,,ii #aacth ,,congress #b;d ,session ,s4 #bahi ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,april #a1 #bjad,mr4 ,cardin 7for himself1 ,mrs4 ,feinstein1 and ,mr4 ,schatz7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to improve and extend the deduction for new and existing energy-efficient commercial buildings1 and for other purposes4 #a4 ,short title2 amendment of #aihf ,code2 table of contents 7a7 ,short title ,this ,act may be cited as the ,energy ,efficiency ,tax ,incentives ,act4 7b7 ,amendment of #aihf ,code ,except as otherwise expressly provided1 whenever in this ,act an amendment or repeal is expressed in terms of an amendment to1 or repeal of1 a section or other provision1 the reference shall be considered to be made to a section or other provision of the ,internal ,revenue ,code of #aihf4 7c7 ,table of contents ,the table of contents of this ,act is as follows3 ,sec4 #a4 ,short title2 amendment of #aihf ,code2 table of contents4,,title ,i--,commercial ,building ,modernization,sec4 #aja4 ,extension and modification of deduction for energy-efficient commercial buildings4,sec4 #ajb4 ,deduction for retrofits of existing commercial and multifamily buildings4,,title ,,ii--,home energy improvements,sec4 #bja4 ,performance based home energy improvements4,,title ,,iii--,industrial ,energy and ,water ,efficiency,sec4 #cja4 ,modifications in credit for combined heat and power system property4,sec4 #cjb4 ,investment tax credit for biomass heating property4,sec4 #cjc4 ,investment tax credit for waste heat to power property4,sec4 #cjd4 ,motor energy efficiency improvement tax credit4,sec4 #cje4 ,credit for replacement of ,,cfc refrigerant chiller4,sec4 #cjf4 ,qualifying efficient industrial process water use project credit4 ,i ,commercial ,building ,modernization #aja4 ,extension and modification of deduction for energy-efficient commercial buildings 7a7 ,extension 7#a7 ,through #bjaf ,section #agi;,d7h7 is amended by striking ,december #ca1 #bjac and inserting ,december #ca1 #bjaf4 7#b7 ,inclusion of multifamily buildings 7,a7 ,in general ,subparagraph 7,b7 of section #agi;,d7c77#a7 is amended by striking building and inserting commercial building or multifamily building4 7,b7 ,definitions ,subsection 7c7 of section #agi;,d is amended by adding at the end the following new paragraphs3 7#c7 ,commercial building ,the term commercial building means a building with a primary use or purpose other than as residential housing4 7#d7 ,multifamily building ,the term multifamily building means a structure of #e or more dwelling units with a primary use as residential housing1 and includes such buildings owned and operated as a condominium1 cooperative1 or other common interest community4 4 7b7 ,increase in maximum amount of deduction 7#a7 ,in general ,subparagraph 7,a7 of section #agi;,d7b77#a7 is amended by striking #a4hj and inserting #c4jj4 7#b7 ,partial allowance ,paragraph 7#a7 of section #agi;,d7d7 is amended to read as follows3 7#a7 ,partial allowance 7,a7 ,in general ,except as provided in subsection 7f71 if-- 7i7 the requirement of subsection 7c77#a77;,d7 is not met1 but 7ii7 there is a certification in accordance with paragraph 7#f7 that-- 7,i7 any system referred to in subsection 7c77#a77;,c7 satisfies the energy-savings targets established by the ,secretary under subparagraph 7,b7 with respect to such system1 or 7,,ii7 the systems referred to in subsection 7c77#a77;,c77ii7 and subsection 7c77#a77;,c77iii7 together satisfy the energy-savings targets established by the ,secretary under subparagraph 7,b7 with respect to such systems1 then the requirement of subsection 7c77#a77;,d7 shall be treated as met with respect to such system or systems1 and the deduction under subsection 7a7 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 targets1 except that subsection 7b7 shall be applied to such property described in clause 7ii77,i7 by substituting #a4jj for #c4jj and to such property described in clause 7ii77,,ii7 by substituting #b4bj for #c4jj4 7,b7 ,regulations 7i7 ,in general ,the ,secretary1 after consultation with the ,secretary of ,energy1 shall promulgate regulations establishing a target for each system described in subsection 7c77#a77;,c7 which1 if such targets were met for all such systems1 the property would meet the requirements of subsection 7c77#a77;,d74 7ii7 ,safe harbor for combined systems ,the ,secretary1 after consultation with the ,secretary of ,energy1 and not later than #f months after the date of the enactment of the ,energy ,efficiency ,tax ,incentives ,act1 shall promulgate regulations regarding combined envelope and mechanical system performance that detail appropriate components1 efficiency levels1 or other relevant information for the systems referred to in subsection 7c77#a77;,c77ii7 and subsection 7c77#a77;,c77iii7 together to be deemed to have achieved two-thirds of the requirements of subsection 7c77#a77;,d74 4 7c7 ,denial of double benefit rules 7#a7 ,in general ,section #agi;,d is amended by redesignating subsection 7h7 as subsection 7i7 and by inserting after subsection 7g7 the following new subsection3 7h7 ,tax incentives not available ,energy-efficient measures for which a deduction is allowed under this section shall not be eligible for a deduction under section #agi;,f4 4 7#b7 ,low-income housing exception to basis reduction ,subsection 7e7 of section #agi;,d is amended by inserting 7other than property placed in service in a qualified low-income building 7within the meaning of section #db77 after building property4 7d7 ,allocation of deduction ,paragraph 7#d7 of section #agi;,d7d7 is amended to read as follows3 7#d7 ,allocation of deduction 7,a7 ,in general ,not later than #ahj days after the date of the enactment of this subsection1 the ,secretary1 in consultation with the ,secretary of ,energy1 shall promulgate a regulation to allow the owner of a commercial or multifamily building1 including a government1 tribal1 or non-profit owner1 to allocate any deduction allowed under this section1 or a portion thereof1 to the person primarily responsible for designing the property in lieu of the owner or to a commercial tenant that leases or otherwise occupies space in such building pursuant to a written agreement4 ,such person shall be treated as the taxpayer for purposes of this section4 7,b7 ,form of allocation ,an allocation made under this paragraph shall be in writing and in a form that meets the form of allocation requirements in ,notice #bjjh-dj of the ,internal ,revenue ,service4 7,c7 ,provision of allocation ,not later than #cj days after receipt of a written request from a person eligible to receive an allocation under this paragraph1 the owner of a building that makes an allocation under this paragraph shall provide the form of allocation 7as described in subparagraph 7,b77 to such person4 7,d7 ,allocation from public owner of building ,in the case of a commercial building or multifamily building that is owned by a ,federal1 ,state1 or local government or a subdivision thereof1 ,notice #bjjf-eb of the ,internal ,revenue ,service1 as amplified by ,notice #bjjh-dj1 shall apply to any allocation4 4 7e7 ,treatment of basis in context of allocation ,subsection 7e7 of section #agi;,d1 as amended by subsection 7c77#b71 is amended by inserting or so allocated after so allowed4 7f7 ,earnings and profits conformity for real estate investment trusts ,subparagraph 7,b7 of section #cab7k77#c7 is amended-- 7#a7 by striking 4--,for purposes of and inserting 84-- 7i7 ,in general ,except as provided in clause 7ii71 for purposes of 1 and 7#b7 by adding at the end the following new clause3 7ii7 ,earnings and profits conformity for real estate investment trusts 7,i7 ,in general ,for purposes of computing the earnings and profits of a real estate investment trust 7other than a captive real estate investment trust71 the entire amount deductible under section #agi;,d shall be allowed as deductions in the taxable years for which such amounts are claimed under such section4 7,,ii7 ,captive real estate investment trust ,the term captive real estate investment trust means a real estate investment trust the shares or beneficial interests of which are not regularly traded on an established securities market and more than #ej percent of the voting power or value of the beneficial interests or shares of which are owned or controlled1 directly or indirectly1 or constructively1 by a single entity that is treated as an association taxable as a corporation under this title and is not exempt from taxation pursuant to the provisions of section #eja7;a74 7,,iii7 ,rules of application ,for purposes of this clause1 the constructive ownership rules of section #cah7;a71 as modified by section #hef7;d77#e71 shall apply in determining the ownership of stock1 assets1 or net profits of any person1 and the following entities are not considered an association taxable as a corporation3 7aa7 ,any real estate investment trust other than a captive real estate investment trust4 7bb7 ,any qualified real estate investment trust subsidiary under section #hef1 other than a qualified ,,reit subsidiary of a captive real estate investment trust4 7cc7 ,any ,listed ,australian ,property ,trust 7meaning an ,australian unit trust registered as a ,managed ,investment ,scheme under the ,australian ,corporations ,act in which the principal class of units is listed on a recognized stock exchange in ,australia and is regularly traded on an established securities market71 or an entity organized as a trust1 provided that a ,listed ,australian ,property ,trust owns or controls1 directly or indirectly1 #ge percent or more of the voting power or value of the beneficial interests or shares of such trust4 7dd7 ,any corporation1 trust1 association1 or partnership organized outside the laws of the ,united ,states and which satisfies the criteria described in subclause 7,,iv74 7,,iv7 ,criteria ,the criteria described in this subclause are as follows3 7aa7 ,at least #ge percent of the entity's total asset value at the close of its taxable year is represented by real estate assets 7as defined in section #hef7;c77#e77;,b771 cash and cash equivalents1 and ,united ,states ,government securities4 7bb7 ,the entity is not subject to tax on amounts distributed to its beneficial owners1 or is exempt from entity-level taxation4 7cc7 ,the entity distributes at least #he percent of its taxable income 7as computed in the jurisdiction in which it is organized7 to the holders of its shares or certificates of beneficial interest on an annual basis4 7dd7 ,not more than #aj percent of the voting power or value in such entity is held directly or indirectly or constructively by a single entity or individual1 or the shares or beneficial interests of such entity are regularly traded on an established securities market4 7ee7 ,the entity is organized in a country which has a tax treaty with the ,united ,states4 4 7g7 ,rules for lighting systems ,subsection 7f7 of section #agi;,d is amended to read as follows3 7f7 ,rules for lighting systems 7#a7 ,in general ,with respect to property that is part of a lighting system1 the deduction allowed under subsection 7a7 shall be equal to-- 7,a7 for a lighting system that includes installation of a lighting control described in paragraph 7#b77;,a71 the applicable amount determined under paragraph 7#c77;,a71 7,b7 for a lighting system that includes installation of a lighting control described in paragraph 7#b77;,b71 the applicable amount determined under paragraph 7#c77;,b71 or 7,c7 for a lighting system that does not include installation of any lighting controls described in subparagraph 7,a7 or 7,b7 of paragraph 7#b71 the applicable amount determined under paragraph 7#c77;,c74 7#b7 ,energy saving controls 7,a7 ,lighting controls in certain spaces ,for purposes of paragraph 7#a77;,a71 the lighting controls described in this subparagraph are the following3 7i7 ,occupancy sensors 7as described in paragraph 7#d77;,i77 in spaces not greater than #hjj square feet4 7ii7 ,bi-level controls 7as described in paragraph 7#d77;,a774 7iii7 ,continuous or step dimming controls 7as described in subparagraphs 7,b7 and 7,k7 of paragraph 7#d774 7iv7 ,daylight dimming where sufficient daylight is available 7as described in paragraph 7#d77;,c774 7v7 ,a multi-scene controller 7as described in paragraph 7#d77;,h774 7vi7 ,time scheduling controls 7as described in paragraph 7#d77,l771 provided that such controls are not required by ,standard #ij4a-bjaj4 7vii7 ,such other lighting controls as the ,secretary1 in consultation with the ,secretary of ,energy1 determines appropriate4 7,b7 ,other control types ,for purposes of paragraph 7#a77;,b71 the lighting controls described in this subparagraph are the following3 7i7 ,occupancy sensors 7as described in paragraph 7#d77;,i77 in spaces greater than #hjj square feet4 7ii7 ,demand responsive controls 7as described in paragraph 7#d77;,d774 7iii7 ,lumen maintenance controls 7as described in paragraph 7#d77;,f77 where solid state lighting is used4 7iv7 ,such other lighting controls as the ,secretary1 in consultation with the ,secretary of ,energy1 determines appropriate4 7#c7 ,applicable amount 7,a7 ,lighting controls in certain spaces ,for purposes of paragraph 7#a77;,a71 the applicable amount shall be determined in accordance with the following table3 ,if the percentage of reduction in lighting power density is not less than3,the amount of the deduction per square foot is3#ae percent#j4cjbj percent#j4ddbe percent#j4ehcj percent#j4gbce percent#j4hfdj percent#a4jj4 7,b7 ,lighting controls in larger spaces and where solid lighting is used ,for purposes of paragraph 7#a77;,b71 the applicable amount shall be determined in accordance with the following table3 ,if the percentage of reduction in lighting power density is not less than3,the amount of the deduction per square foot is3#bj percent#j4cjbe percent#j4ddcj percent#j4ehce percent#j4gbdj percent#j4hfde percent#a4jj4 7,c7 ,no qualified lighting controls ,for purposes of paragraph 7#a77;,c71 the applicable amount shall be determined in accordance with the following table3 ,if the percentage of reduction in lighting power density is not less than3,the amount of the deduction per square foot is3#be percent#j4cjcj percent#j4ddce percent#j4ehdj percent#j4gbde percent#j4hfej percent#a4jj4 7#d7 ,definitions ,for purposes of this subsection3 7,a7 ,bi-level control 7i7 ,in general ,subject to clause 7ii71 the term bi-level control means a lighting control strategy that provides for #b different levels of lighting4 7ii7 ,full-off setting ,for purposes of clause 7i71 a bi-level control shall also provide for a full-off setting4 7,b7 ,continuous dimming ,the term continuous dimming means a lighting control strategy that adjusts the light output of a lighting system between minimum and maximum light output in a manner that is not perceptible4 7,c7 ,daylight dimming2 sufficient daylight 7i7 ,daylight dimming ,the term daylight dimming means any device that-- 7,i7 adjusts electric lighting power in response to the amount of daylight that is present in an area1 and 7,,ii7 provides for separate control of the lamps for general lighting in the daylight area by not less than #a multi-level photocontrol1 including continuous dimming devices1 that satisfies the following requirements3 7aa7 ,the light sensor for the multi-level photocontrol is remote from where calibration adjustments are made4 7bb7 ,the calibration adjustments are readily accessible4 7cc7 ,the multi-level photocontrol reduces electric lighting power in response to the amount of daylight with-- 7,,aa7 not less than #a control step that is between #ej percent and #gj percent of design lighting power1 and 7,,bb7 not less than #a control step that is not less than #ce percent of design lighting power4 7ii7 ,sufficient daylight 7,i7 ,in general ,the term sufficient daylight means-- 7aa7 in the case of toplighted areas1 when the total daylight area under skylights plus the total daylight area under rooftop monitors in an enclosed space is greater than #ijj square feet 7as defined in ,standard #ij4a-bjaj71 and 7bb7 in the case of sidelighted areas1 when the combined primary sidelight area in an enclosed space is not less than #bej square feet 7as defined in ,standard #ij4a-bjaj74 7,,ii7 ,exceptions ,sufficient daylight shall be deemed to not be available if-- 7aa7 in the case of areas described in subclause 7,i77aa7-- 7,,aa7 for daylighted areas under skylights1 it is documented that existing adjacent structures or natural objects block direct beam sunlight for more than #aejj daytime hours 7after #h a4m4 and before #d p4m41 local time7 per year1 7,,bb7 for daylighted areas1 the skylight effective aperture is less than #j4jjf1 or 7,,cc7 for buildings in climate zone #h1 as defined under ,standard #ij4a-bjaj1 the daylight areas total less than #aejj square feet in an enclosed space1 and 7bb7 in the case of primary sidelighted areas described in subclause 7,i77bb7-- 7,,aa7 the top of the existing adjacent structures are at least twice as high above the windows as the distance from the window1 or 7,,bb7 the sidelighting effective aperture is less than #j4a4 7iii7 ,daylight1 sidelighting1 and other related terms ,the terms daylight area1 daylight area under skylights1 daylight area under rooftop monitors1 daylighted area1 enclosed space1 primary sidelighted areas1 sidelighting effective aperture1 and skylight effective aperture have the same meaning given such terms under ,standard #ij4a-bjaj4 7,d7 ,demand ,responsive ,control 7i7 ,in general ,the term demand responsive control means a control device that receives and automatically responds to a demand response signal and-- 7,i7 in the case of space-conditioning systems1 conducts a centralized demand shed for non-critical zones during a demand response period and that has the capability to1 on a signal from a centralized contract or software point within an ,energy ,management ,control ,system-- 7aa7 remotely increase the operating cooling temperature set points in such zones by not less than #d degrees1 7bb7 remotely decrease the operating heating temperature set points in such zones by not less than #d degrees1 7cc7 remotely reset temperatures in such zones to originating operating levels1 and 7dd7 provide an adjustable rate of change for any temperature adjustment and reset1 and 7,,ii7 in the case of lighting power1 has the capability to reduce lighting power by not less than #cj percent during a demand response period4 7ii7 ,demand response period ,the term demand response period means a period in which short-term adjustments in electricity usage are made by end-use customers from normal electricity consumption patterns1 including adjustments in response to-- 7,i7 the price of electricity1 and 7,,ii7 participation in programs or services that are designed to modify electricity usage in response to wholesale market prices for electricity or when reliability of the electrical system is in jeopardy4 7iii7 ,demand response signal ,the term demand response signal means a signal sent to an end-use customer by a local utility1 independent system operator1 or designated curtailment service provider or aggregator that-- 7,i7 indicates an adjustment in the price of electricity1 or 7,,ii7 is a request to modify electricity consumption4 7,e7 ,lamp ,the term lamp means an artificial light source that produces optical radiation 7including ultraviolet and infrared radiation74 7,f7 ,lumen maintenance control ,the term lumen maintenance control means a lighting control strategy that maintains constant light output by adjusting lamp power to compensate for age and cleanliness of luminaires4 7,g7 ,luminaire ,the term luminaire means a complete lighting unit for the production1 control1 and distribution of light that consists of-- 7i7 not less than #a lamp1 and 7ii7 any of the following items3 7,i7 ,optical control devices designed to distribute light4 7,,ii7 ,sockets or mountings for the positioning1 protection1 and operation of the lamps4 7,,iii7 ,mechanical components for support or attachment4 7,,iv7 ,electrical and electronic components for operation and control of the lamps4 7,h7 ,multi-scene control ,the term multi-scene control means a lighting control device or system that allows for-- 7i7 not less than #b predetermined lighting settings1 7ii7 a setting that turns off all luminaires in an area1 and 7iii7 a recall of the settings described in clauses 7i7 and 7ii7 for any luminaires or groups of luminaires to adjust to multiple activities within the area4 7,i7 ,occupancy sensor ,the term occupancy sensor means a control device that-- 7i7 detects the presence or absence of individuals within an area and regulates lighting1 equipment1 or appliances according to a required sequence of operation1 7ii7 shuts off lighting when an area is unoccupied1 7iii7 except in areas designated as emergency egress and using less than #j4b watts per square foot of floor area1 provides for manual shut-off of all luminaires regardless of the status of the sensor and allows for-- 7,i7 independent control in each area enclosed by ceiling-height partitions1 7,,ii7 controls that are readily accessible1 and 7,,iii7 operation by a manual switch that is located in the same area as the lighting that is subject to the control device4 7,j7 ,standard #ij4a-bjaj ,the term ,standard #ij4a-bjaj means ,standard #ij4a-bjaj of the ,american ,society of ,heating1 ,refrigerating1 and ,air ,conditioning ,engineers and the ,illuminating ,engineering ,society of ,north ,america4 7,k7 ,step dimming ,the term step dimming means a lighting control strategy that adjusts the light output of a lighting system by #a or more predetermined amounts of greater than #a percent of full output in a manner that may be perceptible4 7,l7 ,time scheduling control ,the term time scheduling control means a control strategy that automatically controls lighting1 equipment1 or systems based on a particular time of day or other daily event 7including sunrise and sunset74 4 7h7 ,updated standards 7#a7 ,initial update 7,a7 ,in general ,section #agi;,d7c7 is amended by striking #ij4a-bjja each place it appears and inserting #ij4a-bjjd4 7,b7 ,conforming amendment ,paragraph 7#b7 of section #agi;,d7c7 is amended by striking 7as in effect on ,april #b1 #bjjc74 7#b7 ,second update 7,a7 ,in general ,section #agi;,d is amended by striking #ij4a-bjjd each place it appears in subsections 7c7 and 7f7 and inserting #ij4a-bjjg4 7,b7 ,effective date ,the amendments made by subparagraph 7,a7 shall apply to property placed in service after ,december #ca1 #bjad4 7i7 ,treatment of lighting systems ,section #agi;,d7c77#a7 is amended by striking interior each place it appears4 7j7 ,reporting program ,section #agi;,d1 as amended by subsection 7c77#a71 is amended by redesignating subsection 7i7 as subsection 7j7 and by inserting after subsection 7h7 the following new subsection3 7i7 ,reporting program ,for purposes of the report required under section #agi;,f7l71 the ,secretary1 in consultation with the ,secretary of ,energy1 shall-- 7#a7 develop a program to collect a statistically valid sample of energy consumption data from taxpayers that received full deductions under this section1 regardless of whether such taxpayers allocated all or a portion of such deduction1 and 7#b7 include such data in the report1 with such redactions as deemed necessary to protect the personally identifiable information of such taxpayers4 4 7k7 ,special rule for partnerships and ,s corporations ,section #agi;,d1 as amended by subsection 7j71 is amended by redesignating subsection 7j7 as subsection 7k7 and by inserting after subsection 7i7 the following new subsection3 7j7 ,special rule for partnerships and ,s corporations ,in the case of a partnership or ,s corporation1 this section shall be applied at the partner or shareholder level1 subject to such reporting requirements as are determined appropriate by the ,secretary4 4 7l7 ,effective date ,except as otherwise provided1 the amendments made by this section shall apply to property placed in service in taxable years beginning after the date of the enactment of this ,act4 #ajb4 ,deduction for retrofits of existing commercial and multifamily buildings 7a7 ,in general ,part ,,vi of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after section #agi;,e the following new section3 #agi;,f4 ,deduction for retrofits of existing commercial and multifamily buildings 7a7 ,allowance of deduction 7#a7 ,in general ,with respect to each certified retrofit plan1 there shall be allowed as a deduction an amount equal to the lesser of-- 7,a7 the sum of-- 7i7 the design deduction1 and 7ii7 the realized deduction1 or 7,b7 the total cost to develop and implement such certified retrofit plan4 7#b7 ,exception ,for purposes of the amount described in paragraph 7#a77;,b71 if such amount is taken as a design deduction1 no realized deduction shall be allowed4 7b7 ,deduction amounts ,for purposes of this section-- 7#a7 ,design deduction ,a design deduction shall be-- 7,a7 based on projected source energy savings as calculated in accordance with subsection 7c77#c77;,b71 7,b7 correlated to the percent of source energy savings set forth in the general scale in paragraph 7#c77;,a7 that a certified retrofit plan is projected to achieve when energy-efficient measures are placed in service1 and 7,c7 equal to #fj percent of the amount allowed under the general scale4 7#b7 ,realized deduction 7,a7 ,in general ,a realized deduction shall be-- 7i7 based on realized source energy savings as calculated in accordance with subsection 7c77#c77;,c71 7ii7 correlated to the percent of source energy savings set forth in the general scale in paragraph 7#c77;,a7 as realized by a certified retrofit plan1 and 7iii7 equal to #dj percent of the amount allowed under the general scale4 7,b7 ,adjustment of source energy savings ,the percent of source energy savings for purposes of any realized deduction may vary from such savings projected when energy-efficient measures were placed in service for purposes of a design deduction under paragraph 7#a74 7,c7 ,no recapture of design deduction ,notwithstanding the regulations prescribed under subsection 7f71 no recapture of a design deduction shall be required where the owner of the commercial or multifamily building-- 7i7 claims or allocates a design deduction when energy-efficient measures are placed into service pursuant to the terms and conditions of a certified retrofit plan1 and 7ii7 is not eligible for or does not subsequently claim or allocate a realized deduction4 7#c7 ,general scale 7,a7 ,in general ,the scale for deductions allowed under this section shall be-- 7i7 #a4jj per square foot of retrofit floor area for #bj to #bd percent source energy savings1 7ii7 #a4ej per square foot of retrofit floor area for #be to #bi percent source energy savings1 7iii7 #b4jj per square foot of retrofit floor area for #cj to #cd percent source energy savings1 7iv7 #b4ej per square foot of retrofit floor area for #ce to #ci percent source energy savings1 7v7 #c4jj per square foot of retrofit floor area for #dj to #dd percent source energy savings1 7vi7 #c4ej per square foot of retrofit floor area for #de to #di percent source energy savings1 and 7vii7 #d4jj per square foot of retrofit floor area for #ej percent or more source energy savings4 7,b7 ,historic buildings 7i7 ,in general ,with respect to energy-efficient measures placed in service as part of a certified retrofit plan in a commercial building or multifamily building on or eligible for the ,national ,register of ,historic ,places1 the respective dollar amounts set forth in the general scale under subparagraph 7,a7 shall-- 7,i7 each be increased by #bj percent1 for the purposes of calculating any applicable design deduction and realized deduction1 and 7,,ii7 not exceed the total cost to develop and implement such certified retrofit plan4 7ii7 ,exception ,if the amount described in clause 7i77,,ii7 is taken as a design deduction1 then no realized deduction shall be allowed4 7c7 ,calculation of energy savings 7#a7 ,in general ,for purposes of the design deduction and the realized deduction1 source energy savings shall be calculated with reference to a baseline of the annual source energy consumption of the commercial or multifamily building before energy-efficient measures were placed in service4 7#b7 ,baseline benchmark ,the baseline under paragraph 7#a7 shall be determined using a building energy performance benchmarking tool designated by the ,administrator of the ,environmental ,protection ,agency1 and based upon #a year of source energy consumption data prior to the date upon which the energy-efficient measures are placed in service4 7#c7 ,design and realized source energy savings 7,a7 ,in general ,in certifying a retrofit plan as a certified retrofit plan1 a licensed engineer or architect shall calculate source energy savings by utilizing the baseline benchmark defined in paragraph 7#b7 and determining percent improvements from such baseline4 7,b7 ,design deduction ,for purposes of claiming a design deduction1 the regulations issued under subsection 7f77#a7 shall prescribe the standards and process for a licensed engineer or architect to calculate and certify source energy savings projected from the design of a certified retrofit plan as of the date energy-efficient measures are placed in service4 7,c7 ,realized deduction ,for purposes of claiming a realized deduction1 a licensed engineer or architect shall calculate and certify source energy savings realized by a certified retrofit plan #b years after a design deduction is allowed by utilizing energy consumption data after energy-efficient measures are placed in service1 and adjusting for climate1 building occupancy hours1 density1 or other factors deemed appropriate in the benchmarking tool designated under paragraph 7#b74 7d7 ,certified retrofit plan and other definitions ,for purposes of this section-- 7#a7 ,certified retrofit plan ,the term certified retrofit plan means a plan that-- 7,a7 is designed to reduce the annual source energy costs of a commercial building1 or a multifamily building1 through the installation of energy-efficient measures1 7,b7 is certified under penalty of perjury by a licensed engineer or architect1 who is not a direct employee of the owner of the commercial building or multifamily building that is the subject of the plan1 and is licensed in the ,state in which such building is located1 7,c7 describes the square footage of retrofit floor area covered by such a plan1 7,d7 specifies that it is designed to achieve a final source energy usage intensity after energy-efficient measures are placed in service in a commercial building or a multifamily building that does not exceed on a square foot basis the average level of energy usage intensity of other similar buildings1 as described in paragraph 7#b71 7,e7 requires that after the energy-efficient measures are placed in service1 the commercial building or multifamily building meets the applicable ,state and local building code requirements for the area in which such building is located1 7,f7 satisfies the regulations prescribed under subsection 7f71 and 7,g7 is submitted to the ,secretary of ,energy after energy-efficient measures are placed in service1 for the purpose of informing the report to ,congress required by subsection 7l74 7#b7 ,average level of energy usage intensity 7,a7 ,in general ,the maximum average level of energy usage intensity under paragraph 7#a77;,d7 shall not exceed #cjj1jjj ,british thermal units per square foot4 7,b7 ,regulations 7i7 ,in general ,the ,secretary1 in consultation with the ,administrator of the ,environmental ,protection ,agency1 shall develop distinct standards for categories and subcategories of buildings with respect to maximum average level of energy usage intensity based on the best available information used by the ,,energy ,,star program4 7ii7 ,review ,the standards developed pursuant to clause 7i7 shall be reviewed and updated by the ,secretary1 in consultation with the ,administrator of the ,environmental ,protection ,agency1 not later than every #c years4 7#c7 ,commercial building 7,a7 ,in general ,the term commercial building means a building located in the ,united ,states-- 7i7 that is in existence and occupied on the date of the enactment of this section1 7ii7 for which a certificate of occupancy has been issued at least #aj years before energy efficiency measures are placed in service1 and 7iii7 with a primary use or purpose other than as residential housing4 7,b7 ,shopping centers ,in the case of a retail shopping center1 the term commercial building shall include an area within such building that is-- 7i7 #ej1jjj square feet or larger that is covered by a separate utility grade meter to record energy consumption in such area1 and 7ii7 under the day-to-day management and operation of-- 7,i7 the owner of such building as common space areas1 or 7,,ii7 a retail tenant1 lessee1 or other occupant4 7#d7 ,energy-efficient measures ,the term energy-efficient measures means a measure1 or combination of measures1 placed in service through a certified retrofit plan-- 7,a7 on or in a commercial building or multifamily building1 7,b7 as part of-- 7i7 the lighting systems1 7ii7 the heating1 cooling1 ventilation1 refrigeration1 or hot water systems1 7iii7 building transportation systems1 such as elevators and escalators1 7iv7 the building envelope1 which may include an energy-efficient cool roof1 7v7 a continuous commissioning contract under the supervision of a licensed engineer or architect1 or 7vi7 building operations or monitoring systems1 including utility-grade meters and submeters1 and 7,c7 including equipment1 materials1 and systems within subparagraph 7,b7 with respect to which depreciation 7or amortization in lieu of depreciation7 is allowed4 7#e7 ,energy savings ,the term energy savings means source energy usage intensity reduced on a per square foot basis through design and implementation of a certified retrofit plan4 7#f7 ,multifamily building ,the term multifamily building-- 7,a7 means-- 7i7 a structure of #e or more dwelling units located in the ,united ,states-- 7,i7 that is in existence and occupied on the date of the enactment of this section1 7,,ii7 for which a certificate of occupancy has been issued at least #aj years before energy efficiency measures are placed in service1 and 7,,iii7 with a primary use as residential housing1 and 7,b7 includes such buildings owned and operated as a condominium1 cooperative1 or other common interest community4 7#g7 ,source energy ,the term source energy means the total amount of raw fuel that is required to operate a commercial building or multifamily building1 and accounts for losses that are incurred in the generation1 storage1 transport1 and delivery of fuel to such a building4 7e7 ,timing of claiming deductions ,deductions allowed under this section may be claimed as follows3 7#a7 ,design deduction ,in the case of a design deduction1 in the taxable year that energy efficiency measures are placed in service4 7#b7 ,realized deduction ,in the case of a realized deduction1 in the second taxable year following the taxable year described in paragraph 7#a74 7f7 ,regulations 7#a7 ,in general ,not later than #ahj days after the date of the enactment of this section1 and after notice and opportunity for public comment1 the ,secretary1 in consultation with the ,secretary of ,energy and the ,administrator of the ,environmental ,protection ,agency1 shall prescribe regulations-- 7,a7 for the manner and method for a licensed engineer or architect to certify retrofit plans1 model projected energy savings1 and calculate realized energy savings1 and 7,b7 notwithstanding subsection 7b77#b77;,c71 to provide1 as appropriate1 for a recapture of the deductions allowed under this section if a retrofit plan is not fully implemented1 or a retrofit plan and energy savings are not certified or verified in accordance with regulations prescribed under this subsection4 7#b7 ,reliance on established protocols1 etc ,to the maximum extent practicable and available1 such regulations shall rely upon established protocols and documents used in the ,,energy ,,star program1 and industry best practices and existing guidelines1 such as the ,building ,energy ,modeling ,guidelines of the ,commercial ,energy ,services ,network 7,,comnet74 7#c7 ,allowance of deductions pending issuance of regulations ,pending issuance of the regulations under paragraph 7#a71 the owner of a commercial building or a multifamily building shall be allowed to claim or allocate a deduction allowed under this section4 7g7 ,notice to owner ,each certification of a retrofit plan and calculation of energy savings required under this section shall include an explanation to the owner of a commercial building or a multifamily building regarding the energy-efficient measures placed in service and their projected and realized annual energy costs4 7h7 ,allocation of deduction 7#a7 ,in general ,not later than #ahj days after the date of the enactment of this section1 the ,secretary1 in consultation with the ,secretary of ,energy1 shall promulgate a regulation to allow the owner of a commercial building or a multifamily building1 including a government1 tribal1 or non-profit owner1 to allocate any deduction allowed under this section1 or a portion thereof1 to the person primarily responsible for funding1 financing1 designing1 leasing1 operating1 or placing in service energy-efficient measures4 ,such person shall be treated as the taxpayer for purposes of this section and shall include a building tenant1 financier1 architect1 professional engineer1 licensed contractor1 energy services company1 or other building professional4 7#b7 ,form of allocation ,an allocation made under this paragraph shall be in writing and in a form that meets the form of allocation requirements in ,notice #bjjh-dj of the ,internal ,revenue ,service4 7#c7 ,provision of allocation ,not later than #cj days after receipt of a written request from a person eligible to receive an allocation under this paragraph1 the owner of a building that makes an allocation under this paragraph shall provide the form of allocation 7as described in paragraph 7#b77 to such person4 7#d7 ,allocation from public owner of building ,in the case of a commercial building or a multifamily building that is owned by a ,federal1 ,state1 or local government or a subdivision thereof1 ,notice #bjjf-eb of the ,internal ,revenue ,service1 as amplified by ,notice #bjjh-dj1 shall apply to any allocation4 7i7 ,basis reduction ,for purposes of this subtitle1 if a deduction is allowed under this section with respect to any energy-efficient measures placed in service under a certified retrofit plan other than in a qualified low-income building 7within the meaning of section #db71 the basis of such measures shall be reduced by the amount of the deduction so allowed or so allocated4 7j7 ,special ,rule for ,partnerships and ,s ,corporations ,in the case of a partnership or ,s corporation1 this section shall be applied at the partner or shareholder level1 subject to such reporting requirements as are determined appropriate by the ,secretary4 7k7 ,tax incentives not available 7#a7 ,energy efficient commercial buildings deduction ,energy-efficient measures for which a deduction is allowed under this section shall not be eligible for a deduction under section #agi;,d4 7#b7 ,new energy efficient home credit ,no deduction shall be allowed under this section with respect to any building or dwelling unit with respect to which a credit under section #de,l was allowed4 7l7 ,report to ,congress 7#a7 ,in general ,biennially1 beginning with the first year after the enactment of this section1 the ,secretary1 in conjunction with the ,secretary of ,energy1 shall submit a report to ,congress that-- 7,a7 explains the energy saved1 the energy-efficient measures implemented1 the realization of energy savings projected1 and records the amounts and types of deductions allowed under this section1 7,b7 explains the energy saved1 the energy efficient measures implemented1 and records the amount of deductions allowed under section #agi;,d1 based on the data collected pursuant to subsection 7i7 of such section1 7,c7 determines the number of jobs created as a result of the deduction allowed under this section1 7,d7 determines how the use of any deduction allowed under this section may be improved1 based on the information provided to the ,secretary of ,energy1 7,e7 provides aggregated data with respect to the information described in subparagraphs 7,a7 through 7,d71 and 7,f7 provides statutory recommendations to ,congress that would reduce energy consumption in new and existing commercial buildings located in the ,united ,states1 including recommendations on providing energy-efficient tax incentives for subsections of buildings that operate with specific utility-grade metering4 7#b7 ,protection of taxpayer information ,the ,secretary and the ,secretary of ,energy shall share information on deductions allowed under this section and related reports submitted1 as requested by each agency to fulfill its obligations under this section1 with such redactions as deemed necessary to protect the personally identifiable financial information of a taxpayer4 7#c7 ,incorporation into ,department of ,energy programs ,the ,secretary of ,energy shall1 to the maximum extent practicable1 incorporate conclusions of the report under this subsection into current ,department of ,energy building performance and energy efficiency data collection and other reporting programs4 7m7 ,termination ,this section shall not apply to any property placed in service after ,december #ca1 #bjaf4 4 7b7 ,effect on depreciation on earnings and profits ,subparagraph 7,b7 of section #cab7k77#c71 as amended by this title1 is amended-- 7#a7 by striking or #agi;,e both places it appears in clause 7i7 and inserting #agi;,e1 or #agi;,f1 7#b7 by striking or #agi;,e in the heading and inserting #agi;,e1 or #agi;,f1 and 7#c7 by inserting or #agi;,f after section #agi;,d in clause 7ii77,i74 7c7 ,conforming amendment ,the table of sections for part ,,vi of subchapter ,b of chapter #a is amended by inserting after the item relating to section #agi;,e the following new item3 ,sec4 #agi;,f4 ,deduction for retrofits of existing commercial and multifamily buildings4 4 7d7 ,effective date ,except as otherwise provided1 the amendments made by this section shall apply to property placed in service in taxable years beginning after the date of the enactment of this ,act4 ,,ii ,home energy improvements #bja4 ,performance based home energy improvements 7a7 ,in general ,subpart ,a of part ,,iv of subchapter ,a of chapter #a is amended by adding at the end the following new section3 #be;,e4 ,performance based energy improvements 7a7 ,in general ,in the case of an individual1 there shall be allowed as a credit against the tax imposed by this chapter for the taxable year for a qualified whole home energy efficiency retrofit an amount determined under subsection 7b74 7b7 ,amount determined 7#a7 ,in general ,subject to paragraph 7#d71 the amount determined under this subsection is equal to-- 7,a7 the base amount under paragraph 7#b71 increased by 7,b7 the amount determined under paragraph 7#c74 7#b7 ,base amount ,for purposes of paragraph 7#a77;,a71 the base amount is #b1jjj1 but only if the energy use for the residence is reduced by at least #bj percent below the baseline energy use for such residence as calculated according to paragraph 7#e74 7#c7 ,increase amount ,for purposes of paragraph 7#a77;,b71 the amount determined under this paragraph is #ejj for each additional #e percentage point reduction in energy use4 7#d7 ,limitation ,in no event shall the amount determined under this subsection exceed the lesser of-- 7,a7 #e1jjj with respect to any residence1 or 7,b7 #cj percent of the qualified home energy efficiency expenditures paid or incurred by the taxpayer under subsection 7c7 with respect to such residence4 7#e7 ,determination of energy use reduction ,for purposes of this subsection-- 7,a7 ,in general ,the reduction in energy use for any residence shall be determined by modeling the annual predicted percentage reduction in total energy costs for heating1 cooling1 hot water1 and permanent lighting4 ,it shall be modeled using computer modeling software approved under subsection 7d77#b7 and a baseline energy use calculated according to subsection 7d77#a77;,c74 7,b7 ,energy costs ,for purposes of subparagraph 7,a71 the energy cost per unit of fuel for each fuel type shall be determined by dividing the total actual energy bill for the residence for that fuel type for the most recent available #ab-month period by the total energy units of that fuel type used over the same period4 7c7 ,qualified home energy efficiency expenditures ,for purposes of this section1 the term qualified home energy efficiency expenditures-- 7#a7 means any amount paid or incurred by the taxpayer during the taxable year for a qualified whole home energy efficiency retrofit1 including the cost of diagnostic procedures1 labor1 and modeling1 7#b7 includes only measures that have an average estimated life of #e years or more as determined by the ,secretary1 after consultation with the ,secretary of ,energy1 and 7#c7 does not include any amount which is paid or incurred in connection with any expansion of the building envelope of the residence4 7d7 ,qualified whole home energy efficiency retrofit ,for purposes of this section-- 7#a7 ,in general ,the term qualified whole home energy efficiency retrofit means the implementation of measures placed in service during the taxable year intended to reduce the energy use of the principal residence of the taxpayer which is located in the ,united ,states4 ,a qualified whole home energy efficiency retrofit shall-- 7,a7 subject to paragraph 7#d71 be designed1 implemented1 and installed by a contractor which is-- 7i7 accredited by the ,building ,performance ,institute 7hereafter in this section referred to as ,,bpi7 or a preexisting ,,bpi accreditation-based ,state certification program with enhancements to achieve ,state energy policy1 7ii7 a ,residential ,energy ,services ,network 7hereafter in this section referred to as ,,resnet7 accredited ,energy ,smart ,home ,performance ,team1 or 7iii7 accredited by an equivalent certification program approved by the ,secretary1 after consultation with the ,secretary of ,energy1 for this purpose1 7,b7 install a set of measures modeled to achieve a reduction in energy use of at least #bj percent below the baseline energy use established in subparagraph 7,c71 using computer modeling software approved under paragraph 7#b71 7,c7 establish the baseline energy use by calibrating the model using sections #c and #d and ,annex ,d of ,,bpi ,standard ,,bpi-#bdjj-,s-#bjaa3 ,standardized ,qualification of ,whole ,house ,energy ,savings ,estimates1 or an equivalent standard approved by the ,secretary1 after consultation with ,secretary of ,energy1 for this purpose1 7,d7 document the measures implemented in the residence through photographs taken before and after the retrofit1 including photographs of its visible energy systems and envelope as relevant1 and 7,e7 implement a test-out procedure1 following guidelines of the applicable certification program specified under clause 7i7 or 7ii7 of subparagraph 7,a71 or equivalent guidelines approved by the ,secretary1 after consultation with the ,secretary of ,energy1 for this purpose1 to ensure-- 7i7 the safe operation of all systems post retrofit1 and 7ii7 that all improvements are included in1 and have been installed according to1 standards of the applicable certification program specified under clause 7i7 or 7ii7 of subparagraph 7,a71 or equivalent standards approved by the ,secretary1 after consultation with the ,secretary of ,energy1 for this purpose4 ,for purposes of subparagraph 7,a77iii71 an organization or ,state may submit an equivalent certification program for approval by the ,secretary1 in consultation with the ,secretary of ,energy4 ,the ,secretary shall approve or deny such submission not later than #ahj days after receipt1 and1 if the ,secretary fails to respond in that time period1 the submitted equivalent certification program shall be considered approved4 7#b7 ,approved modeling software ,for purposes of paragraph 7#a77;,b71 the contractor 7or1 if applicable1 the person described in paragraph 7#d77 shall use modeling software certified by ,,resnet as following the software verification test suites in section #d4b4a of ,,resnet ,publication ,no4 #jf-jja or certified by an alternative organization as following an equivalent standard1 as approved by the ,secretary1 after consultation with the ,secretary of ,energy1 for this purpose4 7#c7 ,documentation ,the ,secretary1 after consultation with the ,secretary of ,energy1 shall prescribe regulations directing what specific documentation is required to be retained or submitted by the taxpayer in order to claim the credit under this section1 which shall include1 in addition to the photographs under paragraph 7#a77;,d71 a form approved by the ,secretary that is completed and signed by the qualified whole home energy efficiency retrofit contractor under penalties of perjury4 ,such form shall include-- 7,a7 a statement that the contractor 7or1 if applicable1 the person described in paragraph 7#d77 followed the specified procedures for establishing baseline energy use and estimating reduction in energy use1 7,b7 the name of the software used for calculating the baseline energy use and reduction in energy use1 the percentage reduction in projected energy savings achieved1 and a statement that such software was certified for this program by the ,secretary1 after consultation with the ,secretary of ,energy1 7,c7 a statement that the contractor 7or1 if applicable1 the person described in paragraph 7#d77 will retain the details of the calculations and underlying energy bills for #e years and will make such details available for inspection by the ,secretary or the ,secretary of ,energy1 if so requested1 7,d7 a list of measures installed and a statement that all measures included in the reduction in energy use estimate are included in1 and installed according to1 standards of the applicable certification program specified under clause 7i7 or 7ii7 of subparagraph 7,a71 or equivalent standards approved by the ,secretary1 after consultation with the ,secretary of ,energy1 7,e7 a statement that the contractor 7or1 if applicable1 the person described in paragraph 7#d77 meets the requirements of paragraph 7#a77;,a71 and 7,f7 documentation of the total cost of the project in order to comply with the limitation under subsection 7b77#d77;,b74 7#d7 ,certified home energy rater ,for purposes of paragraph 7#a77;,a71 a contractor shall be deemed to have satisfied the accreditation requirement under such paragraph if the contractor enters into a contract with a person that satisfies such accreditation requirement for purposes of modeling the energy use reduction described in paragraph 7#a77;,b74 7e7 ,additional rules ,for purposes of this section-- 7#a7 ,no double benefit 7,a7 ,in general ,with respect to any residence1 no credit shall be allowed under this section for any taxable year in which the taxpayer claims a credit under section #be;,c4 7,b7 ,renewable energy systems and appliances ,in the case of a renewable energy system or appliance that qualifies for another credit under this chapter1 the resulting reduction in energy use shall not be taken into account in determining the percentage energy use reductions under subsection 7b74 7,c7 ,no double benefit for certain expenditures ,the term qualified home energy efficiency expenditures shall not include any expenditure for which a deduction or credit is claimed by the taxpayer under this chapter for the taxable year or with respect to which the taxpayer receives any ,federal energy efficiency rebate4 7#b7 ,principal residence ,the term principal residence has the same meaning as when used in section #aba4 7#c7 ,special rules ,rules similar to the rules under paragraphs 7#d71 7#e71 7#f71 7#g71 and 7#h7 of section #be;,d7e7 and section #be;,c7e77#b7 shall apply1 as determined by the ,secretary1 after consultation with the ,secretary of ,energy4 7#d7 ,basis adjustments ,for purposes of this subtitle1 if a credit is allowed under this section with respect to any expenditure with respect to any property1 the increase in the basis of such property which would 7but for this paragraph7 result from such expenditure shall be reduced by the amount of the credit so allowed4 7#e7 ,election not to claim credit ,no credit shall be determined under subsection 7a7 for the taxable year if the taxpayer elects not to have subsection 7a7 apply to such taxable year4 7#f7 ,multiple year retrofits ,if the taxpayer has claimed a credit under this section in a previous taxable year1 the baseline energy use for the calculation of reduced energy use must be established after the previous retrofit has been placed in service4 7f7 ,termination ,this section shall not apply with respect to any costs paid or incurred after ,december #ca1 #bjaf4 7g7 ,secretary review ,the ,secretary1 after consultation with the ,secretary of ,energy1 shall establish a review process for the retrofits performed1 including an estimate of the usage of the credit and a statistically valid analysis of the average actual energy use reductions1 utilizing utility bill data collected on a voluntary basis1 and report to ,congress not later than ,june #cj1 #bjad1 any findings and recommendations for-- 7#a7 improvements to the effectiveness of the credit under this section1 and 7#b7 expansion of the credit under this section to rental units4 4 7b7 ,conforming amendments 7#a7 ,section #ajaf7;a7 is amended-- 7,a7 by striking and at the end of paragraph 7#cf71 7,b7 by striking the period at the end of paragraph 7#cg7 and inserting 1 and1 and 7,c7 by adding at the end the following new paragraph3 7#ch7 to the extent provided in section #be;,e7e77#d71 in the case of amounts with respect to which a credit has been allowed under section #be;,e4 4 7#b7 ,section #feja7m7 is amended by inserting #be;,e7e77#e71 after section4 7#c7 ,the table of sections for subpart ,a of part ,,iv of subchapter ,a chapter #a is amended by inserting after the item relating to section #be;,d the following new item3 ,sec4 #be;,e4 ,performance based energy improvements4 4 7c7 ,effective date ,the amendments made by this section shall apply to amounts paid or incurred for a qualified whole home energy efficiency retrofit placed in service after ,december #ca1 #bjac4 ,,iii ,industrial ,energy and ,water ,efficiency #cja4 ,modifications in credit for combined heat and power system property 7a7 ,modification of certain capacity limitations ,section #dh7;c77#c77;,b7 is amended-- 7#a7 by striking #ae megawatts in clause 7ii7 and inserting #be megawatts1 7#b7 by striking #bj1jjj horsepower in clause 7ii7 and inserting #cd1jjj horsepower1 and 7#c7 by striking clause 7iii74 7b7 ,increase in credit percentage for systems with greater efficiency ,subparagraph 7,a7 of section #dh7;a77#b7 is amended-- 7#a7 by striking and at the end of subclause 7,,iii7 of clause 7i71 7#b7 by adding at the end of clause 7i7 the following new subclause3 7,v7 combined heat and power system property the energy efficiency percentage of which 7as defined in subsection 7c77#c77;,c77i77 is equal to or greater than #he percent1 1 7#c7 by redesignating clause 7ii7 as clause 7iii71 7#d7 by striking clause 7i7 in clause 7iii71 as so redesignated1 and inserting clause 7i7 or 7ii71 and 7#e7 by inserting after clause 7i7 the following new clause3 7ii7 #bj percent in the case of combined heat and power system property the energy percentage of which 7as defined in subsection 7c77#c77;,c77i77 is equal to or greater than #ge percent and less than #he percent1 and 4 7c7 ,extension ,clause 7iv7 of section #dh7;c77#c77;,a7 is amended by striking ,january #a1 #bjag and inserting ,january #a1 #bjai4 7d7 ,effective date ,the amendments made by this section shall apply to periods after the date of the enactment of this ,act1 under rules similar to the rules of section #dh7m7 of the ,internal ,revenue ,code of #aihf 7as in effect on the day before the date of the enactment of the ,revenue ,reconciliation ,act of #aiij74 #cjb4 ,investment tax credit for biomass heating property 7a7 ,in general ,subparagraph 7,a7 of section #dh7;a77#c7 is amended by striking or at the end of clause 7vi71 by inserting or at the end of clause 7vii71 and by inserting after clause 7vii7 the following new clause3 7viii7 open-loop biomass 7within the meaning of section #de7;c77#c77 heating property1 including boilers or furnaces which operate at output efficiencies of not less than #fe percent 7measured by the higher heating value of the fuel7 and which provide thermal energy in the form of heat1 hot water1 or steam for space heating1 air conditioning1 domestic hot water1 or industrial process heat1 but only with respect to periods ending before ,january #a1 #bjaf1 4 7b7 #cj-,percent and #ae-,percent credits 7#a7 ,in general ,subparagraph 7,a7 of section #dh7;a77#b71 as amended by this title1 is amended-- 7,a7 by redesignating clause 7iii7 as clause 7iv71 7,b7 by striking and at the end of clause 7ii71 7,c7 by striking clause 7i7 or 7ii7 in clause 7iv71 as so redesignated1 and inserting clause 7i71 7ii71 or 7iii71 and 7,d7 by inserting after clause 7ii7 the following new clause3 7iii7 #ae percent in the case of energy property described in paragraph 7#c77;,a77viii7 to which clause 7i77,,vi7 does not apply1 and 4 7#b7 ,increased credit for greater efficiency ,clause 7i7 of section #dh7;a77#b77;,a71 as amended by this title1 is amended by striking and at the end of subclause 7,,iv71 by striking the comma at the end of subclause 7,v7 and inserting 1 and1 and by inserting after subclause 7,v7 the following new subclause3 7,,vi7 energy property described in paragraph 7#c77;,a77viii7 which operates at an output efficiency of not less than #hj percent 7measured by the higher heating value of the fuel71 4 7c7 ,effective date ,the amendments made by this section shall apply to periods after the date of the enactment of this ,act1 in taxable years ending after such date1 under rules similar to the rules of section #dh7m7 of the ,internal ,revenue ,code of #aihf 7as in effect on the day before the date of the enactment of the ,revenue ,reconciliation ,act of #aiij74 #cjc4 ,investment tax credit for waste heat to power property 7a7 ,in general ,subparagraph 7,a7 of section #dh7;a77#c71 as amended by this title1 is amended by striking or at the end of clause 7vii71 by striking the comma at the end of clause 7viii7 and inserting 1 or1 and by inserting after clause 7viii7 the following new clause3 7ix7 waste heat to power property1 4 7b7 #cj-,percent credit ,clause 7i7 of section #dh7;a77#b77;,a71 as amended by this title1 is amended by striking and at the end of subclause 7,v71 by striking the comma at the end of subclause 7,,vi7 and inserting 1 and1 and by inserting after subclause 7,,vi7 the following new subclause3 7,,vii7 waste heat to power property1 4 7c7 ,waste heat ,to power property ,subsection 7c7 of section #dh is amended by adding at the end the following new paragraph3 7#e7 ,waste heat to power property 7,a7 ,in general ,the term waste heat to power property means property-- 7i7 comprising a system which generates electricity through the recovery of a qualified waste heat resource1 and 7ii7 which is placed in service before ,january #a1 #bjai4 7,b7 ,qualified waste heat resource ,the term qualified waste heat resource means-- 7i7 exhaust heat or flared gas from an industrial process1 7ii7 waste gas or industrial tail gas that would otherwise be flared1 incinerated1 or vented1 7iii7 a pressure drop in any gas for an industrial or commercial process1 or 7iv7 such other forms of waste heat resources as the ,secretary may determine4 7,c7 ,exception ,the term qualified waste heat resource does not include any heat resource from a process whose primary purpose is the generation of electricity utilizing a fossil fuel or the production of oil1 natural gas1 or other fossil fuels4 4 7d7 ,effective date ,the amendments made by this section shall apply to periods after the date of the enactment of this ,act1 in taxable years ending after such date1 under rules similar to the rules of section #dh7m7 of the ,internal ,revenue ,code of #aihf 7as in effect on the day before the date of the enactment of the ,revenue ,reconciliation ,act of #aiij74 #cjd4 ,motor energy efficiency improvement tax credit 7a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a is amended by adding at the end the following new section3 #de,s4 ,motor energy efficiency improvement tax credit 7a7 ,in general ,for purposes of section #ch1 the motor energy efficiency improvement tax credit determined under this section for the taxable year is an amount equal to #abj multiplied by the motor horsepower of an appliance1 machine1 or equipment-- 7#a7 manufactured in such taxable year by a manufacturer which incorporates an advanced motor and drive system into a newly designed appliance1 machine1 or equipment or into a redesigned appliance1 machine1 or equipment which did not previously make use of the advanced motor and drive system1 or 7#b7 placed back into service in such taxable year by an end user which upgrades an existing appliance1 machine1 or equipment with an advanced motor and drive system4 ,for any advanced motor and drive system with a total horsepower of less than #aj1 such motor energy efficiency improvement tax credit is an amount which bears the same ratio to #abj as such total horsepower bears to #a horsepower4 7b7 ,advanced motor and drive system ,for purposes of this section1 the term advanced motor and drive system means a motor and any required associated electronic control which-- 7#a7 offers variable or multiple speed operation1 and 7#b7 uses permanent magnet technology1 electronically commutated motor technology1 switched reluctance motor technology1 synchronous reluctance1 or such other motor and drive systems technologies as determined by the ,secretary of ,energy4 7c7 ,aggregate per taxpayer limitation 7#a7 ,in general ,the amount of the credit determined under this section for any taxpayer for any taxable year shall not exceed the excess 7if any7 of #b1jjj1jjj over the aggregate credits allowed under this section with respect to such taxpayer for all prior taxable years4 7#b7 ,aggregation rules ,for purposes of this section1 all persons treated as a single employer under subsections 7a7 and 7b7 of section #eb shall be treated as #a taxpayer4 7d7 ,special rules 7#a7 ,basis reduction ,for purposes of this subtitle1 the basis of any property for which a credit is allowable under subsection 7a7 shall be reduced by the amount of such credit so allowed4 7#b7 ,no double benefit ,no other credit shall be allowable under this chapter for property with respect to which a credit is allowed under this section4 7#c7 ,property used outside ,united ,states not qualified ,no credit shall be allowable under subsection 7a7 with respect to any property referred to in section #ej7;b77#a74 7e7 ,application ,this section shall not apply to property manufactured or placed back into service before the date which is #f months after the date of the enactment of this section or after ,december #ca1 #bjaf4 4 7b7 ,conforming amendments 7#a7 ,section #ch7;b7 is amended by striking plus at the end of paragraph 7#ce71 by striking the period at the end of paragraph 7#cf7 and inserting 1 plus1 and by adding at the end the following new paragraph3 7#cg7 the motor energy efficiency improvement tax credit determined under section #de,s4 4 7#b7 ,section #ajaf7;a7 is amended by striking and at the end of paragraph 7#cf71 by striking the period at the end of paragraph 7#cg7 and inserting 1 and1 and by adding at the end the following new paragraph3 7#ch7 to the extent provided in section #de,s7d77#a74 4 7#c7 ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a is amended by adding at the end the following new item3 ,sec4 #de,s4 ,motor energy efficiency improvement tax credit4 4 7c7 ,effective date ,the amendments made by this section shall apply to property manufactured or placed back into service after the date which is #f months after the date of the enactment of this ,act4 #cje4 ,credit for replacement of ,,cfc refrigerant chiller 7a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a1 as amended by this title1 is amended by adding at the end the following new section3 #de,t4 ,,cfc chiller replacement credit 7a7 ,in general ,for purposes of section #ch1 the ,,cfc chiller replacement credit determined under this section for the taxable year is an amount equal to-- 7#a7 #aej multiplied by the tonnage rating of a ,,cfc chiller replaced with a new efficient chiller that is placed in service by the taxpayer during the taxable year1 plus 7#b7 if all chilled water distribution pumps connected to the new efficient chiller include variable frequency drives1 #ajj multiplied by any tonnage downsizing4 7b7 ,,cfc chiller ,for purposes of this section1 the term ,,cfc chiller includes property which-- 7#a7 was installed after #aihj and before #aiic1 7#b7 utilizes chlorofluorocarbon refrigerant1 and 7#c7 until replaced by a new efficient chiller1 has remained in operation and utilized for cooling a commercial building4 7c7 ,new efficient chiller ,for purposes of this section1 the term new efficient chiller includes a water-cooled chiller which is certified to meet efficiency standards effective on ,january #a1 #bjae1 as defined in table #f4h in ,standard #ij4a-bjac of the ,american ,society of ,heating1 ,refrigerating1 and ,air ,conditioning ,engineers4 7d7 ,tonnage downsizing ,for purposes of this section1 the term tonnage downsizing means the amount by which the tonnage rating of the ,,cfc chiller exceeds the tonnage rating of the new efficient chiller4 7e7 ,energy audit ,as a condition of receiving a tax credit under this section1 an energy audit shall be performed on the building prior to installation of the new efficient chiller1 identifying cost-effective energy-saving measures1 particularly measures that could contribute to chiller downsizing4 ,the audit shall satisfy criteria that shall be issued by the ,secretary of ,energy4 7f7 ,property used by tax-,exempt entity ,in the case of a ,,cfc chiller replaced by a new efficient chiller the use of which is described in paragraph 7#c7 or 7#d7 of section #ej7;b71 the person who sold such new efficient chiller to the entity shall be treated as the taxpayer that placed in service the new efficient chiller that replaced the ,,cfc chiller1 but only if such person clearly discloses to such entity in a document the amount of any credit allowable under subsection 7a7 and the person certifies to the ,secretary that the person reduced the price the entity paid for such new efficient chiller by the entire amount of such credit4 7g7 ,termination ,this section shall not apply to replacements made after ,december #ca1 #bjag4 4 7b7 ,conforming amendments 7#a7 ,section #ch7;b71 as amended by this title1 is amended by striking plus at the end of paragraph 7#cf71 by striking the period at the end of paragraph 7#cg7 and inserting 1 plus1 and by adding at the end the following new paragraph3 7#ch7 the ,,cfc chiller replacement credit determined under section #de,t4 4 7#b7 ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a1 as amended by this title1 is amended by adding at the end the following new item3 ,sec4 #de,t4 ,,cfc chiller replacement credit4 4 7c7 ,effective date ,the amendments made by this section shall apply to replacements made after the date of the enactment of this ,act4 #cjf4 ,qualifying efficient industrial process water use project credit 7a7 ,in general ,section #df is amended by inserting a comma at the end of paragraph 7#d71 by striking and at the end of paragraph 7#e71 by striking the period at the end of paragraph 7#f7 and inserting 1 and1 and by adding at the end the following new paragraph3 7#g7 the qualifying efficient industrial process water use project credit4 4 7b7 ,amount of credit ,subpart ,e of part ,,iv of subchapter ,a of chapter #a is amended by inserting after section #dh;,d the following new section3 #dh;,e4 ,qualifying efficient industrial process water use project credit 7a7 ,in general 7#a7 ,allowance of credit ,for purposes of section #df1 the qualifying efficient industrial process water use project credit for any taxable year is an amount equal to the applicable percentage of the qualified investment for such taxable year with respect to any qualifying efficient industrial process water use project of the taxpayer4 7#b7 ,applicable percentage ,for purposes of subsection 7a7-- 7,a7 ,in general ,the applicable percentage is-- 7i7 #aj percent in the case of a qualifying efficient industrial process water use project which achieves a #be percent or greater 7but less than #ej percent7 reduction in water use for industrial purposes1 7ii7 #bj percent in the case of a qualifying efficient industrial process water use project which achieves a #ej percent or greater 7but less than #ge percent7 reduction in water use for industrial purposes1 and 7iii7 #cj percent in the case of a qualifying efficient industrial process water use project which achieves a #ge percent or greater reduction in water use for industrial purposes4 7,b7 ,water use ,for purposes of subparagraph 7,a7-- 7i7 ,measurement of reduction in water use 7,i7 ,in general ,the taxpayer shall elect one of the methods specified in clause 7ii7 for measuring the reduction in water use achieved by a qualifying efficient industrial process water use project4 7,,ii7 ,irrevocable election ,an election under subclause 7,i71 once made with respect to a qualifying efficient industrial process water use project1 shall apply to the taxable year for which made and all subsequent taxable years1 and may not be revoked4 7,,iii7 ,projected savings ,the credit under subsection 7a7 may be claimed on the basis of a reduction in water use which is projected1 by a registered professional engineer who is not a related person 7within the meaning of section #add7;a77#c77;,a77 to the taxpayer or the installer of eligible property1 to be achieved by a qualifying efficient industrial process water use project4 ,such projection1 if used as a basis for determining the credit under subsection 7a71 shall be included with the return of tax4 7ii7 ,methods specified ,the methods specified in this clause are-- 7,i7 a measurement of the percentage reduction in water use per unit of product manufactured by the taxpayer1 and 7,,ii7 a measurement of the percentage reduction in water use per pound of product manufactured by the taxpayer4 7b7 ,qualified investment 7#a7 ,in general ,for purposes of subsection 7a71 the qualified investment for any taxable year is the basis of eligible property placed in service by the taxpayer during such taxable year which is part of a qualifying efficient industrial process water use project4 7#b7 ,exceptions ,such term shall not include any portion of the basis related to-- 7,a7 permitting1 7,b7 land acquisition1 or 7,c7 infrastructure not directly associated with the implementation of the technology or process improvements of the qualifying efficient industrial process water use project4 7#c7 ,certain qualified progress expenditures rules made applicable ,rules similar to the rules of subsections 7c77#d7 and 7d7 of section #df 7as in effect on the day before the enactment of the ,revenue ,reconciliation ,act of #aiij7 shall apply for purposes of this section4 7#d7 ,special rule for subsidized energy financing ,rules similar to the rules of section #dh7;a77#d7 7without regard to subparagraph 7,d7 thereof7 shall apply for purposes of this section4 7#e7 ,limitation ,the amount which is treated for all taxable years with respect to any qualifying efficient industrial process water use project with respect to any site shall not exceed #aj1jjj1jjj4 7c7 ,definitions ,for purposes of this section-- 7#a7 ,qualifying efficient industrial process water use project 7,a7 ,in general ,the term qualifying efficient industrial process water use project means1 with respect to any site1 a project which retrofits or expands an existing facility to implement technology or process improvements which are designed to reduce water use for systems that use any form of water in the production of goods in the manufacturing sector 7as defined in ,north ,american ,industrial ,classification ,system codes #ca1 #cb1 and #cc71 including any system that uses water for heating1 cooling1 or energy production for the production of goods in the trade or business of manufacturing 7other than extraction of fossil fuels74 ,such term shall not include a project which alters an existing facility to change the type of goods produced by such facility4 7,b7 ,systems ,for purposes of subparagraph 7,a71 the term system does not include any system which does not encompass #a or more complete processes4 7#b7 ,eligible property ,the term eligible property means any property-- 7,a7 which is part of a qualifying efficient industrial process water use project and which is necessary for the reduction in water use described in paragraph 7#a71 7,b7 7i7 the construction1 reconstruction1 or erection of which is completed by the taxpayer1 or 7ii7 which is acquired by the taxpayer if the original use of such property commences with the taxpayer1 and 7,c7 with respect to which depreciation 7or amortization in lieu of depreciation7 is allowable4 7#c7 ,water use 7,a7 ,in general ,the term water use means all water taken for use at the site directly from ground and surface water sources together with any water supplied to the site by a regulated water system4 7,b7 ,regulated water system ,the term regulated water system means a system that supplies water that has been treated to potable standards4 7d7 ,termination ,this section shall not apply to periods after ,december #ca1 #bjag1 under rules similar to the rules of section #dh7m7 7as in effect on the day before the date of the enactment of the ,revenue ,reconciliation ,act of #aiij74 4 7c7 ,conforming amendments 7#a7 ,section #di7;a77#a77;,c7 is amended by striking and at the end of clause 7v71 by striking the period at the end of clause 7vi7 and inserting 1 and1 and by adding at the end the following new clause3 7vii7 the basis of any property which is part of a qualifying efficient industrial use water project under section #dh;,e4 4 7#b7 ,the table of sections for subpart ,e of part ,,iv of subchapter ,a of chapter #a is amended by inserting after the item relating to section #dh;,d the following new item3 ,sec4 #dh;,e4 ,qualifying efficient industrial process water use project credit4 4 7d7 ,effective date ,the amendments made by this section shall apply to periods after the date of the enactment of this ,act1 under rules similar to the rules of section #dh7m7 of the ,internal ,revenue ,code of #aihf 7as in effect on the day before the date of the enactment of the ,revenue ,reconciliation ,act of #aiij74