109th CONGRESS
1st Session
H. R. 1834
To provide for various energy efficiency programs and tax incentives,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
April 26, 2005
Mr. CUNNINGHAM (for himself and Mr. MARKEY) introduced the following bill;
which was referred to the Committee on Energy and Commerce, and in addition
to the Committees on Ways and Means and Financial Services, 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 provide for various energy efficiency programs and tax incentives,
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; TABLE OF CONTENTS.
(a) Short Title- This Act may be cited as the `Efficient Energy Through Certified
Technologies and Electricity Reliability (EFFECTER) Act of 2005'.
(b) Table of Contents- The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I--TAX INCENTIVES
Sec. 101. Energy efficient commercial buildings deduction.
Sec. 102. Credit for construction of new energy efficient homes.
Sec. 103. Incentive for certain energy efficient property used in business.
Sec. 104. Credit for certain nonbusiness energy property.
Sec. 105. Energy credit for combined heat and power system property.
TITLE II--ENERGY EFFICIENT PRODUCTS
Sec. 201. Energy conservation standards for additional products.
Sec. 202. Energy labeling.
Sec. 203. Commercial package air conditioning and heating equipment.
Sec. 204. Commercial refrigerators, freezers, and refrigerator-freezers.
TITLE III--ENERGY EFFICIENT FEDERAL PROGRAMS
Sec. 301. Procurement of energy efficient products.
Sec. 302. Energy savings performance contracts.
Sec. 303. Federal building performance standards.
TITLE IV--PUBLIC HOUSING
Sec. 401. Public housing capital fund.
Sec. 402. Grants for energy-conserving improvements for assisted housing.
Sec. 403. Energy-efficient appliances.
Sec. 404. Energy efficiency standards.
TITLE V--RELIABILITY STANDARDS
Sec. 501. Electric reliability standards.
TITLE I--TAX INCENTIVES
SEC. 101. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
(a) In General- Part VI of subchapter B of chapter 1 of the Internal Revenue
Code of 1986 (relating to itemized deductions for individuals and corporations)
is amended by inserting after section 179B the following new section:
`SEC. 179C. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
`(a) In General- There shall be allowed as a deduction an amount equal to
the cost of energy efficient commercial building property placed in service
during the taxable year.
`(b) Maximum Amount of Deduction- The deduction under subsection (a) with
respect to any building for the taxable year and all prior taxable years shall
not exceed an amount equal to the product of--
`(2) the square footage of the building.
`(c) Definitions- For purposes of this section--
`(1) ENERGY EFFICIENT COMMERCIAL BUILDING PROPERTY- The term `energy efficient
commercial building property' means property--
`(A) which is installed on or in any building located in the United States,
`(B) which is installed as part of--
`(i) the interior lighting systems,
`(ii) the heating, cooling, ventilation, and hot water systems, or
`(iii) the building envelope, and
`(C) which is certified in accordance with subsection (d)(6) as being
installed as part of a plan designed to reduce the total annual energy
and power costs with respect to the interior lighting systems, heating,
cooling, ventilation, and hot water systems of the building by 50 percent
or more in comparison to a reference building which meets the minimum
requirements of Standard 90.1-2001 using methods of calculation under
subsection (d)(2).
A building described in subparagraph (A) may include any residential rental
property, including any low-rise multifamily structure or single family
housing property which is not within the scope of Standard 90.1-2001, but
shall not include any qualified new energy efficient home (within the meaning
of section 45J(d)(3)) for which a credit under section 45J has been allowed.
`(2) STANDARD 90.1-2001- The term `Standard 90.1-2001' means Standard 90.1-2001
of the American Society of Heating, Refrigerating, and Air Conditioning
Engineers and the Illuminating Engineering Society of North America (as
in effect on April 2, 2003).
`(A) IN GENERAL- Except as provided in subsection (f), if--
`(i) the requirement of subsection (c)(1)(C) is not met, but
`(ii) there is a certification in accordance with paragraph (6) that
any system referred to in subsection (c)(1)(B) satisfies the energy-savings
targets established by the Secretary under subparagraph (B) with respect
to such system,
then the requirement of subsection (c)(1)(C) shall be treated as met with
respect to such system, and the deduction under subsection (a) shall be
allowed with respect to energy efficient commercial building property
installed as part of such system and as part of a plan to meet such targets,
except that subsection (b) shall be applied to such property by substituting
`$.75' for `$2.25'.
`(B) REGULATIONS- The Secretary, after consultation with the Secretary
of Energy, shall establish a target for each system described in subsection
(c)(1)(B) which, if such targets were met for all such systems, the building
would meet the requirements of subsection (c)(1)(C).
`(2) METHODS OF CALCULATION- The Secretary, after consultation with the
Secretary of Energy, shall promulgate regulations which describe in detail
methods for calculating and verifying energy and power consumption and cost,
based on the provisions of the 2005 California Nonresidential Alternative
Calculation Method Approval Manual or, in the case of residential property,
the 2005 California Residential Alternative Calculation Method Approval
Manual. These regulations shall meet the following requirements:
`(A) In calculating tradeoffs and energy performance, the regulations
shall prescribe the costs per unit of energy and power, such as kilowatt
hour, kilowatt, gallon of fuel oil, and cubic foot or Btu of natural gas,
which may be dependent on time of usage. If a State has developed annual
energy usage and cost calculation procedures based on time of usage costs
for use in the performance standards of the State's building energy code
before the effective date of this section, the State may use those annual
energy usage and cost calculation procedures in lieu of those adopted
by the Secretary.
`(B) The calculation methods under this paragraph need not comply fully
with section 11 of Standard 90.1-2001.
`(C) The calculation methods shall be fuel neutral, such that the same
energy efficiency features shall qualify a building for the deduction
under this section regardless of whether the heating source is a gas or
oil furnace or an electric heat pump. The reference building for a proposed
design which employs electric resistance heating shall be modeled as using
a heat pump.
`(D) The calculation methods shall provide appropriate calculated energy
savings for design methods and technologies not otherwise credited in
either Standard 90.1-2001 or in the 2005 California Nonresidential Alternative
Calculation Method Approval Manual, including the following:
`(i) Natural ventilation.
`(ii) Evaporative cooling.
`(iii) Automatic lighting controls such as occupancy sensors, photocells,
and timeclocks.
`(v) Designs utilizing semi-conditioned spaces which maintain adequate
comfort conditions without air conditioning or without heating.
`(vi) Improved fan system efficiency, including reductions in static
pressure.
`(vii) Advanced unloading mechanisms for mechanical cooling, such as
multiple or variable speed compressors.
`(viii) The calculation methods may take into account the extent of
commissioning in the building, and allow the taxpayer to take into account
measured performance which exceeds typical performance.
`(ix) On-site generation of electricity, including combined heat and
power systems, fuel cells, and renewable energy generation such as solar
energy.
`(x) Wiring with lower energy losses than wiring satisfying Standard
90.1-2001 requirements for building power distribution systems.
`(A) IN GENERAL- Any calculation under paragraph (2) shall be prepared
by qualified computer software.
`(B) QUALIFIED COMPUTER SOFTWARE- For purposes of this paragraph, the
term `qualified computer software' means software--
`(i) for which the software designer has certified that the software
meets all procedures and detailed methods for calculating energy and
power consumption and costs as required by the Secretary,
`(ii) which provides such forms as required to be filed by the Secretary
in connection with energy efficiency of property and the deduction allowed
under this section, and
`(iii) which provides a notice form which documents the energy efficiency
features of the building and its projected annual energy costs.
`(4) ALLOCATION OF DEDUCTION FOR PUBLIC PROPERTY- In the case of energy
efficient commercial building property installed on or in public property,
the Secretary shall promulgate a regulation to allow the allocation of the
deduction to the person primarily responsible for designing the property
in lieu of the public entity which is the owner of such property. Such person
shall be treated as the taxpayer for purposes of this section.
`(5) NOTICE TO OWNER- Each certification required under this section shall
include an explanation to the building owner regarding the energy efficiency
features of the building and its projected annual energy costs as provided
in the notice under paragraph (3)(B)(iii).
`(A) IN GENERAL- The Secretary shall prescribe the manner and method for
the making of certifications under this section.
`(B) PROCEDURES- The Secretary shall include as part of the certification
process procedures for inspection and testing by qualified individuals
described in subparagraph (C) to ensure compliance of buildings with energy-savings
plans and targets. Such procedures shall be comparable, given the difference
between commercial and residential buildings, to the requirements in the
Mortgage Industry National Accreditation Procedures for Home Energy Rating
Systems.
`(C) QUALIFIED INDIVIDUALS- Individuals qualified to determine compliance
shall be only those individuals who are recognized by an organization
certified by the Secretary for such purposes.
`(e) Basis Reduction- For purposes of this subtitle, if a deduction is allowed
under this section with respect to any energy efficient commercial building
property, the basis of such property shall be reduced by the amount of the
deduction so allowed.
`(f) Interim Rules for Lighting Systems- Until such time as the Secretary
issues final regulations under subsection (d)(1)(B) with respect to property
which is part of a lighting system--
`(1) IN GENERAL- The lighting system target under subsection (d)(1)(A)(ii)
shall be a reduction in lighting power density of 25 percent (50 percent
in the case of a warehouse) of the minimum requirements in Table 9.3.1.1
or Table 9.3.1.2 (not including additional interior lighting power allowances)
of Standard 90.1-2001.
`(2) REDUCTION IN DEDUCTION IF REDUCTION LESS THAN 40 PERCENT-
`(A) IN GENERAL- If, with respect to the lighting system of any building
other than a warehouse, the reduction in lighting power density of the
lighting system is not at least 40 percent, only the applicable percentage
of the amount of deduction otherwise allowable under this section with
respect to such property shall be allowed.
`(B) APPLICABLE PERCENTAGE- For purposes of subparagraph (A), the applicable
percentage is the number of percentage points (not greater than 100) equal
to the sum of--
`(ii) the amount which bears the same ratio to 50 as the excess of the
reduction of lighting power density of the lighting system over 25 percentage
points bears to 15.
`(C) EXCEPTIONS- This subsection shall not apply to any system--
`(i) the controls and circuiting of which do not comply fully with the
mandatory and prescriptive requirements of Standard 90.1-2001 and which
do not include provision for bilevel switching in all occupancies except
hotel and motel guest rooms, store rooms, restrooms, and public lobbies,
or
`(ii) which does not meet the minimum requirements for calculated lighting
levels as set forth in the Illuminating Engineering Society of North
America Lighting Handbook, Performance and Application, Ninth Edition,
2000.
`(g) Coordination With Other Tax Benefits-
`(1) NO DOUBLE BENEFIT- No deduction shall be allowed under subsection (a)
with respect to any building for which a credit under section 45J has been
allowed.
`(2) SPECIAL RULE WITH RESPECT TO BUILDINGS WITH ENERGY EFFICIENT PROPERTY-
In any case in which a deduction under section 200 or a credit under section
25C has been allowed with respect to property in connection with a building,
the annual energy and power costs of the reference building referred to
in subsection (c)(1)(C) shall be determined assuming such reference building
contains the property for which such deduction or credit has been allowed.
`(h) Regulations- The Secretary shall promulgate such regulations as necessary--
`(1) to take into account new technologies regarding energy efficiency and
renewable energy for purposes of determining energy efficiency and savings
under this section, and
`(2) to provide for a recapture of the deduction allowed under this section
if the plan described in subsection (c)(1)(C) or (d)(1)(A) is not fully
implemented.
`(i) Termination- This section shall not apply with respect to property placed
in service after December 31, 2010.'.
(b) Conforming Amendments-
(1) Section 1016(a) of the Internal Revenue Code of 1986 is amended by striking
`and' at the end of paragraph (30), by striking the period at the end of
paragraph (31) and inserting `, and', and by adding at the end the following
new paragraph:
`(32) to the extent provided in section 179C(e).'.
(2) Section 1245(a) of such Code is amended by inserting `179C,' after `179B,'
both places it appears in paragraphs (2)(C) and (3)(C).
(3) Section 1250(b)(3) of such Code is amended by inserting before the period
at the end of the first sentence `or by section 179C'.
(4) Section 263(a)(1) of such Code is amended by striking `or' at the end
of subparagraph (H), by striking the period at the end of subparagraph (I)
and inserting `, or', and by inserting after subparagraph (I) the following
new subparagraph:
`(J) expenditures for which a deduction is allowed under section 179C.'.
(5) Section 312(k)(3)(B) of such Code is amended by striking `section 179,
179A, or 179B' each place it appears in the heading and text and inserting
`section 179, 179A, 179B, or 179C'.
(c) Clerical Amendment- The table of sections for part VI of subchapter B
of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting
after section 179B the following new item:
`179C. Energy efficient commercial buildings deduction.'.
(d) Effective Date- The amendments made by this section shall apply to property
placed in service after the date of the enactment of this Act in taxable years
ending after such date.
SEC. 102. CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT HOMES.
(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. 45J. NEW ENERGY EFFICIENT HOME CREDIT.
`(a) In General- For purposes of section 38, in the case of an eligible contractor
with respect to a qualified new energy efficient home, the credit determined
under this section for the taxable year with respect to such home is an amount
equal to the aggregate adjusted bases of all energy efficient property installed
in such home during construction of such home.
`(A) IN GENERAL- The credit allowed by this section with respect to a
dwelling unit shall not exceed--
`(i) in the case of a dwelling unit described in clause (i) or (iii)
of subsection (c)(3)(C), $1,000, and
`(ii) in the case of a dwelling unit described in clause (ii) or (iv)
of subsection (c)(3)(C), $2,000.
`(B) PRIOR CREDIT AMOUNTS ON SAME DWELLING UNIT TAKEN INTO ACCOUNT- If
a credit was allowed under subsection (a) with respect to a dwelling unit
in 1 or more prior taxable years, the amount of the credit otherwise allowable
for the taxable year with respect to such dwelling unit shall be reduced
by the sum of the credits allowed under subsection (a) with respect to
the dwelling unit for all prior taxable years.
`(2) COORDINATION WITH CERTAIN CREDITS- For purposes of this section--
`(A) the basis of any property referred to in subsection (a) shall be
reduced by that portion of the basis of any property which is attributable
to qualified rehabilitation expenditures (as defined in section 47(c)(2))
or to the energy percentage of energy property (as determined under section
48(a)), and
`(B) expenditures taken into account under section 47 or 48(a) shall not
be taken into account under this section.
`(c) Definitions- For purposes of this section--
`(1) ELIGIBLE CONTRACTOR- The term `eligible contractor' means--
`(A) the person who constructed the qualified new energy efficient home,
or
`(B) in the case of a qualified new energy efficient home which is a manufactured
home, the manufactured home producer of such home.
If more than 1 person is described in subparagraph (A) or (B) with respect
to any qualified new energy efficient home, such term means the person designated
as such by the owner of such home.
`(2) ENERGY EFFICIENT PROPERTY- The term `energy efficient property' means
any energy efficient building envelope component, and any energy efficient
heating or cooling equipment or system, which can, individually or in combination
with other components, result in a dwelling unit meeting the requirements
of this section.
`(3) QUALIFIED NEW ENERGY EFFICIENT HOME- The term `qualified new energy
efficient home' means a dwelling unit--
`(A) located in the United States,
`(B) the construction of which is substantially completed after the date
of the enactment of this section, and
`(i) certified to have a level of annual heating and cooling energy
consumption which is at least 30 percent below the annual level of heating
and cooling energy consumption of a comparable dwelling unit constructed
in accordance with the standards of chapter 4 of the 2003 International
Energy Conservation Code, as such Code (including supplements) is in
effect on the date of the enactment of this section, and for which the
heating and cooling equipment efficiencies correspond to the minimum
allowed under the regulations established by the Department of Energy
pursuant to the National Appliance Energy Conservation Act of 1987 and
in effect at the time of construction, and to have building envelope
component improvements account for at least 1/3 of such 30 percent,
`(ii) certified to have a level of annual heating and cooling energy
consumption which is at least 50 percent below such annual level and
to have building envelope component improvements account for at least
1/5 of such 50 percent,
`(iii) a manufactured home which meets the requirements of clause (i)
and which conforms to Federal Manufactured Home Construction and Safety
Standards (section 3280 of title 24, Code of Federal Regulations), or
`(iv) a manufactured home which meets the requirements of clause (ii)
and which conforms to Federal Manufactured Home Construction and Safety
Standards (section 3280 of title 24, Code of Federal Regulations).
`(4) CONSTRUCTION- The term `construction' includes substantial reconstruction
and rehabilitation.
`(5) ACQUIRE- The term `acquire' includes purchase and, in the case of reconstruction
and rehabilitation, such term includes a binding written contract for such
reconstruction or rehabilitation.
`(6) BUILDING ENVELOPE COMPONENT- The term `building envelope component'
means--
`(A) any insulation material or system which is specifically and primarily
designed to reduce the heat loss or gain of a dwelling unit when installed
in or on such dwelling unit,
`(B) exterior windows (including skylights),
`(D) any metal roof installed on a dwelling unit, but only if such roof
has appropriate pigmented coatings which--
`(i) are specifically and primarily designed to reduce the heat gain
of such dwelling unit, and
`(ii) meet the Energy Star program requirements.
`(1) METHOD OF CERTIFICATION- A certification described in subsection (c)(3)(C)
shall be determined in accordance with guidance prescribed by the Secretary,
after consultation with the Secretary of Energy. Such guidance shall specify
procedures and methods for calculating energy and cost savings.
`(2) FORM- A certification described in subsection (c)(3)(C) shall be made
in writing in a manner which specifies in readily verifiable fashion the
energy efficient building envelope components and energy efficient heating
or cooling equipment installed and their respective rated energy efficiency
performance.
`(e) Basis Adjustment- For purposes of this subtitle, if a credit is determined
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 determined.
`(f) Special Rule With Respect to Buildings With Energy Efficient Property-
In any case in which a deduction under section 200 or a credit under section
25C has been allowed with respect to property in connection with a dwelling
unit, the level of annual heating and cooling energy consumption of the comparable
dwelling unit referred to in clauses (i) and (ii) of subsection (c)(3)(C)
shall be determined assuming such comparable dwelling unit contains the property
for which such deduction or credit has been allowed.
`(g) Application of Section-
`(1) 50 PERCENT HOMES- In the case of any dwelling unit described in clause
(ii) or (iv) of subsection (c)(3)(C), subsection (a) shall apply to qualified
new energy efficient homes acquired during the period beginning on the date
of the enactment of this section, and ending on December 31, 2009.
`(2) 30 PERCENT HOMES- In the case of any dwelling unit described in clause
(i) or (iii) of subsection (c)(3)(C), subsection (a) shall apply to qualified
new energy efficient homes acquired during the period beginning on the date
of the enactment of this section, and ending on December 31, 2007.'.
(b) Credit Made Part of General Business Credit- Section 38(b) of the Internal
Revenue Code of 1986 (relating to current year business credit) is amended
by striking `plus' at the end of paragraph (18), by striking the period at
the end of paragraph (19) and inserting `, plus', and by adding at the end
the following new paragraph:
`(20) the new energy efficient home credit determined under section 45J(a).'.
(c) Basis Adjustment- Subsection (a) of section 1016 of the Internal Revenue
Code of 1986, as amended by section 101, is amended by striking `and' at the
end of paragraph (31), by striking the period at the end of paragraph (32)
and inserting `, and', and by adding at the end the following new paragraph:
`(33) to the extent provided in section 45J(e), in the case of amounts with
respect to which a credit has been allowed under section 45J.'.
(d) Deduction for Certain Unused Business Credits- Section 196(c) of the Internal
Revenue Code of 1986 (defining qualified business credits) is amended by striking
`and' at the end of paragraph (11), by striking the period at the end of paragraph
(12) and inserting `, and', and by adding after paragraph (12) the following
new paragraph:
`(13) the new energy efficient home credit determined under section 45J(a).'.
(e) Clerical Amendment- The table of sections for subpart D of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended
by adding at the end the following new item:
`45J. New energy efficient home credit.'.
(f) Effective Date- The amendments made by this section shall apply to taxable
years ending after the date of the enactment of this Act.
SEC. 103. INCENTIVE FOR CERTAIN ENERGY EFFICIENT PROPERTY USED IN BUSINESS.
(a) In General- Part VI of subchapter B of chapter 1 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
`SEC. 200. ENERGY PROPERTY DEDUCTION.
`(a) In General- There shall be allowed as a deduction for the taxable year
an amount equal to the sum of--
`(1) the amount determined under subsection (b) for each energy property
of the taxpayer placed in service during such taxable year, and
`(2) the energy efficient residential rental building property deduction
determined under subsection (e).
`(b) Amount for Energy Property-
`(1) IN GENERAL- The amount determined under this subsection for the taxable
year for each item of energy property shall equal the amount specified for
such property in the following table:
`
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Description of property: Allowable amount is:
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Elected solar hot water property $1.00 per each kwh/year of savings
Photovoltaic property $4.50 per peak watt
Advanced main air circulating fan or a Tier 1 natural gas, propane, or oil water heater $150
Tier 2 energy-efficient building property $900
Tier 1 energy-efficient building property (other than an advanced main air circulating fan or a natural gas, propane, or oil water heater) $450.
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`(2) ELECTED SOLAR HOT WATER PROPERTY- In the case of elected solar hot
water property, the taxpayer may elect to substitute `$21 per annual Therm
of natural gas savings' for `$1.00 per each kwh/year of savings' in the
table contained in paragraph (1).
`(c) Energy Property Defined-
`(1) IN GENERAL- For purposes of this part, the term `energy property' means
any property--
`(i) solar energy property,
`(ii) Tier 2 energy-efficient building property,
`(iii) Tier 1 energy-efficient building property, or
`(iv) an advanced main air circulating fan,
`(B)(i) the construction, reconstruction, or erection of which is completed
by the taxpayer, or
`(ii) which is acquired by the taxpayer if the original use of such property
commences with the taxpayer,
`(C) with respect to which depreciation (or amortization in lieu of depreciation)
is allowable, and
`(D) which meets the performance and quality standards, and the certification
requirements (if any), which--
`(i) have been prescribed by the Secretary by regulations (after consultation
with the Secretary of Energy or the Administrator of the Environmental
Protection Agency, as appropriate),
`(ii) in the case of the energy efficiency ratio (EER) for central air
conditioners and electric heat pumps--
`(I) require measurements to be based on published data which is tested
by manufacturers at 95 degrees Fahrenheit, and
`(II) may be based on the certified data of the Air Conditioning and
Refrigeration Institute that are prepared in partnership with the
Consortium for Energy Efficiency,
`(iii) in the case of geothermal heat pumps--
`(I) shall be based on testing under the conditions of ARI/ISO Standard
13256-1 for Water Source Heat Pumps or ARI 870 for Direct Expansion
GeoExchange Heat Pumps (DX), as appropriate, and
`(II) shall include evidence that water heating services have been
provided through a desuperheater or integrated water heating system
connected to the storage water heater tank, and
`(iv) are in effect at the time of the acquisition of the property.
`(2) SOLAR ENERGY PROPERTY- In the case of--
`(A) elected solar hot water property, the regulations under paragraph
(1)(D) shall be based on the OG-300 Standard for the Annual Performance
of OG-300 Certified Systems of the Solar Rating and Certification Corporation,
and
`(B) photovoltaics, such regulations shall be based on the ASTM Standard
E 1036 and E 1036M-96 Standard Test Method for Electric Performance of
Nonconcentrator Terrestrial Photovoltaic Modules and Arrays Using Reference
Cells,
to the extent the Secretary determines such standards carry out the purposes
of this section.
`(3) EXCEPTION- Such term shall not include any property which is public
utility property (as defined in section 46(f)(5) as in effect on the day
before the date of the enactment of the Revenue Reconciliation Act of 1990).
`(d) Definitions Relating to Types of Energy Property- For purposes of this
section--
`(1) SOLAR ENERGY PROPERTY-
`(A) IN GENERAL- The term `solar energy property' means equipment which
uses solar energy--
`(i) to generate electricity, or
`(ii) to provide hot water for use in a structure.
`(B) ELECTED SOLAR HOT WATER PROPERTY-
`(i) IN GENERAL- The term `elected solar hot water property' means property
which is solar energy property by reason of subparagraph (A)(ii) and
for which an election under this subparagraph is in effect.
`(ii) ELECTION- For purposes of clause (i), a taxpayer may elect to
treat property described in clause (i) as elected solar hot water property.
`(C) PHOTOVOLTAIC PROPERTY- The term `photovoltaic property' means solar
energy property which uses a solar photovoltaic process to generate electricity.
`(D) SWIMMING POOLS, ETC., USED AS STORAGE MEDIUM- The term `solar energy
property' shall not include a swimming pool, hot tub, or any other energy
storage medium which has a function other than the function of such storage.
`(E) SOLAR PANELS- No solar panel or other property installed as a roof
(or portion thereof) shall fail to be treated as solar energy property
solely because it constitutes a structural component of the structure
on which it is installed.
`(2) TIER 2 ENERGY-EFFICIENT BUILDING PROPERTY- The term `Tier 2 energy-efficient
building property' means--
`(A) an electric heat pump water heater which yields an energy factor
of at least 2.0 in the standard Department of Energy test procedure,
`(B) an electric heat pump which has a heating seasonal performance factor
(HSPF) of at least 9, a seasonal energy efficiency ratio (SEER) of at
least 15, and an energy efficiency ratio (EER) of at least 13,
`(C) a geothermal heat pump which--
`(i) in the case of a closed loop product, has an energy efficiency
ratio (EER) of at least 14.1 and a heating coefficient of performance
(COP) of at least 3.3,
`(ii) in the case of an open loop product, has an energy efficiency
ratio (EER) of at least 16.2 and a heating coefficient of performance
(COP) of at least 3.6, and
`(iii) in the case of a direct expansion (DX) product, has an energy
efficiency ratio (EER) of at least 15 and a heating coefficient of performance
(COP) of at least 3.5,
`(D) a central air conditioner which has a seasonal energy efficiency
ratio (SEER) of at least 15 and an energy efficiency ratio (EER) of at
least 13, and
`(E) a natural gas, propane, or oil water heater which has an energy factor
of at least 0.80.
`(3) TIER 1 ENERGY-EFFICIENT BUILDING PROPERTY- The term `Tier 1 energy-efficient
building property' means--
`(A) an electric heat pump which has a heating system performance factor
(HSPF) of at least 8.5, a cooling seasonal energy efficiency ratio (SEER)
of at least 14, and an energy efficiency ratio (EER) of at least 12,
`(B) a central air conditioner which has a cooling seasonal energy efficiency
ratio (SEER) of at least 14 and an energy efficiency ratio (EER) of at
least 12,
`(C) a natural gas, propane, or oil water heater which has an energy factor
of at least 0.65, and
`(D) an oil, natural gas, or propane furnace or hot water boiler which
achieves at least 95 percent annual fuel utilization efficiency (AFUE).
`(4) ADVANCED MAIN AIR CIRCULATING FAN- The term `advanced main air circulating
fan' means a fan used in a natural gas, propane, or oil furnace originally
placed in service by the taxpayer during the taxable year, including a fan
which uses a brushless permanent magnet motor or another type of motor which
achieves similar or higher efficiency at full and half speed, as determined
by the Secretary.
`(e) Energy Efficient Residential Rental Building Property Deduction-
`(1) DEDUCTION ALLOWED- For purposes of subsection (a)--
`(A) IN GENERAL- The energy efficient residential rental building property
deduction determined under this subsection is an amount equal to energy
efficient residential rental building property expenditures made by a
taxpayer for the taxable year.
`(B) MAXIMUM AMOUNT OF DEDUCTION- The amount of energy efficient residential
rental building property expenditures taken into account under subparagraph
(A) with respect to each dwelling unit shall not exceed--
`(i) $6,000 in the case of a percentage reduction of 50 percent as determined
under paragraph (2)(B), and
`(ii) $12,000 times the percentage reduction in the case of a percentage
reduction of less than 50 percent as determined under paragraph (2)(B).
`(C) YEAR DEDUCTION ALLOWED- The deduction under subparagraph (A) shall
be allowed in the taxable year in which the construction, reconstruction,
erection, or rehabilitation of the property is completed.
`(2) ENERGY EFFICIENT RESIDENTIAL RENTAL BUILDING PROPERTY EXPENDITURES-
For purposes of this subsection--
`(A) IN GENERAL- The term `energy efficient residential rental building
property expenditures' means an amount paid or incurred in connection
with construction, reconstruction, erection, or rehabilitation of energy
efficient residential rental building property--
`(i) for which depreciation is allowable under section 167,
`(ii) which is located in the United States, and
`(iii) the construction, reconstruction, erection, or rehabilitation
of which is completed by the taxpayer.
Such term includes expenditures for labor costs properly allocable to
the onsite preparation, assembly, or original installation of the property.
`(B) ENERGY EFFICIENT RESIDENTIAL RENTAL BUILDING PROPERTY-
`(i) IN GENERAL- The term `energy efficient residential rental building
property' means any property which reduces total annual energy and power
costs with respect to heating and cooling of the building by a percentage
certified according to clause (ii).
`(I) IN GENERAL- For purposes of clause (i), energy usage and costs
shall be demonstrated by performance-based compliance.
`(II) PERFORMANCE-BASED COMPLIANCE- Performance-based compliance shall
be demonstrated by calculating the percent energy cost savings for
heating and cooling, as applicable, with respect to a dwelling unit
when compared to the original condition of the dwelling unit.
`(III) COMPUTER SOFTWARE- Computer software shall be used in support
of performance-based compliance under subclause (II) and such software
shall meet all of the procedures and methods for calculating energy
savings reductions which are promulgated by the Secretary of Energy.
Such regulations on the specifications for software and verification
protocols shall be based on the 2005 California Residential Alternative
Calculation Method Approval Manual.
`(IV) CALCULATION REQUIREMENTS- In calculating tradeoffs and energy
performance, the regulations prescribed under this clause shall prescribe
for the taxable year the costs per unit of energy and power, such
as kilowatt hour, kilowatt, gallon of fuel oil, and cubic foot or
Btu of natural gas, which may be dependent on time of usage. Where
a State has developed annual energy usage and cost calculation procedures
based on time of usage costs for use in the performance standards
of the State's building energy code prior to the effective date of
this section, the State may use those annual energy usage and cost
calculation procedures in lieu of those adopted by the Secretary.
`(V) APPROVAL OF SOFTWARE SUBMISSIONS- The Secretary shall approve
software submissions which comply with the requirements of subclause
(III).
`(VI) PROCEDURES FOR INSPECTION AND TESTING OF HOMES- The Secretary
shall ensure that procedures for the inspection and testing for compliance
comply with the calculation requirements under subclause (IV) of this
clause and clause (iv).
`(iii) DETERMINATIONS OF COMPLIANCE- A determination of compliance with
respect to energy efficient residential rental building property made
for the purposes of this subparagraph shall be filed with the Secretary
not later than 1 year after the date of such determination and shall
include the TIN of the certifier, the address of the building in compliance,
and the identity of the person for whom such determination was performed.
Determinations of compliance filed with the Secretary shall be available
for inspection by the Secretary of Energy.
`(I) IN GENERAL- The Secretary, after consultation with the Secretary
of Energy, shall establish requirements for certification and compliance
procedures after examining the requirements for energy consultants
and home energy ratings providers specified by the Mortgage Industry
National Home Energy Rating Standards.
`(II) INDIVIDUALS QUALIFIED TO DETERMINE COMPLIANCE- The determination
of compliance may be provided by a local building regulatory authority,
a utility, a manufactured home production inspection primary inspection
agency (IPIA), or an accredited home energy rating system provider.
All providers shall be accredited, or otherwise authorized to use
approved energy performance measurement methods, by the Residential
Energy Services Network (RESNET).
`(C) ALLOCATION OF DEDUCTION FOR PUBLIC PROPERTY- In the case of energy
efficient residential rental building property which is public property,
the Secretary shall promulgate a regulation to allow the allocation of
the deduction to the person primarily responsible for designing the improvements
to the property in lieu of the public entity which is the owner of such
property. Such person shall be treated as the taxpayer for purposes of
this subsection.
`(f) Special Rules- For purposes of this section--
`(1) BASIS REDUCTION- For purposes of this subtitle, if a deduction is allowed
under this section with respect to any property, the basis of such property
shall be reduced by the amount of the deduction so allowed.
`(2) DOUBLE BENEFIT- Property which would, but for this paragraph, be eligible
for a deduction under more than one provision of this section shall be eligible
only under one such provision, the provision specified by the taxpayer.
`(g) Regulations- The Secretary shall promulgate such regulations as necessary
to take into account new technologies regarding energy efficiency and renewable
energy for purposes of determining energy efficiency and savings under this
section.
`(h) Termination- This section shall not apply with respect to--
`(1) any energy property placed in service after December 31, 2009 (December
31, 2005, in the case of Tier 1 energy-efficient building property (other
than an oil, natural gas, or propane furnace or hot water boiler described
in subsection (d)(3)(D))), and
`(2) any energy efficient residential rental building property expenditures
in connection with property--
`(A) placed in service after December 31, 2009, or
`(B) the construction, reconstruction, erection, or rehabilitation of
which is not completed on or before December 31, 2009.'.
(b) Conforming Amendments-
(1) Section 48(a)(3)(A) of the Internal Revenue Code of 1986 is amended
to read as follows:
`(A) which is equipment used to produce, distribute, or use energy derived
from a geothermal deposit (within the meaning of section 613(e)(2)), but
only, in the case of electricity generated by geothermal power, up to
(but not including) the electrical transmission stage,'.
(2) Subparagraph (B) of section 168(e)(3) of such Code is amended--
(i) by striking `section 48(a)(3)' and inserting `section 200(d)(1)',
and
(ii) by striking `clause (i)' and inserting `such subparagraph (A)',
and
(B) in the last sentence, by striking `section 48(a)(3)' and inserting
`section 200(c)(3)'.
(3) Section 1016(a) of such Code, as amended by section 102, is amended
by striking `and' at the end of paragraph (32), by striking the period at
the end of paragraph (33) and inserting `, and', and by inserting the following
new paragraph:
`(34) for amounts allowed as a deduction under section 200(a).'.
(c) Clerical Amendment- The table of sections for part VI of subchapter B
of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at
the end the following new item:
`200. Energy property deduction.'.
(d) Authorization of Appropriations- There are authorized to be appropriated
to the Department of Energy out of amounts not already appropriated such sums
as necessary to carry out this section.
(e) Effective Date- The amendments made by this section shall apply to taxable
years beginning after December 31, 2004.
SEC. 104. CREDIT FOR CERTAIN NONBUSINESS ENERGY PROPERTY.
(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 section 25B the following new section:
`SEC. 25C. NONBUSINESS ENERGY PROPERTY.
`(a) Allowance of Credit-
`(1) IN GENERAL- In the case of an individual, there shall be allowed as
a credit against the tax imposed by this chapter for the taxable year an
amount equal to the sum of--
`(A) the amount determined under subsection (b) for each qualified energy
property of the taxpayer placed in service during such taxable year, and
`(B) so much of the credit amount specified in paragraph (2) which does
not exceed the expenditures made by the taxpayer in connection with the
construction, reconstruction, erection, or rehabilitation of a dwelling
unit of the taxpayer which results in the unit being a highly energy-efficient
principal residence.
For purposes of subparagraph (B), the expenditures may include labor costs
properly allocable to the onsite preparation, assembly, or original installation
of such property.
`(2) CREDIT AMOUNT- The credit amount with respect to a highly energy-efficient
principal residence is--
`(A) $2,000 in the case of a percentage reduction of 50 percent as determined
under subsection (c)(6)(A)(iii), and
`(B) $4,000 times the percentage reduction in the case of a percentage
reduction of less than 50 percent as determined under subsection (c)(6)(A)(iii).
`(b) Amount for Qualified Energy Property-
`(1) RESIDENTIAL ENERGY PROPERTY EXPENDITURES- Except as provided in paragraph
(2), the amount determined under this subsection for the taxable year for
each item of qualified energy property shall equal the amount of residential
energy property expenditures made by the taxpayer with respect to such property
during such taxable year.
`(2) SOLAR HOT WATER PROPERTY; PHOTOVOLTAIC PROPERTY-
`(A) IN GENERAL- In the case of solar hot water property and photovoltaic
property, the amount determined under this subsection for the taxable
year shall equal the amount specified for such property in the following
table:
`
--------------------------------------------------------------------------
Description of property: Allowable amount is:
--------------------------------------------------------------------------
Elected solar hot water property 35› per each kwh/year of savings
Photovoltaic property $1.50 per peak watt.
--------------------------------------------------------------------------
`(B) ELECTED SOLAR HOT WATER PROPERTY- In the case of elected solar hot
water property (as defined in section 200(d)(1)(B)), the taxpayer may
elect to substitute `$7 per annual Therm of natural gas savings' for `35›
per each kwh/year of savings' in the table contained in subparagraph (A).
`(3) MAXIMUM AMOUNT- In the case of property described in the following
table, the amount of expenditures taken into account under paragraph (1)
and the amount determined under paragraph (2) for the taxable year for each
item of qualified energy property with respect to a dwelling unit shall
not exceed the amount specified for such property in such table:
`
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Description of property item: Maximum allowable credit amount is:
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Tier 2 energy-efficient building property $300
Advanced main air circulating fan or a Tier 1 natural gas, propane, or oil water heater $50
Tier 1 energy-efficient building property (other than an advanced main air circulating fan or a natural gas, propane, or oil water heater) $150
Solar hot water property $1,000
Photovoltaic property $6,000.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
`(c) Definitions and Special Rules- For purposes of this section--
`(1) RESIDENTIAL ENERGY PROPERTY EXPENDITURES- The term `residential energy
property expenditures' means expenditures made by the taxpayer for qualified
energy property installed on or in connection with a dwelling unit which--
`(A) is located in the United States, and
`(B) is used as a principal residence.
Such term includes expenditures for labor costs properly allocable to the
onsite preparation, assembly, or original installation of the property.
`(2) QUALIFIED ENERGY PROPERTY-
`(A) IN GENERAL- The term `qualified energy property' means--
`(i) energy-efficient building property,
`(ii) solar hot water property,
`(iii) photovoltaic property, and
`(iv) an advanced main air circulating fan.
`(B) SWIMMING POOL, ETC., USED AS STORAGE MEDIUM; SOLAR PANELS- For purposes
of this paragraph, the provisions of subparagraphs (D) and (E) section
200(d)(1) shall apply.
`(C) REQUIRED STANDARDS- Property described under subparagraph (A) shall
meet the performance and quality standards and certification standards
of paragraphs (1)(D) and (2) of section 200(c).
`(3) ENERGY-EFFICIENT BUILDING PROPERTY- The term `energy-efficient building
property' has the same meaning given the terms `Tier 2 energy-efficient
property', `Tier 1 energy-efficient property', and `advanced main air circulating
fan' in paragraphs (2), (3), and (4) of section 200(d), respectively.
`(4) SOLAR HOT WATER PROPERTY- The term `solar hot water property' means
property which, when installed in connection with a structure, uses solar
energy for the purpose of providing hot water for use within such structure
and the performance of which is determined in accordance with section 200(c)(2)(A).
`(5) PHOTOVOLTAIC PROPERTY- The term `photovoltaic property' has the same
meaning given such term in section 200(d)(1)(C).
`(6) HIGHLY ENERGY-EFFICIENT PRINCIPAL RESIDENCE-
`(A) IN GENERAL- Property is a highly energy-efficient principal residence
if--
`(i) such property is located in the United States,
`(ii) the property is used as a principal residence, and
`(iii) the projected heating and cooling energy usage of such property,
measured in terms of average annual energy cost to taxpayer, is reduced
by a percentage certified according to subparagraph (C) in comparison
to the energy cost of such property if expenditures made by the taxpayer
with respect to energy efficient improvements to such property were
not made.
`(B) PRINCIPAL RESIDENCE-
`(i) IN GENERAL- The term `principal residence' has the same meaning
as when used in section 121, except that--
`(I) no ownership requirement shall be imposed, and
`(II) the period for which a building is treated as used as a principal
residence shall also include the 60-day period ending on the 1st day
on which it would (but for this subparagraph) first be treated as
used as a principal residence.
`(ii) MANUFACTURED HOUSING- The term `residence' shall include a dwelling
unit which is a manufactured home conforming to Federal Manufactured
Home Construction and Safety Standards (24 C.F.R. 3280).
`(C) CERTIFICATION PROCEDURES-
`(i) IN GENERAL- For purposes of subparagraph (A)(iii), energy usage
shall be demonstrated by performance-based compliance.
`(ii) PERFORMANCE-BASED COMPLIANCE- Performance-based compliance shall
be demonstrated if the percent energy cost savings for heating and cooling
is met with respect to a dwelling unit when compared to the original
condition of the dwelling unit.
`(iii) COMPUTER SOFTWARE- Computer software shall be used in support
of performance-based compliance under clause (ii) and such software
shall meet all of the procedures and methods for calculating energy
savings reductions which are promulgated by the Secretary of Energy.
Such regulations on the specifications for software and verification
protocols shall be based on the 2005 California Residential Alternative
Calculation Method Approval Manual.
`(iv) CALCULATION REQUIREMENTS- In calculating tradeoffs and energy
performance, the regulations shall prescribe the costs per unit of energy
and power, such as kilowatt hour, kilowatt, gallon of fuel oil, and
cubic foot or Btu of natural gas, which may be dependent on time of
usage. If a State has developed annual energy usage and cost calculation
procedures based on time of usage costs for use in the performance standards
of the State's building energy code before the effective date of this
section, the State may use those annual energy usage and cost calculation
procedures in lieu of those adopted by the Secretary.
`(v) APPROVAL OF SOFTWARE SUBMISSIONS- The Secretary shall approve software
submissions which comply with the calculation requirements of clause
(iii).
`(vi) PROCEDURES FOR INSPECTION AND TESTING OF DWELLING UNITS- The Secretary
shall ensure that procedures for the inspection and testing for compliance
comply with the calculation requirements under clause (iii) and subsection
(d)(2).
`(d) Special Rules- For purposes of this section--
`(1) DETERMINATIONS OF COMPLIANCE- A determination of compliance made for
the purposes of this section shall be filed with the Secretary within 1
year of the date of such determination and shall include the TIN of the
certifier, the address of the building in compliance, and the identity of
the person for whom such determination was performed. Determinations of
compliance filed with the Secretary shall be available for inspection by
the Secretary of Energy.
`(A) IN GENERAL- The Secretary, after consultation with the Secretary
of Energy shall establish requirements for certification and compliance
procedures after examining the requirements for energy consultants and
home energy ratings providers specified by the Mortgage Industry National
Home Energy Rating Standards.
`(B) INDIVIDUALS QUALIFIED TO DETERMINE COMPLIANCE- The determination
of compliance may be provided by a local building regulatory authority,
a utility, a manufactured home production inspection primary inspection
agency (IPIA), or an accredited home energy rating system provider. All
providers shall be accredited, or otherwise authorized to use approved
energy performance measurement methods, by the Residential Energy Services
Network (RESNET).
`(3) DOLLAR AMOUNTS IN CASE OF JOINT OCCUPANCY- In the case of any dwelling
unit which if jointly occupied and used during any calendar year as a principal
residence by 2 or more individuals the following rules shall apply:
`(A) The amount of the credit allowable under subsection (a) by reason
of expenditures 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 1 taxpayer whose taxable year is such calendar
year.
`(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.
`(4) 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
and such credit shall be allocated pro rata to such individual.
`(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 and any credit shall be allocated
appropriately.
`(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 principal residences.
`(6) JOINT OWNERSHIP OF ENERGY ITEMS-
`(A) IN GENERAL- Any expenditure otherwise qualifying as an expenditure
under this section 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 for each dwelling unit.
`(7) ALLOCATION IN CERTAIN CASES- If less than 80 percent of the use of
an item is for nonbusiness purposes, only that portion of the expenditures
for such item which is properly allocable to use for nonbusiness purposes
shall be taken into account.
`(8) COORDINATION WITH OTHER CREDITS- Property which would, but for this
paragraph, be eligible for credit under more than one provision of this
section shall be eligible only under one such provision, the provision specified
by the taxpayer.
`(9) YEAR CREDIT ALLOWED- The credit under subsection (a)(2) shall be allowed
in the taxable year in which the percentage reduction with respect to the
principal residence is certified.
`(10) WHEN EXPENDITURE MADE; AMOUNT OF EXPENDITURE-
`(A) IN GENERAL- Except as provided in subparagraph (B), an expenditure
with respect to an item shall be treated as made when the original installation
of the item is completed.
`(B) EXPENDITURES PART OF BUILDING CONSTRUCTION- In the case of an expenditure
in connection with the construction of a structure, such expenditure shall
be treated as made when the original use of the constructed structure
by the taxpayer begins.
`(11) PROPERTY FINANCED BY SUBSIDIZED ENERGY FINANCING-
`(A) REDUCTION OF EXPENDITURES-
`(i) IN GENERAL- Except as provided in subparagraph (C), for purposes
of determining the amount of 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.
`(ii) SUBSIDIZED ENERGY FINANCING- For purposes of clause (i), the term
`subsidized energy financing' has the same meaning given such term in
section 48(a)(4)(C).
`(B) DOLLAR LIMITS REDUCED- The dollar amounts in the table contained
in subsection (b)(3) with respect to each property purchased for such
dwelling unit for any taxable year of such taxpayer shall be reduced proportionately
by an amount equal to the sum of--
`(i) the amount of the expenditures made by the taxpayer during such
taxable year with respect to such dwelling unit and 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 which is used to make residential
energy property expenditures with respect to the dwelling unit and is
not included in the gross income of such taxpayer.
`(C) EXCEPTION FOR STATE PROGRAMS- Subparagraphs (A) and (B) shall not
apply to expenditures made with respect to property for which the taxpayer
has received a loan, State tax credit, or grant under any State energy
program.
`(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) Regulations- The Secretary shall promulgate such regulations as necessary
to take into account new technologies regarding energy efficiency and renewable
energy for purposes of determining energy efficiency and savings under this
section.
`(g) Termination- This section shall not apply with respect to any energy
property placed in service after December 31, 2009 (December 31, 2005, in
the case of Tier 1 energy-efficient building property (other than an oil,
natural gas, or propane furnace or hot water boiler described in section 200(d)(3)(D))).'.
(b) Conforming Amendments-
(1) Subsection (a) of section 1016 of the Internal Revenue Code of 1986,
as amended by section 103, is amended by striking `and' at the end of paragraph
(33), by striking the period at the end of paragraph (34) and inserting
`, and', and by adding at the end the following new paragraph:
`(35) to the extent provided in section 25C(e), in the case of amounts with
respect to which a credit has been allowed under section 25C.'.
(2) 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:
`25C. Nonbusiness energy property.'.
(c) Effective Dates- The amendments made by this section shall apply to expenditures
made after December 31, 2004.
SEC. 105. ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM PROPERTY.
(a) In General- Section 48(a)(3)(A) of the Internal Revenue Code of 1986 (defining
energy property), as amended by section 103, is amended to read as follows:
`(i) equipment used to produce, distribute, or use energy derived from
a geothermal deposit (within the meaning of section 613(e)(2)), but
only, in the case of electricity generated by geothermal power, up to
(but not including) the electrical transmission stage, or
`(ii) combined heat and power system property,'.
(b) Combined Heat and Power System Property- Section 48 of the Internal Revenue
Code of 1986 (relating to energy credit; reforestation credit) is amended
by adding at the end the following new subsection:
`(c) Combined Heat and Power System Property- For purposes of subsection (a)(3)(A)(ii)--
`(1) COMBINED HEAT AND POWER SYSTEM PROPERTY- The term `combined heat and
power system property' means property comprising a system--
`(A) which uses the same energy source for the simultaneous or sequential
generation of electrical power, mechanical shaft power, or both, in combination
with the generation of steam or other forms of useful thermal energy (including
heating and cooling applications),
`(B) which has an electrical capacity of not more than 15 megawatts or
a mechanical energy capacity of not more than 2,000 horsepower or an equivalent
combination of electrical and mechanical energy capacities,
`(i) at least 20 percent of its total useful energy in the form of thermal
energy which is not used to produce electrical or mechanical power (or
combination thereof), and
`(ii) at least 20 percent of its total useful energy in the form of
electrical or mechanical power (or combination thereof),
`(D) the energy efficiency percentage of which exceeds 60 percent, and
`(E) which is placed in service before January 1, 2008.
`(A) ENERGY EFFICIENCY PERCENTAGE- For purposes of this subsection, the
energy efficiency percentage of a system is the fraction--
`(i) the numerator of which is the total useful electrical, thermal,
and mechanical power produced by the system at normal operating rates,
and expected to be consumed in its normal application, and
`(ii) the denominator of which is the lower heating value of the fuel
sources for the system.
`(B) DETERMINATIONS MADE ON BTU BASIS- The energy efficiency percentage
and the percentages under paragraph (1)(C) shall be determined on a Btu
basis.
`(C) INPUT AND OUTPUT PROPERTY NOT INCLUDED- The term `combined heat and
power system property' does not include property used to transport the
energy source to the facility or to distribute energy produced by the
facility.
`(D) PUBLIC UTILITY PROPERTY-
`(i) ACCOUNTING RULE FOR PUBLIC UTILITY PROPERTY- If the combined heat
and power system property is public utility property (as defined in
section 168(i)(10)), the taxpayer may only claim the credit under subsection
(a) if, with respect to such property, the taxpayer uses a normalization
method of accounting.
`(ii) CERTAIN EXCEPTION NOT TO APPLY- The matter in subsection (a)(3)
which follows subparagraph (D) thereof shall not apply to combined heat
and power system property.
`(3) SYSTEMS USING BAGASSE- If a system is designed to use bagasse for at
least 90 percent of the energy source--
`(A) paragraph (1)(D) shall not apply, but
`(B) the amount of credit determined under subsection (a) with respect
to such system shall not exceed the amount which bears the same ratio
to such amount of credit (determined without regard to this paragraph)
as the energy efficiency percentage of such system bears to 60 percent.'.
(c) Effective Date- The amendments made by this subsection shall apply to
periods after December 31, 2004, in taxable years ending after such date,
under rules similar to the rules of section 48(m) of the Internal Revenue
Code of 1986 (as in effect on the day before the date of the enactment of
the Revenue Reconciliation Act of 1990).
TITLE II--ENERGY EFFICIENT PRODUCTS
SEC. 201. ENERGY CONSERVATION STANDARDS FOR ADDITIONAL PRODUCTS.
(a) Definitions- Section 321 of the Energy Policy and Conservation Act (42
U.S.C. 6291) is amended--
(1) in paragraph (30)(S)--
(A) by inserting `(i)' before `The term'; and
(B) by adding at the end the following:
`(ii) The term `medium base compact fluorescent lamp' does not include--
`(aa) specifically designed to be used for special purpose applications;
and
`(bb) unlikely to be used in general purpose applications, such as
the applications described in subparagraph (D); or
`(II) any lamp not described in subparagraph (D) that is excluded by
the Secretary, by rule, because the lamp is--
`(aa) designed for special applications; and
`(bb) unlikely to be used in general purpose applications.'; and
(2) by adding at the end the following:
`(32) The term `battery charger' means a device that charges batteries for
consumer products, including battery chargers embedded in other consumer
products.
`(33) The term `ceiling fan' means a nonportable device that is suspended
from a ceiling for circulating air via the rotation of fan blades.
`(34) The term `ceiling fan light kit' means equipment designed to provide
light from a ceiling fan that can be--
`(A) integral, such that the equipment is attached to the ceiling fan
prior to the time of retail sale; or
`(B) attachable, such that at the time of retail sale the equipment is
not physically attached to the ceiling fan, but may be included inside
the ceiling fan package at the time of sale or sold separately for subsequent
attachment to the fan.
`(35) The term `commercial refrigerators, freezers, and refrigerator-freezers'
means refrigerators, freezers, or refrigerator-freezers that--
`(A) are not consumer products regulated under this Act; and
`(B) incorporate most components involved in the vapor-compression cycle
and the refrigerated compartment in a single package.
`(36) The term `dehumidifier' means a self-contained, electrically operated,
and mechanically encased assembly consisting of--
`(A) a refrigerated surface (evaporator) that condenses moisture from
the atmosphere;
`(B) a refrigerating system, including an electric motor;
`(C) an air-circulating fan; and
`(D) means for collecting or disposing of the condensate.
`(37)(A) The term `distribution transformer' means a transformer that--
`(i) has an input voltage of 34.5 kilovolts or less;
`(ii) has an output voltage of 600 volts or less; and
`(iii) is rated for operation at a frequency of 60 hertz.
`(B) The term `distribution transformer' does not include--
`(i) a transformer with multiple voltage taps, with the highest voltage
tap equaling at least 20 percent more than the lowest voltage tap;
`(ii) a transformer that is designed to be used in a special purpose application
and is unlikely to be used in general purpose applications, such as a
drive transformer, rectifier transformer, auto-transformer, Uninterruptible
Power System transformer, impedance transformer, harmonic transformer,
regulating transformer, sealed and nonventilating transformer, machine
tool transformer, welding transformer, grounding transformer, or testing
transformer; or
`(iii) any transformer not listed in clause (ii) that is excluded by the
Secretary by rule because--
`(I) the transformer is designed for a special application;
`(II) the transformer is unlikely to be used in general purpose applications;
and
`(III) the application of standards to the transformer would not result
in significant energy savings.
`(38) The term `external power supply' means an external power supply circuit
that is used to convert household electric current into DC current or lower-voltage
AC current to operate a consumer product.
`(39) The term `illuminated exit sign' means a sign that--
`(A) is designed to be permanently fixed in place to identify an exit;
and
`(B) consists of an electrically powered integral light source that--
`(i) illuminates the legend `EXIT' and any directional indicators; and
`(ii) provides contrast between the legend, any directional indicators,
and the background.
`(40) The term `low-voltage dry-type distribution transformer' means a distribution
transformer that--
`(A) has an input voltage of 600 volts or less;
`(C) does not use oil as a coolant.
`(41) The term `standby mode' means the lowest power consumption mode, as
established on an individual product basis by the Secretary, that--
`(A) cannot be switched off or influenced by the user; and
`(B) may persist for an indefinite time when an appliance is--
`(i) connected to the main electricity supply; and
`(ii) used in accordance with the instructions of the manufacturer.
`(42) The term `torchiere' means a portable electric lamp with a reflector
bowl that directs light upward to give indirect illumination.
`(43) The term `traffic signal module' means a standard 8-inch (200mm) or
12-inch (300mm) traffic signal indication that--
`(A) consists of a light source, a lens, and all other parts necessary
for operation; and
`(B) communicates movement messages to drivers through red, amber, and
green colors.
`(44) The term `transformer' means a device consisting of 2 or more coils
of insulated wire that transfers alternating current by electromagnetic
induction from 1 coil to another to change the original voltage or current
value.
`(45)(A) The term `unit heater' means a self-contained fan-type heater designed
to be installed within the heated space.
`(B) The term `unit heater' does not include a warm air furnace.
`(46)(A) The term `commercial prerinse spray valve' means a handheld device
designed and marketed for use with commercial dishwashing and ware washing
equipment that sprays water on dishes, flatware, and other food service
items for the purpose of removing food residue before cleaning the items.
`(B) The Secretary may modify the definition of `commercial prerinse spray
valve' by rule--
`(i) to include products--
`(I) that are extensively used in conjunction with commercial dishwashing
and ware washing equipment;
`(II) the application of standards to which would result in significant
energy savings; and
`(III) the application of standards to which would meet the criteria
specified in subsection (o)(4); and
`(ii) to exclude products--
`(I) that are used for special food service applications;
`(II) that are unlikely to be widely used in conjunction with commercial
dishwashing and ware washing equipment; and
`(III) the application of standards to which would not result in significant
energy savings.'.
(b) Test Procedures- Section 323 of the Energy Policy and Conservation Act
(42 U.S.C. 6293) is amended--
(1) in subsection (b), by adding at the end the following:
`(9) Test procedures for illuminated exit signs shall be based on the test
method used under version 2.0 of the Energy Star program of the Environmental
Protection Agency for illuminated exit signs.
`(10)(A) Test procedures for distribution transformers and low-voltage dry-type
distribution transformers shall be based on the `Standard Test Method for
Measuring the Energy Consumption of Distribution Transformers' prescribed
by the National Electrical Manufacturers Association (NEMA TP 2-1998).
`(B) The Secretary may review and revise the test procedures established under
subparagraph (A).
`(C) For purposes of section 346(a), the test procedures established under
subparagraph (A) shall be considered to be the testing requirements prescribed
by the Secretary under section 346(a)(1) for distribution transformers for
which the Secretary makes a determination that energy conservation standards
would--
`(i) be technologically feasible and economically justified; and
`(ii) result in significant energy savings.
`(11) Test procedures for traffic signal modules shall be based on the test
method used under the Energy Star program of the Environmental Protection
Agency for traffic signal modules, as in effect on the date of enactment of
this paragraph.
`(12)(A) Test procedures for medium-base compact fluorescent lamps shall be
based on the test methods for compact fluorescent lamps used under the August
9, 2001, version of the Energy Star program of the Environmental Protection
Agency and the Department of Energy.
`(B) Except as provided in subparagraph (C), medium-base compact fluorescent
lamps shall meet all test requirements for regulated parameters of section
325(bb).
`(C) Notwithstanding subparagraph (B), if manufacturers document engineering
predictions and analysis that support expected attainment of lumen maintenance
at 40 percent rated life and lamp life time, medium-base compact fluorescent
lamps may be marketed before completion of lamp life and lumen maintenance
at 40 percent of rated life testing.
`(13) Air movement test procedures for ceiling fans shall be based on the
test procedure contained in the Energy Star Program Requirements for Residential
Ceiling Fans, version 2.0, developed by the Environmental Protection Agency,
unless, pursuant to this section, the Secretary promulgates an alternative
test procedure.
`(14) Test procedures for dehumidifiers shall be based on the test criteria
used under the Energy Star Program Requirements for Dehumidifiers developed
by the Environmental Protection Agency, as in effect on the date of enactment
of this paragraph unless revised by the Secretary pursuant to this section.
`(15) The test procedure for measuring flow rate for commercial prerinse spray
valves shall be based on American Society for Testing and Materials Standard
F2324, entitled `Standard Test Method for Prerinse Spray Valves.'; and
(2) by adding at the end the following:
`(f) Additional Consumer and Commercial Products- (1) Not later than 2 years
after the date of enactment of this subsection, the Secretary shall prescribe
testing requirements for--
`(A) refrigerated bottled or canned beverage vending machines; and
`(B) commercial refrigerators, freezers, and refrigerator-freezers.
`(2) To the maximum extent practicable, the testing requirements prescribed
under paragraph (1) shall be based on existing test procedures used in industry.'.
(c) New Standards- Section 325 of the Energy Policy and Conservation Act (42
U.S.C. 6295) is amended by adding at the end the following:
`(u) Battery Charger and External Power Supply Electric Energy Consumption-
(1)(A) Not later than 18 months after the date of enactment of this subsection,
the Secretary shall, after providing notice and an opportunity for comment,
prescribe, by rule, definitions and test procedures for the power use of battery
chargers and external power supplies.
`(B) In establishing the test procedures under subparagraph (A), the Secretary
shall--
`(i) consider existing definitions and test procedures used for measuring
energy consumption in standby mode and other modes; and
`(ii) assess the current and projected future market for battery chargers
and external power supplies.
`(C) The assessment under subparagraph (B)(ii) shall include--
`(i) estimates of the significance of potential energy savings from technical
improvements to battery chargers and external power supplies; and
`(ii) suggested product classes for standards.
`(D) Not later than 18 months after the date of enactment of this subsection,
the Secretary shall hold a scoping workshop to discuss and receive comments
on plans for developing energy conservation standards for energy use for battery
chargers and external power supplies.
`(E)(i) Not later than 3 years after the date of enactment of this subsection,
the Secretary shall issue a final rule that determines whether energy conservation
standards shall be issued for battery chargers and external power supplies
or classes of battery chargers and external power supplies.
`(ii) For each product class, any standards issued under clause (i) shall
be set at the lowest level of energy use that--
`(I) meets the criteria and procedures of subsections (o), (p), (q), (r),
(s), and (t); and
`(II) would result in significant overall annual energy savings, considering
standby mode and other operating modes.
`(2) In determining under section 323 whether test procedures and energy conservation
standards under this section should be revised with respect to covered products
that are major sources of standby mode energy consumption, the Secretary shall
consider whether to incorporate standby mode into the test procedures and
energy conservation standards, taking into account standby mode power consumption
compared to overall product energy consumption.
`(3) The Secretary shall not propose a standard under this section unless
the Secretary has issued applicable test procedures for each product under
section 323.
`(4) Any standard issued under this subsection shall be applicable to products
manufactured or imported beginning on the date that is 3 years after the date
of issuance.
`(5) The Secretary and the Administrator shall collaborate and develop programs
(including Energy Star Programs and other voluntary industry agreements or
codes of conduct) that are designed to reduce standby mode energy use.
`(v) Vending Machines and Commercial Refrigerators, Freezers, and Refrigerator-Freezers-
(1) Not later than 3 years after the date on which testing requirements are
prescribed by the Secretary under section 323(f), the Secretary shall prescribe,
by rule, energy conservation standards for--
`(A) refrigerated bottled or canned beverage vending machines; and
`(B) commercial refrigerators, freezers, and refrigerator-freezers.
`(2) In establishing standards under this subsection, the Secretary shall
use the criteria and procedures prescribed under subsections (o) and (p).
`(3) Any standard prescribed under this subsection shall apply to products
manufactured 3 years after the date of publication of a final rule establishing
the standard.
`(w) Illuminated EXIT Signs- An illuminated exit sign manufactured on or after
January 1, 2006, shall meet the version 2.0 Energy Star Program performance
requirements for illuminated exit signs prescribed by the Environmental Protection
Agency.
`(x) Torchieres- A torchiere manufactured on or after January 1, 2006--
`(1) shall consume not more than 190 watts of power; and
`(2) shall not be capable of operating with lamps that total more than 190
watts.
`(y) Low Voltage Dry-Type Distribution Transformers- The efficiency of a low
voltage dry-type distribution transformer manufactured on or after January
1, 2006, shall be the Class I Efficiency Levels for distribution transformers
specified in table 4-2 of the `Guide for Determining Energy Efficiency for
Distribution Transformers' published by the National Electrical Manufacturers
Association (NEMA TP-1-2002).
`(z) Traffic Signal Modules- A traffic signal module manufactured on or after
January 1, 2007, shall--
`(1) meet the performance requirements used under the Energy Star program
of the Environmental Protection Agency for traffic signals, as in effect
on the date of enactment of this subsection; and
`(2) be installed with compatible, electrically connected signal control
interface devices and conflict monitoring systems.
`(aa) Unit Heaters- A unit heater manufactured on or after the date that is
3 years after the date of enactment of this subsection shall--
`(1) be equipped with an intermittent ignition device; and
`(2) have power venting or an automatic flue damper.
`(bb) Medium-Base Compact Fluorescent Lamps- (1) A bare lamp and covered lamp
(no reflector) medium-base compact fluorescent lamp manufactured on or after
January 1, 2006, shall meet the following requirements prescribed by the August
9, 2001, version of the Energy Star Program Requirements for Compact Fluorescent
Lamps, Energy Star Eligibility Criteria, Energy-Efficiency Specification issued
by the Environmental Protection Agency and Department of Energy:
`(A) Minimum initial efficacy.
`(B) Lumen maintenance at 1,000 hours.
`(C) Lumen maintenance at 40 percent of rated life.
`(D) Rapid cycle stress test.
`(2) The Secretary may, by rule, establish requirements for color quality
(CRI), power factor, operating frequency, and maximum allowable start time
based on the requirements prescribed by the August 9, 2001, version of the
Energy Star Program Requirements for Compact Fluorescent Lamps.
`(3) The Secretary may, by rule--
`(A) revise the requirements established under paragraph (2); or
`(B) establish other requirements, after considering energy savings, cost
effectiveness, and consumer satisfaction.
`(cc) Ceiling Fans and Ceiling Fan Light Kits- (1)(A) All ceiling fans manufactured
on or after January 1, 2008, shall have the following features:
`(i) Lighting controls separate from fan speed controls.
`(ii) Adjustable speed controls (either more than 1 speed or variable speed).
`(iii) The capability of reversible fan action, except for fans sold for
industrial applications, outdoor applications, and where safety standards
would be violated by the use of the reversible mode.
`(B) The Secretary may promulgate regulations to define in greater detail
the exceptions provided under subparagraph (A)(iii) but may not substantively
expand the exceptions.
`(2) Ceiling fan light kits manufactured on or after January 1, 2008, shall--
`(A) meet the Energy Star Program Requirements for Residential Light Fixtures,
version 3.1, issued by the Environmental Protection Agency, and be packaged
with lamps to fill all sockets;
`(B) be packaged with screw-based compact fluorescent lamps to fill all
sockets and meet the Energy Star Program Requirements for Compact Fluorescent
Lamps, version 3.0, issued by the Department of Energy; or
`(C) use and be packaged with light sources other than compact fluorescent
lamps that meet the minimum efficacy requirements, as measured in lumens
per watt, of the Energy Star Program Requirements for Compact Fluorescent
Lamps, version 3.0, issued by the Department of Energy.
`(3)(A) Notwithstanding any provision of this Act, if the requirements of
subsections (o) and (p) are met, the Secretary may consider and prescribe
energy efficiency or energy use standards for electricity used by ceiling
fans to circulate air in a room.
`(B) If the Secretary sets the standards, the Secretary shall consider--
`(i) exempting or setting different standards for certain product classes
for which the primary standards are not technically feasible or economically
justified; and
`(ii) establishing separate exempted product classes for highly decorative
fans for which air movement performance is a secondary design feature.
`(C) Any air movement standard prescribed under this subsection shall apply
to products manufactured on or after the date that is 3 years after the date
of publication of a final rule establishing the standard.
`(dd) Dehumidifiers- (1) Dehumidifiers manufactured on or after October 1,
2008, shall have an Energy Factor that meets or exceeds the following values:
`Product Capacity (pints/day):
Minimum Energy Factor (Liters/kWh)
25
1.00
> 25 - 35
1.20
> 35 - 54
1.30
> 54 - < 75
1.50
75
2.25.
`(2)(A) Not later than October 1, 2010, the Secretary shall publish a final
rule in accordance with subsections (o) and (p), to determine whether the
standards established under paragraph (1) should be amended.
`(B) The final rule shall contain any amendment by the Secretary and shall
provide that the amendment shall apply to products manufactured on or after
October 1, 2012.
`(C) If the Secretary does not publish an amendment that takes effect by October
1, 2012, dehumidifiers manufactured on or after October 1, 2012, shall have
an Energy Factor that meets or exceeds the following values:
`Product Capacity (pints/day):
Minimum Energy Factor (Liters/kWh)
25
1.20
> 25 - 35
1.30
> 35 - 45
1.40
> 45 - 54
1.50
> 54 - < 75
1.60
75
2.5.
`(ee) Commercial Prerinse Spray Valves- Commercial prerinse spray valves manufactured
on or after January 1, 2006, shall have a flow rate less than or equal to
1.6 gallons per minute.
`(ff) Effective Date- Section 327 shall apply to--
`(1) a product for which standards are to be established under subsections
(u) and (v) on the date on which a final rule is issued by the Department
of Energy, except that any State or local standards prescribed or enacted
for the product before the date on which the final rule is issued shall
not be preempted until the standard established under subsection (u) or
(v) for the product takes effect; and
`(2) a product for which standards are established under subsections (w)
through (ee) on the date of enactment of those subsections, except that
any State or local standards prescribed or enacted before the date of enactment
of those subsections shall not be preempted until the standards established
under subsections (w) through (ee) take effect.'.
(d) Residential Furnace Fans- Section 325(f)(3) of the Energy Policy and Conservation
Act (42 U.S.C. 6295(f)(3)) is amended by adding at the end the following:
`(D) Notwithstanding any other provision of this Act, if the requirements
of subsection (o) are met, the Secretary may consider and prescribe energy
efficiency or energy use standards for electricity used for purposes of circulating
air through duct work.'.
(e) General Rule of Preemption- Section 327(c) of the Energy Policy and Conservation
Act (42 U.S.C. 6297(c)) is amended--
(1) in paragraph (5), by striking `or' at the end;
(2) in paragraph (6), by striking the period at the end and inserting `;
or'; and
(3) by adding at the end the following:
`(7) is a regulation concerning standards for commercial prerinse spray
valves adopted by the California Energy Commission before January 1, 2005,
or is an amendment to such a regulation developed to align California regulations
with changes in American Society for Testing and Materials Regulation F2324.'.
SEC. 202. ENERGY LABELING.
(a) Rulemaking on Effectiveness of Consumer Product Labeling- Section 324(a)(2)
of the Energy Policy and Conservation Act (42 U.S.C. 6294(a)(2)) is amended
by adding at the end the following:
`(F)(i) Not later than 90 days after the date of enactment of this subparagraph,
the Commission shall initiate a rulemaking to consider--
`(I) the effectiveness of the consumer products labeling program in--
`(aa) assisting consumers in making purchasing decisions; and
`(bb) improving energy efficiency; and
`(II) changes to the labeling rules that would improve the effectiveness
of consumer product labels.
`(ii) Not later than 2 years after the date of enactment of this subparagraph,
the Commission shall complete the rulemaking initiated under clause (i).'.
(b) Rulemaking on Labeling for Additional Products- Section 324(a) of the
Energy Policy and Conservation Act (42 U.S.C. 6294(a)) is amended by adding
at the end the following:
`(5)(A) After a test procedure has been prescribed under section 323, the
Secretary or the Commission, as appropriate, may, for covered products referred
to in subsections (u) through (ee) of section 325, prescribe, by rule, under
this section, labeling requirements for the products.
`(B) In the case of products to which TP-1 standards under section 325(y)
apply, labeling requirements shall be based on the `Standard for the Labeling
of Distribution Transformer Efficiency' prescribed by the National Electrical
Manufacturers Association (NEMA TP-3) as in effect on the date of enactment
of this paragraph.
`(C) In the case of dehumidifiers covered under section 325(dd), the Commission
shall not require an Energy Guide label.
`(6)(A) Not later than July 1, 2006, the Commission shall prescribe by rule,
pursuant to this section, labeling requirements for the electricity used by
ceiling fans to circulate air in a room.
`(B) The requirements shall be based on the test procedure and labeling requirements
contained in the Energy Star Program Requirements for Residential Ceiling
Fans, version 2.0, issued by the Environmental Protection Agency, except that
third party testing and other non-labeling requirements shall not be promulgated
unless the Commission determines the requirements are necessary to achieve
compliance.
`(C) The rule shall apply to products manufactured after the later of--
`(ii) the date that is 60 days after the final rule is prescribed.'.
SEC. 203. COMMERCIAL PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT.
(a) Definitions- Section 340 of the Energy Policy and Conservation Act (42
U.S.C. 6311) is amended--
(A) by redesignating subparagraphs (D) through (G) as subparagraphs (E)
through (H), respectively; and
(B) by inserting after subparagraph (C) the following:
`(D) Very large commercial package air conditioning and heating equipment.';
(2) in paragraph (2)(B), by striking `small and large'; and
(3) by striking paragraphs (8) and (9) and inserting the following:
`(8)(A) The term `commercial package air conditioning and heating equipment'
means air-cooled, water-cooled, evaporatively-cooled, or water source (not
including ground water source) electrically operated, unitary central air
conditioners and central air conditioning heat pumps for commercial application.
`(B) The term `small commercial package air conditioning and heating equipment'
means commercial package air conditioning and heating equipment that is
rated below 135,000 Btu per hour (cooling capacity).
`(C) The term `large commercial package air conditioning and heating equipment'
means commercial package air conditioning and heating equipment that is
rated at or above 135,000 Btu per hour and below 240,000 Btu per hour (cooling
capacity).
`(D) The term `very large commercial package air conditioning and heating
equipment' means commercial package air conditioning and heating equipment
that is rated at or above 240,000 Btu per hour and below 760,000 Btu per
hour (cooling capacity).'.
(b) Standards- Section 342(a) of the Energy Policy and Conservation Act (42
U.S.C. 6313(a)) is amended--
(1) in the subsection heading, by striking `Small and Large' and inserting
`Small, Large, and Very Large';
(2) in paragraph (1), by inserting `but before January 1, 2010,' after `January
1, 1994,';
(3) in paragraph (2), by inserting `but before January 1, 2010,' after `January
1, 1995,'; and
(A) in subparagraph (A)--
(i) by inserting `(i)' after `(A)';
(ii) by striking `the date of enactment of the Energy Policy Act of
1992' and inserting `January 1, 2010';
(iii) by inserting after `large commercial package air conditioning
and heating equipment' the following: `and very large commercial package
air conditioning and heating equipment, or if ASHRAE/IES Standard 90.1,
as in effect on October 24, 1992, is amended with respect to any'; and
(iv) by adding at the end the following:
`(ii) If ASHRAE/IES Standard 90.1 is not amended with respect to small commercial
package air conditioning and heating equipment, large commercial package air
conditioning and heating equipment, and very large commercial package air
conditioning and heating equipment during the 5-year period beginning on the
effective date of a standard, the Secretary may initiate a rulemaking to determine
whether a more stringent standard would result in significant additional conservation
of energy and is technologically feasible and economically justified.'; and
(B) in subparagraph (C)(ii), by inserting `and very large commercial package
air conditioning and heating equipment' after `large commercial package
air conditioning and heating equipment'; and
(5) by adding at the end the following:
`(7) Each small commercial package air conditioning and heating equipment
manufactured on or after January 1, 2010, shall meet the following standards:
`(A) The minimum energy efficiency ratio of air-cooled central air conditioners
at or above 65,000 Btu per hour (cooling capacity) and less than 135,000
Btu per hour (cooling capacity) shall be--
`(i) 11.2 for equipment with no heating or electric resistance heating;
and
`(ii) 11.0 for equipment with all other heating system types that are
integrated into the equipment (at a standard rating of 95 degrees F db).
`(B) The minimum energy efficiency ratio of air-cooled central air conditioner
heat pumps at or above 65,000 Btu per hour (cooling capacity) and less than
135,000 Btu per hour (cooling capacity) shall be--
`(i) 11.0 for equipment with no heating or electric resistance heating;
and
`(ii) 10.8 for equipment with all other heating system types that are
integrated into the equipment (at a standard rating of 95 degrees F db).
`(C) The minimum coefficient of performance in the heating mode of air-cooled
central air conditioning heat pumps at or above 65,000 Btu per hour (cooling
capacity) and less than 135,000 Btu per hour (cooling capacity) shall be
3.3 (at a high temperature rating of 47 degrees F db).
`(8) Each large commercial package air conditioning and heating equipment
manufactured on or after January 1, 2010, shall meet the following standards:
`(A) The minimum energy efficiency ratio of air-cooled central air conditioners
at or above 135,000 Btu per hour (cooling capacity) and less than 240,000
Btu per hour (cooling capacity) shall be--
`(i) 11.0 for equipment with no heating or electric resistance heating;
and
`(ii) 10.8 for equipment with all other heating system types that are
integrated into the equipment (at a standard rating of 95 degrees F db).
`(B) The minimum energy efficiency ratio of air-cooled central air conditioner
heat pumps at or above 135,000 Btu per hour (cooling capacity) and less
than 240,000 Btu per hour (cooling capacity) shall be--
`(i) 10.6 for equipment with no heating or electric resistance heating;
and
`(ii) 10.4 for equipment with all other heating system types that are
integrated into the equipment (at a standard rating of 95 degrees F db).
`(C) The minimum coefficient of performance in the heating mode of air-cooled
central air conditioning heat pumps at or above 135,000 Btu per hour (cooling
capacity) and less than 240,000 Btu per hour (cooling capacity) shall be
3.2 (at a high temperature rating of 47 degrees F db).
`(9) Each very large commercial package air conditioning and heating equipment
manufactured on or after January 1, 2010, shall meet the following standards:
`(A) The minimum energy efficiency ratio of air-cooled central air conditioners
at or above 240,000 Btu per hour (cooling capacity) and less than 760,000
Btu per hour (cooling capacity) shall be--
`(i) 10.0 for equipment with no heating or electric resistance heating;
and
`(ii) 9.8 for equipment with all other heating system types that are integrated
into the equipment (at a standard rating of 95 degrees F db).
`(B) The minimum energy efficiency ratio of air-cooled central air conditioner
heat pumps at or above 240,000 Btu per hour (cooling capacity) and less
than 760,000 Btu per hour (cooling capacity) shall be--
`(i) 9.5 for equipment with no heating or electric resistance heating;
and
`(ii) 9.3 for equipment with all other heating system types that are integrated
into the equipment (at a standard rating of 95 degrees F db).
`(C) The minimum coefficient of performance in the heating mode of air-cooled
central air conditioning heat pumps at or above 240,000 Btu per hour (cooling
capacity) and less than 760,000 Btu per hour (cooling capacity) shall be
3.2 (at a high temperature rating of 47 degrees F db).'.
(c) Test Procedures- Section 343 of the Energy Policy and Conservation Act
(42 U.S.C. 6314) is amended in subsections (a)(4) and (d)(1), by inserting
`very large commercial package air conditioning and heating equipment,' after
`large commercial package air conditioning and heating equipment,' each place
it appears.
(d) Labeling- Section 344(e) of the Energy Policy and Conservation Act (42
U.S.C. 6315(e)) is amended in the first and second sentences, by inserting
`very large commercial package air conditioning and heating equipment,' after
`large commercial package air conditioning and heating equipment,' each place
it appears.
(e) Administration, Penalties, Enforcement, and Preemption- Section 345 of
the Energy Policy and Conservation Act (42 U.S.C. 6316) is amended by adding
at the end the following:
`(d)(1) Except as provided in paragraphs (2) and (3), section 327 shall apply
with respect to the equipment specified in section 340(1)(D) to the same extent
and in the same manner as section 327 applies under part B on the date of
enactment of this subsection.
`(2) Any State or local standard prescribed or enacted prior to the date of
enactment of this subsection shall not be preempted until the standards established
under section 342(a)(9) take effect on January 1, 2010.
`(3) If the California Energy Commission adopts, not later than March 31,
2006, a regulation concerning the energy efficiency or energy use of the equipment
specified in section 340(1)(D), the regulation shall be effective until, and
shall no longer be effective after, the standards established under section
342(a)(9) take effect on January 1, 2010.'.
SEC. 204. COMMERCIAL REFRIGERATORS, FREEZERS, AND REFRIGERATOR-FREEZERS.
(a) Definitions- Section 340 of the Energy Policy and Conservation Act (42
U.S.C. 6311), as amended by section 203, is amended--
(A) by redesignating subparagraph (H) as subparagraph (I); and
(B) by inserting after subparagraph (G) the following:
`(H) commercial refrigerators, freezers, and refrigerator-freezers.'; and
(2) by adding at the end the following:
`(19)(A) The term `commercial refrigerator, freezer, and refrigerator-freezer'
means refrigeration equipment that--
`(i) is not a consumer product (as defined in section 321);
`(ii) operates at a chilled, frozen, combination chilled and frozen, or
variable temperature;
`(iii) displays or stores merchandise and other perishable materials horizontally,
semivertically, or vertically;
`(iv) has transparent or solid doors, sliding or hinged doors, a combination
of hinged, sliding, transparent, or solid doors, or no doors;
`(v) is designed for pull-down temperature applications or holding temperature
applications; and
`(vi) is connected to a self-contained condensing unit or to a remote
condensing unit.
`(B) The term `holding temperature application' means a use of commercial
refrigeration equipment other than a pull-down temperature application,
except a blast chiller or freezer.
`(C) The term `integrated average temperature' means the average temperature
of all test package measurements taken during the test.
`(D) The term `pull-down temperature application' means a commercial refrigerator
with doors that, when fully loaded with 12 ounce beverage cans at 90 degrees
F, can cool those beverages to an average stable temperature of 38 degrees
F in 12 hours or less.
`(E) The term `remote condensing unit' means a factory-made assembly of
refrigerating components designed to compress and liquefy a specific refrigerant
that is remotely located from the refrigerated equipment and consists of
1 or more refrigerant compressors, refrigerant condensers, condenser fans
and motors, and factory supplied accessories.
`(F) The term `self-contained condensing unit' means a factory-made assembly
of refrigerating components designed to compress and liquefy a specific
refrigerant that is an integral part of the refrigerated equipment and consists
of 1 or more refrigerant compressors, refrigerant condensers, condenser
fans and motors, and factory supplied accessories.'.
(b) Standards- Section 342 of the Energy Policy and Conservation Act (42 U.S.C.
6313) is amended by adding at the end the following:
`(c) Commercial Refrigerators, Freezers, and Refrigerator-Freezers- (1) In
this subsection:
`(A) The term `AV' means the adjusted volume (ft3) (defined as 1.63 x frozen
temperature compartment volume (ft3) + chilled temperature compartment volume
(ft3)) with compartment volumes measured in accordance with the Association
of Home Appliance Manufacturers Standard HRF1-1979.
`(B) The term `V' means the chilled or frozen compartment volume (ft3) (as
defined in the Association of Home Appliance Manufacturers Standard HRF1-1979).
`(C) Other terms have the meanings established by the Secretary, based on
industry-accepted definitions and practice.
`(2) Each commercial refrigerator, freezer, and refrigerator-freezer with
a self-contained condensing unit designed for holding temperature applications
manufactured on or after January 1, 2010, shall meet the following standard
levels in kilowatt hours per day:
`
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
`Refrigerators with solid doors 0.10 V + 2.04
Refrigerators with transparent doors 0.12 V + 3.34
Freezers with solid doors 0.40 V + 1.38
Freezers with transparent doors 0.75 V + 4.10
Refrigerators/freezers with solid doors the greater of 0.27 AV - 0.71 or 0.70.
-------------------------------------------------------------------------------
`(3) Each commercial refrigerator with a self-contained condensing unit designed
for pull-down temperature applications manufactured on or after January 1,
2010, shall meet the following standard levels in kilowatt hours per day:
Refrigerators with transparent doors 0.126 V + 3.51.
`(4)(A) Not later than January 1, 2009, the Secretary of Energy shall prescribe,
by rule, standard levels for ice-cream freezers, self-contained commercial
refrigerators, freezers, and refrigerator-freezers without doors, and remote
condensing commercial refrigerators, freezers, and refrigerator-freezers,
with the standard levels effective for equipment manufactured on or after
January 1, 2012.
`(B) Not later than January 1, 2009, the Secretary shall prescribe, by rule,
standard levels for other types of commercial refrigerators, freezers, and
refrigerator-freezers not covered by paragraphs (1), (2), and (3) and subparagraph
(A) with the standard levels effective for equipment manufactured on or after
January 1, 2012.
`(5)(A)(i) Not later than January 1, 2013, the Secretary shall publish a final
rule to determine if the standards established under paragraphs (1), (2),
(3), and (4)(A) should be amended.
`(ii) The rule shall provide that any amended standards shall apply to products
manufactured on or after the date that is 3 years after the final amended
standard is published unless the Secretary determines, by rule, that 3 years
is inadequate, in which case the Secretary may establish an application date
for products manufactured not later than 5 years after the final amended standard
is published.
`(B)(i) Not later than 3 years after the amended final standard referred to
in subparagraph (A) takes effect or after the Secretary publishes a final
rule determining that the standard should not be amended, the Secretary shall
publish a final rule to determine if the standards established under paragraphs
(1), (2), (3), and (4)(A) should be amended.
`(ii) The rule shall provide that any amended standards shall apply to products
manufactured on or after the date that is 3 years after the final amended
standard is published unless the Secretary determines, by rule, that 3 years
is inadequate, in which case the Secretary may establish an application date
for products manufactured not later than 5 years after the final amended standard
is published.'.
(c) Test Procedures- Section 343 of the Energy Policy and Conservation Act
(42 U.S.C. 6314) is amended--
(1) in subsection (a), by adding at the end the following:
`(6)(A)(i) In the case of commercial refrigerators, freezers, and refrigerator-freezers,
the test procedures shall be the test procedures determined by the Secretary
to be generally accepted industry testing procedures or rating procedures
developed or recognized by the ASHRAE or by the American National Standards
Institute.
`(ii) In the case of self-contained refrigerators, freezers, and refrigerator-freezers
to which standards are applicable under subsection 342(c)(1), the initial
test procedures shall be ASHRAE 117 that is in effect on January 1, 2005.
`(B) In the case of commercial refrigerators, freezers, and refrigerators-freezers
with doors covered by the standards adopted in February 2002, by the California
Energy Commission, the rating temperatures shall be the integrated average
temperature of 38 degrees F (+/- 2 degrees F) for refrigerator compartments
and 0 degrees F (+/- 2 degrees F) for freezer compartments.
`(C) The Secretary shall prescribe a rule, that meets the requirements of
paragraphs (2) and (3), to establish the appropriate rating temperatures for
the other products for which standards will be established under subsection
342(c)(2).
`(D) In establishing the appropriate test temperatures under this subparagraph,
the Secretary shall follow the procedures and meet the requirements specified
in section 323(e).
`(E)(i) Not later than 180 days after the publication of the new ASHRAE 117
test procedure, if the ASHRAE 117 test procedure for commercial refrigerators,
freezers, and refrigerator-freezers is amended, the Secretary shall, by rule,
amend the test procedure for the product as necessary to be consistent with
the amended ASHRAE 117 test procedure unless the Secretary makes a determination,
by rule, and supported by clear and convincing evidence, that to do so would
not meet the requirements for test procedures described in paragraphs (2)
and (3).
`(ii) If the Secretary needs more than 180 days to review and adopt the amended
test procedure or rating procedure, the Secretary shall publish a notice in
the Federal Register stating the intent of the Secretary to take up to an
additional 1 year before the amended test procedure or rating procedure would
become effective.
`(F)(i) If another test procedure besides ASHRAE 117 is approved by the American
National Standards Institute, the Secretary shall, by rule--
`(I) review the relative strengths and weaknesses of the new test procedure
relative to ASHRAE 117; and
`(II) based on that review, adopt 1 of those test procedures for subsequent
use in the standards program.
`(ii) If a new test procedure is adopted--
`(I) section 323(e) shall apply; and
`(II) subparagraph (B) shall apply to the adopted test procedure.'; and
(2) in subsection (d)(1), by striking `and unfired hot water storage tanks,'
and inserting: `unfired hot water storage tanks, and commercial refrigerators,
freezers, and refrigerator-freezers,'.
(d) Labeling- Section 344(e) of the Energy Policy and Conservation Act (42
U.S.C. 6315(e)), as amended by section 203(d), is amended by striking `and
unfired hot water storage tanks' each place it appears and inserting `unfired
hot water storage tanks, and commercial refrigerators, freezers, and refrigerator-freezers'.
(e) Administration, Penalties, Enforcement, and Preemption- Section 345 of
the Energy Policy and Conservation Act (42 U.S.C. 6316), as amended by section
203(e), is amended by adding at the end the following:
`(e)(1)(A) The provisions of subsections (a), (b), and (d) of section 326,
subsections (m) through (s) of section 325, and sections 328 through 336 shall
apply with respect to equipment specified in section 340(1)(G) to the same
extent and in the same manner as those provisions apply under part B.
`(B) In applying those provisions to that equipment, paragraphs (1), (2),
(3), and (4) of subsection (a) shall apply.
`(2)(A)(i) The provisions of section 327 shall apply with respect to the equipment
specified in section 340(1)(G) that have standards established under section
342(c)(2) to the same extent and in the same manner as those provisions apply
under part B on the date of enactment of this subsection, except that any
State or local standard prescribed or enacted before the date of enactment
of this subsection shall not be preempted until the standards established
under section 342(c) take effect.
`(ii) In applying those provisions to that equipment, paragraphs (1), (2),
and (3) of subsection (a) shall apply.
`(B) Notwithstanding subparagraph (A), if the California Energy Commission
adopts, not later than March 31, 2005, a regulation concerning the energy
efficiency or energy use of the equipment specified in section 340(1)(G) that
have standards established under section 342(c)(2), those standards shall
be effective until, and shall no longer be effective after, the standards
established under section 342(c)(2) take effect on January 1, 2010.
`(3)(A) The provisions of section 327 shall apply with respect to the equipment
specified in 340(1)(G) that have standards established under section 342(c)(3)
to the same extent and in the same manner as they apply under part B on the
date of publication of the final rule by the Secretary, except that any State
or local standard prescribed or enacted before the date of publication of
the final rule by the Secretary shall not be preempted until the standards
take effect.
`(B) In applying those provisions for the purpose of that equipment, paragraphs
(1), (2), and (3) of subsection (a) shall apply.
`(4) If the Secretary does not issue a final rule for a specific type of equipment
specified in section 340(1)(G) within the time frame specified in section
342(c)(3), the provisions of subsections (b) and (c) of section 327 shall
no longer apply to that specific type of equipment beginning on the date that
is 2 years after the scheduled date for a final rule and until the Secretary
publishes a final rule covering the specific type of equipment, at which time
those provisions shall apply to the specific type of equipment.
`(5)(A) In the case of any commercial refrigerator, freezer, and refrigerator-freezer
to which standards are applicable under section 342(c)(2), the Secretary shall
require manufacturers to certify, through an independent testing or certification
program nationally recognized in the United States, that the commercial refrigerator,
freezer, and refrigerator-freezer meets the applicable standard.
`(B) The Secretary shall, to the maximum extent practicable, encourage the
establishment of at least 2 such independent testing and certification programs.
`(C) As part of certification, information on equipment energy use and interior
volume shall be made available to the Secretary.'.
TITLE III--ENERGY EFFICIENT FEDERAL PROGRAMS
SEC. 301. PROCUREMENT OF ENERGY EFFICIENT PRODUCTS.
(a) Requirements- Part 3 of title V of the National Energy Conservation Policy
Act is amended--
(1) by redesignating section 551 (42 U.S.C. 8259) as section 552; and
(2) by inserting after section 550 (42 U.S.C. 8258b) the following:
`SEC. 551. FEDERAL PROCUREMENT OF ENERGY EFFICIENT PRODUCTS.
`(a) Definitions- In this section:
`(1) The term `Energy Star product' means a product that is rated for energy
efficiency under an Energy Star program.
`(2) The term `Energy Star program' means the Energy Star program of the
Environmental Protection Agency.
`(3) The term `executive agency' has the meaning given the term in section
4 of the Office of Federal Procurement Policy Act (41 U.S.C. 403).
`(4) The term `FEMP designated product' means a product that is designated
under the Federal Energy Management Program of the Department of Energy
as being among the highest 25 percent of equivalent products for energy
efficiency.
`(b) Procurement of Energy Efficient Products- (1) Except as provided in paragraph
(2), to meet the requirements of an executive agency for an energy consuming
product, the head of the executive agency shall procure--
`(A) an Energy Star product; or
`(B) a FEMP designated product.
`(2) The head of an executive agency shall not be required to comply with
paragraph (1) if the head of the executive agency specifies in writing that--
`(A) taking into account energy cost savings, an Energy Star product or
FEMP designated product is not cost-effective over the life of the product;
or
`(B) no Energy Star product or FEMP designated product is reasonably available
that meets the functional requirements of the executive agency.
`(3) The head of an executive agency shall incorporate criteria for energy
efficiency that are consistent with the criteria used for rating Energy Star
products and FEMP designated products into--
`(A) the specifications for any procurements involving energy consuming
products and systems, including--
`(i) guide specifications;
`(ii) project specifications; and
`(iii) construction, renovation, and services contracts that include the
provision of energy consuming products and systems; and
`(B) the factors for the evaluation of offers received for the procurement.
`(c) Listing of Energy Efficient Products in Federal Catalogs- (1) Any inventory
or listing of products by the General Services Administration or the Defense
Logistics Agency shall clearly identify and prominently display Energy Star
products and FEMP designated products.
`(2)(A) Except as provided in subparagraph (B), the General Services Administration
or the Defense Logistics Agency shall supply only Energy Star products or
FEMP designated products for all product categories covered by the Energy
Star program or the Federal Energy Management Program.
`(B) Subparagraph (A) shall not apply if an agency ordering a product specifies
in writing that--
`(i) taking into account energy cost savings, no Energy Star product or
FEMP designated product is cost-effective for the intended application over
the life of the product; or
`(ii) no Energy Star product or FEMP designated product is available to
meet the functional requirements of the ordering agency.
`(d) Specific Products- (1) In the case of an electric motor of 1 to 500 horsepower,
an executive agency shall select only a premium efficient motor that meets
the standard established by the Secretary under paragraph (2).
`(2) Not later than 120 days after the date of enactment of this subsection
and after considering the recommendations of associated electric motor manufacturers
and energy efficiency groups, the Secretary shall establish a standard for
premium efficient motors.
`(3)(A) Each Federal agency is encouraged to take actions (such as appropriate
cleaning and maintenance) to maximize the efficiency of air conditioning and
refrigeration equipment, including the use of a system treatment or additive
that--
`(i) would reduce the electricity consumed by air conditioning and refrigeration
equipment; and
`(ii) meets the criteria specified in subparagraph (B).
`(B) A system treatment or additive referred to in subparagraph (A) shall
be--
`(i) determined by the Secretary to be effective in increasing the efficiency
of air conditioning and refrigeration equipment without having an adverse
impact on--
`(I) air conditioning and refrigeration performance (including cooling
capacity); or
`(II) the useful life of the equipment;
`(ii) determined by the Administrator of the Environmental Protection Agency
to be environmentally safe; and
`(iii) shown, in tests conducted by the National Institute of Standards
and Technology, in accordance with Department of Energy test procedures,
to increase the seasonal energy efficiency ratio (SEER) or energy efficiency
ratio (EER) without having any adverse impact on the system, system components,
the refrigerant or lubricant, or other materials in the system.
`(4) The results of the tests described in paragraph (3)(B)(iii) shall be
published in the Federal Register for public review and comment.
`(5) For purposes of this subsection, a hardware device or primary refrigerant
shall not be considered an additive.
`(e) Regulations- Not later than 180 days after the date of enactment of this
section, the Secretary shall issue guidelines to carry out this section.'.
(b) Conforming Amendment- The table of contents of the National Energy Conservation
Policy Act is amended--
(1) by redesignating the item relating to section 551 as section 552; and
(2) by inserting after the item relating to section 550 the following:
`551. Federal procurement of energy efficient products.'.
SEC. 302. ENERGY SAVINGS PERFORMANCE CONTRACTS.
(a) Permanent Extension- Effective September 30, 2005, section 801 of the
National Energy Conservation Policy Act (42 U.S.C. 8287) is amended by striking
subsection (c).
(b) Payment of Costs- Section 802 of the National Energy Conservation Policy
Act (42 U.S.C. 8287a) is amended by inserting `, water, or wastewater treatment'
after `payment of energy'.
(c) Energy Savings- Section 804 of the National Energy Conservation Policy
Act (42 U.S.C. 8287c) is amended by striking paragraph (2) and inserting the
following:
`(2) The term `energy savings' means a reduction in the cost of energy,
water, or wastewater treatment, from a base cost established through a methodology
set forth in the contract, used in 1 or more existing federally owned buildings
or other federally owned facilities as a result of--
`(A) the lease or purchase of operating equipment, improvements, altered
operation and maintenance, or technical services;
`(B) the increased efficient use of existing energy sources by cogeneration
or heat recovery, excluding any cogeneration process for other than a
federally owned building or buildings or other federally owned facilities;
or
`(C) the increased efficient use of existing water sources in interior
or exterior applications.'.
(d) Energy Savings Contract- Section 804 of the National Energy Conservation
Policy Act (42 U.S.C. 8287c) is amended by striking paragraph (3) and inserting
the following:
`(3)(A) The terms `energy savings contract' and `energy savings performance
contract' mean a contract that provides for the performance of services
for the design, acquisition, installation, testing, and, as appropriate,
operation, maintenance, and repair, of an identified energy or water conservation
measure or series of measures at 1 or more locations.
`(B) With respect to an agency facility that is a public building (as defined
in section 3301 of title 40, United States Code), a contract described in
subparagraph (A) shall be in compliance with the prospectus requirements
and procedures of section 3307 of title 40, United States Code.'.
(e) Energy or Water Conservation Measure- Section 804(4) of the National Energy
Conservation Policy Act (42 U.S.C. 8287c(4)) is amended to read as follows:
`(4) The term `energy or water conservation measure' means--
`(A) an energy conservation measure (as defined in section 551); or
`(B) a water conservation measure at a non-Federal hydroelectric facility
that--
`(i) improves the efficiency of water use;
`(ii) is life-cycle cost-effective; and
`(I) water conservation, recycling, or reuse;
`(II) more efficient treatment of wastewater or stormwater;
`(III) improvements in operation or maintenance efficiencies;
`(IV) retrofit activities; or
`(V) other related activities.'.
(1) IN GENERAL- Not later than 180 days after the date of enactment of this
Act, the Secretary of Energy shall complete a review of the energy savings
performance contract program carried out under title VIII of the National
Energy Conservation Policy Act (42 U.S.C. 8287 et seq.) to identify--
(A) statutory, regulatory, and administrative obstacles that prevent Federal
agencies from fully using the program; and
(B) any areas for increasing program flexibility and effectiveness, including--
(i) audit and measurement verification requirements;
(ii) accounting for energy use in determining savings;
(iii) contracting requirements, including the identification of additional
qualified contractors; and
(iv) energy efficiency services covered.
(2) REPORT- The Secretary shall--
(A) submit to Congress a report that describes the findings of the Secretary
under paragraph (1); and
(B) to the extent that the changes are consistent with statutory authority,
implement the identified administrative and regulatory changes to increase
program flexibility and effectiveness.
(g) Extension of Authority- Any energy savings performance contract entered
into under section 801 of the National Energy Conservation Policy Act (42
U.S.C. 8287) after October 1, 2004, and before the date of enactment of this
Act, shall be deemed to have been entered into under that section.
SEC. 303. FEDERAL BUILDING PERFORMANCE STANDARDS.
Section 305(a) of the Energy Conservation and Production Act (42 U.S.C. 6834(a))
is amended--
(1) in paragraph (2)(A), by striking `CABO Model Energy Code, 1992' and
inserting `the 2003 International Energy Conservation Code, as such Code
(including supplements) is in effect on the date of the enactment of the
Efficient Energy Through Certified Technologies and Electricity Reliability
(EFFECTER) Act of 2005'; and
(2) by adding at the end the following:
`(3)(A) Not later than 1 year after the date of enactment of this paragraph,
there shall be establish, by rule, revised Federal building energy efficiency
performance standards that require that--
`(i) if life-cycle cost-effective for new Federal buildings--
`(I) the buildings be designed to achieve energy consumption levels that
are at least 30 percent below the levels established in the version of
the ASHRAE Standard or the International Energy Conservation Code, as
appropriate, that is in effect as of the date of enactment of this paragraph;
and
`(II) sustainable design principles are applied to the siting, design,
and construction of all new and replacement buildings; and
`(ii) if water is used to achieve energy efficiency, water conservation
technologies shall be applied to the extent that the technologies are life-cycle
cost-effective.
`(B) Not later than 1 year after the date of approval of each subsequent revision
of the ASHRAE Standard or the International Energy Conservation Code, as appropriate,
the Secretary shall determine, based on the cost-effectiveness of the requirements
under the amendment, whether the revised standards established under this
paragraph should be updated to reflect the amendment.
`(C) In the budget request of the Federal agency for each fiscal year and
each report submitted by the Federal agency under section 548(a) of the National
Energy Conservation Policy Act (42 U.S.C. 8258(a)), the head of each Federal
agency shall include--
`(i) a list of all new Federal buildings owned, operated, or controlled
by the Federal agency; and
`(ii) a statement specifying whether the Federal buildings meet or exceed
the revised standards established under this paragraph.'.
TITLE IV--PUBLIC HOUSING
SEC. 401. PUBLIC HOUSING CAPITAL FUND.
Section 9 of the United States Housing Act of 1937 (42 U.S.C. 1437g) is amended--
(1) in subsection (d)(1)--
(A) in subparagraph (I), by striking `and' at the end;
(B) in subparagraph (J), by striking the period at the end and inserting
a semicolon; and
(C) by adding at the end the following new subparagraphs:
`(K) improvement of energy and water-use efficiency by installing fixtures
and fittings that conform to the American Society of Mechanical Engineers/American
National Standards Institute standards A112.19.2-1998 and A112.18.1-2000,
or any revision thereto, applicable at the time of installation, and by
increasing energy efficiency and water conservation by such other means
as the Secretary determines are appropriate; and
`(L) integrated utility management and capital planning to maximize energy
conservation and efficiency measures.'; and
(2) in subsection (e)(2)(C)--
(A) by striking `The' and inserting the following:
`(i) IN GENERAL- The'; and
(B) by adding at the end the following:
`(ii) THIRD-PARTY CONTRACTS- Contracts described in clause (i) may include
contracts for equipment conversions to less costly utility sources,
projects with resident-paid utilities, and adjustments to frozen base
year consumption, including systems repaired to meet applicable building
and safety codes and adjustments for occupancy rates increased by rehabilitation.
`(iii) TERM OF CONTRACT- The total term of a contract described in clause
(i) shall not exceed 20 years to allow longer payback periods for retrofits,
including windows, heating system replacements, wall insulation, site-based
generation, advanced energy savings technologies, including renewable
energy generation, and other such retrofits.'.
SEC. 402. GRANTS FOR ENERGY-CONSERVING IMPROVEMENTS FOR ASSISTED HOUSING.
Section 251(b)(1) of the National Energy Conservation Policy Act (42 U.S.C.
8231(1)) is amended--
(1) by striking `financed with loans' and inserting `assisted';
(2) by inserting after `1959,' the following: `which are eligible multifamily
housing projects (as such term is defined in section 512 of the Multifamily
Assisted Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f note))
and are subject to mortgage restructuring and rental assistance sufficiency
plans under such Act,'; and
(3) by inserting after the period at the end of the first sentence the following
new sentence: `Such improvements may also include the installation of energy
and water conserving fixtures and fittings that conform to the American
Society of Mechanical Engineers/American National Standards Institute standards
A112.19.2-1998 and A112.18.1-2000, or any revision thereto, applicable at
the time of installation.'.
SEC. 403. ENERGY-EFFICIENT APPLIANCES.
In purchasing appliances, a public housing agency shall purchase energy-efficient
appliances that are Energy Star products or FEMP-designated products, as such
terms are defined in section 553 of the National Energy Conservation Policy
Act (as amended by this subtitle), unless the purchase of energy-efficient
appliances is not cost-effective to the agency.
SEC. 404. ENERGY EFFICIENCY STANDARDS.
Section 109 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.
12709) is amended--
(i) by striking `1 year after the date of the enactment of the Energy
Policy Act of 1992' and inserting `September 30, 2005';
(ii) in subparagraph (A), by striking `and' at the end;
(iii) in subparagraph (B), by striking the period at the end and inserting
`; and'; and
(iv) by adding at the end the following:
`(C) rehabilitation and new construction of public and assisted housing
funded by HOPE VI revitalization grants under section 24 of the United
States Housing Act of 1937 (42 U.S.C. 1437v), where such standards are
determined to be cost effective by the Secretary of Housing and Urban
Development.'; and
(B) in paragraph (2), by striking `Council of American' and all that follows
through `90.1-1989')' and inserting `2003 International Energy Conservation
Code, as such Code (including supplements) is in effect on the date of
the enactment of the Efficient Energy Through Certified Technologies and
Electricity Reliability (EFFECTER) Act of 2005';
(A) by striking `within 1 year after the date of the enactment of the
Energy Policy Act of 1992' and inserting `by September 30, 2005'; and
(B) by striking `CABO' and all that follows through `1989' and inserting
`2003 International Energy Conservation Code, as such Code (including
supplements) is in effect on the date of the enactment of the Efficient
Energy Through Certified Technologies and Electricity Reliability (EFFECTER)
Act of 2005'; and
(A) in the heading, by striking `Model Energy Code' and inserting `The
International Energy Conservation Code'; and
(B) by striking `CABO' and all that follows through `1989' and inserting
`the 2003 International Energy Conservation Code, as such Code (including
supplements) is in effect on the date of the enactment of the Efficient
Energy Through Certified Technologies and Electricity Reliability (EFFECTER)
Act of 2005'.
TITLE V--RELIABILITY STANDARDS
SEC. 501. ELECTRIC RELIABILITY STANDARDS.
(a) In General- Part II of the Federal Power Act (16 U.S.C 824 et seq.) is
amended by adding at the end the following:
`SEC. 215. ELECTRIC RELIABILITY.
`(a) Definitions- In this section:
`(1)(A) The term `bulk-power system' means--
`(i) facilities and control systems necessary for operating an interconnected
electric energy transmission network (or any portion thereof); and
`(ii) electric energy from generation facilities needed to maintain transmission
system reliability.
`(B) The term `bulk-power system' does not include facilities used in the
local distribution of electric energy.
`(2) The terms `Electric Reliability Organization' and `ERO' mean the organization
certified by the Commission under subsection (c) the purpose of which is
to establish and enforce reliability standards for the bulk-power system,
subject to Commission review.
`(3) The term `interconnection' means a geographic area in which the operation
of bulk-power system components is synchronized such that the failure of
1 or more of such components may adversely affect the ability of the operators
of other components within the system to maintain reliable operation of
the facilities within their control.
`(4) The term `regional entity' means an entity having enforcement authority
pursuant to subsection (e)(4).
`(5)(A) The term `reliability standard' means a requirement, approved by
the Commission under this section, to provide for reliable operation of
the bulk-power system.
`(B) The term `reliability standard' includes requirements for the operation
of existing bulk-power system facilities and the design of planned additions
or modifications to those facilities to the extent necessary to provide
for reliable operation of the bulk-power system.
`(C) The term `reliability standard' does not include any requirement to
enlarge a facility described in subparagraph (B) or to construct new transmission
capacity or generation capacity.
`(6) The term `reliable operation' means operating the elements of the bulk-power
system within equipment and electric system thermal, voltage, and stability
limits so that instability, uncontrolled separation, or cascading failures
of such system will not occur as a result of a sudden disturbance or unanticipated
failure of system elements.
`(7) The term `transmission organization' means a regional transmission
organization, independent system operator, independent transmission provider,
or other transmission organization finally approved by the Commission for
the operation of transmission facilities.
`(b) Jurisdiction and Applicability- (1)(A) The Commission shall have jurisdiction,
within the United States, over the ERO certified by the Commission under subsection
(c), any regional entities, and all users, owners and operators of the bulk-power
system, including the entities described in section 201(f), for purposes of
approving reliability standards established under this section and enforcing
compliance with this section.
`(B) All users, owners, and operators of the bulk-power system shall comply
with reliability standards that take effect under this section.
`(2) Not later than 180 days after the date of enactment of this section,
the Commission shall issue a final rule to implement this section.
`(c) Certification- (1) Following the issuance of a Commission rule under
subsection (b)(2), any person may submit an application to the Commission
for certification as the Electric Reliability Organization.
`(2) The Commission may certify an ERO described in paragraph (1) if the Commission
determines that the ERO--
`(A) has the ability to develop and enforce, subject to subsection (e)(2),
reliability standards that provide for an adequate level of reliability
of the bulk-power system; and
`(B) has established rules that--
`(i) ensure the independence of the ERO from the users and owners and
operators of the bulk-power system, while ensuring fair stakeholder representation
in the selection of directors of the ERO and balanced decisionmaking in
any ERO committee or subordinate organizational structure;
`(ii) allocate equitably reasonable dues, fees, and other charges among
end users for all activities under this section;
`(iii) provide fair and impartial procedures for enforcement of reliability
standards through the imposition of penalties in accordance with subsection
(e) (including limitations on activities, functions, or operations, or
other appropriate sanctions);
`(iv) provide for reasonable notice and opportunity for public comment,
due process, openness, and balance of interests in developing reliability
standards and otherwise exercising the duties of the ERO; and
`(v) provide for taking, after certification, appropriate steps to gain
recognition in Canada and Mexico.
`(d) Reliability Standards- (1) The Electric Reliability Organization shall
file each reliability standard or modification to a reliability standard that
the Electric Reliability Organization proposes to be made effective under
this section with the Commission.
`(2)(A) The Commission may approve, by rule or order, a proposed reliability
standard or modification to a reliability standard if the Commission determines
that the standard is just, reasonable, not unduly discriminatory or preferential,
and in the public interest.
`(i) shall give due weight to the technical expertise of the Electric Reliability
Organization with respect to the content of a proposed standard or modification
to a reliability standard and to the technical expertise of a regional entity
organized on an interconnection-wide basis with respect to a reliability
standard to be applicable within that interconnection; but
`(ii) shall not defer with respect to the effect of a standard on competition.
`(C) A proposed standard or modification shall take effect upon approval by
the Commission.
`(3) The Electric Reliability Organization shall rebuttably presume that a
proposal from a regional entity organized on an interconnection-wide basis
for a reliability standard or modification to a reliability standard to be
applicable on an interconnection-wide basis is just, reasonable, and not unduly
discriminatory or preferential, and in the public interest.
`(4) The Commission shall remand to the Electric Reliability Organization
for further consideration a proposed reliability standard or a modification
to a reliability standard that the Commission disapproves in whole or in part.
`(5) The Commission, upon a motion of the Commission or upon complaint, may
order the Electric Reliability Organization to submit to the Commission a
proposed reliability standard or a modification to a reliability standard
that addresses a specific matter if the Commission considers such a new or
modified reliability standard appropriate to carry out this section.
`(6)(A) The final rule adopted under subsection (b)(2) shall include fair
processes for the identification and timely resolution of any conflict between
a reliability standard and any function, rule, order, tariff, rate schedule,
or agreement accepted, approved, or ordered by the Commission applicable to
a transmission organization.
`(B) The transmission organization shall continue to comply with such function,
rule, order, tariff, rate schedule, or agreement as is accepted, approved,
or ordered by the Commission until--
`(i) the Commission finds a conflict exists between a reliability standard
and any such provision;
`(ii) the Commission orders a change to the provision pursuant to section
206; and
`(iii) the ordered change becomes effective under this part.
`(C) If the Commission determines that a reliability standard needs to be
changed as a result of such a conflict, the Commission shall order the ERO
to develop and file with the Commission a modified reliability standard under
paragraph (4) or (5).
`(e) Enforcement- (1) Subject to paragraph (2), the ERO may impose a penalty
on a user or owner or operator of the bulk-power system for a violation of
a reliability standard approved by the Commission under subsection (d) if
the ERO, after notice and an opportunity for a hearing--
`(A) finds that the user or owner or operator has violated a reliability
standard approved by the Commission under subsection (d); and
`(B) files notice and the record of the proceeding with the Commission.
`(2)(A) A penalty imposed under paragraph (1) may take effect not earlier
than the 31st day after the date on which the ERO files with the Commission
notice of the penalty and the record of proceedings.
`(B) The penalty shall be subject to review by the Commission upon--
`(i) a motion by the Commission; or
`(ii) application by the user, owner, or operator that is the subject of
the penalty filed not later than 30 days after the date on which the notice
is filed with the Commission.
`(C) Application to the Commission for review, or the initiation of review
by the Commission upon a motion of the Commission, shall not operate as a
stay of the penalty unless the Commission orders otherwise upon a motion of
the Commission or upon application by the user, owner, or operator that is
the subject of the penalty.
`(D) In any proceeding to review a penalty imposed under paragraph (1), the
Commission, after notice and opportunity for hearing (which hearing may consist
solely of the record before the ERO and opportunity for the presentation of
supporting reasons to affirm, modify, or set aside the penalty), shall by
order affirm, set aside, reinstate, or modify the penalty, and, if appropriate,
remand to the ERO for further proceedings.
`(E) The Commission shall implement expedited procedures for hearings described
in subparagraph (D).
`(3) Upon a motion of the Commission or upon complaint, the Commission may
order compliance with a reliability standard and may impose a penalty against
a user or owner or operator of the bulk-power system if the Commission finds,
after notice and opportunity for a hearing, that the user or owner or operator
of the bulk-power system has engaged or is about to engage in any act or practice
that constitutes or will constitute a violation of a reliability standard.
`(4)(A) The Commission shall issue regulations authorizing the ERO to enter
into an agreement to delegate authority to a regional entity for the purpose
of proposing reliability standards to the ERO and enforcing reliability standards
under paragraph (1) if--
`(i) the regional entity is governed by an independent board, a balanced
stakeholder board, or a combination of an independent and balanced stakeholder
board;
`(ii) the regional entity otherwise meets the requirements of paragraphs
(1) and (2) of subsection (c); and
`(iii) the agreement promotes effective and efficient administration of
bulk-power system reliability.
`(B) The Commission may modify a delegation under this paragraph.
`(C) The ERO and the Commission shall rebuttably presume that a proposal for
delegation to a regional entity organized on an interconnection-wide basis
promotes effective and efficient administration of bulk-power system reliability
and should be approved.
`(D) The regulations issued under this paragraph may provide that the Commission
may assign the authority of the ERO to enforce reliability standards under
paragraph (1) directly to a regional entity in accordance with this paragraph.
`(5) The Commission may take such action as the Commission determines to be
appropriate against the ERO or a regional entity to ensure compliance with
a reliability standard or any Commission order affecting the ERO or a regional
entity.
`(6) Any penalty imposed under this section shall bear a reasonable relation
to the seriousness of the violation and shall take into consideration the
efforts of the user, owner, or operator to remedy the violation in a timely
manner.
`(f) Changes in Electric Reliability Organization Rules- (1) The Electric
Reliability Organization shall file with the Commission for approval any proposed
rule or proposed rule change, accompanied by an explanation of the basis and
purpose of the rule and proposed rule change.
`(2) The Commission, upon a motion of the Commission or upon complaint, may
propose a change to the rules of the ERO.
`(3) A proposed rule or proposed rule change shall take effect upon a finding
by the Commission, after notice and opportunity for comment, that the change
is just, reasonable, not unduly discriminatory or preferential, is in the
public interest, and meets the requirements of subsection (c).
`(g) Reliability Reports- The ERO shall conduct periodic assessments of the
reliability and adequacy of the bulk-power system in North America.
`(h) Coordination With Canada and Mexico- The President is urged to negotiate
international agreements with the governments of Canada and Mexico to provide
for effective compliance with reliability standards and the effectiveness
of the ERO in the United States and Canada or Mexico.
`(i) Savings Provisions- (1) The ERO may develop and enforce compliance with
reliability standards for only the bulk-power system.
`(2) Nothing in this section authorizes the ERO or the Commission to order
the construction of additional generation or transmission capacity or to set
and enforce compliance with standards for adequacy or safety of electric facilities
or services.
`(3) Nothing in this section preempts any authority of any State to take action
to ensure the safety, adequacy, and reliability of electric service within
that State, as long as such action is not inconsistent with any reliability
standard.
`(4) Not later than 90 days after the date of application of the Electric
Reliability Organization or other affected party, and after notice and opportunity
for comment, the Commission shall issue a final order determining whether
a State action is inconsistent with a reliability standard, taking into consideration
any recommendation of the ERO.
`(5) The Commission, after consultation with the ERO and the State taking
action, may stay the effectiveness of any State action, pending the issuance
by the Commission of a final order.
`(j) Regional Advisory Bodies- (1) The Commission shall establish a regional
advisory body on the petition of at least 2/3 of the States within a region
that have more than 1/2 of the electric load of the States served within the
region.
`(2) A regional advisory body--
`(A) shall be composed of 1 member from each participating State in the
region, appointed by the Governor of the State; and
`(B) may include representatives of agencies, States, and provinces outside
the United States.
`(3) A regional advisory body may provide advice to the Electric Reliability
Organization, a regional entity, or the Commission regarding--
`(A) the governance of an existing or proposed regional entity within the
same region;
`(B) whether a standard proposed to apply within the region is just, reasonable,
not unduly discriminatory or preferential, and in the public interest;
`(C) whether fees proposed to be assessed within the region are just, reasonable,
not unduly discriminatory or preferential, and in the public interest; and
`(D) any other responsibilities requested by the Commission.
`(4) The Commission may give deference to the advice of a regional advisory
body if that body is organized on an interconnection-wide basis.
`(k) Alaska and Hawaii- This section does not apply to Alaska or Hawaii.'.
(b) Status of ERO- The Electric Reliability Organization certified by the
Federal Energy Regulatory Commission under section 215(c) of the Federal Power
Act (as added by subsection (a)) and any regional entity delegated enforcement
authority pursuant to section 215(e)(4) of that Act (as so added) are not
departments, agencies, or instrumentalities of the United States Government.
END
