I 

110TH CONGRESS 

1ST SESSION H. R. 1385 

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

energy-related tax provisions, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 7, 2007 

Mr. MCDERMOTT (for himself, Mr. MARKEY, and Mr. WELLER of Illinois) 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 improve 

and extend certain energy-related tax provisions, 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; ETC. 

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

5 ‘‘EXTEND the Energy Efficiency Incentives Act of 

6 2007’’. 

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; etc. 

TITLE I—NON-BUSINESS ENERGY IMPROVEMENTS 

Sec. 101. Performance based energy improvements for non-business property. 

Sec. 102. Extension and modification of credit for nonbusiness energy property. 

TITLE II—BUSINESS-RELATED ENERGY IMPROVEMENTS 

Sec. 201. Extension and clarification of new energy efficient home credit. 

Sec. 202. Extension and modification of deduction for energy efficient commercial buildings. 

Sec. 203. Deduction for energy efficient low-rise buildings. 

Sec. 204. Energy efficient property deduction. 

TITLE III—INCENTIVES FOR ENERGY SAVINGS CERTIFICATIONS 

Sec. 301. Credit for energy savings certifications. 

6 TITLE I—NON-BUSINESS 

7 ENERGY IMPROVEMENTS 

8 SEC. 101. PERFORMANCE BASED ENERGY IMPROVEMENTS 

9 FOR NON-BUSINESS PROPERTY. 

10 (a) IN GENERAL.—Subpart A of part IV of sub11 chapter A of chapter 1 is amended by inserting after sec12 tion 25D the following new section: 

13 ‘‘SEC. 25E. PERFORMANCE BASED ENERGY IMPROVE14 MENTS. 

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

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

17 by this chapter for the taxable year an amount equal to 


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1 the amount of qualified energy efficiency expenditures 

2 paid or incurred by the taxpayer during the taxable year. 

3 ‘‘(b) LIMITATIONS.— 

4 ‘‘(1) IN GENERAL.—The amount allowed as a 

5 credit under subsection (a) shall not exceed the 

6 product of— 

7 ‘‘(A) the qualified energy savings achieved, 

8 and 

9 ‘‘(B) $4,000. 

10 ‘‘(2) MINIMUM AMOUNT OF QUALIFIED ENERGY

11 SAVINGS.—No credit shall be allowed under sub12 section (a) with respect to any principal residence 

13 which achieves a qualified energy savings of less 

14 than 20 percent. 

15 ‘‘(3) LIMITATION BASED ON AMOUNT OF

16 TAX.—In the case of taxable years to which section 

17 26(a)(2) does not apply, the credit allowed under 

18 subsection (a) for any taxable year shall not exceed 

19 the excess of— 

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

21 (as defined in section 26(b)) plus the tax im22 posed by section 55, over 

23 ‘‘(B) the sum of the credit allowable under 

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1 tions 23, 24, and 25B) and section 27 for the 

2 taxable year. 

3 ‘‘(c) QUALIFIED ENERGY EFFICIENCY EXPENDI4 TURES.—For purposes of this section: 

5 ‘‘(1) IN GENERAL.—The term ‘qualified energy 

6 efficiency expenditures’ means any amount paid or 

7 incurred which is related to producing qualified en8 ergy savings in a principal residence of the taxpayer 

9 which is located in the United States. 

10 ‘‘(2) NO DOUBLE BENEFIT FOR CERTAIN EX11 PENDITURES.—The term ‘qualified energy efficiency 

12 expenditures’ shall not include any expenditure for 

13 which a deduction or credit is otherwise allowed to 

14 the taxpayer under this chapter. 

15 ‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin16 cipal residence’ has the same meaning as when used 

17 in section 121, except that— 

18 ‘‘(A) no ownership requirement shall be 

19 imposed, and 

20 ‘‘(B) the period for which a building is 

21 treated as used as a principal residence shall 

22 also include the 60-day period ending on the 1st 

23 day on which it would (but for this subpara24 graph) first be treated as used as a principal 

25 residence. 


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1 ‘‘(d) QUALIFIED ENERGY SAVINGS.—For purposes of 

2 this section— 

3 ‘‘(1) IN GENERAL.—The term ‘qualified energy 

4 savings’ means, with respect to any principal resi5 dence, the amount (measured as a percentage) by 

6 which— 

7 ‘‘(A) the annual energy use with respect to 

8 the principal residence after qualified energy ef9 ficiency expenditures are made, as certified 

10 under paragraph (2), is less than 

11 ‘‘(B) the annual energy use with respect to 

12 the principal residence before the qualified en13 ergy efficiency expenditures were made, as cer14 tified under paragraph (2). 

15 In determining annual energy use under subpara16 graph (B), any energy efficiency improvements 

17 which are not attributable to qualified energy effi18 ciency expenditures shall be disregarded. 

19 ‘‘(2) CERTIFICATION.— 

20 ‘‘(A) IN GENERAL.—The Secretary, in con21 sultation with the Secretary of Energy, shall 

22 prescribe the procedures and methods for the 

23 making of certifications under this paragraph 

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1 work (RESNET) Technical Guidelines in effect 

2 on the date of the enactment of this section. 

3 ‘‘(B) QUALIFIED INDIVIDUALS.—Any cer4 tification made under this paragraph may only 

5 be made by an individual who is recognized by 

6 an organization certified by the Secretary for 

7 such purposes. 

8 ‘‘(e) SPECIAL RULES.—For purposes of this section 

9 rules similar to the rules under paragraphs (4), (5), (6), 

10 (7), (8), and (9) of section 25D(e) and section 25C(e)(2) 

11 shall apply. 

12 ‘‘(f) BASIS ADJUSTMENTS.—For purposes of this 

13 subtitle, if a credit is allowed under this section with re14 spect to any expenditure with respect to any property, the 

15 increase in the basis of such property which would (but 

16 for this subsection) result from such expenditure shall be 

17 reduced by the amount of the credit so allowed. 

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

19 with respect to any property placed in service after Decem20 ber 31, 2011.’’. 

21 (b) INTERIM GUIDANCE ON CERTIFICATION.— 

22 (1) IN GENERAL.—Not later than 90 days after 

23 the date of the enactment of this Act, the Secretary 

24 of the Treasury, in consultation with the Secretary 

25 of Energy, shall issue interim guidance on— 


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1 (A) the procedures and methods for mak2 ing certifications under sections 25E(d)(2)(A) 

3 and 179F(d)(2)(A) of the Internal Revenue 

4 Code of 1986, as added by subsection (a) and 

5 section 203, respectively; 

6 (B) the recognition of qualified individuals 

7 under sections 25E(d)(2)(B) and 

8 179F(d)(2)(B) of such Code for the purpose of 

9 making such certifications; 

10 (C) how participation in State energy effi11 ciency programs can be used in the procedures 

12 and methods described in subparagraph (A). 

13 (2) CONSULTATION WITH STAKEHOLDERS.— 

14 (A) IN GENERAL.—The Secretary of the 

15 Treasury, in issuing guidance pursuant to para16 graph (1), shall consider comments from energy 

17 efficiency experts and other interested parties. 

18 (B) OTHER CONSIDERATIONS.—In the case 

19 of guidance issued pursuant to paragraph 

20 (1)(B), the Secretary of the Treasury shall also 

21 consider— 

22 (i) the Residential Energy Services 

23 Network Technical Guidelines and other 

24 pertinent guidelines for evaluating energy 

25 savings; 


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1 (ii) energy modeling software, includ2 ing software accredited through the Resi3 dential Energy Services Network; and 

4 (iii) quality assurance procedures of 

5 the Building Performance Institute, Home 

6 Performance through Energy Star, and the 

7 Residential Energy Services Network. 

8 (c) ALTERNATIVE CERTIFICATION METHODS.— 

9 (1) IN GENERAL.—The Secretary of the Treas10 ury shall establish a procedure for individuals and 

11 businesses to petition for the approval of alternative 

12 methods of certification under sections 25E(d)(2)(A) 

13 and 179F(d)(2)(A) of the Internal Revenue Code of 

14 1986, as added by subsection (a) and section 203, 

15 respectively. 

16 (2) DETERMINATION.—The Secretary of the 

17 Treasury shall make a determination on the ap18 proval or disapproval of such alternative methods of 

19 certification not later than 90 days after receiving a 

20 petition under paragraph (1). 

21 (d) CONFORMING AMENDMENTS.— 

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

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

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


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

2 paragraph: 

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

4 25E(f).’’. 

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

6 IV of subchapter A chapter 1 is amended by insert7 ing after the item relating to section 25D the fol8 lowing new item: 

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

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

10 this section shall apply to amounts paid or incurred in tax11 able years beginning after the date of the enactment of 

12 this Act. 

13 SEC. 102. EXTENSION AND MODIFICATION OF CREDIT FOR 

14 NONBUSINESS ENERGY PROPERTY. 

15 (a) EXTENSION.—Subsection (g) of section 25C (re16 lating to termination) is amended by striking ‘‘December 

17 31, 2007’’ and inserting ‘‘December 31, 2011’’. 

18 (b) LABOR COSTS FOR QUALIFIED ENERGY EFFI19 CIENCY IMPROVEMENTS.—Section 25C(c)(1) is amended 

20 by adding at the end the following new flush sentence: 

21 ‘‘The amount taken into account under subsection 

22 (a)(1) with respect to qualified energy efficiency im23 provements shall include expenditures for labor costs 

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1 bly, or original installation of any component de2 scribed in this paragraph.’’. 

3 (c) MODIFICATIONS FOR RESIDENTIAL ENERGY EF4 FICIENCY PROPERTY EXPENDITURES.— 

5 (1) INCREASED LIMITATION FOR OIL FURNACES

6 AND NATURAL GAS, PROPANE, AND OIL HOT WATER

7 BOILERS.— 

8 (A) IN GENERAL.—Subparagraphs (B) and 

9 (C) of section 25C(b)(3) are amended to read 

10 as follows: 

11 ‘‘(B) $150 for any qualified natural gas 

12 furnace or qualified propane furnace, and 

13 ‘‘(C) $300 for— 

14 ‘‘(i) any item of energy-efficient build15 ing property, and 

16 ‘‘(ii) any qualified oil furnace, quali17 fied natural gas hot water boiler, qualified 

18 propane hot water boiler, or qualified oil 

19 hot water boiler.’’. 

20 (B) CONFORMING AMENDMENT.—Clause 

21 (ii) of section 25C(d)(2)(A) is amended to read 

22 as follows: 

23 ‘‘(ii) any qualified natural gas fur24 nace, qualified propane furnace, qualified 

25 oil furnace, qualified natural gas hot water 


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1 boiler, qualified propane hot water boiler, 

2 or qualified oil hot water boiler, or’’. 

3 (2) MODIFICATIONS OF STANDARDS FOR EN4 ERGY-EFFICIENT BUILDING PROPERTY.— 

5 (A) ELECTRIC HEAT PUMPS.—Subpara6 graph (B) of section 25C(d)(3) is amended to 

7 read as follows: 

8 ‘‘(A) an electric heat pump which achieves 

9 the highest efficiency tier established by the 

10 Consortium for Energy Efficiency, as in effect 

11 on January 1, 2008.’’. 

12 (B) CENTRAL AIR CONDITIONERS.—Sec13 tion 25C(d)(3)(D) is amended by striking 

14 ‘‘2006’’ and inserting ‘‘2008’’. 

15 (C) WATER HEATERS.—Subparagraph (E) 

16 of section 25C(d) is amended to read as follows: 

17 ‘‘(E) a natural gas, propane, or oil water 

18 heater which has either an energy factor of at 

19 least 0.80 or a thermal efficiency of at least 90 

20 percent.’’. 

21 (D) OIL FURNACES AND HOT WATER BOIL22 ERS.—Paragraph (4) of section 25C(d) is 

23 amended to read as follows: 

24 ‘‘(4) QUALIFIED NATURAL GAS, PROPANE, AND

25 OIL FURNACES AND HOT WATER BOILERS.— 


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1 ‘‘(A) QUALIFIED NATURAL GAS FUR2 NACE.—The term ‘qualified natural gas fur3 nace’ means any natural gas furnace which 

4 achieves an annual fuel utilization efficiency 

5 rate of not less than 95. 

6 ‘‘(B) QUALIFIED NATURAL GAS HOT

7 WATER BOILER.—The term ‘qualified natural 

8 gas hot water boiler’ means any natural gas hot 

9 water boiler which achieves an annual fuel utili10 zation efficiency rate of not less than 90. 

11 ‘‘(C) QUALIFIED PROPANE FURNACE.— 

12 The term ‘qualified propane furnace’ means any 

13 propane furnace which achieves an annual fuel 

14 utilization efficiency rate of not less than 95. 

15 ‘‘(D) QUALIFIED PROPANE HOT WATER

16 BOILER.—The term ‘qualified propane hot 

17 water boiler’ means any propane hot water boil18 er which achieves an annual fuel utilization effi19 ciency rate of not less than 90. 

20 ‘‘(E) QUALIFIED OIL FURNACES.—The 

21 term ‘qualified oil furnace’ means any oil fur22 nace which achieves an annual fuel utilization 

23 efficiency rate of not less than 90. 

24 ‘‘(F) QUALIFIED OIL HOT WATER BOIL25 ER.—The term ‘qualified oil hot water boiler’ 


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1 means any oil hot water boiler which achieves 

2 an annual fuel utilization efficiency rate of not 

3 less than 90.’’. 

4 (3) ELIMINATION OF LIFETIME LIMITATION.— 

5 Paragraph (1) of section 25C(b) is amended by in6 serting ‘‘by reason of subsection (a)(1)’’ after 

7 ‘‘under this section’’. 

8 (d) MODIFICATION OF QUALIFIED ENERGY EFFI9 CIENCY IMPROVEMENTS.— 

10 (1) IN GENERAL.—Paragraph (1) of section 

11 25C(c) is amended by inserting ‘‘, or an asphalt roof 

12 with appropriate cooling granules,’’ before ‘‘which 

13 meet the Energy Star program requirements’’. 

14 (2) BUILDING ENVELOPE COMPONENT.—Sub15 paragraph (D) of section 25C(c)(2) is amended— 

16 (A) by inserting ‘‘or asphalt roof’’ after 

17 ‘‘metal roof’’, and 

18 (B) by inserting ‘‘or cooling granules’’ 

19 after ‘‘pigmented coatings’’. 

20 (e) NATURAL GAS FIRED HEAT PUMPS.—Section 

21 25C(d)(3), as amended by this section, is amended by 

22 striking ‘‘and’’ at the end of subparagraph (D), by strik23 ing the period at the end of subparagraph (E) and insert24 ing ‘‘, and’’, and by adding at the end the following new 

25 subparagraph: 


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1 ‘‘(F) a natural gas fired heat pump with a 

2 heating coefficient of performance (COP) of at 

3 least 1.1.’’. 

4 (f) ELIMINATION OF CREDIT FOR QUALIFIED EN5 ERGY EFFICIENCY IMPROVEMENTS IN 2010.— 

6 (1) IN GENERAL.—Subsection (a) of section 

7 25C is amended to read as follows: 

8 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in9 dividual, there shall be allowed as a credit against the tax 

10 imposed by this chapter for the taxable year an amount 

11 equal to the amount of residential energy property expend12 itures paid or incurred by the taxpayer during the taxable 

13 year.’’. 

14 (2) CONFORMING AMENDMENTS.— 

15 (A) Section 25C(b), as amended by sub16 section (b), is amended by striking paragraphs 

17 (1) and (2) and by redesignating paragraph (3) 

18 as paragraph (1). 

19 (B) Section 25C(b)(1), as redesignated by 

20 subparagraph (A), is amended by striking ‘‘by 

21 reason of subsection (a)(2)’’. 

22 (C) Section 25C is amended by striking 

23 subsection (c). 

24 (g) CLARIFICATION OF ELIGIBILITY OF STANDARDS

25 FOR QUALIFIED ENERGY PROPERTY.—Section 


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1 25C(d)(2)(C) is amended by striking ‘‘and’’ at the end of 

2 clause (i), by striking the period at the end of clause (ii) 

3 and inserting ‘‘, and’’, and by adding at the end the fol4 lowing new clause: 

5 ‘‘(iii) shall allow for the testing of 

6 products regardless of the size or capacity 

7 of the product.’’. 

8 (h) EFFECTIVE DATES.— 

9 (1) IN GENERAL.—Except as provided in para10 graphs (2) and (3), the amendments made by this 

11 section shall apply to property placed in service after 

12 the date of the enactment of this Act. 

13 (2) STANDARDS FOR ELECTRIC HEAT PUMPS

14 AND CENTRAL AIR CONDITIONERS.—The amend15 ments made by subparagraphs (A) and (B) sub16 section (c)(2) shall apply to property placed in serv17 ice after December 31, 2007. 

18 (3) ELIMINATION OF CREDIT FOR QUALIFIED

19 ENERGY EFFICIENCY IMPROVEMENTS.—The amend20 ments made by subsection (f) shall apply to property 

21 placed in service after December 31, 2009. 


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1 TITLE II—BUSINESS-RELATED 

2 ENERGY IMPROVEMENTS 

3 SEC. 201. EXTENSION AND CLARIFICATION OF NEW EN4 ERGY EFFICIENT HOME CREDIT. 

5 (a) EXTENSION.—Subsection (g) of section 45L (re6 lating to termination), as amended by section 205 of divi7 sion A of the Tax Relief and Health Care Act of 2006, 

8 is amended by striking ‘‘December 31, 2008’’ and insert9 ing ‘‘December 31, 2011’’. 

10 (b) CLARIFICATION.— 

11 (1) IN GENERAL.—Paragraph (1) of section 

12 45L(a) is amended by striking ‘‘and’’ at the end of 

13 subparagraph (A) and by striking subparagraph (B) 

14 and inserting the following: 

15 ‘‘(B) acquired by a person from such eligi16 ble contractor, and 

17 ‘‘(C) used by any person as a residence 

18 during the taxable year.’’. 

19 (2) EFFECTIVE DATE.—The amendments made 

20 by this subsection shall take effect as if included in 

21 section 1332 of the Energy Policy Act of 2005. 


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1 SEC. 202. EXTENSION AND MODIFICATION OF DEDUCTION 

2 FOR ENERGY EFFICIENT COMMERCIAL 

3 BUILDINGS. 

4 (a) EXTENSION.—Subsection (h) of section 179D 

5 (relating to termination) is amended to read as follows: 

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

7 with respect to property— 

8 ‘‘(1) which is certified under subsection (d)(6) 

9 after December 31, 2012, or 

10 ‘‘(2) which is placed in service after December 

11 31, 2014. 

12 A provisional certification shall be treated as meeting the 

13 requirements of paragraph (1) if it is based on the build14 ing plans, subject to inspection and testing after installa15 tion.’’. 

16 (b) INCREASE IN MAXIMUM AMOUNT OF DEDUC17 TION.— 

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

19 179D(b)(1) is amended by striking ‘‘$1.80’’ and in20 serting ‘‘$2.25’’. 

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

22 section 179D(d) is amended— 

23 (A) by striking ‘‘$.60’’ and inserting 

24 ‘‘$0.75’’, and 

25 (B) by striking ‘‘$1.80’’ and inserting 

26 ‘‘$2.25’’. 


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1 (c) MODIFICATIONS TO CERTAIN SPECIAL RULES.— 

2 (1) METHODS OF CALCULATING ENERGY SAV3 INGS.— 

4 (A) IN GENERAL.—Paragraph (2) of sec5 tion 179D(d) is amended— 

6 (i) by inserting ‘‘in detail’’ after 

7 ‘‘based’’, 

8 (ii) by inserting ‘‘, except that the 

9 Secretary shall use Standard 90.1–2001 in 

10 lieu of the California title 24 energy stand11 ards and the tables contained therein and 

12 the Secretary may add requirements from 

13 Standard 90.1–2001 (or any successor 

14 standard)’’ before the period at the end, 

15 and 

16 (iii) by adding at the end the fol17 lowing new sentence: ‘‘The calculation 

18 methods contained in such regulations 

19 shall also provide for the calculation of ap20 propriate energy savings for design meth21 ods and technologies not otherwise credited 

22 in such manual or standard, including en23 ergy savings associated with natural ven24 tilation, evaporative cooling, automatic 

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1 sors, photocells, and time clocks), day 

2 lighting, designs utilizing semi-conditioned 

3 spaces which maintain adequate comfort 

4 conditions without air conditioning or with5 out heating, improved fan system efficiency 

6 (including reductions in static pressure), 

7 advanced unloading mechanisms for me8 chanical cooling (such as multiple or vari9 able speed compressors), on-site generation 

10 of electricity (including combined heat and 

11 power systems, fuel cells, and renewable 

12 energy generation such as solar energy), 

13 and wiring with lower energy losses than 

14 wiring satisfying Standard 90.1–2001 re15 quirements for building power distribution 

16 systems.’’. 

17 (B) REQUIREMENTS FOR COMPUTER SOFT18 WARE USED IN CALCULATING ENERGY AND

19 POWER CONSUMPTION COSTS.—Paragraph 

20 (3)(B) of section 179D(d) is amended by strik21 ing ‘‘and’’ at the end of clause (ii), by striking 

22 the period at the end of clause (iii) and insert23 ing ‘‘, and’’, and by adding at the end the fol24 lowing: 

25 ‘‘(iv) which automatically— 


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1 ‘‘(I) generates the features, en2 ergy use, and energy and power con3 sumption costs of a reference building 

4 which meets Standard 90.1–2001, 

5 ‘‘(II) generates the features, en6 ergy use, and energy and power con7 sumption costs of a compliant build8 ing or system which reduces the an9 nual energy and power costs by 50 

10 percent compared to Standard 90.1– 

11 2001, and 

12 ‘‘(III) compares such features, 

13 energy use, and consumption costs to 

14 the features, energy use, and con15 sumption costs of the building or sys16 tem with respect to which the calcula17 tion is being made.’’. 

18 (2) TARGETS FOR PARTIAL ALLOWANCE OF

19 CREDIT.—Paragraph (1)(B) of section 179D(d) is 

20 amended— 

21 (A) by striking ‘‘The Secretary’’ and in22 serting the following: 

23 ‘‘(i) IN GENERAL.—The Secretary’’, 

24 and 

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


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1 ‘‘(ii) ADDITIONAL REQUIREMENTS.— 

2 For purposes of clause (i)— 

3 ‘‘(I) the Secretary shall deter4 mine prescriptive criteria that can be 

5 modeled explicitly for reference build6 ings which meet the requirements of 

7 subsection (c)(1)(D) for different 

8 building types and regions, 

9 ‘‘(II) a system may be certified 

10 as meeting the target under subpara11 graph (A)(ii) if the appropriate ref12 erence building either meets the re13 quirements of subsection (c)(1)(D) 

14 with such system rather than the 

15 comparable reference system (using 

16 the calculation under paragraph (2)) 

17 or meets the relevant prescriptive cri18 teria under subclause (I), and 

19 ‘‘(III) the lighting system target 

20 shall be based on lighting power den21 sity, except that it shall allow lighting 

22 controls credits that trade off for 

23 lighting power density savings based 

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1 fornia Nonresidential Alternative Cal2 culation Method Approval Manual. 

3 ‘‘(iii) PUBLICATION.—The Secretary 

4 shall publish in the Federal Register the 

5 bases for the target levels established in 

6 the regulations under clause (i).’’. 

7 (d) ALTERNATIVE STANDARDS.—Section 179D(d) is 

8 amended by adding at the end the following new para9 graph: 

10 ‘‘(7) ALTERNATIVE STANDARDS PENDING

11 FINAL REGULATIONS.—Until such time as the Sec12 retary issues final regulations under paragraph 

13 (1)(B)— 

14 ‘‘(A) in the case of property which is part 

15 of a building envelope, the building envelope 

16 system target under paragraph (1)(A)(ii) shall 

17 be a 7 percent reduction in total annual energy 

18 and power costs (determined in the same man19 ner as under subsection (c)(1)(D)), and 

20 ‘‘(B) in the case of property which is part 

21 of the heating, cooling, ventilation, and hot 

22 water systems, the heating, cooling, ventilation, 

23 and hot water system shall be treated as meet24 ing the target under paragraph (1)(A)(ii) if it 

25 would meet the requirement in subsection 


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1 (c)(1)(D) if combined with a building envelope 

2 system and lighting system which met their re3 spective targets under paragraph(1)(A)(ii) (in4 cluding interim targets in effect under sub5 sections (f) and subparagraph (A)).’’. 

6 (e) MODIFICATIONS TO LIGHTING STANDARDS.— 

7 (1) STANDARDS TO BE ALTERNATE STAND8 ARDS.—Subsection (f) of section 179D is amended 

9 by— 

10 (A) striking ‘‘INTERIM’’ in the heading and 

11 inserting ‘‘ALTERNATIVE’’, and 

12 (B) inserting ‘‘, or, if the taxpayer elects, 

13 in lieu of the target set forth in such final regu14 lations’’ after ‘‘lighting system’’ at the end of 

15 the matter preceding paragraph (1). 

16 (2) QUALIFIED INDIVIDUALS.—Section 

17 179D(d)(6)(C) is amended by adding at the end the 

18 following: ‘‘For purposes of certification of whether 

19 the alternative target for lighting systems under 

20 subsection (f) is met, individuals qualified to deter21 mine compliance shall include individuals who are 

22 certified as Lighting Certified (LC) by the National 

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1 ited Professionals (AP) by the U.S. Green Buildings 

2 Council.’’. 

3 (3) REQUIREMENT FOR BILEVEL SWITCHING.— 

4 Section 179D(f)(2) is amended by adding at the end 

5 the following new subparagraph: 

6 ‘‘(3) APPLICATION OF SUBSECTION TO BILEVEL

7 SWITCHING.— 

8 ‘‘(A) IN GENERAL.—Notwithstanding para9 graph (2)(C)(i), this subsection shall apply to a 

10 system which does not include provisions for 

11 bilevel switching if the reduction in lighting 

12 power density is at least 37.5 percent of the 

13 minimum requirements in Table 9.3.1.1 or 

14 Table 9.3.1.2 (not including additional interior 

15 lighting allowances) of Standard 90.1–2001. 

16 ‘‘(B) REDUCTION IN DEDUCTION.—In the 

17 case of a system to which this subsection ap18 plies by reason of subparagraph (A), paragraph 

19 (2) shall be applied— 

20 ‘‘(i) by substituting ‘50 percent’ for 

21 ‘40 percent’ in subparagraph (A) thereof, 

22 and 

23 ‘‘(ii) in subparagraph (B)(ii) there24 of— 


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1 ‘‘(I) by substituting ‘37.5 per2 centage points’ for ‘25 percentage 

3 points’, and 

4 ‘‘(II) by substituting ‘12.5’ for 

5 ‘15’.’’. 

6 (f) PUBLIC PROPERTY.—Paragraph (4) of section 

7 179(d) is amended by striking ‘‘the Secretary shall pro8 mulgate a regulation to allow the allocation of the deduc9 tion’’ and inserting ‘‘the deduction under this section shall 

10 be allowed’’. 

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

12 this section shall apply to property placed in service in 

13 taxable years beginning after the date of the enactment 

14 of this Act. 

15 SEC. 203. DEDUCTION FOR ENERGY EFFICIENT LOW-RISE 

16 BUILDINGS. 

17 (a) IN GENERAL.—Part VI of subchapter B of chap18 ter 1, as amended by section 404 of division A of the Tax 

19 Relief and Health Care Act of 2006, is amended by insert20 ing after section 179E the following new section: 

21 ‘‘SEC. 179F. ENERGY EFFICIENT LOW-RISE BUILDINGS DE22 DUCTION. 

23 ‘‘(a) IN GENERAL.—There shall be allowed as a de24 duction an amount equal to the amount of qualified energy 


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1 efficiency expenditures paid or incurred by the taxpayer 

2 during the taxable year. 

3 ‘‘(b) LIMITATIONS.— 

4 ‘‘(1) IN GENERAL.—The amount allowed as a 

5 credit under subsection (a) with respect to any 

6 dwelling unit shall not exceed the product of— 

7 ‘‘(A) the qualified energy savings achieved, 

8 and 

9 ‘‘(B) $12,000. 

10 ‘‘(2) MINIMUM AMOUNT OF QUALIFIED ENERGY

11 SAVINGS.—No credit shall be allowed under sub12 section (a) with respect to any dwelling unit in a 

13 qualified low-rise building which achieves a qualified 

14 energy savings of less than 20 percent. 

15 ‘‘(c) QUALIFIED ENERGY EFFICIENCY EXPENDI16 TURES.—For purposes of this section— 

17 ‘‘(1) IN GENERAL.—The term ‘qualified energy 

18 efficiency expenditures’ means any amount paid or 

19 incurred which is related to producing qualified en20 ergy savings in any dwelling unit located in a quali21 fied low-rise building of the taxpayer which is lo22 cated in the United States. 

23 ‘‘(2) NO DOUBLE BENEFIT FOR CERTAIN EX24 PENDITURES.—The term ‘qualified energy efficiency 

25 expenditures’ shall not include any expenditure for 


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1 any property for which a deduction has been allowed 

2 to the taxpayer under section 179G. 

3 ‘‘(3) QUALIFIED LOW-RISE BUILDING.—The 

4 term ‘qualified low-rise building’ means a building— 

5 ‘‘(A) with respect to which depreciation is 

6 allowable under section 167, 

7 ‘‘(B) which is used for multifamily hous8 ing, and 

9 ‘‘(C) which is not within the scope of 

10 Standard 90.1–2001 (as defined under section 

11 179D(c)(2)). 

12 ‘‘(d) QUALIFIED ENERGY SAVINGS.—For purposes of 

13 this section— 

14 ‘‘(1) IN GENERAL.—The term ‘qualified energy 

15 savings’ means, with respect to any dwelling unit in 

16 a qualified low-rise building, the amount (measured 

17 as a percentage) by which— 

18 ‘‘(A) the annual energy use with respect to 

19 such dwelling unit after qualified energy effi20 ciency expenditures are made, as certified under 

21 paragraph (2), is less than 

22 ‘‘(B) the annual energy use with respect to 

23 such dwelling unit before the qualified energy 

24 efficiency expenditures were made, as certified 

25 under paragraph (2). 


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1 In determining annual energy use under subpara2 graph (B), any energy efficiency improvements 

3 which are not attributable to qualified energy effi4 ciency expenditures shall be disregarded. 

5 ‘‘(2) CERTIFICATION.— 

6 ‘‘(A) IN GENERAL.—The Secretary, in con7 sultation with the Secretary of Energy, shall 

8 prescribe the procedures and method for the 

9 making of certifications under this paragraph 

10 based on the Residential Energy Services Net11 work (RESNET) Technical Guidelines in effect 

12 on the date of the enactment of this Act. 

13 ‘‘(B) QUALIFIED INDIVIDUALS.—Any cer14 tification made under this paragraph may only 

15 be made by an individual who is recognized by 

16 an organization certified by the Secretary for 

17 such purposes. 

18 ‘‘(e) SPECIAL RULES.—For purposes of this section, 

19 rules similar to the rules under paragraphs (8) and (9) 

20 of section 25D(e) shall apply. 

21 ‘‘(f) BASIS ADJUSTMENTS.—For purposes of this 

22 subtitle, if a credit is allowed under this section with re23 spect to any expenditure with respect to any property, the 

24 increase in the basis of such property which would (but 


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1 for this subsection) result from such expenditure shall be 

2 reduced by the amount of the credit so allowed. 

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

4 with respect to any property placed in service after Decem5 ber 31, 2011.’’. 

6 (b) CONFORMING AMENDMENTS.— 

7 (1) Section 263(a)(1), as amended by section 

8 404 of division A of the Tax Relief and Health Care 

9 Act of 2006, the is amended by striking ‘‘or’’ at the 

10 end of subparagraph (K), by striking the period at 

11 the end of subparagraph (L) and inserting ‘‘, or’’, 

12 and by inserting after subparagraph (L) the fol13 lowing new subparagraph: 

14 ‘‘(M) expenditures for which a deduction is 

15 allowed under section 179F.’’. 

16 (2) Section 312(k)(3)(B) is amended by strik17 ing ‘‘179, 179A, 179B, 179C, 179D, or 179E’’ each 

18 place it appears in the heading and text and insert19 ing ‘‘179, 179A, 179B, 179C, 179D, 179E, or 

20 179F’’. 

21 (3) Section 1016(a), as amended by section 

22 101, is amended by striking ‘‘and’’ at the end of 

23 paragraph (37), by striking the period at the end of 

24 paragraph (38) and inserting ‘‘, and’’, and by add25 ing at the end the following new paragraph: 


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1 ‘‘(39) to the extent provided in section 

2 179F(f).’’. 

3 (4) Section 1245(a) is amended by inserting 

4 ‘‘179F,’’ after ‘‘179E,’’ both places it appears in 

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

6 (5) The table of sections for part VI of sub7 chapter B is amended by inserting after the item re8 lating to section 179E the following new item: 

‘‘Sec. 179F. Energy efficient low-rise buildings deduction.’’. 

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

10 this section shall apply to amounts paid or incurred in tax11 able years beginning after the date of the enactment of 

12 this Act. 

13 SEC. 204. ENERGY EFFICIENT PROPERTY DEDUCTION. 

14 (a) IN GENERAL.—Part VI of subchapter B of chap15 ter 1, as amended by section 203, is amended by inserting 

16 after section 179F the following new section: 

17 ‘‘SEC. 179G. ENERGY EFFICIENT PROPERTY. 

18 ‘‘(a) IN GENERAL.—There shall be allowed as a de19 duction an amount equal to the energy efficient property 

20 expenditures paid or incurred by the taxpayer during the 

21 taxable year. 

22 ‘‘(b) LIMITATION.—The amount of the deduction al23 lowed under subsection (a) for any taxable years shall not 

24 exceed— 


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1 ‘‘(1) $150 for any advanced main air circu2 lating fan, 

3 ‘‘(2) $450 for any qualified natural gas furnace 

4 or qualified propane furnace, and 

5 ‘‘(3) $900 for— 

6 ‘‘(A) any item of energy-efficient building 

7 property, and 

8 ‘‘(B) any qualified oil furnace, qualified 

9 natural gas hot water boiler, qualified propane 

10 hot water boiler, or qualified oil hot water boil11 er. 

12 ‘‘(c) ENERGY EFFICIENT PROPERTY EXPENDI13 TURES.—For purposes of this section— 

14 ‘‘(1) IN GENERAL.—The term ‘energy efficient 

15 property expenditures’ means expenditures paid by 

16 the taxpayer for qualified energy property which is— 

17 ‘‘(A) of a character subject to the allow18 ance for depreciation, and 

19 ‘‘(B) originally placed in service by the tax20 payer. 

21 ‘‘(2) QUALIFIED ENERGY PROPERTY.—The 

22 term ‘qualified energy property’ has the meaning 

23 given such term by section 25C(d)(2). 

24 ‘‘(d) BASIS ADJUSTMENTS.—For purposes of this 

25 subtitle, if a deduction is allowed under this section with 


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1 respect to any expenditure with respect to any property, 

2 the increase in the basis of such property which would (but 

3 for this subsection) result from such expenditure shall be 

4 reduced by the amount of the deduction so allowed. 

5 ‘‘(e) TERMINATION.—This section shall not apply 

6 with respect to any property placed in service after Decem7 ber 31, 2011.’’. 

8 (b) NO DOUBLE BENEFIT.—Section 179D(c) is 

9 amended by adding at the end the following new para10 graph: 

11 ‘‘(3) CERTAIN PROPERTY EXCLUDED.—The 

12 term ‘energy efficient commercial building property’ 

13 does not include any property with respect to which 

14 a credit has been allowed to the taxpayer under sec15 tion 179G.’’. 

16 (c) CONFORMING AMENDMENTS.— 

17 (1) Section 263(a)(1), as amended by section 

18 203, is amended by striking ‘‘or’’ at the end of sub19 paragraph (K), by striking the period at the end of 

20 subparagraph (L) and inserting ‘‘, or’’, and by in21 serting after subparagraph (L) the following new 

22 subparagraph: 

23 ‘‘(M) expenditures for which a deduction is 

24 allowed under section 179G.’’. 


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1 (2) Section 312(k)(3)(B), as amended by sec2 tion 203, is amended by striking ‘‘179, 179A, 179B, 

3 179C, 179D, 179E, or 179F’’ each place it appears 

4 in the heading and text and inserting ‘‘179, 179A, 

5 179B, 179C, 179D, 179E, 179F, or 179G’’. 

6 (3) Section 1016(a), as amended by section 

7 203, is amended by striking ‘‘and’’ at the end of 

8 paragraph (38), by striking the period at the end of 

9 paragraph (39) and inserting ‘‘, and’’, and by add10 ing at the end the following new paragraph: 

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

12 179G(e).’’. 

13 (4) Section 1245(a), as amended by section 203 

14 is amended by inserting ‘‘179G,’’ after ‘‘179F,’’ both 

15 places it appears in paragraphs (2)(C) and (3)(C). 

16 (5) The table of sections for part VI of sub17 chapter B is amended by inserting after the item re18 lating to section 179F the following new item: 

‘‘Sec. 179G. Energy efficient property.’’. 

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

20 this section shall apply to property placed in service in 

21 taxable years beginning after the date of the enactment 

22 of this Act. 


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1 TITLE III—INCENTIVES FOR EN2 ERGY SAVINGS CERTIFI3 CATIONS 

4 SEC. 301. CREDIT FOR ENERGY SAVINGS CERTIFICATIONS. 

5 (a) IN GENERAL.—Subpart D of part IV of sub6 chapter A of chapter 1 is amended by adding at the end 

7 the following new section: 

8 ‘‘SEC. 45O. ENERGY SAVINGS CERTIFICATION CREDIT. 

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

10 energy savings certification credit determined under this 

11 section for any taxable year is an amount equal to the 

12 sum of— 

13 ‘‘(1) the qualified training and certification 

14 costs paid or incurred by the taxpayer which may be 

15 taken into account for such taxable year, plus 

16 ‘‘(2) the qualified certification equipment ex17 penditures paid or incurred by the taxpayer which 

18 may be taken into account for such taxable year. 

19 ‘‘(b) QUALIFIED TRAINING AND CERTIFICATION

20 COSTS.— 

21 ‘‘(1) IN GENERAL.—The term ‘qualified train22 ing and certification costs’ means costs paid or in23 curred for training which is required for the tax24 payer or employees of the taxpayer to be certified by 

25 the Secretary under section 25D(d)(2)(B) or 


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1 179F(d)(2)(B) for the purpose of certifying energy 

2 savings. 

3 ‘‘(2) LIMITATION.—The qualified training and 

4 certification costs taken into account under sub5 section (a)(1) for the taxable year with respect to 

6 any individual shall not exceed $500 reduced by the 

7 amount of the credit allowed under subsection (a)(1) 

8 to the taxpayer (or any predecessor) with respect to 

9 such individual for all prior taxable years. 

10 ‘‘(3) YEAR COSTS TAKEN INTO ACCOUNT.— 

11 Qualified training and certifications costs with re12 spect to any individual shall not be taken into ac13 count under subsection (a)(1) before the taxable 

14 year in which the individual with respect to whom 

15 such costs are paid or incurred has performed 25 

16 certifications under sections 25E(d)(2)(A) and 

17 179F(d)(2)(A). 

18 ‘‘(c) QUALIFIED CERTIFICATION EQUIPMENT EX19 PENDITURES.— 

20 ‘‘(1) IN GENERAL.—The term ‘qualified train21 ing equipment expenditures’ means costs paid or in22 curred for— 

23 ‘‘(A) blower doors, 

24 ‘‘(B) duct leakage testing equipment, 

25 ‘‘(C) flue gas combustion equipment, and 


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1 ‘‘(D) digital manometers. 

2 ‘‘(2) LIMITATION.— 

3 ‘‘(A) IN GENERAL.—The qualified certifi4 cation equipment expenditures taken into ac5 count under subsection (a)(2) with respect to 

6 any taxpayer for any taxable year shall not ex7 ceed $1,000. 

8 ‘‘(B) LIMITATION ON INDIVIDUAL

9 ITEMS.—The qualified certification equipment 

10 expenditures taken into account under sub11 section (a)(2) shall not exceed— 

12 ‘‘(i) $500 with respect to any blower 

13 door or duct leakage testing equipment, 

14 and 

15 ‘‘(ii) $100 with respect to any flue gas 

16 combustion equipment or digital manom17 eter. 

18 ‘‘(3) YEAR EXPENDITURES TAKEN INTO AC19 COUNT.—The qualified certification equipment ex20 penditures of any taxpayer shall not be taken into 

21 account under subsection (a)(2) before the taxable 

22 year in which the taxpayer has performed 25 certifi23 cations under sections 25E(d)(2)(A) and 

24 179F(d)(2)(A). 

25 ‘‘(d) SPECIAL RULES.— 


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1 ‘‘(1) AGGREGATION RULES.—For purposes of 

2 this section, all persons treated as a single employer 

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

4 treated as 1 person. 

5 ‘‘(2) BASIS REDUCTION.—The basis of any 

6 property shall be reduced by the portion of the cost 

7 of such property taken into account under sub8 section (a). 

9 ‘‘(3) DENIAL OF DOUBLE BENEFIT.— 

10 ‘‘(A) IN GENERAL.—No deduction shall be 

11 allowed for that portion of the expenses other12 wise allowable as a deduction for the taxable 

13 year which is equal to the amount taken into 

14 account under subsection (a) for such taxable 

15 year. 

16 ‘‘(B) AMOUNT PREVIOUSLY DEDUCTED.— 

17 No credit shall be allowed under subsection (a) 

18 with respect to any amount for which a deduc19 tion has been allowed in any preceding taxable 

20 year.’’. 

21 (b) CREDIT TREATED AS PART OF GENERAL BUSI22 NESS CREDIT.—Section 38(b) is amended by striking 

23 ‘‘plus’’ at the end of paragraph (30), by striking the period 

24 at the end of paragraph (31) and inserting ‘‘plus’’, and 

25 by adding at the end the following new paragraph: 


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1 ‘‘(32) the energy savings certification credit de2 termined under section 45O(a).’’. 

3 (c) CONFORMING AMENDMENTS.— 

4 (1) Section 1016(a), as amended by this Act, is 

5 amended by striking ‘‘and’’ at the end of paragraph 

6 (39), by striking the period at the end of paragraph 

7 (40) and inserting ‘‘and’’, and by adding at the end 

8 the following new paragraph: 

9 ‘‘(41) to the extent provided in section 

10 45O(d)(2).’’. 

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

12 IV of subchapter A of chapter 1 is amended by in13 serting after the item relating to section 45N the 

14 following new item: 

‘‘Sec. 45O. Energy savings certification credit.’’. 

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

16 this section shall apply to amounts paid or incurred after 

17 the date of the enactment of this Act. 

Æ 


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