I

107TH CONGRESS

1ST SESSION H. R. 2147

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

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

IN THE HOUSE OF REPRESENTATIVES

JUNE 13, 2001

Mr. WELLER (for himself, Mr. JOHNSON of Illinois, Mr. CARDIN, Mr.

ENGLISH, Mr. RAMSTAD, and Mr. KERNS) introduced the following bill;

which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide

tax credits for making energy efficiency improvements

to existing homes and for constructing new energy efficient homes.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Save America’s Valu5 able Energy Resources Act of 2001’’.
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1 SEC. 2. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS

2 TO EXISTING HOMES.

3 (a) IN GENERAL.—Subpart A of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of

5 1986 (relating to nonrefundable personal credits) is

6 amended by inserting after section 25A the following new

7 section:

8 ‘‘SEC. 25B. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST9 ING HOMES.

10 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in11 dividual, there shall be allowed as a credit against the tax

12 imposed by this chapter for the taxable year an amount

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

14 the taxpayer for qualified energy efficiency improvements

15 installed during such taxable year.

16 ‘‘(b) LIMITATIONS.—

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

18 this section with respect to a dwelling shall not ex19 ceed $2,000.

20 ‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER

21 ON SAME DWELLING TAKEN INTO ACCOUNT.—If a

22 credit was allowed to the taxpayer under subsection

23 (a) with respect to a dwelling in 1 or more prior tax24 able years, the amount of the credit otherwise allow25 able for the taxable year with respect to that dwell26 ing shall not exceed the amount of $2,000 reduced
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1 by the sum of the credits allowed under subsection

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

3 all prior 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 subpart

8 A of part IV of subchapter A (other than this section),

9 such excess shall be carried to the succeeding taxable year

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

11 such 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 that is certified to meet

16 or exceed the prescriptive criteria for such component es17 tablished by the 1998 International Energy Conservation

18 Code, if—

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

20 dwelling—

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

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

23 the taxpayer’s principal residence (within the

24 meaning of section 121),
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1 ‘‘(2) the original use of such component com2 mences with the taxpayer, and

3 ‘‘(3) such component reasonably can be ex4 pected to remain in use for at least 5 years.

5 The certification requirement of the preceding sentence

6 shall apply only to the extent that the aggregate cost of

7 such components exceeds $2,500.

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

9 subsection (d) shall be—

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

11 specifications or applicable ratings (including prod12 uct labeling requirements) for the measurement of

13 energy efficiency, based upon energy use or building

14 envelope component performance, for the energy effi15 cient building envelope component,

16 ‘‘(2) provided by the contractor who installed

17 such building envelope component, a local building

18 regulatory authority, a utility, a manufactured home

19 production inspection primary inspection agency

20 (IPIA), or an accredited home energy rating system

21 provider who is accredited by or otherwise author22 ized to use approved energy performance measure23 ment methods by the Home Energy Ratings Systems

24 Council or the National Association of State Energy

25 Officials, and
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1 ‘‘(3) made in writing in a manner that specifies

2 in readily verifiable fashion the energy efficient

3 building envelope components installed and their re4 spective energy efficiency levels.

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

6 ‘‘(1) TENANT-STOCKHOLDER IN COOPERATIVE

7 HOUSING CORPORATION.—In the case of an indi8 vidual who is a tenant-stockholder (as defined in sec9 tion 216) in a cooperative housing corporation (as

10 defined in such section), such individual shall be

11 treated as having paid his tenant-stockholder’s pro12 portionate share (as defined in section 216(b)(3)) of

13 the cost of qualified energy efficiency improvements

14 made by such corporation.

15 ‘‘(2) CONDOMINIUMS.—

16 ‘‘(A) IN GENERAL.—In the case of an indi17 vidual who is a member of a condominium man18 agement association with respect to a condo19 minium which he owns, such individual shall be

20 treated as having paid his proportionate share

21 of the cost of qualified energy efficiency im22 provements made by such association.

23 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO24 CIATION.—For purposes of this paragraph, the

25 term ‘condominium management association’
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1 means an organization which meets the require2 ments of paragraph (1) of section 528(c) (other

3 than subparagraph (E) thereof) with respect to

4 a condominium project substantially all of the

5 units of which are used as residences.

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

7 term ‘building envelope component’ means—

8 ‘‘(A) insulation material or system which is

9 specifically and primarily designed to reduce the

10 heat loss or gain or a dwelling when installed

11 in or on such dwelling, and

12 ‘‘(B) exterior windows (including skylights)

13 and doors.

14 ‘‘(4) MANUFACTURED HOMES INCLUDED.—For

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

16 a manufactured home which conforms to Federal

17 Manufactured Home Construction and Safety Stand18 ards (24 C.F.R. 3280).

19 ‘‘(g) BASIS ADJUSTMENT.—For purposes of this sub20 title, if a credit is allowed under this section for any ex21 penditure with respect to any property, the increase in the

22 basis of such property which would (but for this sub23 section) result from such expenditure shall be reduced by

24 the amount of the credit so allowed.
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1 ‘‘(h) TERMINATION.—Subsection (a) shall apply to

2 qualified energy efficiency improvements installed during

3 the period beginning on January 1, 2001, and ending on

4 December 31, 2005.’’.

5 (b) CONFORMING AMENDMENTS.—

6 (1) Subsection (c) of section 23 of such Code

7 is amended by inserting ‘‘, section 25B, and section

8 1400C’’ after ‘‘other than this section’’.

9 (2) Subparagraph (C) of section 25(e)(1) of

10 such Code is amended by striking ‘‘section 23’’ and

11 inserting ‘‘sections 23, 25B, and 1400C’’.

12 (3) Subsection (d) of section 1400C of such

13 Code is amended by inserting ‘‘and section 25B’’

14 after ‘‘other than this section’’.

15 (4) Subsection (a) of section 1016 of such Code

16 is amended by striking ‘‘and’’ at the end of para17 graph (26), by striking the period at the end of

18 paragraph (27) and inserting ‘‘; and’’, and by add19 ing at the end the following new paragraph:

20 ‘‘(28) to the extent provided in section 25B(f),

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

22 has been allowed under section 25B.’’.

23 (5) 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 inserting after the item relating to sec2 tion 25A the following new item:

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

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

4 this section shall apply to taxable years ending after De5 cember 31, 2000.

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

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of

10 1986 (relating to business related credits) is amended by

11 inserting after section 45F the following new section:

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

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

14 the case of an eligible contractor, the credit determined

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

16 to the aggregate adjusted bases of all energy efficient

17 property installed in a qualified new energy efficient home

18 during construction of such home.

19 ‘‘(b) LIMITATIONS.—

20 ‘‘(1) MAXIMUM CREDIT.—

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

22 this section with respect to a dwelling shall not

23 exceed $2,000.

24 ‘‘(B) PRIOR CREDIT AMOUNTS ON SAME

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

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

3 the amount of the credit otherwise allowable for

4 the taxable year with respect to that dwelling

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

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

8 prior taxable years.

9 ‘‘(2) COORDINATION WITH REHABILITATION

10 AND ENERGY CREDITS.—For purposes of this

11 section—

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

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

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

17 percentage of energy property (as determined

18 under section 48(a)), and

19 ‘‘(B) expenditures taken into account

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

21 taken into account under this section.

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

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

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

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

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

6 term ‘energy efficient property’ means any energy

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

9 ‘‘(3) QUALIFIED NEW ENERGY EFFICIENT

10 HOME.—The term ‘qualified new energy efficient

11 home’ means a dwelling—

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

13 ‘‘(B) the construction of which is substan14 tially completed after December 31, 2000,

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

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

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

21 annual heating and cooling energy consumption

22 that is at least 30 percent below the annual

23 level of heating and cooling energy consumption

24 of a comparable dwelling constructed in accord-
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1 ance with the standards of the 1998 Inter2 national Energy Conservation Code.

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

4 includes reconstruction and rehabilitation.

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

6 purchase and, in the case of reconstruction and re7 habilitation, such term includes a binding written

8 contract for such reconstruction or rehabilitation.

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

10 term ‘building envelope component’ means—

11 ‘‘(A) insulation material or system which is

12 specifically and primarily designed to reduce the

13 heat loss or gain of a dwelling when installed in

14 or on such dwelling, and

15 ‘‘(B) exterior windows (including skylights)

16 and doors.

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

18 term ‘dwelling’ includes a manufactured home con19 forming to Federal Manufactured Home Construc20 tion and Safety Standards (24 C.F.R. 3280).

21 ‘‘(d) CERTIFICATION.—

22 ‘‘(1) METHOD.—A certification described in

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

24 basis of one of the following methods:
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1 ‘‘(A) The technical specifications or appli2 cable ratings (including product labeling re3 quirements) for the measurement of energy effi4 ciency for the energy efficient building envelope

5 component or energy efficient heating or cooling

6 appliance, based upon energy use or building

7 envelope component performance.

8 ‘‘(B) An energy performance measurement

9 method that utilizes computer software ap10 proved by organizations designated by the Sec11 retary.

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

13 provided by—

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

15 paragraph (1)(A), the eligible contractor, a

16 local building regulatory authority, a utility, a

17 manufactured home production inspection pri18 mary inspection agency (IPIA), or an accred19 ited home energy rating systems provider who

20 is accredited by, or otherwise authorized to use,

21 approved energy performance measurement

22 methods by the Home Energy Ratings Systems

23 Council or the National Association of State

24 Energy Officials, or
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1 ‘‘(B) in the case of a method described in

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

3 an organization designated by the Secretary for

4 such purposes.

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

6 in writing in a manner that specifies in readily

7 verifiable fashion the energy efficient building enve8 lope components and energy efficient heating or

9 cooling appliances installed and their respective en10 ergy efficiency levels, and in the case of a method

11 described in subparagraph (B) of paragraph (1), ac12 companied by written analysis documenting the

13 proper application of a permissible energy perform14 ance measurement method to the specific cir15 cumstances of such dwelling.

16 ‘‘(4) REGULATIONS.—

17 ‘‘(A) IN GENERAL.—In prescribing regula18 tions under this subsection for energy perform19 ance measurement methods, the Secretary shall

20 prescribe procedures for calculating annual en21 ergy costs for heating and cooling and cost sav22 ings and for the reporting of the results. Such

23 regulations shall—

24 ‘‘(i) be based on the National Home

25 Energy Rating Technical Guidelines of the
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1 National Association of State Energy Offi2 cials, the Home Energy Rating Guidelines

3 of the Home Energy Rating Systems

4 Council, or the modified 1998 California

5 Residential ACM manual,

6 ‘‘(ii) provide that any calculation pro7 cedures be developed such that the same

8 energy efficiency measures allow a home to

9 qualify for the credit under this section re10 gardless of whether the house uses a gas

11 or oil furnace or boiler or an electric heat

12 pump, and

13 ‘‘(iii) require that any computer soft14 ware allow for the printing of the Federal

15 tax forms necessary for the credit under

16 this section and explanations for the home17 buyer of the energy efficient features that

18 were used to comply with the requirements

19 of this section.

20 ‘‘(B) PROVIDERS.—For purposes of para21 graph (2)(B), the Secretary shall establish re22 quirements for the designation of individuals

23 based on the requirements for energy consult24 ants and home energy raters specified by the

25 National Association of State Energy Officials.
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1 ‘‘(e) BASIS ADJUSTMENT.—For purposes of this sub2 title, if a credit is allowed under this section for any ex3 penditure with respect to any property, the increase in the

4 basis of such property which would (but for this sub5 section) result from such expenditure shall be reduced by

6 the amount of the credit so allowed.

7 ‘‘(f) TERMINATION.—Subsection (a) shall apply to

8 dwellings purchased during the period beginning on Janu9 ary 1, 2001, and ending on December 31, 2005.’’

10 (b) CREDIT MADE PART OF GENERAL BUSINESS

11 CREDIT.—Subsection (b) of section 38 of such Code (re12 lating to current year business credit) is amended by strik13 ing ‘‘plus’’ at the end of paragraph (13), by striking the

14 period at the end of paragraph (14) and inserting ‘‘, plus’’,

15 and by adding at the end thereof the following new para16 graph:

17 ‘‘(16) the new energy efficient home credit de18 termined under section 45G.’’.

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

20 such Code (relating to certain expenses for which credits

21 are allowable) is amended by adding at the end thereof

22 the following new subsection:

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

24 No deduction shall be allowed for that portion of expenses

25 for a new energy efficient home otherwise allowable as a
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1 deduction for the taxable year which is equal to the

2 amount of the credit determined for such taxable year

3 under section 45G.’’.

4 (d) CREDIT ALLOWED AGAINST REGULAR AND MIN5 IMUM TAX.—

6 (1) IN GENERAL.—Subsection (c) of section 38

7 of such Code (relating to limitation based on amount

8 of tax) is amended by redesignating paragraph (3)

9 as paragraph (4) and by inserting after paragraph

10 (2) the following new paragraph:

11 ‘‘(3) SPECIAL RULES FOR NEW ENERGY EFFI12 CIENT HOME CREDIT.—

13 ‘‘(A) IN GENERAL.—In the case of the new

14 energy efficient home credit—

15 ‘‘(i) this section and section 39 shall

16 be applied separately with respect to the

17 credit, and

18 ‘‘(ii) in applying paragraph (1) to the

19 credit—

20 ‘‘(I) subparagraph (A) thereof

21 shall not apply, and

22 ‘‘(II) the limitation under para23 graph (1) (as modified by subclause

24 (I)) shall be reduced by the credit al25 lowed under subsection (a) for the
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1 taxable year (other than the new en2 ergy efficient home credit).

3 ‘‘(B) NEW ENERGY EFFICIENT HOME

4 CREDIT.—For purposes of this subsection, the

5 term ‘new energy efficient home credit’ means

6 the credit allowable under subsection (a) by rea7 son of section 45G.’’.

8 (2) CONFORMING AMENDMENT.—Subclause (II)

9 of section 38(c)(2)(A)(ii) of such Code is amended

10 by inserting ‘‘or the new energy efficient home cred11 it’’ after ‘‘employment credit’’.

12 (e) LIMITATION ON CARRYBACK.—Subsection (d) of

13 section 39 of such Code is amended by adding at the end

14 the following new paragraph:

15 ‘‘(11) NO CARRYBACK OF NEW ENERGY EFFI16 CIENT HOME CREDIT BEFORE EFFECTIVE DATE.—

17 No portion of the unused business credit for any

18 taxable year which is attributable to the credit deter19 mined under section 45G may be carried back to any

20 taxable year ending before the date of the enactment

21 of section 45G.’’.

22 (f) DEDUCTION FOR CERTAIN UNUSED BUSINESS

23 CREDITS.—Subsection (c) of section 196 of such Code is

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

25 by striking the period at the end of paragraph (10) and
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1 inserting ‘‘, and’’, and by adding after paragraph (10) the

2 following new paragraph:

3 ‘‘(11) the new energy efficient home credit de4 termined under section 45G.’’.

5 (g) CLERICAL AMENDMENT.—The table of sections

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

7 of such Code is amended by inserting after the item relat8 ing to section 45F the following new item:

‘‘Sec. 45G. New energy efficient home credit.’’.

9 (h) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to taxable years ending after De11 cember 31, 2000.

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