[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4538 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 4538

  To amend the Internal Revenue Code of 1986 to provide incentives to 
                       reduce energy consumption.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 10, 1998

Mr. Matsui (for himself, Mrs. Kennelly of Connecticut, Ms. McCarthy of 
      Missouri, Mrs. Thurman, Mr. Pallone, Mr. Vento, Mr. Neal of 
  Massachusetts, Ms. DeLauro, Mr. Berman, Mrs. Lowey, Ms. Furse, Mr. 
Lewis of Georgia, Mr. Waxman, Mr. Hinchey, Mr. Gutierrez, Mr. Becerra, 
 and Mr. Farr of California) introduced the following bill; which was 
              referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to provide incentives to 
                       reduce energy consumption.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Energy Efficient Technology Tax 
Act''.

SEC. 2. CREDIT FOR CERTAIN ENERGY-EFFICIENT PROPERTY USED IN BUSINESS.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 48 the following new section:

``SEC. 48A. ENERGY CREDIT.

    ``(a) In General.--For purposes of section 46, the energy credit 
for any taxable year is the sum of--
            ``(1) the amount equal to the energy percentage of the 
        basis of each energy property placed in service during such 
        taxable year, and
            ``(2) the credit amount for each highly efficient passenger 
        vehicle placed in service during the taxable year.
    ``(b) Energy Percentage.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the energy percentage is 10 percent.
            ``(2) Energy efficient building property.--The energy 
        percentage is 20 percent in the case of energy efficient 
        building property.
            ``(3) Elected solar hot water property and photovoltaic 
        property.--The energy percentage is--
                    ``(A) 15 percent for elected solar hot water 
                property for the period beginning on January 1, 1999, 
                and ending on December 31, 2003, and
                    ``(B) 15 percent for photovoltaic property for the 
                period beginning on January 1, 1999, and ending on 
                December 31, 2005.
            ``(4) Period for which credit is allowed for certain energy 
        properties.--
                    ``(A) In general.--In the case of energy property 
                described in subparagraph (B), the credit under 
                subsection (a) shall be allowed only for the period--
                            ``(i) beginning on January 1, 1999 (January 
                        1, 2000, in the case of a fuel cell described 
                        in subsection (e)(3)(A)), and
                            ``(ii) ending on December 31, 2003 
                        (December 31, 2004, in the case of such fuel 
                        cell).
                    ``(B) Energy property specified.--The energy 
                property specified in this subparagraph is energy-
                efficient building property, combined heat and power 
                system property, qualified circuit breaker property, 
                and hydrofluorocarbon and perfluorocompound recycling 
                property.
            ``(5) Coordination with rehabilitation.--The energy 
        percentage shall not apply to that portion of the basis of any 
        property which is attributable to qualified rehabilitation 
        expenditures.
            ``(6) Transitional rules.--Rules similar to the rules of 
        section 48(m) (as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this subsection.
    ``(c) Maximum Credit for Certain Property.--In the case of property 
referred to in any of the following subparagraphs, the amount of the 
current year business credit for the taxable year shall not exceed--
            ``(1) $1,000 in the case of each item of elected solar hot 
        water property,
            ``(2) $2,000 in the case of each item of photovoltaic 
        property,
            ``(3) $500 in the case of each item of energy-efficient 
        building property not referred to in paragraph (4) or (5),
            ``(4) $500 for each kilowatt of capacity in the case of a 
        fuel cell described in subsection (e)(3)(A), and
            ``(5) $1,000 in the case of a natural gas heat pump 
        described in subsection (e)(3)(D).
Paragraphs (1) and (2) shall apply only to property for which the 
energy percentage is greater than 10 percent.
    ``(d) Energy Property Defined.--
            ``(1) In general.--For purposes of this subpart, the term 
        `energy property' means any property--
                    ``(A) which is--
                            ``(i) solar energy property,
                            ``(ii) geothermal energy property,
                            ``(iii) energy-efficient building property,
                            ``(iv) combined heat and power system 
                        property,
                            ``(v) qualified circuit breaker property, 
                        or
                            ``(vi) hydrofluorocarbon and 
                        perfluorocompound recycling property,
                    ``(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--
                            ``(i) the performance and quality standards 
                        (if any), and the certification requirements 
                        (if any), which have been prescribed by the 
                        Secretary by regulations (after consultation 
                        with the Secretary of Energy or the EPA 
                        Administrator, as appropriate), and
                            ``(ii) are in effect at the time of the 
                        acquisition of the property.
            ``(2) 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). The 
        preceding sentence shall not apply to qualified circuit breaker 
        property and combined heat and power system property.
    ``(e) 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,
                            ``(ii) to heat or cool (or provide hot 
                        water for use in) a structure, or
                            ``(iii) to provide solar process heat.
                    ``(B) Elected solar water heating property.--The 
                term `elected solar water heating 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.
                    ``(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.
                    ``(F) Double benefit.--Credit shall not be allowed 
                under subsection (a)(1) for a taxable year for an item 
                of property described in a subparagraph of this 
                paragraph if, for such taxable year, such item is 
                described in another subparagraph of this paragraph for 
                which credit is allowed under subsection (a)(1).
            ``(2) Geothermal energy property.--The term `geothermal 
        energy property' means 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.
            ``(3) Energy-efficient building property.--The term 
        `energy-efficient building property' means--
                    ``(A) a fuel cell that--
                            ``(i) generates electricity and heat using 
                        an electrochemical process,
                            ``(ii) has an electricity-only generation 
                        efficiency greater than 35 percent, and
                            ``(iii) has a minimum generating capacity 
                        of 50 kilowatts,
                    ``(B) an electric heat pump hot water heater that 
                yields an energy factor of 1.7 or greater,
                    ``(C) an electric heat pump that has a heating 
                system performance factor (HSPF) of 9 or greater and a 
                cooling seasonal energy efficiency ratio (SEER) of 15 
                or greater,
                    ``(D) a natural gas heat pump that has a 
                coefficient of performance of not less than 1.25 for 
                heating and not less than 0.70 for cooling,
                    ``(E) a central air conditioner that has a cooling 
                seasonal energy efficiency ratio (SEER) of 15 or 
                greater, and
                    ``(F) an advanced natural gas water heater that has 
                an energy factor of at least 0.80.
            ``(4) Combined heat and power system property.--
                    ``(A) In general.--The term `combined heat and 
                power system property' means property comprising a 
                system--
                            ``(i) 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),
                            ``(ii) which has an electrical capacity of 
                        more than 50 kilowatts or a mechanical energy 
                        capacity of more than 67 horsepower or an 
                        equivalent combination of electrical and 
                        mechanical energy capacities,
                            ``(iii) which produces--
                                    ``(I) at least 20 percent of its 
                                total useful energy in the form of 
                                thermal energy, and
                                    ``(II) at least 20 percent of its 
                                total useful energy in the form of 
                                electrical or mechanical power (or a 
                                combination thereof), and
                            ``(iv) the energy efficiency percentage of 
                        which exceeds 60 percent (70 percent in the 
                        case of a system with an electrical capacity in 
                        excess of 50 megawatts or a mechanical energy 
                        capacity in excess of 67,000 horsepower).
                    ``(B) Special rules.--
                            ``(i) Energy efficiency percentage.--For 
                        purposes of subparagraph (A)(iv), 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
                                    ``(II) the denominator of which is 
                                the lower heating value of the primary 
                                fuel source for the system.
                            ``(ii) Determinations made on btu basis.--
                        The energy efficiency percentage and the 
                        percentages under subparagraph (A)(iii) shall 
                        be determined on a Btu basis.
                            ``(iii) 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.
                            ``(iv) Accounting rule for public utility 
                        property.--In the case that combined heat and 
                        power system property 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), the taxpayer may only claim the credit 
under subsection (a)(1) if, with respect to such property, the taxpayer 
uses a normalization method of accounting.
                            ``(v) Depreciation.--No credit shall be 
                        allowed for any combined heat and power system 
                        property unless the taxpayer elects to treat 
                        such property for purposes of section 168 as 
                        having a class life of 22 years.
            ``(5) Qualified circuit breaker property.--
                    ``(A) In general.--The term `qualified circuit 
                breaker property' means circuit breaker equipment which 
                replaces a dual pressure circuit breaker that--
                            ``(i) contains sulfur hexafluoride (SF6),
                            ``(ii) has a capacity of not less than 115 
                        kilovolts, and
                            ``(iii) was placed into service before 
                        January 1, 1986.
                    ``(B) Requirement to destroy old equipment.--A 
                credit shall not be allowed under subsection (a)(1) for 
                qualified circuit breaker property unless the 
                taxpayer--
                            ``(i) promptly destroys the replaced 
                        property, and
                            ``(ii) certifies such destruction in the 
                        manner prescribed in regulations by the 
                        Secretary (in consultation with the EPA 
                        Administrator).
            ``(6) Qualified hydrofluorocarbon and perfluorocompound 
        recycling property.--
                    ``(A) In general.--The term `qualified 
                hydrofluorocarbon and perfluorocompound recycling 
                property' means equipment--
                            ``(i) which is used to recover and recycle 
                        gas containing any hydrofluorocarbon or 
                        specified perfluorocompound used in the 
                        manufacturing of semiconductors, and
                            ``(ii) which recovers and recycles not less 
                        than 95 percent of the hydrofluorocarbons and 
                        specified perfluorocompounds within such gas.
                    ``(B) Specified perfluorocompound.--For purposes of 
                subparagraph (A), the term `specified 
                perfluorocompound' means--
                            ``(i) perfluoromethane,
                            ``(ii) perfluoroethane,
                            ``(iii) perfluoropropane,
                            ``(iv) nitrogen trifluoride,
                            ``(v) sulfur hexafluoride, and
                            ``(vi) any other fully fluorinated 
                        compound.
    ``(f) Highly Efficient Passenger Vehicles.--For purposes of 
subsection (a)(2)--
            ``(1) Credit amount.--
                    ``(A) 2 x  vehicle.--The credit amount for a highly 
                efficient passenger vehicle not described in 
                subparagraph (B) shall be the amount determined in 
                accordance with the following table:

``Vehicle placed in service in                   The credit amount is--
        calendar year--
    2000, 2001, 2002, 2003........................              $3,000 
    2004..........................................              $2,000 
    2005..........................................              $1,000.
                    ``(B) 3 x  vehicle.--The credit amount for a highly 
                efficient passenger vehicle with a fuel economy of at 
                least 3 times the base fuel economy for the EPA 
                category of such vehicle shall be the amount determined 
                in accordance with the following table:

``Vehicle placed in service in                   The credit amount is--
        calendar year--
    2003, 2004, 2005, 2006........................              $4,000 
    2007..........................................              $3,000 
    2008..........................................              $2,000 
    2009..........................................              $1,000.
            ``(2) Highly efficient passenger vehicle.--The term `highly 
        efficient passenger vehicle' means any automobile--
                    ``(A) with a fuel economy of at least 2 times the 
                base fuel economy for the EPA category of such 
                automobile, and
                    ``(B) to which section 168 applies.
            ``(3) EPA category.--
                    ``(A) In general.--The term `EPA category' means a 
                category of automobiles established by the EPA 
                Administrator pursuant to this paragraph.
                    ``(B) Classification.--The EPA Administrator shall, 
                for each model year, assign--
                            ``(i) automobiles of such model year which 
                        are passenger automobiles into 4 classes: 
                        subcompact (including minicompact and 2-seat 
                        automobiles), compact and small wagon, midsize 
                        and midsize wagon, and large and large wagon, 
                        and
                            ``(ii) automobiles of such model year which 
                        are light trucks into 2 classes: 2-wheel drive 
                        and 4-wheel drive.
                    ``(C) Category.--
                            ``(i) In general.--The EPA Administrator 
                        shall establish vehicle categories within each 
                        class established under subparagraph (B).
                            ``(ii) Passenger automobiles.--In the case 
                        of a class of passenger automobiles, each 
                        category shall consist of vehicles in the class 
                        with comparable 0-60 miles per hour 
                        acceleration times (as determined by a 
                        performance test specified in regulations 
                        prescribed by the EPA Administrator).
                            ``(iii) Light trucks.--In the case of a 
                        class of light trucks, each category shall 
                        consist of vehicles in the class with 
                        comparable gross vehicle weight ratings.
                            ``(iv) Nongasoline-powered automobiles.--If 
                        any vehicle in a category is propelled by a 
                        fuel other than gasoline, the EPA Administrator 
                        shall establish a base fuel economy for such 
                        vehicle which, for such fuel, is equivalent on 
                        a Btu basis to the base fuel economy for 
                        gasoline-powered vehicles in such category.
            ``(4) Fuel economy.--
                    ``(A) Base fuel economy.--The term `base fuel 
                economy' means the average fuel economy determined by 
                the EPA Administrator for each EPA category for a model 
                year.
                    ``(B) Fuel economy.--Fuel economy for any vehicle 
                shall be measured in accordance with testing and 
                calculation procedures established by the EPA 
                Administrator by regulation. The Administrator shall 
                report any measurements of fuel economy to the 
                Secretary.
            ``(5) Automobile.--The term `automobile' has the meaning 
        given to such term by section 4064(b)(1). A vehicle shall not 
        fail to be treated as an automobile solely by reason of weight 
        if such vehicle is rated at 8,500 pounds unloaded gross vehicle 
        weight or less.
            ``(6) EPA administrator.--The term `EPA Administrator' 
        means the Administrator of the Environmental Protection Agency.
            ``(7) Model year.--The term `model year' has the meaning 
        given to such term by section 4064(b)(4).
            ``(8) Time by which regulations must be issued.--Testing 
        and calculation procedures applicable to a vehicle, and any 
        amendment to such procedures (other than a technical or 
        clerical amendment), shall be promulgated not less than 12 
        months before the model year to which such procedures apply 
        (July 1, 1999, in the case of procedures applicable to model 
        years beginning in 2000).
    ``(g) Special Rules.--For purposes of this section--
            ``(1) Special rule for property financed by subsidized 
        energy financing or industrial development bonds.--
                    ``(A) Reduction of basis.--For purposes of applying 
                the energy percentage to any property, if such property 
                is financed in whole or in part by--
                            ``(i) subsidized energy financing, or
                            ``(ii) the proceeds of a private activity 
                        bond (within the meaning of section 141) the 
                        interest on which is exempt from tax under 
                        section 103,
                the amount taken into account as the basis of such 
                property shall not exceed the amount which (but for 
                this subparagraph) would be so taken into account 
                multiplied by the fraction determined under 
                subparagraph (B).
                    ``(B) Determination of fraction.--For purposes of 
                subparagraph (A), the fraction determined under this 
                subparagraph is 1 reduced by a fraction--
                            ``(i) the numerator of which is that 
                        portion of the basis of the property which is 
                        allocable to such financing or proceeds, and
                            ``(ii) the denominator of which is the 
                        basis of the property.
                    ``(C) Subsidized energy financing.--For purposes of 
                subparagraph (A), the term `subsidized energy 
                financing' means financing provided under a Federal, 
                State, or local program a principal purpose of which is 
                to provide subsidized financing for projects designed 
                to conserve or produce energy.
            ``(2) Certain progress expenditure rules made applicable.--
        Rules similar to the rules of subsections (c)(4) and (d) of 
        section 46 (as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.''.
    (b) Conforming Amendments.--
            (1) Section 48 of such Code is amended to read as follows:

``SEC. 48. REFORESTATION CREDIT.

    ``(a) In General.--For purposes of section 46, the reforestation 
credit for any taxable year is 10 percent of the portion of the 
amortizable basis of any qualified timber property which was acquired 
during such taxable year and which is taken into account under section 
194 (after the application of section 194(b)(1)).
    ``(b) Definitions.--For purposes of this subpart, the terms 
`amortizable basis' and `qualified timber property' have the respective 
meanings given to such terms by section 194.''.
            (2) Subsection (d) of section 39 of such Code is amended by 
        adding at the end the following new paragraph:
            ``(9) No carryback of energy credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the energy credit determined 
        under section 48A may be carried back to a taxable year ending 
        before the date of the enactment of section 48A.''.
            (3) Paragraph (3) of section 50(c) of such Code is amended 
        by adding at the end the following flush sentence:
        ``In the case of the energy credit, the preceding sentence 
        shall apply only to so much of such credit as relates to solar 
        energy property and geothermal property (as such terms are 
        defined in section 48A(e)).''.
            (4) Subclause (III) of section 29(b)(3)(A)(i) of such Code 
        is amended by striking ``section 48(a)(4)(C)'' and inserting 
        ``section 48A(g)(1)(C)''.
            (5) Subparagraph (E) of section 50(a)(2) of such Code is 
        amended by striking ``section 48(a)(5)'' and inserting 
        ``section 48A(g)(2)''.
            (6) Subparagraph (B) of section 168(e)(3) of such Code is 
        amended--
                    (A) in clause (vi)(I) by striking ``section 
                48(a)(3)'' and inserting ``paragraphs (1) and (2) of 
                section 48A(e)'', and
                    (B) in the last sentence by striking ``section 
                48(a)(3)'' and inserting ``section 48A(d)(2)''.
            (7) Subparagraph (E) of section 168(e)(3) of such Code is 
        amended by striking ``and'' at the end of clause (ii), by 
        striking the period at the end of clause (iii) and inserting 
        ``, and'', and by inserting after clause (iii) the following 
        new clause:
                            ``(iv) any combined heat and power system 
                        property (as defined in section 48A(e)(4)) for 
                        which a credit is allowed under section 48A and 
                        which, but for this clause, would have a 
                        recovery period of less than 15 years.''.
            (8) The table contained in subparagraph (B) of section 
        168(g)(3) of such Code is amended by adding at the end the 
        following:

                ``(E)(iv)......................................   22''.
    (c) Clerical Amendment.--The table of sections for subpart E of 
part IV of subchapter A of chapter 1 of such Code is amended by 
striking the item relating to section 48 and inserting the following 
new items:

                              ``Sec. 48. Reforestation credit.
                              ``Sec. 48A. Energy credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 1998, 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).

SEC. 3. 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 25A the 
following new section:

``SEC. 25B. 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 applicable percentage of residential 
                energy property expenditures made by the taxpayer 
                during such year, and
                    ``(B) the credit amount (determined under section 
                48A(f)) for each vehicle purchased during the taxable 
                year which would be a highly efficient passenger 
                vehicle as defined in section 48A(f)(2) but for 
                subparagraph (B) thereof.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the term `applicable percentage' means--
                    ``(A) 20 percent in the case of energy-efficient 
                building property,
                    ``(B) 15 percent in the case of solar water heating 
                property and photovoltaic property, and
                    ``(C) 1 percent in the case of a new, highly 
                energy-efficient principal residence.
    ``(b) Maximum Credit.--
            ``(1) In general.--The amount of the credit allowed under 
        subsection (a)(1)(A) with respect to each dwelling unit for the 
        taxable year shall not exceed--
                    ``(A) $500 in the case of expenditures attributable 
                to each item of energy-efficient building property 
                (other than a fuel cell or natural gas heat pump),
                    ``(B) $500 for each kilowatt of capacity in the 
                case of a fuel cell,
                    ``(C) $1,000 in the case of expenditures 
                attributable to each natural gas heat pump,
                    ``(D) $1,000 in the case of expenditures 
                attributable to each item of solar water heating 
                property,
                    ``(E) $2,000 in the case of expenditures 
                attributable to each item of photovoltaic property, and
                    ``(F) $2,000 in the case of expenditures 
                attributable to the acquisition of a new, highly 
                energy-efficient principal residence ($1,000 in the 
                case of an acquisition after December 31, 2003, and 
                before January 1, 2006).
            ``(2) Coordination of limitations.--If a credit is allowed 
        to the taxpayer for any taxable year by reason of an 
        acquisition of a new, highly energy-efficient principal 
        residence, no other credit shall be allowed under subsection 
        (a)(1)(A) with respect to such residence during the 1-taxable 
        year period beginning with such taxable year.
    ``(c) Residential Energy Property Expenditures.--For purposes of 
this section--
            ``(1) In general.--The term `residential energy property 
        expenditures' means--
                    ``(A) expenditures made for the purchase by the 
                taxpayer of a new, highly energy-efficient principal 
                residence located in the United States, and
                    ``(B) expenditures made by the taxpayer for 
                qualified energy property installed on or in connection 
                with a dwelling unit--
                            ``(i) which is located in the United 
                        States, and
                            ``(ii) which is used by the taxpayer as a 
                        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 water heating property, and
                            ``(iii) photovoltaic property.
                    ``(B) Swimming pool, etc., used as storage medium; 
                solar panels.--For purposes of this paragraph, the 
                provisions of subparagraphs (D) and (E) section 
                48A(e)(1) shall apply.
            ``(3) Energy-efficient building property.--The term 
        `energy-efficient building property' has the meaning given to 
        such term by section 48A(e)(3).
            ``(4) Solar water heating property.--The term `solar water 
        heating 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.
            ``(5) Photovoltaic property.--The term `photovoltaic 
        property' has the meaning given to such term by section 
        48A(e)(1)(C).
            ``(6) New, highly energy-efficient principal residence.--
                    ``(A) In general.--Property is a new, highly 
                energy-efficient principal residence if--
                            ``(i) the original use of such property 
                        commences with the taxpayer and is, at the time 
                        of such use, the principal residence of the 
                        taxpayer, and
                            ``(ii) such property--
                                    ``(I) exceeds by 50 percent or more 
                                the energy efficiency standards 
                                specified in the Model Energy Code, 
                                1993 of the Council of American 
                                Building Officials, and
                                    ``(II) is certified before such use 
                                commences as meeting the requirements 
                                of subclause (I).
                    ``(B) Certification.--The certification required by 
                subparagraph (A)(ii)(II) shall be made to the Secretary 
                of Energy by an individual qualified to make such 
                certifications (as determined by the Secretary of 
                Energy by regulations prescribed in consultation with 
                the Secretary). Certifications made for the purposes of 
                this paragraph shall be filed with the Secretary of 
                Energy no less frequently than annually and shall 
                include the TIN of the certifier, the address of the 
                building certified, and the identity of the person for 
                whom such certification was performed. Certifications 
                filed with the Secretary of Energy shall be available 
                for inspection by the Secretary.
                    ``(C) Principal residence.--The term `principal 
                residence' has the same meaning as when used in section 
                121, except that the period for which a building is 
                treated as the principal residence of the taxpayer 
                shall also include the 60-day period ending on the 1st 
                day on which it would (but for this subparagraph) first 
                be treated as his principal residence.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) 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 residence by 2 or more 
        individuals the following 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.
            ``(2) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216) in a cooperative 
        housing corporation (as defined in such section), such 
        individual shall be treated as having made his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of any expenditures of such corporation.
            ``(3) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which he owns, such 
                individual shall be treated as having made his 
                proportionate share of any expenditures of such 
                association.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `condominium 
                management association' means an organization which 
                meets the requirements of paragraph (1) of section 
                528(c) (other than subparagraph (E) thereof) with 
                respect to a condominium project substantially all of 
                the units of which are used as residences.
            ``(4) Joint ownership of energy items.--
                    ``(A) In general.--Any expenditure otherwise 
                qualifying as a residential energy property expenditure 
                shall not be treated as failing to so qualify merely 
                because such expenditure was made with respect to 2 or 
                more dwelling units.
                    ``(B) Limits applied separately.--In the case of 
                any expenditure described in subparagraph (A), the 
                amount of the credit allowable under subsection (a) 
                shall (subject to paragraph (1)) be computed separately 
                with respect to the amount of the expenditure made for 
                each dwelling unit.
            ``(5) Allocation in certain cases.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), 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. For purposes of this paragraph, use 
                for a swimming pool shall be treated as use which is 
                not for nonbusiness purposes.
                    ``(B) Special rule for vehicles.--For purposes of 
                this section and section 48A, a vehicle shall be 
                treated as used entirely for business or nonbusiness 
                purposes if the majority of the use of such vehicle is 
                for business or nonbusiness purposes, as the case may 
                be.
            ``(6) 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.
                    ``(C) Amount.--The amount of any expenditure shall 
                be the cost thereof.
            ``(7) Property financed by subsidized energy financing.--
                    ``(A) Reduction of expenditures.--For purposes of 
                determining the amount of residential energy property 
                expenditures made by any individual with respect to any 
                dwelling unit, there shall not be taken in to account 
                expenditures which are made from subsidized energy 
                financing (as defined in section 48A(g)(1)).
                    ``(B) Dollar limits reduced.--The appropriate 
                subparagraph of subsection (b)(1) shall be applied with 
                respect to such dwelling unit for any taxable year of 
                such taxpayer by reducing each dollar amount contained 
                in such subparagraph by an amount equal to the sum of--
                            ``(i) the amount of the expenditures which 
                        were made by the taxpayer during such taxable 
                        year with respect to such dwelling unit and 
                        which were not taken into account by reason of 
                        subparagraph (A), and
                            ``(ii) the amount of any Federal, State, or 
                        local grant received by the taxpayer during 
                        such taxable year which was used to make 
                        residential energy property expenditures with 
                        respect to the dwelling unit and which was not 
                        included in the gross income of such taxpayer.
    ``(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) Application of Section.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, this section shall apply to expenditures made after 
        December 31, 1998, and before January 1, 2004.
            ``(2) Fuel cells.--This section shall apply to expenditures 
        attributable to fuel cells which are made after December 31, 
        1999, and before January 1, 2005.
            ``(3) Photovoltaic property.--This section shall apply to 
        expenditures attributable to photovoltaic property which are 
        made after December 31, 1998, and before January 1, 2006.
            ``(4) New, highly energy-efficient principal residence.--
        This section shall apply to expenditures attributable to new, 
        highly energy-efficient principal residences acquired (within 
        the meaning of section 72(t)(8)(D)(iii)) after December 31, 
        1998, and before January 1, 2006.
            ``(5) Highly efficient passenger vehicles.--This section 
        shall apply to vehicles purchased after December 31, 1998, and 
        before January 1, 2010.''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 1016 of such Code is amended 
        by striking ``and'' at the end of paragraph (26), by striking 
        the period at the end of paragraph (27) and inserting ``; 
        and'', and by adding at the end the following new paragraph:
            ``(28) to the extent provided in section 25B(e), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25B.''.
            (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 25A the following new item:

                              ``Sec. 25B. Nonbusiness energy 
                                        property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures after December 31, 1998.

SEC. 4. EQUALIZATION OF TREATMENT OF PARKING AND TRANSIT FRINGE 
              BENEFITS.

    (a) Increase in Monthly Limit for Transit and Commuter Highway 
Vehicles Benefits.--Subparagraph (A) of section 132(f)(2) of the 
Internal Revenue Code of 1986 (relating to limitation on exclusion), as 
amended by the Transportation Equity Act for the 21st Century, is 
amended by striking ``$65'' and inserting ``$175''.
    (b) Conforming Amendment.--Subsection (c) of section 9010 of the 
Transportation Equity Act for the 21st Century is repealed, and section 
132 of the Internal Revenue Code of 1986 shall be applied as if such 
subsection had never been enacted.
    (c) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in the amendments made by section 9010(b) of 
the Transportation Equity Act for the 21st Century.

SEC. 5. EXTENSION OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN 
              RENEWABLE RESOURCES.

    Paragraph (3) of section 45(c) of the Internal Revenue Code of 1986 
(definitions relating to electricity produced from certain renewable 
resources) is amended by striking ``July 1, 1999'' and inserting ``July 
1, 2004.''.
                                 <all>