I 108th CONGRESS 2d Session H. R. 3953 IN THE HOUSE OF REPRESENTATIVES March 11, 2004 Mr. Hoekstra (for himself, Mr. Camp, Mr. Manzullo, and Mrs. Jones of Ohio) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide a shorter recovery period for the depreciation of certain systems installed in nonresidential buildings.

1.

Short title

This Act may be cited as the &short-title1;.

2.

Findings

The Congress finds the following: (1)The current 39 year depreciation period for commercial and industrial heating, ventilation, air conditioning and refrigeration (HVACR) systems does not accurately reflect the life span of these systems. (2)The upkeep and energy costs required for HVACR systems which are between 15 and 20 years old in nonresidential buildings are not cost-effective but these same businesses find it difficult to make the high-cost investment in new energy systems. (3)A reduced depreciation period for HVACR systems would be a clear incentive to keep systems up-to-date and help increase businesses’ bottom line while decreasing the Nation’s energy consumption. (4)Reducing the depreciation period for HVACR systems would also provide an incentive for replacing the estimated 35,000 large tonnage chillers in use as of January 1, 2004, that still use chlorofluorocarbon (CFC) refrigerants which were banned from production in the United States due to concerns about depletion of the ozone layer. (5)The Environmental Protection Agency recently concluded in a report that a new, energy-efficient chiller can easily pay for itself in electricity savings, improved reliability, and lower maintenance costs in five years. (6)Recent technological advancements that have increased the ability of businesses to conserve energy include co-generation and combined heat and power systems which are recognized as highly efficient systems for large buildings. (7)One example of the remarkable increase in energy efficiency due to technological advances is the great progress the air conditioning industry has made. For unitary products, average efficiencies increased by 50 percent between 1976 and 1995. (8)Buildings in the United States use more than 30,000,000,000,000,000 Btu of energy per year. 1,000,000,000,000,000 Btu of energy is enough power to run all the residential refrigerators in the United States for one year. Without energy-conservation technologies energy use could reach 40,000,000,000,000,000 Btu by 2020.

3.

Recovery period for depreciation of certain systems installed in nonresidential buildings

(a)

15-Year recovery period

Subparagraph (E) of section 168(e)(3) of the Internal Revenue Code of 1986 (relating to 15-year property) is amended by striking and at the end of clause (ii), by striking the period at the end of clause (iii) and inserting , and, and by adding at the end the following new clause: (iv)any property which is part of a heating, ventilation, air conditioning, or refrigeration system and which is installed on or in a building which is nonresidential real property.. (b)

Requirement to use straight line method

Paragraph (3) of section 168(b) of such Code (relating to property to which straight line method applies) is amended by adding at the end the following new subparagraph: (G)Property described in subsection (e)(3)(E)(iv).. (c)

Alternative system

The table contained in section 168(g)(3)(B) of such Code is amended by inserting after the item relating to subparagraph (E)(iii) the following new item: “(E)(iv) 15”. (d)

Effective date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.