 this section shall apply to appliances produced after the 

15 date of the enactment of this Act, in taxable years ending 

16 after such date. 

17 SEC. 506. INCENTIVE FOR CERTAIN ENERGY EFFICIENT 

18 PROPERTY USED IN BUSINESS. 

19 (a) IN GENERAL.—Part VI of subchapter B of chap20 ter 1 is amended by adding at the end the following new 

21 section: 

22 ‘‘SEC. 200. ENERGY PROPERTY DEDUCTION. 

23 ‘‘(a) IN GENERAL.—There shall be allowed as a de24 duction for the taxable year an amount equal to the sum 

25 of— 
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1 ‘‘(1) the amount determined under subsection 

2 (b) for each energy property of the taxpayer placed 

3 in service during such taxable year, and 

4 ‘‘(2) the energy efficient residential rental 

5 building property deduction determined under sub6 section (d). 

7 ‘‘(b) AMOUNT FOR ENERGY PROPERTY.— 

8 ‘‘(1) IN GENERAL.—The amount determined 

9 under this subsection for the taxable year for each 

10 item of energy property is— 

11 ‘‘(A) $900 for each Tier 2 electric heat 

12 pump water heater, 

13 ‘‘(B) $900 for each Tier 2 natural gas, oil 

14 or propane furnace or hot water boiler installed 

15 in 2006 ($750 for equipment installed in 2007, 

16 $600 for equipment installed in 2008), 

17 ‘‘(C) $600 for each Tier 1 natural gas, oil, 

18 or propane furnace, or hot water boiler installed 

19 in 2006 ($450 for equipment installed in 2007, 

20 $300 for equipment installed in 2008), 

21 ‘‘(D) $900 for each Tier 2 natural gas, oil, 

22 or propane water heater, 

23 ‘‘(E) $150 for each Tier 1 natural gas, oil, 

24 or propane water heater, 
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1 ‘‘(F) $150 for a Tier 1advanced main air 

2 circulating fan which is installed in a furnace 

3 with an Annual Fuel Utilization Efficiency of 

4 less than 92 percent, 

5 ‘‘(G) $900 for each Tier 2 combination 

6 space and water heating system, 

7 ‘‘(H) $150 for each Tier 1combination 

8 space and water heating system, 

9 ‘‘(I) $750 for each Tier 2 geothermal heat 

10 pump, 

11 ‘‘(J) $900 for each Tier 2 central air con12 ditioner or central heat pump ($600 for equip13 ment installed in 2008), and 

14 ‘‘(K) $600 for each Tier 1central air con15 ditioner or central heat pump ($300 for equip16 ment installed in 2008). 

17 ‘‘(2) SAFETY CERTIFICATIONS.—A rule similar 

18 to the rule of section 25E(b)(2) shall apply for pur19 poses of this section. 

20 ‘‘(c) ENERGY PROPERTY DEFINED.—For purposes of 

21 this part, the term ‘energy property’ means any prop22 erty— 

23 ‘‘(1) which is energy efficient building property 

24 (as defined in section 25E(d), 
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1 ‘‘(2)(A) the construction, reconstruction, or 

2 erection of which is completed by the taxpayer, or 

3 ‘‘(B) which is acquired by the taxpayer if the 

4 original use of such property commences with the 

5 taxpayer, and 

6 ‘‘(3) with respect to which depreciation (or am7 ortization in lieu of depreciation) is allowable. 

8 ‘‘(d) ENERGY EFFICIENT RESIDENTIAL RENTAL

9 BUILDING PROPERTY DEDUCTION.— 

10 ‘‘(1) DEDUCTION ALLOWED.—For purposes of 

11 subsection (a)— 

12 ‘‘(A) IN GENERAL.—The energy efficient 

13 residential rental building property deduction 

14 determined under this subsection is an amount 

15 equal to energy efficient residential rental build16 ing property expenditures made by a taxpayer 

17 for the taxable year. 

18 ‘‘(B) MAXIMUM AMOUNT OF DEDUC19 TION.—The amount of energy efficient residen20 tial rental building property expenditures taken 

21 into account under subparagraph (A) with re22 spect to each dwelling unit shall not exceed— 

23 ‘‘(i) $6,000 in the case of a percent24 age reduction of 50 percent as determined 

25 under paragraph (2)(B), and 
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1 ‘‘(ii) $12,000 times the percentage re2 duction in the case of a percentage reduc3 tion of less than 50 percent as determined 

4 under paragraph (2)(B). 

5 ‘‘(C) YEAR DEDUCTION ALLOWED.—The 

6 deduction under subparagraph (A) shall be al7 lowed in the taxable year in which the construc8 tion, reconstruction, erection, or rehabilitation 

9 of the property is completed. 

10 ‘‘(2) ENERGY EFFICIENT RESIDENTIAL RENTAL

11 BUILDING PROPERTY EXPENDITURES.—For pur12 poses of this subsection— 

13 ‘‘(A) IN GENERAL.—The term ‘energy effi14 cient residential rental building property ex15 penditures’ means an amount paid or incurred 

16 in connection with construction, reconstruction, 

17 erection, or rehabilitation of energy efficient 

18 residential rental building property— 

19 ‘‘(i) for which depreciation is allow20 able under section 167, 

21 ‘‘(ii) which is located in the United 

22 States, and 

23 ‘‘(iii) the construction, reconstruction, 

24 erection, or rehabilitation of which is com25 pleted by the taxpayer. 
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1 Such term includes expenditures for labor costs 

2 properly allocable to the onsite preparation, as3 sembly, or original installation of the property. 

4 ‘‘(B) ENERGY EFFICIENT RESIDENTIAL

5 RENTAL BUILDING PROPERTY.— 

6 ‘‘(i) IN GENERAL.—The term ‘energy 

7 efficient residential rental building prop8 erty’ means any property which reduces 

9 total annual energy and power costs with 

10 respect to heating and cooling of the build11 ing by a percentage certified according to 

12 clause (ii). 

13 ‘‘(ii) PROCEDURES.— 

14 ‘‘(I) IN GENERAL.—For purposes 

15 of clause (i), energy usage and costs 

16 shall be demonstrated by perform17 ance-based compliance. 

18 ‘‘(II) PERFORMANCE-BASED COM19 PLIANCE.—Performance-based compli20 ance shall be demonstrated by calcu21 lating the percent energy cost savings 

22 for heating and cooling, as applicable, 

23 with respect to a dwelling unit when 

24 compared to the original condition of 

25 the dwelling unit. 
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1 ‘‘(III) COMPUTER SOFTWARE.— 

2 Computer software shall be used in 

3 support of performance-based compli4 ance under subclause (II) and such 

5 software shall meet all of the proce6 dures and methods for calculating en7 ergy savings reductions which are pro8 mulgated by the Secretary of Energy. 

9 Such regulations on the specifications 

10 for software and verification protocols 

11 shall be based on the 2005 California 

12 Residential Alternative Calculation 

13 Method Approval Manual. 

14 ‘‘(IV) CALCULATION REQUIRE15 MENTS.—In calculating tradeoffs and 

16 energy performance, the regulations 

17 prescribed under this clause shall pre18 scribe for the taxable year the costs 

19 per unit of energy and power, such as 

20 kilowatt hour, kilowatt, gallon of fuel 

21 oil, and cubic foot or Btu of natural 

22 gas, which may be dependent on time 

23 of usage. Where a State has developed 

24 annual energy usage and cost reduc25 tion procedures based on time of 
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1 usage costs for use in the performance 

2 standards of the State’s building en3 ergy code prior to the effective date of 

4 this section, the State may use those 

5 annual energy usage and cost reduc6 tion procedures in lieu of those adopt7 ed by the Secretary. 

8 ‘‘(V) APPROVAL OF SOFTWARE

9 SUBMISSIONS.—The Secretary shall 

10 approve software submissions which 

11 comply with the requirements of sub12 clause (III). 

13 ‘‘(VI) PROCEDURES FOR INSPEC14 TION AND TESTING OF HOMES.—The 

15 Secretary shall ensure that procedures 

16 for the inspection and testing for com17 pliance comply with the calculation re18 quirements under subclause (IV) of 

19 this clause and clause (iv). 

20 ‘‘(iii) DETERMINATIONS OF COMPLI21 ANCE.—A determination of compliance 

22 with respect to energy efficient residential 

23 rental building property made for the pur24 poses of this subparagraph shall be filed 

25 with the Secretary not later than 1 year 
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1 after the date of such determination and 

2 shall include the TIN of the certifier, the 

3 address of the building in compliance, and 

4 the identity of the person for whom such 

5 determination was performed. Determina6 tions of compliance filed with the Secretary 

7 shall be available for inspection by the Sec8 retary of Energy. 

9 ‘‘(iv) COMPLIANCE.— 

10 ‘‘(I) IN GENERAL.—The Sec11 retary, after consultation with the 

12 Secretary of Energy, shall establish 

13 requirements for certification and 

14 compliance procedures after exam15 ining the requirements for energy con16 sultants and home energy ratings pro17 viders specified by the Mortgage In18 dustry National Home Energy Rating 

19 Standards. 

20 ‘‘(II) INDIVIDUALS QUALIFIED

21 TO DETERMINE COMPLIANCE.—The 

22 determination of compliance may be 

23 provided by a local building regulatory 

24 authority, a utility, a manufactured 

25 home production inspection primary 
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1 inspection agency (IPIA), a home in2 spector, or an accredited home energy 

3 rating system provider. All providers 

4 shall be accredited, or otherwise au5 thorized to use approved energy per6 formance measurement methods, by 

7 the Residential Energy Services Net8 work (RESNET). 

9 ‘‘(C) ALLOCATION OF DEDUCTION FOR

10 PUBLIC PROPERTY.—In the case of energy effi11 cient residential rental building property which 

12 is public property, the Secretary shall promul13 gate a regulation to allow the allocation of the 

14 deduction to the person primarily responsible 

15 for designing the improvements to the property 

16 in lieu of the public entity which is the owner 

17 of such property. Such person shall be treated 

18 as the taxpayer for purposes of this subsection. 

19 ‘‘(e) SPECIAL RULES.—For purposes of this sec20 tion— 

21 ‘‘(1) BASIS REDUCTION.—For purposes of this 

22 subtitle, if a deduction is allowed under this section 

23 with respect to any property, the basis of such prop24 erty shall be reduced by the amount of the deduction 

25 so allowed. 
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1 ‘‘(2) DOUBLE BENEFIT.—Property which 

2 would, but for this paragraph, be eligible for deduc3 tion under more than one provision of this section 

4 shall be eligible only under one such provision, the 

5 provision specified by the taxpayer. 

6 ‘‘(f) REGULATIONS.—The Secretary shall promulgate 

7 such regulations as necessary to take into account new 

8 technologies regarding energy efficiency and renewable en9 ergy for purposes of determining energy efficiency and 

10 savings under this section. 

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

12 with respect to— 

13 ‘‘(1) any energy property placed in service after 

14 December 31, 2008, and 

15 ‘‘(2) any energy efficient residential rental 

16 building property expenditures in connection with 

17 property— 

18 ‘‘(A) placed in service after December 31, 

19 2009, or 

20 ‘‘(B) the construction, reconstruction, erec21 tion, or rehabilitation of which is not completed 

22 on or before December 31, 2009.’’. 

23 (b) CONFORMING AMENDMENTS.— 

24 (1) Section 48(a)(3)(A) is amended to read as 

25 follows: 
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1 ‘‘(A) which is equipment used to produce, 

2 distribute, or use energy derived from a geo3 thermal deposit (within the meaning of section 

4 613(e)(2)), but only, in the case of electricity 

5 generated by geothermal power, up to (but not 

6 including) the electrical transmission stage,’’. 

7 (2) Subparagraph (B) of section 168(e)(3) is 

8 amended— 

9 (A) in clause (vi)(I)— 

10 (i) by striking ‘‘section 48(a)(3)’’ and 

11 inserting ‘‘section 200(d)(1)’’, and 

12 (ii) by striking ‘‘clause (i)’’ and in13 serting ‘‘such subparagraph (A)’’, and 

14 (B) in the last sentence, by striking ‘‘sec15 tion 48(a)(3)’’ and inserting ‘‘section 

16 200(c)(3)’’. 

17 (3) Section 1016(a), as amended by this Act, is 

18 amended by striking ‘‘and’’ at the end of paragraph 

19 (35), by striking the period at the end of paragraph 

20 (36) and inserting ‘‘, and’’, and by inserting the fol21 lowing new paragraph: 

22 ‘‘(37) for amounts allowed as a deduction under 

23 section 200(a).’’. 
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1 (c) CLERICAL AMENDMENT.—The table of sections 

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

3 adding at the end the following new item: 

‘‘200. Energy property deduction.’’. 

4 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

5 are authorized to be appropriated to the Department of 

6 Energy out of amounts not already appropriated such 

7 sums as necessary to carry out this section. 

8 (e) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 December 31, 2005. 

11 SEC. 507. CREDIT FOR BUSINESS INSTALLATION OF QUALI12 FIED FUEL CELLS. 

13 (a) IN GENERAL.—Section 48(a)(3)(A) of the Inter14 nal Revenue Code of 1986 (defining energy property), as 

15 amended by section 301, is amended by striking ‘‘or’’ at 

16 the end of clause (i), by adding ‘‘or’’ at the end of clause 

17 (ii), and by inserting after clause (ii) the following new 

18 clause: 

19 ‘‘(iii) qualified fuel cell property,’’. 

20 (b) QUALIFIED FUEL CELL PROPERTY.—Section 48 

21 of such Code (relating to energy credit) is amended by 

22 adding at the end the following new subsection: 

23 ‘‘(c) QUALIFIED FUEL CELL PROPERTY.—For pur24 poses of subsection (a)(3)(A)(iii)— 
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1 ‘‘(1) IN GENERAL.—The term ‘qualified fuel 

2 cell property’ means a fuel cell power plant which 

3 generates at least 0.5 kilowatt of electricity using an 

4 electrochemical process. 

5 ‘‘(2) LIMITATION.—The energy credit with re6 spect to any qualified fuel cell property shall not ex7 ceed an amount equal to $500 for each 0.5 kilowatt 

8 of capacity of such property. 

9 ‘‘(3) FUEL CELL POWER PLANT.—The term 

10 ‘fuel cell power plant’ means an integrated system, 

11 comprised of a fuel cell stack assembly and associ12 ated balance of plant components, which converts a 

13 fuel into electricity using electrochemical means. 

14 ‘‘(4) TERMINATION.—The term ‘qualified fuel 

15 cell property’ shall not include any property placed 

16 in service after December 31, 2009.’’. 

17 (c) ENERGY PERCENTAGE.—Subparagraph (A) of 

18 section 48(a)(2) of such Code (relating to energy percent19 age) is amended to read as follows: 

20 ‘‘(A) IN GENERAL.—The energy percent21 age is— 

22 ‘‘(i) in the case of qualified fuel cell 

23 property, 30 percent, and 

24 ‘‘(ii) in the case of any other energy 

25 property, 10 percent.’’. 
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1 (d) CONFORMING AMENDMENT.—Section 48(a)(1) of 

2 such Code is amended by inserting ‘‘except as provided 

3 in subsection (c)(2),’’ before ‘‘the energy’’. 

4 (e) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to periods after December 31, 

6 2005, under rules similar to the rules of section 48(m) 

7 of the Internal Revenue Code of 1986 (as in effect on the 

8 day before the date of the enactment of the Revenue Rec9 onciliation Act of 1990). 

10 SEC. 508. CREDIT FOR NONBUSINESS INSTALLATION OF 

11 QUALIFIED FUEL CELLS [NEW ADDITION NOT 

12 UPDATED]. 

13 (a) IN GENERAL.—Subpart A of part IV of sub14 chapter A of chapter 1 of the Internal Revenue Code of 

15 1986 (relating to nonrefundable personal credits) is 

16 amended by inserting after section 25B the following new 

17 section: 

18 ‘‘SEC. 25F. NONBUSINESS INSTALLATION OF QUALIFIED 

19 FUEL CELLS. 

20 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in21 dividual, there shall be allowed as a credit against the tax 

22 imposed by this chapter for the taxable year an amount 

23 equal to the sum of 30 percent of the qualified fuel cell 

24 property expenditures made by the taxpayer during such 

25 year. 
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1 ‘‘(b) LIMITATIONS.— 

2 ‘‘(1) MAXIMUM CREDIT.—The credit allowed 

3 under subsection (a) shall not exceed $500 for each 

4 0.5 kilowatt of capacity of qualified fuel cell prop5 erty. 

6 ‘‘(2) PROPERTY STANDARDS.—No credit shall 

7 be allowed under this section for an item of property 

8 unless— 

9 ‘‘(A) the original use of such property com10 mences with the taxpayer, 

11 ‘‘(B) such property reasonably can be ex12 pected to remain in use for at least 5 years, 

13 ‘‘(C) such property is installed on or in 

14 connection with a dwelling unit located in the 

15 United States and used as a residence by the 

16 taxpayer, 

17 ‘‘(D) such property meets the performance 

18 and quality standards (if any) which have been 

19 prescribed by the Secretary by regulations 

20 (after consultation with the Secretary of En21 ergy), and 

22 ‘‘(E) such property meets appropriate fire 

23 and electric code requirements. 

24 ‘‘(c) QUALIFIED FUEL CELL PROPERTY EXPENDI25 TURE.—For purposes of this section, the term ‘qualified 
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1 fuel cell property expenditure’ means an expenditure for 

2 any qualified fuel cell property (as defined in section 

3 48(c)(1)). 

4 ‘‘(d) SPECIAL RULES.—For purposes of this sec5 tion— 

6 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC7 CUPANCY.—In the case of any dwelling unit which is 

8 jointly occupied and used during any calendar year 

9 as a residence by 2 or more individuals, the fol10 lowing rules shall apply: 

11 ‘‘(A) The amount of the credit allowable 

12 under subsection (a) by reason of expenditures 

13 made during such calendar year by any of such 

14 individuals with respect to such dwelling unit 

15 shall be determined by treating all of such indi16 viduals as 1 taxpayer whose taxable year is 

17 such calendar year. 

18 ‘‘(B) There shall be allowable, with respect 

19 to such expenditures to each of such individ20 uals, a credit under subsection (a) for the tax21 able year in which such calendar year ends in 

22 an amount which bears the same ratio to the 

23 amount determined under subparagraph (A) as 

24 the amount of such expenditures made by such 

25 individual during such calendar year bears to 
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1 the aggregate of such expenditures made by all 

2 of such individuals during such calendar year. 

3 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

4 HOUSING CORPORATION.—In the case of an indi5 vidual who is a tenant-stockholder (as defined in sec6 tion 216) in a cooperative housing corporation (as 

7 defined in such section), such individual shall be 

8 treated as having made the individual’s tenant-stock9 holder’s proportionate share (as defined in section 

10 216(b)(3)) of any expenditures of such corporation. 

11 ‘‘(3) CONDOMINIUMS.— 

12 ‘‘(A) IN GENERAL.—In the case of an indi13 vidual who is a member of a condominium man14 agement association with respect to a condo15 minium which the individual owns, such indi16 vidual shall be treated as having made the indi17 vidual’s proportionate share of any expenditures 

18 of such association. 

19 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO20 CIATION.—For purposes of this paragraph, the 

21 term ‘condominium management association’ 

22 means an organization which meets the require23 ments of paragraph (1) of section 528(c) (other 

24 than subparagraph (E) thereof) with respect to 
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1 a condominium project substantially all of the 

2 units of which are used as residences. 

3 ‘‘(4) ALLOCATION IN CERTAIN CASES.—If less 

4 than 80 percent of the use of an item is for nonbusi5 ness purposes, only that portion of the expenditures 

6 for such item which is properly allocable to use for 

7 nonbusiness purposes shall be taken into account. 

8 ‘‘(5) WHEN EXPENDITURE MADE; AMOUNT OF

9 EXPENDITURE.— 

10 ‘‘(A) IN GENERAL.—Except as provided in 

11 subparagraph (B), an expenditure with respect 

12 to an item shall be treated as made when the 

13 original installation of the item is completed. 

14 ‘‘(B) EXPENDITURES PART OF BUILDING

15 CONSTRUCTION.—In the case of an expenditure 

16 in connection with the construction or recon17 struction of a structure, such expenditure shall 

18 be treated as made when the original use of the 

19 constructed or reconstructed structure by the 

20 taxpayer begins. 

21 ‘‘(C) AMOUNT.—The amount of any ex22 penditure shall be the cost thereof. 

23 ‘‘(6) PROPERTY FINANCED BY SUBSIDIZED EN24 ERGY FINANCING.—For purposes of determining the 

25 amount of expenditures made by any individual with 
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1 respect to any dwelling unit, there shall not be taken 

2 into account expenditures which are made from sub3 sidized energy financing (as defined in section 

4 48(a)(4)(C)). 

5 ‘‘(e) BASIS ADJUSTMENTS.—For purposes of this 

6 subtitle, if a credit is allowed under this section for any 

7 expenditure with respect to any property, the increase in 

8 the basis of such property which would (but for this sub9 section) result from such expenditure shall be reduced by 

10 the amount of the credit so allowed. 

11 ‘‘(f) TERMINATION.—The credit allowed under this 

12 section shall not apply to taxable years beginning after 

13 December 31, 2009.’’. 

14 (b) CONFORMING AMENDMENTS.— 

15 (1) Section 1016(a) of such Code is amended 

16 by striking ‘‘and’’ at the end of paragraph (36), by 

17 striking the period at the end of paragraph (37) and 

18 inserting ‘‘, and’’, and by adding at the end the fol19 lowing new paragraph: 

20 ‘‘(38) to the extent provided in section 25F(e), 

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

22 has been allowed under section 25F.’’. 

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

24 IV of subchapter A of chapter 1 of such Code is 
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1 amended by adding at the end the following new 

2 item: 

‘‘Sec. 25F. Nonbusiness installation of qualified fuel cells.’’. 

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

4 this section shall apply to taxable years ending after De5 cember 31, 2005. 

6 SEC. 509. NEW NONREFUNDABLE PERSONAL CREDITS AL7 LOWED AGAINST REGULAR AND MINIMUM 

8 TAXES. 

9 (a) IN GENERAL.— 

10 (1) SECTION 25c.—Section 25C(c), as added by 

11 this Act, is amended by adding at the end the fol12 lowing new paragraph: 

13 ‘‘(12) LIMITATION BASED ON AMOUNT OF

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

15 the taxable year shall not exceed the excess of— 

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

17 (as defined in section 26(b)) plus the tax im18 posed by section 55, over 

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

20 under this subpart (other than this section) and 

21 section 27 for the taxable year.’’. 

22 (2) SECTION 25d.—Section 25D(f), as added by 

23 this Act, is amended by adding at the end the fol24 lowing new paragraph: 
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1 ‘‘(6) LIMITATION BASED ON AMOUNT OF

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

3 the taxable year shall not exceed the excess of— 

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

5 (as defined in section 26(b)) plus the tax im6 posed by section 55, over 

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

8 under this subpart (other than this section) and 

9 section 27 for the taxable year.’’. 

10 (3) SECTION 25e.—Section 25E(e), as added by 

11 this Act, is amended by adding at the end the fol12 lowing new paragraph: 

13 ‘‘(7) LIMITATION BASED ON AMOUNT OF

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

15 the taxable year shall not exceed the excess of— 

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

17 (as defined in section 26(b)) plus the tax im18 posed by section 55, over 

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

20 under this subpart (other than this section) and 

21 section 27 for the taxable year.’’. 

22 (4) SECTION 25f.—Section 25F(b), as added by 

23 this Act, is amended by adding at the end the fol24 lowing new paragraph: 
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1 ‘‘(3) LIMITATION BASED ON AMOUNT OF

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

3 the taxable year shall not exceed the excess of— 

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

5 (as defined in section 26(b)) plus the tax im6 posed by section 55, over 

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

8 under this subpart (other than this section) and 

9 section 27 for the taxable year.’’. 

10 (b) CONFORMING AMENDMENTS.— 

11 (1) Section 23(b)(4)(B) is amended by inserting 

12 ‘‘and sections 25C, 25D, 25E, and 25F’’ after ‘‘this 

13 section’’. 

14 (2) Section 24(b)(3)(B) is amended by striking 

15 ‘‘and 25B’’ and inserting ‘‘, 25B, 25C, 25D, 25E, 

16 and 25F’’. 

17 (3) Section 25(e)(1)(C) is amended by inserting 

18 ‘‘25C, 25D, 25E, and 25F’’ after ‘‘25B,’’. 

19 (4) Section 25B(g)(2) is amended by striking 

20 ‘‘section 23’’ and inserting ‘‘sections 23, 25C, 25D, 

21 25E, and 25F’’. 

22 (5) Section 26(a)(1) is amended by striking 

23 ‘‘and 25B’’ and inserting ‘‘25B, 25C, 25D, 25E, 

24 and 25F’’. 
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1 (6) Section 904(i) is amended by striking ‘‘and 

2 25B’’ and inserting ‘‘25B, 25C, 25D, 25E, and 

3 25F’’. 

4 (7) Section 1400C(d) is amended by striking 

5 ‘‘and 25B’’ and inserting ‘‘25B, 25C, 25D, 25E, 

6 and 25F’’. 

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

8 this section shall apply to taxable years beginning after 

9 December 31, 2005. 

10 SEC. 510. CERTAIN BUSINESS ENERGY CREDITS ALLOWED 

11 AGAINST REGULAR AND MINIMUM TAXES. 

12 (a) IN GENERAL.—Subparagraph (B) of section 

13 38(c)(4) (relating to specified credits) is amended by re14 designating clause (ii) as clause (iv) and by striking clause 

15 (i) and inserting the following new clauses: 

16 ‘‘(i) the credits determined under sec17 tions 40, 45H, 45I, 45J, and 45K, 

18 ‘‘(ii) so much of the credit determined 

19 under section 46 as is attributable to sec20 tion 48(a)(3)(A)(iii), 

21 ‘‘(iii) for taxable years beginning after 

22 December 31, 2005, and before January 1, 

23 2008, the credit determined under section 

24 43, and’’. 

25 (b) EFFECTIVE DATES.— 
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1 (1) IN GENERAL.—Except as provided by para2 graph (2), the amendment made by subsection (a) 

3 shall apply to credits determined under the Internal 

4 Revenue Code of 1986 for taxable years beginning 

5 after December 31, 2005. 

6 (2) FUEL CELLS.—Clause (ii) of section 

7 38(c)(4)(B) of the Internal Revenue Code of 1986, 

8 as amended by subsection (a) of this section, shall 

9 apply to credits determined under the Internal Rev10 enue Code of 1986 for taxable years ending after 

11 April 11, 2005. 

12 Subtitle B—Transportation 

13 Incentives 

14 SEC. 511. ALTERNATIVE MOTOR VEHICLE CREDIT. 

15 (a) IN GENERAL.—Subpart B of part IV of sub16 chapter A of chapter 1 (relating to foreign tax credit, etc.) 

17 is amended by adding at the end the following new section: 

18 ‘‘SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT. 

19 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al20 lowed as a credit against the tax imposed by this chapter 

21 for the taxable year an amount equal to the sum of— 

22 ‘‘(1) the new qualified fuel cell motor vehicle 

23 credit determined under subsection (b), and 

24 ‘‘(2) the new qualified hybrid motor vehicle 

25 credit determined under subsection (c). 
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1 ‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE

2 CREDIT.— 

3 ‘‘(1) IN GENERAL.—For purposes of subsection 

4 (a), the new qualified fuel cell motor vehicle credit 

5 determined under this subsection with respect to a 

6 new qualified fuel cell motor vehicle placed in service 

7 by the taxpayer during the taxable year is— 

8 ‘‘(A) $8,000 ($4,000 in the case of vehicles 

9 placed in service after December 31, 2009), if 

10 such vehicle has a gross vehicle weight rating of 

11 not more than 8,500 pounds, 

12 ‘‘(B) $10,000, if such vehicle has a gross 

13 vehicle weight rating of more than 8,500 

14 pounds but not more than 14,000 pounds, 

15 ‘‘(C) $20,000, if such vehicle has a gross 

16 vehicle weight rating of more than 14,000 

17 pounds but not more than 26,000 pounds, and 

18 ‘‘(D) $40,000, if such vehicle has a gross 

19 vehicle weight rating of more than 26,000 

20 pounds. 

21 ‘‘(2) INCREASE FOR FUEL EFFICIENCY.— 

22 ‘‘(A) IN GENERAL.—The amount deter23 mined under paragraph (1)(A) with respect to 

24 a new qualified fuel cell motor vehicle which is 
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1 a passenger automobile or light truck shall be 

2 increased by— 

3 ‘‘(i) $1,000, if such vehicle achieves at 

4 least 150 percent but less than 175 per5 cent of the 2002 model year city fuel econ6 omy, 

7 ‘‘(ii) $1,500, if such vehicle achieves 

8 at least 175 percent but less than 200 per9 cent of the 2002 model year city fuel econ10 omy, 

11 ‘‘(iii) $2,000, if such vehicle achieves 

12 at least 200 percent but less than 225 per13 cent of the 2002 model year city fuel econ14 omy, 

15 ‘‘(iv) $2,500, if such vehicle achieves 

16 at least 225 percent but less than 250 per17 cent of the 2002 model year city fuel econ18 omy, 

19 ‘‘(v) $3,000, if such vehicle achieves 

20 at least 250 percent but less than 275 per21 cent of the 2002 model year city fuel econ22 omy, 

23 ‘‘(vi) $3,500, if such vehicle achieves 

24 at least 275 percent but less than 300 per-
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1 cent of the 2002 model year city fuel econ2 omy, and 

3 ‘‘(vii) $4,000, if such vehicle achieves 

4 at least 300 percent of the 2002 model 

5 year city fuel economy. 

6 ‘‘(B) 2002 MODEL YEAR CITY FUEL ECON7 OMY.—For purposes of subparagraph (A), the 

8 2002 model year city fuel economy with respect 

9 to a vehicle shall be determined in accordance 

10 with the following tables: 

11 ‘‘(i) In the case of a passenger auto12 mobile: 

‘‘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. 

13 ‘‘(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
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‘‘If vehicle inertia The 2002 model year city 

weight class is: fuel economy is: 

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. 

1 ‘‘(C) VEHICLE INERTIA WEIGHT CLASS.— 

2 For purposes of subparagraph (B), the term 

3 ‘vehicle inertia weight class’ has the same 

4 meaning as when defined in regulations pre5 scribed by the Administrator of the Environ6 mental Protection Agency for purposes of the 

7 administration of title II of the Clean Air Act 

8 (42 U.S.C. 7521 et seq.). 

9 ‘‘(3) NEW QUALIFIED FUEL CELL MOTOR VEHI10 CLE.—For purposes of this subsection, the term 

11 ‘new qualified fuel cell motor vehicle’ means a motor 

12 vehicle— 

13 ‘‘(A) which is propelled by power derived 

14 from one or more cells which convert chemical 

15 energy directly into electricity by combining ox16 ygen with hydrogen fuel which is stored on 

17 board the vehicle in any form and may or may 

18 not require reformation prior to use, 

19 ‘‘(B) which, in the case of a passenger 

20 automobile or light truck, has received a certifi21 cate that such vehicle meets or exceeds the Bin 
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1 5 Tier II emission level established in regula2 tions prescribed by the Administrator of the 

3 Environmental Protection Agency under section 

4 202(i) of the Clean Air Act for that make and 

5 model year vehicle, 

6 ‘‘(C) the original use of which commences 

7 with the taxpayer, 

8 ‘‘(D) which is acquired for use or lease by 

9 the taxpayer and not for resale, and 

10 ‘‘(E) which is made by a manufacturer. 

11 ‘‘(c) NEW QUALIFIED HYBRID MOTOR VEHICLE

12 CREDIT.— 

13 ‘‘(1) IN GENERAL.—For purposes of subsection 

14 (a), the new qualified hybrid motor vehicle credit de15 termined under this subsection with respect to a new 

16 qualified hybrid motor vehicle placed in service by 

17 the taxpayer during the taxable year is the credit 

18 amount determined under paragraph (2). 

19 ‘‘(2) CREDIT AMOUNT.— 

20 ‘‘(A) IN GENERAL.—The credit amount de21 termined under this paragraph shall be deter22 mined in accordance with the following tables: 

23 ‘‘(i) In the case of a new qualified hy24 brid motor vehicle which is a passenger 

25 automobile, medium duty passenger vehi-
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1 cle, or light truck and which provides the 

2 following percentage of the maximum 

3 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. 

4 ‘‘(ii) In the case of a new qualified hy5 brid motor vehicle which is a heavy duty 

6 hybrid motor vehicle and which provides 

7 the following percentage of the maximum 

8 available power: 

9 ‘‘(I) If such vehicle has a gross 

10 vehicle weight rating of not more than 

11 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. 

12 ‘‘(II) If such vehicle has a gross 

13 vehicle weight rating of more than 

14 14,000 but not more than 26,000 

15 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. 
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1 ‘‘(III) If such vehicle has a gross 

2 vehicle weight rating of more than 

3 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. 

4 ‘‘(B) INCREASE FOR FUEL EFFICIENCY.— 

5 ‘‘(i) AMOUNT.—The amount deter6 mined under subparagraph (A)(i) with re7 spect to a new qualified hybrid motor vehi8 cle which is a passenger automobile or 

9 light truck shall be increased by— 

10 ‘‘(I) $500, if such vehicle 

11 achieves at least 125 percent but less 

12 than 150 percent of the 2002 model 

13 year city fuel economy, 

14 ‘‘(II) $1,000, if such vehicle 

15 achieves at least 150 percent but less 

16 than 175 percent of the 2002 model 

17 year city fuel economy, 

18 ‘‘(III) $1,500, if such vehicle 

19 achieves at least 175 percent but less 

20 than 200 percent of the 2002 model 

21 year city fuel economy, 
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1 ‘‘(IV) $2,000, if such vehicle 

2 achieves at least 200 percent but less 

3 than 225 percent of the 2002 model 

4 year city fuel economy, 

5 ‘‘(V) $2,500, if such vehicle 

6 achieves at least 225 percent but less 

7 than 250 percent of the 2002 model 

8 year city fuel economy, and 

9 ‘‘(VI) $3,000, if such vehicle 

10 achieves at least 250 percent of the 

11 2002 model year city fuel economy. 

12 ‘‘(ii) 2002 MODEL YEAR CITY FUEL

13 ECONOMY.—For purposes of clause (i), the 

14 2002 model year city fuel economy with re15 spect to a vehicle shall be determined on a 

16 gasoline gallon equivalent basis as deter17 mined by the Administrator of the Envi18 ronmental Protection Agency using the ta19 bles provided in subsection (b)(2)(B) with 

20 respect to such vehicle. 

21 ‘‘(C) INCREASE FOR ACCELERATED EMIS22 SIONS PERFORMANCE.—The amount deter23 mined under subparagraph (A)(ii) with respect 

24 to an applicable heavy duty hybrid motor vehi25 cle shall be increased by the increased credit 
186 

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1 amount determined in accordance with the fol2 lowing tables: 

3 ‘‘(i) In the case of a vehicle which has 

4 a gross vehicle weight rating of not more 

5 than 14,000 pounds: 

‘‘If the model year is: The increased credit amount is: 

2005 ......................................................................................... $2,000

2006 ......................................................................................... $1,500. 

6 ‘‘(ii) In the case of a vehicle which 

7 has a gross vehicle weight rating of more 

8 than 14,000 pounds but not more than 

9 26,000 pounds: 

‘‘If the model year is: The increased credit amount is: 

2005 ......................................................................................... $5,250

2006 ......................................................................................... $4,000. 

10 ‘‘(iii) In the case of a vehicle which 

11 has a gross vehicle weight rating of more 

12 than 26,000 pounds: 

‘‘If the model year is: The increased credit amount is: 

2005 ......................................................................................... $8,000

2006 ......................................................................................... $6,000. 

13 ‘‘(D) DEFINITIONS RELATING TO CREDIT

14 AMOUNT.— 

15 ‘‘(i) APPLICABLE HEAVY DUTY HY16 BRID MOTOR VEHICLE.—For purposes of 

17 subparagraph (C), the term ‘applicable 

18 heavy duty hybrid motor vehicle’ means a 

19 heavy duty hybrid motor vehicle which is 

20 powered by an internal combustion or heat 
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1 engine which is certified as meeting the 

2 emission standards set in the regulations 

3 prescribed by the Administrator of the En4 vironmental Protection Agency for 2007 

5 and later model year diesel heavy duty en6 gines, or for 2008 and later model year 

7 ottocycle heavy duty engines, as applicable. 

8 ‘‘(ii) MAXIMUM AVAILABLE POWER.— 

9 ‘‘(I) PASSENGER AUTOMOBILE, 

10 MEDIUM DUTY PASSENGER VEHICLE, 

11 OR LIGHT TRUCK.—For purposes of 

12 subparagraph (A)(i), the term ‘max13 imum available power’ means the 

14 maximum power available from the re15 chargeable energy storage system, 

16 during a standard 10 second pulse 

17 power or equivalent test, divided by 

18 such maximum power and the SAE 

19 net power of the heat engine. 

20 ‘‘(II) HEAVY DUTY HYBRID

21 MOTOR VEHICLE.—For purposes of 

22 subparagraph (A)(ii), the term ‘max23 imum available power’ means the 

24 maximum power available from the re25 chargeable energy storage system, 
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1 during a standard 10 second pulse 

2 power or equivalent test, divided by 

3 the vehicle’s total traction power. The 

4 term ‘total traction power’ means the 

5 sum of the peak power from the re6 chargeable energy storage system and 

7 the heat engine peak power of the ve8 hicle, except that if such storage sys9 tem is the sole means by which the ve10 hicle can be driven, the total traction 

11 power is the peak power of such stor12 age system. 

13 ‘‘(3) NEW QUALIFIED HYBRID MOTOR VEHI14 CLE.—For purposes of this subsection, the term 

15 ‘new qualified hybrid motor vehicle’ means a motor 

16 vehicle— 

17 ‘‘(A) which draws propulsion energy from 

18 onboard sources of stored energy which are 

19 both— 

20 ‘‘(i) an internal combustion or heat 

21 engine using combustible fuel, and 

22 ‘‘(ii) a rechargeable energy storage 

23 system, 

24 ‘‘(B) which, in the case of a passenger 

25 automobile, medium duty passenger vehicle, or 
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•HR 3263 IH 

1 light truck, has received a certificate that such 

2 vehicle meets or exceeds the Bin 5 Tier II emis3 sion level established in regulations prescribed 

4 by the Administrator of the Environmental Pro5 tection Agency under section 202(i) of the 

6 Clean Air Act for that make and model year ve7 hicle, 

8 ‘‘(C) which, in the case of a heavy duty hy9 brid motor vehicle, the internal combustion or 

10 heat engine of which has received a certificate 

11 of conformity under the Clean Air Act as meet12 ing the emission standards set in the regula13 tions prescribed by the Administrator of the 

14 Environmental Protection Agency for 2004 

15 through 2007 model year diesel heavy duty en16 gines or ottocycle heavy duty engines, as appli17 cable, 

18 ‘‘(D) the original use of which commences 

19 with the taxpayer, 

20 ‘‘(E) which is acquired for use or lease by 

21 the taxpayer and not for resale, and 

22 ‘‘(F) which is made by a manufacturer. 

23 ‘‘(4) HEAVY DUTY HYBRID MOTOR VEHICLE.— 

24 For purposes of this subsection, the term ‘heavy 

25 duty hybrid motor vehicle’ means a new qualified hy-
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1 brid motor vehicle which has a gross vehicle weight 

2 rating of more than 8,500 pounds. Such term does 

3 not include a medium duty passenger vehicle. 

4 ‘‘(d) APPLICATION WITH OTHER CREDITS.—The 

5 credit allowed under subsection (a) for any taxable year 

6 shall not exceed the excess (if any) of— 

7 ‘‘(1) the regular tax for the taxable year re8 duced by the sum of the credits allowable under sub9 part A and sections 27, 29, and 30, over 

10 ‘‘(2) the tentative minimum tax for the taxable 

11 year. 

12 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.— 

13 For purposes of this section— 

14 ‘‘(1) CONSUMABLE FUEL.—The term 

15 ‘consumable fuel’ means any solid, liquid, or gaseous 

16 matter which releases energy when consumed by an 

17 auxiliary power unit. 

18 ‘‘(2) MOTOR VEHICLE.—The term ‘motor vehi19 cle’ has the meaning given such term by section 

20 30(c)(2). 

21 ‘‘(3) CITY FUEL ECONOMY.—The city fuel econ22 omy with respect to any vehicle shall be measured in 

23 a manner which is substantially similar to the man24 ner city fuel economy is measured in accordance 

25 with procedures under part 600 of subchapter Q of 
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1 chapter I of title 40, Code of Federal Regulations, 

2 as in effect on the date of the enactment of this sec3 tion. 

4 ‘‘(4) OTHER TERMS.—The terms ‘automobile’, 

5 ‘passenger automobile’, ‘medium duty passenger ve6 hicle’, ‘light truck’, and ‘manufacturer’ have the 

7 meanings given such terms in regulations prescribed 

8 by the Administrator of the Environmental Protec9 tion Agency for purposes of the administration of 

10 title II of the Clean Air Act (42 U.S.C. 7521 et 

11 seq.). 

12 ‘‘(5) REDUCTION IN BASIS.—For purposes of 

13 this subtitle, the basis of any property for which a 

14 credit is allowable under subsection (a) shall be re15 duced by the amount of such credit so allowed (de16 termined without regard to subsection (e)). 

17 ‘‘(6) NO DOUBLE BENEFIT.—The amount of 

18 any deduction or other credit allowable under this 

19 chapter— 

20 ‘‘(A) for any incremental cost taken into 

21 account in computing the amount of the credit 

22 determined under subsection (d) shall be re23 duced by the amount of such credit attributable 

24 to such cost, and 
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1 ‘‘(B) with respect to a vehicle described 

2 under subsection (b) or (c), shall be reduced by 

3 the amount of credit allowed under subsection 

4 (a) for such vehicle for the taxable year. 

5 ‘‘(7) PROPERTY USED BY TAX-EXEMPT ENTI6 TIES.—In the case of a credit amount which is al7 lowable with respect to a motor vehicle which is ac8 quired by an entity exempt from tax under this 

9 chapter, the person which sells or leases such vehicle 

10 to the entity shall be treated as the taxpayer with 

11 respect to the vehicle for purposes of this section 

12 and the credit shall be allowed to such person, but 

13 only if the person clearly discloses to the entity at 

14 the time of any sale or lease the specific amount of 

15 any credit otherwise allowable to the entity under 

16 this section. 

17 ‘‘(8) RECAPTURE.—The Secretary shall, by reg18 ulations, provide for recapturing the benefit of any 

19 credit allowable under subsection (a) with respect to 

20 any property which ceases to be property eligible for 

21 such credit (including recapture in the case of a 

22 lease period of less than the economic life of a vehi23 cle). 

24 ‘‘(9) PROPERTY USED OUTSIDE UNITED

25 STATES, ETC., NOT QUALIFIED.—No credit shall be 
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1 allowed under subsection (a) with respect to any 

2 property referred to in section 50(b) or with respect 

3 to the portion of the cost of any property taken into 

4 account under section 179. 

5 ‘‘(10) ELECTION TO NOT TAKE CREDIT.—No 

6 credit shall be allowed under subsection (a) for any 

7 vehicle if the taxpayer elects to not have this section 

8 apply to such vehicle. 

9 ‘‘(11) CARRYBACK AND CARRYFORWARD AL10 LOWED.— 

11 ‘‘(A) IN GENERAL.—If the credit amount 

12 allowable under subsection (a) for a taxable 

13 year exceeds the amount of the limitation under 

14 subsection (e) for such taxable year (in this 

15 paragraph referred to as the ‘unused credit 

16 year’), such excess shall be allowed as a credit 

17 carryback for each of the 3 taxable years begin18 ning after the date of the enactment of this sec19 tion, which precede the unused credit year and 

20 a credit carryforward for each of the 20 taxable 

21 years which succeed the unused credit year. 

22 ‘‘(B) RULES.—Rules similar to the rules of 

23 section 39 shall apply with respect to the credit 

24 carryback and credit carryforward under sub25 paragraph (A). 
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1 ‘‘(12) INTERACTION WITH AIR QUALITY AND

2 MOTOR VEHICLE SAFETY STANDARDS.—Unless oth3 erwise provided in this section, a motor vehicle shall 

4 not be considered eligible for a credit under this sec5 tion unless such vehicle is in compliance with— 

6 ‘‘(A) the applicable provisions of the Clean 

7 Air Act for the applicable make and model year 

8 of the vehicle (or applicable air quality provi9 sions of State law in the case of a State which 

10 has adopted such provision under a waiver 

11 under section 209(b) of the Clean Air Act), and 

12 ‘‘(B) the motor vehicle safety provisions of 

13 sections 30101 through 30169 of title 49, 

14 United States Code. 

15 ‘‘(f) REGULATIONS.— 

16 ‘‘(1) IN GENERAL.—Except as provided in para17 graph (2), the Secretary shall promulgate such regu18 lations as necessary to carry out the provisions of 

19 this section. 

20 ‘‘(2) COORDINATION IN PRESCRIPTION OF CER21 TAIN REGULATIONS.—The Secretary of the Treas22 ury, in coordination with the Secretary of Transpor23 tation and the Administrator of the Environmental 

24 Protection Agency, shall prescribe such regulations 

25 as necessary to determine whether a motor vehicle 
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1 meets the requirements to be eligible for a credit 

2 under this section. 

3 ‘‘(g) TERMINATION.—This section shall not apply to 

4 any property purchased after— 

5 ‘‘(1) in the case of a new qualified fuel cell 

6 motor vehicle (as described in subsection (b)), De7 cember 31, 2014, and 

8 ‘‘(2) in the case of any other property, Decem9 ber 31, 2010.’’. 

10 (b) CONFORMING AMENDMENTS.— 

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

12 ‘‘and’’ at the end of paragraph (37), by striking the 

13 period at the end of paragraph (38) and inserting ‘‘, 

14 and’’, and by adding at the end the following new 

15 paragraph: 

16 ‘‘(39) to the extent provided in section 

17 30B(e)(5).’’. 

18 (2) Section 55(c)(2) is amended by inserting 

19 ‘‘30B(d),’’ after ‘‘30(b)(3)’’. 

20 (3) Section 6501(m) is amended by inserting 

21 ‘‘30B(e)(10),’’ after ‘‘30(d)(4),’’. 

22 (4) The table of sections for subpart B of part 

23 IV of subchapter A of chapter 1 is amended by in24 serting after the item relating to section 30A the fol25 lowing new item: 

‘‘30B. Alternative motor vehicle credit.’’. 
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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to property placed in service after 

3 the date of the enactment of this Act, in taxable years 

4 ending after such date. 

5 Subtitle C—Industry Incentives 

6 SEC. 521. ENERGY CREDIT FOR COMBINED HEAT AND 

7 POWER SYSTEM PROPERTY. 

8 (a) IN GENERAL.—Section 48(a)(3)(A) (defining en9 ergy property), as amended by this Act, is amended to 

10 read as follows: 

11 ‘‘(A) which is— 

12 ‘‘(i) equipment used to produce, dis13 tribute, or use energy derived from a geo14 thermal deposit (within the meaning of 

15 section 613(e)(2)), but only, in the case of 

16 electricity generated by geothermal power, 

17 up to (but not including) the electrical 

18 transmission stage, or 

19 ‘‘(ii) combined heat and power system 

20 property,’’. 

21 (b) COMBINED HEAT AND POWER SYSTEM PROP22 ERTY.—Section 48 (relating to energy credit) is amended 

23 by redesignating subsection (b) as paragraph (5) of sub24 section (a), by moving such paragraph (5) two ems to the 
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1 right, and by adding at the end the following new sub2 section: 

3 ‘‘(b) COMBINED HEAT AND POWER SYSTEM PROP4 ERTY.—For purposes of subsection (a)(3)(A)(ii)— 

5 ‘‘(1) COMBINED HEAT AND POWER SYSTEM

6 PROPERTY.—The term ‘combined heat and power 

7 system property’ means property comprising a sys8 tem— 

9 ‘‘(A) which uses the same energy source 

10 for the simultaneous or sequential generation of 

11 electrical power, mechanical shaft power, or 

12 both, in combination with the generation of 

13 steam or other forms of useful thermal energy 

14 (including heating and cooling applications), 

15 ‘‘(B) which has an electrical capacity of 

16 not more than 15 megawatts or a mechanical 

17 energy capacity of not more than 2,000 horse18 power or an equivalent combination of electrical 

19 and mechanical energy capacities, 

20 ‘‘(C) which produces— 

21 ‘‘(i) at least 20 percent of its total 

22 useful energy in the form of thermal en23 ergy which is not used to produce electrical 

24 or mechanical power (or combination 

25 thereof), and 
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1 ‘‘(ii) at least 20 percent of its total 

2 useful energy in the form of electrical or 

3 mechanical power (or combination thereof), 

4 ‘‘(D) the energy efficiency percentage of 

5 which exceeds 60 percent, and 

6 ‘‘(E) which is placed in service before Jan7 uary 1, 2009. 

8 ‘‘(2) SPECIAL RULES.— 

9 ‘‘(A) ENERGY EFFICIENCY PERCENT10 AGE.—For purposes of this subsection, the en11 ergy efficiency percentage of a system is the 

12 fraction— 

13 ‘‘(i) the numerator of which is the 

14 total useful electrical, thermal, and me15 chanical power produced by the system at 

16 normal operating rates, and expected to be 

17 consumed in its normal application, and 

18 ‘‘(ii) the denominator of which is the 

19 lower heating value of the fuel sources for 

20 the system. 

21 ‘‘(B) DETERMINATIONS MADE ON BTU

22 BASIS.—The energy efficiency percentage and 

23 the percentages under paragraph (1)(C) shall 

24 be determined on a Btu basis. 
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1 ‘‘(C) INPUT AND OUTPUT PROPERTY NOT

2 INCLUDED.—The term ‘combined heat and 

3 power system property’ does not include prop4 erty used to transport the energy source to the 

5 facility or to distribute energy produced by the 

6 facility. 

7 ‘‘(D) PUBLIC UTILITY PROPERTY.— 

8 ‘‘(i) ACCOUNTING RULE FOR PUBLIC

9 UTILITY PROPERTY.—If the combined heat 

10 and power system property is public utility 

11 property (as defined in section 168(i)(10)), 

12 the taxpayer may only claim the credit 

13 under subsection (a) if, with respect to 

14 such property, the taxpayer uses a normal15 ization method of accounting. 

16 ‘‘(ii) CERTAIN EXCEPTION NOT TO

17 APPLY.—The matter in subsection (a)(3) 

18 which follows subparagraph (D) thereof 

19 shall not apply to combined heat and 

20 power system property. 

21 ‘‘(E) NONAPPLICATION OF CERTAIN

22 RULES.—For purposes of determining if the 

23 term ‘combined heat and power system prop24 erty’ includes technologies which generate elec25 tricity or mechanical power using back-pressure 
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1 steam turbines in place of existing pressure-re2 ducing valves or which make use of waste heat 

3 from industrial processes such as by using or4 ganic rankine, stirling, or kalina heat engine 

5 systems, paragraph (1) shall be applied without 

6 regard to subparagraphs (A), (C), and (D) 

7 thereof.’’ 

8 ‘‘(3) SYSTEMS USING BAGASSE.—If a system is 

9 designed to use bagasse for at least 90 percent of 

10 the energy source— 

11 ‘‘(A) paragraph (1)(D) shall not apply, but 

12 ‘‘(B) the amount of credit determined 

13 under subsection (a) with respect to such sys14 tem shall not exceed the amount which bears 

15 the same ratio to such amount of credit (deter16 mined without regard to this paragraph) as the 

17 energy efficiency percentage of such system 

18 bears to 60 percent.’’. 

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

20 this subsection shall apply to periods after December 31, 

21 2005, in taxable years ending after such date, under rules 

22 similar to the rules of section 48(m) of the Internal Rev23 enue Code of 1986 (as in effect on the day before the date 
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1 of the enactment of the Revenue Reconciliation Act of 

2 1990). 

Æ