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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5302 Introduced in House (IH)]

108th CONGRESS
  2d Session
                                H. R. 5302

  To promote the purchase of renewable energy systems, and for other 
                               purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            October 8, 2004

  Mr. Bass (for himself, Mr. Upton, and Mr. Bradley of New Hampshire) 
 introduced the following bill; which was referred to the Committee on 
   Energy and Commerce, and in addition to the Committee on Ways and 
 Means, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
  To promote the purchase of renewable energy systems, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Renewable Energy Security Act of 
2004''.

SEC. 2. WEATHERIZATION ASSISTANCE.

    Section 415(c) of the Energy Conservation and Production Act (42 
U.S.C. 6865(c)) is amended--
            (1) in paragraph (1), by striking ``in paragraph (3)'' and 
        inserting ``in paragraphs (3) and (4)'';
            (2) in paragraph (3), by striking ``$2,500 per dwelling 
        unit average provided in paragraph (1)'' and inserting 
        ``dwelling unit averages provided in paragraphs (1) and (4)''; 
        and
            (3) by adding at the end the following new paragraphs:
    ``(4) The expenditure of financial assistance provided under this 
part for labor, weatherization materials, and related matters for a 
renewable energy system shall not exceed an average of $3,000 per 
dwelling unit.
    ``(5)(A) The Secretary, in consultation with the Secretary of 
Housing and Urban Development and other appropriate Federal officers, 
shall by regulations--
            ``(i) establish the criteria which are to be used in 
        prescribing performance and quality standards under paragraph 
        (6)(A)(ii) or in specifying any form of renewable energy under 
        paragraph (6)(A)(i)(I); and
            ``(ii) establish a procedure under which a manufacturer of 
        an item may request the Secretary to certify that the item will 
        be treated, for purposes of this paragraph, as a renewable 
        energy system.
    ``(B) The Secretary shall make a final determination with respect 
to any request filed under subparagraph (A)(ii) within 1 year after the 
filing of the request, together with any information required to be 
filed with such request under subparagraph (A)(ii).
    ``(C) Each month the Secretary shall publish a report of any 
request under subparagraph (A)(ii) which has been denied during the 
preceding month and the reasons for the denial.
    ``(D) The Secretary shall not specify any form of renewable energy 
under paragraph (6)(A)(i)(I) unless the Secretary determines that--
            ``(i) there will be a reduction in oil or natural gas 
        consumption as a result of such specification;
            ``(ii) such specification will not result in an increased 
        use of any item which is known to be, or reasonably suspected 
        to be, environmentally hazardous or a threat to public health 
        or safety; and
            ``(iii) available Federal subsidies do not make such 
        specification unnecessary or inappropriate (in the light of the 
        most advantageous allocation of economic resources).
    ``(6) In this subsection--
            ``(A) the term `renewable energy system' means a system 
        which--
                    ``(i) when installed in connection with a dwelling, 
                transmits or uses--
                            ``(I) solar energy, energy derived from the 
                        geothermal deposits, energy derived from 
                        biomass, or any other form of renewable energy 
                        which the Secretary specifies by regulations, 
                        for the purpose of heating or cooling such 
                        dwelling or providing hot water or electricity 
                        for use within such dwelling; or
                            ``(II) wind energy for nonbusiness 
                        residential purposes;
                    ``(ii) meets the performance and quality standards 
                (if any) which have been prescribed by the Secretary by 
                regulations;
                    ``(iii) in the case of a combustion rated system, 
                has a thermal efficiency rating of at least 75 percent; 
                and
                    ``(iv) in the case of a solar system, has a thermal 
                efficiency rating of at least 15 percent; and
            ``(B) the term `biomass' means any organic matter that is 
        available on a renewable or recurring basis, including 
        agricultural crops and trees, wood and wood wastes and 
        residues, plants (including aquatic plants), grasses, residues, 
        fibers, and animal wastes, municipal wastes, and other waste 
        materials.''.

SEC. 3. DISTRICT HEATING AND COOLING PROGRAMS.

    Section 172 of the Energy Policy Act of 1992 (42 U.S.C. 13451 note) 
is amended--
            (1) in subsection (a)--
                    (A) by striking ``and'' at the end of paragraph 
                (3);
                    (B) by striking the period at the end of paragraph 
                (4) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(5) evaluate the use of renewable energy systems (as such 
        term is defined in section 415(c) of the Energy Conservation 
        and Production Act (42 U.S.C. 6865(c))) in residential 
        buildings.''; and
            (2) in subsection (b), by striking ``this Act'' and 
        inserting ``the Renewable Energy Security Act of 2004''.

SEC. 4. DEFINITION OF BIOMASS.

    Section 203(2) of the Biomass Energy and Alcohol Fuels Act of 1980 
(42 U.S.C. 8802(2)) is amended to read as follows:
            ``(2) The term `biomass' means any organic matter that is 
        available on a renewable or recurring basis, including 
        agricultural crops and trees, wood and wood wastes and 
        residues, plants (including aquatic plants), grasses, residues, 
        fibers, and animal wastes, municipal wastes, and other waste 
        materials.''.

SEC. 5. CREDIT FOR RESIDENTIAL RENEWABLE ENERGY SYSTEMS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after the item relating to 
section 25B the following new section:

``SEC. 25C. RESIDENTIAL RENEWABLE ENERGY SYSTEM.

    ``(a) General Rule.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle for the 
taxable year an amount equal to 20 percent of the qualified renewable 
energy system expenditures made by the taxpayer during the taxable 
year.
    ``(b) Limitations.--For purposes of subsection (a)--
            ``(1) Maximum credit.--The amount of the credit allowed 
        under subsection (a) for a taxable year shall not exceed 
        $3,000.
            ``(2) Prior expenditures by taxpayer on same residence 
        taken into account.--If for any prior year a credit was allowed 
        to the taxpayer under this section with respect to any dwelling 
        unit by reason of qualified renewable energy system 
        expenditures, paragraph (1) shall be applied for the taxable 
        year with respect to such dwelling unit by reducing the dollar 
        amount contained therein by the prior year expenditures taken 
        into account under such paragraph.
            ``(3) Minimum dollar amount.--No credit shall be allowed 
        under this section with respect to any return for any taxable 
        year if the amount which would (but for this paragraph) be 
        allowed with respect to such return is less than $10.
            ``(4) Limitation based on amount of tax.--The credit 
        allowed under subsection (a) for any taxable year shall not 
        exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                subpart (other than this section and section 23) and 
                section 27 for the taxable year.
            ``(5) Carryover of unused credit.--If the credit allowable 
        under subsection (a) for any taxable year exceeds the 
        limitation imposed by paragraph (4) for such taxable year, such 
        excess shall be carried to the succeeding taxable year and 
        added to the credit allowable under subsection (a) for such 
        taxable year. No credit may be carried forward under this 
        subsection to any taxable year following the fifth taxable year 
        after the taxable year in which the credit arose. For purposes 
        of the preceding sentence, credits shall be treated as used on 
        a first-in first-out basis.
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualified renewable energy system expenditure.--
                    ``(A) In general.--The term `qualified renewable 
                energy system expenditure' means an expenditure made by 
                the taxpayer for renewable energy system property 
                installed in connection with a dwelling unit--
                            ``(i) which is located in the United 
                        States, and
                            ``(ii) which is used by the taxpayer as his 
                        principal residence.
                    ``(B) Certain labor and other costs included.--The 
                term `qualified renewable energy system expenditure' 
                includes--
                            ``(i) expenditures for labor costs properly 
                        allocable to the onsite preparation, assembly, 
                        or original installation of renewable energy 
                        system property, and
                            ``(ii) expenditures for an onsite well 
                        drilled for any geothermal deposit (as defined 
                        in section 613(e)(3)), but only if the taxpayer 
                        has not elected under section 263(c) to deduct 
                        any portion of such expenditures.
                    ``(C) Swimming pool, etc., used as storage 
                medium.--The term `qualified renewable energy system 
                expenditure' does not include any expenditure properly 
                allocable to a swimming pool used as an energy storage 
                medium or to any other energy storage medium which has 
                a primary function other than the function of such 
                storage.
                    ``(D) Certain solar panels.--No solar panel 
                installed as a roof (or portion thereof) shall fail to 
                be treated as renewable energy system property solely 
                because it constitutes a structural component of the 
                dwelling on which it is installed.
            ``(2) Renewable energy system property.--The term 
        `renewable energy system property' means property--
                    ``(A) which constitutes a renewable energy system, 
                as defined by section 415(c)(6) of the Energy 
                Conservation and Production Act (42 U.S.C. 6865(c)(6)),
                    ``(B) the original use of which begins with the 
                taxpayer, and
                    ``(C) which can reasonably be expected to remain in 
                operation for at least 5 years.
            ``(3) Effective date.--
                    ``(A) In general.--In the case of any energy system 
                specified under paragraph (2)(A), the credit allowed by 
                subsection (a) shall apply with respect to expenditures 
                which are made on or after the date on which final 
                notice of such specification is published in the 
                Federal Register.
                    ``(B) Expenditures taken into account in following 
                taxable years.--The Secretary may prescribe by 
                regulations that expenditures made on or after the date 
                referred to in clause (i) and before the close of the 
                taxable year in which such date occurs shall be taken 
                into account in the following taxable year.
            ``(4) When expenditures made; amount of expenditures.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), an expenditure with respect to an 
                item shall be treated as made when original 
                installation of the item is completed.
                    ``(B) Construction or reconstruction of dwelling.--
                In the case of qualified renewable energy system 
                expenditures in connection with the construction or 
                reconstruction of a dwelling, such expenditures shall 
                be treated as made when the original use of the 
                constructed or reconstructed dwelling by the taxpayer 
                begins.
                    ``(C) Amount.--The amount of any expenditure shall 
                be the cost thereof.
                    ``(D) Allocation in certain cases.--If less than 80 
                percent of the use of an item is for nonbusiness 
                residential purposes, only that portion of the 
                expenditures for such item which is properly allocable 
                to use for nonbusiness residential purposes shall be 
                taken into account. For purposes of this subparagraph, 
                use for a swimming pool shall be treated as use which 
                is not for residential purposes.
            ``(5) Principal residence.--The determination of whether or 
        not a dwelling unit is a taxpayer's principal residence shall 
        be made under principles similar to those applicable to section 
        121, except that--
                    ``(A) no ownership requirement shall be imposed, 
                and
                    ``(B) the period for which a dwelling is treated as 
                the principal residence of the taxpayer shall include 
                the 30-day period ending on the first day on which it 
                would (but for this subparagraph) be treated as his 
                principal residence.
            ``(6) Property financed by subsidized energy financing.--
                    ``(A) Reduction of qualified expenditures.--For 
                purposes of determining the amount of qualified 
                renewable energy system expenditures made by any 
                individual with respect to any dwelling unit, there 
                shall not be taken into account expenditures which are 
                made from subsidized energy financing.
                    ``(B) Dollar limits reduced.--Paragraph (1) of 
                subsection (b) shall be applied with respect to such 
                dwelling unit for any taxable year of such taxpayer by 
                reducing each dollar amount contained in such paragraph 
                (reduced as provided in subsection (b)(3)) by an amount 
                equal to the sum of--
                            ``(i) the amount of the expenditures which 
                        were made by the taxpayer during such taxable 
                        year or any prior taxable year with respect to 
                        such dwelling unit and which were not taken 
                        into account by reason of subparagraph (A), and
                            ``(ii) the amount of any Federal, State, or 
                        local grant received by the taxpayer during 
                        such taxable year or any prior taxable year 
                        which was used to make qualified renewable 
                        energy system expenditures with respect to the 
                        dwelling unit and which was not included in the 
                        gross income of such taxpayer.
                    ``(C) Subsidized energy financing.--For purposes of 
                subparagraph (A), the term `subsidized energy 
                financing' means financing provided under a Federal, 
                State, or local program a principal purpose of which is 
                to provide subsidized financing for projects designed 
                to conserve or produce energy.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Dollar amounts in case of joint occupancy.--In the 
        case of any dwelling unit which is jointly occupied and used 
        during any calendar year as a principal residence by 2 or more 
        individuals--
                    ``(A) the amount of the credit allowable under 
                subsection (a) by reason of qualified renewable energy 
                system expenditures (as the case may be) made during 
                such calendar year by any of such individuals with 
                respect to such dwelling unit shall be determined by 
                treating all of such individuals as one taxpayer whose 
                taxable year is such calendar year, and
                    ``(B) there shall be allowable with respect to such 
                expenditures to each of such individuals, a credit 
                under subsection (a) for the taxable year in which such 
                calendar year ends in an amount which bears the same 
                ratio to the amount determined under subparagraph (A) 
                as the amount of such expenditures made by such 
                individual during such calendar year bears to the 
                aggregate of such expenditures made by all of such 
                individuals during such calendar year.
            ``(2) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216) in a cooperative 
        housing corporation (as defined in such section), such 
        individual shall be treated as having made his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of any expenditures of such corporation.
            ``(3) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which he owns, such 
                individual shall be treated as having made his 
                proportionate share of any expenditures of such 
                association.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `condominium 
                management association' means an organization which 
                meets the requirements of paragraph (1) of section 
                528(c) (other than subparagraph (E) thereof) with 
                respect to a condominium project substantially all of 
                the units of which are used as residences.
            ``(4) Joint ownership of energy items.--
                    ``(A) In general.--Any expenditure otherwise 
                qualifying as a qualified renewable energy system 
                expenditure shall not be treated as failing to so 
                qualify merely because such expenditure was made with 
                respect to 2 or more dwelling units.
                    ``(B) Limits applied separately.--In the case of 
                any expenditure described in subparagraph (A), the 
                amount of the credit allowable under subsection (a) 
                shall (subject to paragraph (1)) be computed separately 
                with respect to the amount of the expenditure made by 
                each individual.
    ``(e) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section for any expenditure with respect 
to any property, the increase in the basis of such property which would 
(but for this subsection) result from such expenditure shall be reduced 
by the amount of the credit so allowed.
    ``(f) Termination.--This section shall not apply to expenditures 
made after December 31, 2009.''.
    (b) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 25B the following new 
item:

``Sec. 25C. Residential renewable energy system.''.
    (c) Basis Adjustment.--Section 1016(a) of such Code is amended by 
striking ``and'' at the end of paragraph (27), by striking the period 
at the end of paragraph (28) and inserting ``, and'', and by adding at 
the end the following new paragraph:
            ``(29) to the extent provided in section 25C(e).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2004.

SEC. 6. CREDIT FOR RENEWABLE ENERGY SYSTEMS PLACED IN SERVICE BY SMALL 
              BUSINESSES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45G. RENEWABLE ENERGY SYSTEMS CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible small business, the amount of the renewable energy systems 
credit determined under this section for any taxable year shall be an 
amount equal to 20 percent of the qualified renewable energy system 
expenditures for the taxable year.
    ``(b) Limitation.--The amount of the credit allowed under 
subsection (a) for a taxable year shall not exceed $10,000.
    ``(c) Eligible Small Business.--For purposes of this section, the 
term `eligible small business' has the meaning given such term by 
section 44(b).
    ``(d) Qualified Renewable Energy System Expenditures.--The term 
`qualified renewable energy system expenditures' has the meaning given 
such term by section 25C(c)(1), except that `commercial property' shall 
be substituted for `dwelling unit' each place it appears and 
subparagraph (A)(ii) thereof shall not apply.
    ``(e) Applicable Rules.--For purposes of this section, rules 
similar to the rules of paragraphs (2), (6), and (7) of section 44(d) 
shall apply.''.
    (b) Credit Made Part of General Business Credit.--Section 38(b) of 
such Code (relating to current year business credit) is amended by 
striking ``plus'' at the end of paragraph (14), by striking the period 
at the end of paragraph (15) and inserting ``, plus'', and by adding at 
the end the following new paragraph:
            ``(16) the renewable energy systems credit determined under 
        section 45G(a).''.
    (c) Limitation on Carryback.--Section 39(d) of such Code (relating 
to transitional rules) is amended by adding at the end the following 
new paragraph:
            ``(11) No carryback of renewable energy systems credit 
        before effective date.--No portion of the unused business 
        credit for any taxable year which is attributable to the credit 
        determined under section 45G may be carried back to any taxable 
        year ending on or before the date of the enactment of section 
        45G.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

``Sec. 45G. Renewable energy systems credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.
                                 <all>
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