II 

113TH CONGRESS 

2D SESSION S. 2189 

To amend the Internal Revenue Code of 1986 to improve and extend the 

deduction for new and existing energy-efficient commercial buildings, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 1, 2014 

Mr. CARDIN (for himself, Mrs. FEINSTEIN, and Mr. SCHATZ) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to improve 

and extend the deduction for new and existing energyefficient commercial buildings, 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, 

3 SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; 

4 TABLE OF CONTENTS. 

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

6 ‘‘Energy Efficiency Tax Incentives Act’’. 

7 (b) AMENDMENT OF 1986 CODE.—Except as other8 wise expressly provided, whenever in this Act an amend9 ment or repeal is expressed in terms of an amendment 


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

2 shall be considered to be made to a section or other provi3 sion of the Internal Revenue Code of 1986. 

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

5 this Act is as follows: 

Sec. 1. Short title; amendment of 1986 Code; table of contents. 

TITLE I—COMMERCIAL BUILDING MODERNIZATION 

Sec. 101. Extension and modification of deduction for energy-efficient commercial buildings. 

Sec. 102. Deduction for retrofits of existing commercial and multifamily buildings. 

TITLE II—HOME ENERGY IMPROVEMENTS 

Sec. 201. Performance based home energy improvements. 

TITLE III—INDUSTRIAL ENERGY AND WATER EFFICIENCY 

Sec. 301. Modifications in credit for combined heat and power system property. 

Sec. 302. Investment tax credit for biomass heating property. 

Sec. 303. Investment tax credit for waste heat to power property. 

Sec. 304. Motor energy efficiency improvement tax credit. 

Sec. 305. Credit for replacement of CFC refrigerant chiller. 

Sec. 306. Qualifying efficient industrial process water use project credit. 

6 TITLE I—COMMERCIAL 

7 BUILDING MODERNIZATION 

8 SEC. 101. EXTENSION AND MODIFICATION OF DEDUCTION 

9 FOR ENERGY-EFFICIENT COMMERCIAL 

10 BUILDINGS. 

11 (a) EXTENSION.— 

12 (1) THROUGH 2016.—Section 179D(h) is 

13 amended by striking ‘‘December 31, 2013’’ and in14 serting ‘‘December 31, 2016’’. 

15 (2) INCLUSION OF MULTIFAMILY BUILDINGS.— 


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1 (A) IN GENERAL.—Subparagraph (B) of 

2 section 179D(c)(1) is amended by striking 

3 ‘‘building’’ and inserting ‘‘commercial building 

4 or multifamily building’’. 

5 (B) DEFINITIONS.—Subsection (c) of sec6 tion 179D is amended by adding at the end the 

7 following new paragraphs: 

8 ‘‘(3) COMMERCIAL BUILDING.—The term ‘com9 mercial building’ means a building with a primary 

10 use or purpose other than as residential housing. 

11 ‘‘(4) MULTIFAMILY BUILDING.—The term ‘mul12 tifamily building’ means a structure of 5 or more 

13 dwelling units with a primary use as residential 

14 housing, and includes such buildings owned and op15 erated as a condominium, cooperative, or other com16 mon interest community.’’. 

17 (b) INCREASE IN MAXIMUM AMOUNT OF DEDUC18 TION.— 

19 (1) IN GENERAL.—Subparagraph (A) of section 

20 179D(b)(1) is amended by striking ‘‘$1.80’’ and in21 serting ‘‘$3.00’’. 

22 (2) PARTIAL ALLOWANCE.—Paragraph (1) of 

23 section 179D(d) is amended to read as follows: 

24 ‘‘(1) PARTIAL ALLOWANCE.— 


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1 ‘‘(A) IN GENERAL.—Except as provided in 

2 subsection (f), if— 

3 ‘‘(i) the requirement of subsection 

4 (c)(1)(D) is not met, but 

5 ‘‘(ii) there is a certification in accord6 ance with paragraph (6) that— 

7 ‘‘(I) any system referred to in 

8 subsection (c)(1)(C) satisfies the en9 ergy-savings targets established by the 

10 Secretary under subparagraph (B) 

11 with respect to such system, or 

12 ‘‘(II) the systems referred to in 

13 subsection (c)(1)(C)(ii) and subsection 

14 (c)(1)(C)(iii) together satisfy the en15 ergy-savings targets established by the 

16 Secretary under subparagraph (B) 

17 with respect to such systems, 

18 then the requirement of subsection (c)(1)(D) 

19 shall be treated as met with respect to such sys20 tem or systems, and the deduction under sub21 section (a) shall be allowed with respect to en22 ergy-efficient commercial building property in23 stalled as part of such system and as part of 

24 a plan to meet such targets, except that sub25 section (b) shall be applied to such property deVerDate Mar 15 2010 04:22 Apr 02, 2014 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2189.IS S2189

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1 scribed in clause (ii)(I) by substituting ‘$1.00’ 

2 for ‘$3.00’ and to such property described in 

3 clause (ii)(II) by substituting ‘$2.20’ for 

4 ‘$3.00’. 

5 ‘‘(B) REGULATIONS.— 

6 ‘‘(i) IN GENERAL.—The Secretary, 

7 after consultation with the Secretary of 

8 Energy, shall promulgate regulations es9 tablishing a target for each system de10 scribed in subsection (c)(1)(C) which, if 

11 such targets were met for all such systems, 

12 the property would meet the requirements 

13 of subsection (c)(1)(D). 

14 ‘‘(ii) SAFE HARBOR FOR COMBINED

15 SYSTEMS.—The Secretary, after consulta16 tion with the Secretary of Energy, and not 

17 later than 6 months after the date of the 

18 enactment of the Energy Efficiency Tax 

19 Incentives Act, shall promulgate regula20 tions regarding combined envelope and me21 chanical system performance that detail 

22 appropriate components, efficiency levels, 

23 or other relevant information for the sys24 tems referred to in subsection (c)(1)(C)(ii) 

25 and subsection (c)(1)(C)(iii) together to be 


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1 deemed to have achieved two-thirds of the 

2 requirements of subsection (c)(1)(D).’’. 

3 (c) DENIAL OF DOUBLE BENEFIT RULES.— 

4 (1) IN GENERAL.—Section 179D is amended by 

5 redesignating subsection (h) as subsection (i) and by 

6 inserting after subsection (g) the following new sub7 section: 

8 ‘‘(h) TAX INCENTIVES NOT AVAILABLE.—Energy-ef9 ficient measures for which a deduction is allowed under 

10 this section shall not be eligible for a deduction under sec11 tion 179F.’’. 

12 (2) LOW-INCOME HOUSING EXCEPTION TO

13 BASIS REDUCTION.—Subsection (e) of section 179D 

14 is amended by inserting ‘‘(other than property 

15 placed in service in a qualified low-income building 

16 (within the meaning of section 42))’’ after ‘‘building 

17 property’’. 

18 (d) ALLOCATION OF DEDUCTION.—Paragraph (4) of 

19 section 179D(d) is amended to read as follows: 

20 ‘‘(4) ALLOCATION OF DEDUCTION.— 

21 ‘‘(A) IN GENERAL.—Not later than 180 

22 days after the date of the enactment of this 

23 subsection, the Secretary, in consultation with 

24 the Secretary of Energy, shall promulgate a 

25 regulation to allow the owner of a commercial 


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1 or multifamily building, including a govern2 ment, tribal, or non-profit owner, to allocate 

3 any deduction allowed under this section, or a 

4 portion thereof, to the person primarily respon5 sible for designing the property in lieu of the 

6 owner or to a commercial tenant that leases or 

7 otherwise occupies space in such building pur8 suant to a written agreement. Such person shall 

9 be treated as the taxpayer for purposes of this 

10 section. 

11 ‘‘(B) FORM OF ALLOCATION.—An alloca12 tion made under this paragraph shall be in 

13 writing and in a form that meets the form of 

14 allocation requirements in Notice 2008–40 of 

15 the Internal Revenue Service. 

16 ‘‘(C) PROVISION OF ALLOCATION.—Not 

17 later than 30 days after receipt of a written re18 quest from a person eligible to receive an alloca19 tion under this paragraph, the owner of a build20 ing that makes an allocation under this para21 graph shall provide the form of allocation (as 

22 described in subparagraph (B)) to such person. 

23 ‘‘(D) ALLOCATION FROM PUBLIC OWNER

24 OF BUILDING.—In the case of a commercial 

25 building or multifamily building that is owned 


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1 by a Federal, State, or local government or a 

2 subdivision thereof, Notice 2006–52 of the In3 ternal Revenue Service, as amplified by Notice 

4 2008–40, shall apply to any allocation.’’. 

5 (e) TREATMENT OF BASIS IN CONTEXT OF ALLOCA6 TION.—Subsection (e) of section 179D, as amended by 

7 subsection (c)(2), is amended by inserting ‘‘or so allo8 cated’’ after ‘‘so allowed’’. 

9 (f) EARNINGS AND PROFITS CONFORMITY FOR REAL

10 ESTATE INVESTMENT TRUSTS.—Subparagraph (B) of 

11 section 312(k)(3) is amended— 

12 (1) by striking ‘‘.—For purposes of’’ and in13 serting ‘‘.— 

14 ‘‘(i) IN GENERAL.—Except as pro15 vided in clause (ii), for purposes of’’, and 

16 (2) by adding at the end the following new 

17 clause: 

18 ‘‘(ii) EARNINGS AND PROFITS CON19 FORMITY FOR REAL ESTATE INVESTMENT

20 TRUSTS.— 

21 ‘‘(I) IN GENERAL.—For purposes 

22 of computing the earnings and profits 

23 of a real estate investment trust 

24 (other than a captive real estate in25 vestment trust), the entire amount deVerDate Mar 15 2010 04:22 Apr 02, 2014 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2189.IS S2189

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1 ductible under section 179D shall be 

2 allowed as deductions in the taxable 

3 years for which such amounts are 

4 claimed under such section. 

5 ‘‘(II) CAPTIVE REAL ESTATE IN6 VESTMENT TRUST.—The term ‘captive 

7 real estate investment trust’ means a 

8 real estate investment trust the shares 

9 or beneficial interests of which are not 

10 regularly traded on an established se11 curities market and more than 50 per12 cent of the voting power or value of 

13 the beneficial interests or shares of 

14 which are owned or controlled, directly 

15 or indirectly, or constructively, by a 

16 single entity that is treated as an as17 sociation taxable as a corporation 

18 under this title and is not exempt 

19 from taxation pursuant to the provi20 sions of section 501(a). 

21 ‘‘(III) RULES OF APPLICATION.— 

22 For purposes of this clause, the con23 structive ownership rules of section 

24 318(a), as modified by section 

25 856(d)(5), shall apply in determining 


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1 the ownership of stock, assets, or net 

2 profits of any person, and the fol3 lowing entities are not considered an 

4 association taxable as a corporation: 

5 ‘‘(aa) Any real estate invest6 ment trust other than a captive 

7 real estate investment trust. 

8 ‘‘(bb) Any qualified real es9 tate investment trust subsidiary 

10 under section 856, other than a 

11 qualified REIT subsidiary of a 

12 captive real estate investment 

13 trust. 

14 ‘‘(cc) Any Listed Australian 

15 Property Trust (meaning an Aus16 tralian unit trust registered as a 

17 ‘Managed Investment Scheme’ 

18 under the Australian Corpora19 tions Act in which the principal 

20 class of units is listed on a recog21 nized stock exchange in Australia 

22 and is regularly traded on an es23 tablished securities market), or 

24 an entity organized as a trust, 

25 provided that a Listed Australian 


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1 Property Trust owns or controls, 

2 directly or indirectly, 75 percent 

3 or more of the voting power or 

4 value of the beneficial interests 

5 or shares of such trust. 

6 ‘‘(dd) Any corporation, 

7 trust, association, or partnership 

8 organized outside the laws of the 

9 United States and which satisfies 

10 the criteria described in sub11 clause (IV). 

12 ‘‘(IV) CRITERIA.—The criteria 

13 described in this subclause are as fol14 lows: 

15 ‘‘(aa) At least 75 percent of 

16 the entity’s total asset value at 

17 the close of its taxable year is 

18 represented by real estate assets 

19 (as defined in section 

20 856(c)(5)(B)), cash and cash 

21 equivalents, and United States 

22 Government securities. 

23 ‘‘(bb) The entity is not sub24 ject to tax on amounts distrib25 uted to its beneficial owners, or 


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1 is exempt from entity-level tax2 ation. 

3 ‘‘(cc) The entity distributes 

4 at least 85 percent of its taxable 

5 income (as computed in the juris6 diction in which it is organized) 

7 to the holders of its shares or 

8 certificates of beneficial interest 

9 on an annual basis. 

10 ‘‘(dd) Not more than 10 

11 percent of the voting power or 

12 value in such entity is held di13 rectly or indirectly or construc14 tively by a single entity or indi15 vidual, or the shares or beneficial 

16 interests of such entity are regu17 larly traded on an established se18 curities market. 

19 ‘‘(ee) The entity is organized 

20 in a country which has a tax 

21 treaty with the United States.’’. 

22 (g) RULES FOR LIGHTING SYSTEMS.—Subsection (f) 

23 of section 179D is amended to read as follows: 

24 ‘‘(f) RULES FOR LIGHTING SYSTEMS.— 


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1 ‘‘(1) IN GENERAL.—With respect to property 

2 that is part of a lighting system, the deduction al3 lowed under subsection (a) shall be equal to— 

4 ‘‘(A) for a lighting system that includes in5 stallation of a lighting control described in 

6 paragraph (2)(A), the applicable amount deter7 mined under paragraph (3)(A), 

8 ‘‘(B) for a lighting system that includes in9 stallation of a lighting control described in 

10 paragraph (2)(B), the applicable amount deter11 mined under paragraph (3)(B), or 

12 ‘‘(C) for a lighting system that does not in13 clude installation of any lighting controls de14 scribed in subparagraph (A) or (B) of para15 graph (2), the applicable amount determined 

16 under paragraph (3)(C). 

17 ‘‘(2) ENERGY SAVING CONTROLS.— 

18 ‘‘(A) LIGHTING CONTROLS IN CERTAIN

19 SPACES.—For purposes of paragraph (1)(A), 

20 the lighting controls described in this subpara21 graph are the following: 

22 ‘‘(i) Occupancy sensors (as described 

23 in paragraph (4)(I)) in spaces not greater 

24 than 800 square feet. 


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1 ‘‘(ii) Bi-level controls (as described in 

2 paragraph (4)(A)). 

3 ‘‘(iii) Continuous or step dimming 

4 controls (as described in subparagraphs 

5 (B) and (K) of paragraph (4)). 

6 ‘‘(iv) Daylight dimming where suffi7 cient daylight is available (as described in 

8 paragraph (4)(C)). 

9 ‘‘(v) A multi-scene controller (as de10 scribed in paragraph (4)(H)). 

11 ‘‘(vi) Time scheduling controls (as de12 scribed in paragraph (4)(L)), provided that 

13 such controls are not required by Standard 

14 90.1-2010. 

15 ‘‘(vii) Such other lighting controls as 

16 the Secretary, in consultation with the Sec17 retary of Energy, determines appropriate. 

18 ‘‘(B) OTHER CONTROL TYPES.—For pur19 poses of paragraph (1)(B), the lighting controls 

20 described in this subparagraph are the fol21 lowing: 

22 ‘‘(i) Occupancy sensors (as described 

23 in paragraph (4)(I)) in spaces greater than 

24 800 square feet. 


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1 ‘‘(ii) Demand responsive controls (as 

2 described in paragraph (4)(D)). 

3 ‘‘(iii) Lumen maintenance controls (as 

4 described in paragraph (4)(F)) where solid 

5 state lighting is used. 

6 ‘‘(iv) Such other lighting controls as 

7 the Secretary, in consultation with the Sec8 retary of Energy, determines appropriate. 

9 ‘‘(3) APPLICABLE AMOUNT.— 

10 ‘‘(A) LIGHTING CONTROLS IN CERTAIN

11 SPACES.—For purposes of paragraph (1)(A), 

12 the applicable amount shall be determined in 

13 accordance with the following table: 

‘‘If the percentage of reduction in lighting power 

density is not less than: 

The amount of the deduction 

per square foot is: 

15 percent .................................................................................... $0.30

20 percent .................................................................................... $0.44

25 percent .................................................................................... $0.58

30 percent .................................................................................... $0.72

35 percent .................................................................................... $0.86

40 percent .................................................................................... $1.00. 

14 ‘‘(B) LIGHTING CONTROLS IN LARGER

15 SPACES AND WHERE SOLID LIGHTING IS

16 USED.—For purposes of paragraph (1)(B), the 

17 applicable amount shall be determined in ac18 cordance with the following table: 

‘‘If the percentage of reduction in lighting power 

density is not less than: 

The amount of the deduction 

per square foot is: 

20 percent .................................................................................... $0.30

25 percent .................................................................................... $0.44

30 percent .................................................................................... $0.58


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‘‘If the percentage of reduction in lighting power 

density is not less than: 

The amount of the deduction 

per square foot is: 

35 percent .................................................................................... $0.72

40 percent .................................................................................... $0.86

45 percent .................................................................................... $1.00. 

1 ‘‘(C) NO QUALIFIED LIGHTING CON2 TROLS.—For purposes of paragraph (1)(C), the 

3 applicable amount shall be determined in ac4 cordance with the following table: 

‘‘If the percentage of reduction in lighting power 

density is not less than: 

The amount of the deduction 

per square foot is: 

25 percent .................................................................................... $0.30

30 percent .................................................................................... $0.44

35 percent .................................................................................... $0.58

40 percent .................................................................................... $0.72

45 percent .................................................................................... $0.86

50 percent .................................................................................... $1.00. 

5 ‘‘(4) DEFINITIONS.—For purposes of this sub6 section: 

7 ‘‘(A) BI-LEVEL CONTROL.— 

8 ‘‘(i) IN GENERAL.—Subject to clause 

9 (ii), the term ‘bi-level control’ means a 

10 lighting control strategy that provides for 

11 2 different levels of lighting. 

12 ‘‘(ii) FULL-OFF SETTING.—For pur13 poses of clause (i), a bi-level control shall 

14 also provide for a full-off setting. 

15 ‘‘(B) CONTINUOUS DIMMING.—The term 

16 ‘continuous dimming’ means a lighting control 

17 strategy that adjusts the light output of a lightVerDate Mar 15 2010 04:22 Apr 02, 2014 Jkt 039200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\S2189.IS S2189

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1 ing system between minimum and maximum 

2 light output in a manner that is not perceptible. 

3 ‘‘(C) DAYLIGHT DIMMING; SUFFICIENT

4 DAYLIGHT.— 

5 ‘‘(i) DAYLIGHT DIMMING.—The term 

6 ‘daylight dimming’ means any device 

7 that— 

8 ‘‘(I) adjusts electric lighting 

9 power in response to the amount of 

10 daylight that is present in an area, 

11 and 

12 ‘‘(II) provides for separate con13 trol of the lamps for general lighting 

14 in the daylight area by not less than 

15 1 multi-level photocontrol, including 

16 continuous dimming devices, that sat17 isfies the following requirements: 

18 ‘‘(aa) The light sensor for 

19 the multi-level photocontrol is re20 mote from where calibration ad21 justments are made. 

22 ‘‘(bb) The calibration ad23 justments are readily accessible. 

24 ‘‘(cc) The multi-level 

25 photocontrol reduces electric 


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1 lighting power in response to the 

2 amount of daylight with— 

3 ‘‘(AA) not less than 1 

4 control step that is between 

5 50 percent and 70 percent 

6 of design lighting power, 

7 and 

8 ‘‘(BB) not less than 1 

9 control step that is not less 

10 than 35 percent of design 

11 lighting power. 

12 ‘‘(ii) SUFFICIENT DAYLIGHT.— 

13 ‘‘(I) IN GENERAL.—The term 

14 ‘sufficient daylight’ means— 

15 ‘‘(aa) in the case of 

16 toplighted areas, when the total 

17 daylight area under skylights 

18 plus the total daylight area under 

19 rooftop monitors in an enclosed 

20 space is greater than 900 square 

21 feet (as defined in Standard 

22 90.1-2010), and 

23 ‘‘(bb) in the case of 

24 sidelighted areas, when the com25 bined primary sidelight area in 


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1 an enclosed space is not less than 

2 250 square feet (as defined in 

3 Standard 90.1-2010). 

4 ‘‘(II) EXCEPTIONS.—Sufficient 

5 daylight shall be deemed to not be 

6 available if— 

7 ‘‘(aa) in the case of areas 

8 described in subclause (I)(aa)— 

9 ‘‘(AA) for daylighted 

10 areas under skylights, it is 

11 documented that existing 

12 adjacent structures or nat13 ural objects block direct 

14 beam sunlight for more than 

15 1500 daytime hours (after 8 

16 a.m. and before 4 p.m., local 

17 time) per year, 

18 ‘‘(BB) for daylighted 

19 areas, the skylight effective 

20 aperture is less than 0.006, 

21 or 

22 ‘‘(CC) for buildings in 

23 climate zone 8, as defined 

24 under Standard 90.1-2010, 

25 the daylight areas total less 


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1 than 1500 square feet in an 

2 enclosed space, and 

3 ‘‘(bb) in the case of primary 

4 sidelighted areas described in 

5 subclause (I)(bb)— 

6 ‘‘(AA) the top of the 

7 existing adjacent structures 

8 are at least twice as high 

9 above the windows as the 

10 distance from the window, 

11 or 

12 ‘‘(BB) the sidelighting 

13 effective aperture is less 

14 than 0.1. 

15 ‘‘(iii) DAYLIGHT, SIDELIGHTING, AND

16 OTHER RELATED TERMS.—The terms ‘day17 light area’, ‘daylight area under skylights’, 

18 ‘daylight area under rooftop monitors’, 

19 ‘daylighted area’, ‘enclosed space’, ‘primary 

20 sidelighted areas’, ‘sidelighting effective 

21 aperture’, and ‘skylight effective aperture’ 

22 have the same meaning given such terms 

23 under Standard 90.1-2010. 

24 ‘‘(D) DEMAND RESPONSIVE CONTROL.— 


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1 ‘‘(i) IN GENERAL.—The term ‘demand 

2 responsive control’ means a control device 

3 that receives and automatically responds to 

4 a demand response signal and— 

5 ‘‘(I) in the case of space-condi6 tioning systems, conducts a central7 ized demand shed for non-critical 

8 zones during a demand response pe9 riod and that has the capability to, on 

10 a signal from a centralized contract or 

11 software point within an Energy Man12 agement Control System— 

13 ‘‘(aa) remotely increase the 

14 operating cooling temperature set 

15 points in such zones by not less 

16 than 4 degrees, 

17 ‘‘(bb) remotely decrease the 

18 operating heating temperature 

19 set points in such zones by not 

20 less than 4 degrees, 

21 ‘‘(cc) remotely reset tem22 peratures in such zones to origi23 nating operating levels, and 


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1 ‘‘(dd) provide an adjustable 

2 rate of change for any tempera3 ture adjustment and reset, and 

4 ‘‘(II) in the case of lighting 

5 power, has the capability to reduce 

6 lighting power by not less than 30 

7 percent during a demand response pe8 riod. 

9 ‘‘(ii) DEMAND RESPONSE PERIOD.— 

10 The term ‘demand response period’ means 

11 a period in which short-term adjustments 

12 in electricity usage are made by end-use 

13 customers from normal electricity con14 sumption patterns, including adjustments 

15 in response to— 

16 ‘‘(I) the price of electricity, and 

17 ‘‘(II) participation in programs 

18 or services that are designed to mod19 ify electricity usage in response to 

20 wholesale market prices for electricity 

21 or when reliability of the electrical 

22 system is in jeopardy. 

23 ‘‘(iii) DEMAND RESPONSE SIGNAL.— 

24 The term ‘demand response signal’ means 

25 a signal sent to an end-use customer by a 


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1 local utility, independent system operator, 

2 or designated curtailment service provider 

3 or aggregator that— 

4 ‘‘(I) indicates an adjustment in 

5 the price of electricity, or 

6 ‘‘(II) is a request to modify elec7 tricity consumption. 

8 ‘‘(E) LAMP.—The term ‘lamp’ means an 

9 artificial light source that produces optical radi10 ation (including ultraviolet and infrared radi11 ation). 

12 ‘‘(F) LUMEN MAINTENANCE CONTROL.— 

13 The term ‘lumen maintenance control’ means a 

14 lighting control strategy that maintains con15 stant light output by adjusting lamp power to 

16 compensate for age and cleanliness of 

17 luminaires. 

18 ‘‘(G) LUMINAIRE.—The term ‘luminaire’ 

19 means a complete lighting unit for the produc20 tion, control, and distribution of light that con21 sists of— 

22 ‘‘(i) not less than 1 lamp, and 

23 ‘‘(ii) any of the following items: 

24 ‘‘(I) Optical control devices de25 signed to distribute light. 


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1 ‘‘(II) Sockets or mountings for 

2 the positioning, protection, and oper3 ation of the lamps. 

4 ‘‘(III) Mechanical components for 

5 support or attachment. 

6 ‘‘(IV) Electrical and electronic 

7 components for operation and control 

8 of the lamps. 

9 ‘‘(H) MULTI-SCENE CONTROL.—The term 

10 ‘multi-scene control’ means a lighting control 

11 device or system that allows for— 

12 ‘‘(i) not less than 2 predetermined 

13 lighting settings, 

14 ‘‘(ii) a setting that turns off all 

15 luminaires in an area, and 

16 ‘‘(iii) a recall of the settings described 

17 in clauses (i) and (ii) for any luminaires or 

18 groups of luminaires to adjust to multiple 

19 activities within the area. 

20 ‘‘(I) OCCUPANCY SENSOR.—The term ‘oc21 cupancy sensor’ means a control device that— 

22 ‘‘(i) detects the presence or absence of 

23 individuals within an area and regulates 

24 lighting, equipment, or appliances accord25 ing to a required sequence of operation, 


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1 ‘‘(ii) shuts off lighting when an area 

2 is unoccupied, 

3 ‘‘(iii) except in areas designated as 

4 emergency egress and using less than 0.2 

5 watts per square foot of floor area, pro6 vides for manual shut-off of all luminaires 

7 regardless of the status of the sensor and 

8 allows for— 

9 ‘‘(I) independent control in each 

10 area enclosed by ceiling-height parti11 tions, 

12 ‘‘(II) controls that are readily ac13 cessible, and 

14 ‘‘(III) operation by a manual 

15 switch that is located in the same area 

16 as the lighting that is subject to the 

17 control device. 

18 ‘‘(J) STANDARD 90.1-2010.—The term 

19 ‘Standard 90.1-2010’ means Standard 90.1- 

20 2010 of the American Society of Heating, Re21 frigerating, and Air Conditioning Engineers and 

22 the Illuminating Engineering Society of North 

23 America. 

24 ‘‘(K) STEP DIMMING.—The term ‘step 

25 dimming’ means a lighting control strategy that 


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1 adjusts the light output of a lighting system by 

2 1 or more predetermined amounts of greater 

3 than 1 percent of full output in a manner that 

4 may be perceptible. 

5 ‘‘(L) TIME SCHEDULING CONTROL.—The 

6 term ‘time scheduling control’ means a control 

7 strategy that automatically controls lighting, 

8 equipment, or systems based on a particular 

9 time of day or other daily event (including sun10 rise and sunset).’’. 

11 (h) UPDATED STANDARDS.— 

12 (1) INITIAL UPDATE.— 

13 (A) IN GENERAL.—Section 179D(c) is 

14 amended by striking ‘‘90.1-2001’’ each place it 

15 appears and inserting ‘‘90.1-2004’’. 

16 (B) CONFORMING AMENDMENT.—Para17 graph (2) of section 179D(c) is amended by 

18 striking ‘‘(as in effect on April 2, 2003)’’. 

19 (2) SECOND UPDATE.— 

20 (A) IN GENERAL.—Section 179D is 

21 amended by striking ‘‘90.1-2004’’ each place it 

22 appears in subsections (c) and (f) and inserting 

23 ‘‘90.1-2007’’. 


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1 (B) EFFECTIVE DATE.—The amendments 

2 made by subparagraph (A) shall apply to prop3 erty placed in service after December 31, 2014. 

4 (i) TREATMENT OF LIGHTING SYSTEMS.—Section 

5 179D(c)(1) is amended by striking ‘‘interior’’ each place 

6 it appears. 

7 (j) REPORTING PROGRAM.—Section 179D, as amend8 ed by subsection (c)(1), is amended by redesignating sub9 section (i) as subsection (j) and by inserting after sub10 section (h) the following new subsection: 

11 ‘‘(i) REPORTING PROGRAM.—For purposes of the re12 port required under section 179F(l), the Secretary, in con13 sultation with the Secretary of Energy, shall— 

14 ‘‘(1) develop a program to collect a statistically 

15 valid sample of energy consumption data from tax16 payers that received full deductions under this sec17 tion, regardless of whether such taxpayers allocated 

18 all or a portion of such deduction, and 

19 ‘‘(2) include such data in the report, with such 

20 redactions as deemed necessary to protect the per21 sonally identifiable information of such taxpayers.’’. 

22 (k) SPECIAL RULE FOR PARTNERSHIPS AND S COR23 PORATIONS.—Section 179D, as amended by subsection 

24 (j), is amended by redesignating subsection (j) as subVerDate Mar 15 2010 04:22 Apr 02, 2014 Jkt 039200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S2189.IS S2189

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1 section (k) and by inserting after subsection (i) the fol2 lowing new subsection: 

3 ‘‘(j) SPECIAL RULE FOR PARTNERSHIPS AND S COR4 PORATIONS.—In the case of a partnership or S corpora5 tion, this section shall be applied at the partner or share6 holder level, subject to such reporting requirements as are 

7 determined appropriate by the Secretary.’’. 

8 (l) EFFECTIVE DATE.—Except as otherwise pro9 vided, the amendments made by this section shall apply 

10 to property placed in service in taxable years beginning 

11 after the date of the enactment of this Act. 

12 SEC. 102. DEDUCTION FOR RETROFITS OF EXISTING COM13 MERCIAL AND MULTIFAMILY BUILDINGS. 

14 (a) IN GENERAL.—Part VI of subchapter B of chap15 ter 1 of the Internal Revenue Code of 1986 is amended 

16 by inserting after section 179E the following new section: 

17 ‘‘SEC. 179F. DEDUCTION FOR RETROFITS OF EXISTING 

18 COMMERCIAL AND MULTIFAMILY BUILDINGS. 

19 ‘‘(a) ALLOWANCE OF DEDUCTION.— 

20 ‘‘(1) IN GENERAL.—With respect to each cer21 tified retrofit plan, there shall be allowed as a deduc22 tion an amount equal to the lesser of— 

23 ‘‘(A) the sum of— 

24 ‘‘(i) the design deduction, and 

25 ‘‘(ii) the realized deduction, or 


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1 ‘‘(B) the total cost to develop and imple2 ment such certified retrofit plan. 

3 ‘‘(2) EXCEPTION.—For purposes of the amount 

4 described in paragraph (1)(B), if such amount is 

5 taken as a design deduction, no realized deduction 

6 shall be allowed. 

7 ‘‘(b) DEDUCTION AMOUNTS.—For purposes of this 

8 section— 

9 ‘‘(1) DESIGN DEDUCTION.—A design deduction 

10 shall be— 

11 ‘‘(A) based on projected source energy sav12 ings as calculated in accordance with subsection 

13 (c)(3)(B), 

14 ‘‘(B) correlated to the percent of source 

15 energy savings set forth in the general scale in 

16 paragraph (3)(A) that a certified retrofit plan 

17 is projected to achieve when energy-efficient 

18 measures are placed in service, and 

19 ‘‘(C) equal to 60 percent of the amount al20 lowed under the general scale. 

21 ‘‘(2) REALIZED DEDUCTION.— 

22 ‘‘(A) IN GENERAL.—A realized deduction 

23 shall be— 


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1 ‘‘(i) based on realized source energy 

2 savings as calculated in accordance with 

3 subsection (c)(3)(C), 

4 ‘‘(ii) correlated to the percent of 

5 source energy savings set forth in the gen6 eral scale in paragraph (3)(A) as realized 

7 by a certified retrofit plan, and 

8 ‘‘(iii) equal to 40 percent of the 

9 amount allowed under the general scale. 

10 ‘‘(B) ADJUSTMENT OF SOURCE ENERGY

11 SAVINGS.—The percent of source energy sav12 ings for purposes of any realized deduction may 

13 vary from such savings projected when energy14 efficient measures were placed in service for 

15 purposes of a design deduction under paragraph 

16 (1). 

17 ‘‘(C) NO RECAPTURE OF DESIGN DEDUC18 TION.—Notwithstanding the regulations pre19 scribed under subsection (f), no recapture of a 

20 design deduction shall be required where the 

21 owner of the commercial or multifamily build22 ing— 

23 ‘‘(i) claims or allocates a design de24 duction when energy-efficient measures are 

25 placed into service pursuant to the terms 


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1 and conditions of a certified retrofit plan, 

2 and 

3 ‘‘(ii) is not eligible for or does not 

4 subsequently claim or allocate a realized 

5 deduction. 

6 ‘‘(3) GENERAL SCALE.— 

7 ‘‘(A) IN GENERAL.—The scale for deduc8 tions allowed under this section shall be— 

9 ‘‘(i) $1.00 per square foot of retrofit 

10 floor area for 20 to 24 percent source en11 ergy savings, 

12 ‘‘(ii) $1.50 per square foot of retrofit 

13 floor area for 25 to 29 percent source en14 ergy savings, 

15 ‘‘(iii) $2.00 per square foot of retrofit 

16 floor area for 30 to 34 percent source en17 ergy savings, 

18 ‘‘(iv) $2.50 per square foot of retrofit 

19 floor area for 35 to 39 percent source en20 ergy savings, 

21 ‘‘(v) $3.00 per square foot of retrofit 

22 floor area for 40 to 44 percent source en23 ergy savings, 


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1 ‘‘(vi) $3.50 per square foot of retrofit 

2 floor area for 45 to 49 percent source en3 ergy savings, and 

4 ‘‘(vii) $4.00 per square foot of retrofit 

5 floor area for 50 percent or more source 

6 energy savings. 

7 ‘‘(B) HISTORIC BUILDINGS.— 

8 ‘‘(i) IN GENERAL.—With respect to 

9 energy-efficient measures placed in service 

10 as part of a certified retrofit plan in a 

11 commercial building or multifamily build12 ing on or eligible for the National Register 

13 of Historic Places, the respective dollar 

14 amounts set forth in the general scale 

15 under subparagraph (A) shall— 

16 ‘‘(I) each be increased by 20 per17 cent, for the purposes of calculating 

18 any applicable design deduction and 

19 realized deduction, and 

20 ‘‘(II) not exceed the total cost to 

21 develop and implement such certified 

22 retrofit plan. 

23 ‘‘(ii) EXCEPTION.—If the amount de24 scribed in clause (i)(II) is taken as a deVerDate Mar 15 2010 04:22 Apr 02, 2014 Jkt 039200 PO 00000 Frm 00032 Fmt 6652 Sfmt 6201 E:\BILLS\S2189.IS S2189

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1 sign deduction, then no realized deduction 

2 shall be allowed. 

3 ‘‘(c) CALCULATION OF ENERGY SAVINGS.— 

4 ‘‘(1) IN GENERAL.—For purposes of the design 

5 deduction and the realized deduction, source energy 

6 savings shall be calculated with reference to a base7 line of the annual source energy consumption of the 

8 commercial or multifamily building before energy-ef9 ficient measures were placed in service. 

10 ‘‘(2) BASELINE BENCHMARK.—The baseline 

11 under paragraph (1) shall be determined using a 

12 building energy performance benchmarking tool des13 ignated by the Administrator of the Environmental 

14 Protection Agency, and based upon 1 year of source 

15 energy consumption data prior to the date upon 

16 which the energy-efficient measures are placed in 

17 service. 

18 ‘‘(3) DESIGN AND REALIZED SOURCE ENERGY

19 SAVINGS.— 

20 ‘‘(A) IN GENERAL.—In certifying a retrofit 

21 plan as a certified retrofit plan, a licensed engi22 neer or architect shall calculate source energy 

23 savings by utilizing the baseline benchmark de24 fined in paragraph (2) and determining percent 

25 improvements from such baseline. 


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1 ‘‘(B) DESIGN DEDUCTION.—For purposes 

2 of claiming a design deduction, the regulations 

3 issued under subsection (f)(1) shall prescribe 

4 the standards and process for a licensed engi5 neer or architect to calculate and certify source 

6 energy savings projected from the design of a 

7 certified retrofit plan as of the date energy-effi8 cient measures are placed in service. 

9 ‘‘(C) REALIZED DEDUCTION.—For pur10 poses of claiming a realized deduction, a li11 censed engineer or architect shall calculate and 

12 certify source energy savings realized by a cer13 tified retrofit plan 2 years after a design deduc14 tion is allowed by utilizing energy consumption 

15 data after energy-efficient measures are placed 

16 in service, and adjusting for climate, building 

17 occupancy hours, density, or other factors 

18 deemed appropriate in the benchmarking tool 

19 designated under paragraph (2). 

20 ‘‘(d) CERTIFIED RETROFIT PLAN AND OTHER DEFI21 NITIONS.—For purposes of this section— 

22 ‘‘(1) CERTIFIED RETROFIT PLAN.—The term 

23 ‘certified retrofit plan’ means a plan that— 

24 ‘‘(A) is designed to reduce the annual 

25 source energy costs of a commercial building, or 


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1 a multifamily building, through the installation 

2 of energy-efficient measures, 

3 ‘‘(B) is certified under penalty of perjury 

4 by a licensed engineer or architect, who is not 

5 a direct employee of the owner of the commer6 cial building or multifamily building that is the 

7 subject of the plan, and is licensed in the State 

8 in which such building is located, 

9 ‘‘(C) describes the square footage of ret10 rofit floor area covered by such a plan, 

11 ‘‘(D) specifies that it is designed to achieve 

12 a final source energy usage intensity after en13 ergy-efficient measures are placed in service in 

14 a commercial building or a multifamily building 

15 that does not exceed on a square foot basis the 

16 average level of energy usage intensity of other 

17 similar buildings, as described in paragraph (2), 

18 ‘‘(E) requires that after the energy-effi19 cient measures are placed in service, the com20 mercial building or multifamily building meets 

21 the applicable State and local building code re22 quirements for the area in which such building 

23 is located, 

24 ‘‘(F) satisfies the regulations prescribed 

25 under subsection (f), and 


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1 ‘‘(G) is submitted to the Secretary of En2 ergy after energy-efficient measures are placed 

3 in service, for the purpose of informing the re4 port to Congress required by subsection (l). 

5 ‘‘(2) AVERAGE LEVEL OF ENERGY USAGE IN6 TENSITY.— 

7 ‘‘(A) IN GENERAL.—The maximum aver8 age level of energy usage intensity under para9 graph (1)(D) shall not exceed 300,000 British 

10 thermal units per square foot. 

11 ‘‘(B) REGULATIONS.— 

12 ‘‘(i) IN GENERAL.—The Secretary, in 

13 consultation with the Administrator of the 

14 Environmental Protection Agency, shall 

15 develop distinct standards for categories 

16 and subcategories of buildings with respect 

17 to maximum average level of energy usage 

18 intensity based on the best available infor19 mation used by the ENERGY STAR pro20 gram. 

21 ‘‘(ii) REVIEW.—The standards devel22 oped pursuant to clause (i) shall be re23 viewed and updated by the Secretary, in 

24 consultation with the Administrator of the 


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1 Environmental Protection Agency, not 

2 later than every 3 years. 

3 ‘‘(3) COMMERCIAL BUILDING.— 

4 ‘‘(A) IN GENERAL.—The term ‘commercial 

5 building’ means a building located in the United 

6 States— 

7 ‘‘(i) that is in existence and occupied 

8 on the date of the enactment of this sec9 tion, 

10 ‘‘(ii) for which a certificate of occu11 pancy has been issued at least 10 years be12 fore energy efficiency measures are placed 

13 in service, and 

14 ‘‘(iii) with a primary use or purpose 

15 other than as residential housing. 

16 ‘‘(B) SHOPPING CENTERS.—In the case of 

17 a retail shopping center, the term ‘commercial 

18 building’ shall include an area within such 

19 building that is— 

20 ‘‘(i) 50,000 square feet or larger that 

21 is covered by a separate utility grade meter 

22 to record energy consumption in such area, 

23 and 

24 ‘‘(ii) under the day-to-day manage25 ment and operation of— 


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1 ‘‘(I) the owner of such building 

2 as common space areas, or 

3 ‘‘(II) a retail tenant, lessee, or 

4 other occupant. 

5 ‘‘(4) ENERGY-EFFICIENT MEASURES.—The 

6 term ‘energy-efficient measures’ means a measure, 

7 or combination of measures, placed in service 

8 through a certified retrofit plan— 

9 ‘‘(A) on or in a commercial building or 

10 multifamily building, 

11 ‘‘(B) as part of— 

12 ‘‘(i) the lighting systems, 

13 ‘‘(ii) the heating, cooling, ventilation, 

14 refrigeration, or hot water systems, 

15 ‘‘(iii) building transportation systems, 

16 such as elevators and escalators, 

17 ‘‘(iv) the building envelope, which may 

18 include an energy-efficient cool roof, 

19 ‘‘(v) a continuous commissioning con20 tract under the supervision of a licensed 

21 engineer or architect, or 

22 ‘‘(vi) building operations or moni23 toring systems, including utility-grade me24 ters and submeters, and 


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1 ‘‘(C) including equipment, materials, and 

2 systems within subparagraph (B) with respect 

3 to which depreciation (or amortization in lieu of 

4 depreciation) is allowed. 

5 ‘‘(5) ENERGY SAVINGS.—The term ‘energy sav6 ings’ means source energy usage intensity reduced 

7 on a per square foot basis through design and imple8 mentation of a certified retrofit plan. 

9 ‘‘(6) MULTIFAMILY BUILDING.—The term ‘mul10 tifamily building’— 

11 ‘‘(A) means— 

12 ‘‘(i) a structure of 5 or more dwelling 

13 units located in the United States— 

14 ‘‘(I) that is in existence and oc15 cupied on the date of the enactment 

16 of this section, 

17 ‘‘(II) for which a certificate of 

18 occupancy has been issued at least 10 

19 years before energy efficiency meas20 ures are placed in service, and 

21 ‘‘(III) with a primary use as resi22 dential housing, and 

23 ‘‘(B) includes such buildings owned and 

24 operated as a condominium, cooperative, or 

25 other common interest community. 


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1 ‘‘(7) SOURCE ENERGY.—The term ‘source en2 ergy’ means the total amount of raw fuel that is re3 quired to operate a commercial building or multi4 family building, and accounts for losses that are in5 curred in the generation, storage, transport, and de6 livery of fuel to such a building. 

7 ‘‘(e) TIMING OF CLAIMING DEDUCTIONS.—Deduc8 tions allowed under this section may be claimed as follows: 

9 ‘‘(1) DESIGN DEDUCTION.—In the case of a de10 sign deduction, in the taxable year that energy effi11 ciency measures are placed in service. 

12 ‘‘(2) REALIZED DEDUCTION.—In the case of a 

13 realized deduction, in the second taxable year fol14 lowing the taxable year described in paragraph (1). 

15 ‘‘(f) REGULATIONS.— 

16 ‘‘(1) IN GENERAL.—Not later than 180 days 

17 after the date of the enactment of this section, and 

18 after notice and opportunity for public comment, the 

19 Secretary, in consultation with the Secretary of En20 ergy and the Administrator of the Environmental 

21 Protection Agency, shall prescribe regulations— 

22 ‘‘(A) for the manner and method for a li23 censed engineer or architect to certify retrofit 

24 plans, model projected energy savings, and cal25 culate realized energy savings, and 


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1 ‘‘(B) notwithstanding subsection (b)(2)(C), 

2 to provide, as appropriate, for a recapture of 

3 the deductions allowed under this section if a 

4 retrofit plan is not fully implemented, or a ret5 rofit plan and energy savings are not certified 

6 or verified in accordance with regulations pre7 scribed under this subsection. 

8 ‘‘(2) RELIANCE ON ESTABLISHED PROTOCOLS, 

9 ETC.—To the maximum extent practicable and avail10 able, such regulations shall rely upon established 

11 protocols and documents used in the ENERGY 

12 STAR program, and industry best practices and ex13 isting guidelines, such as the Building Energy Mod14 eling Guidelines of the Commercial Energy Services 

15 Network (COMNET). 

16 ‘‘(3) ALLOWANCE OF DEDUCTIONS PENDING

17 ISSUANCE OF REGULATIONS.—Pending issuance of 

18 the regulations under paragraph (1), the owner of a 

19 commercial building or a multifamily building shall 

20 be allowed to claim or allocate a deduction allowed 

21 under this section. 

22 ‘‘(g) NOTICE TO OWNER.—Each certification of a 

23 retrofit plan and calculation of energy savings required 

24 under this section shall include an explanation to the 

25 owner of a commercial building or a multifamily building 


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1 regarding the energy-efficient measures placed in service 

2 and their projected and realized annual energy costs. 

3 ‘‘(h) ALLOCATION OF DEDUCTION.— 

4 ‘‘(1) IN GENERAL.—Not later than 180 days 

5 after the date of the enactment of this section, the 

6 Secretary, in consultation with the Secretary of En7 ergy, shall promulgate a regulation to allow the 

8 owner of a commercial building or a multifamily 

9 building, including a government, tribal, or non-prof10 it owner, to allocate any deduction allowed under 

11 this section, or a portion thereof, to the person pri12 marily responsible for funding, financing, designing, 

13 leasing, operating, or placing in service energy-effi14 cient measures. Such person shall be treated as the 

15 taxpayer for purposes of this section and shall in16 clude a building tenant, financier, architect, profes17 sional engineer, licensed contractor, energy services 

18 company, or other building professional. 

19 ‘‘(2) FORM OF ALLOCATION.—An allocation 

20 made under this paragraph shall be in writing and 

21 in a form that meets the form of allocation require22 ments in Notice 2008–40 of the Internal Revenue 

23 Service. 

24 ‘‘(3) PROVISION OF ALLOCATION.—Not later 

25 than 30 days after receipt of a written request from 


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1 a person eligible to receive an allocation under this 

2 paragraph, the owner of a building that makes an 

3 allocation under this paragraph shall provide the 

4 form of allocation (as described in paragraph (2)) to 

5 such person. 

6 ‘‘(4) ALLOCATION FROM PUBLIC OWNER OF

7 BUILDING.—In the case of a commercial building or 

8 a multifamily building that is owned by a Federal, 

9 State, or local government or a subdivision thereof, 

10 Notice 2006–52 of the Internal Revenue Service, as 

11 amplified by Notice 2008–40, shall apply to any allo12 cation. 

13 ‘‘(i) BASIS REDUCTION.—For purposes of this sub14 title, if a deduction is allowed under this section with re15 spect to any energy-efficient measures placed in service 

16 under a certified retrofit plan other than in a qualified 

17 low-income building (within the meaning of section 42), 

18 the basis of such measures shall be reduced by the amount 

19 of the deduction so allowed or so allocated. 

20 ‘‘(j) SPECIAL RULE FOR PARTNERSHIPS AND S COR21 PORATIONS.—In the case of a partnership or S corpora22 tion, this section shall be applied at the partner or share23 holder level, subject to such reporting requirements as are 

24 determined appropriate by the Secretary. 

25 ‘‘(k) TAX INCENTIVES NOT AVAILABLE.— 


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1 ‘‘(1) ENERGY EFFICIENT COMMERCIAL BUILD2 INGS DEDUCTION.—Energy-efficient measures for 

3 which a deduction is allowed under this section shall 

4 not be eligible for a deduction under section 179D. 

5 ‘‘(2) NEW ENERGY EFFICIENT HOME CREDIT.— 

6 No deduction shall be allowed under this section 

7 with respect to any building or dwelling unit with re8 spect to which a credit under section 45L was al9 lowed. 

10 ‘‘(l) REPORT TO CONGRESS.— 

11 ‘‘(1) IN GENERAL.—Biennially, beginning with 

12 the first year after the enactment of this section, the 

13 Secretary, in conjunction with the Secretary of En14 ergy, shall submit a report to Congress that— 

15 ‘‘(A) explains the energy saved, the energy16 efficient measures implemented, the realization 

17 of energy savings projected, and records the 

18 amounts and types of deductions allowed under 

19 this section, 

20 ‘‘(B) explains the energy saved, the energy 

21 efficient measures implemented, and records the 

22 amount of deductions allowed under section 

23 179D, based on the data collected pursuant to 

24 subsection (i) of such section, 


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1 ‘‘(C) determines the number of jobs cre2 ated as a result of the deduction allowed under 

3 this section, 

4 ‘‘(D) determines how the use of any deduc5 tion allowed under this section may be im6 proved, based on the information provided to 

7 the Secretary of Energy, 

8 ‘‘(E) provides aggregated data with respect 

9 to the information described in subparagraphs 

10 (A) through (D), and 

11 ‘‘(F) provides statutory recommendations 

12 to Congress that would reduce energy consump13 tion in new and existing commercial buildings 

14 located in the United States, including rec15 ommendations on providing energy-efficient tax 

16 incentives for subsections of buildings that op17 erate with specific utility-grade metering. 

18 ‘‘(2) PROTECTION OF TAXPAYER INFORMA19 TION.—The Secretary and the Secretary of Energy 

20 shall share information on deductions allowed under 

21 this section and related reports submitted, as re22 quested by each agency to fulfill its obligations 

23 under this section, with such redactions as deemed 

24 necessary to protect the personally identifiable finan25 cial information of a taxpayer. 


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1 ‘‘(3) INCORPORATION INTO DEPARTMENT OF

2 ENERGY PROGRAMS.—The Secretary of Energy 

3 shall, to the maximum extent practicable, incor4 porate conclusions of the report under this sub5 section into current Department of Energy building 

6 performance and energy efficiency data collection 

7 and other reporting programs. 

8 ‘‘(m) TERMINATION.—This section shall not apply to 

9 any property placed in service after December 31, 2016.’’. 

10 (b) EFFECT ON DEPRECIATION ON EARNINGS AND

11 PROFITS.—Subparagraph (B) of section 312(k)(3), as 

12 amended by this title, is amended— 

13 (1) by striking ‘‘or 179E’’ both places it ap14 pears in clause (i) and inserting ‘‘179E, or 179F’’, 

15 (2) by striking ‘‘OR 179E’’ in the heading and 

16 inserting ‘‘179E, OR 179F’’, and 

17 (3) by inserting ‘‘or 179F’’ after ‘‘section 

18 179D’’ in clause (ii)(I). 

19 (c) CONFORMING AMENDMENT.—The table of sec20 tions for part VI of subchapter B of chapter 1 is amended 

21 by inserting after the item relating to section 179E the 

22 following new item: 

‘‘Sec. 179F. Deduction for retrofits of existing commercial and multifamily 

buildings.’’. 

23 (d) EFFECTIVE DATE.—Except as otherwise pro24 vided, the amendments made by this section shall apply 


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1 to property placed in service in taxable years beginning 

2 after the date of the enactment of this Act. 

3 TITLE II—HOME ENERGY 

4 IMPROVEMENTS 

5 SEC. 201. PERFORMANCE BASED HOME ENERGY IMPROVE6 MENTS. 

7 (a) IN GENERAL.—Subpart A of part IV of sub8 chapter A of chapter 1 is amended by adding at the end 

9 the following new section: 

10 ‘‘SEC. 25E. PERFORMANCE BASED ENERGY IMPROVE11 MENTS. 

12 ‘‘(a) IN GENERAL.—In the case of an individual, 

13 there shall be allowed as a credit against the tax imposed 

14 by this chapter for the taxable year for a qualified whole 

15 home energy efficiency retrofit an amount determined 

16 under subsection (b). 

17 ‘‘(b) AMOUNT DETERMINED.— 

18 ‘‘(1) IN GENERAL.—Subject to paragraph (4), 

19 the amount determined under this subsection is 

20 equal to— 

21 ‘‘(A) the base amount under paragraph 

22 (2), increased by 

23 ‘‘(B) the amount determined under para24 graph (3). 


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1 ‘‘(2) BASE AMOUNT.—For purposes of para2 graph (1)(A), the base amount is $2,000, but only 

3 if the energy use for the residence is reduced by at 

4 least 20 percent below the baseline energy use for 

5 such residence as calculated according to paragraph 

6 (5). 

7 ‘‘(3) INCREASE AMOUNT.—For purposes of 

8 paragraph (1)(B), the amount determined under this 

9 paragraph is $500 for each additional 5 percentage 

10 point reduction in energy use. 

11 ‘‘(4) LIMITATION.—In no event shall the 

12 amount determined under this subsection exceed the 

13 lesser of— 

14 ‘‘(A) $5,000 with respect to any residence, 

15 or 

16 ‘‘(B) 30 percent of the qualified home en17 ergy efficiency expenditures paid or incurred by 

18 the taxpayer under subsection (c) with respect 

19 to such residence. 

20 ‘‘(5) DETERMINATION OF ENERGY USE REDUC21 TION.—For purposes of this subsection— 

22 ‘‘(A) IN GENERAL.—The reduction in en23 ergy use for any residence shall be determined 

24 by modeling the annual predicted percentage re25 duction in total energy costs for heating, coolVerDate Mar 15 2010 04:22 Apr 02, 2014 Jkt 039200 PO 00000 Frm 00048 Fmt 6652 Sfmt 6201 E:\BILLS\S2189.IS S2189

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1 ing, hot water, and permanent lighting. It shall 

2 be modeled using computer modeling software 

3 approved under subsection (d)(2) and a baseline 

4 energy use calculated according to subsection 

5 (d)(1)(C). 

6 ‘‘(B) ENERGY COSTS.—For purposes of 

7 subparagraph (A), the energy cost per unit of 

8 fuel for each fuel type shall be determined by 

9 dividing the total actual energy bill for the resi10 dence for that fuel type for the most recent 

11 available 12-month period by the total energy 

12 units of that fuel type used over the same pe13 riod. 

14 ‘‘(c) QUALIFIED HOME ENERGY EFFICIENCY EX15 PENDITURES.—For purposes of this section, the term 

16 ‘qualified home energy efficiency expenditures’— 

17 ‘‘(1) means any amount paid or incurred by the 

18 taxpayer during the taxable year for a qualified 

19 whole home energy efficiency retrofit, including the 

20 cost of diagnostic procedures, labor, and modeling, 

21 ‘‘(2) includes only measures that have an aver22 age estimated life of 5 years or more as determined 

23 by the Secretary, after consultation with the Sec24 retary of Energy, and 


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1 ‘‘(3) does not include any amount which is paid 

2 or incurred in connection with any expansion of the 

3 building envelope of the residence. 

4 ‘‘(d) QUALIFIED WHOLE HOME ENERGY EFFI5 CIENCY RETROFIT.—For purposes of this section— 

6 ‘‘(1) IN GENERAL.—The term ‘qualified whole 

7 home energy efficiency retrofit’ means the implemen8 tation of measures placed in service during the tax9 able year intended to reduce the energy use of the 

10 principal residence of the taxpayer which is located 

11 in the United States. A qualified whole home energy 

12 efficiency retrofit shall— 

13 ‘‘(A) subject to paragraph (4), be designed, 

14 implemented, and installed by a contractor 

15 which is— 

16 ‘‘(i) accredited by the Building Per17 formance Institute (hereafter in this sec18 tion referred to as ‘BPI’) or a preexisting 

19 BPI accreditation-based State certification 

20 program with enhancements to achieve 

21 State energy policy, 

22 ‘‘(ii) a Residential Energy Services 

23 Network (hereafter in this section referred 

24 to as ‘RESNET’) accredited Energy Smart 

25 Home Performance Team, or 


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1 ‘‘(iii) accredited by an equivalent cer2 tification program approved by the Sec3 retary, after consultation with the Sec4 retary of Energy, for this purpose, 

5 ‘‘(B) install a set of measures modeled to 

6 achieve a reduction in energy use of at least 20 

7 percent below the baseline energy use estab8 lished in subparagraph (C), using computer 

9 modeling software approved under paragraph 

10 (2), 

11 ‘‘(C) establish the baseline energy use by 

12 calibrating the model using sections 3 and 4 

13 and Annex D of BPI Standard BPI–2400–S– 

14 2011: Standardized Qualification of Whole 

15 House Energy Savings Estimates, or an equiva16 lent standard approved by the Secretary, after 

17 consultation with Secretary of Energy, for this 

18 purpose, 

19 ‘‘(D) document the measures implemented 

20 in the residence through photographs taken be21 fore and after the retrofit, including photo22 graphs of its visible energy systems and enve23 lope as relevant, and 

24 ‘‘(E) implement a test-out procedure, fol25 lowing guidelines of the applicable certification 


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1 program specified under clause (i) or (ii) of 

2 subparagraph (A), or equivalent guidelines ap3 proved by the Secretary, after consultation with 

4 the Secretary of Energy, for this purpose, to 

5 ensure— 

6 ‘‘(i) the safe operation of all systems 

7 post retrofit, and 

8 ‘‘(ii) that all improvements are in9 cluded in, and have been installed accord10 ing to, standards of the applicable certifi11 cation program specified under clause (i) 

12 or (ii) of subparagraph (A), or equivalent 

13 standards approved by the Secretary, after 

14 consultation with the Secretary of Energy, 

15 for this purpose. 

16 For purposes of subparagraph (A)(iii), an orga17 nization or State may submit an equivalent cer18 tification program for approval by the Sec19 retary, in consultation with the Secretary of 

20 Energy. The Secretary shall approve or deny 

21 such submission not later than 180 days after 

22 receipt, and, if the Secretary fails to respond in 

23 that time period, the submitted equivalent cer24 tification program shall be considered approved. 


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1 ‘‘(2) APPROVED MODELING SOFTWARE.—For 

2 purposes of paragraph (1)(B), the contractor (or, if 

3 applicable, the person described in paragraph (4)) 

4 shall use modeling software certified by RESNET as 

5 following the software verification test suites in sec6 tion 4.2.1 of RESNET Publication No. 06–001 or 

7 certified by an alternative organization as following 

8 an equivalent standard, as approved by the Sec9 retary, after consultation with the Secretary of En10 ergy, for this purpose. 

11 ‘‘(3) DOCUMENTATION.—The Secretary, after 

12 consultation with the Secretary of Energy, shall pre13 scribe regulations directing what specific documenta14 tion is required to be retained or submitted by the 

15 taxpayer in order to claim the credit under this sec16 tion, which shall include, in addition to the photo17 graphs under paragraph (1)(D), a form approved by 

18 the Secretary that is completed and signed by the 

19 qualified whole home energy efficiency retrofit con20 tractor under penalties of perjury. Such form shall 

21 include— 

22 ‘‘(A) a statement that the contractor (or, 

23 if applicable, the person described in paragraph 

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1 lishing baseline energy use and estimating re2 duction in energy use, 

3 ‘‘(B) the name of the software used for 

4 calculating the baseline energy use and reduc5 tion in energy use, the percentage reduction in 

6 projected energy savings achieved, and a state7 ment that such software was certified for this 

8 program by the Secretary, after consultation 

9 with the Secretary of Energy, 

10 ‘‘(C) a statement that the contractor (or, 

11 if applicable, the person described in paragraph 

12 (4)) will retain the details of the calculations 

13 and underlying energy bills for 5 years and will 

14 make such details available for inspection by 

15 the Secretary or the Secretary of Energy, if so 

16 requested, 

17 ‘‘(D) a list of measures installed and a 

18 statement that all measures included in the re19 duction in energy use estimate are included in, 

20 and installed according to, standards of the ap21 plicable certification program specified under 

22 clause (i) or (ii) of subparagraph (A), or equiv23 alent standards approved by the Secretary, 

24 after consultation with the Secretary of Energy, 


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1 ‘‘(E) a statement that the contractor (or, 

2 if applicable, the person described in paragraph 

3 (4)) meets the requirements of paragraph 

4 (1)(A), and 

5 ‘‘(F) documentation of the total cost of the 

6 project in order to comply with the limitation 

7 under subsection (b)(4)(B). 

8 ‘‘(4) CERTIFIED HOME ENERGY RATER.—For 

9 purposes of paragraph (1)(A), a contractor shall be 

10 deemed to have satisfied the accreditation require11 ment under such paragraph if the contractor enters 

12 into a contract with a person that satisfies such ac13 creditation requirement for purposes of modeling the 

14 energy use reduction described in paragraph (1)(B). 

15 ‘‘(e) ADDITIONAL RULES.—For purposes of this sec16 tion— 

17 ‘‘(1) NO DOUBLE BENEFIT.— 

18 ‘‘(A) IN GENERAL.—With respect to any 

19 residence, no credit shall be allowed under this 

20 section for any taxable year in which the tax21 payer claims a credit under section 25C. 

22 ‘‘(B) RENEWABLE ENERGY SYSTEMS AND

23 APPLIANCES.—In the case of a renewable en24 ergy system or appliance that qualifies for an25 other credit under this chapter, the resulting reVerDate Mar 15 2010 04:22 Apr 02, 2014 Jkt 039200 PO 00000 Frm 00055 Fmt 6652 Sfmt 6201 E:\BILLS\S2189.IS S2189

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1 duction in energy use shall not be taken into 

2 account in determining the percentage energy 

3 use reductions under subsection (b). 

4 ‘‘(C) NO DOUBLE BENEFIT FOR CERTAIN

5 EXPENDITURES.—The term ‘qualified home en6 ergy efficiency expenditures’ shall not include 

7 any expenditure for which a deduction or credit 

8 is claimed by the taxpayer under this chapter 

9 for the taxable year or with respect to which 

10 the taxpayer receives any Federal energy effi11 ciency rebate. 

12 ‘‘(2) PRINCIPAL RESIDENCE.—The term ‘prin13 cipal residence’ has the same meaning as when used 

14 in section 121. 

15 ‘‘(3) SPECIAL RULES.—Rules similar to the 

16 rules under paragraphs (4), (5), (6), (7), and (8) of 

17 section 25D(e) and section 25C(e)(2) shall apply, as 

18 determined by the Secretary, after consultation with 

19 the Secretary of Energy. 

20 ‘‘(4) BASIS ADJUSTMENTS.—For purposes of 

21 this subtitle, if a credit is allowed under this section 

22 with respect to any expenditure with respect to any 

23 property, the increase in the basis of such property 

24 which would (but for this paragraph) result from 


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1 such expenditure shall be reduced by the amount of 

2 the credit so allowed. 

3 ‘‘(5) ELECTION NOT TO CLAIM CREDIT.—No 

4 credit shall be determined under subsection (a) for 

5 the taxable year if the taxpayer elects not to have 

6 subsection (a) apply to such taxable year. 

7 ‘‘(6) MULTIPLE YEAR RETROFITS.—If the tax8 payer has claimed a credit under this section in a 

9 previous taxable year, the baseline energy use for the 

10 calculation of reduced energy use must be estab11 lished after the previous retrofit has been placed in 

12 service. 

13 ‘‘(f) TERMINATION.—This section shall not apply 

14 with respect to any costs paid or incurred after December 

15 31, 2016. 

16 ‘‘(g) SECRETARY REVIEW.—The Secretary, after con17 sultation with the Secretary of Energy, shall establish a 

18 review process for the retrofits performed, including an es19 timate of the usage of the credit and a statistically valid 

20 analysis of the average actual energy use reductions, uti21 lizing utility bill data collected on a voluntary basis, and 

22 report to Congress not later than June 30, 2014, any find23 ings and recommendations for— 

24 ‘‘(1) improvements to the effectiveness of the 

25 credit under this section, and 


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1 ‘‘(2) expansion of the credit under this section 

2 to rental units.’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) Section 1016(a) is amended— 

5 (A) by striking ‘‘and’’ at the end of para6 graph (36), 

7 (B) by striking the period at the end of 

8 paragraph (37) and inserting ‘‘, and’’, and 

9 (C) by adding at the end the following new 

10 paragraph: 

11 ‘‘(38) to the extent provided in section 

12 25E(e)(4), in the case of amounts with respect to 

13 which a credit has been allowed under section 

14 25E.’’. 

15 (2) Section 6501(m) is amended by inserting 

16 ‘‘25E(e)(5),’’ after ‘‘section’’. 

17 (3) The table of sections for subpart A of part 

18 IV of subchapter A chapter 1 is amended by insert19 ing after the item relating to section 25D the fol20 lowing new item: 

‘‘Sec. 25E. Performance based energy improvements.’’. 

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

22 this section shall apply to amounts paid or incurred for 

23 a qualified whole home energy efficiency retrofit placed in 

24 service after December 31, 2013. 


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1 TITLE III—INDUSTRIAL ENERGY 

2 AND WATER EFFICIENCY 

3 SEC. 301. MODIFICATIONS IN CREDIT FOR COMBINED HEAT 

4 AND POWER SYSTEM PROPERTY. 

5 (a) MODIFICATION OF CERTAIN CAPACITY LIMITA6 TIONS.—Section 48(c)(3)(B) is amended— 

7 (1) by striking ‘‘15 megawatts’’ in clause (ii) 

8 and inserting ‘‘25 megawatts’’, 

9 (2) by striking ‘‘20,000 horsepower’’ in clause 

10 (ii) and inserting ‘‘34,000 horsepower’’, and 

11 (3) by striking clause (iii). 

12 (b) INCREASE IN CREDIT PERCENTAGE FOR SYS13 TEMS WITH GREATER EFFICIENCY.—Subparagraph (A) 

14 of section 48(a)(2) is amended— 

15 (1) by striking ‘‘and’’ at the end of subclause 

16 (III) of clause (i), 

17 (2) by adding at the end of clause (i) the fol18 lowing new subclause: 

19 ‘‘(V) combined heat and power 

20 system property the energy efficiency 

21 percentage of which (as defined in 

22 subsection (c)(3)(C)(i)) is equal to or 

23 greater than 85 percent,’’, 

24 (3) by redesignating clause (ii) as clause (iii), 


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1 (4) by striking ‘‘clause (i)’’ in clause (iii), as so 

2 redesignated, and inserting ‘‘clause (i) or (ii)’’, and 

3 (5) by inserting after clause (i) the following 

4 new clause: 

5 ‘‘(ii) 20 percent in the case of com6 bined heat and power system property the 

7 energy percentage of which (as defined in 

8 subsection (c)(3)(C)(i)) is equal to or 

9 greater than 75 percent and less than 85 

10 percent, and’’. 

11 (c) EXTENSION.—Clause (iv) of section 48(c)(3)(A) 

12 is amended by striking ‘‘January 1, 2017’’ and inserting 

13 ‘‘January 1, 2019’’. 

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

15 this section shall apply to periods after the date of the 

16 enactment of this Act, under rules similar to the rules of 

17 section 48(m) of the Internal Revenue Code of 1986 (as 

18 in effect on the day before the date of the enactment of 

19 the Revenue Reconciliation Act of 1990). 

20 SEC. 302. INVESTMENT TAX CREDIT FOR BIOMASS HEATING 

21 PROPERTY. 

22 (a) IN GENERAL.—Subparagraph (A) of section 

23 48(a)(3) is amended by striking ‘‘or’’ at the end of clause 

24 (vi), by inserting ‘‘or’’ at the end of clause (vii), and by 

25 inserting after clause (vii) the following new clause: 


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1 ‘‘(viii) open-loop biomass (within the 

2 meaning of section 45(c)(3)) heating prop3 erty, including boilers or furnaces which 

4 operate at output efficiencies of not less 

5 than 65 percent (measured by the higher 

6 heating value of the fuel) and which pro7 vide thermal energy in the form of heat, 

8 hot water, or steam for space heating, air 

9 conditioning, domestic hot water, or indus10 trial process heat, but only with respect to 

11 periods ending before January 1, 2016,’’. 

12 (b) 30-PERCENT AND 15-PERCENT CREDITS.— 

13 (1) IN GENERAL.—Subparagraph (A) of section 

14 48(a)(2), as amended by this title, is amended— 

15 (A) by redesignating clause (iii) as clause 

16 (iv), 

17 (B) by striking ‘‘and’’ at the end of clause 

18 (ii), 

19 (C) by striking ‘‘clause (i) or (ii)’’ in clause 

20 (iv), as so redesignated, and inserting ‘‘clause 

21 (i), (ii), or (iii)’’, and 

22 (D) by inserting after clause (ii) the fol23 lowing new clause: 

24 ‘‘(iii) 15 percent in the case of energy 

25 property described in paragraph 


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1 (3)(A)(viii) to which clause (i)(VI) does not 

2 apply, and’’. 

3 (2) INCREASED CREDIT FOR GREATER EFFI4 CIENCY.—Clause (i) of section 48(a)(2)(A), as 

5 amended by this title, is amended by striking ‘‘and’’ 

6 at the end of subclause (IV), by striking the comma 

7 at the end of subclause (V) and inserting ‘‘, and’’, 

8 and by inserting after subclause (V) the following 

9 new subclause: 

10 ‘‘(VI) energy property described 

11 in paragraph (3)(A)(viii) which oper12 ates at an output efficiency of not less 

13 than 80 percent (measured by the 

14 higher heating value of the fuel),’’. 

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

16 this section shall apply to periods after the date of the 

17 enactment of this Act, in taxable years ending after such 

18 date, under rules similar to the rules of section 48(m) of 

19 the Internal Revenue Code of 1986 (as in effect on the 

20 day before the date of the enactment of the Revenue Rec21 onciliation Act of 1990). 

22 SEC. 303. INVESTMENT TAX CREDIT FOR WASTE HEAT TO 

23 POWER PROPERTY. 

24 (a) IN GENERAL.—Subparagraph (A) of section 

25 48(a)(3), as amended by this title, is amended by striking 


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1 ‘‘or’’ at the end of clause (vii), by striking the comma at 

2 the end of clause (viii) and inserting ‘‘, or’’, and by insert3 ing after clause (viii) the following new clause: 

4 ‘‘(ix) waste heat to power property,’’. 

5 (b) 30-PERCENT CREDIT.—Clause (i) of section 

6 48(a)(2)(A), as amended by this title, is amended by strik7 ing ‘‘and’’ at the end of subclause (V), by striking the 

8 comma at the end of subclause (VI) and inserting ‘‘, and’’, 

9 and by inserting after subclause (VI) the following new 

10 subclause: 

11 ‘‘(VII) waste heat to power prop12 erty,’’. 

13 (c) WASTE HEAT TO POWER PROPERTY.—Sub14 section (c) of section 48 is amended by adding at the end 

15 the following new paragraph: 

16 ‘‘(5) WASTE HEAT TO POWER PROPERTY.— 

17 ‘‘(A) IN GENERAL.—The term ‘waste heat 

18 to power property’ means property— 

19 ‘‘(i) comprising a system which gen20 erates electricity through the recovery of a 

21 qualified waste heat resource, and 

22 ‘‘(ii) which is placed in service before 

23 January 1, 2019. 


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1 ‘‘(B) QUALIFIED WASTE HEAT RE2 SOURCE.—The term ‘qualified waste heat re3 source’ means— 

4 ‘‘(i) exhaust heat or flared gas from 

5 an industrial process, 

6 ‘‘(ii) waste gas or industrial tail gas 

7 that would otherwise be flared, incinerated, 

8 or vented, 

9 ‘‘(iii) a pressure drop in any gas for 

10 an industrial or commercial process, or 

11 ‘‘(iv) such other forms of waste heat 

12 resources as the Secretary may determine. 

13 ‘‘(C) EXCEPTION.—The term ‘qualified 

14 waste heat resource’ does not include any heat 

15 resource from a process whose primary purpose 

16 is the generation of electricity utilizing a fossil 

17 fuel or the production of oil, natural gas, or 

18 other fossil fuels.’’. 

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

20 this section shall apply to periods after the date of the 

21 enactment of this Act, in taxable years ending after such 

22 date, under rules similar to the rules of section 48(m) of 

23 the Internal Revenue Code of 1986 (as in effect on the 

24 day before the date of the enactment of the Revenue Rec25 onciliation Act of 1990). 


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1 SEC. 304. MOTOR ENERGY EFFICIENCY IMPROVEMENT TAX 

2 CREDIT. 

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 is amended by adding at the end 

5 the following new section: 

6 ‘‘SEC. 45S. MOTOR ENERGY EFFICIENCY IMPROVEMENT 

7 TAX CREDIT. 

8 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

9 motor energy efficiency improvement tax credit deter10 mined under this section for the taxable year is an amount 

11 equal to $120 multiplied by the motor horsepower of an 

12 appliance, machine, or equipment— 

13 ‘‘(1) manufactured in such taxable year by a 

14 manufacturer which incorporates an advanced motor 

15 and drive system into a newly designed appliance, 

16 machine, or equipment or into a redesigned appli17 ance, machine, or equipment which did not pre18 viously make use of the advanced motor and drive 

19 system, or 

20 ‘‘(2) placed back into service in such taxable 

21 year by an end user which upgrades an existing ap22 pliance, machine, or equipment with an advanced 

23 motor and drive system. 

24 For any advanced motor and drive system with a total 

25 horsepower of less than 10, such motor energy efficiency 

26 improvement tax credit is an amount which bears the 


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1 same ratio to $120 as such total horsepower bears to 1 

2 horsepower. 

3 ‘‘(b) ADVANCED MOTOR AND DRIVE SYSTEM.—For 

4 purposes of this section, the term ‘advanced motor and 

5 drive system’ means a motor and any required associated 

6 electronic control which— 

7 ‘‘(1) offers variable or multiple speed operation, 

8 and 

9 ‘‘(2) uses permanent magnet technology, elec10 tronically commutated motor technology, switched 

11 reluctance motor technology, synchronous reluctance, 

12 or such other motor and drive systems technologies 

13 as determined by the Secretary of Energy. 

14 ‘‘(c) AGGREGATE PER TAXPAYER LIMITATION.— 

15 ‘‘(1) IN GENERAL.—The amount of the credit 

16 determined under this section for any taxpayer for 

17 any taxable year shall not exceed the excess (if any) 

18 of $2,000,000 over the aggregate credits allowed 

19 under this section with respect to such taxpayer for 

20 all prior taxable years. 

21 ‘‘(2) AGGREGATION RULES.—For purposes of 

22 this section, all persons treated as a single employer 

23 under subsections (a) and (b) of section 52 shall be 

24 treated as 1 taxpayer. 

25 ‘‘(d) SPECIAL RULES.— 


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1 ‘‘(1) BASIS REDUCTION.—For purposes of this 

2 subtitle, the basis of any property for which a credit 

3 is allowable under subsection (a) shall be reduced by 

4 the amount of such credit so allowed. 

5 ‘‘(2) NO DOUBLE BENEFIT.—No other credit 

6 shall be allowable under this chapter for property 

7 with respect to which a credit is allowed under this 

8 section. 

9 ‘‘(3) PROPERTY USED OUTSIDE UNITED STATES

10 NOT QUALIFIED.—No credit shall be allowable under 

11 subsection (a) with respect to any property referred 

12 to in section 50(b)(1). 

13 ‘‘(e) APPLICATION.—This section shall not apply to 

14 property manufactured or placed back into service before 

15 the date which is 6 months after the date of the enactment 

16 of this section or after December 31, 2016.’’. 

17 (b) CONFORMING AMENDMENTS.— 

18 (1) Section 38(b) is amended by striking ‘‘plus’’ 

19 at the end of paragraph (35), by striking the period 

20 at the end of paragraph (36) and inserting ‘‘, plus’’, 

21 and by adding at the end the following new para22 graph: 

23 ‘‘(37) the motor energy efficiency improvement 

24 tax credit determined under section 45S.’’. 


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

2 ‘‘and’’ at the end of paragraph (36), by striking the 

3 period at the end of paragraph (37) and inserting ‘‘, 

4 and’’, and by adding at the end the following new 

5 paragraph: 

6 ‘‘(38) to the extent provided in section 

7 45S(d)(1).’’. 

8 (3) The table of sections for subpart D of part 

9 IV of subchapter A of chapter 1 is amended by add10 ing at the end the following new item: 

‘‘Sec. 45S. Motor energy efficiency improvement tax credit.’’. 

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

12 this section shall apply to property manufactured or 

13 placed back into service after the date which is 6 months 

14 after the date of the enactment of this Act. 

15 SEC. 305. CREDIT FOR REPLACEMENT OF CFC REFRIG16 ERANT CHILLER. 

17 (a) IN GENERAL.—Subpart D of part IV of sub18 chapter A of chapter 1, as amended by this title, is amend19 ed by adding at the end the following new section: 

20 ‘‘SEC. 45T. CFC CHILLER REPLACEMENT CREDIT. 

21 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

22 CFC chiller replacement credit determined under this sec23 tion for the taxable year is an amount equal to— 

24 ‘‘(1) $150 multiplied by the tonnage rating of 

25 a CFC chiller replaced with a new efficient chiller 


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1 that is placed in service by the taxpayer during the 

2 taxable year, plus 

3 ‘‘(2) if all chilled water distribution pumps con4 nected to the new efficient chiller include variable 

5 frequency drives, $100 multiplied by any tonnage 

6 downsizing. 

7 ‘‘(b) CFC CHILLER.—For purposes of this section, 

8 the term ‘CFC chiller’ includes property which— 

9 ‘‘(1) was installed after 1980 and before 1993, 

10 ‘‘(2) utilizes chlorofluorocarbon refrigerant, and 

11 ‘‘(3) until replaced by a new efficient chiller, 

12 has remained in operation and utilized for cooling a 

13 commercial building. 

14 ‘‘(c) NEW EFFICIENT CHILLER.—For purposes of 

15 this section, the term ‘new efficient chiller’ includes a 

16 water-cooled chiller which is certified to meet efficiency 

17 standards effective on January 1, 2015, as defined in table 

18 6.8 in Standard 90.1-2013 of the American Society of 

19 Heating, Refrigerating, and Air Conditioning Engineers. 

20 ‘‘(d) TONNAGE DOWNSIZING.—For purposes of this 

21 section, the term ‘tonnage downsizing’ means the amount 

22 by which the tonnage rating of the CFC chiller exceeds 

23 the tonnage rating of the new efficient chiller. 

24 ‘‘(e) ENERGY AUDIT.—As a condition of receiving a 

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1 formed on the building prior to installation of the new effi2 cient chiller, identifying cost-effective energy-saving meas3 ures, particularly measures that could contribute to chiller 

4 downsizing. The audit shall satisfy criteria that shall be 

5 issued by the Secretary of Energy. 

6 ‘‘(f) PROPERTY USED BY TAX-EXEMPT ENTITY.—In 

7 the case of a CFC chiller replaced by a new efficient chiller 

8 the use of which is described in paragraph (3) or (4) of 

9 section 50(b), the person who sold such new efficient chill10 er to the entity shall be treated as the taxpayer that placed 

11 in service the new efficient chiller that replaced the CFC 

12 chiller, but only if such person clearly discloses to such 

13 entity in a document the amount of any credit allowable 

14 under subsection (a) and the person certifies to the Sec15 retary that the person reduced the price the entity paid 

16 for such new efficient chiller by the entire amount of such 

17 credit. 

18 ‘‘(g) TERMINATION.—This section shall not apply to 

19 replacements made after December 31, 2017.’’. 

20 (b) CONFORMING AMENDMENTS.— 

21 (1) Section 38(b), as amended by this title, is 

22 amended by striking ‘‘plus’’ at the end of paragraph 

23 (36), by striking the period at the end of paragraph 

24 (37) and inserting ‘‘, plus’’, and by adding at the 

25 end the following new paragraph: 


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1 ‘‘(38) the CFC chiller replacement credit deter2 mined under section 45T.’’. 

3 (2) The table of sections for subpart D of part 

4 IV of subchapter A of chapter 1, as amended by this 

5 title, is amended by adding at the end the following 

6 new item: 

‘‘Sec. 45T. CFC chiller replacement credit.’’. 

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

8 this section shall apply to replacements made after the 

9 date of the enactment of this Act. 

10 SEC. 306. QUALIFYING EFFICIENT INDUSTRIAL PROCESS 

11 WATER USE PROJECT CREDIT. 

12 (a) IN GENERAL.—Section 46 is amended by insert13 ing a comma at the end of paragraph (4), by striking 

14 ‘‘and’’ at the end of paragraph (5), by striking the period 

15 at the end of paragraph (6) and inserting ‘‘, and’’, and 

16 by adding at the end the following new paragraph: 

17 ‘‘(7) the qualifying efficient industrial process 

18 water use project credit.’’. 

19 (b) AMOUNT OF CREDIT.—Subpart E of part IV of 

20 subchapter A of chapter 1 is amended by inserting after 

21 section 48D the following new section: 

22 ‘‘SEC. 48E. QUALIFYING EFFICIENT INDUSTRIAL PROCESS 

23 WATER USE PROJECT CREDIT. 

24 ‘‘(a) IN GENERAL.— 


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1 ‘‘(1) ALLOWANCE OF CREDIT.—For purposes of 

2 section 46, the qualifying efficient industrial process 

3 water use project credit for any taxable year is an 

4 amount equal to the applicable percentage of the 

5 qualified investment for such taxable year with re6 spect to any qualifying efficient industrial process 

7 water use project of the taxpayer. 

8 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

9 of subsection (a)— 

10 ‘‘(A) IN GENERAL.—The applicable per11 centage is— 

12 ‘‘(i) 10 percent in the case of a quali13 fying efficient industrial process water use 

14 project which achieves a 25 percent or 

15 greater (but less than 50 percent) reduc16 tion in water use for industrial purposes, 

17 ‘‘(ii) 20 percent in the case of a quali18 fying efficient industrial process water use 

19 project which achieves a 50 percent or 

20 greater (but less than 75 percent) reduc21 tion in water use for industrial purposes, 

22 and 

23 ‘‘(iii) 30 percent in the case of a 

24 qualifying efficient industrial process water 

25 use project which achieves a 75 percent or 


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1 greater reduction in water use for indus2 trial purposes. 

3 ‘‘(B) WATER USE.—For purposes of sub4 paragraph (A)— 

5 ‘‘(i) MEASUREMENT OF REDUCTION

6 IN WATER USE.— 

7 ‘‘(I) IN GENERAL.—The taxpayer 

8 shall elect one of the methods speci9 fied in clause (ii) for measuring the 

10 reduction in water use achieved by a 

11 qualifying efficient industrial process 

12 water use project. 

13 ‘‘(II) IRREVOCABLE ELECTION.— 

14 An election under subclause (I), once 

15 made with respect to a qualifying effi16 cient industrial process water use 

17 project, shall apply to the taxable year 

18 for which made and all subsequent 

19 taxable years, and may not be re20 voked. 

21 ‘‘(III) PROJECTED SAVINGS.— 

22 The credit under subsection (a) may 

23 be claimed on the basis of a reduction 

24 in water use which is projected, by a 

25 registered professional engineer who is 


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1 not a related person (within the mean2 ing of section 144(a)(3)(A)) to the 

3 taxpayer or the installer of eligible 

4 property, to be achieved by a quali5 fying efficient industrial process water 

6 use project. Such projection, if used 

7 as a basis for determining the credit 

8 under subsection (a), shall be included 

9 with the return of tax. 

10 ‘‘(ii) METHODS SPECIFIED.—The 

11 methods specified in this clause are— 

12 ‘‘(I) a measurement of the per13 centage reduction in water use per 

14 unit of product manufactured by the 

15 taxpayer, and 

16 ‘‘(II) a measurement of the per17 centage reduction in water use per 

18 pound of product manufactured by 

19 the taxpayer. 

20 ‘‘(b) QUALIFIED INVESTMENT.— 

21 ‘‘(1) IN GENERAL.—For purposes of subsection 

22 (a), the qualified investment for any taxable year is 

23 the basis of eligible property placed in service by the 

24 taxpayer during such taxable year which is part of 


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1 a qualifying efficient industrial process water use 

2 project. 

3 ‘‘(2) EXCEPTIONS.—Such term shall not in4 clude any portion of the basis related to— 

5 ‘‘(A) permitting, 

6 ‘‘(B) land acquisition, or 

7 ‘‘(C) infrastructure not directly associated 

8 with the implementation of the technology or 

9 process improvements of the qualifying efficient 

10 industrial process water use project. 

11 ‘‘(3) CERTAIN QUALIFIED PROGRESS EXPENDI12 TURES RULES MADE APPLICABLE.—Rules similar to 

13 the rules of subsections (c)(4) and (d) of section 46 

14 (as in effect on the day before the enactment of the 

15 Revenue Reconciliation Act of 1990) shall apply for 

16 purposes of this section. 

17 ‘‘(4) SPECIAL RULE FOR SUBSIDIZED ENERGY

18 FINANCING.—Rules similar to the rules of section 

19 48(a)(4) (without regard to subparagraph (D) there20 of) shall apply for purposes of this section. 

21 ‘‘(5) LIMITATION.—The amount which is treat22 ed for all taxable years with respect to any quali23 fying efficient industrial process water use project 

24 with respect to any site shall not exceed 

25 $10,000,000. 


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

2 ‘‘(1) QUALIFYING EFFICIENT INDUSTRIAL

3 PROCESS WATER USE PROJECT.— 

4 ‘‘(A) IN GENERAL.—The term ‘qualifying 

5 efficient industrial process water use project’ 

6 means, with respect to any site, a project which 

7 retrofits or expands an existing facility to im8 plement technology or process improvements 

9 which are designed to reduce water use for sys10 tems that use any form of water in the produc11 tion of goods in the manufacturing sector (as 

12 defined in North American Industrial Classi13 fication System codes 31, 32, and 33), includ14 ing any system that uses water for heating, 

15 cooling, or energy production for the production 

16 of goods in the trade or business of manufac17 turing (other than extraction of fossil fuels). 

18 Such term shall not include a project which al19 ters an existing facility to change the type of 

20 goods produced by such facility. 

21 ‘‘(B) SYSTEMS.—For purposes of subpara22 graph (A), the term ‘system’ does not include 

23 any system which does not encompass 1 or 

24 more complete processes. 


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1 ‘‘(2) ELIGIBLE PROPERTY.—The term ‘eligible 

2 property’ means any property— 

3 ‘‘(A) which is part of a qualifying efficient 

4 industrial process water use project and which 

5 is necessary for the reduction in water use de6 scribed in paragraph (1), 

7 ‘‘(B)(i) the construction, reconstruction, or 

8 erection of which is completed by the taxpayer, 

9 or 

10 ‘‘(ii) which is acquired by the taxpayer if 

11 the original use of such property commences 

12 with the taxpayer, and 

13 ‘‘(C) with respect to which depreciation (or 

14 amortization in lieu of depreciation) is allow15 able. 

16 ‘‘(3) WATER USE.— 

17 ‘‘(A) IN GENERAL.—The term ‘water use’ 

18 means all water taken for use at the site di19 rectly from ground and surface water sources 

20 together with any water supplied to the site by 

21 a regulated water system. 

22 ‘‘(B) REGULATED WATER SYSTEM.—The 

23 term ‘regulated water system’ means a system 

24 that supplies water that has been treated to po25 table standards. 


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1 ‘‘(d) TERMINATION.—This section shall not apply to 

2 periods after December 31, 2017, under rules similar to 

3 the rules of section 48(m) (as in effect on the day before 

4 the date of the enactment of the Revenue Reconciliation 

5 Act of 1990).’’. 

6 (c) CONFORMING AMENDMENTS.— 

7 (1) Section 49(a)(1)(C) is amended by striking 

8 ‘‘and’’ at the end of clause (v), by striking the pe9 riod at the end of clause (vi) and inserting ‘‘, and’’, 

10 and by adding at the end the following new clause: 

11 ‘‘(vii) the basis of any property which 

12 is part of a qualifying efficient industrial 

13 use water project under section 48E.’’. 

14 (2) The table of sections for subpart E of part 

15 IV of subchapter A of chapter 1 is amended by in16 serting after the item relating to section 48D the 

17 following new item: 

‘‘Sec. 48E. Qualifying efficient industrial process water use project credit.’’. 

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

19 this section shall apply to periods after the date of the 

20 enactment of this Act, under rules similar to the rules of 

21 section 48(m) of the Internal Revenue Code of 1986 (as 

22 in effect on the day before the date of the enactment of 

23 the Revenue Reconciliation Act of 1990). 

Æ 


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