amount with respect to any project shall be zero un-
less such amount was allocated pursuant to a quali-
fied allocation plan of the energy credit agency 
which is approved by the governmental unit (in ac-
cordance with rules similar to the rules of section 
147(f)(2) (other than subparagraph (B)(ii) thereof)) 
of which such agency is a part. 
‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur-
poses of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
allocation plan’ means any plan which meets 
the requirements of subparagraphs (B) through 
(E). 
‘‘(B) SELECTION CRITERIA.—The require-
ments of this subparagraph are met if such 
plan sets forth selection criteria to be used to 
determine priorities of the energy credit agency 
which are appropriate to local conditions. An 
energy credit agency may establish selection cri-
teria which are more stringent than the require-
ments under subsection (d)(1)(B). 
‘‘(C) PROJECT
PREFERENCE.—The re-
quirements of this subparagraph are met if 
such plan gives preference in allocating energy 
credit dollar amounts among selected projects 
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to those projects which achieve the most energy 
savings. A plan shall not be treated as failing 
to meet the requirements of this subsection 
solely by reason of allocating credit dollar 
amounts ratably among projects with propor-
tionally more allocated to those projects which 
achieve higher energy savings. 
‘‘(D) COMPLIANCE MONITORING.—The re-
quirements of this subparagraph are met if 
such plan establishes a program which— 
‘‘(i) is certified by the Secretary as 
meeting the requirements of this subpara-
graph, and 
‘‘(ii) provides for monitoring by the 
agency (or an agent or other private con-
tractor of such agency) for noncompliance 
with the provisions of this section and noti-
fying the Internal Revenue Service of any 
such noncompliance of which such agency 
becomes aware. 
‘‘(E) CERTIFICATION METHODS.— 
‘‘(i) IN GENERAL.—The requirements 
of this subparagraph are met if such plan 
has a certification procedure for inspection 
and testing by qualified individuals under 
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which only projects complying with energy- 
savings plans and targets are certified. 
‘‘(ii) QUALIFIED INDIVIDUALS.—Indi-
viduals qualified to determine compliance 
shall be only those individuals who are rec-
ognized by the energy credit agency for 
such purposes. 
‘‘(iii) PRE-CERTIFICATION.—The re-
quirements of this subparagraph shall be 
treated as met if the plan includes a pre- 
certification 
procedure 
for 
commercial 
building energy projects, unless application 
fees with respect to a project under such 
pre-certification procedure exceeds 1 per-
cent of the estimated cost of such project. 
‘‘(g) TRANSFER OF CREDIT.— 
‘‘(1) IN GENERAL.—A person described in para-
graph (4) may transfer the credit which would (but 
for the tax-exempt status of such person) be allow-
able under subsection (a) with respect to energy con-
servation commercial building property placed in 
service by such person. A credit may only be trans-
ferred once and may only be transferred to another 
person not described in such paragraph. 
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‘‘(2) TREATMENT OF TRANSFEREE.—The per-
son to whom the credit is transferred under this 
subsection shall be treated for purposes of this title 
as the taxpayer with respect to whom the credit is 
allowable under subsection (a). 
‘‘(3) TREATMENT OF TRANSFEROR.— 
‘‘(A) TRANSFER
PROCEEDS
TREATED
AS 
ARISING FROM ESSENTIAL GOVERNMENT FUNC-
TION.—Any proceeds derived by a person de-
scribed in paragraph (4)(B) from the transfer 
of any credit under this subsection shall be 
treated as arising from the exercise of an essen-
tial government function. 
‘‘(B) CREDIT NOT INCOME.—Any proceeds 
derived from the transfer of a credit under this 
subsection shall not treated as income for pur-
poses of this title. 
‘‘(4) PERSONS
DESCRIBED.—A person is de-
scribed in this paragraph if the person is— 
‘‘(A) an organization exempt from tax 
under section 501(a), or 
‘‘(B) any State or political subdivision 
thereof, the District of Columbia, any posses-
sion of the United States, or any agency or in-
strumentality of any of the foregoing. 
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‘‘(h) DENIAL OF DOUBLE BENEFIT.—No credit shall 
be allowed under this section for any expense for which 
a deduction is allowed under any other provision of this 
chapter. 
‘‘(i) BASIS REDUCTION.—For purposes of this sub-
title, if a credit is allowed under this section with respect 
to any energy conservation commercial building property, 
the basis of such property shall be reduced by the amount 
of the credit so allowed. 
‘‘(j) REGULATIONS.—The Secretary may prescribe 
such regulations as may be necessary or appropriate to 
carry out this section.’’. 
(b) STATE GUIDANCE.—The Secretary of Energy, in 
consultation with the Secretary of Treasury, shall develop 
and provide guidance to States and energy credit agencies 
(as defined in section 45R(e) of the Internal Revenue Code 
of 1986) for establishing methods of measuring overall en-
ergy savings of commercial building energy projects (as 
defined in section 45R(e) of such Code), including meth-
ods for comparing energy savings ratings under industry 
energy standards for commercial buildings other than 
ASHRAE Standard 90.1–2007 with such ASHRAE 
standard. 
(c) CREDIT TREATED AS PART OF GENERAL BUSI-
NESS CREDIT.—Subsection (b) of section 38 of such Code 
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is amended by striking ‘‘plus’’ at the end of paragraph 
(33), by striking the period at the end of paragraph (34) 
and inserting ‘‘, plus’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(35) commercial building energy credit deter-
mined under section 45R(a).’’. 
(d) CONFORMING AMENDMENT.—Subsection (a) of 
section 1016 of such Code is amended by striking ‘‘and’’ 
at the end of paragraph (36), by striking the period at 
the end of paragraph (37) and inserting ‘‘, and’’, and by 
adding at the end the following new paragraph: 
‘‘(38) to the extent provided in section 45R(i).’’. 
(e) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
is amended by adding at the end the following new item: 
‘‘Sec. 45R. Commercial building energy project credit.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
Æ 
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