[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2380 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2380

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 29, 1999

   Mr. Matsui (for himself, Mr. Neal of Massachusetts, Mr. Lewis of 
   Georgia, Mr. Becerra, Mrs. Thurman, Mr. Waxman, Ms. DeLauro, Mr. 
   Pallone, Mr. Brown of Ohio, Mr. Minge, Mr. Frost, Mr. Filner, Ms. 
Lofgren, Mrs. Lowey, Ms. Lee, Mr. Hinchey, Mr. Kucinich, Mr. Vento, Mr. 
   LaFalce, and Mr. Berman) 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 qualified hybrid vehicle 
        placed in service during the taxable year.
    ``(b) Energy Percentage.--
            ``(1) In general.--The energy percentage shall be 
        determined in accordance with the following table:
      

----------------------------------------------------------------------------------------------------------------
       ``Column A--Description        Column B-- Energy Percentage                Column C--Period
----------------------------------------------------------------------------------------------------------------
                                                                                   For the period:
           In the case of:              The energy percentage is:  ---------------------------------------------
                                                                        Beginning on:            Ending on:
----------------------------------------------------------------------------------------------------------------
Solar energy property (other than     10 percent                     1/1/2000               no end date
 elected solar hot water property
 and photovoltaic property) and
 geothermal energy property.........
Elected solar hot water property....  15 percent                     1/1/2000              12/31/2004
Photovoltaic property...............  15 percent                     1/1/2000              12/31/2006
20 percent energy-efficient building  20 percent                     1/1/2000              12/31/2003
 property...........................
10 percent energy-efficient building  10 percent                     1/1/2000              12/31/2001
 property...........................
Combined heat and power system        8 percent                      1/1/2000              12/31/2002.
 property...........................
----------------------------------------------------------------------------------------------------------------

            ``(2) Periods for which percentage not specified.--In the 
        case of any energy property, the energy percentage shall be 
        zero for any period for which an energy percentage is not 
        specified for such property under paragraph (1).
            ``(3) 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.
            ``(4) 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 
described in the following table, the amount of the current year 
business credit under subsection (a) for the taxable year for each item 
of such property with respect to a building shall not exceed the amount 
specified for such property in such table:
      

------------------------------------------------------------------------
     Description of property:        Maximum allowable credit amount is:
------------------------------------------------------------------------
Elected solar hot water property..      $1,000.
Photovoltaic property with respect      $2,000.
 to which the energy percentage is
 greater than 10 percent.
20 percent energy-efficient         ....................................
 building property:
  fuel cell described in                $ 500 per each kw/hr of
   subsection (e)(3)(A).             capacity.
  natural gas heat pump described       $1,000.
   in subsection (e)(3)(D).
20 percent energy-efficient             $500.
 building property (other than a
 fuel cell and a natural gas heat
 pump)
10 percent energy-efficient             $ 250.
 building property.
------------------------------------------------------------------------

    ``(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) 20 percent energy-efficient 
                        building property,
                            ``(iv) 10 percent energy-efficient building 
                        property, or
                            ``(v) combined heat and power system 
                        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 the performance and quality 
                standards (if any), and the certification requirements 
                (if any), which--
                            ``(i) have been prescribed by the Secretary 
                        by regulations (after consultation with the 
                        Secretary of Energy or the Administrator of the 
                        Environmental Protection Agency, as 
                        appropriate), 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 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.--
                            ``(i) In general.--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.
                            ``(ii) Election.--For purposes of clause 
                        (i) and the energy percentage specified in the 
                        table in subsection (b)(1), a taxpayer may 
                        elect to treat property described in clause (i) 
                        as elected solar water heating property.
                    ``(C) Photovoltaic property.--The term 
                `photovoltaic property' means solar energy property 
                which uses a solar photovoltaic process to generate 
                electricity.
                    ``(D) Swimming pools, etc., used as storage 
                medium.--The term `solar energy property' shall not 
                include a swimming pool, hot tub, or any other energy 
                storage medium which has a function other than the 
                function of such storage.
                    ``(E) Solar panels.--No solar panel or other 
                property installed as a roof (or portion thereof) shall 
                fail to be treated as solar energy property solely 
                because it constitutes a structural component of the 
                structure on which it is installed.
            ``(2) 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) 20 percent energy-efficient building property.--The 
        term `20 percent 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 5 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) 10 percent energy-efficient building property.--The 
        term `10 percent energy-efficient building property' means--
                    ``(A) an electric heat pump that has a heating 
                system performance factor (HSPF) of 7.5 or greater and 
                a cooling seasonal energy efficiency ratio (SEER) of 
                13.5 or greater,
                    ``(B) a central air conditioner that has a cooling 
                seasonal energy efficiency ratio (SEER) of 13.5 or 
                greater, and
                    ``(C) an advanced natural gas water heater that has 
                an energy factor of at least 0.65.
            ``(5) 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, or an 
                        equivalent combination of electrical and 
                        mechanical energy capacities).
                    ``(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 not less than 22 years.
    ``(f) Qualified Hybrid Vehicles.--For purposes of subsection 
(a)(2)--
            ``(1) Credit amount.--
                    ``(A) In general.--The credit amount for each 
                qualified hybrid vehicle with a rechargeable energy 
                storage system that provides the applicable percentage 
                of the maximum available power shall be the amount 
                specified in the following table:
      

------------------------------------------------------------------------
               ``Applicable percentage
------------------------------------------------------ Credit amount is:
    Greater than or equal to--         Less than--
------------------------------------------------------------------------
5 percent.........................      10 percent           $ 500
10 percent........................      20 percent           $1,000
20 percent........................      30 percent           $1,500
30 percent........................                           $2,000
------------------------------------------------------------------------

                    ``(B) Increase in credit amount for regenerative 
                braking system.--In the case of a qualified hybrid 
                vehicle that actively employs a regenerative braking 
                system which supplies to the rechargeable energy 
                storage system the applicable percentage of the energy 
                available from braking in a typical 60 miles per hour 
                to 0 miles per hour braking event, the credit amount 
                determined under subparagraph (A) shall be increased by 
                the amount specified in the following table:
      

------------------------------------------------------------------------
               ``Applicable percentage
------------------------------------------------------   Credit amount
    Greater than or equal to--         Less than--        increase is:
------------------------------------------------------------------------
20 percent........................      40 percent           $ 250
40 percent........................      60 percent           $ 500
60 percent........................                           $1,000
------------------------------------------------------------------------

            ``(2) Qualified hybrid vehicle.--The term `qualified hybrid 
        vehicle means an automobile that meets all applicable 
        regulatory requirements and that can draw propulsion energy 
        from both of the following on-board sources of stored energy:
                    ``(A) A consumable fuel.
                    ``(B) A rechargeable energy storage system.
            ``(3) Maximum available power.--The term `maximum available 
        power' means the maximum value of the sum of the heat engine 
        and electric drive system power or other non-heat energy 
        conversion devices available for a driver's command for maximum 
        acceleration at vehicle speeds under 75 miles per hour.
            ``(4) Automobile.--The term `automobile' has the meaning 
        given such term by section 4064(b)(1) (without regard to 
        subparagraphs (B) and (C) thereof). 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 gross vehicle weight rating or 
        less.
            ``(5) Double benefit; property used outside united states, 
        etc., not qualified.--No credit shall be allowed under 
        subsection (a)(2) with respect to--
                    ``(A) any property for which a credit is allowed 
                under section 25B or 30,
                    ``(B) any property referred to in section 50(b), 
                and
                    ``(C) the portion of the cost of any property taken 
                into account under section 179 or 179A.
            ``(6) Regulations.--
                    ``(A) Treasury.--The Secretary shall prescribe such 
                regulations as may be necessary or appropriate to carry 
                out the purposes of this subsection.
                    ``(B) Environmental protection agency.--
                    ``(A) Treasury.--The Administrator of the 
                Environmental Protection Agency shall prescribe such 
                regulations as may be necessary or appropriate to 
                specify the testing and calculation procedures that 
                would be used to determine whether a vehicle meets the 
                qualifications for a credit under this subsection.
            ``(7) Termination.--Paragraph (2) shall not apply with 
        respect to any vehicle placed in service during a calendar year 
        ending before January 1, 2003, or after December 31, 2006.
    ``(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) Business use.--The rule similar to the rule of 
        section 25(B)(d)(5)(B) shall apply for purposes of determining 
        the business use of a vehicle.
            ``(3) 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.
            ``(4) Double benefit.--Property which would, but for this 
        paragraph, be eligible for credit under more than one provision 
        of this section shall be eligible only under one such 
        provision, the provision specified by the taxpayer.''.
    (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)(3)''.
            (6) Subparagraph (B) of section 168(e)(3) of such Code is 
        amended--
                    (A) in clause (vi)(I)--
                            (i) by striking ``section 48(a)(3)'' and 
                        inserting ``paragraphs (1) and (2) of section 
                        48A(e)'', and
                            (ii) by striking ``clause (i)'' and 
                        inserting ``paragraph (1)(A)'', 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)(5)) 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, 1999, 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. EXTENSION OF CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) Extension of Credit for Qualified Electric Vehicles.--
Subsection (f) of section 30 of such Code (relating to termination) is 
amended by striking ``December 31, 2004'' and inserting ``December 31, 
2006''.
    (b) Repeal of Phaseout.--Subsection (b) of section 30 of such Code 
(relating to limitations) is amended by striking paragraph (2) and 
redesignating paragraph (3) as paragraph (2).
    (c) No Double Benefit.--
            (1) Subsection (d) of section 30 of such Code (relating to 
        special rules) is amended by adding at the end the following 
        new paragraph:
            ``(5) No credit shall be allowed under subsection (a) with 
        respect to any vehicle if the taxpayer claims a credit for such 
        vehicle under section 25B(a)(1)(B) or 48A(f).''.
            (2) Paragraph (3) of section 30(d) of such Code (relating 
        to property used outside United States, etc., not qualified) is 
        amended by striking ``section 50(b)'' and inserting ``section 
        25B, 48A, or 50(b)''.
            (3) Paragraph (5) of section 179A(e) of such Code (relating 
        to property used outside United States, etc., not qualified) is 
        amended by striking ``section 50(b)'' and inserting ``section 
        25B, 48A, or 50(b)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.

SEC. 4. MODIFICATIONS TO CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN 
              RENEWABLE RESOURCES.

    (a) Extension.--Paragraph (3) of section 45(c) of the Internal 
Revenue Code of 1986 (relating to qualified facility) is amended by 
striking ``July 1, 1999'' and inserting ``July 1, 2004''.
    (b) Qualified Facilities Include All Biomass Facilities.--
            (1) In general.--Paragraph (1) of section 45(c) of such 
        Code (relating to definition of qualified energy resources) is 
        amended by striking ``and'' at the end of subparagraph (A), by 
        striking the period at the end of subparagraph (B), and by 
        inserting after subparagraph (B) the following:
                    ``(C) biomass (other than closed-loop biomass).''.
            (2) Biomass defined.--Paragraph (2) of section 45(c) of 
        such Code is amended to read as follows:
            ``(2) Biomass.--
                    ``(A) In general.--The term `biomass' means--
                            ``(i) closed-loop biomass, and
                            ``(ii) any solid, nonhazardous, cellulosic 
                        waste material, which is segregated from other 
                        waste materials, and which is derived from--
                                    ``(I) any of the following forest-
                                related resources: mill residues, 
                                precommercial thinnings, slash, and 
                                brush, but not including old-growth 
                                timber,
                                    ``(II) waste pallets, crates, and 
                                dunnage, and landscape or right-of-way 
                                tree trimmings, but not including 
                                unsegregated municipal solid waste 
                                (garbage) and post-consumer wastepaper, 
                                or
                                    ``(III) agriculture sources, 
                                including orchard tree crops, vineyard, 
                                grain, legumes, sugar, and other crop 
                                by-products or residues.
                    ``(B) Closed-loop biomass.--The term `closed-loop 
                biomass' means any organic material from a plant which 
                is planted exclusively for purposes of being used at a 
                qualified facility to produce electricity.''.
    (c) Electricity Produced From Biomass Co-fired in Coal Plants.--
            (1) Credit amount.--Paragraph (1) of section 45(a) of such 
        Code (relating to general rule) is amended by inserting ``(1.0 
        cents in the case of electricity produced from biomass co-fired 
        in a facility which produces electricity from coal) after ``1.5 
        cents''.
            (2) Qualified facility.--Paragraph (3) of section 45(c) of 
        such Code (relating to definitions) is amended by striking the 
        period at the end and inserting the following: ``, and any 
        facility using biomass other than closed loop biomass to 
        produce electricity which is owned by the taxpayer and which is 
        originally placed in service after June 30, 1999.''.
            (3) Adjustment for inflation.--
                    (A) In general.--Paragraph (2) of section 45(b) of 
                such Code (relating to credit and phaseout adjustment 
                based on inflation) is amended by striking ``1.5 cent 
                amount'' and inserting ``1.5 and 1.0 cent amounts''.
                    (B) Base year for inflation adjustment factor.--
                Subparagraph (B) of section 45(d)(2) of such Code 
                (relating to inflation adjustment factor) is amended by 
                adding at the end the following new sentence: ``In the 
                case of the 1.0 cents amount in subsection (a), the 
                first sentence of this subparagraph shall be applied by 
                substituting `1999' for `1992'.''.
    (d) Credit Not To Apply to Electricity Sold to Utilities Under 
Certain Contracts.--Subsection (b) of section 45 of such Code (relating 
to limitations and adjustments) is amended by adding at the end the 
following new paragraph:
            ``(4) Credit not to apply to electricity sold to utilities 
        under certain contracts.--
                    ``(A) In general.--The credit determined under 
                subsection (a) shall not apply to electricity--
                            ``(i) produced at a qualified facility 
                        placed in service by the taxpayer after June 
                        30, 1999, and
                            ``(ii) sold to a utility pursuant to a 
                        contract originally entered into before January 
                        1, 1987 (whether or not amended or restated 
                        after that date).
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                if--
                            ``(i) the prices for energy and capacity 
                        from such facility are established pursuant to 
                        an amendment to the contract referred to in 
                        subparagraph (A)(ii),
                            ``(ii) such amendment provides that the 
                        prices set forth in the contract which exceed 
                        avoided cost prices determined at the time of 
                        delivery shall apply only to annual quantities 
                        of electricity (prorated for partial years) 
                        which do not exceed the greater of--
                                    ``(I) the average annual quantity 
                                of electricity sold to the utility 
                                under the contract during calendar 
                                years 1994, 1995, 1996, 1997, and 1998, 
                                or
                                    ``(II) the estimate of the annual 
                                electricity production set forth in the 
                                contract, or, if there is no such 
                                estimate, the greatest annual quantity 
                                of electricity sold to the utility 
                                under the contract in any of the 
                                calendar years 1996, 1997, or 1998, and
                            ``(iii) such amendment provides that energy 
                        and capacity in excess of the limitation in 
                        clause (ii) may be--
                                    ``(I) sold to the utility only at 
                                prices that do not exceed avoided cost 
                                prices determined at the time of 
                                delivery, or
                                    ``(II) sold to a third party 
                                subject to a mutually agreed upon 
                                advance notice to the utility.
                For purposes of this subparagraph, avoided cost prices 
                shall be determined as provided for in section 
                292.304(d)(1) of title 18, Code of Federal Regulations, 
                or any successor regulation.''.
    (e) Effective Date.--
            (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        ending after June 30, 1999.
            (2) Adjustment for inflation.--The amendments made by 
        subsection (c)(3) shall apply to taxable years ending after 
        December 31, 1999.

SEC. 5. 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,
                    ``(B) the credit amount (determined under section 
                48A(f)) for each vehicle purchased during the taxable 
                year which is a qualified hybrid vehicle (as defined in 
                section 48A(f)(2)), and
                    ``(C) the credit amount specified in the following 
                table for a new, highly energy-efficient principal 
                residence:

``New, Highly Energy-Efficient                           Credit Amount:
        Principal Residence:
        30 percent property.................................... $1,000.
        40 percent property.................................... $1,500.
        50 percent property.................................... $2,000.
            ``(2) Applicable percentage.--
                    ``(A) In general.--The applicable percentage shall 
                be determined in accordance with the following table:
      

----------------------------------------------------------------------------------------------------------------
       ``Column A--Description            Column B-- Applicable                   Column C--Period
-------------------------------------          Percentage          ---------------------------------------------
                                     ------------------------------                For the period:
           In the case of:              The applicable percentage  ---------------------------------------------
                                                   is:                  Beginning on:            Ending on:
----------------------------------------------------------------------------------------------------------------
20 percent energy-efficient building  20 percent                     1/1/2000              12/31/2003
 property...........................
10 percent energy-efficient building  10 percent                     1/1/2000              12/31/2001
 property...........................
Solar water heating property........  15 percent                     1/1/2000              12/31/2006
Photovoltaic property...............  15 percent                     1/1/2000              12/31/2006.
----------------------------------------------------------------------------------------------------------------

                    ``(B) Periods for which percentage not specified.--
                In the case of any residential energy property, the 
                applicable percentage shall be zero for any period for 
                which an applicable percentage is not specified for 
                such property under subparagraph (A).
    ``(b) Maximum Credit.--
            ``(1) In general.--In the case of property described in the 
        following table, the amount of the credit allowed under 
        subsection (a)(1)(A) for the taxable year for each item of such 
        property with respect to a dwelling unit shall not exceed the 
        amount specified for such property in such table:

      

------------------------------------------------------------------------
  ``Description of property item:    Maximum allowable credit amount is:
------------------------------------------------------------------------
20 percent energy-efficient             $500.
 building property (other than a
 fuel cell or natural gas heat
 pump).
20 percent energy-efficient         ....................................
 building property:
  fuel cell described in section        $ 500 per each kw/hr of
   48A(e)(3)(A).                     capacity.
  natural gas heat pump described       $1,000.
   in section 48A(e)(3)(D).
10 percent energy-efficient             $ 250.
 building property.
Solar water heating property......      $1,000.
Photovoltaic property.............      $2,000.
------------------------------------------------------------------------

            ``(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) Definitions.--For purposes of this section--
            ``(1) Residential Energy Property Expenditures.--The term 
        `residential energy property expenditures' means expenditures 
        made by the taxpayer for qualified energy property installed on 
        or in connection with a dwelling unit which--
                    ``(A) is located in the United States, and
                    ``(B) is used 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 paragraphs (3) and (4) of section 48A(e).
            ``(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) such property is located in the 
                        United States,
                            ``(ii) 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
                            ``(iii) such property is certified before 
                        such use commences as being 50 percent 
                        property, 40 percent property, or 30 percent 
                        property.
                    ``(B) 50, 40, or 30 percent property.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), property is 50 percent 
                        property, 40 percent property, or 30 percent 
                        property if the projected energy usage of such 
                        property is reduced by 50 percent, 40 percent, 
                        or 30 percent, respectively, compared to the 
                        energy usage of a reference house that complies 
                        with minimum standard practice, such as the 
                        1998 International Energy Conservation Code of 
                        the International Code Council, as determined 
                        according to the requirements specified in 
                        clause (ii).
                            ``(ii) Procedures.--
                                    ``(I) In general.--For purposes of 
                                clause (i), energy usage shall be 
                                demonstrated either by a component-
                                based approach or a performance-based 
                                approach.
                                    ``(II) Component approach.--
                                Compliance by the component approach is 
                                achieved when all of the components of 
                                the house comply with the requirements 
                                of prescriptive packages established by 
                                the Secretary of Energy, in 
                                consultation with the Administrator of 
                                the Environmental Protection Agency, 
                                such that they are equivalent to the 
                                results of using the performance-based 
                                approach of subclause (III) to achieve 
                                the required reduction in energy usage.
                                    ``(III) Performance-based 
                                approach.--Performance-based compliance 
                                shall be demonstrated in terms of the 
                                required percentage reductions in 
                                projected energy use. Computer software 
                                used in support of performance-based 
                                compliance must meet all of the 
                                procedures and methods for calculating 
                                energy savings reductions that are 
                                promulgated by the Secretary of Energy. 
                                Such regulations on the specifications 
                                for software shall be based in the 1998 
                                California Residential Alternative 
                                Calculation Method Approval Manual, 
                                except that the calculation procedures 
                                shall be developed such that the same 
                                energy efficiency measures qualify a 
                                home for tax credits regardless of 
                                whether the home uses a gas or oil 
                                furnace or boiler, or an electric heat 
                                pump.
                                    ``(IV) Approval of software 
                                submissions.--The Secretary of Energy 
                                shall approve software submissions that 
                                comply with the calculation 
                                requirements of subclause (III).
                    ``(C) Determinations of compliance.--A 
                determination of compliance made for the purposes of 
                this paragraph shall be filed with the Secretary of 
                Energy within 1 year of the date of such determination 
                and shall include the TIN of the certifier, the address 
                of the building in compliance, and the identity of the 
                person for whom such determination was performed. 
                Determinations of compliance filed with the Secretary 
                of Energy shall be available for inspection by the 
                Secretary.
                    ``(D) Compliance.--
                            ``(i) In general.--The Secretary of Energy 
                        in consultation with the Secretary of the 
                        Treasury shall establish requirements for 
                        certification and compliance procedures after 
                        examining the requirements for energy 
                        consultants and home energy ratings providers 
                        specified by the Mortgage Industry National 
                        Accreditation Procedures for Home Energy Rating 
                        Systems.
                            ``(ii) Individuals qualified to determine 
                        compliance.--Individuals qualified to determine 
                        compliance shall be only those individuals who 
                        are recognized by an organization certified by 
                        the Secretary of Energy for such purposes.
                    ``(D) 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) Double benefit; property used outside United States, 
        etc., not qualified.--No credit shall be allowed under 
        subsection (a)(1)(B) with respect to--
                    ``(A) any property for which a credit is allowed 
                under section 30 or 48A,
                    ``(B) any property referred to in section 50(b), 
                and
                    ``(C) the portion of the cost of any property taken 
                into account under section 179 or 179A.
            ``(7) 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.
            ``(8) 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 dollar amounts in 
                the table contained in subsection (b)(1) with respect 
                to each property purchased for such dwelling unit for 
                any taxable year of such taxpayer shall be reduced 
                proportionately by an amount equal to the sum of--
                            ``(i) the amount of the expenditures made 
                        by the taxpayer during such taxable year with 
                        respect to such dwelling unit and not taken 
                        into account by reason of subparagraph (A), and
                            ``(ii) the amount of any Federal, State, or 
                        local grant received by the taxpayer during 
                        such taxable year which is used to make 
                        residential energy property expenditures with 
                        respect to the dwelling unit and is not 
                        included in the gross income of such taxpayer.
    ``(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.''.
    (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, 1999.
                                 <all>