[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2478 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 2478

   To establish a balanced energy program for the United States that 
 unlocks the potential of renewable energy and energy efficiency, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 11, 2001

 Ms. Woolsey (for herself, Mr. Filner, Mr. Sanders, Ms. McKinney, Mr. 
 Hoeffel, Mr Thompson of Mississippi, Mr. Payne, Mr. Baird, Mr. Baca, 
  Mr. Baldacci, Ms. Rivers, Mr. Blumenauer, Mr. Lantos, Mrs. Mink of 
 Hawaii, Mr. Wu, Mr. Honda, and Mr. Udall of Colorado) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committees on Science, and Energy and Commerce, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of 
                        the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To establish a balanced energy program for the United States that 
 unlocks the potential of renewable energy and energy efficiency, and 
                          for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Comprehensive 
Renewable Energy and Energy Efficiency Act of 2001''.
    (b) Table of Contents.--

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. National research and development policy.
Sec. 4. Definitions.
           TITLE I--RESEARCH, DEVELOPMENT, AND DEMONSTRATION

Sec. 101. Enhanced renewable energy research, development, and 
                            demonstration.
Sec. 102. Enhanced energy efficiency research, development, and 
                            demonstration.
Sec. 103. Biomass energy and related chemical research, development, 
                            and demonstration.
Sec. 104. Assessment of renewable energy resources.
Sec. 105. Enhanced aeronautical system energy efficiency research, 
                            development, and demonstration.
Sec. 106. Progress report.
Sec. 107. National Building Performance Initiative.
                   TITLE II--COMMERCIAL APPLICATIONS

Sec. 201. Study of financing for prototype technologies.
Sec. 202. Regulatory reviews for new technologies and processes.
Sec. 203. Commercialization assistance.
Sec. 204. Education and outreach.
Sec. 205. Proton exchange membrane demonstration programs.
                    TITLE III--REGULATORY PROVISIONS

Sec. 301. Public Benefits Trust Fund.
Sec. 302. Net metering.
Sec. 303. Renewable energy portfolio standards.
Sec. 304. High performance schools.
Sec. 305. High performance schools research.
Sec. 306. Vehicle fuel economy standards.
Sec. 307. Energy Star program.
Sec. 308. Fuel Efficient Tire program.
Sec. 309. Environmental disclosure to consumers.
                 TITLE IV--FEDERAL GOVERNMENT PROGRAMS

Sec. 401. Energy savings measures in Capitol.
Sec. 402. Energy savings performance contracts.
Sec. 403. Federal purchase requirement.
Sec. 404. Federal buildings energy efficiency.
Sec. 405. Retention of savings.
Sec. 406. Guaranteed energy savings.
Sec. 407. President's Management Council.
Sec. 408. Federal use of Energy Star standards.
                        TITLE V--TAX PROVISIONS

Sec. 500. Amendment of 1986 Code.
         Subtitle A--Energy-Efficient Property Used in Business

Sec. 501. Credit for certain energy-efficient property used in 
                            business.
Sec. 502. Energy-efficient commercial building property deduction.
Sec. 503. Business tax credit for the manufacture of energy efficient 
                            appliances.
                 Subtitle B--Residential Energy Systems

Sec. 511. Credit for construction of new energy-efficient home.
Sec. 512. Credit for energy efficiency improvements to existing homes.
Sec. 513. Credit for residential solar, wind, and fuel cell energy 
                            property.
Sec. 514. Credit for purchase of energy star products.
           Subtitle C--Electricity Facilities and Production

Sec. 521. Incentive for distributed generation.
Sec. 522. Modifications to credit for electricity produced from 
                            renewable and waste products.
Sec. 523. Treatment of facilities using bagasse to produce energy as 
                            solid waste disposal facilities eligible 
                            for tax-exempt financing.
Sec. 524. Depreciation of property used in the transmission of 
                            electricity.
Sec. 525. Credit for investment in additional plant capacity for 
                            existing renewable resources facilities 
                            producing electricity.
                  Subtitle D--Hybrid Electric Vehicles

Sec. 531. Alternative motor vehicle credit.
Sec. 532. Modification of credit for qualified electric vehicles.
Sec. 533. Credit for retail sale of alternative fuels as motor vehicle 
                            fuel.
Sec. 534. Extension of deduction for certain refueling property.
Sec. 535. Credit for installation of alternative fueling stations.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) there is a need for a robust renewable energy and 
        energy efficiency research and development program that 
        provides a basis for the development, demonstration, and 
        deployment of new energy technologies in partnership with 
        industry;
            (2) Federal budget authority for renewable energy and 
        energy efficiency research and development has declined 
        significantly since 1980; and
            (3) the President's budget request for fiscal year 2002 
        makes even greater reductions in these programs, imperiling 
        promising technologies that have the potential to reduce energy 
        consumption and increase energy efficiency.

SEC. 3. NATIONAL RESEARCH AND DEVELOPMENT POLICY.

    It shall be the policy of the United States that its research, 
development, demonstration, and commercial applications programs be 
designed to enable 20 percent of the energy generated in the United 
States from stationary sources to be generated from nonhydropower 
renewable energy sources by the year 2020.

SEC. 4. DEFINITIONS.

    For purposes of this Act, except as otherwise provided--
            (1) the term ``biomass'' means any organic matter that is 
        available on a renewable or recurring basis, including 
        agricultural crops and trees, wood and wood wastes and 
        residues, plants (including aquatic plants), grasses, residues, 
        fibers, animal wastes, and municipal wastes; and
            (2) the term ``renewable energy source'' means--
                    (A) wind;
                    (B) biomass;
                    (C) a geothermal source;
                    (D) a solar source;
                    (E) a photovoltaic source; or
                    (F) additional hydroelectric generation capacity 
                achieved from increased efficiency at an existing 
                hydroelectric dam.

           TITLE I--RESEARCH, DEVELOPMENT, AND DEMONSTRATION

SEC. 101. ENHANCED RENEWABLE ENERGY RESEARCH, DEVELOPMENT, AND 
              DEMONSTRATION.

    (a) Goals.--In order to achieve the goal stated in section 3, the 
United States shall have a balanced energy research, development, and 
demonstration program to enhance renewable energy with the following 
goals:
            (1) For wind power, the program should reduce the cost of 
        wind electricity by 50 percent by 2006, compared to the cost as 
        of the date of the enactment of this Act, so that wind power 
        can be widely competitive with fossil-fuel-based electricity in 
        a restructured electric industry, with concentration within the 
        program on a variety of advanced wind turbine concepts and 
        manufacturing technologies.
            (2) For photovoltaics, the programs should pursue research, 
        development, and demonstration that would lead to photovoltaic 
        systems prices of $3,000 per kilowatt by January 1, 2003, and 
        $1,500 per kilowatt by January 1, 2006. Program activities 
        should include assisting industry in developing manufacturing 
        technologies, giving greater attention to balance of system 
        issues, and expanding fundamental research on relevant advanced 
        materials.
            (3) For solar thermal electric systems the program should 
        strengthen ongoing research, development, and demonstration 
        combining high-efficiency and high-temperature receivers with 
        advanced thermal storage and power cycles, with the goal of 
        making solar-only power (including baseload solar power) widely 
        competitive with fossil fuel power by 2015.
            (4) For geothermal energy, the program should continue work 
        on hydrothermal systems, and reactivate research, development, 
        and demonstration on advanced concepts, giving top priority to 
        high-grade hot dry-rock geothermal energy.
            (5) For hydrogen-based energy systems, the program should 
        support research, development, and demonstration on hydrogen-
        using and hydrogen-producing technologies. The program should 
        also coordinate hydrogen-using technology development with 
        proton exchange membrane fuel cell vehicle development 
        activities under the enhanced energy efficiency program 
        described in section 102.
            (6) For hydropower, the program should provide a new 
        generation of turbine technologies that will increase 
        generating capacity and will be less damaging to fish and 
        aquatic ecosystems.
            (7) For electric energy and storage, the program should 
        develop high capacity superconducting transmission lines and 
        generators, and develop distributed generating systems to 
        accommodate multiple types of energy sources under a common 
        interconnect standard.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy for carrying out activities to 
achieve the goals described in subsection (a)--
            (1) $420,000,000 for fiscal year 2002;
            (2) $470,000,000 for fiscal year 2003;
            (3) $525,000,000 for fiscal year 2004;
            (4) $585,000,000 for fiscal year 2005; and
            (5) $655,000,000 for fiscal year 2006.

SEC. 102. ENHANCED ENERGY EFFICIENCY RESEARCH, DEVELOPMENT, AND 
              DEMONSTRATION.

    (a) Goals.--In order to achieve the goal stated in section 3, the 
United States shall have a balanced energy research, development, and 
demonstration program to enhance energy efficiency with the following 
goals:
            (1) For energy efficiency in housing, the program should 
        develop technologies, housing components, designs, and 
        production methods that will, by 2010--
                    (A) reduce the time needed to move technologies to 
                market by 50 percent, compared to the time needed as of 
                the date of the enactment of this Act;
                    (B) reduce the monthly cost of new housing by 20 
                percent, compared to the cost as of the date of the 
                enactment of this Act;
                    (C) cut the environmental impact and energy use of 
                new housing by 50 percent, compared to the impact and 
                use as of the date of the enactment of this Act;
                    (D) ensure that at least 15,000,000 homes existing 
                as of the date of the enactment of this Act reduce 
                their energy use by 30 percent, compared to the use as 
                of the date of the enactment of this Act; and
                    (E) improve durability and reduce maintenance costs 
                by 50 percent compared to the durability and costs as 
                of the date of the enactment of this Act.
            (2) For industrial energy efficiency, the program should, 
        in cooperation with the affected industries--
                    (A) develop a microturbine (40 to 300 kilowatt) 
                that is more than 40 percent efficient by 2006, 
                compared to the efficiency as of the date of the 
                enactment of this Act;
                    (B) develop a microturbine that is more than 50 
                percent efficient by 2010, compared to the efficiency 
                as of the date of the enactment of this Act;
                    (C) develop advanced materials for combustion 
                systems that reduce emissions of nitrogen oxides by 30 
                to 50 percent while increasing efficiency 5 to 10 
                percent by 2007, compared to such emissions as of the 
                date of the enactment of this Act; and
                    (D) improve the energy intensity of the major 
                energy-consuming industries by at least 25 percent by 
                2010, compared to the energy intensity as of the date 
                of the enactment of this Act.
            (3) For transportation energy efficiency, the program 
        should, in cooperation with affected industries--
                    (A) develop a production prototype passenger 
                automobile that has fuel economy equivalent to 80 miles 
                per gallon of gasoline by 2004;
                    (B) develop class 7 and 8 heavy duty trucks and 
                buses with ultra low emissions and the ability to use 
                an alternative fuel that has an average fuel economy 
                equivalent to--
                            (i) 10 miles per gallon of gasoline by 
                        2007; and
                            (ii) 13 miles per gallon of gasoline by 
                        2010;
                    (C) develop a production prototype of a passenger 
                automobile with zero equivalent emissions that has an 
                average fuel economy of 100 miles per gallon of 
                gasoline by 2010; and
                    (D) improve, by 2010, the average fuel economy of 
                trucks--
                            (i) in classes 1 and 2 by 300 percent; and
                            (ii) in classes 3 through 6 by 200 percent,
                compared to the fuel economy as of the date of the 
                enactment of this Act.
    (b) Definitions.--For purposes of this section--
            (1) the term ``alternative fuel'' has the meaning given 
        that term in section 301(2) of the Energy Policy Act of 1992; 
        and
            (2) the term ``major energy-consuming industries'' means--
                    (A) the forest product industry;
                    (B) the steel industry;
                    (C) the aluminum industry;
                    (D) the metal casting industry;
                    (E) the chemical industry;
                    (F) the petroleum refining industry; and
                    (G) the glass-making industry.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy for carrying out activities to 
achieve the goals described in subsection (a), including State and 
local grants and the Federal Energy Management Program--
            (1) $900,000,000 for fiscal year 2002;
            (2) $950,000,000 for fiscal year 2003;
            (3) $1,025,000,000 for fiscal year 2004;
            (4) $1,110,000,000 for fiscal year 2005; and
            (5) $1,200,000,000 for fiscal year 2006.

SEC. 103. BIOMASS ENERGY AND RELATED CHEMICAL RESEARCH, DEVELOPMENT, 
              AND DEMONSTRATION.

    (a) Goals.--In order to achieve the goal stated in section 3, the 
United States shall have a balanced energy research, development, and 
demonstration program to enhance biomass energy and related chemical 
research, development, and demonstration with the following goals:
            (1) The program should enable the United States to triple 
        bioenergy use by 2010.
            (2) For biomass-based power systems, the program should 
        enable commercialization, within five years after the date of 
        the enactment of this Act, of integrated power-generating 
        technologies that employ gas turbines and fuel cells integrated 
        with biomass gasifiers.
            (3) For biofuels, the program should accelerate research, 
        development, and demonstration on advanced enzymatic hydrolysis 
        technology for making ethanol from cellulosic feedstock, with 
        the goal that between 2010 and 2015 ethanol produced from 
        energy crops would be fully competitive in terms of price with 
        gasoline as a neat fuel, in either internal combustion engines 
        or fuel cell vehicles.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy for carrying out research, 
development, and demonstration activities on biomass-related 
technologies, including transportation, power, and related chemical 
production technologies, under the Biomass Research and Development Act 
of 2000--
            (1) for biomass transportation--
                    (A) $54,000,000 for fiscal year 2002;
                    (B) $65,000,000 for fiscal year 2003;
                    (C) $78,000,000 for fiscal year 2004;
                    (D) $94,000,000 for fiscal year 2005; and
                    (E) $113,000,000 for fiscal year 2006;
            (2) for biomass power--
                    (A) $48,000,000 for fiscal year 2002;
                    (B) $58,000,000 for fiscal year 2003;
                    (C) $70,000,000 for fiscal year 2004;
                    (D) $84,000,000 for fiscal year 2005; and
                    (E) $101,000,000 for fiscal year 2006; and
            (3) for biomass energy-related industrial applications--
                    (A) $53,000,000 for fiscal year 2002;
                    (B) $58,000,000 for fiscal year 2003;
                    (C) $63,000,000 for fiscal year 2004;
                    (D) $68,000,000 for fiscal year 2005; and
                    (E) $73,000,000 for fiscal year 2006.

SEC. 104. ASSESSMENT OF RENEWABLE ENERGY RESOURCES.

    (a) In General.--Not later than one year after the date of the 
enactment of this Act, the Secretary of Energy shall submit to the 
Congress an assessment of all renewable energy resources available for 
commercial applications within the United States.
    (b) Resource Assessment.--Such assessment shall include a detailed 
inventory describing the available amount and characteristics of 
renewable energy sources, and an estimate of the research, development, 
demonstration, and commercial applications efforts necessary to develop 
each resource. The assessment shall also include such other information 
as the Secretary of Energy believes would be useful in achieving wider 
commercial applications of emerging and state-of-the-art renewable 
energy generation facilities or devices.
    (c) Availability.--The technology development information and cost 
estimates in the assessment shall be updated annually and made 
available to the public, along with the data used to create the 
assessment.
    (d) Authorization of Appropriations.--For the purposes of carrying 
out this section, there are authorized to be appropriated to the 
Secretary of Energy $10,000,000 for fiscal year 2002, and such sums as 
may be necessary for the fiscal years 2003 through 2020.

SEC. 105. ENHANCED AERONAUTICAL SYSTEM ENERGY EFFICIENCY RESEARCH, 
              DEVELOPMENT, AND DEMONSTRATION.

    (a) Goals.--For aeronautical system energy efficiency, the National 
Aeronautics and Space Administration shall seek to--
            (1) develop technologies that will enable a 50 percent 
        increase in aircraft engine energy efficiencies by 2010 as 
        compared to the most energy efficient engine in the United 
        States commercial aircraft fleet as of the date of the 
        enactment of this Act; and
            (2) develop air transportation management operational 
        concepts and procedures that will enable a 25 percent increase 
        in the energy efficiency of the overall air transport system on 
        a per flight basis by 2010 as compared to the efficiency as of 
        the date of the enactment of this Act.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Administrator of the National Aeronautics and Space 
Administration for carrying out activities to achieve the goals 
described in subsection (a)--
            (1) $50,000,000 for fiscal year 2002;
            (2) $55,000,000 for fiscal year 2003;
            (3) $60,000,000 for fiscal year 2004;
            (4) $65,000,000 for fiscal year 2005; and
            (5) $70,000,000 for fiscal year 2006.

SEC. 106. PROGRESS REPORT.

    The Secretary of Energy shall transmit to the Committee on Science 
of the House of Representatives and the Committee on Energy and Natural 
Resources of the Senate an annual report assessing the progress made 
pursuant to this title in achieving the goal set forth in section 3. 
The first such report shall be transmitted along with the first annual 
budget request from the President occurring at least 6 months after the 
date of the enactment of this Act.

SEC. 107. NATIONAL BUILDING PERFORMANCE INITIATIVE.

    (a) Interagency Group.--Not later than 90 days after the date of 
the enactment of this Act, the Director of the Office of Science and 
Technology Policy shall establish an Interagency Group responsible for 
the development and implementation of a National Building Performance 
Initiative. The Director of the Office of Science and Technology Policy 
or the Director's designee shall serve as Chairperson of the 
Interagency Group. The membership of the Interagency Group shall 
include representatives the National Institute of Standards and 
Technology, the Department of Energy, the National Science Foundation, 
the Environmental Protection Agency, and other agencies with 
jurisdiction over energy conservation research and development, 
buildings, construction, or related issues. The Interagency Group shall 
work to ensure regular agency coordination and information sharing. The 
National Institute of Standards and Technology shall provide necessary 
administrative support for the Interagency Group.
    (b) Objective.--The objective of the Interagency Group shall be to 
detail the appropriate government role in reducing the costs, including 
energy and health and safety related costs, of using, owning, and 
operating commercial, institutional, residential, and industrial 
buildings by 30 percent by 2020.
    (c) Plan.--Not later than 270 days after the date of the enactment 
of this Act, the Interagency Group shall transmit to the Congress a 
multiyear implementation plan for achieving the objective stated in 
subsection (b). The plan shall address--
            (1) the appropriate Federal Government role in achieving 
        the objective, including the elements described in subsection 
        (d);
            (2) research, development, and demonstration of new or 
        improved technologies, including the elements described in 
        subsection (e);
            (3) better understanding of impediments and disincentives 
        to adoption of best practices;
            (4) dissemination of information on cost-effective and 
        affordable construction and building operation technologies and 
        techniques to industry, State and local governments, 
        homeowners, and the general public, including the elements 
        described in subsection (f); and
            (5) incentives for the creation of partnerships between the 
        public and private sectors.
The plan shall defer to the private sector and State and local 
government for implementation in all appropriate instances.
    (d) Federal Role.--The plan required under subsection (c) shall 
include--
            (1) a statement of research, development, and demonstration 
        goals and priorities;
            (2) the establishment, consistent with this Act, of goals, 
        priorities, and target dates for implementation of the plan;
            (3) assignment of responsibilities with respect to each 
        element of the plan, avoiding duplication whenever possible and 
        assigning responsibilities to Federal agencies with existing 
        expertise;
            (4) a description of resources, including staffing, needed 
        to carry out the plan; and
            (5) a description of plans for cooperation and coordination 
        in all phases described in the plan with interested 
        governmental entities in the States.
    (e) Research, Development, and Demonstration Elements.--The 
research, development, and demonstration elements of the plan shall 
include--
            (1) peer-reviewed research and development on and 
        demonstration of systems and materials for new construction and 
        retrofit, including composite materials; building envelope 
        components, including windows, doors, and roofs; structural 
        design; and design and construction techniques, through 
        physical testing and through computer simulation when 
        appropriate, taking into consideration cost-effectiveness, 
        affordability, and regional climate differences and 
        susceptibility to natural hazards;
            (2) development of mechanisms for collecting information on 
        building systems and materials performance and other pertinent 
        information from sources such as the construction industry, 
        insurance companies, and building officials; and
            (3) development of updatable, cost-effective, and 
        affordable systems, both for new construction and for 
        retrofitting, and for inventorying information on components 
        and materials and their interaction.
    (f) Technology Transfer.--The technology transfer elements of the 
plan shall include--
            (1) the collection, classification, presentation, and 
        dissemination in a usable form to Federal, State, and local 
        officials, community leaders, the design and construction 
        industry, contractors, home owners, and the general public, of 
        research results and other pertinent information;
            (2) in coordination with the private sector, academia, and 
        the States, curriculum development and related measures to 
        facilitate the education or training of employees of the design 
        and construction industry, the insurance industry, and State 
        and local governments, and other persons as appropriate; and
            (3) efforts to increase public awareness and information.
    (g) Additional Functions.--The Interagency Group established under 
subsection (a) shall--
            (1) refine, in conjunction with appropriate representatives 
        of State and local units of government and private sector 
        organizations, the objective stated in subsection (b) as 
        necessary; and
            (2) develop measurements related to the objective, 
        including emphasis on cost-effectiveness and affordability.
    (h) National Building Performance Advisory Committee.--A National 
Building Performance Advisory Committee shall be established to advise 
on creation of the plan, review progress made under the plan, advise on 
any improvements that should be made to the plan, and report to the 
Congress on actions that have been taken to advance the Nation's 
capability to meet the objective described in subsection (b). The 
Advisory Committee shall be composed of 21 members to be appointed by 
the President, one of whom shall be designated by the President as 
chair. The members shall include representatives of a broad cross-
section of interests such as the research, technology transfer, 
architectural, engineering, and financial communities; materials and 
systems suppliers; State, county, and local governments; the 
residential, multifamily, and commercial sectors of the construction 
industry; and the insurance industry. The Advisory Committee shall 
coordinate with existing advisory committees of the Federal Government 
and of the National Academies of Sciences and Engineering. As 
appropriate, the work and reports of the Advisory Committee may be done 
in conjunction with or replace the work of other advisory committees. 
The Advisory Committee shall not be subject to section 14 of the 
Federal Advisory Committee Act.
    (i) Report.--The Interagency Group shall, within 90 days after the 
end of each fiscal year, transmit a report to the Congress describing 
progress achieved during the preceding fiscal year by government at all 
levels and by the private sector, toward achieving the objective 
described in subsection (b) and implementing the plan developed under 
subsection (c), and including any amendments to the plan. Each such 
report shall include any recommendations for legislative and other 
action the Interagency Group considers necessary and appropriate.

                   TITLE II--COMMERCIAL APPLICATIONS

SEC. 201. STUDY OF FINANCING FOR PROTOTYPE TECHNOLOGIES.

    (a) Independent Assessment.--The Secretary of Energy shall 
commission an independent assessment of innovative financing techniques 
to facilitate construction of new renewable energy and energy 
efficiency facilities that might not otherwise be built in a 
competitive market.
    (b) Conduct of the Assessment.--The Secretary of Energy shall 
retain an independent contractor with proven expertise in financing 
large capital projects or in financial services consulting to conduct 
the assessment under this section.
    (c) Content of the Assessment.--The assessment shall include a 
comprehensive examination of all available techniques to safeguard 
private investors against risks (including both market-based and 
government-imposed risks) that are beyond the control of the investors. 
Such techniques may include Federal loan guarantees, Federal price 
guarantees, special tax considerations, and direct Federal investment.
    (d) Report.--The Secretary of Energy shall submit the results of 
the independent assessment to the Congress not later than 9 months 
after the date of enactment of this section.

SEC. 202. REGULATORY REVIEWS FOR NEW TECHNOLOGIES AND PROCESSES.

    (a) Regulatory Reviews.--Not later than one year after the date of 
the enactment of this Act, and every five years thereafter, the 
Director of the Office of Science and Technology Policy shall oversee a 
review of each Federal agency's regulations and policies to identify--
            (1) existing regulations and policies that act as barriers 
        to the development and commercialization of emerging renewable 
        energy and energy efficiency technologies and processes 
        (including fuel cells, combined heat and power, distributed 
        generation, and small-scale renewable energy); and
            (2) actions the agency is taking or could take to--
                    (A) remove barriers to market entry for emerging 
                renewable energy and energy efficiency technologies;
                    (B) increase energy efficiency; or
                    (C) encourage the use of new processes to meet 
                energy and environmental goals.
    (b) Reports to Congress.--Not later than 18 months after the date 
of the enactment of this Act, and every five years thereafter, the 
Director of the Office of Science and Technology Policy shall report to 
the Congress on the results of the agency reviews conducted under 
subsection (a).
    (c) Contents of the Reports.--The reports required under subsection 
(b) shall--
            (1) identify all regulatory and policy barriers to the 
        development and commercialization of emerging renewable energy 
        and energy efficiency technologies and processes;
            (2) actions taken, or proposed to be taken, that are 
        identified under subsection (a)(2); and
            (3) recommendations for changes in laws or regulations that 
        may be needed to--
                    (A) expedite the siting and development of energy 
                production and distribution facilities; and
                    (B) encourage the adoption of energy efficiency and 
                process improvements.

SEC. 203. COMMERCIALIZATION ASSISTANCE.

    (a) Authority.--The Secretary of Energy shall provide, through a 
competitive review process, assistance to private sector entities for 
the commercial application of renewable energy and energy efficiency 
technologies.
    (b) Applications.--The Secretary of Energy shall establish 
requirements for applications for assistance under this section. Such 
applications shall contain a commercial application plan, including a 
description of the financial, business, and technical support 
(including support from universities and national laboratories) the 
applicant anticipates in its commercial application effort.
    (c) Selection.--The Secretary of Energy shall select applicants to 
receive assistance under this section on the basis of which 
applications are the most likely to result in commercial application of 
renewable energy and energy efficiency technologies. The Secretary 
shall ensure that at least 50 percent of the funds provided under this 
section are provided to small businesses or startup companies.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy for carrying out this section 
$200,000,000 for each of the fiscal years 2002 through 2006, and such 
sums as may be necessary for each of the fiscal years 2007 through 
2020.

SEC. 204. EDUCATION AND OUTREACH.

    (a) Program.--The Secretary of Energy shall establish a program 
education and outreach, including innovative education and outreach 
techniques, on renewable energy and energy efficiency technologies to 
manufacturers, consumers, engineers, architects, builders, energy 
service companies, universities, facility planners and managers, State 
and local governments, and other appropriate entities.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy for carrying out this section 
$100,000,000 for each of the fiscal years 2002 through 2006, and such 
sums as may be necessary for each of the fiscal years 2007 through 
2020.

SEC. 205. PROTON EXCHANGE MEMBRANE DEMONSTRATION PROGRAMS.

    (a) In General.--
            (1) Establishment.--The Secretary of Energy, in 
        consultation with the Secretary of Transportation, the 
        Secretary of Defense, and the Secretary of Housing and Urban 
        Development, shall establish a program for the demonstration of 
        fuel cell technologies, including fuel cell proton exchange 
        membrane technology, for commercial, residential, and 
        transportation applications, including buses. Such program 
        shall specifically focus on promoting the application of and 
        improved manufacturing production and processes for fuel cell 
        technologies.
            (2) Authorization of appropriations.--For the purpose of 
        carrying out this subsection, there are authorized to be 
        appropriated $140,000,000 for the period encompassing fiscal 
        years 2002 through 2006.
    (b) Bus Demonstration Program.--
            (1) Establishment.--The Secretary of Energy, in 
        consultation with the Secretary of Transportation, shall 
        establish a comprehensive fuel cell bus demonstration program 
        to address hydrogen production, storage, and use in transit bus 
        applications. Such program shall cover all aspects of the 
        introduction of this new technology, and shall include the 
        following components:
                    (A) Development, installation, and operation of a 
                hydrogen delivery system located on-site at transit bus 
                terminals.
                    (B) Development, installation, and operation of on-
                site storage associated with the hydrogen delivery 
                systems as well as storage tank systems incorporated 
                into the bus itself.
                    (C) Demonstration of use of hydrogen as a 
                practical, safe, renewable energy source in a highly 
                efficient, zero-emission power system for buses.
                    (D) Development of fuel cell power systems that are 
                confirmed and verified as being compatible with transit 
                bus application requirements.
                    (E) Durability testing of the fuel cell bus at a 
                national testing facility.
                    (F) Identification and implementation of necessary 
                codes and standards for the safe use of hydrogen as a 
                fuel suitable for bus application, including the fuel 
                cell power system and related operational facilities.
                    (G) Identification and implementation of 
                maintenance and overhaul requirements for fuel cell 
                transit buses.
                    (H) Completion of fleet vehicle evaluation program 
                by bus operators along normal transit routes, providing 
                equipment manufacturers and transit operators with the 
                necessary analyses to enable operation of fuel cell 
                buses under a range of operating environments.
            (2) Domestic assembly.--All fuel cell systems and fuel cell 
        stacks in power plants acquired, or from which power is 
        acquired, under paragraph (1) shall be assembled in the United 
        States.
            (3) Authorization of appropriations.--For the purpose of 
        carrying out this subsection, there are authorized to be 
        appropriated $150,000,000 for the period encompassing fiscal 
        years 2002 through 2006.

                    TITLE III--REGULATORY PROVISIONS

SEC. 301. PUBLIC BENEFITS TRUST FUND.

    (a) Board.--
            (1) Establishment.--The Secretary shall establish a 
        National Electric System Public Benefits Board to carry out the 
        functions and responsibilities described in this section.
            (2) Membership.--The Board shall be composed of--
                    (A) 1 representative of the Federal Energy 
                Regulatory Commission appointed by the Federal Energy 
                Regulatory Commission;
                    (B) 2 representatives of the Secretary of Energy 
                appointed by the Secretary of Energy;
                    (C) 2 persons nominated by the National Association 
                of Regulatory Utility Commissioners and appointed by 
                the Secretary;
                    (D) 1 person nominated by the National Association 
                of State Utility Consumer Advocates and appointed by 
                the Secretary;
                    (E) 1 person nominated by the National Association 
                of State Energy Officials and appointed by the 
                Secretary;
                    (F) 1 person nominated by the National Energy 
                Assistance Directors Association and appointed by the 
                Secretary; and
                    (G) 1 representative of the Environmental 
                Protection Agency appointed by the Administrator.
            (3) Chairperson.--The Secretary shall select a member of 
        the Board to serve as Chairperson of the Board.
    (b) Establishment of Fund.--
            (1) In general.--The Board shall establish an account or 
        accounts at one or more financial institutions, which account 
        or accounts shall be known as the National Electric System 
        Public Benefits Fund (in this section referred to as the 
        ``Fund''), consisting of amounts deposited in the fund under 
        subsection (d).
            (2) Status of fund.--Amounts collected under subsection (d) 
        and deposited in the Fund--
                    (A) shall not constitute funds of the United 
                States;
                    (B) shall be held in trust by the Board solely for 
                the purposes stated in subsection (c); and
                    (C) shall not be available to meet any obligations 
                of the United States.
    (c) Use of Fund.--
            (1) Funding of public benefits programs.--Amounts in the 
        Fund shall be used by the Board to provide matching funds to 
        States and Indian tribes for the support of State or tribal 
        public benefits programs relating to--
                    (A) renewable energy sources;
                    (B) universal electric service;
                    (C) affordable electric service;
                    (D) energy conservation and efficiency;
                    (E) research and development in areas described in 
                subparagraphs (A) through (D); or
                    (F) disconnections during periods of extreme cold 
                or heat.
            (2) Distribution.--
                    (A) In general.--Except for amounts needed to pay 
                costs of the Board in carrying out its duties under 
                this section, the Board shall distribute all amounts in 
                the Fund to States or Indian tribes to fund public 
                benefits programs under paragraph (1).
                    (B) Fund share.--
                            (i) In general.--Except as otherwise 
                        provided in this subparagraph, the Fund share 
                        of a public benefits program funded under 
                        paragraph (1) shall not exceed 50 percent.
                            (ii) Proportionate reduction.--To the 
                        extent that the amount of matching funds 
                        requested by States and Indian tribes exceeds 
                        the maximum projected revenues of the Fund, the 
                        matching funds distributed to the States and 
                        Indian tribes shall be reduced proportionately.
                            (iii) Additional funding.--A State or 
                        Indian tribe may apply funds to public benefits 
                        programs in addition to the amount of funds 
                        applied for the purpose of matching the Fund 
                        share.
            (3) Application.--Not later than August 1 of each year 
        beginning in 2002, a State or Indian tribe seeking matching 
        funds for the following fiscal year shall file with the Board, 
        in such form as the Board may require, an application--
                    (A) certifying that the funds will be used for an 
                eligible public benefits program; and
                    (B) stating the amount of State or Indian tribe 
                funds earmarked for the program.
    (d) Public Benefits Charge.--
            (1) Amount of charge.--As a condition of interconnection 
        with facilities of any transmitting utility, the owner of an 
        electric generating facility whose nameplate capacity exceeds 
        five megawatts shall pay the transmitting utility a public 
        benefits charge equal to one mill per kilowatt-hour on electric 
        energy generated by such electric generating facility.
            (2) Affiliates.--The owner of an electric generating 
        facility subject to the charge under paragraph (1) shall pay 
        the charge even if the generation facility and the transmitting 
        facility are under common ownership or are otherwise 
        affiliated.
            (3) Imported electricity.--Each importer of electric 
        energy, as a condition of interconnection with facilities of 
        any transmitting utility in the United States, shall pay the 
        charge required under paragraph (1) for imported electric 
        energy.
            (4) Payment of the charge.--The transmitting utility shall 
        pay the amounts collected under this subsection to the Board at 
        the close of each month, and the Board shall deposit the 
        amounts into the Fund.
    (e) Report.--One year before the date of expiration of this 
section, the Secretary of Energy shall report to Congress whether a 
public benefits fund should continue to exist.
    (f) Expiration.--This section expires after December 31, 2020.

SEC. 302. NET METERING.

    Title VI of the Public Utility Regulatory Policies Act of 1978 is 
amended by adding at the end the following:

``SEC. 605. NET METERING FOR RENEWABLE ENERGY AND FUEL CELLS.

    ``(a) Definitions.--For purposes of this section:
            ``(1) The term `eligible on-site generating facility' 
        means--
                    ``(A) a facility on the site of a residential 
                electric consumer with a maximum generating capacity of 
                100 kilowatts or less that is fueled by solar or wind 
                energy; or
                    ``(B) a facility on the site of a commercial 
                electric consumer with a maximum generating capacity of 
                250 kilowatts or less that is fueled solely by a 
                renewable energy resource.
            ``(2) The term `renewable energy resource' means solar 
        energy, wind energy, biomass, geothermal energy, or fuel cells.
            ``(3) The term `net metering service' means service to an 
        electric consumer under which electricity generated by that 
        consumer from an eligible on-site generating facility and 
        delivered to the distribution system through the same meter 
        through which purchased electricity is received may be used to 
        offset electricity provided by the retail electric supplier to 
the electric consumer during the applicable billing period so that an 
electric consumer is billed only for the net electricity consumed 
during the billing period.
    ``(b) Requirement To Provide Net Metering Service.--Each retail 
electric supplier shall make available upon request net metering 
service to any retail electric consumer that the supplier currently 
serves or solicits for service.
    ``(c) Rates and Charges.--
            ``(1) Identical charges.--A retail electric supplier--
                    ``(A) shall charge the owner or operator of an on-
                site generating facility rates and charges that are 
                identical to those that would be charged other retail 
                electric customers of the electric company in the same 
                rate class; and
                    ``(B) shall not charge the owner or operator of an 
                on-site generating facility any additional standby, 
                capacity, interconnection, or other rate or charge.
            ``(2) Measurement.--A retail electric supplier that 
        supplies electricity to the owner or operator of an on-site 
        generating facility shall measure the quantity of electricity 
        produced by the on-site facility and the quantity of 
        electricity consumed by the owner or operator of an on-site 
        generating facility during a billing period in accordance with 
        normal metering practices.
            ``(3) Electricity supplied exceeding electricity 
        generated.--If the quantity of electricity supplied by a retail 
        electric supplier during a billing period exceeds the quantity 
        of electricity generated by an on-site generating facility and 
        fed back to the electric distribution system during the billing 
        period, the supplier may bill the owner or operator for the net 
        quantity of electricity supplied by the retail electric 
        supplier, in accordance with normal metering practices.
            ``(4) Electricity generated exceeding electricity 
        supplied.--If the quantity of electricity generated by an on-
        site generating facility during a billing period exceeds the 
        quantity of electricity supplied by the retail electric 
        supplier during the billing period--
                    ``(A) the retail electric supplier may bill the 
                owner or operator of the on-site generating facility 
                for the appropriate charges for the billing period in 
                accordance with paragraph (2); and
                    ``(B) the owner or operator of the on-site 
                generating facility shall be credited for the excess 
                kilowatt-hours generated during the billing period, 
                with the kilowatt-hour credit appearing on the bill for 
                the following billing period.
    ``(d) Safety and Performance Standards.--
            ``(1) Requirement.--An eligible on-site generating facility 
        and net metering system used by a retail electric consumer 
        shall meet all applicable safety, performance, reliability, and 
        interconnection standards established by the National 
        Electrical Code, the Institute of Electrical and Electronics 
        Engineers, and Underwriters Laboratories.
            ``(2) Additional control and testing requirements.--The 
        Commission, after consultation with State regulatory 
        authorities and nonregulated local distribution systems and 
        after notice and opportunity for comment, may adopt, by rule, 
        additional control and testing requirements for on-site 
        generating facilities and net metering systems that the 
        Commission determines are necessary to protect public safety 
        and system reliability.''.

SEC. 303. RENEWABLE ENERGY PORTFOLIO STANDARDS.

    (a) Definition of Covered Generation Facility.--In this section, 
the term ``covered generation facility'' means a nonhydroelectric 
facility that generates electric energy for sale.
    (b) Required Renewable Energy.--Of the total amount of electricity 
sold by covered generation facilities during a calendar year, the 
amount generated by renewable energy sources shall be not less than--
            (1) 3.0 percent in 2002;
            (2) 3.5 percent in 2003;
            (3) 4.0 percent in 2004;
            (4) 5.0 percent in 2005;
            (5) 6.0 percent in 2006;
            (6) 7.0 percent in 2007;
            (7) 8.0 percent in 2008;
            (8) 9.0 percent in 2009;
            (9) 10.0 percent in 2010;
            (10) 11.0 percent in 2011;
            (11) 12.0 percent in 2012;
            (12) 13.0 percent in 2013;
            (13) 14.0 percent in 2014;
            (14) 15.0 percent in 2015;
            (15) 16.0 percent in 2016;
            (16) 17.0 percent in 2017;
            (17) 18.0 percent in 2018;
            (18) 19.0 percent in 2019; and
            (19) 20.0 percent in 2020 and each year thereafter.
    (c) Renewable Energy Credits.--
            (1) Identification of energy sources.--The Federal Energy 
        Regulatory Commission shall establish standards and procedures 
        under which a covered generation facility shall certify to a 
        purchaser of electricity--
                    (A) the amount of the electricity that is generated 
                by a renewable energy source; and
                    (B) the amount of the electricity that is generated 
                by a source other than a renewable energy source.
            (2) Issuance of renewable energy credits.--Not later than 
        April 1 of each year, beginning in 2003, the Federal Energy 
        Regulatory Commission shall issue to a covered generation 
        facility 1 renewable energy credit for each megawatt-hour of 
        electricity sold by the covered generation facility in the 
        preceding calendar year that was generated by a renewable 
        energy source.
            (3) Submission of renewable energy credits.--Not later than 
        July 1 of each year, a covered generation facility shall submit 
        credits to the Federal Energy Regulatory Commission in 
an amount equal to the total number of megawatt-hours of electricity 
sold by the covered generation facility in the preceding year 
multiplied by the applicable renewable energy source requirement under 
subsection (a).
            (4) Use of renewable energy credits.--
                    (A) Time for use.--A renewable energy credit shall 
                be used for the calendar year for which the renewable 
                energy credit is issued.
                    (B) Permitted uses.--Until July 1 of the year in 
                which a renewable energy credit was issued, a covered 
                generation facility may--
                            (i) use the renewable energy credit to make 
                        a submission to the Federal Energy Regulatory 
                        Commission under paragraph (3); or
                            (ii) on notice to the Federal Energy 
                        Regulatory Commission, sell or otherwise 
                        transfer a renewable energy credit to another 
                        covered generation facility.
    (d) Recordkeeping.--The Federal Energy Regulatory Commission shall 
maintain records of all renewable energy credits issued and all credits 
sold or transferred.
    (e) Penalties.--
            (1) In general.--The Federal Energy Regulatory Commission 
        may bring an action in United States district court to impose a 
        civil penalty on any person that fails to comply with 
        subsection (c)(3).
            (2) Amount of penalty.--A person that fails to comply with 
        a requirement to submit renewable energy credits under 
        subsection (c)(3) shall be subject to a civil penalty of not 
        more than 3 times the estimated national average market value 
        (as determined by the Federal Energy Regulatory Commission) for 
        the calendar year concerned of the quantity of renewable energy 
        credits that person is required to submit for the applicable 
        fiscal year.

SEC. 304. HIGH PERFORMANCE SCHOOLS.

    (a) Program Establishment and Administration.--
            (1) Establishment.--There is established in the Department 
        of Energy the High Performance Schools Program (in this section 
        referred to as the ``Program'').
            (2) In general.--The Secretary of Energy may, through the 
        Program, make grants--
                    (A) to assist school districts in the production, 
                through construction or renovation, of high performance 
                elementary and secondary school buildings that are 
                healthful, productive, energy efficient, and 
                environmentally sound;
                    (B) to State energy offices to administer the 
                program of assistance to school districts pursuant to 
                this section; and
                    (C) to State energy offices to promote 
                participation by school districts in the Program.
            (3) Grants to assist school districts.--Grants under 
        paragraph (2)(A) for new school buildings shall be used to 
        achieve energy efficiency performance that reduces energy use 
        at least 30 percent below that of a school constructed in 
        compliance with standards prescribed in Chapter 8 of the 2000 
        International Energy Conservation Code, or a similar State code 
        intended to achieve substantially equivalent results. Grants 
        under paragraph (2)(A) for existing school buildings shall be 
        used to achieve energy efficiency performance that reduces 
        energy use below the school's baseline consumption, assuming a 
        3-year, weather-normalized average for calculating such 
        baseline. Grants under paragraph (2)(A) shall be made to school 
        districts that have--
                    (A) demonstrated a need for such grants in order to 
                respond appropriately to increasing elementary and 
                secondary school enrollments or to make major 
                investments in renovation of school facilities; and
                    (B) made a commitment to use the grant funds to 
                develop high performance school buildings in accordance 
                with a plan developed and approved pursuant to 
                paragraph (5)(A).
            (4) Other grants.--
                    (A) Grants for administration.--Grants under 
                paragraph (2)(B) shall be used to evaluate compliance 
                by school districts with the requirements of this 
                section, and in addition may be used for--
                            (i) distributing information and materials 
                        to clearly define and promote the development 
                        of high performance school buildings for both 
                        new and existing facilities;
                            (ii) organizing and conducting programs for 
                        school board members, school district 
                        personnel, architects, engineers, and others to 
                        advance the concepts of high performance school 
                        buildings;
                            (iii) obtaining technical services and 
                        assistance in planning and designing high 
                        performance school buildings; and
                            (iv) collecting and monitoring data and 
                        information pertaining to the high performance 
                        school building projects.
                    (B) Grants to promote participation.--Grants under 
                paragraph (2)(C) may be used for promotional and 
                marketing activities, including facilitating private 
                and public financing, promoting the use of energy 
                service companies, working with school administrations, 
                students, and communities, and coordinating public 
                benefit programs.
            (5) Implementation.--
                    (A) Plans.--A grant under paragraph (2)(A) shall be 
                provided only to a school district that, in 
                consultation with its State office of energy and 
                education, has developed a plan that the State energy 
                office determines to be feasible and appropriate in 
                order to achieve the purposes for which such grants are 
                made.
                    (B) Supplementing grant funds.--State energy 
                offices shall encourage qualifying school districts to 
                supplement their grant funds with funds from other 
                sources in the implementation of their plans.
    (b) Allocation of Funds.--
            (1) In general.--Except as provided in paragraph (3), funds 
        appropriated to carry out this section shall be provided to 
        State energy offices.
            (2) Purposes.--Except as provided in paragraph (3), funds 
        appropriated to carry out this section shall be allocated as 
        follows:
                    (A) Seventy percent shall be used to make grants 
                under subsection (a)(2)(A).
                    (B) Fifteen percent shall be used to make grants 
                under subsection (a)(2)(B).
                    (C) Fifteen percent shall be used to make grants 
                under subsection (a)(2)(C).
            (3) Other funds.--The Secretary of Energy may retain not to 
        exceed $300,000 per year from amounts appropriated under 
        subsection (c) to assist State energy offices in coordinating 
        and implementing the Program. Such funds may be used to develop 
        reference materials to further define the principles and 
        criteria to achieve high performance school buildings.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy to carry out this section 
$200,000,000 for each of the fiscal years 2002 through 2006, and such 
sums as may be necessary for each of the fiscal years 2007 through 
2020.
    (d) Report to Congress.--The Secretary of Energy shall conduct a 
biennial review of State actions implementing this section, and the 
Secretary shall report to Congress on the results of such reviews. In 
conducting such reviews, the Secretary shall assess the effectiveness 
of the calculation procedures used by the States in establishing 
eligibility of schools for funding under this section, and may assess 
other aspects of the State program to determine whether they have been 
effectively implemented.
    (e) Definitions.--For purposes of this section:
            (1) Elementary and secondary school.--The terms 
        ``elementary school'' and ``secondary school'' shall have the 
        same meaning given such terms in paragraphs (14) and (26) of 
        section 14101 of the Elementary and Secondary Education Act of 
        1965 (20 U.S.C. 8801(14), (26)).
            (2) High performance school building.--The term ``high 
        performance school building'' means a school building which, in 
        its design, construction, operation, and maintenance, maximizes 
        use of renewable energy and energy efficiency practices, is 
        cost-effective on a life cycle basis, uses affordable, 
        environmentally preferable, durable materials, enhances indoor 
        environmental quality, protects and conserves water, and 
        optimizes site potential.
            (3) Renewable energy.--The term ``renewable energy'' means 
        energy produced by solar, wind, geothermal, photovoltaic, fuel 
        cell, or biomass power.

SEC. 305. HIGH PERFORMANCE SCHOOLS RESEARCH.

    (a) Program Authorized.--The Director of the National Science 
Foundation (in this section referred to as the ``Director'') shall 
establish a competitive, merit-based research program to investigate 
how the characteristics of the physical environment of elementary and 
secondary schools affect student educational achievement.
    (b) Program Requirements.--
            (1) Research projects.--Awards made under subsection (a) 
        shall be for research projects that focus on the quantification 
        of the effects on student educational achievement of lighting, 
        noise, temperature and ventilation, general upkeep, and other 
        characteristics of the physical environment of school 
        classrooms. The research projects shall be designed to separate 
        the effects of the key variables that influence student 
        educational achievement in order to isolate the effects of the 
        environmental variables.
            (2) Assessments.--For awards made under subsection (a), the 
        Director shall ensure that each research project specifies 
        appropriate procedures to make assessments of student 
        educational achievement. Such assessments shall be carried out 
        over a multiyear period.
            (3) Dissemination of findings.--The Director may sponsor 
        and support workshops, conferences, and dedicated web sites to 
        disseminate information to school administrators about the 
        findings of research projects carried out under subsection (a).
    (c) Guidelines, Procedures, and Criteria.--The Director shall 
establish and publish application and selection guidelines, procedures, 
and criteria for the program established under subsection (a).
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated to the National Science Foundation to carry out this 
section $2,000,000 for each of the fiscal years 2002, 2003, and 2004.

SEC. 306. VEHICLE FUEL ECONOMY STANDARDS.

    (a) Increased Average Fuel Economy Standard for Light Trucks.--
            (1) Definition of light truck.--Section 32901(a) of title 
        49, United States Code, is amended by adding at the end the 
        following new paragraph:
            ``(17) `light truck' has the meaning given that term in 
        regulations prescribed by the Secretary of Transportation in 
        the administration of this chapter.''.
            (2) Requirement for increased standard.--Section 32902(a) 
        of title 49, United States Code, is amended--
                    (A) by inserting ``(1)'' after ``automobiles.--'';
                    (B) by inserting before the period at the end of 
                the third sentence the following: ``, subject to 
                paragraph (2)''; and
                    (C) by adding at the end the following new 
                paragraph:
    ``(2) The average fuel economy standard for light trucks 
manufactured by a manufacturer may not be less than 27.5 miles per 
gallon, except that the average fuel economy standard for--
            ``(A) light trucks manufactured by a manufacturer in a 
        model year after model year 2002 and before model year 2005 may 
        not be less than 22.5 miles per gallon; and
            ``(B) light trucks manufactured by a manufacturer in a 
        model year after model year 2004 and before model year 2007 may 
        not be less than 25 miles per gallon.''.
            (3) Applicability.--Paragraph (2) of section 32902(a) of 
        such title does not apply with respect to light trucks 
        manufactured before model year 2003.
    (b) Fuel Economy Standards for Automobiles up to 10,000 Pounds 
Gross Vehicle Weight.--
            (1) Vehicles defined as automobiles.--Section 32901(a)(3) 
        of title 49, United States Code, is amended by striking ``and 
        rated at--'' and all that follows through the end and inserting 
        ``and is rated at not more than 10,000 pounds gross vehicle 
        weight.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on January 1, 2007.
    (c) Fuel Economy of the Federal Fleet of Vehicles.--
            (1) Baseline average fuel economy.--The head of each 
        executive agency shall determine, for each class of vehicles 
        that are in the agency's fleet of vehicles in fiscal year 2001, 
        the average fuel economy for all of the vehicles in that class 
        that are in the agency's fleet of vehicles for that fiscal 
        year. For the purposes of this subsection, the average fuel 
        economy so determined for the agency's vehicles in a class of 
        vehicles shall be the baseline average fuel economy for the 
        agency's fleet of vehicles in that class.
            (2) Increase of average fuel economy.--The head of an 
        executive agency shall manage the procurement of vehicles in 
        each class of vehicles for that agency in such a manner that--
                    (A) not later than September 30, 2003, the average 
                fuel economy of the new vehicles in the agency's fleet 
                of vehicles in each class of vehicles is not less than 
                3 miles per gallon higher than the baseline average 
                fuel economy determined for that class; and
                    (B) not later than September 30, 2005, the average 
                fuel economy of the new vehicles in the agency's fleet 
                of vehicles in each class of vehicles is not less than 
                6 miles per gallon higher than the baseline average 
                fuel economy determined for that class.
            (3) Calculation of average fuel economy.--Average fuel 
        economy shall be calculated for the purposes of this subsection 
        in accordance with guidance which the Secretary of 
        Transportation shall prescribe for the implementation of this 
        subsection.
            (4) Definitions.--In this subsection:
                    (A) The term ``class of vehicles'' means a class of 
                vehicles for which an average fuel economy standard is 
                in effect under chapter 329 of title 49, United States 
                Code.
                    (B) The term ``executive agency'' has the meaning 
                given the term in section 4(1) of the Office of Federal 
                Procurement Policy Act (41 U.S.C. 403(1)).
                    (C) The term ``new vehicle'', with respect to the 
                fleet of vehicles of an executive agency, means a 
                vehicle procured by or for the agency after September 
                30, 2002.

SEC. 307. ENERGY STAR PROGRAM.

    (a) Establishment.--There shall be established, as a jointly 
administered program of the Environmental Protection Agency and the 
Department of Energy, an Energy Star program to identify, establish 
standards for, and promote cost-effective, energy-efficient products 
and buildings for government, industrial, commercial, and individual 
energy users. Such program shall be conducted so that Energy Star 
labels for each product and building system, design, or product 
represents a standard of high quality and solid scientific basis.
    (b) Memorandum of Understanding.--Not later than 3 months after the 
date of the enactment of this Act, the Administrator of the 
Environmental Protection Agency and the Secretary of Energy shall enter 
into and transmit to the Congress a memorandum of understanding 
delineating the respective responsibilities of the Environmental 
Protection Agency and the Department of Energy for the Energy Star 
program.
    (c) Consolidation Report.--Not later than 6 months after the date 
of the enactment of this Act, the Administrator of the Environmental 
Protection Agency and the Secretary of Energy shall jointly transmit to 
the Congress a report on the consolidation of standards for energy-
efficient products and building systems, designs, and products for 
government, industrial, commercial, and individual energy users. Such 
report shall include an assessment of--
            (1) standards established by private sector standards 
        organizations and by Federal agencies; and
            (2) how the Energy Star program should coordinate its 
        efforts with such organizations and agencies to establish a 
        uniform standard for each type of product or building system, 
design, or product that is designated with an Energy Star label.
    (d) Annual Report.--The Administrator of the Environmental 
Protection Agency and the Secretary of Energy shall jointly transmit to 
the Congress an annual report containing--
            (1) a description of the activities of the Environmental 
        Protection Agency and the Department of Energy through the 
        Energy Star program; and
            (2) goals for the future of the Energy Star program.
    (e) Authorization of Appropriations.--For purposes of carrying out 
the Energy Star program, there are authorized to be appropriated--
            (1) to the Administrator of the Environmental Protection 
        Agency $75,000,000 for fiscal year 2002 and $100,000,000 for 
        fiscal year 2003; and
            (2) to the Secretary of Energy $3,000,000 for fiscal year 
        2002 and $5,000,000 for fiscal year 2003.

SEC. 308. FUEL EFFICIENT TIRE PROGRAM.

    Section 30123 of title 49, United States Code, is amended--
            (1) in subsection (b)--
                    (A) by inserting ``(1)'' before the first sentence; 
                and
                    (B) by adding at the end the following:
    ``(2) The uniform quality system shall include standards for rating 
tires for the following:
            ``(A) Treadwear.
            ``(B) Traction.
            ``(C) Temperature resistance.
            ``(D) Rolling resistance and fuel economy.''; and
            (2) by adding at the end the following:
    ``(d) National Tire Fuel Efficiency Program.--(1) The Secretary 
shall, after consulting with the Administrator of the Environmental 
Protection Agency, industry representatives, and other appropriate 
organizations, develop a national tire fuel efficiency program that 
will develop fuel efficiency ratings and label requirements for tires.
    ``(2) The program shall include--
            ``(A) specifications for testing procedures and labels that 
        will enable tire buyers to make more informed purchasing 
        decisions about the fuel efficiency of tires;
            ``(B) dissemination of information through labels, 
        catalogs, trade publications, or other mechanisms, that will 
        allow tire buyers to assess the energy consumption and 
        potential costs savings of alternative tire products;
            ``(C) by no later than September 30, 2002, development by 
        the Secretary of recommendations for minimum fuel efficiency 
        standards for tires; and
            ``(D) by no later than January 1, 2003, prescription by the 
        Secretary of minimum fuel efficiency standards for tires.
    ``(3) Recommendations and standards under paragraph (2) (C) and 
(D), respectively, shall--
            ``(A) be designed to ensure that the fuel efficiency of 
        replacement tires is equal to or better than the fuel 
        efficiency of tires sold as original equipment on new vehicles;
            ``(B) consider all safety implications; and
            ``(C) ensure the standards do not adversely impact tire 
        safety.''.

SEC. 309. ENVIRONMENTAL DISCLOSURE TO CONSUMERS.

    (a) Retail Sales.--The Federal Trade Commission shall issue rules 
requiring each retail electric supplier to include with each monthly 
billing to retail electric consumers a statement of the known energy 
sources used to generate the electricity the supplier distributes, on 
an annual basis, stated in numbers of kilowatt-hours, both in 
percentages and in the form of a pie chart, of biomass power, coal-
fired power, hydropower, natural gas-fired power, nuclear power, oil-
fired power, wind power, geothermal power, solar thermal power, 
photovoltaic power, combined heat and power, and other sources of 
power, respectively.
    (b) Wholesale Sales.--The Federal Trade Commission shall issue 
rules requiring any electric supplier that sells or makes an offer to 
sell electric energy at wholesale to provide the purchaser or offeree 
such known information about the energy source used to generate the 
electricity, on an annual basis, as the Commission may determine.
    (c) Certification Program.--The Secretary of Energy, in 
consultation with the Federal Trade Commission, shall develop a 
certification program for each retail electric supplier that sells 
electric energy, at least 50 percent of which, averaged over a year, is 
generated from renewable energy sources. For purposes of this 
subsection, the term ``renewable energy source'' means biomass, wind 
power, geothermal power, solar thermal power, or photovoltaic power.

                 TITLE IV--FEDERAL GOVERNMENT PROGRAMS

SEC. 401. ENERGY SAVINGS MEASURES IN CAPITOL.

    (a) Requirements.--The Architect of the Capitol--
            (1) shall develop and implement a cost-effective energy 
        conservation strategy for all facilities currently administered 
        by Congress to achieve a net reduction of 25 percent in energy 
        consumption on the congressional campus compared to fiscal year 
        1991 consumption levels on a Btu-per-gross-square-foot basis 
        not later than 4 years after the date of the enactment of this 
        Act;
            (2) shall submit to Congress not later than 10 months after 
        the date of the enactment of this Act a comprehensive energy 
        conservation and management plan which includes life cycle cost 
        methods to determine the cost-effectiveness of proposed energy 
        efficiency projects;
            (3) shall present to Congress annually a report on 
        congressional energy management and conservation programs which 
        details energy expenditures and cost estimates for each 
        facility, energy management and conservation projects, and 
        future priorities to ensure compliance with the requirements of 
        this section;
            (4) shall perform energy surveys of all congressional 
        buildings and update such surveys as needed;
            (5) shall use such surveys to determine the cost and 
        payback period of energy and water conservation measures likely 
        to achieve the energy consumption levels contained in the 
        strategy developed under paragraph (1);
            (6) shall install energy and water conservation measures 
        that will achieve such levels through life cycle cost methods 
        and procedures included in the plan submitted under paragraph 
        (2);
            (7) may contract with nongovernmental entities and employ 
        private sector capital to finance energy conservation projects 
        and achieve energy consumption targets;
            (8) may develop innovative contracting methods that will 
        attract private sector funding for the installation of energy-
        efficient and renewable energy technology to meet the 
        requirements of this section;
            (9) may participate in the Department of Energy's Financing 
        Renewable Energy and Efficiency (FREE Savings) contracts 
        program for Federal Government facilities;
            (10) within 100 days after the date of the enactment of 
        this Act, shall submit to Congress the results of a study of 
        the installation of sub-metering in buildings on the 
        congressional campus;
            (11) shall produce information packages and ``how-to'' 
        guides for each Member and employing authority of Congress that 
        detail simple, cost-effective methods to save energy and 
        taxpayer dollars;
            (12) shall work with the Department of Energy's Federal 
        Energy Management Program and appropriate manufacturers, local 
        utilities, trade associations, and national laboratories to 
        identify and demonstrate innovative new renewable energy or 
        energy efficiency technologies in the Visitor's Center, as 
        allowed by the Visitor's Center design parameters; and
            (13) shall include in the Visitor's Center an exhibit on 
        the energy efficiency measures employed in the congressional 
        campus.
    (b) Repeal.--Section 310 of the Legislative Branch Appropriations 
Act, 1999 (40 U.S.C. 166i) is repealed.

SEC. 402. ENERGY SAVINGS PERFORMANCE CONTRACTS.

    (a) Cost Savings From Replacement Facilities.--Section 801(a) of 
the National Energy Conservation Policy Act (42 U.S.C. 8287(a)) is 
amended by adding at the end the following:
            ``(3)(A) In the case of an energy savings contract or 
        energy savings performance contract providing for energy 
        savings through the construction and operation of one or more 
        buildings or facilities to replace one or more existing 
        buildings or facilities, benefits ancillary to the purpose of 
        such contract under paragraph (1) may include savings resulting 
        from reduced costs of operation and maintenance at such 
        replacement buildings or facilities when compared with costs of 
        operation and maintenance at the buildings or facilities being 
        replaced.
            ``(B) Notwithstanding paragraph (2)(B), aggregate annual 
        payments by an agency under an energy savings contract or 
        energy savings performance contract referred to in subparagraph 
        (A) may take into account (through the procedures developed 
        pursuant to this section) savings resulting from reduced costs 
        of operation and maintenance as described in subparagraph 
        (A).''.
    (b) Repeal of Sunset.--Section 801(c) of the National Energy 
Conservation Policy Act (42 U.S.C. 8287(c)) is repealed.
    (c) Energy Savings Performance Contract Definitions.--
            (1) Energy savings.--Section 804(2) of the National Energy 
        Conservation Policy Act (42 U.S.C. 8287c(2)) is amended to read 
        as follows:
            ``(2) The term `energy savings' means a reduction in the 
        cost of energy or water, from a base cost established through a 
        methodology set forth in the contract, used in either--
                    ``(A) an existing federally owned building or 
                buildings or other federally owned facilities as a 
                result of--
                            ``(i) the lease or purchase of operating 
                        equipment, improvements, altered operation and 
                        maintenance, or technical services;
                            ``(ii) the increased efficient use of 
                        existing energy sources by cogeneration or heat 
                        recovery, excluding any cogeneration process 
                        for other than a federally owned building or 
                        buildings or other federally owned facilities; 
                        or
                            ``(iii) the increased efficient use of 
                        existing water sources; or
                    ``(B) a replacement facility under section 
                801(a)(3).''.
            (2) Energy savings contract.--Section 804(3) of the 
        National Energy Conservation Policy Act (42 U.S.C. 8287c(3)) is 
        amended to read as follows:
            ``(3) The terms `energy savings contract' and `energy 
        savings performance contract' mean a contract which provides 
        for--
                    ``(A) the performance of services for the design, 
                acquisition, installation, testing, operation, and, 
                where appropriate, maintenance and repair, of an 
                identified energy or water conservation measure or 
                series of measures at one or more locations; or
                    ``(B) energy savings through the construction and 
                operation of one or more buildings or facilities to 
                replace one or more existing buildings or 
                facilities.''.
            (3) Energy or water conservation measure.--Section 804(4) 
        of the National Energy Conservation Policy Act (42 U.S.C. 
        8287c(4)) is amended to read as follows:
            ``(4) The term `energy or water conservation measure' 
        means--
                    ``(A) an energy conservation measure, as defined in 
                section 551(4) (42 U.S.C. 8259(4)); or
                    ``(B) a water conservation measure that improves 
                water efficiency, is life cycle cost effective, and 
                involves water conservation, water recycling or reuse, 
                improvements in operation or maintenance efficiencies, 
                retrofit activities or other related activities, not at 
                a Federal hydroelectric facility.''.
            (4) Conforming Amendment.--Section 801(a)(2)(C) of the 
        National Energy Conservation Policy Act (42 U.S.C. 
        8287(a)(2)(C)) is amended by inserting ``or water'' after 
        ``finance energy''.

SEC. 403. FEDERAL PURCHASE REQUIREMENT.

    The President shall ensure that, of the total amount of electric 
power the Federal Government purchases during any fiscal year--
            (1) not less than 3 percent in fiscal years 2002 through 
        2004;
            (2) not less than 5 percent in fiscal years 2005 through 
        2009;
            (3) not less than 7.5 percent in fiscal years 2010 through 
        2019; and
            (4) not less than 20 percent in fiscal year 2020 and each 
        fiscal year thereafter,
shall be electric power generated by a renewable energy source.

SEC. 404. FEDERAL BUILDINGS ENERGY EFFICIENCY.

    (a) Minimum Requirement.--Any federally owned or leased building 
for which a contract for construction or major retrofit is entered into 
after the date of the enactment of this Act shall be required to 
achieve energy efficient design standards that exceed by at least 30 
percent the standards contained in Standard 90.1-1999 of the American 
Society of Heating, Refrigerating, and Air-Conditioning Engineers.
    (b) Alternative Standards.--The Secretary may establish a 
requirement for stricter standards than those required by subsection 
(a) where local climate conditions or other circumstances so warrant.

SEC. 405. RETENTION OF SAVINGS.

    A Federal agency that is authorized by law to retain a portion of 
savings resulting from efficient energy and water management shall 
permit the retention of the savings at the facility or site where the 
savings occur to provide greater incentive for facility and site 
managers to undertake energy and water management initiatives, invest 
in renewable energy systems, and purchase electricity from renewable 
energy sources.

SEC. 406. GUARANTEED ENERGY SAVINGS.

    Section 546(a) of the National Energy Conservation Policy Act (42 
U.S.C. 8256(a)) is amended by adding at the end the following new 
paragraph:
    ``(3) A contract entered into under this subsection shall provide 
for a guarantee of energy savings to the agency, shall establish 
payment schedules reflecting such guarantee, taking into account any 
capital costs under the contract, and shall provide for monitoring and 
verification of the energy savings.''.

SEC. 407. PRESIDENT'S MANAGEMENT COUNCIL.

    The President's Management Council shall periodically assess the 
progress of Federal agencies in improving energy management.

SEC. 408. FEDERAL USE OF ENERGY STAR STANDARDS.

    (a) Requirement.--Each Federal agency, in acquiring energy-using 
products, or in acquiring building systems, designs, or products, shall 
acquire Energy Star products, systems, or designs. If Energy Star 
products, systems, or designs are not available, the Federal agency 
shall acquire products, systems, or designs designated as among the top 
25 percent of such type of product, system, or design under the Federal 
Energy Management Program, or other appropriate standards-setting 
organizations.
    (b) Availability.--The General Services Administration and the 
Defense Logistics Agency shall ensure that Energy Star products, 
systems, and designs are made known and readily available to Federal 
agencies for acquisition.

                        TITLE V--TAX PROVISIONS

SEC. 500. AMENDMENT OF 1986 CODE.

    Except as otherwise expressly provided, whenever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Internal Revenue Code of 
1986.

         Subtitle A--Energy-Efficient Property Used in Business

SEC. 501. CREDIT FOR CERTAIN ENERGY-EFFICIENT PROPERTY USED IN 
              BUSINESS.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
(relating to rules for computing investment credit) is amended by 
inserting after section 48 the following:

``SEC. 48A. ENERGY CREDIT.

    ``(a) In General.--For purposes of section 46, the energy credit 
for any taxable year is the energy percentage of the basis of each 
energy property placed in service during such taxable year.
    ``(b) Energy Percentage.--
            ``(1) In general.--The energy percentage is--
                    ``(A) except as otherwise provided in this 
                paragraph, 10 percent,
                    ``(B) in the case of energy property described in 
                clauses (i), (iii), and (vi) of subsection (c)(1)(A), 
                20 percent,
                    ``(C) in the case of energy property described in 
                subsection (c)(1)(A)(v), 15 percent,
                    ``(D) in the case of energy property described in 
                subsection (c)(1)(A)(ii) relating to a high risk 
                geothermal well, 20 percent,
                    ``(E) in the case of energy property described in 
                subsection (c)(1)(A)(vii), 30 percent, and
                    ``(F)(i) in the case of a small employer with 
                respect to the energy property described in subsection 
                (c)(1)(A)(viii), 30 percent, and
                    ``(ii) in the case of energy property described in 
                subsection (c)(1)(A)(viii) other than with respect to a 
                small employer, 0 percent.
            ``(2) 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.
    ``(c) 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 
                        other than property described in clauses 
                        (iii)(I) and (v)(I) of subsection (d)(3)(A),
                            ``(iv) combined heat and power system 
                        property,
                            ``(v) low core loss distribution 
                        transformer property,
                            ``(vi) qualified anaerobic digester 
                        property,
                            ``(vii) qualified wind energy systems 
                        equipment property, or
                            ``(viii) qualified energy star 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) which can reasonably be expected to remain in 
                operation for at least 5 years,
                    ``(D) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable, and
                    ``(E) which meets the performance and quality 
                standards (if any) which--
                            ``(i) have been prescribed by the Secretary 
                        by regulations (after consultation with the 
                        Secretary of Energy), and
                            ``(ii) are in effect at the time of the 
                        acquisition of the property.
            ``(2) Exceptions.--
                    ``(A) Public utility property.--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), except for property 
                described in paragraph (1)(A)(iv).
                    ``(B) Certain wind equipment.--Such term shall not 
                include equipment described in paragraph (1)(A)(vii) 
                which is taken into account for purposes of section 45 
                for the taxable year.
    ``(d) Definitions Relating to Types of Energy Property.--For 
purposes of this section--
            ``(1) Solar energy property.--
                    ``(A) In general.--The term `solar energy property' 
                means equipment which uses solar energy to generate 
                electricity, to heat or cool (or provide hot water for 
                use in) a structure, or to provide solar process heat.
                    ``(B) Swimming pools, etc. used as storage 
                medium.--The term `solar energy property' shall not 
                include property with respect to which expenditures are 
                properly allocable to a swimming pool, hot tub, or any 
                other energy storage medium which has a function other 
                than the function of such storage.
                    ``(C) 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.--
                    ``(A) In general.--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.
                    ``(B) High risk geothermal well.--The term `high 
                risk geothermal well' means a geothermal deposit 
                (within the meaning of section 613(e)(2)) which 
                requires high risk drilling techniques. Such deposit 
                may not be located in a State or national park or in an 
                area in which the relevant State park authority or the 
                National Park Service determines the development of 
                such a deposit will negatively impact on a State or 
                national park.
            ``(3) Energy-efficient building property.--
                    ``(A) In general.--The term `energy-efficient 
                building property' means--
                            ``(i) a fuel cell which--
                                    ``(I) generates electricity using 
                                an electrochemical process,
                                    ``(II) has an electricity-only 
                                generation efficiency greater than 30 
                                percent, and
                                    ``(III) has a minimum generating 
                                capacity of 2 kilowatts,
                            ``(ii) an electric heat pump hot water 
                        heater which yields an energy factor of 1.7 or 
                        greater under test procedures prescribed by the 
                        Secretary of Energy,
                            ``(iii)(I) an electric heat pump which has 
                        a heating system performance factor (HSPF) of 
                        at least 8.5 but less than 9 and a cooling 
                        seasonal energy efficiency ratio (SEER) of at 
                        least 13.5 but less than 15,
                            ``(II) an electric heat pump which has a 
                        heating system performance factor (HSPF) of 9 
                        or greater and a cooling seasonal energy 
                        efficiency ratio (SEER) of 15 or greater,
                            ``(iv) a natural gas heat pump which has a 
                        coefficient of performance of not less than 
                        1.25 for heating and not less than 0.70 for 
                        cooling,
                            ``(v)(I) a central air conditioner which 
                        has a cooling seasonal energy efficiency ratio 
                        (SEER) of at least 13.5 but less than 15,
                            ``(II) a central air conditioner which has 
                        a cooling seasonal energy efficiency ratio 
                        (SEER) of 15 or greater,
                            ``(vi) an advanced natural gas water heater 
                        which--
                                    ``(I) increases steady state 
                                efficiency and reduces standby and vent 
                                losses, and
                                    ``(II) has an energy factor of at 
                                least 0.65,
                            ``(vii) an advanced natural gas furnace 
                        which achieves a 90 percent AFUE and rated for 
                        seasonal electricity use of less than 300 kWh 
                        per year, and
                            ``(viii) natural gas cooling equipment 
                        which meets all applicable standards of the 
                        American Society of Heating, Refrigerating, and 
                        Air Conditioning Engineers and which--
                                    ``(I) has a coefficient of 
                                performance of not less than .60, or
                                    ``(II) uses desiccant technology 
                                and has an efficiency rating of not 
                                less than 50 percent.
                    ``(B) Limitations.--The credit under subsection (a) 
                for the taxable year may not exceed--
                            ``(i) $500 in the case of property 
                        described in subparagraph (A) other than 
                        clauses (i), (iv), and (viii) thereof,
                            ``(ii) $1,000 for each kilowatt of capacity 
                        in the case of any fuel cell described in 
                        subparagraph (A)(i),
                            ``(iii) $1,000 in the case of any natural 
                        gas heat pump described in subparagraph 
                        (A)(iv), and
                            ``(iv) $150 for each ton of capacity in the 
                        case of any natural gas cooling equipment 
                        described in subparagraph (A)(viii).
            ``(4) Combined heat and power system property.--
                    ``(A) In general.--The term `combined heat and 
                power system property' means property--
                            ``(i) comprising a system for the same 
                        energy source for the simultaneous or 
                        sequential generation of electrical power, 
                        mechanical shaft power, or both, in combination 
                        with steam, heat, or other forms of useful 
                        energy,
                            ``(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--
                                    ``(I) 60 percent in the case of a 
                                system with an electrical capacity of 
                                less than 1 megawatt),
                                    ``(II) 65 percent in the case of a 
                                system with an electrical capacity of 
                                not less than 1 megawatt and not in 
                                excess of 50 megawatts), and
                                    ``(III) 70 percent in the case of a 
                                system with an electrical capacity in 
                                excess of 50 megawatts).
                    ``(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.--If the 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.
            ``(5) Low core loss distribution transformer property.--The 
        term `low core loss distribution transformer property' means a 
        distribution transformer which has energy savings from a highly 
        efficient core of at least 20 percent more than the average for 
        power ratings reported by studies required under section 124 of 
        the Energy Policy Act of 1992.
            ``(6) Qualified anaerobic digester property.--The term 
        `qualified anaerobic digester property' means an anaerobic 
        digester for manure or crop waste which achieves at least 65 
        percent efficiency measured in terms of the fraction of energy 
        input converted to electricity and useful thermal energy.
            ``(7) Qualified wind energy systems equipment property.--
        The term `qualified wind energy systems equipment property' 
        means wind energy systems equipment with a turbine size of not 
        more than 75 kilowatts rated capacity.
            ``(8) Qualified energy star property.--
                    ``(A) In general.--The term `qualified energy star 
                product' means a product which--
                            ``(i) meets the guidelines, specifications, 
                        and performance levels of the Energy Star 
                        program jointly managed by the Environmental 
                        Protection Agency and the Department of Energy, 
                        and
                            ``(ii) displays the Energy Star label.
                    ``(B) Small employer.--The term `small employer' 
                means, with respect to any calendar year, any employer 
if such employer employed an average of 100 or fewer employees on 
business days during either of the 2 preceding calendar years. For 
purposes of the preceding sentence, a preceding calendar year may be 
taken into account only if the employer was in existence throughout 
such year.
    ``(e) 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.
    ``(f) Application of Section.--
            ``(1) In general.--Except as provided by paragraph (2), 
        this section shall apply to property placed in service after 
        December 31, 2001, and before January 1, 2009.
            ``(2) Exceptions.--
                    ``(A) Solar energy and geothermal energy 
                property.--Paragraph (1) shall not apply to solar 
                energy property or geothermal energy property.
                    ``(B) Certain electric heat pumps and central air 
                conditioners.--In the case of property which is 
                described in subsection (d)(3)(A)(iii)(I) or 
                (d)(3)(A)(v)(I), this section shall apply to property 
                placed in service after December 31, 2001, and before 
                January 1, 2006.
    ``(g) Termination.--This section shall not apply to property placed 
in service after December 31, 2006.''.
    (b) Conforming Amendments.--
            (1) Section 48 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 20 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) Section 39(d) is amended by adding at the end the 
        following:
            ``(11) 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 January 1, 2002.''.
            (3) Section 280C is amended by adding at the end the 
        following:
    ``(d) Credit for Energy Property Expenses.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the expenses for energy property (as defined in 
        section 48A(c)) otherwise allowable as a deduction for the 
        taxable year which is equal to the amount of the credit 
        determined for such taxable year under section 48A(a).
            ``(2) Similar rule where taxpayer capitalizes rather than 
        deducts expenses.--If--
                    ``(A) the amount of the credit allowable for the 
                taxable year under section 48A (determined without 
                regard to section 38(c)), exceeds
                    ``(B) the amount allowable as a deduction for the 
                taxable year for expenses for energy property 
                (determined without regard to paragraph (1)), the 
                amount chargeable to capital account for the taxable 
                year for such expenses shall be reduced by the amount 
                of such excess.
            ``(3) Controlled groups.--Paragraph (3) of subsection (b) 
        shall apply for purposes of this subsection.''.
            (4) Section 29(b)(3)(A)(i)(III) is amended by striking 
        `section 48(a)(4)(C)' and inserting `section 48A(e)(1)(C)'.
            (5) Section 50(a)(2)(E) is amended by striking `section 
        48(a)(5)' and inserting `section 48A(e)(2)'.
            (6) Section 168(e)(3)(B) is amended--
                    (A) by striking clause (vi)(I) and inserting the 
                following:
                            ``(I) is described in paragraph (1) or (2) 
                        of section 48A(d) (or would be so described if 
                        `solar and wind' were substituted for `solar' 
                        in paragraph (1)(B)),'', and
                    (B) in the last sentence by striking ``section 
                48(a)(3)'' and inserting ``section 48A(c)(2)(A)''.
    (c) Clerical Amendment.--The table of sections for subpart E of 
part IV of subchapter A of chapter 1 is amended by striking the item 
relating to section 48 and inserting the following:

``Sec. 48. Reforestation credit.
``Sec. 48A. Energy credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001, 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. 502. ENERGY-EFFICIENT COMMERCIAL BUILDING PROPERTY DEDUCTION.

    (a) In General.--Part VI of subchapter B of chapter 1 (relating to 
itemized deductions for individuals and corporations) is amended by 
adding at the end the following:

``SEC. 199. ENERGY-EFFICIENT COMMERCIAL BUILDING PROPERTY.

    ``(a) In General.--There shall be allowed as a deduction for the 
taxable year an amount equal to the energy-efficient commercial 
building property expenditures made by a taxpayer for the taxable year.
    ``(b) Maximum Amount of Deduction.--The amount of energy-efficient 
commercial building property expenditures taken into account under 
subsection (a) shall not exceed an amount equal to the product of--
            ``(1) $2.25, and
            ``(2) the square footage of the building with respect to 
        which the expenditures are made.
    ``(c) Year Deduction Allowed.--The deduction under subsection (a) 
shall be allowed in the taxable year in which the construction of the 
building is completed.
    ``(d) Energy-Efficient Commercial Building Property Expenditures.--
For purposes of this section--
            ``(1) In general.--The term `energy-efficient commercial 
        building property expenditures' means an amount paid or 
        incurred for energy-efficient commercial building property 
        installed on or in connection with new construction or 
        reconstruction of property--
                    ``(A) for which depreciation is allowable under 
                section 167,
                    ``(B) which is located in the United States, and
                    ``(C) the construction or erection of which is 
                completed by the taxpayer.
        Such property includes all residential rental property, 
        including low-rise multifamily structures and single family 
        housing property which is not within the scope of Standard 
        90.1-1999 (described in paragraph (3)).
            ``(2) Labor costs included.--Such term includes 
        expenditures for labor costs properly allocable to the onsite 
        preparation, assembly, or original installation of the 
        property.
            ``(3) Energy expenditures excluded.--Such term does not 
        include any expenditures taken into account in determining any 
        credit allowed under section 48A.
    ``(e) Energy-Efficient Commercial Building Property.--For purposes 
of subsection (d)--
            ``(1) In general.--The term `energy-efficient commercial 
        building property' means any property which reduces total 
        annual energy and power costs with respect to the lighting, 
        heating, cooling, ventilation, and hot water supply systems of 
        the building by 50 percent or more in comparison to a reference 
        building which meets the requirements of Standard 90.1-1999 of 
        the American Society of Heating, Refrigerating, and Air 
        Conditioning Engineers and the Illuminating Engineering Society 
        of North America using methods of calculation under 
        subparagraph (B) and certified by qualified professionals as 
        provided under paragraph (6).
            ``(2) Methods of calculation.--The Secretary, in 
        consultation with the Secretary of Energy, shall promulgate 
        regulations which describe in detail methods for calculating 
        and verifying energy and power consumption and cost, taking 
        into consideration the provisions of the 1998 California 
        Nonresidential ACM Manual. These procedures shall meet the 
        following requirements:
                    ``(A) In calculating tradeoffs and energy 
                performance, the regulations shall prescribe the costs 
                per unit of energy and power, such as kilowatt hour, 
                kilowatt, gallon of fuel oil, and cubic foot or Btu of 
                natural gas, which may be dependent on time of usage.
                    ``(B) The calculational methodology shall require 
                that compliance be demonstrated for a whole building. 
                If some systems of the building, such as lighting, are 
                designed later than other systems of the building, the 
                method shall provide that either--
                            ``(i) the expenses taken into account under 
                        paragraph (1) shall not occur until the date 
                        designs for all energy-using systems of the 
                        building are completed, or
                            ``(ii) the expenses taken into account 
                        under paragraph (1) shall be a fraction of such 
                        expenses based on the performance of less than 
                        all energy-using systems in accordance with 
                        subparagraph (C), and the energy performance of 
                        all systems and components not yet designed 
                        shall be assumed to comply minimally with the 
                        requirements of such Standard 90.1-1999.
                    ``(C) The expenditures in connection with the 
                design of subsystems in the building, such as the 
                envelope, the heating, ventilation, air conditioning 
                and water heating system, and the lighting system shall 
                be allocated to the appropriate building subsystem 
                based on system-specific energy cost savings targets in 
                regulations promulgated by the Secretary of Energy 
                which are equivalent, using the calculation 
                methodology, to the whole building requirement of 50 
                percent savings.
                    ``(D) The calculational methods under this 
                paragraph need not comply fully with section 11 of such 
                Standard 90.1-1999.
                    ``(E) The calculational methods shall be fuel 
                neutral, such that the same energy efficiency features 
                shall qualify a building for the deduction under this 
                section regardless of whether the heating source is a 
                gas or oil furnace or an electric heat pump.
                    ``(F) The calculational methods shall provide 
                appropriate calculated energy savings for design 
                methods and technologies not otherwise credited in 
                either such Standard 90.1-1999 or in the 1998 
                California Nonresidential ACM Manual, including the 
                following:
                            ``(i) Natural ventilation.
                            ``(ii) Evaporative cooling.
                            ``(iii) Automatic lighting controls such as 
                        occupancy sensors, photocells, and timeclocks.
                            ``(iv) Daylighting.
                            ``(v) Designs utilizing semi-conditioned 
                        spaces which maintain adequate comfort 
                        conditions without air conditioning or without 
                        heating.
                            ``(vi) Improved fan system efficiency, 
                        including reductions in static pressure.
                            ``(vii) Advanced unloading mechanisms for 
                        mechanical cooling, such as multiple or 
                        variable speed compressors.
                            ``(viii) The calculational methods may take 
                        into account the extent of commissioning in the 
                        building, and allow the taxpayer to take into 
                        account measured performance which exceeds 
                        typical performance.
            ``(3) Computer software.--
                    ``(A) In general.--Any calculation under this 
                subsection shall be prepared by qualified computer 
                software.
                    ``(B) Qualified computer software.--For purposes of 
                this paragraph, the term `qualified computer software' 
                means software--
                            ``(i) for which the software designer has 
                        certified that the software meets all 
                        procedures and detailed methods for calculating 
                        energy and power consumption and costs as 
                        required by the Secretary,
                            ``(ii) which provides such forms as 
                        required to be filed by the Secretary in 
                        connection with energy efficiency of property 
                        and the deduction allowed under this section, 
                        and
                            ``(iii) which provides a notice form which 
                        summarizes the energy efficiency features of 
                        the building and its projected annual energy 
                        costs.
            ``(4) Allocation of deduction for public property.--In the 
        case of energy-efficient commercial building property installed 
        on or in public property, the Secretary shall promulgate a 
        regulation to allow the allocation of the deduction to the 
        person primarily responsible for designing the property in lieu 
        of the public entity which is the owner of such property. Such 
        person shall be treated as the taxpayer for purposes of this 
        section.
            ``(5) Notice to owner.--The qualified individual shall 
        provide an explanation to the owner of the building regarding 
        the energy efficiency features of the building and its 
        projected annual energy costs as provided in the notice under 
        paragraph (3)(B)(iii).
            ``(6) Certification.--
                    ``(A) In general.--Except as provided in this 
                paragraph, the Secretary, in consultation with the 
                Secretary of Energy, shall establish requirements for 
                certification and compliance procedures similar to the 
                procedures under section 45G(d).
                    ``(B) Qualified individuals.--Individuals qualified 
                to determine compliance shall be only those individuals 
                who are recognized by an organization certified by the 
                Secretary for such purposes.
                    ``(C) Proficiency of qualified individuals.--The 
                Secretary shall consult with nonprofit organizations 
                and State agencies with expertise in energy efficiency 
                calculations and inspections to develop proficiency 
                tests and training programs to qualify individuals to 
                determine compliance.
    ``(f) Termination.--This section shall not apply with respect to 
any energy-efficient commercial building property expenditures in 
connection with property--
            ``(1) the plans for which are not certified under 
        subsection (e)(6) on or before December 31, 2006, and
            ``(2) the construction of which is not completed on or 
        before December 31, 2008.''.
    (b) Conforming Amendments.--Section 1016(a) is amended by striking 
``and'' at the end of paragraph (27), by striking the period at the end 
of paragraph (28) and inserting ``, and'', and by inserting the 
following:
            ``(29) for amounts allowed as a deduction under section 
        199(a).''.
    (c) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 is amended by adding at the end the 
following:

``Sec. 199. Energy-efficient commercial building property.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 503. BUSINESS TAX CREDIT FOR THE MANUFACTURE OF ENERGY EFFICIENT 
              APPLIANCES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business-related credits) is amended by adding at the end 
the following new section:

``SEC. 45G. ENERGY EFFICIENT APPLIANCE CREDIT.

    ``(a) General Rule.--For purposes of section 38, the energy 
efficient appliance credit determined under this section for the 
taxable year is an amount equal to the applicable amount determined 
under subsection (b) with respect to qualified energy efficient 
appliances produced by the taxpayer during the calendar year ending 
with or within the taxable year.
    ``(b) Applicable Amount.--For purposes of subsection (a), the 
applicable amount determined under this subsection with respect to a 
taxpayer is the sum of--
            ``(1) in the case of an energy efficient clothes washer 
        described in subsection (d)(2)(A), an energy efficient 
        refrigerator described in subsection (d)(3)(B)(i), or an energy 
        efficient air conditioner described in subsection (d)(4)(A), an 
        amount equal to--
                    ``(A) $50, multiplied by
                    ``(B) the number of such washers, refrigerators, 
                and air conditioners produced by the taxpayer during 
                such calendar year, and
            ``(2) in the case of an energy efficient clothes washer 
        described in subsection (d)(2)(B), an energy efficient 
        refrigerator described in subsection (d)(3)(B)(ii), or an 
        energy efficient air conditioner described in subsection 
(d)(4)(B), an amount equal to--
                    ``(A) $100, multiplied by
                    ``(B) the number of such washers, refrigerators, or 
                air conditioners produced by the taxpayer during such 
                calendar year.
    ``(c) Limitation on Maximum Credit.--
            ``(1) In general.--The maximum amount of credit allowed 
        under subsection (a) with respect to a taxpayer for all taxable 
        years shall be--
                    ``(A) $30,000,000 with respect to the credit 
                determined under subsection (b)(1), and
                    ``(B) $30,000,000 with respect to the credit 
                determined under subsection (b)(2).
            ``(2) Limitation based on gross receipts.--The credit 
        allowed under subsection (a) with respect to a taxpayer for the 
        taxable year shall not exceed an amount equal to 2 percent of 
        the average annual gross receipts of the taxpayer for the 3 
        taxable years preceding the taxable year in which the credit is 
        determined.
            ``(3) Gross receipts.--For purposes of this subsection, the 
        rules of paragraphs (2) and (3) of section 448(c) shall apply.
    ``(d) Qualified Energy Efficient Appliance.--For purposes of this 
section--
            ``(1) In general.--The term `qualified energy efficient 
        appliance' means--
                    ``(A) an energy efficient clothes washer,
                    ``(B) an energy efficient refrigerator, or
                    ``(C) an energy efficient air conditioner.
            ``(2) Energy efficient clothes washer.--The term `energy 
        efficient clothes washer' means a residential clothes washer, 
        including a residential style coin operated washer, which is 
        manufactured with--
                    ``(A) a 1.26 Modified Energy Factor (referred to in 
                this paragraph as `MEF') (as determined by the 
                Secretary of Energy), or
                    ``(B) a 1.42 MEF (as determined by the Secretary of 
                Energy) (1.5 MEF for calendar years beginning after 
                2004).
            ``(3) Energy efficient refrigerator.--The term `energy 
        efficient refrigerator' means an automatic defrost 
        refrigerator-freezer which--
                    ``(A) has an internal volume of at least 16.5 cubic 
                feet, and
                    ``(B) consumes--
                            ``(i) 10 percent less kw/hr/yr than the 
                        energy conservation standards promulgated by 
                        the Department of Energy for such refrigerator 
                        for 2001, or
                            ``(ii) 15 percent less kw/hr/yr than such 
                        energy conservation standards.
            ``(4) Energy efficient air conditioner.--The term `energy 
        efficient air conditioner' means--
                    ``(A) a central air conditioner which has a cooling 
                seasonal energy efficiency ratio (SEER) of at least 
                13.5 but less than 15, or
                    ``(B) a central air conditioner which has a cooling 
                seasonal energy efficiency ratio (SEER) of 15 or 
                greater.
    ``(e) Special Rules.--
            ``(1) In general.--Rules similar to the rules of 
        subsections (c), (d), and (e) of section 52 shall apply for 
        purposes of this section.
            ``(2) Aggregation rules.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52 or 
        subsection (m) or (o) of section 414 shall be treated as one 
        person for purposes of subsection (a).
    ``(f) Verification.--The taxpayer shall submit such information or 
certification as the Secretary, in consultation with the Secretary of 
Energy, determines necessary to claim the credit amount under 
subsection (a).
    ``(g) Termination.--This section shall not apply--
            ``(1) with respect to energy efficient refrigerators 
        described in subsection (d)(3)(B)(i) produced in calendar years 
        beginning after 2005, and
            ``(2) with respect to all other qualified energy efficient 
        appliances produced in calendar years beginning after 2007.''.
    (b) Limitation on Carryback.--Section 39(d) (relating to transition 
rules) is amended by adding at the end the following new paragraph:
            ``(12) No carryback of energy efficient appliance credit 
        before effective date.--No portion of the unused business 
        credit for any taxable year which is attributable to the energy 
        efficient appliance credit determined under section 45G may be 
        carried to a taxable year ending before the date of the 
        enactment of section 45G.''.
    (c) Conforming Amendment.--Section 38(b) (relating to general 
business credit) is amended by striking ``plus'' at the end of 
paragraph (14), by striking the period at the end of paragraph (15) and 
inserting ``, plus'', and by adding at the end the following new 
paragraph:
            ``(16) the energy efficient appliance credit determined 
        under section 45G(a).''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 45F the following new item:

                              ``Sec. 45G. Energy efficient appliance 
                                        credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

                 Subtitle B--Residential Energy Systems

SEC. 511. CREDIT FOR CONSTRUCTION OF NEW ENERGY-EFFICIENT HOME.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits) is amended by inserting after 
section 45G the following:

``SEC. 45H. NEW ENERGY-EFFICIENT HOME CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible contractor, the credit determined under this section for the 
taxable year is an amount equal to the aggregate adjusted bases of all 
energy-efficient property installed in a qualified new energy-efficient 
home during construction of such home.
    ``(b) Limitations.--
            ``(1) Maximum credit.--
                    ``(A) In general.--The credit allowed by this 
                section with respect to a dwelling shall not exceed--
                            ``(i) in the case of a dwelling described 
                        in subsection (c)(3)(D)(i), $2,000, and
                            ``(ii) in the case of a dwelling described 
                        in subsection (c)(3)(D)(ii), $3,000.
                    ``(B) Prior credit amounts on same dwelling taken 
                into account.--If a credit was allowed under subsection 
                (a) with respect to a dwelling in 1 or more prior 
                taxable years, the amount of the credit otherwise 
                allowable for the taxable year with respect to that 
                dwelling shall not exceed the amount under clause (i) 
                or (ii) (as the case may be), reduced by the sum of the 
                credits allowed under subsection (a) with respect to 
                the dwelling for all prior taxable years.
                    ``(C) Adjustment for inflation.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning in a calendar year after 
                        2002, each dollar amount contained in 
                        subparagraph (A) shall be increased by an 
                        amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year in which 
                                the taxable year begins by substituting 
                                `calendar year 2001' for `calendar year 
                                1992' in subparagraph (B) thereof.
                    ``(B) Rounding.--If any increase determined under 
                paragraph (1) is not a multiple of $100, such increase 
                shall be rounded to the next lower multiple of $100.
            ``(2) Coordination with rehabilitation and energy 
        credits.--For purposes of this section--
                    ``(A) the basis of any property referred to in 
                subsection (a) shall be reduced by that portion of the 
                basis of any property which is attributable to 
                qualified rehabilitation expenditures (as defined in 
                section 47(c)(2)) or to the energy percentage of energy 
                property (as determined under section 48A(a)), and
                    ``(B) expenditures taken into account under either 
                section 47 or 48A(a) shall not be taken into account 
                under this section.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible contractor.--The term `eligible contractor' 
        means the person who constructed the new energy-efficient home, 
        or in the case of a manufactured home which conforms to Federal 
        Manufactured Home Construction and Safety Standards (24 C.F.R. 
        3280), the manufactured home producer of such home.
            ``(2) Energy-efficient property.--The term `energy-
        efficient property' means any energy-efficient building 
        envelope component, and any energy-efficient heating or cooling 
        equipment which can, individually or in combination with other 
        components, meet the requirements of this section.
            ``(3) Qualified new energy-efficient home.--The term 
        `qualified new energy-efficient home' means a dwelling--
                    ``(A) located in the United States,
                    ``(B) the construction of which is substantially 
                completed after December 31, 2000,
                    ``(C) the original use of which is as a principal 
                residence (within the meaning of section 121) which 
                commences with the person who acquires such dwelling 
                from the eligible contractor, and
                    ``(D) which is certified to have a projected level 
                of annual heating and cooling energy consumption, 
                measured in terms of average annual energy cost to the 
                homeowner which is at least--
                            ``(i) 30 percent less than the annual level 
                        of heating and cooling energy consumption of a 
                        reference dwelling constructed in accordance 
                        with the standards of chapter 4 of the 2000 
                        International Energy Conservation Code, or
                            ``(ii) 50 percent less than such annual 
                        level of heating and cooling energy 
                        consumption.
            ``(4) Construction.--The term `construction' includes 
        reconstruction and rehabilitation.
            ``(5) Acquire.--The term `acquire' includes purchase and, 
        in the case of reconstruction and rehabilitation, such term 
        includes a binding written contract for such reconstruction or 
        rehabilitation.
            ``(6) Building envelope component.--The term `building 
        envelope component' means--
                    ``(A) insulation material or system which is 
                specifically and primarily designed to reduce the heat 
                loss or gain of a dwelling when installed in or on such 
                dwelling, and
                    ``(B) exterior windows (including skylights) and 
                doors.
            ``(7) Manufactured home included.--The term `dwelling' 
        includes a manufactured home conforming to Federal Manufactured 
        Home Construction and Safety Standards (24 C.F.R. 3280).
    ``(d) Certification.--
            ``(1) Method.--A certification described in subsection 
        (c)(3)(D) shall be determined on the basis of 1 of the 
        following methods:
                    ``(A) A component-based method, using the 
                applicable technical energy efficiency specifications 
                or ratings (including product labeling requirements) 
                for the energy-efficient building envelope component or 
                energy-efficient heating or cooling equipment. The 
                Secretary shall, in consultation with the Administrator 
                of the Environmental Protection Agency, develop 
                prescriptive component-based packages that are 
                equivalent in energy performance to properties that 
                qualify under subparagraph (B).
                    ``(B) An energy performance-based method that 
                calculates projected energy usage and cost reductions 
in the dwelling in relation to a reference dwelling--
                            ``(i) heated by the same energy source and 
                        heating system type, and
                            ``(ii) constructed in accordance with the 
                        standards of chapter 4 of the 2000 
                        International Energy Conservation Code.
        Computer software shall be used in support of an energy 
        performance-based method certification under subparagraph (B). 
        Such software shall meet procedures and methods for calculating 
        energy and cost savings in regulations promulgated by the 
        Secretary of Energy. Such regulations on the specifications for 
        software and verification protocols shall be based on the 1998 
        California Residential Alternative Calculation Method Approval 
        Manual.
            ``(2) Provider.--Such certification shall be provided by--
                    ``(A) in the case of a method described in 
                paragraph (1)(A), a local building regulatory 
                authority, a utility, a manufactured home production 
                inspection primary inspection agency (IPIA), or a home 
                energy rating organization, or
                    ``(B) in the case of a method described in 
                paragraph (1)(B), an individual recognized by an 
                organization designated by the Secretary for such 
                purposes.
            ``(3) Form.--
                    ``(A) In general.--Such certification shall be made 
                in writing in a manner that specifies in readily 
                verifiable fashion the energy-efficient building 
                envelope components and energy-efficient heating or 
                cooling equipment installed and their respective rated 
                energy efficiency performance, and in the case of a 
                method described in paragraph (1)(B), accompanied by 
                written analysis documenting the proper application of 
                a permissible energy performance calculation method to 
                the specific circumstances of such dwelling.
                    ``(B) Form provided to buyer.--A form documenting 
                the energy-efficient building envelope components and 
                energy-efficient heating or cooling equipment installed 
                and their rated energy efficiency performance shall be 
                provided to the buyer of the dwelling. The form shall 
                include labeled R-value for insulation products, NFRC-
                labeled U-factor and Solar Heat Gain Coefficient for 
                windows, skylights, and doors, labeled AFUE ratings for 
                furnaces and boilers, labeled HSPF ratings for electric 
                heat pumps, and labeled SEER ratings for air 
                conditioners.
                    ``(C) Ratings label affixed in dwelling.--A 
                permanent label documenting the ratings in subparagraph 
                (B) shall be affixed to the front of the electrical 
                distribution panel of the dwelling, or shall be 
                otherwise permanently displayed in a readily 
                inspectable location in the dwelling.
            ``(4) Regulations.--
                    ``(A) In general.--In prescribing regulations under 
                this subsection for energy performance-based 
                certification methods, the Secretary, 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, shall prescribe procedures for 
                calculating annual energy usage and cost reductions for 
                heating and cooling and for the reporting of the 
                results. Such regulations shall--
                            ``(i) provide that any calculation 
                        procedures be fuel neutral such that the same 
                        energy efficiency measures allow a home to 
                        qualify for the credit under this section 
                        regardless of whether the dwelling uses a gas 
                        or oil furnace or boiler or an electric heat 
                        pump, and
                            ``(ii) require that any computer software 
                        allow for the printing of the Federal tax forms 
                        necessary for the credit under this section and 
                        for the printing of forms for disclosure to the 
                        homebuyer.
                    ``(B) Providers.--For purposes of paragraph (2)(B), 
                the Secretary shall establish requirements for the 
                designation of individuals based on the requirements 
                for energy consultants and home energy raters specified 
                by the Mortgage Industry National Accreditation 
                Procedures for Home Energy Rating Systems.
    ``(e) Basis Adjustment.--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) Credit Made Part of General Business Credit.--Subsection (b) of 
section 38 (relating to current year business credit) is amended by 
striking ``plus'' at the end of paragraph (15), by striking the period 
at the end of paragraph (16) and inserting ``, plus'', and by adding at 
the end the following:
            ``(17) the new energy-efficient home credit determined 
        under section 45H.''.
    (c) Denial of Double Benefit.--Section 280C (relating to certain 
expenses for which credits are allowable) is amended by adding at the 
end the following:
    (e) New Energy-Efficient Home Expenses.--No deduction shall be 
allowed for that portion of expenses for a new energy-efficient home 
otherwise allowable as a deduction for the taxable year which is equal 
to the amount of the credit determined for such taxable year under 
section 45H.''.
    (d) Credit Allowed Against Regular and Minimum Tax.--
            (1) In general.--Subsection (c) of section 38 (relating to 
        limitation based on amount of tax) is amended by redesignating 
        paragraph (3) as paragraph (4) and by inserting after paragraph 
        (2) the following new paragraph:
            ``(3) Special rules for new energy efficient home credit.--
                    ``(A) In general.--In the case of the new energy 
                efficient home credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) subparagraphs (A) and (B) 
                                thereof shall not apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the new energy 
                                efficient home credit).
                    ``(B) New energy efficient home credit.--For 
                purposes of this subsection, the term `new energy 
                efficient home credit' means the credit allowable under 
                subsection (a) by reason of section 45H.
    ``(e) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2006.''.
            (2) Conforming amendment.--Subclause (II) of section 
        38(c)(2)(A)(ii) is amended by inserting ``or the new energy 
        efficient home credit'' after ``employment credit''.
    (e) Limitation on Carryback.--Subsection (d) of section 39 is 
amended by adding at the end the following:
            ``(13) No carryback of new energy-efficient home credit 
        before effective date.--No portion of the unused business 
        credit for any taxable year which is attributable to the credit 
        determined under section 45H may be carried back to any taxable 
        year ending before January 1, 2001.''.
    (f) Deduction for Certain Unused Business Credits.--Subsection (c) 
of section 196 is amended by striking ``and'' at the end of paragraph 
(8), by striking the period at the end of paragraph (9) and inserting 
``, and'', and by adding after paragraph (10) the following:
            ``(11) the new energy-efficient home credit determined 
        under section 45H.''.
    (g) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 45G the following:

                              ``Sec. 45H. New energy-efficient home 
                                        credit.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2000.

SEC. 512. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
(relating to nonrefundable personal credits) is amended by inserting 
after section 25B the following new section:

``SEC. 25C. ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

    ``(a) Allowance of Credit.--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 20 percent of the amount paid 
or incurred by the taxpayer for qualified energy efficiency 
improvements installed during such taxable year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--The credit allowed by this section 
        with respect to a dwelling shall not exceed $2,000.
            ``(2) Prior credit amounts for taxpayer on same dwelling 
        taken into account.--If a credit was allowed to the taxpayer 
        under subsection (a) with respect to a dwelling in 1 or more 
        prior taxable years, the amount of the credit otherwise 
        allowable for the taxable year with respect to that dwelling 
        shall not exceed the amount of $2,000 reduced by the sum of the 
        credits allowed under subsection (a) to the taxpayer with 
        respect to the dwelling for all prior taxable years.
            ``(3) Adjustment for inflation.--
                    ``(A) In general.--In the case of any taxable year 
                beginning in a calendar year after 2001, the $2,000 
                amount contained in paragraphs (1) and (2) shall each 
                be increased by an amount equal to--
                            ``(i) $2000, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins 
                        by substituting `calendar year 2000' for 
                        `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any increase determined under 
                subparagraph (A) is not a multiple of $100, such 
                increase shall be rounded to the next lowest multiple 
                of $100.''.
    ``(c) Carryforward of Unused Credit.--If the credit allowable under 
subsection (a) exceeds the limitation imposed by section 26(a) for such 
taxable year reduced by the sum of the credits allowable under this 
subpart (other than this section), such excess shall be carried to the 
succeeding taxable year and added to the credit allowable under 
subsection (a) for such taxable year.
    ``(d) Qualified Energy Efficiency Improvements.--For purposes of 
this section, the term `qualified energy efficiency improvements' means 
any energy efficient building envelope component which is certified to 
meet or exceed the prescriptive criteria for such component in the 2000 
International Energy Conservation Code, or any combination of energy 
efficiency measures which achieves at least a 30 percent reduction in 
heating and cooling energy usage for the dwelling (as measured in terms 
of energy cost to the taxpayer), if--
            ``(1) such component or combinations of measures is 
        installed in or on a dwelling--
                    ``(A) located in the United States, and
                    ``(B) owned and used by the taxpayer as the 
                taxpayer's principal residence (within the meaning of 
                section 121),
            ``(2) the original use of such component or combination of 
        measures commences with the taxpayer, and
            ``(3) such component or combination of measures reasonably 
        can be expected to remain in use for at least 5 years.
    ``(e) Certification.--The certification described in subsection (d) 
shall be--
            `(1) in the case of any component described in subsection 
        (d), determined on the basis of applicable energy efficiency 
        ratings (including product labeling requirements) for affected 
        building envelope components,
            ``(2) in the case of combinations of measures described in 
        subsection (d), determined by the performance-based methods 
        described in section 45G(d),
            ``(3) provided by a third party, such as a local building 
        regulatory authority, a utility, a manufactured home production 
        inspection primary inspection agency (IPIA), or a home energy 
        rating organization, consistent with the requirements of 
        section 45G(d)(2), and
            ``(4) made in writing on forms which specify in readily 
        inspectable fashion the energy-efficient components and other 
        measures and their respective efficiency ratings, and which 
        shall include a permanent label affixed to the electrical 
        distribution panel as described in section 45G(d)(3)(C).
    ``(f) Definitions and Special Rules.--
            ``(1) Dollar amounts in case of joint occupancy.--In the 
        case of any dwelling unit which is 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 for the 
                qualified energy efficiency improvements 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 paid his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of the cost of qualified energy efficiency 
        improvements made by 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 paid his 
                proportionate share of the cost of qualified energy 
                efficiency improvements made by 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) Building envelope component.--The term `building 
        envelope component' means--
                    ``(A) insulation material or system which is 
                specifically and primarily designed to reduce the heat 
                loss or gain or a dwelling when installed in or on such 
                dwelling, and
                    ``(B) exterior windows (including skylights) and 
                doors.
            ``(5) Manufactured homes included.--For purposes of this 
        section, the term `dwelling' includes a manufactured home which 
        conforms to Federal Manufactured Home Construction and Safety 
        Standards (24 C.F.R. 3280).
    ``(g) Basis Adjustment.--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.
    ``(h) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2006.''.
    (b) Conforming Amendments.--
            (1) Subsection (c) of section 23 is amended by striking 
        ``and 1400C'' and inserting ``, 25C, and 1400C''.
            (2) Subparagraph (C) of section 25(e)(1) is amended by 
        inserting ``25C,'' after ``24,''.
            (3) Section 904(h) is amended by inserting ``, 25C'' after 
        ``24''.
            (4) Subsection (d) of section 1400C is amended by striking 
        ``section 24'' and inserting ``sections 24 and 25C''.
            (5) Subsection (a) of section 1016 is amended by striking 
        ``and'' at the end of paragraph (28), by striking the period at 
        the end of paragraph (29) and inserting ``; and'', and by 
        adding at the end the following:
            ``(30) to the extent provided in section 25C(f), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25C.''.
            (6) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 25A the following new item:

                              ``Sec. 25C. Energy efficiency 
                                        improvements to existing 
                                        homes.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending on or after the date of the enactment of 
this Act.

SEC. 513. CREDIT FOR RESIDENTIAL SOLAR, WIND, AND FUEL CELL ENERGY 
              PROPERTY.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
(relating to nonrefundable personal credits) is amended by inserting 
after section 25C the following:

``SEC. 25D. RESIDENTIAL WIND, AND FUEL CELL ENERGY PROPERTY.

    ``(a) Allowance of Credit.--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--
            ``(1) 30 percent of the qualified photovoltaic property 
        expenditures,
            ``(2) 30 percent of the qualified wind energy property 
        expenditures, and
            ``(3) 30 percent for the qualified fuel cell property 
        expenditures,
made by the taxpayer during the taxable year.
    ``(b) Limitations.--
            ``(1) Type of property.--No expenditure may be taken into 
        account under this section unless such expenditure is made by 
        the taxpayer for property installed on or in connection with a 
        dwelling unit which is located in the United States and which 
        is used as a residence.
            ``(2) Safety certifications.--No credit shall be allowed 
        under this section for an item of photovoltaic, wind energy, or 
        fuel cell property unless such property meets appropriate fire 
        and electric code requirements.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified photovoltaic property expenditure.--The 
        term `qualified photovoltaic property expenditure' means an 
        expenditure for property which uses solar energy to generate 
        electricity for use in a dwelling unit.
            ``(2) Solar panels.--No expenditure relating to a solar 
        panel or other property installed as a roof (or portion 
        thereof) shall fail to be treated as property described in 
        paragraph (1) or (2) solely because it constitutes a structural 
        component of the structure on which it is installed.
            ``(3) Qualified wind energy property expenditure.--The term 
        `qualified wind energy property expenditure' means an 
        expenditure for property which uses wind energy to generate 
        electricity for use in a dwelling unit.
            ``(4) Qualified fuel cell property expenditure.--The term 
        `qualified fuel cell property expenditure' means an expenditure 
        for property which uses an electrochemical fuel cell system to 
        generate electricity for use in a dwelling unit.
            ``(5) Labor costs.--Expenditures for labor costs properly 
        allocable to the onsite preparation, assembly, or original 
        installation of the property described in paragraph (1), (2), 
        or (4) and for piping or wiring to interconnect such property 
        to the dwelling unit shall be taken into account for purposes 
        of this section.
            ``(6) Energy storage medium.--Expenditures which are 
        properly allocable to a swimming pool, hot tub, or any other 
        energy storage medium which has a function other than the 
        function of such storage shall not be taken into account for 
        purposes of this section.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Dollar amounts in case of joint occupancy.--In the 
        case of any dwelling unit which is 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 (as the case 
                may be) 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 such individual 
                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 items of solar or wind energy 
        property.--
                    ``(A) In general.--Any expenditure otherwise 
                qualifying as an expenditure described in paragraph 
                (1), (2), or (4) of subsection (c) 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.--If less than 80 percent 
        of the use of an item is for nonbusiness residential purposes, 
        only that portion of the expenditures for such item which is 
        properly allocable to use for nonbusiness residential 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 residential purposes.
            ``(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 or reconstruction of a structure, such 
                expenditure shall be treated as made when the original 
                use of the constructed or reconstructed structure by 
                the taxpayer begins.
                    ``(C) Amount.--The amount of any expenditure shall 
                be the cost thereof.
            ``(7) Reduction of credit for grants, tax-exempt bonds, and 
        subsidized energy financing.--The rules of section 29(b)(3) 
        shall apply for purposes of this section.
    ``(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) Termination.--The credit allowed under this section shall not 
apply to taxable years beginning after December 31, 2006.''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 1016 is amended by striking 
        ``and'' at the end of paragraph (29), by striking the period at 
        the end of paragraph (30) and inserting ``; and'', and by 
        adding at the end the following:
            ``(31) to the extent provided in section 25D(e), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25D.''.
            (2) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 25B the following:

                              ``Sec. 25D. Residential solar, wind, and 
                                        fuel cell energy property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures made after the date of the enactment of this Act, 
in taxable years ending after such date.

SEC. 514. CREDIT FOR PURCHASE OF ENERGY STAR PRODUCTS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
is amended by inserting after section 25D the following new section:

``SEC. 25E. CREDIT FOR PURCHASE OF ENERGY STAR PRODUCTS.

    ``(a) Allowance of Credit.--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 30 percent of the amount paid 
by the taxpayer for the purchase of any Energy Star product during the 
taxable year.
    ``(b) Limitation.--The amount allowable as a credit under 
subsection (a) for a taxable year shall not exceed $1,000.
    ``(c) Energy Star Product.--For purposes of this section, the term 
`Energy Star product' means a product which--
            ``(1) meets the guidelines, specifications, and performance 
        levels of the Energy Star program jointly managed by the 
        Environmental Protection Agency and the Department of Energy, 
        and
            ``(2) displays the Energy Star label.
    ``(d) Refundable Credit for Certain Taxpayers.--If the adjusted 
gross income of the taxpayer for the taxable year is $75,000 or less 
($150,000 or less in the case of a joint return), the credit allowable 
under subsection (a) shall be treated as a credit allowed under subpart 
C.
    ``(e) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2006.''.
    (b) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 25D the following new item:

                              ``Sec. 25E. Credit for purchase of Energy 
                                        Star products.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

           Subtitle C--Electricity Facilities and Production

SEC. 521. INCENTIVE FOR DISTRIBUTED GENERATION.

    (a) Depreciation of Distributed Power Property.--
            (1) In general.--Subparagraph (C) of section 168(e)(3) 
        (relating to 7-year property) is amended by redesignating 
        clause (ii) as clause (iii) and by inserting after clause (i) 
        the following:
                            ``(ii) any distributed power property, 
                        and''.
            (2) 10-year class life.--The table contained in section 
        168(g)(3)(B) is amended by inserting after the item relating to 
        subparagraph (C)(i) the following:

``(C)(ii)......................................................   10''.
    (b) Distributed Power Property.--Section 168(i) is amended by 
adding at the end the following:
            ``(15) Distributed power property.--The term `distributed 
        power property' means property--
                    ``(A) which is used in the generation of 
                electricity for primary use--
                            ``(i) in nonresidential real or residential 
                        rental property used in the taxpayer's trade or 
                        business, or
                            ``(ii) in the taxpayer's industrial 
                        manufacturing process or plant activity, with a 
                        rated total capacity in excess of 500 
                        kilowatts,
                    ``(B) which also may produce usable thermal energy 
                or mechanical power for use in a heating or cooling 
                application, as long as at least 40 percent of the 
                total useful energy produced consists of--
                            ``(i) with respect to assets described in 
                        subparagraph (A)(i), electrical power (whether 
                        sold or used by the taxpayer), or
                            ``(ii) with respect to assets described in 
                        subparagraph (A)(ii), electrical power (whether 
                        sold or used by the taxpayer) and thermal or 
                        mechanical energy used in the taxpayer's 
                        industrial manufacturing process or plant 
                        activity,
                    ``(C) which is not used to transport primary fuel 
                to the generating facility or to distribute energy 
                within or outside of the facility, and
                    ``(D) where it is reasonably expected that not more 
                than 50 percent of the produced electricity will be 
                sold to, or used by, unrelated persons.
        For purposes of subparagraph (B), energy output is determined 
        on the basis of expected annual output levels, measured in 
        British thermal units (Btu), using standard conversion factors 
        established by the Secretary.''.
    (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. 522. MODIFICATIONS TO CREDIT FOR ELECTRICITY PRODUCED FROM 
              RENEWABLE AND WASTE PRODUCTS.

    (a) Increase in Credit Rate.--
            (1) In general.--Section 45(a)(1) is amended by striking 
        ``1.5 cents'' and inserting ``1.8 cents''.
            (2) Conforming amendments.--
                    (A) Section 45(b)(2) is amended by striking ``1.5 
                cent'' and inserting ``1.8 cent''.
                    (B) Section 45(d)(2)(B) is amended by inserting 
                ``(calendar year 2001 in the case of the 1.8 cent 
                amount in subsection (a))'' after ``1992''.
    (b) Expansion of Qualified Resources.--
            (1) In general.--Section 45(c)(1) (relating to qualified 
        energy resources) is amended by striking ``and'' at the end of 
        subparagraph (B), by striking the period at the end of 
        subparagraph (C) and inserting ``, and'', and by adding at the 
        end the following:
                    ``(D) alternative resources.''.
            (2) Definition of alternative resources.--Section 45(c) 
        (relating to definitions) is amended--
                    (A) by redesignating paragraph (3) as paragraph 
                (5),
                    (B) by redesignating paragraph (4) as paragraph 
                (3), and
                    (C) by inserting after paragraph (3), as 
                redesignated by subparagraph (B), the following:
            ``(4) Alternative Resources.--
                    ``(A) In general.--The term `alternative resources' 
                means--
                            ``(i) solar,
                            ``(ii) biomass (other than closed loop 
                        biomass),
                            ``(iii) municipal solid waste,
                            ``(iv) geothermal, and
                            ``(v) landfill gas.
                    ``(B) Biomass.--The term `biomass' means any solid, 
                nonhazardous, cellulosic waste material or any organic 
                carbohydrate matter, 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, dunnage, 
                        untreated wood waste from construction or 
                        manufacturing activities, landscape or right-
                        of-way tree trimmings, unsegregated municipal 
                        solid waste, and post-consumer wastepaper, or
                            ``(iii) any of the following agriculture 
                        sources: orchard tree crops, vineyard, grain, 
                        legumes, sugar, and other crop by-products or 
                        residues, including any packaging and other 
                        materials which are nontoxic and biodegradable 
                        and are associated with the processing, 
                        feeding, selling, transporting, and disposal of 
                        such agricultural materials.
                    ``(C) Municipal solid waste.--The term `municipal 
                solid waste' has the same meaning given the term `solid 
                waste' under section 2(27) of the Solid Waste 
                Utilization Act (42 U.S.C. 6903).
                    ``(D) Geothermal.--The term `geothermal' means 
                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.
                    ``(E) Landfill gas.--The term `landfill gas' means 
                gas generated from the decomposition of any household 
                solid waste, commercial solid waste, and industrial 
                solid waste disposed of in a municipal solid waste 
                landfill unit (as such terms are defined in regulations 
                promulgated under subtitle D of the Solid Waste 
                Disposal Act (42 U.S.C. 6941 et seq.).''.
            (3) Qualified facility.--Section 45(c)(5) (defining 
        qualified facility), as redesignated by paragraph (2)(A), is 
        amended by adding at the end the following:
                    ``(D) Alternative resources facility.--
                            ``(i) In general.--Except as provided in 
                        clauses (ii) and (iii), in the case of a 
                        facility using alternative resources to produce 
                        electricity, the term `qualified facility' 
                        means any facility of the taxpayer which is 
                        originally placed in service after the date of 
                        the enactment of this subparagraph.
                            ``(ii) Biomass facility.--In the case of a 
                        facility using biomass described in paragraph 
                        (4)(A)(ii) to produce electricity, the term 
                        `qualified facility' means any facility of the 
                        taxpayer.
                            ``(iii) Geothermal facility.--In the case 
                        of a facility using geothermal to produce 
                        electricity, the term `qualified facility' 
                        means any facility of the taxpayer which is 
                        originally placed in service after December 31, 
                        1992.
                            ``(iv) Special rules.--In the case of a 
                        qualified facility described in this 
                        subparagraph, the 10-year period referred to in 
                        subsection (a) shall be treated as beginning no 
                        earlier than the date of the enactment of this 
                        subparagraph.''.
            (4) Government-owned facility.--Section 45(d)(6) (relating 
        to credit eligibility in the case of government-owned 
        facilities using poultry waste) is amended--
                    (A) by inserting ``or alternative resources'' after 
                ``poultry waste'', and
                    (B) by inserting ``or alternative resources'' after 
                ``poultry waste'' in the heading thereof.
            (5) Qualified facilities with co-production.--Section 45(b) 
        (relating to limitations and adjustments) is amended by adding 
        at the end the following:
            ``(4) Increased credit for co-production facilities.--
                    ``(A) In general.--In the case of a qualified 
                facility described in subsection (c)(3)(D)(i) which has 
                a co-production facility or a qualified facility 
                described in subparagraph (A), (B), or (C) of 
                subsection (c)(3) which adds a co-production facility 
                after the date of the enactment of this paragraph, the 
                amount in effect under subsection (a)(1) for an 
                eligible taxable year of a taxpayer shall (after 
                adjustment under paragraph (2) and before adjustment 
                under paragraphs (1) and (3)) be increased by .25 
                cents.
                    ``(B) Co-production facility.--For purposes of 
                subparagraph (A), the term `co-production facility' 
                means a facility which--
                            ``(i) enables a qualified facility to 
                        produce heat, mechanical power, chemicals, 
                        liquid fuels, or minerals from qualified energy 
                        resources in addition to electricity, and
                            ``(ii) produces such energy on a continuous 
                        basis.
                    ``(C) Eligible taxable year.--For purposes of 
                subparagraph (A), the term `eligible taxable year' 
                means any taxable year in which the amount of gross 
                receipts attributable to the co-production facility of 
                a qualified facility are at least 10 percent of the 
                amount of gross receipts attributable to electricity 
                produced by such facility.''.
            (6) Qualified facilities located within qualified indian 
        lands.--Section 45(b) (relating to limitations and adjustments) 
        is amended by adding at the end the following:
            ``(5) Increased credit for qualified facility located 
        within qualified indian land.--In the case of a qualified 
        facility described in subsection (c)(3)(D) which--
                    ``(A) is located within--
                            ``(i) qualified Indian lands (as defined in 
                        section 7871(c)(3)), or
                            ``(ii) lands which are held in trust by a 
                        Native Corporation (as defined in section 3(m) 
                        of the Alaska Native Claims Settlement Act (43 
                        U.S.C. 1602(m)) for Alaska Natives, and
                    ``(B) is operated with the explicit written 
                approval of the Indian tribal government or Native 
                Corporation (as so defined) having jurisdiction over 
                such lands,
        the amount in effect under subsection (a)(1) for a taxable year 
        shall (after adjustment under paragraphs (2) and (4) and before 
        adjustment under paragraphs (1) and (3)) be increased by .25 
        cents.''.
            (7) Electricity produced from certain resources co-fired in 
        coal plants.--Section 45(d) (relating to definitions and 
        special rules) is amended by adding at the end the following:
            ``(8) Special rule for electricity produced from certain 
        resources co-fired in coal plants.--In the case of electricity 
        produced from biomass (including closed loop biomass), 
        municipal solid waste, or animal waste, co-fired in a facility 
        which produces electricity from coal--
                    ``(A) subsection (a)(1) shall be applied by 
                substituting `1 cent' for `1.8 cents',
                    ``(B) such facility shall be considered a qualified 
                facility for purposes of this section, and
                    ``(C) the 10-year period referred to in subsection 
                (a) shall be treated as beginning no earlier than the 
                date of the enactment of this paragraph.''.
            (8) Conforming amendments.--
                    (A) The heading for section 45 is amended by 
                inserting ``and waste energy'' after ``renewable''.
                    (B) The item relating to section 45 in the table of 
                sections subpart D of part IV of subchapter A of 
                chapter 1 is amended by inserting ``and waste energy'' 
                after ``renewable''.
    (c) Additional Modifications of Renewable and Waste Energy Resource 
Credit.--
            (1) Credits for certain tax exempt organizations and 
        governmental units.--Section 45(d) (relating to definitions and 
        special rules) is amended by adding at the end the following:
            ``(9) Credits for certain tax exempt organizations and 
        governmental units.--
                    ``(A) Allowance of credit.--Any credit which would 
                be allowable under subsection (a) with respect to a 
                qualified facility of an entity if such entity were not 
                exempt from tax under this chapter shall be treated as 
                a credit allowable under subpart C to such entity if 
                such entity is--
                            ``(i) an organization described in section 
                        501(c)(12)(C) and exempt from tax under section 
                        501(a),
                            ``(ii) an organization described in section 
                        1381(a)(2)(C), or
                            ``(iii) an entity the income of which is 
                        excludable from gross income under section 115.
                    ``(B) Use of credit.--
                            ``(i) Transfer of credit.--An entity 
                        described in subparagraph (A) may assign, 
                        trade, sell, or otherwise transfer any credit 
                        allowable to such entity under subparagraph (A) 
                        to any taxpayer.
                            ``(ii) Use of credit as an offset.--
                        Notwithstanding any other provision of law, in 
                        the case of an entity described in clause (i) 
                        or (ii) of subparagraph (A), any credit 
                        allowable to such entity under subparagraph (A) 
                        may be applied by such entity, without penalty, 
                        as a prepayment of any loan, debt, or other 
                        obligation the entity has incurred under 
                        subchapter I of chapter 31 of title 7 of the 
                        Rural Electrification Act of 1936 (7 U.S.C. 901 
                        et seq.).
                    ``(C) Credit not income.--Neither a transfer under 
                clause (i) or a use under clause (ii) of subparagraph 
                (B) of any credit allowable under subparagraph (A) 
                shall result in income for purposes of section 
                501(c)(12).
                    ``(D) Transfer proceeds treated as arising from 
                essential government function.--Any proceeds derived by 
                an entity described in subparagraph (A)(iii) from the 
                transfer of any credit under subparagraph (B)(i) shall 
                be treated as arising from an essential government 
                function.
                    ``(E) Credits not reduced by tax-exempt bonds or 
                certain other subsidies.--Subsection (b)(3) shall not 
                apply to reduce any credit allowable under subparagraph 
                (A) with respect to--
                            ``(i) proceeds described in subparagraph 
                        (A)(ii) of such subsection, or
                            ``(ii) any loan, debt, or other obligation 
                        incurred under subchapter I of chapter 31 of 
                        title 7 of the Rural Electrification Act of 
                        1936 (7 U.S.C. 901 et seq.),
                used to provide financing for any qualified facility.
                    ``(F) Treatment of unrelated persons.--For purposes 
                of this paragraph, sales among and between entities 
                described in subparagraph (A) shall be treated as sales 
                between unrelated parties.''.
            (2) Coordination with other credits.--Section 45(d) is 
        amended by adding at the end the following:
            ``(10) Coordination with other credits.--This section shall 
        not apply to any qualified facility with respect to which a 
        credit under any other section is allowed for the taxable year 
        unless the taxpayer elects to waive the application of such 
        credit to such facility.''.
            (3) Expansion to include animal waste.--Section 45 
        (relating to electricity produced from certain renewable 
        resources), is amended--
                    (A) by striking ``poultry'' each place it appears 
                in subsection (c)(1)(C) and subsection (d)(6) and 
                inserting ``animal'',
                    (B) by striking ``poultry'' in the heading of 
                paragraph (6) of subsection (d) and inserting 
                ``animal'',
                    (C) by striking paragraph (3) of subsection (c) and 
                inserting the following:
            ``(3) Animal waste.--The term `animal waste' means poultry 
        manure and litter and other animal wastes, including--
                    ``(A) wood shavings, straw, rice hulls, and other 
                bedding material for the disposition of manure, and
                    ``(B) byproducts, packaging, and other materials 
                which are nontoxic and biodegradable and are associated 
                with the processing, feeding, selling, transporting, 
and disposal of such animal wastes.'', and
                    (D) by striking subparagraph (C) of subsection 
                (c)(5) and inserting the following:
                    ``(C) Animal waste facility.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), in the case of a facility using 
                        animal waste (other than poultry) to produce 
                        electricity, the term `qualified facility' 
                        means any facility of the taxpayer which is 
                        originally placed in service after the date of 
                        the enactment of this clause.
                            ``(ii) Poultry waste.--In the case of a 
                        facility using animal waste relating to poultry 
                        to produce electricity, the term `qualified 
                        facility' means any facility of the taxpayer 
                        which is originally placed in service after 
                        December 31, 1999.''.
            (4) Treatment of qualified facilities not in compliance 
        with pollution laws.--Section 45(c)(5) (relating to qualified 
        facilities) is amended by adding at the end the following:
                    ``(E) Noncompliance with pollution laws.--For 
                purposes of this paragraph, a facility which is not in 
                compliance with the applicable State and Federal 
                pollution prevention, control, and permit requirements 
                for any period of time shall not be considered to be a 
                qualified facility during such period.''.
            (5) Permanent extension of qualified facility dates.--
        Section 45(c)(5) (relating to qualified facility), as 
        redesignated by subsection (b)(2), is amended by striking ``, 
        and before January 1, 2002'' in subparagraphs (A) and (B).
    (d) Effective Date.--The amendments made by this section shall 
apply to electricity and other energy produced after the date of the 
enactment of this Act.

SEC. 523. TREATMENT OF FACILITIES USING BAGASSE TO PRODUCE ENERGY AS 
              SOLID WASTE DISPOSAL FACILITIES ELIGIBLE FOR TAX-EXEMPT 
              FINANCING.

    (a) In General.--Section 142 (relating to exempt facility bond) is 
amended by adding at the end the following:
    ``(k) Solid Waste Disposal Facilities.--For purposes of subsection 
(a)(6), the term `solid waste disposal facilities' includes property 
located in Hawaii and used for the collection, storage, treatment, 
utilization, processing, or final disposal of bagasse in the 
manufacture of ethanol.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds issued after the date of the enactment of this Act.

SEC. 524. DEPRECIATION OF PROPERTY USED IN THE TRANSMISSION OF 
              ELECTRICITY.

    (a) Depreciation of Property Used in the Transmission of 
Electricity.--
            (1) In general.--Subparagraph (C) of section 168(e)(3) 
        (relating to 7-year property) is amended by striking ``and'' at 
        the end of clause (ii), by redesignating clause (iii) as clause 
        (iv), and by inserting after clause (ii) the following:
                            ``(iii) any property used in the 
                        transmission of electricity, and''.
            (2) 10-year class life.--The table contained in section 
        168(g)(3)(B) is amended by inserting after the item relating to 
        subparagraph (C)(ii) the following:

``(C)(iii).....................................................   10''.
    (b) Definition of Property Used in the Transmission of 
Electricity.--Section 168(i) is amended by adding at the end the 
following:
            ``(16) Property used in the transmission of electricity.--
        The term `property used in the transmission of electricity' 
        means property used in the transmission of electricity for 
        sale.''.
    (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. 525. CREDIT FOR INVESTMENT IN ADDITIONAL PLANT CAPACITY FOR 
              EXISTING RENEWABLE RESOURCES FACILITIES PRODUCING 
              ELECTRICITY.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
(relating to rules for computing investment credit) is amended by 
inserting after section 48A the following:

``SEC. 48B. INCREASED OUTPUT OF EXISTING RENEWABLE RESOURCES FACILITIES 
              PRODUCING ELECTRICITY.

    ``(a) In General.--For purposes of section 46, the renewable 
resources facilities increased output credit for any taxable year is 
the 20 percent of the basis of qualified property placed in service 
during such taxable year.
    ``(b) Qualified Property.--For purposes of subsection (a), the term 
`qualified property' means property originally placed in service after 
the date of the enactment of this section as part of a qualified 
facility if--
            ``(1) such property is used to generate additional capacity 
        from increased efficiency or additions of new capacity, and
            ``(2) after such property is placed in service, the 
        nameplate capacity rating of such facility for electricity 
        production is not less than 110 percent of the nameplate 
        capacity rating of such facility as of the date of the 
        enactment of this section.
    ``(c) Qualified Facility.--For purposes of this section, the term 
`qualified facility' means a facility described in section 45(c)(5).
    ``(d) Applicable Rules.--For purposes of this section, rules 
similar to the rules of section 48A(e) shall apply.
    ``(e) Termination.--No credit shall be allowed under this section 
for property placed in service after December 31, 2004.''.
    (b) Credit Made Part of Investment Credit.--Section 46 is amended 
by striking ``and'' at the end of paragraph (2), by striking the period 
at the end of paragraph (3) and inserting ``, and'', and by inserting 
after paragraph (3) the following new paragraph:
            ``(4) the renewable resources facilities increased output 
        credit.''.
    (c) No Carryback Before Effective Date.--Section 39(d) is amended 
by adding at the end the following:
            ``(12) No carryback of renewable resources facilities 
        increased output credit before effective date.--No portion of 
        the unused business credit for any taxable year which is 
        attributable to the renewable resources facilities increased 
        output credit determined under section 48B may be carried back 
        to a taxable year ending before January 1, 2002.''.
    (d) Clerical Amendment.--The table of sections for subpart E of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

``Sec. 48. Increased output of existing renewable resources facilities 
                            producing electricity.--''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001.

                  Subtitle D--Hybrid Electric Vehicles

SEC. 531. ALTERNATIVE MOTOR VEHICLE CREDIT.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to foreign tax credit, etc.) is amended by adding at the end 
the following:

``SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.

    ``(a) Allowance of Credit.--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--
            ``(1) the new qualified fuel cell motor vehicle credit 
        determined under subsection (b),
            ``(2) the new qualified hybrid motor vehicle credit 
        determined under subsection (c), and
            ``(3) the new qualified alternative fuel motor vehicle 
        credit determined under subsection (d).
    ``(b) New Qualified Fuel Cell Motor Vehicle Credit.--
            ``(1) In general.--For purposes of subsection (a), the new 
        qualified fuel cell motor vehicle credit determined under this 
        subsection with respect to a new qualified fuel cell motor 
        vehicle placed in service by the taxpayer during the taxable 
        year is--
                    ``(A) $4,000, if such vehicle has a gross vehicle 
                weight rating of not more than 8,500 pounds,
                    ``(B) $10,000, if such vehicle has a gross vehicle 
                weight rating of more than 8,500 pounds but not more 
                than 14,000 pounds,
                    ``(C) $20,000, if such vehicle has a gross vehicle 
                weight rating of more than 14,000 pounds but not more 
                than 26,000 pounds, and
                    ``(D) $40,000, if such vehicle has a gross vehicle 
                weight rating of more than 26,000 pounds.
            ``(2) Increase for fuel efficiency.--
                    ``(A) In general.--The amount determined under 
                paragraph (1)(A) with respect to a new qualified fuel 
                cell motor vehicle which is a passenger automobile or 
                light truck shall be increased by--
                            ``(i) $1,000, if such vehicle achieves at 
                        least 150 percent but less than 175 percent of 
                        the 2000 model year city fuel economy,
                            ``(ii) $1,500, if such vehicle achieves at 
                        least 175 percent but less than 200 percent of 
                        the 2000 model year city fuel economy,
                            ``(iii) $2,000, if such vehicle achieves at 
                        least 200 percent but less than 225 percent of 
                        the 2000 model year city fuel economy,
                            ``(iv) $2,500, if such vehicle achieves at 
                        least 225 percent but less than 250 percent of 
                        the 2000 model year city fuel economy,
                            ``(v) $3,000, if such vehicle achieves at 
                        least 250 percent but less than 275 percent of 
                        the 2000 model year city fuel economy,
                            ``(vi) $3,500, if such vehicle achieves at 
                        least 275 percent but less than 300 percent of 
                        the 2000 model year city fuel economy, and
                            ``(vii) $4,000, if such vehicle achieves at 
                        least 300 percent of the 2000 model year city 
                        fuel economy.
                    ``(B) 2000 model year city fuel economy.--For 
                purposes of subparagraph (A), the 2000 model year city 
                fuel economy with respect to a vehicle shall be 
                determined in accordance with the following tables:
                            ``(i) In the case of a passenger 
                        automobile:

``If vehicle inertia weight class   The 2000 model year city fuel 
        is:                                 economy is:
    1,500 or 1,750 lbs............................            43.7 mpg 
    2,000 lbs.....................................            38.3 mpg 
    2,250 lbs.....................................            34.1 mpg 
    2,500 lbs.....................................            30.7 mpg 
    2,750 lbs.....................................            27.9 mpg 
    3,000 lbs.....................................            25.6 mpg 
    3,500 lbs.....................................            22.0 mpg 
    4,000 lbs.....................................            19.3 mpg 
    4,500 lbs.....................................            17.2 mpg 
    5,000 lbs.....................................            15.5 mpg 
    5,500 lbs.....................................            14.1 mpg 
    6,000 lbs.....................................            12.9 mpg 
    6,500 lbs.....................................            11.9 mpg 
    7,000 or 8,500 lbs............................            11.1 mpg.
                            ``(ii) In the case of a light truck:

``If vehicle inertia weight class   The 2000 model year city fuel 
        is:                                 economy is:
    1,500 or 1,750 lbs............................            37.6 mpg 
    2,000 lbs.....................................            33.7 mpg 
    2,250 lbs.....................................            30.6 mpg 
    2,500 lbs.....................................            28.0 mpg 
    2,750 lbs.....................................            25.9 mpg 
    3,000 lbs.....................................            24.1 mpg 
    3,500 lbs.....................................            21.3 mpg 
    4,000 lbs.....................................            19.0 mpg 
    4,500 lbs.....................................            17.3 mpg 
    5,000 lbs.....................................            15.8 mpg 
    5,500 lbs.....................................            14.6 mpg 
    6,000 lbs.....................................            13.6 mpg 
    6,500 lbs.....................................            12.8 mpg 
    7,000 or 8,500 lbs............................            12.0 mpg.
                    ``(C) Vehicle inertia weight class.--For purposes 
                of subparagraph (B), the term `vehicle inertia weight 
                class' has the same meaning as when defined in 
                regulations prescribed by the Administrator of the 
                Environmental Protection Agency for purposes of the 
                administration of title II of the Clean Air Act (42 
                U.S.C. 7521 et seq.).
            ``(3) New qualified fuel cell motor vehicle.--For purposes 
        of this subsection, the term `new qualified fuel cell motor 
        vehicle' means a motor vehicle--
                    ``(A) which is propelled by power derived from one 
                or more cells which convert chemical energy directly 
                into electricity by combining oxygen with hydrogen fuel 
                which is stored on board the vehicle in any form and 
                may or may not require reformation prior to use,
                    ``(B) which, in the case of a passenger automobile 
                or light truck--
                            ``(i) for 2002 and later model vehicles, 
                        has received a certificate of conformity under 
                        the Clean Air Act and meets or exceeds the 
                        equivalent qualifying California low emission 
                        vehicle standard under section 243(e)(2) of the 
                        Clean Air Act for that make and model year, and
                            ``(ii) for 2004 and later model vehicles, 
                        has received a certificate that such vehicle 
                        meets or exceeds the Bin 5 Tier II emission 
                        level established in regulations prescribed by 
                        the Administrator of the Environmental 
                        Protection Agency under section 202(i) of the 
                        Clean Air Act for that make and model year 
                        vehicle,
                    ``(C) the original use of which commences with the 
                taxpayer,
                    ``(D) which is acquired for use or lease by the 
                taxpayer and not for resale, and
                    ``(E) which is made by a manufacturer.
    ``(c) New Qualified Hybrid Motor Vehicle Credit.--
            ``(1) In general.--For purposes of subsection (a), the new 
        qualified hybrid motor vehicle credit determined under this 
        subsection with respect to a new qualified hybrid motor vehicle 
        placed in service by the taxpayer during the taxable year is 
        the credit amount determined under paragraph (2).
            ``(2) Credit amount.--
                    ``(A) In general.--The credit amount determined 
                under this paragraph shall be determined in accordance 
                with the following tables:
                            ``(i) In the case of a new qualified hybrid 
                        motor vehicle which is a passenger automobile 
                        or light truck and which provides the following 
                        percentage of the maximum available power:

``If percentage of the maximum      The credit amount is:
        available power is:
    At least 5 percent but less than 10 percent...                $250 
    At least 10 percent but less than 20 percent..                $500 
    At least 20 percent but less than 30 percent..                $750 
    At least 30 percent...........................              $1,000.
                            ``(ii) In the case of a new qualified 
                        hybrid motor vehicle which is a heavy duty 
                        hybrid motor vehicle and which provides the 
                        following percentage of the maximum available 
                        power:
                                    ``(I) If such vehicle has a gross 
                                vehicle weight rating of not more than 
                                14,000 pounds:

``If percentage of the maximum      The credit amount is:
        available power is:
    At least 20 percent but less than 30 percent..              $1,500 
    At least 30 percent but less than 40 percent..              $1,750 
    At least 40 percent but less than 50 percent..              $2,000 
    At least 50 percent but less than 60 percent..              $2,250 
    At least 60 percent...........................              $2,500.
                                    ``(II) If such vehicle has a gross 
                                vehicle weight rating of more than 
                                14,000 but not more than 26,000 pounds:

``If percentage of the maximum      The credit amount is:
        available power is:
    At least 20 percent but less than 30 percent..              $4,000 
    At least 30 percent but less than 40 percent..              $4,500 
    At least 40 percent but less than 50 percent..              $5,000 
    At least 50 percent but less than 60 percent..              $5,500 
    At least 60 percent...........................              $6,000.
                                    ``(III) If such vehicle has a gross 
                                vehicle weight rating of more than 
                                26,000 pounds:

``If percentage of the maximum      The credit amount is:
        available power is:
    At least 20 percent but less than 30 percent..              $6,000 
    At least 30 percent but less than 40 percent..              $7,000 
    At least 40 percent but less than 50 percent..              $8,000 
    At least 50 percent but less than 60 percent..              $9,000 
    At least 60 percent...........................             $10,000.
                    ``(B) Increase for fuel efficiency.--
                            ``(i) Amount.--The amount determined under 
                        subparagraph (A)(i) with respect to a passenger 
                        automobile or light truck shall be increased 
                        by--
                                    ``(I) $500, if such vehicle 
                                achieves at least 125 percent but less 
                                than 150 percent of the 2000 model year 
                                city fuel economy,
                                    ``(II) $1,000, if such vehicle 
                                achieves at least 150 percent but less 
                                than 175 percent of the 2000 model year 
                                city fuel economy,
                                    ``(III) $1,500, if such vehicle 
                                achieves at least 175 percent but less 
                                than 200 percent of the 2000 model year 
                                city fuel economy,
                                    ``(IV) $2,000, if such vehicle 
                                achieves at least 200 percent but less 
                                than 225 percent of the 2000 model year 
                                city fuel economy,
                                    ``(V) $2,500, if such vehicle 
                                achieves at least 225 percent but less 
                                than 250 percent of the 2000 model year 
                                city fuel economy, and
                                    ``(VI) $3,000, if such vehicle 
                                achieves at least 250 percent of the 
                                2000 model year city fuel economy.
                            ``(ii) 2000 model year city fuel economy.--
                        For purposes of clause (i), the 2000 model year 
                        city fuel economy with respect to a vehicle 
                        shall be determined using the tables provided 
                        in subsection (b)(2)(B) with respect to such 
                        vehicle.
                    ``(C) Increase for accelerated emissions 
                performance.--The amount determined under subparagraph 
                (A)(ii) with respect to an applicable heavy duty hybrid 
                motor vehicle shall be increased by the increase credit 
                amount determined in accordance with the following 
                tables:
                            ``(i) In the case of a vehicle which has a 
                        gross vehicle weight rating of not more than 
                        14,000 pounds:

``If the model year is:             The increase credit amount is:
    2002..........................................              $3,500 
    2003..........................................              $3,000 
    2004..........................................              $2,500 
    2005..........................................              $2,000 
    2006..........................................              $1,500.
                            ``(ii) In the case of a vehicle which has a 
                        gross vehicle weight rating of more than 14,000 
                        pounds but not more than 26,000 pounds:

``If the model year is:             The increase credit amount is:
    2002..........................................              $9,000 
    2003..........................................              $7,750 
    2004..........................................              $6,500 
    2005..........................................              $5,250 
    2006..........................................              $4,000.
                            ``(iii) In the case of a vehicle which has 
                        a gross vehicle weight rating of more than 
                        26,000 pounds:

``If the model year is:             The increase credit amount is:
    2002..........................................             $14,000 
    2003..........................................             $12,000 
    2004..........................................             $10,000 
    2005..........................................              $8,000 
    2006..........................................              $6,000.
                    ``(D) Definitions.--
                            ``(i) Applicable heavy duty hybrid motor 
                        vehicle.--For purposes of subparagraph (C), the 
                        term `applicable heavy duty hybrid motor 
                        vehicle' means a heavy duty hybrid motor 
                        vehicle which is powered by an internal 
                        combustion or heat engine which is certified as 
                        meeting the emission standards set in the 
                        regulations prescribed by the Administrator of 
                        the Environmental Protection Agency for 2007 
                        and later model year diesel heavy duty engines 
                        or 2008 and later model year ottocycle heavy 
                        duty engines, as applicable.
                            ``(ii) Heavy duty hybrid motor vehicle.--
                        For purposes of this paragraph, the term `heavy 
                        duty hybrid motor vehicle' means a new 
                        qualified hybrid motor vehicle which has a 
                        gross vehicle weight rating of more than 10,000 
                        pounds and draws propulsion energy from both of 
                        the following onboard sources of stored energy:
                                    ``(I) An internal combustion or 
                                heat engine using consumable fuel 
                                which, for 2002 and later model 
                                vehicles, has received a certificate of 
                                conformity under the Clean Air Act and 
                                meets or exceeds a level of not greater 
                                than 3.0 grams per brake horsepower-
                                hour of oxides of nitrogen and 0.01 per 
                                brake horsepower-hour of particulate 
                                matter.
                                    ``(II) A rechargeable energy 
                                storage system.
                            ``(iii) Maximum available power.--
                                    ``(I) Passenger automobile or light 
                                truck.--For purposes of subparagraph 
                                (A)(i), the term `maximum available 
                                power' means the maximum power 
                                available from the battery or other 
                                electrical storage device, during a 
                                standard 10 second pulse power test, 
                                divided by the sum of the battery or 
                                other electrical storage device and the 
                                SAE net power of the heat engine.
                                    ``(II) Heavy duty hybrid motor 
                                vehicle.--For purposes of subparagraph 
                                (A)(ii), the term `maximum available 
                                power' means the maximum power 
                                available from the battery or other 
                                electrical storage device, during a 
                                standard 10 second pulse power test, 
                                divided by the vehicle's total traction 
                                power. The term `total traction power' 
                                means the sum of the electric motor 
                                peak power and the heat engine peak 
                                power of the vehicle, except that if 
                                the electric motor is the sole means by 
                                which the vehicle can be driven, the 
                                total traction power is the peak 
                                electric motor power.
            ``(3) New qualified hybrid motor vehicle.--For purposes of 
        this subsection, the term `new qualified hybrid motor vehicle' 
        means a motor vehicle--
                    ``(A) which draws propulsion energy from onboard 
                sources of stored energy which are both--
                            ``(i) an internal combustion or heat engine 
                        using combustible fuel, and
                            ``(ii) a rechargeable energy storage 
                        system,
                    ``(B) which, in the case of a passenger automobile 
                or light truck--
                            ``(i) for 2002 and later model vehicles, 
                        has received a certificate of conformity under 
                        the Clean Air Act and meets or exceeds the 
                        equivalent qualifying California low emission 
                        vehicle standard under section 243(e)(2) of the 
                        Clean Air Act for that make and model year, and
                            ``(ii) for 2004 and later model vehicles, 
                        has received a certificate that such vehicle 
                        meets or exceeds the Bin 5 Tier II emission 
                        level established in regulations prescribed by 
                        the Administrator of the Environmental 
                        Protection Agency under section 202(i) of the 
                        Clean Air Act for that make and model year 
                        vehicle,
                    ``(C) the original use of which commences with the 
                taxpayer,
                    ``(D) which is acquired for use or lease by the 
                taxpayer and not for resale, and
                    ``(E) which is made by a manufacturer.
    ``(d) New Qualified Alternative Fuel Motor Vehicle Credit.--
            ``(1) Allowance of credit.--Except as provided in paragraph 
        (5), the credit determined under this subsection is an amount 
        equal to the applicable percentage of the incremental cost of 
        any new qualified alternative fuel motor vehicle placed in 
        service by the taxpayer during the taxable year.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage with respect to any new 
        qualified alternative fuel motor vehicle is--
                    ``(A) 50 percent, plus
                    ``(B) 30 percent, if such vehicle--
                            ``(i) has received a certificate of 
                        conformity under the Clean Air Act and meets or 
                        exceeds the most stringent standard available 
                        for certification under the Clean Air Act for 
                        that make and model year vehicle (other than a 
                        zero emission standard), or
                            ``(ii) has received an order from an 
                        applicable State certifying the vehicle for 
                        sale or lease in California and meets or 
                        exceeds the most stringent standard available 
                        for certification under the State laws of 
                        California (enacted in accordance with a waiver 
                        granted under section 209(b) of the Clean Air 
                        Act) for that make and model year vehicle 
                        (other than a zero emission standard).
            ``(3) Incremental cost.--For purposes of this subsection, 
        the incremental cost of any new qualified alternative fuel 
        motor vehicle is equal to the amount of the excess of the 
        manufacturer's suggested retail price for such vehicle over 
        such price for a gasoline or diesel fuel motor vehicle of the 
        same model, to the extent such amount does not exceed--
                    ``(A) $5,000, if such vehicle has a gross vehicle 
                weight rating of not more than 8,500 pounds,
                    ``(B) $10,000, if such vehicle has a gross vehicle 
                weight rating of more than 8,500 pounds but not more 
                than 14,000 pounds,
                    ``(C) $25,000, if such vehicle has a gross vehicle 
                weight rating of more than 14,000 pounds but not more 
                than 26,000 pounds, and
                    ``(D) $40,000, if such vehicle has a gross vehicle 
                weight rating of more than 26,000 pounds.
            ``(4) Qualified alternative fuel motor vehicle defined.--
        For purposes of this subsection--
                    ``(A) In general.--The term `qualified alternative 
                fuel motor vehicle' means any motor vehicle--
                            ``(i) which is only capable of operating on 
                        an alternative fuel,
                            ``(ii) the original use of which commences 
                        with the taxpayer,
                            ``(iii) which is acquired by the taxpayer 
                        for use or lease, but not for resale, and
                            ``(iv) which is made by a manufacturer.
                    ``(B) Alternative fuel.--The term `alternative 
                fuel' means compressed natural gas, liquefied natural 
                gas, liquefied petroleum gas, hydrogen, and any liquid 
                at least 85 percent of the volume of which consists of 
                methanol.
            ``(5) Credit for mixed-fuel vehicles.--
                    ``(A) In general.--In the case of a mixed-fuel 
                vehicle placed in service by the taxpayer during the 
                taxable year, the credit determined under this 
                subsection is an amount equal to--
                            ``(i) in the case of a 75/25 mixed-fuel 
                        vehicle, 70 percent of the credit which would 
                        have been allowed under this subsection if such 
                        vehicle was a qualified alternative fuel motor 
                        vehicle, and
                            ``(ii) in the case of a 95/5 mixed-fuel 
                        vehicle, 95 percent of the credit which would 
                        have been allowed under this subsection if such 
                        vehicle was a qualified alternative fuel motor 
                        vehicle.
                    ``(B) Mixed-fuel vehicle.--For purposes of this 
                subsection, the term `mixed-fuel vehicle' means any 
                motor vehicle described in subparagraph (C) or (D) of 
                paragraph (3), which--
                            ``(i) is certified by the manufacturer as 
                        being able to perform efficiently in normal 
                        operation on a combination of an alternative 
                        fuel and a petroleum-based fuel,
                            ``(ii) either--
                                    ``(I) has received a certificate of 
                                conformity under the Clean Air Act, or
                                    ``(II) has received an order from 
                                an applicable State certifying the 
                                vehicle for sale or lease in California 
                                and meets or exceeds the low emission 
                                vehicle standard under section 88.105-
                                94 of title 40, Code of Federal 
                                Regulations, for that make and model 
                                year vehicle,
                            ``(iii) the original use of which commences 
                        with the taxpayer,
                            ``(iv) which is acquired by the taxpayer 
                        for use or lease, but not for resale, and
                            ``(v) which is made by a manufacturer.
                    ``(C) 75/25 mixed-fuel vehicle.--For purposes of 
                this subsection, the term `75/25 mixed-fuel vehicle' 
                means a mixed-fuel vehicle which operates using at 
                least 75 percent alternative fuel and not more than 25 
                percent petroleum-based fuel.
                    ``(D) 95/5 mixed-fuel vehicle.--For purposes of 
                this subsection, the term `95/5 mixed-fuel vehicle' 
                means a mixed-fuel vehicle which operates using at 
                least 95 percent alternative fuel and not more than 5 
                percent petroleum-based fuel.
    ``(e) Application With Other Credits.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and sections 27, 
        29, and 30, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(f) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Consumable fuel.--The term `consumable fuel' means 
        any solid, liquid, or gaseous matter which releases energy when 
        consumed by an auxiliary power unit.
            ``(2) Motor vehicle.--The term `motor vehicle' has the 
        meaning given such term by section 30(c)(2).
            ``(3) 2000 model year city fuel economy.--The 2000 model 
        year city fuel economy with respect to any vehicle shall be 
        measured under rules similar to the rules under section 
        4064(c).
            ``(4) Other terms.--The terms `automobile', `passenger 
        automobile', `light truck', and `manufacturer' have the 
        meanings given such terms in regulations prescribed by the 
        Administrator of the Environmental Protection Agency for 
        purposes of the administration of title II of the Clean Air Act 
        (42 U.S.C. 7521 et seq.).
            ``(5) Vehicle must be assembled in united states.--No 
        amount shall be allowed as a credit under subsection (a) with 
        respect to any vehicle unless such vehicle is assembled in the 
        United States by individuals employed under a collective 
        bargaining agreement.
            ``(6)  Reduction in basis.--For purposes of this subtitle, 
        the basis of any property for which a credit is allowable under 
        subsection (a) shall be reduced by the amount of such credit so 
        allowed (determined without regard to subsection (e)).
            ``(7) No double benefit.--The amount of any deduction or 
        credit allowable under this chapter--
                    ``(A) for any incremental cost taken into account 
                in computing the amount of the credit determined under 
subsection (d) shall be reduced by the amount of such credit 
attributable to such cost, and
                    ``(B) with respect to a vehicle described under 
                subsection (b) or (c), shall be reduced by the amount 
                of credit allowed under subsection (a) for such vehicle 
                for the taxable year.
            ``(8) Property used by tax-exempt entities.--In the case of 
        a credit amount which is allowable with respect to a motor 
        vehicle which is acquired by an entity exempt from tax under 
        this chapter, the person which sells or leases such vehicle to 
        the entity shall be treated as the taxpayer with respect to the 
        vehicle for purposes of this section and the credit shall be 
        allowed to such person, but only if the person clearly 
        discloses to the entity in any sale or lease document the 
        specific amount of any credit otherwise allowable to the entity 
        under this section and reduces the sale or lease price of such 
        vehicle by an equivalent amount of such credit.
            ``(9) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any property which ceases 
        to be property eligible for such credit (including recapture in 
        the case of a lease period of less than the economic life of a 
        vehicle).
            ``(10) Property used outside united states, etc., not 
        qualified.--No credit shall be allowed under subsection (a) 
        with respect to any property referred to in section 50(b) or 
        with respect to the portion of the cost of any property taken 
        into account under section 179.
            ``(11) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects to not have this section apply to such vehicle.
            ``(12) Carryforward allowed.--
                    ``(A) In general.--If the credit amount allowable 
                under subsection (a) for a taxable year exceeds the 
                amount of the limitation under subsection (e) for such 
                taxable year (referred to as the `unused credit year' 
                in this paragraph), such excess shall be allowed as a 
                credit carryforward for each of the 20 taxable years 
                following the unused credit year.
                    ``(B) Rules.--Rules similar to the rules of section 
                39 shall apply with respect to the credit carryforward 
                under subparagraph (A).
            ``(13) Interaction with air quality and motor vehicle 
        safety standards.--Unless otherwise provided in this section, a 
        motor vehicle shall not be considered eligible for a credit 
        under this section unless such vehicle is in compliance with--
                    ``(A) the applicable provisions of the Clean Air 
                Act for the applicable make and model year of the 
                vehicle (or applicable air quality provisions of State 
                law in the case of a State which has adopted such 
                provision under a waiver under section 209(b) of the 
                Clean Air Act), and
                    ``(B) the motor vehicle safety provisions of 
                sections 30101 through 30169 of title 49, United States 
                Code.
    ``(g) Regulations.--
            ``(1) In general.--The Secretary shall promulgate such 
        regulations as necessary to carry out the provisions of this 
        section.
            ``(2) Administrator of environmental protection agency.--
        The Administrator of the Environmental Protection Agency, in 
        coordination with the Secretary of Transportation and the 
        Secretary of the Treasury, shall prescribe such regulations as 
        necessary to determine whether a motor vehicle meets the 
        requirements to be eligible for a credit under this section.
    ``(h) Termination.--This section shall not apply to any property 
placed in service after--
            ``(1) in the case of a new qualified fuel cell motor 
        vehicle (as described in subsection (b)), December 31, 2011, 
        and
            ``(2) in the case of any other property, December 31, 
        2007.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a) is amended by striking ``and'' at the 
        end of paragraph (31), by striking the period at the end of 
        paragraph (32) and inserting ``, and'', and by adding at the 
        end the following:
            ``(33) to the extent provided in section 30B(f)(4).''.
            (2) Section 53(d)(1)(B)(iii) is amended by inserting ``, or 
        not allowed under section 30B solely by reason of the 
        application of section 30B(e)(2)'' before the period.
            (3) Section 55(c)(2) is amended by inserting ``30B(e),'' 
        after ``30(b)(3)''.
            (4) Section 6501(m) is amended by inserting ``30B(f)(9),'' 
        after ``30(d)(4),''.
            (5) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 30A the following:

        ``Sec. 30B. Alternative motor vehicle credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001, in taxable 
years ending after such date.

SEC. 532. MODIFICATION OF CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) Amount of Credit.--
            (1) In general.--Section 30(a) (relating to allowance of 
        credit) is amended by striking ``10 percent of''.
            (2) Limitation of credit according to type of vehicle.--
        Section 30(b) (relating to limitations) is amended--
                    (A) by striking paragraphs (1) and (2) and 
                inserting the following:
            ``(1) Limitation according to type of vehicle.--The amount 
        of the credit allowed under subsection (a) for any vehicle 
        shall not exceed the greatest of the following amounts 
        applicable to such vehicle:
                    ``(A) In the case of a vehicle which conforms to 
                the Motor Vehicle Safety Standard 500 prescribed by the 
                Secretary of Transportation, the lesser of--
                            ``(i) 10 percent of the manufacturer's 
                        suggested retail price of the vehicle, or
                            ``(ii) $4,000.
                    ``(B) In the case of a vehicle with a gross vehicle 
                weight rating not exceeding 8,500 pounds--
                            ``(i) $4,000, or
                            ``(ii) $6,000, if such vehicle is--
                                    ``(I) capable of a driving range of 
                                at least 100 miles on a single charge 
                                of the vehicle's rechargeable batteries 
                                and measured pursuant to the urban 
                                dynamometer schedules under appendix I 
                                to part 86 of title 40, Code of Federal 
                                Regulations, or
                                    ``(II) capable of a payload 
                                capacity of at least 1000 pounds.
                    ``(C) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 8,500 but not exceeding 14,000 
                pounds, $10,000.
                    ``(D) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 14,000 but not exceeding 26,000 
                pounds, $20,000.
                    ``(E) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 26,000 pounds, $40,000.'', and
                    (B) by redesignating paragraph (3) as paragraph 
                (2).
            (3) Conforming amendments.--
                    (A) Section 53(d)(1)(B)(iii) is amended by striking 
                ``section 30(b)(3)(B)'' and inserting ``section 
                30(b)(2)(B)''.
                    (B) Section 55(c)(2) is amended by striking 
                ``30(b)(3)'' and inserting ``30(b)(2)''.
    (b) Qualified Battery Electric Vehicle.--
            (1) In general.--Section 30(c)(1)(A) (defining qualified 
        electric vehicle) is amended to read as follows:
                    ``(A) which is--
                            ``(i) operated solely by use of a battery 
                        or battery pack, or
                            ``(ii) powered primarily through the use of 
                        an electric battery or battery pack using a 
                        flywheel or capacitor which stores energy 
                        produced by an electric motor through 
                        regenerative braking to assist in vehicle 
                        operation,''.
            (2) Leased vehicles.--Section 30(c)(1)(C) is amended by 
        inserting ``or lease'' after ``use''.
            (3) Conforming amendments.--
                    (A) Subsections (a), (b)(2), and (c) of section 30 
                are each amended by inserting ``battery'' after 
                ``qualified'' each place it appears.
                    (B) The heading of subsection (c) of section 30 is 
                amended by inserting ``Battery'' after ``Qualified''.
                    (C) The heading of section 30 is amended by 
                inserting ``battery'' after ``qualified''.
                    (D) The item relating to section 30 in the table of 
                sections for subpart B of part IV of subchapter A of 
                chapter 1 is amended by inserting ``battery'' after 
                ``qualified''.
                    (E) Section 179A(c)(3) is amended by inserting 
                ``battery'' before ``electric''.
                    (F) The heading of paragraph (3) of section 179A(c) 
                is amended by inserting ``battery'' before 
                ``electric''.
    (c) Additional Special Rules.--Section 30(d) (relating to special 
rules) is amended by adding at the end the following:
            ``(5) No double benefit.--The amount of any deduction or 
        credit allowable under this chapter for any cost taken into 
        account in computing the amount of the credit determined under 
        subsection (a) shall be reduced by the amount of such credit 
        attributable to such cost.
            ``(6) Property used by tax-exempt entities.--In the case of 
        a credit amount which is allowable with respect to a vehicle 
        which is acquired by an entity exempt from tax under this 
        chapter, the person which sells or leases such vehicle to the 
        entity shall be treated as the taxpayer with respect to the 
        vehicle for purposes of this section and the credit shall be 
        allowed to such person, but only if the person clearly 
        discloses to the entity in any sale or lease contract the 
        specific amount of any credit otherwise allowable to the entity 
        under this section and reduces the sale or lease price of such 
        vehicle by an equivalent amount of such credit.''.
    (d) Extension.--Section 30(e) (relating to termination) is amended 
by striking ``2004'' and inserting ``2007''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001, in taxable 
years ending after such date.

SEC. 533. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR VEHICLE 
              FUEL.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits) is amended by inserting after 
section 40 the following:

``SEC. 40A. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR 
              VEHICLE FUEL.

    ``(a) General Rule.--For purposes of section 38, the alternative 
fuel retail sales credit for any taxable year is 25 cents for each 
gasoline gallon equivalent of alternative fuel sold at retail by the 
taxpayer during such year as a fuel to propel any qualified motor 
vehicle, but only if the taxpayer reduces the retail sales price of 
such fuel by an equivalent amount of such credit.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Alternative fuel.--The term `alternative fuel' means 
        compressed natural gas, liquefied natural gas, liquefied 
        petroleum gas, hydrogen, and any liquid at least 85 percent of 
        the volume of which consists of methanol.
            ``(2) Gasoline gallon equivalent.--The term `gasoline 
        gallon equivalent' means, with respect to any alternative fuel, 
        the amount (determined by the Secretary) of such fuel having a 
Btu content of 114,000.
            ``(3) Qualified motor vehicle.--The term `qualified motor 
        vehicle' means any motor vehicle (as defined in section 
        30(c)(2)) which meets any applicable Federal or State emissions 
        standards with respect to each fuel by which such vehicle is 
        designed to be propelled.
            ``(4) Sold at retail.--
                    ``(A) In general.--The term `sold at retail' means 
                the sale, for a purpose other than resale, after 
                manufacture, production, or importation.
                    ``(B) Use treated as sale.--If any person uses 
                alternative fuel (including any use after importation) 
                as a fuel to propel any qualified alternative fuel 
                motor vehicle (as defined in section 30B(d)(4)) before 
                such fuel is sold at retail, then such use shall be 
                treated in the same manner as if such fuel were sold at 
                retail as a fuel to propel such a vehicle by such 
                person.
    ``(c) No Double Benefit.--The amount of any deduction or credit 
allowable under this chapter for any fuel taken into account in 
computing the amount of the credit determined under subsection (a) 
shall be reduced by the amount of such credit attributable to such 
fuel.
    ``(d) Pass-Thru in the Case of Estates and Trusts.--Under 
regulations prescribed by the Secretary, rules similar to the rules of 
subsection (d) of section 52 shall apply.
    ``(e) Termination.--This section shall not apply to any fuel sold 
at retail after December 31, 2006.''.
    (b) Credit Treated as Business Credit.--Section 38(b) (relating to 
current year business credit) is amended by striking ``plus'' at the 
end of paragraph (16), by striking the period at the end of paragraph 
(17) and inserting ``, plus'', and by adding at the end the following:
            ``(18) the alternative fuel retail sales credit determined 
        under section 40A(a).''.
    (c) Transitional Rule.--Section 39(d) (relating to transitional 
rules) is amended by adding at the end the following:
            ``(14) No carryback of section 40a credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the alternative fuel retail sales 
        credit determined under section 40A(a) may be carried back to a 
        taxable year ending before January 1, 2002.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 40 the following:

        ``Sec. 40A. Credit for retail sale of alternative fuels as 
                            motor vehicle fuel.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to fuel sold at retail after December 31, 2001, in taxable years 
ending after such date.

SEC. 534. EXTENSION OF DEDUCTION FOR CERTAIN REFUELING PROPERTY.

    (a) In General.--Section 179A(f) (relating to termination) is 
amended by striking ``2004'' and inserting ``2007''.
    (b) Conforming Amendment.--Section 179A(c) (relating to qualified 
clean-fuel vehicle property defined) is amended by striking paragraph 
(3).
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001, in taxable 
years ending after such date.

SEC. 535. CREDIT FOR INSTALLATION OF ALTERNATIVE FUELING STATIONS.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to foreign tax credit, etc.) is amended by adding at the end 
the following:

``SEC. 30C. CLEAN-FUEL VEHICLE REFUELING PROPERTY CREDIT.

    ``(a) Credit Allowed.--There shall be allowed as a credit against 
the tax imposed by this chapter for the taxable year an amount equal 
to--
            ``(1) 50 percent, in the case of retail clean-fuel vehicle 
        refueling property, and
            ``(2) 50 percent, in the case of residential clean-fuel 
        vehicle refueling property,
of the amount paid or incurred by the taxpayer during the taxable year 
for the installation of clean-fuel vehicle refueling property.
    ``(b) Limitation.--The credit allowed under--
            ``(1) subsection (a)(1) with respect to clean-fuel vehicle 
        refueling property, shall not exceed $30,000, and
            ``(2) subsection (a)(2) with respect to clean-fuel vehicle 
        refueling property, shall not exceed $1,000.
    ``(c) Year Credit Allowed.--The credit allowed under subsection (a) 
shall be allowed in the taxable year in which the clean-fuel vehicle 
refueling property is placed in service by the taxpayer.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Clean-fuel vehicle refueling property.--The term 
        `clean-fuel vehicle refueling property' has the same meaning 
        given the term `qualified clean-fuel vehicle refueling 
        property' under section 179A.
            ``(2) Residential clean-fuel vehicle refueling property.--
        The term `residential clean-fuel vehicle refueling property' 
        means clean-fuel vehicle refueling property which is installed 
        on property which is used as the principal residence (within 
        the meaning of section 121) of the taxpayer.
            ``(3) Retail clean-fuel vehicle refueling property.--The 
        term `retail clean-fuel vehicle refueling property' means 
        clean-fuel vehicle refueling property--
                    ``(A) which is installed on property used in a 
                trade or business of the taxpayer, and
                    ``(B) if such refueling property--
                            ``(i) is--
                                    ``(I) available to the public 
                                during normal business hours, and
                                    ``(II) capable of serving at least 
                                3 motor vehicles at the same time, or
                            ``(ii) regularly serves at least 1 fleet of 
                        10 or more motor vehicles.
    ``(e) Application With Other Credits.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and sections 27, 
        29, 30, and 30B, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(f) Basis Reduction.--For purposes of this title, the basis of 
any property shall be reduced by the portion of the cost of such 
property taken into account under subsection (a).
    ``(g) No Double Benefit.--No deduction shall be allowed under 
section 179A with respect to any property with respect to which a 
credit is allowed under subsection (a).
    ``(h) Refueling Property Installed for Tax-Exempt Entities.--In the 
case of clean-fuel vehicle refueling property installed on property 
owned or used by an entity exempt from tax under this chapter, the 
person which installs such refueling property for the entity shall be 
treated as the taxpayer with respect to the refueling property for 
purposes of this section (and such refueling property shall be treated 
as retail clean-fuel vehicle refueling property) and the credit shall 
be allowed to such person, but only if the person clearly discloses to 
the entity in any installation contract the specific amount of the 
credit allowable under this section and modifies the price of such 
contract to take into account the amount of such credit.
    ``(i) Carryforward Allowed.--
            ``(1) In general.--If the credit amount allowable under 
        subsection (a) for a taxable year exceeds the amount of the 
        limitation under subsection (b) for such taxable year (referred 
        to as the `unused credit year' in this subsection), such excess 
        shall be allowed as a credit carryforward for each of the 20 
        taxable years following the unused credit year.
            ``(2) Rules.--Rules similar to the rules of section 39 
        shall apply with respect to the credit carryforward under 
        paragraph (1).
    ``(j) Special Rules.--Rules similar to the rules of paragraphs (4) 
and (5) of section 179A(e) shall apply.
    ``(k) Regulations.--The Secretary shall prescribe such regulations 
as necessary to carry out the provisions of this section.
    ``(l) Termination.--This section shall not apply to any property 
placed in service after December 31, 2006.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a) is amended by striking ``and'' at the 
        end of paragraph (32), by striking the period at the end of 
        paragraph (33) and inserting ``, and'', and by adding at the 
        end the following:
            ``(34) to the extent provided in section 30C(f).''.
            (2) Section 53(d)(1)(B)(iii) is amended by inserting ``, or 
        not allowed under section 30C solely by reason of the 
        application of section 30C(e)(2)'' before the period.
            (3) Section 55(c)(2) is amended by inserting ``30C(e),'' 
        after ``30B(e)''.
            (4) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 30B the following:

        ``Sec. 30C. Clean-fuel vehicle refueling property credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001, in taxable 
years ending after such date.
                                 <all>