[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4206 Introduced in House (IH)]
108th CONGRESS
2d Session
H. R. 4206
To provide for various energy efficiency programs and tax incentives,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 22, 2004
Mr. Cunningham (for himself, Mr. Markey, Mr. Matsui, and Mr. Lewis of
California) introduced the following bill; which was referred to the
Committee on Energy and Commerce, and in addition to the Committees on
Ways and Means, and Financial Services, 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 provide for various energy efficiency programs and tax incentives,
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 ``Efficient Energy
Through Certified Technologies and Electricity Reliability (EFFECTER)
Act of 2004''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--TAX INCENTIVES
Sec. 101. Energy efficient commercial buildings deduction.
Sec. 102. Credit for construction of new energy efficient homes.
Sec. 103. Incentive for certain energy efficient property used in
business.
Sec. 104. Credit for certain nonbusiness energy property.
Sec. 105. Energy credit for combined heat and power system property.
Sec. 106. Credit for energy efficient appliances.
TITLE II--ENERGY EFFICIENT PRODUCTS
Sec. 201. Energy conservation standards for additional products.
Sec. 202. Energy labeling.
TITLE III--ENERGY EFFICIENCY FEDERAL PROGRAMS
Sec. 301. Procurement of energy efficient products.
Sec. 302. Energy savings performance contracts.
Sec. 303. Federal building performance standards.
TITLE IV--PUBLIC HOUSING
Sec. 401. Public Housing Capital Fund.
Sec. 402. Grants for energy-conserving improvements for assisted
housing.
Sec. 403. Energy-efficient appliances.
Sec. 404. Energy efficiency standards.
TITLE V--RELIABILITY STANDARDS
Sec. 501. Electric reliability standards.
TITLE I--TAX INCENTIVES
SEC. 101. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
(a) In General.--Part VI of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to itemized deductions for
individuals and corporations) is amended by inserting after section
179A the following new section:
``SEC. 179B. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
``(a) In General.--There shall be allowed as a deduction an amount
equal to the cost of energy efficient commercial building property
placed in service during the taxable year.
``(b) Maximum Amount of Deduction.--The deduction under subsection
(a) with respect to any building for the taxable year and all prior
taxable years shall not exceed an amount equal to the product of--
``(1) $2.25, and
``(2) the square footage of the building.
``(c) Definitions.--For purposes of this section--
``(1) Energy efficient commercial building property.--The
term `energy efficient commercial building property' means
property--
``(A) which is installed on or in any building
located in the United States,
``(B) which is installed as part of--
``(i) the lighting systems,
``(ii) the heating, cooling, ventilation,
and hot water systems, or
``(iii) the building envelope, and
``(C) which is certified in accordance with
subsection (d)(4) as being installed as part of a plan
designed to reduce the total annual energy and power
costs with respect to the lighting systems, heating,
cooling, ventilation, and hot water systems of the
building by 50 percent or more in comparison to a
reference building which meets the minimum requirements
of Standard 90.1-2001 using methods of calculation
under subsection (d)(2).
A building described in subparagraph (A) may include any
residential rental property, including any low-rise multifamily
structure or single family housing property which is not within
the scope of Standard 90.1-2001.
``(2) Standard 90.1-2001.--The term `Standard 90.1-2001'
means Standard 90.1-2001 of the American Society of Heating,
Refrigerating, and Air Conditioning Engineers and the
Illuminating Engineering Society of North America (as in effect
on April 2, 2003).
``(d) Special Rules.--
``(1) Partial allowance.--
``(A) In general.--Except as provided in subsection
(f), if--
``(i) the requirement of subsection
(c)(1)(C) is not met, but
``(ii) there is a certification in
accordance with subsection (d)(4) that any
system referred to in subsection (c)(1)(B)
satisfies the energy-savings targets
established by the Secretary under subparagraph
(B) with respect to such system,
then the requirement of subsection (c)(1)(C) shall be
treated as met with respect to such system, and the
deduction under subsection (a) shall be allowed with
respect to energy efficient commercial building
property installed as part of such system and as part
of a plan to meet such targets, except that subsection
(b) shall be applied to such property by substituting
`$.75' for `$2.25'.
``(B) Regulations.--The Secretary, after
consultation with the Secretary of Energy, shall
establish a target for each system described in
subsection (c)(1)(B) which, if such targets were met
for all such systems, the building would meet the
requirements of subsection (c)(1)(C).
``(2) Methods of calculation.--The Secretary, after
consultation with the Secretary of Energy, shall promulgate
regulations which describe in detail methods for calculating
and verifying energy and power consumption and cost, based on
the provisions of the 2005 California Nonresidential
Alternative Calculation Method Approval Manual or, in the case
of residential property, the 2005 California Residential
Alternative Calculation Method Approval Manual. These
regulations 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.
If a State has developed annual energy usage and cost
reduction procedures based on time of usage costs for
use in the performance standards of the State's
building energy code before the effective date of this
section, the State may use those annual energy usage
and cost reduction procedures in lieu of those adopted
by the Secretary.
``(B) The calculation methods under this paragraph
need not comply fully with section 11 of Standard 90.1-
2001.
``(C) The calculation 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. The
reference building for a proposed design which employs
electric resistance heating shall be modeled as using a
heat pump.
``(D) The calculation methods shall provide
appropriate calculated energy savings for design
methods and technologies not otherwise credited in
either Standard 90.1-2001 or in the 2005 California
Nonresidential Alternative Calculation Method Approval
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 calculation 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.
``(ix) On-site generation of electricity,
including combined heat and power systems, fuel
cells, and renewable energy generation such as
solar energy.
``(x) Wiring with lower energy losses than
wiring satisfying Standard 90.1-2001
requirements for building power distribution
systems.
``(3) Computer software.--
``(A) In general.--Any calculation under paragraph
(2) 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
documents 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.--Each certification required under
this section shall include an explanation to the building owner
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.--The Secretary shall prescribe
the manner and method for the making of certifications
under this section.
``(B) Procedures.--The Secretary shall include as
part of the certification process procedures for
inspection and testing by qualified individuals
described in subparagraph (C) to ensure compliance of
buildings with energy-savings plans and targets. Such
procedures shall be comparable, given the difference
between commercial and residential buildings, to the
requirements in the Mortgage Industry National
Accreditation Procedures for Home Energy Rating
Systems.
``(C) 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.
``(e) Basis Reduction.--For purposes of this subtitle, if a
deduction is allowed under this section with respect to any energy
efficient commercial building property, the basis of such property
shall be reduced by the amount of the deduction so allowed.
``(f) Interim Rules for Lighting Systems.--Until such time as the
Secretary issues final regulations under subsection (d)(1)(B) with
respect to property which is part of a lighting system--
``(1) In general.--The lighting system target under
subsection (d)(1)(A)(ii) shall be a reduction in lighting power
density of 25 percent (50 percent in the case of a warehouse)
of the minimum requirements in Table 9.3.1.1 or Table 9.3.1.2
(not including additional interior lighting power allowances)
of Standard 90.1-2001.
``(2) Reduction in deduction if reduction less than 40
percent.--
``(A) In general.--If, with respect to the lighting
system of any building other than a warehouse, the
reduction in lighting power density of the lighting
system is not at least 40 percent, only the applicable
percentage of the amount of deduction otherwise
allowable under this section with respect to such
property shall be allowed.
``(B) Applicable percentage.--For purposes of
subparagraph (A), the applicable percentage is the
number of percentage points (not greater than 100)
equal to the sum of--
``(i) 50, and
``(ii) the amount which bears the same
ratio to 50 as the excess of the reduction of
lighting power density of the lighting system
over 25 percentage points bears to 15.
``(C) Exceptions.--This subsection shall not apply
to any system--
``(i) the controls and circuiting of which
do not comply fully with the mandatory and
prescriptive requirements of Standard 90.1-2001
and which do not include provision for bilevel
switching in all occupancies except hotel and
motel guest rooms, store rooms, restrooms, and
public lobbies, or
``(ii) which does not meet the minimum
requirements for calculated lighting levels as
set forth in the Illuminating Engineering
Society of North America Lighting Handbook,
Performance and Application, Ninth Edition,
2000.
``(g) Regulations.--The Secretary shall promulgate such regulations
as necessary--
``(1) to take into account new technologies regarding
energy efficiency and renewable energy for purposes of
determining energy efficiency and savings under this section,
and
``(2) to provide for a recapture of the deduction allowed
under this section if the plan described in subsection
(c)(1)(C) or (d)(1)(A) is not fully implemented.
``(h) Termination.--This section shall not apply with respect to
property placed in service after December 31, 2009.''.
(b) Conforming Amendments.--
(1) Section 1016(a) of the Internal Revenue Code of 1986 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 adding at the end the following new
paragraph:
``(29) to the extent provided in section 179B(e).''.
(2) Section 1245(a) of such Code is amended by inserting
``179B,'' after ``179A,'' both places it appears in paragraphs
(2)(C) and (3)(C).
(3) Section 1250(b)(3) of such Code is amended by inserting
before the period at the end of the first sentence ``or by
section 179B''.
(4) Section 263(a)(1) of such Code is amended by striking
``or'' at the end of subparagraph (G), by striking the period
at the end of subparagraph (H) and inserting ``, or'', and by
inserting after subparagraph (H) the following new
subparagraph:
``(I) expenditures for which a deduction is allowed
under section 179B.''.
(5) Section 312(k)(3)(B) of such Code is amended by
striking ``or 179A'' each place it appears in the heading and
text and inserting ``, 179A, or 179B''.
(c) Clerical Amendment.--The table of sections for part VI of
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is
amended by inserting after section 179A the following new item:
``Sec. 179B. Energy efficient commercial
buildings deduction.''.
(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 in taxable years ending after such date.
SEC. 102. CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT HOMES.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business related
credits) is amended by adding at the end the following new section:
``SEC. 45G. NEW ENERGY EFFICIENT HOME CREDIT.
``(a) In General.--For purposes of section 38, in the case of an
eligible contractor with respect to a qualified new energy efficient
home, the credit determined under this section for the taxable year
with respect to such home is an amount equal to the aggregate adjusted
bases of all energy efficient property installed in such 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 unit shall not
exceed--
``(i) in the case of a dwelling unit
described in clause (i) or (iii) of subsection
(c)(3)(C), $1,000, and
``(ii) in the case of a dwelling unit
described in subsection (c)(3)(C)(ii), $2,000.
``(B) Prior credit amounts on same dwelling unit
taken into account.--If a credit was allowed under
subsection (a) with respect to a dwelling unit in 1 or
more prior taxable years, the amount of the credit
otherwise allowable for the taxable year with respect
to such dwelling unit shall be reduced by the sum of
the credits allowed under subsection (a) with respect
to the dwelling unit for all prior taxable years.
``(2) Coordination with certain 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 48(a)), and
``(B) expenditures taken into account under section
47 or 48(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--
``(A) the person who constructed the qualified new
energy efficient home, or
``(B) in the case of a qualified new energy
efficient home which is a manufactured home, the
manufactured home producer of such home.
If more than 1 person is described in subparagraph (A) or (B)
with respect to any qualified new energy efficient home, such
term means the person designated as such by the owner 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 or system, which can, individually or in combination
with other components, result in a dwelling unit meeting the
requirements of this section.
``(3) Qualified new energy efficient home.--The term
`qualified new energy efficient home' means a dwelling unit--
``(A) located in the United States,
``(B) the construction of which is substantially
completed after December 31, 2003, and
``(C) which is--
``(i) certified to have a level of annual
heating and cooling energy consumption which is
at least 30 percent below the annual level of
heating and cooling energy consumption of a
comparable dwelling unit constructed in
accordance with the standards of chapter 4 of
the 2003 International Energy Conservation
Code, as such Code (including supplements) is
in effect on the date of the enactment of this
section, and for which the heating and cooling
equipment efficiencies correspond to the
minimum allowed under the regulations
established by the Department of Energy
pursuant to the National Appliance Energy
Conservation Act of 1987 and in effect at the
time of construction, and to have building
envelope component improvements account for at
least \1/3\ of such 30 percent,
``(ii) certified to have a level of annual
heating and cooling energy consumption which is
at least 50 percent below such annual level and
to have building envelope component
improvements account for at least \1/5\ of such
50 percent, or
``(iii) a manufactured home which--
``(I) conforms to Federal
Manufactured Home Construction and
Safety Standards (section 3280 of title
24, Code of Federal Regulations), and
``(II) meets the applicable
standards required by the Administrator
of the Environmental Protection Agency
under the Energy Star Labeled Homes
program.
``(4) Construction.--The term `construction' includes
substantial 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) any insulation material or system which is
specifically and primarily designed to reduce the heat
loss or gain of a dwelling unit when installed in or on
such dwelling unit,
``(B) exterior windows (including skylights),
``(C) exterior doors, and
``(D) any metal roof installed on a dwelling unit,
but only if such roof has appropriate pigmented
coatings which--
``(i) are specifically and primarily
designed to reduce the heat gain of such
dwelling unit, and
``(ii) meet the Energy Star program
requirements.
``(d) Certification.--
``(1) Method of certification.--A certification described
in subsection (c)(3)(C) shall be determined in accordance with
guidance prescribed by the Secretary, after consultation with
the Secretary of Energy. Such guidance shall specify procedures
and methods for calculating energy and cost savings.
``(2) Form.--A certification described in subsection
(c)(3)(C) shall be made in writing--
``(A) in a manner which 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
``(B) in the case of a qualified new energy
efficient home which is a manufactured home,
accompanied by such documentation as required by the
Administrator of the Environmental Protection Agency
under the Energy Star Labeled Homes program.
``(e) Basis Adjustment.--For purposes of this subtitle, if a credit
is determined 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 determined.
``(f) Application of Section.--Subsection (a) shall apply to
qualified new energy efficient homes acquired during the period
beginning on January 1, 2004, and ending on December 31, 2006.''.
(b) Credit Made Part of General Business Credit.--Section 38(b) of
the Internal Revenue Code of 1986 (relating to current year 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 new energy efficient home credit determined
under section 45G(a).''.
(c) Basis Adjustment.--Subsection (a) of section 1016 of the
Internal Revenue Code of 1986, as amended by section 101, 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 new paragraph:
``(30) to the extent provided in section 45G(e), in the
case of amounts with respect to which a credit has been allowed
under section 45G.''.
(d) Limitation on Carryback.--Section 39(d) of the Internal Revenue
Code of 1986 (relating to transition rules) is amended by adding at the
end the following new paragraph:
``(11) 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 new
energy efficient home credit determined under section 45G(a)
may be carried to a taxable year beginning before January 1,
2004.''.
(e) Deduction for Certain Unused Business Credits.--Section 196(c)
of the Internal Revenue Code of 1986 (defining qualified business
credits) is amended by striking ``and'' at the end of paragraph (10),
by striking the period at the end of paragraph (11) and inserting ``,
and'', and by adding after paragraph (11) the following new paragraph:
``(12) the new energy efficient home credit determined
under section 45G(a).''.
(f) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new item:
``Sec. 45G. New energy efficient home
credit.''.
(g) Effective Date.--The amendments made by this section shall
apply to taxable years ending after December 31, 2003.
SEC. 103. INCENTIVE FOR CERTAIN ENERGY EFFICIENT PROPERTY USED IN
BUSINESS.
(a) In General.--Part VI of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new section:
``SEC. 199. ENERGY PROPERTY DEDUCTION.
``(a) In General.--There shall be allowed as a deduction for the
taxable year an amount equal to the sum of--
``(1) the amount determined under subsection (b) for each
energy property of the taxpayer placed in service during such
taxable year, and
``(2) the energy efficient residential rental building
property deduction determined under subsection (e).
``(b) Amount for Energy Property.--
``(1) In general.--The amount determined under this
subsection for the taxable year for each item of energy
property shall equal the amount specified for such property in
the following table:
------------------------------------------------------------------------
Description of property: Allowable amount is:
------------------------------------------------------------------------
Elected solar hot water property.. $1.00 per each kwh/year of
savings.
Photovoltaic property............. $4.50 per peak watt.
Advanced main air circulating fan $150.
or a Tier 1 natural gas, propane,
or oil water heater.
Tier 2 energy-efficient building $900.
property.
Tier 1 energy-efficient building $450.
property (other than an advanced
main air circulating fan or a
natural gas, propane, or oil
water heater).
------------------------------------------------------------------------
``(2) Elected solar hot water property.--In the case of
elected solar hot water property, the taxpayer may elect to
substitute `$21 per annual Therm of natural gas savings' for
`$1.00 per each kwh/year of savings' in the table contained in
paragraph (1).
``(c) Energy Property Defined.--
``(1) In general.--For purposes of this part, the term
`energy property' means any property--
``(A) which is--
``(i) solar energy property,
``(ii) Tier 2 energy-efficient building
property, or
``(iii) Tier 1 energy-efficient building
property,
``(B)(i) the construction, reconstruction, or
erection of which is completed by the taxpayer, or
``(ii) which is acquired by the taxpayer if the
original use of such property commences with the
taxpayer,
``(C) with respect to which depreciation (or
amortization in lieu of depreciation) is allowable, and
``(D) which meets the performance and quality
standards, and the certification requirements (if any),
which--
``(i) have been prescribed by the Secretary
by regulations (after consultation with the
Secretary of Energy or the Administrator of the
Environmental Protection Agency, as
appropriate),
``(ii) in the case of the energy efficiency
ratio (EER) for central air conditioners and
electric heat pumps--
``(I) require measurements to be
based on published data which is tested
by manufacturers at 95 degrees
Fahrenheit, and
``(II) do not require ratings to be
based on certified data of the Air
Conditioning and Refrigeration
Institute,
``(iii) in the case of geothermal heat
pumps--
``(I) shall be based on testing
under the conditions of ARI/ISO
Standard 13256-1 for Water Source Heat
Pumps or ARI 870 for Direct Expansion
GeoExchange Heat Pumps (DX), as
appropriate, and
``(II) shall include evidence that
water heating services have been
provided through a desuperheater or
integrated water heating system
connected to the storage water heater
tank, and
``(iv) are in effect at the time of the
acquisition of the property.
``(2) Solar energy property.--In the case of--
``(A) elected solar hot water property, the
regulations under paragraph (1)(D) shall be based on
the OG-300 Standard for the Annual Performance of OG-
300 Certified Systems of the Solar Rating and
Certification Corporation, and
``(B) photovoltaics, such regulations shall be
based on the ASTM Standard E 1036 and E 1036M-96
Standard Test Method for Electric Performance of
Nonconcentrator Terrestrial Photovoltaic Modules and
Arrays Using Reference Cells,
to the extent the Secretary determines such standards carry out
the purposes of this section.
``(3) Exception.--Such term shall not include any property
which is public utility property (as defined in section
46(f)(5) as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990).
``(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--
``(i) to generate electricity, or
``(ii) to provide hot water for use in a
structure.
``(B) Elected solar hot water property.--
``(i) In general.--The term `elected solar
hot water property' means property which is
solar energy property by reason of subparagraph
(A)(ii) and for which an election under this
subparagraph is in effect.
``(ii) Election.--For purposes of clause
(i), a taxpayer may elect to treat property
described in clause (i) as elected solar hot
water property.
``(C) Photovoltaic property.--The term
`photovoltaic property' means solar energy property
which uses a solar photovoltaic process to generate
electricity.
``(D) Swimming pools, etc., used as storage
medium.--The term `solar energy property' shall not
include a swimming pool, hot tub, or any other energy
storage medium which has a function other than the
function of such storage.
``(E) Solar panels.--No solar panel or other
property installed as a roof (or portion thereof) shall
fail to be treated as solar energy property solely
because it constitutes a structural component of the
structure on which it is installed.
``(2) Tier 2 energy-efficient building property.--The term
`Tier 2 energy-efficient building property' means--
``(A) an electric heat pump water heater which
yields an energy factor of at least 2.0 in the standard
Department of Energy test procedure,
``(B) an electric heat pump which has a heating
seasonal performance factor (HSPF) of at least 9, a
seasonal energy efficiency ratio (SEER) of at least 15,
and an energy efficiency ratio (EER) of at least 12.5,
``(C) a geothermal heat pump which--
``(i) in the case of a closed loop product,
has an energy efficiency ratio (EER) of at
least 14.1 and a heating coefficient of performance (COP) of at least
3.3,
``(ii) in the case of an open loop product,
has an energy efficiency ratio (EER) of at
least 16.2 and a heating coefficient of
performance (COP) of at least 3.6, and
``(iii) in the case of a direct expansion
(DX) product, has an energy efficiency ratio
(EER) of at least 15 and a heating coefficient
of performance (COP) of at least 3.5,
``(D) a central air conditioner which has a
seasonal energy efficiency ratio (SEER) of at least 15
and an energy efficiency ratio (EER) of at least 12.5,
and
``(E) a natural gas, propane, or oil water heater
which has an energy factor of at least 0.80.
``(3) Tier 1 energy-efficient building property.--The term
`Tier 1 energy-efficient building property' means--
``(A) an electric heat pump which has a heating
system performance factor (HSPF) of at least 7.5, a
cooling seasonal energy efficiency ratio (SEER) of at
least 13.5, and an energy efficiency ratio (EER) of at
least 11.5,
``(B) a central air conditioner which has a cooling
seasonal energy efficiency ratio (SEER) of at least
13.5 and an energy efficiency ratio (EER) of at least
11.5,
``(C) a natural gas, propane, or oil water heater
which has an energy factor of at least 0.65, and
``(D) an oil, natural gas, or propane furnace or
hot water boiler which achieves at least 95 percent
annual fuel utilization efficiency (AFUE).
``(4) Advanced main air circulating fan.--The term
`advanced main air circulating fan' means a fan used in a
natural gas, propane, or oil furnace originally placed in
service by the taxpayer during the taxable year, including a
fan which uses a brushless permanent magnet motor or another
type of motor which achieves similar or higher efficiency at
full and half speed, as determined by the Secretary.
``(e) Energy Efficient Residential Rental Building Property
Deduction.--
``(1) Deduction allowed.--For purposes of subsection (a)--
``(A) In general.--The energy efficient residential
rental building property deduction determined under
this subsection is an amount equal to energy efficient
residential rental building property expenditures made
by a taxpayer for the taxable year.
``(B) Maximum amount of deduction.--The amount of
energy efficient residential rental building property
expenditures taken into account under subparagraph (A)
with respect to each dwelling unit shall not exceed--
``(i) $6,000 in the case of a percentage
reduction of 50 percent as determined under
paragraph (2)(B), and
``(ii) $12,000 times the percentage
reduction in the case of a percentage reduction
of less than 50 percent as determined under
paragraph (2)(B).
``(C) Year deduction allowed.--The deduction under
subparagraph (A) shall be allowed in the taxable year
in which the construction, reconstruction, erection, or
rehabilitation of the property is completed.
``(2) Energy efficient residential rental building property
expenditures.--For purposes of this subsection--
``(A) In general.--The term `energy efficient
residential rental building property expenditures'
means an amount paid or incurred in connection with
construction, reconstruction, erection, or
rehabilitation of energy efficient residential rental
building property--
``(i) for which depreciation is allowable
under section 167,
``(ii) which is located in the United
States, and
``(iii) the construction, reconstruction,
erection, or rehabilitation of which is
completed by the taxpayer.
Such term includes expenditures for labor costs
properly allocable to the onsite preparation, assembly,
or original installation of the property.
``(B) Energy efficient residential rental building
property.--
``(i) In general.--The term `energy
efficient residential rental building property'
means any property which reduces total annual
energy and power costs with respect to heating
and cooling of the building by a percentage
certified according to clause (ii).
``(ii) Procedures.--
``(I) In general.--For purposes of
clause (i), energy usage and costs
shall be demonstrated by performance-
based compliance.
``(II) Performance-based
compliance.--Performance-based
compliance shall be demonstrated by
calculating the percent energy cost
savings for heating and cooling, as
applicable, with respect to a dwelling
unit when compared to the original
condition of the dwelling unit.
``(III) Computer software.--
Computer software shall be used in
support of performance-based compliance
under subclause (II) and such software
shall meet all of the procedures and
methods for calculating energy savings
reductions which are promulgated by the
Secretary of Energy. Such regulations
on the specifications for software and
verification protocols shall be based on the 2005 California
Residential Alternative Calculation Method Approval Manual.
``(IV) Calculation requirements.--
In calculating tradeoffs and energy
performance, the regulations prescribed
under this clause shall prescribe for
the taxable year 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.
Where a State has developed annual
energy usage and cost reduction
procedures based on time of usage costs
for use in the performance standards of
the State's building energy code prior
to the effective date of this section,
the State may use those annual energy
usage and cost reduction procedures in
lieu of those adopted by the Secretary.
``(V) Approval of software
submissions.--The Secretary shall
approve software submissions which
comply with the requirements of
subclause (III).
``(VI) Procedures for inspection
and testing of homes.--The Secretary
shall ensure that procedures for the
inspection and testing for compliance
comply with the calculation
requirements under subclause (IV) of
this clause and clause (iv).
``(iii) Determinations of compliance.--A
determination of compliance with respect to
energy efficient residential rental building
property made for the purposes of this
subparagraph shall be filed with the Secretary
not later than 1 year after the date of such
determination and shall include the TIN of the
certifier, the address of the building in
compliance, and the identity of the person for
whom such determination was performed.
Determinations of compliance filed with the
Secretary shall be available for inspection by
the Secretary of Energy.
``(iv) Compliance.--
``(I) In general.--The Secretary,
after consultation with the Secretary
of Energy, shall establish requirements
for certification and compliance
procedures after examining the
requirements for energy consultants and
home energy ratings providers specified
by the Mortgage Industry National Home
Energy Rating Standards.
``(II) Individuals qualified to
determine compliance.--The
determination of compliance may be
provided by a local building regulatory
authority, a utility, a manufactured
home production inspection primary
inspection agency (IPIA), or an
accredited home energy rating system
provider. All providers shall be
accredited, or otherwise authorized to
use approved energy performance
measurement methods, by the Residential
Energy Services Network (RESNET).
``(C) Allocation of deduction for public
property.--In the case of energy efficient residential
rental building property which is public property, the
Secretary shall promulgate a regulation to allow the
allocation of the deduction to the person primarily
responsible for designing the improvements to 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 subsection.
``(f) Special Rules.--For purposes of this section--
``(1) Basis reduction.--For purposes of this subtitle, if a
deduction is allowed under this section with respect to any
property, the basis of such property shall be reduced by the
amount of the deduction so allowed.
``(2) Double benefit.--Property which would, but for this
paragraph, be eligible for deduction under more than one
provision of this section shall be eligible only under one such
provision, the provision specified by the taxpayer.
``(g) Regulations.--The Secretary shall promulgate such regulations
as necessary to take into account new technologies regarding energy
efficiency and renewable energy for purposes of determining energy
efficiency and savings under this section.
``(h) Termination.--This section shall not apply with respect to--
``(1) any energy property placed in service after December
31, 2008 (December 31, 2005, in the case of Tier 1 energy-
efficient building property), and
``(2) any energy efficient residential rental building
property expenditures in connection with property--
``(A) placed in service after December 31, 2007, or
``(B) the construction, reconstruction, erection,
or rehabilitation of which is not completed on or
before December 31, 2007.''.
(b) Conforming Amendments.--
(1) Section 48(a)(3)(A) of the Internal Revenue Code of
1986 is amended to read as follows:
``(A) which is 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,''.
(2) Subparagraph (B) of section 168(e)(3) of such Code is
amended--
(A) in clause (vi)(I)--
(i) by striking ``section 48(a)(3)'' and
inserting ``section 199(d)(1)'', and
(ii) by striking ``clause (i)'' and
inserting ``such subparagraph (A)'', and
(B) in the last sentence, by striking ``section
48(a)(3)'' and inserting ``section 199(c)(3)''.
(3) Section 1016(a) of such Code, as amended by section
102, 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 inserting the following new
paragraph:
``(31) 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 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new item:
``Sec. 199. Energy property deduction.''.
(d) Authorization of Appropriations.--There are authorized to be
appropriated to the Department of Energy out of amounts not already
appropriated such sums as necessary to carry out this section.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
SEC. 104. CREDIT FOR CERTAIN NONBUSINESS ENERGY PROPERTY.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to nonrefundable
personal credits) is amended by inserting after section 25B the
following new section:
``SEC. 25C. NONBUSINESS ENERGY PROPERTY.
``(a) Allowance of Credit.--
``(1) In general.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this
chapter for the taxable year an amount equal to the sum of--
``(A) the amount determined under subsection (b)
for each qualified energy property of the taxpayer
placed in service during such taxable year, and
``(B) so much of the credit amount specified in
paragraph (2) which does not exceed the expenditures
made by the taxpayer in connection with the
construction, reconstruction, erection, or
rehabilitation of a dwelling unit of the taxpayer which
results in the unit being a highly energy-efficient
principal residence.
For purposes of subparagraph (B), the expenditures may include
labor costs properly allocable to the onsite preparation,
assembly, or original installation of such property.
``(2) Credit amount.--The credit amount with respect to a
highly energy-efficient principal residence is--
``(A) $2,000 in the case of a percentage reduction
of 50 percent as determined under subsection
(c)(6)(A)(iii), and
``(B) $4,000 times the percentage reduction in the
case of a percentage reduction of less than 50 percent
as determined under subsection (c)(6)(A)(iii).
``(b) Amount for Qualified Energy Property.--
``(1) Residential energy property expenditures.--Except as
provided in paragraph (2), the amount determined under this
subsection for the taxable year for each item of qualified
energy property shall equal the amount of residential energy
property expenditures made by the taxpayer with respect to such
property during such taxable year.
``(2) Solar hot water property; photovoltaic property.--
``(A) In general.--In the case of solar hot water
property and photovoltaic property, the amount
determined under this subsection for the taxable year shall equal the
amount specified for such property in the following table:
------------------------------------------------------------------------
Description of property: Allowable amount is:
------------------------------------------------------------------------
Elected solar hot water property.. 35 cents per each kwh/year of
savings.
Photovoltaic property............. $1.50 per peak watt.
------------------------------------------------------------------------
``(B) Elected solar hot water property.--In the
case of elected solar hot water property (as defined in
section 199(d)(1)(B)), the taxpayer may elect to
substitute `$7 per annual Therm of natural gas savings'
for `35 cents per each kwh/year of savings' in the
table contained in subparagraph (A).
``(3) Maximum amount.--In the case of property described in
the following table, the amount of expenditures taken into
account under paragraph (1) and the amount determined under
paragraph (2) for the taxable year for each item of qualified
energy property with respect to a dwelling unit shall not
exceed the amount specified for such property in such table:
------------------------------------------------------------------------
``Description of property item: Maximum allowable credit amount is:
------------------------------------------------------------------------
Tier 2 energy-efficient building $300.
property.
Advanced main air circulating fan $50.
or a Tier 1 natural gas, propane,
or oil water heater.
Tier 1 energy-efficient building $150.
property (other than an advanced
main air circulating fan or a
natural gas, propane, or oil
water heater).
Solar hot water property.......... $1,000.
Photovoltaic property............. $6,000.
------------------------------------------------------------------------
``(c) Definitions and Special Rules.--For purposes of this
section--
``(1) Residential energy property expenditures.--The term
`residential energy property expenditures' means expenditures
made by the taxpayer for qualified energy property installed on
or in connection with a dwelling unit which--
``(A) is located in the United States, and
``(B) is used as a principal residence.
Such term includes expenditures for labor costs properly
allocable to the onsite preparation, assembly, or original
installation of the property.
``(2) Qualified energy property.--
``(A) In general.--The term `qualified energy
property' means--
``(i) energy-efficient building property,
``(ii) solar hot water property, and
``(iii) photovoltaic property.
``(B) Swimming pool, etc., used as storage medium;
solar panels.--For purposes of this paragraph, the
provisions of subparagraphs (D) and (E) section
199(d)(1) shall apply.
``(C) Required standards.--Property described under
subparagraph (A) shall meet the performance and quality
standards and certification standards of paragraphs
(1)(D) and (2) of section 199(c).
``(3) Energy-efficient building property.--The term
`energy-efficient building property' has the same meaning given
the terms `Tier 2 energy-efficient property', `Tier 1 energy-
efficient property', and `advanced main air circulating fan' in
paragraphs (2), (3), and (4) of section 199(d), respectively.
``(4) Solar hot water property.--The term `solar hot water
property' means property which, when installed in connection
with a structure, uses solar energy for the purpose of
providing hot water for use within such structure and the
performance of which is determined in accordance with section
199(c)(2)(A).
``(5) Photovoltaic property.--The term `photovoltaic
property' has the same meaning given such term in section
199(d)(1)(C).
``(6) Highly energy-efficient principal residence.--
``(A) In general.--Property is a highly energy-
efficient principal residence if--
``(i) such property is located in the
United States,
``(ii) the property is used as a principal
residence, and
``(iii) the projected heating and cooling
energy usage of such property, measured in
terms of average annual energy cost to
taxpayer, is reduced by a percentage certified
according to subparagraph (C) in comparison to
the energy cost of such property if
expenditures made by the taxpayer with respect
to energy efficient improvements to such
property were not made.
``(B) Principal residence.--
``(i) In general.--The term `principal
residence' has the same meaning as when used in
section 121, except that--
``(I) no ownership requirement
shall be imposed, and
``(II) the period for which a
building is treated as used as a
principal residence shall also include
the 60-day period ending on the 1st day
on which it would (but for this
subparagraph) first be treated as used
as a principal residence.
``(ii) Manufactured housing.--The term
`residence' shall include a dwelling unit which
is a manufactured home conforming to Federal
Manufactured Home Construction and Safety
Standards (24 C.F.R. 3280).
``(C) Certification procedures.--
``(i) In general.--For purposes of
subparagraph (A)(iii), energy <plus-minus>usage
shall be demonstrated by performance-based
compliance.
``(ii) Performance-based compliance.--
Performance-based compliance shall be
demonstrated if the percent energy cost savings
for heating and cooling is met with respect to
a dwelling unit when compared to the original
condition of the dwelling unit.
``(iii) Computer software.--Computer
software shall be used in support of
performance-based compliance under clause (ii)
and such software shall meet all of the
procedures and methods for calculating energy
savings reductions which are promulgated by the
Secretary of Energy. Such regulations on the
specifications for software and verification
protocols shall be based on the 2005 California
Residential Alternative Calculation Method
Approval Manual.
``(iv) Calculation requirements.--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. If a State has
developed annual energy usage and cost
reduction procedures based on time of usage
costs for use in the performance standards of
the State's building energy code before the
effective date of this section, the State may
use those annual energy usage and cost
reduction procedures in lieu of those adopted
by the Secretary.
``(v) Approval of software submissions.--
The Secretary shall approve software
submissions which comply with the calculation
requirements of clause (iii).
``(vi) Procedures for inspection and
testing of dwelling units.--The Secretary shall
ensure that procedures for the inspection and
testing for compliance comply with the
calculation requirements under clause (iii) and
subsection (d)(2).
``(d) Special Rules.--For purposes of this section--
``(1) Determinations of compliance.--A determination of
compliance made for the purposes of this section shall be filed
with the Secretary within 1 year of the date of such
determination and shall include the TIN of the certifier, the
address of the building in compliance, and the identity of the
person for whom such determination was performed.
Determinations of compliance filed with the Secretary shall be
available for inspection by the Secretary of Energy.
``(2) Compliance.--
``(A) In general.--The Secretary, after
consultation with the Secretary of Energy shall
establish requirements for certification and compliance
procedures after examining the requirements for energy
consultants and home energy ratings providers specified
by the Mortgage Industry National Home Energy Rating
Standards.
``(B) Individuals qualified to determine
compliance.--The determination of compliance may be
provided by a local building regulatory authority, a
utility, a manufactured home production inspection
primary inspection agency (IPIA), or an accredited home
energy rating system provider. All providers shall be
accredited, or otherwise authorized to use approved
energy performance measurement methods, by the
Residential Energy Services Network (RESNET).
``(3) Dollar amounts in case of joint occupancy.--In the
case of any dwelling unit which if jointly occupied and used
during any calendar year as a principal residence by 2 or more
individuals the following rules shall apply:
``(A) The amount of the credit allowable under
subsection (a) by reason of expenditures made during
such calendar year by any of such individuals with
respect to such dwelling unit shall be determined by
treating all of such individuals as 1 taxpayer whose
taxable year is such calendar year.
``(B) There shall be allowable with respect to such
expenditures to each of such individuals, a credit
under subsection (a) for the taxable year in which such
calendar year ends in an amount which bears the same
ratio to the amount determined under subparagraph (A)
as the amount of such expenditures made by such
individual during such calendar year bears to the
aggregate of such expenditures made by all of such
individuals during such calendar year.
``(4) 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 and such
credit shall be allocated pro rata to such individual.
``(5) Condominiums.--
``(A) In general.--In the case of an individual who
is a member of a condominium management association
with respect to a condominium which he owns, such
individual shall be treated as having made his
proportionate share of any expenditures of such
association and any credit shall be allocated
appropriately.
``(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 principal residences.
``(6) Joint ownership of energy items.--
``(A) In general.--Any expenditure otherwise
qualifying as an expenditure under this section 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.
``(7) Allocation in certain cases.--If less than 80 percent
of the use of an item is for nonbusiness purposes, only that
portion of the expenditures for such item which is properly
allocable to use for nonbusiness purposes shall be taken into
account.
``(8) Coordination with other credits.--Property which
would, but for this paragraph, be eligible for credit under
more than one provision of this section shall be eligible only
under one such provision, the provision specified by the
taxpayer.
``(9) Year credit allowed.--The credit under subsection
(a)(2) shall be allowed in the taxable year in which the
percentage reduction with respect to the principal residence is
certified.
``(10) When expenditure made; amount of expenditure.--
``(A) In general.--Except as provided in
subparagraph (B), an expenditure with respect to an
item shall be treated as made when the original
installation of the item is completed.
``(B) Expenditures part of building construction.--
In the case of an expenditure in connection with the
construction of a structure, such expenditure shall be
treated as made when the original use of the
constructed structure by the taxpayer begins.
``(11) Property financed by subsidized energy financing.--
``(A) Reduction of expenditures.--
``(i) In general.--Except as provided in
subparagraph (C), for purposes of determining
the amount of expenditures made by any
individual with respect to any dwelling unit,
there shall not be taken into account
expenditures which are made from subsidized
energy financing.
``(ii) Subsidized energy financing.--For
purposes of clause (i), the term `subsidized
energy financing' has the same meaning given
such term in section 48(a)(4)(C).
``(B) Dollar limits reduced.--The dollar amounts in
the table contained in subsection (b)(3) with respect
to each property purchased for such dwelling unit for
any taxable year of such taxpayer shall be reduced
proportionately by an amount equal to the sum of--
``(i) the amount of the expenditures made
by the taxpayer during such taxable year with
respect to such dwelling unit and not taken
into account by reason of subparagraph (A), and
``(ii) the amount of any Federal, State, or
local grant received by the taxpayer during
such taxable year which is used to make
residential energy property expenditures with
respect to the dwelling unit and is not
included in the gross income of such taxpayer.
``(C) Exception for state programs.--Subparagraphs
(A) and (B) shall not apply to expenditures made with
respect to property for which the taxpayer has received
a loan, State tax credit, or grant under any State
energy program.
``(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) Regulations.--The Secretary shall promulgate such regulations
as necessary to take into account new technologies regarding energy
efficiency and renewable energy for purposes of determining energy
efficiency and savings under this section.
``(g) Termination.--This section shall not apply with respect to
any energy property placed in service after December 31, 2008 (December
31, 2005, in the case of Tier 1 energy-efficient building property).''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 1016 of the Internal Revenue
Code of 1986 as amended by section 103, is amended by striking
``and'' at the end of paragraph (30), by striking the period at
the end of paragraph (31) and inserting ``, and'', and by
adding at the end the following new paragraph:
``(32) to the extent provided in section 25C(e), in the
case of amounts with respect to which a credit has been allowed
under section 25C.''.
(2) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
after the item relating to section 25B the following new item:
``Sec. 25C. Nonbusiness energy
property.''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to expenditures
made after December 31, 2003.
(2) Energy efficient building property used in a principal
residence.--In the case of energy efficient building property,
as defined in section 25B(c) of the Internal Revenue Code of
1986, as added by subsection (a), the amendments made by this
section shall apply to expenditures made after March 31, 2003.
SEC. 105. ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM PROPERTY.
(a) In General.--Section 48(a)(3)(A) of the Internal Revenue Code
of 1986 (defining energy property) is amended by striking ``or'' at the
end of clause (i), by adding ``or'' at the end of clause (ii), and by
inserting after clause (ii) the following new clause:
``(iii) combined heat and power system
property,''.
(b) Combined Heat and Power System Property.--Section 48 of the
Internal Revenue Code of 1986 (relating to energy credit; reforestation
credit) is amended by adding at the end the following new subsection:
``(c) Combined Heat and Power System Property.--For purposes of
subsection (a)(3)(A)(iii)--
``(1) Combined heat and power system property.--The term
`combined heat and power system property' means property
comprising a system--
``(A) which uses the same energy source for the
simultaneous or sequential generation of electrical
power, mechanical shaft power, or both, in combination
with the generation of steam or other forms of useful
thermal energy (including heating and cooling
applications),
``(B) which has an electrical capacity of not more
than 15 megawatts or a mechanical energy capacity of
not more than 2,000 horsepower or an equivalent
combination of electrical and mechanical energy
capacities,
``(C) which produces--
``(i) at least 20 percent of its total
useful energy in the form of thermal energy
which is not used to produce electrical or
mechanical power (or combination thereof), and
``(ii) at least 20 percent of its total
useful energy in the form of electrical or
mechanical power (or combination thereof),
``(D) the energy efficiency percentage of which
exceeds 60 percent, and
``(E) which is placed in service before January 1,
2007.
``(2) Special rules.--
``(A) Energy efficiency percentage.--For purposes
of this subsection, 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 expected to be consumed in
its normal application, and
``(ii) the denominator of which is the
lower heating value of the fuel sources for the
system.
``(B) Determinations made on btu basis.--The energy
efficiency percentage and the percentages under
paragraph (1)(C) shall be determined on a Btu basis.
``(C) 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.
``(D) Public utility property.--
``(i) Accounting rule for public utility
property.--If the combined heat and power
system property is public utility property (as
defined in section 168(i)(10)), the taxpayer
may only claim the credit under subsection (a)
if, with respect to such property, the taxpayer
uses a normalization method of accounting.
``(ii) Certain exception not to apply.--The
matter in subsection (a)(3) which follows
subparagraph (D) thereof shall not apply to
combined heat and power system property.
``(3) Systems using bagasse.--If a system is designed to
use bagasse for at least 90 percent of the energy source--
``(A) paragraph (1)(D) shall not apply, but
``(B) the amount of credit determined under
subsection (a) with respect to such system shall not
exceed the amount which bears the same ratio to such
amount of credit (determined without regard to this
paragraph) as the energy efficiency percentage of such
system bears to 60 percent.''.
(c) Effective Date.--The amendments made by this subsection shall
apply to periods after December 31, 2003, in taxable years ending after
such date, 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. 106. CREDIT FOR ENERGY EFFICIENT APPLIANCES.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business-related
credits), as amended by section 102, is amended by adding at the end
the following new section:
``SEC. 45H. ENERGY EFFICIENT APPLIANCE CREDIT.
``(a) Allowance of Credit.--For purposes of section 38, the energy
efficient appliance credit determined under this section for the
taxable year is an amount equal to the sum of--
``(1) the tier I appliance amount, and
``(2) the tier II appliance amount,
with respect to qualified energy efficient appliances produced by the
taxpayer during the calendar year ending with or within the taxable
year.
``(b) Appliance Amounts.--For purposes of subsection (a)--
``(1) Tier i appliance amount.--The tier I appliance amount
is equal to--
``(A) $100, multiplied by
``(B) an amount (rounded to the nearest whole
number) equal to the applicable percentage of the
eligible production.
``(2) Tier ii appliance amount.--The tier II appliance
amount is equal to $150, multiplied by an amount equal to the
eligible production reduced by the amount determined under
paragraph (1)(B).
``(3) Applicable percentage.--The applicable percentage is
the percentage determined by dividing the tier I appliances
produced by the taxpayer during the calendar year by the sum of
the tier I and tier II appliances so produced.
``(4) Eligible production.--The eligible production of
qualified energy efficient appliances by the taxpayer for any
calendar year is the excess of--
``(A) the number of such appliances which are
produced by the taxpayer during such calendar year,
over
``(B) 110 percent of the average annual number of
such appliances which were produced by the taxpayer (or
any predecessor) during the preceding 3-calendar year
period.
``(c) Qualified Energy Efficient Appliance.--For purposes of this
section--
``(1) In general.--The term `qualified energy efficient
appliance' means any tier I appliance or tier II appliance
which is produced in the United States.
``(2) Tier i appliance.--The term `tier I appliance'
means--
``(A) a clothes washer which is produced with at
least a 1.50 MEF, and
``(B) a refrigerator which consumes at least 15
percent (20 percent in the case of a refrigerator
produced after 2006) less kilowatt hours per year than
the energy conservation standards for refrigerators
promulgated by the Department of Energy and effective
on July 1, 2001.
``(3) Tier ii appliance.--The term `tier II appliance'
means a refrigerator produced before 2007 which consumes at
least 20 percent less kilowatt hours per year than the energy
conservation standards described in paragraph (2)(B).
``(4) Clothes washer.--The term `clothes washer' means a
residential clothes washer, including a residential style coin
operated washer.
``(5) Refrigerator.--The term `refrigerator' means an
automatic defrost refrigerator-freezer which has an internal
volume of at least 16.5 cubic feet.
``(6) MEF.--The term `MEF' means Modified Energy Factor (as
determined by the Secretary of Energy).
``(7) Produced.--The term `produced' includes manufactured.
``(d) Limitation on Maximum Credit.--
``(1) In general.--The amount of credit allowed under
subsection (a) with respect to a taxpayer for any taxable year
shall not exceed $60,000,000, reduced by the amount of the
credit allowed under subsection (a) to the taxpayer (or any
predecessor) for any prior taxable year.
``(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 for 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.
``(e) Special Rules.--For purposes of this section--
``(1) In general.--Rules similar to the rules of
subsections (c), (d), and (e) of section 52 shall apply.
``(2) Controlled groups.--
``(A) In general.--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 a single manufacturer.
``(B) Inclusion of foreign corporations.--For
purposes of subparagraph (A), in applying subsections
(a) and (b) of section 52 to this section, section 1563
shall be applied without regard to subsection (b)(2)(C)
thereof.
``(f) Verification.--The taxpayer shall submit such information or
certification as the Secretary, after consultation with the Secretary
of Energy, determines necessary to claim the credit amount under
subsection (a).
``(g) Termination.--This section shall not apply with respect to
appliances produced after December 31, 2007.''.
(b) Credit Made Part of General Business Credit.--Section 38(b) of
the Internal Revenue Code of 1986 (relating to current year business
credit), as amended by section 102, 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 new paragraph:
``(17) the energy efficient appliance credit determined
under section 45H(a).''.
(c) Limitation on Carryback.--Section 39(d) of the Internal Revenue
Code of 1986 (relating to transition rules), as amended by section 102,
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 45H(a) may
be carried to a taxable year ending before January 1, 2004.''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986, as amended by section 102, is amended by adding at the end the
following new item:
``Sec. 45H. Energy efficient appliance
credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to appliances produced after December 31, 2003, in taxable years
ending after such date.
TITLE II--ENERGY EFFICIENT PRODUCTS
SEC. 201. ENERGY CONSERVATION STANDARDS FOR ADDITIONAL PRODUCTS.
(a) Definitions.--Section 321 of the Energy Policy and Conservation
Act (42 U.S.C. 6291) is amended--
(1) in paragraph (30)(S), by striking the period and adding
at the end the following: ``but does not include any lamp
specifically designed to be used for special purpose
applications and that is unlikely to be used in general purpose
applications such as those described in subparagraph (D), and
also does not include any lamp not described in subparagraph
(D) that is excluded by the Secretary, by rule, because the
lamp is designed for special applications and is unlikely to be
used in general purpose applications.''; and
(2) by adding at the end the following:
``(32) The term `battery charger' means a device that
charges batteries for consumer products and includes battery
chargers embedded in other consumer products.
``(33) The term `ceiling fan' means a nonportable device
that is suspended from a ceiling for circulating air through
the rotation of fan blades.
``(34) The term `ceiling fan light kit' means equipment
designed to provide light from a ceiling fan that can be--
``(A) integral, such that the equipment is attached
to the ceiling fan prior to the time of retail sale; or
``(B) attachable, such that at the time of retail
sale the equipment is not physically attached to the
ceiling fan, but may be included inside the ceiling fan
package at the time of sale or sold separately for
subsequent attachment to the fan.
``(35) The term `commercial refrigerators, freezers, and
refrigerator-freezers' means refrigerators, freezers, or
refrigerator-freezers that--
``(A) are not consumer products regulated under
this Act; and
``(B) incorporate most components involved in the
vapor-compression cycle and the refrigerated
compartment in a single package.
``(36) The term `external power supply' means an external
power supply circuit that is used to convert household electric
current into either DC current or lower-voltage AC current to
operate a consumer product.
``(37) The term `illuminated exit sign' means a sign that--
``(A) is designed to be permanently fixed in place
to identify an exit; and
``(B) consists of an electrically powered integral
light source that illuminates the legend `EXIT' and any
directional indicators and provides contrast between
the legend, any directional indicators, and the
background.
``(38)(A) Except as provided in subparagraph (B), the term
`distribution transformer' means a transformer that--
``(i) has an input voltage of 34.5 kilovolts or
less;
``(ii) has an output voltage of 600 volts or less;
and
``(iii) is rated for operation at a frequency of 60
Hertz.
``(B) The term `distribution transformer' does not
include--
``(i) transformers with multiple voltage taps, with
the highest voltage tap equaling at least 20 percent
more than the lowest voltage tap;
``(ii) transformers, such as those commonly known
as drive transformers, rectifier transformers, auto-
transformers, Uninterruptible Power System
transformers, impedance transformers, harmonic
transformers, regulating transformers, sealed and
nonventilating transformers, machine tool transformers,
welding transformers, grounding transformers, or
testing transformers, that are designed to be used in a
special purpose application and are unlikely to be used
in general purpose applications; or
``(iii) any transformer not listed in clause (ii)
that is excluded by the Secretary by rule because--
``(I) the transformer is designed for a
special application;
``(II) the transformer is unlikely to be
used in general purpose applications; and
``(III) the application of standards to the
transformer would not result in significant
energy savings.
``(39) The term `low-voltage dry-type distribution
transformer' means a distribution transformer that--
``(A) has an input voltage of 600 volts or less;
``(B) is air-cooled; and
``(C) does not use oil as a coolant.
``(40) The term `standby mode' means the lowest power
consumption mode that--
``(A) cannot be switched off or influenced by the
user; and
``(B) may persist for an indefinite time when an
appliance is connected to the main electricity supply
and used in accordance with the manufacturer's
instructions,
as defined on an individual product basis by the Secretary.
``(41) The term `torchiere' means a portable electric lamp
with a reflector bowl that directs light upward so as to give
indirect illumination.
``(42) The term `traffic signal module' means a standard 8-
inch (200mm) or 12-inch (300mm) traffic signal indication,
consisting of a light source, a lens, and all other parts
necessary for operation, that communicates movement messages to
drivers through red, amber, and green colors.
``(43) The term `transformer' means a device consisting of
2 or more coils of insulated wire that transfers alternating
current by electromagnetic induction from 1 coil to another to
change the original voltage or current value.
``(44) The term `unit heater' means a self-contained fan-
type heater designed to be installed within the heated space,
except that such term does not include a warm air furnace.''.
(b) Test Procedures.--Section 323 of the Energy Policy and
Conservation Act (42 U.S.C. 6293) is amended--
(1) in subsection (b), by adding at the end the following:
``(9) Test procedures for illuminated exit signs shall be
based on the test method used under Version 2.0 of the Energy
Star program of the Environmental Protection Agency for
illuminated exit signs.
``(10) Test procedures for distribution transformers and
low voltage dry-type distribution transformers shall be based
on the `Standard Test Method for Measuring the Energy
Consumption of Distribution Transformers' prescribed by the
National Electrical Manufacturers Association (NEMA TP 2-1998).
The Secretary may review and revise this test procedure. For
purposes of section 346(a), this test procedure shall be deemed
to be testing requirements prescribed by the Secretary under
section 346(a)(1) for distribution transformers for which the
Secretary makes a determination that energy conservation
standards would be technologically feasible and economically
justified, and would result in significant energy savings.
``(11) Test procedures for traffic signal modules shall be
based on the test method used under the Energy Star program of
the Environmental Protection Agency for traffic signal modules,
as in effect on the date of enactment of this paragraph.
``(12) Test procedures for medium base compact fluorescent
lamps shall be based on the test methods used under the October
30, 2003, version of the Energy Star program of the
Environmental Protection Agency and Department of Energy for
compact fluorescent lamps. Covered products shall meet all test
requirements for regulated parameters in section 325(bb).
However, covered products may be marketed prior to completion
of lamp life and lumen maintenance at 40 percent of rated life
testing provided manufacturers document engineering predictions
and analysis that support expected attainment of lumen
maintenance at 40 percent rated life and lamp life time.
``(13) Air movement test procedures for ceiling fans shall
be based on the test procedure contained in the Energy Star
Program Requirements for Residential Ceiling Fans (Version 2.0)
developed by the Environmental Protection Agency, unless
pursuant to this section, the Secretary promulgates regulations
establishing an alternative test procedure.''; and
(2) by adding at the end the following:
``(f) Additional Consumer and Commercial Products.--
``(1) In general.--Not later than 2 years after the date of
enactment of this subsection, the Secretary shall prescribe
testing requirements for refrigerated bottled or canned
beverage vending machines, and commercial refrigerators,
freezers, and refrigerator-freezers.
``(2) Basis.--The testing requirements shall be based on
existing test procedures used in industry, to the extent
practicable.''.
(c) New Standards.--Section 325 of the Energy Policy and
Conservation Act (42 U.S.C. 6295) is amended by adding at the end the
following:
``(u) Battery Charger and External Power Supply Electric Energy
Consumption.--
``(1) Initial rulemaking.--(A) The Secretary shall, within
18 months after the date of enactment of this subsection,
prescribe by notice and comment, definitions and test
procedures for the power use of battery chargers and external
power supplies. In establishing these test procedures, the
Secretary shall consider, among other factors, existing
definitions and test procedures used for measuring energy
consumption in standby mode and other modes and assess the
current and projected future market for battery chargers and
external power supplies. This assessment shall include
estimates of the significance of potential energy savings from
technical improvements to these products and suggested product
classes for standards. Prior to the end of this time period,
the Secretary shall hold a scoping workshop to discuss and
receive comments on plans for developing energy conservation
standards for energy use for these products.
``(B) The Secretary shall, within 3 years after the date of
enactment of this subsection, issue a final rule that
determines whether energy conservation standards shall be
issued for battery chargers and external power supplies or
classes thereof. For each product class, any such standards
shall be set at the lowest level of energy use that--
``(i) meets the criteria and procedures of
subsections (o), (p), (q), (r), (s), and (t); and
``(ii) will result in significant overall annual
energy savings, considering both standby mode and other
operating modes.
``(2) Review of standby energy use in covered products.--In
determining pursuant to section 323 whether test procedures and
energy conservation standards pursuant to this section should
be revised, the Secretary shall consider, for covered products
that are major sources of standby mode energy consumption,
whether to incorporate standby mode into such test procedures
and energy conservation standards, taking into account, among
other relevant factors, standby mode power consumption compared
to overall product energy consumption.
``(3) Rulemaking.--The Secretary shall not propose a
standard under this section unless the Secretary has issued
applicable test procedures for each product pursuant to section
323.
``(4) Effective date.--Any standard issued under this
subsection shall be applicable to products manufactured or
imported 3 years after the date of issuance.
``(5) Voluntary programs.--The Secretary and the
Administrator shall collaborate and develop programs, including
programs pursuant to section 324A (relating to Energy Star
Programs) and other voluntary industry agreements or codes of
conduct, that are designed to reduce standby mode energy use.
``(v) Vending Machines, and Commercial Refrigerators, Freezers, and
Refrigerator-Freezers.--
``(1) In general.--Not later than 3 years after the date on
which testing requirements are prescribed by the Secretary
pursuant to section 323(f), the Secretary shall prescribe, by
rule, energy conservation standards for refrigerated bottled
or canned beverage vending machines, and commercial refrigerators,
freezers, and refrigerator-freezers.
``(2) Criteria and procedures.--In establishing standards
under this subsection, the Secretary shall use the criteria and
procedures contained in subsections (o) and (p).
``(3) Applicability.--Any standard prescribed under this
subsection shall apply to products manufactured 3 years after
the date of publication of a final rule establishing the
standard.
``(w) Illuminated Exit Signs.--Illuminated exit signs manufactured
on or after January 1, 2005, shall meet the Version 2.0 Energy Star
Program performance requirements for illuminated exit signs prescribed
by the Environmental Protection Agency.
``(x) Torchieres.--Torchieres manufactured on or after January 1,
2005--
``(1) shall consume not more than 190 watts of power; and
``(2) shall not be capable of operating with lamps that
total more than 190 watts.
``(y) Low Voltage Dry-Type Distribution Transformers.--The
efficiency of low voltage dry-type distribution transformers
manufactured on or after January 1, 2005, shall be the Class I
Efficiency Levels for distribution transformers specified in Table 4-2
of the `Guide for Determining Energy Efficiency for Distribution
Transformers' published by the National Electrical Manufacturers
Association (NEMA TP-1-2002).
``(z) Traffic Signal Modules.--Traffic signal modules manufactured
on or after January 1, 2006, shall meet the performance requirements
used under the Energy Star program of the Environmental Protection
Agency for traffic signals, as in effect on the date of enactment of
this subsection, and shall be installed with compatible, electrically
connected signal control interface devices and conflict monitoring
systems.
``(aa) Unit Heaters.--Unit heaters manufactured on or after the
date that is 3 years after the date of enactment of this subsection
shall be equipped with an intermittent ignition device and shall have
either power venting or an automatic flue damper.
``(bb) Medium Base Compact Fluorescent Lamps.--Bare lamp and
covered lamp (no reflector) medium base compact fluorescent lamps
manufactured on or after January 1, 2005, shall meet the following
requirements prescribed by the August 9, 2001, version of the Energy
Star Program Requirements for Compact Fluorescent Lamps, Energy Star
Eligibility Criteria, Energy-Efficiency Specification issued by the
Environmental Protection Agency and Department of Energy: minimum
initial efficacy; lumen maintenance at 1000 hours; lumen maintenance at
40 percent of rated life; rapid cycle stress test; and lamp life. The
Secretary may, by rule, establish requirements for color quality (CRI);
power factor; operating frequency; and maximum allowable start time
based on the requirements prescribed by the October 30, 2003, version
of the Energy Star Program Requirements for Compact Fluorescent Lamps.
The Secretary may, by rule, revise these requirements or establish
other requirements considering energy savings, cost effectiveness, and
consumer satisfaction.
``(cc) Ceiling Fans and Ceiling Fan Light Kits.--
``(1) Ceiling fans.--All ceiling fans manufactured on or
after January 1, 2007, shall have--
``(A) lighting controls separate from fan speed
controls;
``(B) adjustable speed controls (either more than 1
speed or variable speeds); and
``(C) the capability of reversible fan action,
except (as determined by the Secretary by regulation)--
``(i) for fans sold for industrial
applications;
``(ii) for fans sold for outdoor
applications; and
``(iii) where safety standards would be
violated by the use of the reversible mode.
``(2) Ceiling fan light kits.--Ceiling fan light kits
manufactured on or after January 1, 2007, shall--
``(A) meet the Energy Star Program Requirements for
Residential Light Fixtures (Version 3.1) issued by the
Environmental Protection Agency and be packaged with
lamps to fill all sockets;
``(B) be packaged with screw-based compact
fluorescent lamps to fill all sockets, with such lamps
meeting the Energy Star Program Requirements for
Compact Fluorescent Lamps (Version 3.0) issued by the
Department of Energy; or
``(C) use and be packaged with light sources, other
than compact fluorescent lamps, that meet the minimum
efficacy requirements (as measured in lumens per watt)
of the Energy Star Program Requirements for Compact
Fluorescent Lamps (Version 3.0) issued by the
Department of Energy.
``(3) Energy efficiency standards for ceiling fans.--
``(A) In general.--Notwithstanding any provision of
this Act, the Secretary may consider, and prescribe, if
the requirements of subsections (o) and (p) are met,
energy efficiency or energy use standards (based on
cubic feet per minute per watt or watts) for
electricity used by ceiling fans to circulate air in a
room.
``(B) Exemptions or different standards.--In
prescribing the standards, the Secretary shall
consider--
``(i) exempting or setting different
standards for certain product classes for which
the primary standards are not technically
feasible or economically justified; and
``(ii) establishing separate exempted
product classes for highly decorative fans for
which air movement performance is a secondary
design feature.
``(C) Effective date.--Any air movement standard
prescribed under this subsection shall apply to
products manufactured on or after the date that is 3
years after publication of a final rule establishing the standard.
``(dd) Effective Date.--Section 327 shall apply--
``(1) to products for which standards are to be established
under subsections (u) and (v) on the date on which a final rule
is issued by the Department of Energy, except that any State or
local standards prescribed or enacted for any such product
prior to the date on which such final rule is issued shall not
be preempted until the standard established under subsection
(u) or (v) for that product takes effect; and
``(2) to products for which standards are established under
subsections (w) through (bb) on the date of enactment of those
subsections, except that any State or local standards
prescribed or enacted prior to the date of enactment of those
subsections shall not be preempted until the standards
established under subsections (w) through (bb) take effect.''.
(d) Residential Furnace Fans.--Section 325(f)(3) of the Energy
Policy and Conservation Act (42 U.S.C. 6295(f)(3)) is amended by adding
the following new subparagraph at the end:
``(D) Notwithstanding any provision of this Act, the Secretary may
consider, and prescribe, if the requirements of subsection (o) of this
section are met, energy efficiency or energy use standards for
electricity used for purposes of circulating air through duct work.''.
SEC. 202. ENERGY LABELING.
(a) Rulemaking on Effectiveness of Consumer Product Labeling.--
Section 324(a)(2) of the Energy Policy and Conservation Act (42 U.S.C.
6294(a)(2)) is amended by adding at the end the following:
``(F) During the period beginning not later than 90 days after the
date of enactment of this subparagraph and ending not later than 2
years after the date of enactment of this subparagraph, the Commission
shall initiate a rulemaking to consider--
``(i) the effectiveness of the current consumer products
labeling program in assisting consumers in making purchasing
decisions and improving energy efficiency; and
``(ii) changes to the labeling rules that would improve the
effectiveness of consumer product labels.''.
(b) Rulemaking on Labeling for Additional Products.--Section 324(a)
of the Energy Policy and Conservation Act (42 U.S.C. 6294(a)) is
amended by adding at the end the following:
``(5)(A) The Secretary or the Commission, as appropriate, may, for
covered products referred to in subsections (u) through (aa) of section
325, prescribe, by rule, pursuant to this section, labeling
requirements for the products, after a test procedure has been
established pursuant to section 323.
``(B) In the case of products to which TP 1 standards under section
325(y) apply, labeling requirements shall be based on the `Standard for
the Labeling of Distribution Transformer Efficiency' prescribed by the
National Electrical Manufacturers Association (NEMA TP 3) as in effect
on the date of enactment of this paragraph.
``(6)(A) Not later than July 1, 2005, the Commission shall
prescribe by rule, pursuant to this section, labeling requirements for
the electricity used by ceiling fans to circulate air in a room.
``(B) Except as provided in subparagaph (C), the requirements shall
be based on the test procedure and labeling requirements contained in
the Energy Star Program Requirements for Residential Ceiling Fans
(Version 2.0) issued by the Environmental Protection Agency.
``(C) The Commission shall not promulgate rules covering third
party testing and other nonlabeling requirements unless the Commission
determines the requirements are necessary to achieve compliance.
``(D) The rule shall apply to products manufactured after the
latter of--
``(i) January 1, 2007; or
``(ii) the date that is 60 days after the date the final
rule is promulgated.''.
TITLE III--ENERGY EFFICIENCY FEDERAL PROGRAMS
SEC. 301. PROCUREMENT OF ENERGY EFFICIENT PRODUCTS.
(a) Requirements.--Part 3 of title V of the National Energy
Conservation Policy Act (42 U.S.C. 8251 et seq.) is amended by adding
at the end the following:
``SEC. 552. FEDERAL PROCUREMENT OF ENERGY EFFICIENT PRODUCTS.
``(a) Definitions.--In this section:
``(1) Energy star product.--The term `Energy Star product'
means a product that is rated for energy efficiency under an
Energy Star program.
``(2) Energy star program.--The term `Energy Star program'
means the program established by section 324A of the Energy
Policy and Conservation Act.
``(3) Executive agency.--The term `executive agency' has
the meaning given the term in section 4 of the Office of
Federal Procurement Policy Act (41 U.S.C. 403).
``(4) FEMP designated product.--The term `FEMP designated
product' means a product that is designated under the Federal
Energy Management Program of the Department of Energy as being
among the highest 25 percent of equivalent products for energy
efficiency.
``(b) Procurement of Energy Efficient Products.--
``(1) Requirement.--To meet the requirements of an
executive agency for an energy consuming product, the head of
the executive agency shall, except as provided in paragraph
(2), procure--
``(A) an Energy Star product; or
``(B) a FEMP designated product.
``(2) Exceptions.--The head of an executive agency is not
required to procure an Energy Star product or FEMP designated
product under paragraph (1) if the head of the executive agency
finds in writing that--
``(A) an Energy Star product or FEMP designated
product is not cost-effective over the life of the
product taking energy cost savings into account; or
``(B) no Energy Star product or FEMP designated
product is reasonably available that meets the
functional requirements of the executive agency.
``(3) Procurement planning.--The head of an executive
agency shall incorporate into the specifications for all
procurements involving energy consuming products and systems,
including guide specifications, project specifications, and
construction, renovation, and services contracts that include
provision of energy consuming products and systems, and into
the factors for the evaluation of offers received for the
procurement, criteria for energy efficiency that are consistent
with the criteria used for rating Energy Star products and for
rating FEMP designated products.
``(c) Listing of Energy Efficient Products in Federal Catalogs.--
Energy Star products and FEMP designated products shall be clearly
identified and prominently displayed in any inventory or listing of
products by the General Services Administration or the Defense
Logistics Agency. The General Services Administration or the Defense
Logistics Agency shall supply only Energy Star products or FEMP
designated products for all product categories covered by the Energy
Star program or the Federal Energy Management Program, except in cases
where the agency ordering a product specifies in writing that no Energy
Star product or FEMP designated product is available to meet the
buyer's functional requirements, or that no Energy Star product or FEMP
designated product is cost-effective for the intended application over
the life of the product, taking energy cost savings into account.
``(d) Specific Products.--(1) In the case of electric motors of 1
to 500 horsepower, agencies shall select only premium efficient motors
that meet a standard designated by the Secretary. The Secretary shall
designate such a standard not later than 120 days after the date of the
enactment of this section, after considering the recommendations of
associated electric motor manufacturers and energy efficiency groups.
``(2) All Federal agencies are encouraged to take actions to
maximize the efficiency of air conditioning and refrigeration
equipment, including appropriate cleaning and maintenance, including
the use of any system treatment or additive that will reduce the
electricity consumed by air conditioning and refrigeration equipment.
Any such treatment or additive must be--
``(A) determined by the Secretary to be effective in
increasing the efficiency of air conditioning and refrigeration
equipment without having an adverse impact on air conditioning
performance (including cooling capacity) or equipment useful
life;
``(B) determined by the Administrator of the Environmental
Protection Agency to be environmentally safe; and
``(C) shown to increase seasonal energy efficiency ratio
(SEER) or energy efficiency ratio (EER) when tested by the
National Institute of Standards and Technology according to
Department of Energy test procedures without causing any
adverse impact on the system, system components, the
refrigerant or lubricant, or other materials in the system.
Results of testing described in subparagraph (C) shall be published in
the Federal Register for public review and comment. For purposes of
this section, a hardware device or primary refrigerant shall not be
considered an additive.
``(e) Regulations.--Not later than 180 days after the date of the
enactment of this section, the Secretary shall issue guidelines to
carry out this section.''.
(b) Conforming Amendment.--The table of contents of the National
Energy Conservation Policy Act is amended by inserting after the item
relating to section 551 the following new item:
``Sec. 552. Federal procurement of energy efficient products.''.
SEC. 302. ENERGY SAVINGS PERFORMANCE CONTRACTS.
(a) Permanent Extension.--Effective September 30, 2003, section
801(c) of the National Energy Conservation Policy Act (42 U.S.C.
8287(c)) is repealed.
(b) Payment of Costs.--Section 802 of the National Energy
Conservation Policy Act (42 U.S.C. 8287a) is amended by inserting ``,
water, or wastewater treatment'' after ``payment of energy''.
(c) 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, water, or wastewater treatment, from a base
cost established through a methodology set forth in the
contract, used in an existing federally owned building or
buildings or other federally owned facilities as a result of--
``(A) the lease or purchase of operating equipment,
improvements, altered operation and maintenance, or
technical services;
``(B) 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
``(C) the increased efficient use of existing water
sources in either interior or exterior applications.''.
(d) 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 that provides for
the performance of services for the design, acquisition,
installation, testing, and, where appropriate, operation,
maintenance, and repair, of an identified energy or water
conservation measure or series of measures at 1 or more
locations. Such contracts shall, with respect to an agency
facility that is a public building (as such term is defined in
section 3301 of title 40, United States Code), be in compliance
with the prospectus requirements and procedures of section 3307
of title 40, United States Code.''.
(e) 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; or
``(B) a water conservation measure that improves
the efficiency of water use, is life-cycle cost-
effective, and involves water conservation, water
recycling or reuse, more efficient treatment of
wastewater or stormwater, improvements in operation or
maintenance efficiencies, retrofit activities, or other
related activities, not at a Federal hydroelectric
facility.''.
(f) Review.--Not later than 180 days after the date of the
enactment of this Act, the Secretary of Energy shall complete a review
of the Energy Savings Performance Contract program to identify
statutory, regulatory, and administrative obstacles that prevent
Federal agencies from fully utilizing the program. In addition, this
review shall identify all areas for increasing program flexibility and
effectiveness, including audit and measurement verification
requirements, accounting for energy use in determining savings,
contracting requirements, including the identification of additional
qualified contractors, and energy efficiency services covered. The
Secretary shall report these findings to Congress and shall implement
identified administrative and regulatory changes to increase program
flexibility and effectiveness to the extent that such changes are
consistent with statutory authority.
(g) Extension of Authority.--Any energy savings performance
contract entered into under section 801 of the National Energy
Conservation Policy Act (42 U.S.C. 8287) after October 1, 2003, and
before the date of enactment of this Act, shall be deemed to have been
entered into pursuant to such section 801 as amended by subsection (a)
of this section.
SEC. 303. FEDERAL BUILDING PERFORMANCE STANDARDS.
Section 305(a) of the Energy Conservation and Production Act (42
U.S.C. 6834(a)) is amended--
(1) in paragraph (2)(A), by striking ``CABO Model Energy
Code, 1992'' and inserting ``the 2003 International Energy
Conservation Code''; and
(2) by adding at the end the following:
``(3) Revised federal building energy efficiency performance
standards.--
``(A) In general.--Not later than 1 year after the date of
enactment of this paragraph, the Secretary of Energy shall
establish, by rule, revised Federal building energy efficiency
performance standards that require that--
``(i) if life-cycle cost-effective, for new Federal
buildings--
``(I) such buildings be designed so as to
achieve energy consumption levels at least 30
percent below those of the version current as
of the date of enactment of this paragraph of
the ASHRAE Standard or the International Energy
Conservation Code, as appropriate; and
``(II) sustainable design principles are
applied to the siting, design, and construction
of all new and replacement buildings; and
``(ii) where water is used to achieve energy
efficiency, water conservation technologies shall be
applied to the extent they are life-cycle cost
effective.
``(B) Additional revisions.--Not later than 1 year after
the date of approval of each subsequent revision of the ASHRAE
Standard or the International Energy Conservation Code, as
appropriate, the Secretary of Energy shall determine, based on
the cost-effectiveness of the requirements under the
amendments, whether the revised standards established under
this paragraph should be updated to reflect the amendments.
``(C) Statement on compliance of new buildings.--In the
budget request of the Federal agency for each fiscal year and
each report submitted by the Federal agency under section
548(a) of the National Energy Conservation Policy Act (42
U.S.C. 8258(a)), the head of each Federal agency shall
include--
``(i) a list of all new Federal buildings owned,
operated, or controlled by the Federal agency; and
``(ii) a statement concerning whether the Federal
buildings meet or exceed the revised standards
established under this paragraph.''.
TITLE IV--PUBLIC HOUSING
SEC. 401. PUBLIC HOUSING CAPITAL FUND.
Section 9 of the United States Housing Act of 1937 (42 U.S.C.
1437g) is amended--
(1) in subsection (d)(1)--
(A) in subparagraph (I), by striking ``and'' at the
end;
(B) in subparagraph (J), by striking the period at
the end and inserting a semicolon; and
(C) by adding at the end the following new
subparagraphs:
``(K) improvement of energy and water-use
efficiency by installing fixtures and fittings that
conform to the American Society of Mechanical
Engineers/American National Standards Institute
standards A112.19.2-1998 and A112.18.1-2000, or any
revision thereto, applicable at the time of
installation, and by increasing energy efficiency and
water conservation by such other means as the Secretary
determines are appropriate; and
``(L) integrated utility management and capital
planning to maximize energy conservation and efficiency
measures.''; and
(2) in subsection (e)(2)(C)--
(A) by striking ``The'' and inserting the
following:
``(i) In general.--The''; and
(B) by adding at the end the following:
``(ii) Third party contracts.--Contracts
described in clause (i) may include contracts
for equipment conversions to less costly
utility sources, projects with resident-paid
utilities, and adjustments to frozen base year
consumption, including systems repaired to meet applicable building and
safety codes and adjustments for occupancy rates increased by
rehabilitation.
``(iii) Term of contract.--The total term
of a contract described in clause (i) shall not
exceed 20 years to allow longer payback periods
for retrofits, including windows, heating
system replacements, wall insulation, site-
based generation, advanced energy savings
technologies, including renewable energy
generation, and other such retrofits.''.
SEC. 402. GRANTS FOR ENERGY-CONSERVING IMPROVEMENTS FOR ASSISTED
HOUSING.
Section 251(b)(1) of the National Energy Conservation Policy Act
(42 U.S.C. 8231(1)) is amended--
(1) by striking ``financed with loans'' and inserting
``assisted'';
(2) by inserting after ``1959,'' the following: ``which are
eligible multifamily housing projects (as such term is defined
in section 512 of the Multifamily Assisted Housing Reform and
Affordability Act of 1997 (42 U.S.C. 1437f note)) and are
subject to mortgage restructuring and rental assistance
sufficiency plans under such Act,''; and
(3) by inserting after the period at the end of the first
sentence the following new sentence: ``Such improvements may
also include the installation of energy and water conserving
fixtures and fittings that conform to the American Society of
Mechanical Engineers/American National Standards Institute
standards A112.19.2-1998 and A112.18.1-2000, or any revision
thereto, applicable at the time of installation.''.
SEC. 403. ENERGY-EFFICIENT APPLIANCES.
In purchasing appliances, a public housing agency shall purchase
energy-efficient appliances that are Energy Star products or FEMP-
designated products, as such terms are defined in section 553 of the
National Energy Conservation Policy Act (as amended by this title),
unless the purchase of energy-efficient appliances is not cost-
effective to the agency.
SEC. 404. ENERGY EFFICIENCY STANDARDS.
Section 109 of the Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. 12709) is amended--
(1) in subsection (a)--
(A) in paragraph (1)--
(i) by striking ``1 year after the date of
the enactment of the Energy Policy Act of
1992'' and inserting ``September 30, 2004'';
(ii) in subparagraph (A), by striking
``and'' at the end;
(iii) in subparagraph (B), by striking the
period at the end and inserting ``; and''; and
(iv) by adding at the end the following:
``(C) rehabilitation and new construction of public
and assisted housing funded by HOPE VI revitalization
grants under section 24 of the United States Housing
Act of 1937 (42 U.S.C. 1437v), where such standards are
determined to be cost effective by the Secretary of
Housing and Urban Development.''; and
(B) in paragraph (2), by striking ``Council of
American'' and all that follows through ``90.1-1989')''
and inserting ``2003 International Energy Conservation
Code'';
(2) in subsection (b)--
(A) by striking ``within 1 year after the date of
the enactment of the Energy Policy Act of 1992'' and
inserting ``by September 30, 2004''; and
(B) by striking ``CABO'' and all that follows
through ``1989'' and inserting ``the 2003 International
Energy Conservation Code''; and
(3) in subsection (c)--
(A) in the heading, by striking ``Model Energy
Code'' and inserting ``The International Energy
Conservation Code''; and
(B) by striking ``CABO'' and all that follows
through ``1989'' and inserting ``the 2003 International
Energy Conservation Code''.
TITLE V--RELIABILITY STANDARDS
SEC. 501. ELECTRIC RELIABILITY STANDARDS.
(a) In General.--Part II of the Federal Power Act (16 U.S.C 824 et
seq.) is amended by adding at the end the following:
``SEC. 215. ELECTRIC RELIABILITY.
``(a) Definitions.--For purposes of this section:
``(1) The term `bulk-power system' means--
``(A) facilities and control systems necessary for
operating an interconnected electric energy
transmission network (or any portion thereof); and
``(B) electric energy from generation facilities
needed to maintain transmission system reliability.
The term does not include facilities used in the local
distribution of electric energy.
``(2) The terms `Electric Reliability Organization' and
`ERO' mean the organization certified by the Commission under
subsection (c) the purpose of which is to establish and enforce
reliability standards for the bulk-power system, subject to
Commission review.
``(3) The term `reliability standard' means a requirement,
approved by the Commission under this section, to provide for
reliable operation of the bulk-power system. The term includes
requirements for the operation of existing bulk-power system
facilities and the design of planned additions or modifications
to such facilities to the extent necessary to provide for
reliable operation of the bulk-power system, but the term does
not include any requirement to enlarge such facilities or to
construct new transmission capacity or generation capacity.
``(4) The term `reliable operation' means operating the
elements of the bulk-power system within equipment and electric
system thermal, voltage, and stability limits so that
instability, uncontrolled separation, or cascading failures of
such system will not occur as a result of a sudden disturbance
or unanticipated failure of system elements.
``(5) The term `Interconnection' means a geographic area in
which the operation of bulk-power system components is
synchronized such that the failure of 1 or more of such
components may adversely affect the ability of the operators of
other components within the system to maintain reliable
operation of the facilities within their control.
``(6) The term `transmission organization' means a Regional
Transmission Organization, Independent System Operator,
independent transmission provider, or other transmission
organization finally approved by the Commission for the
operation of transmission facilities.
``(7) The term `regional entity' means an entity having
enforcement authority pursuant to subsection (e)(4).
``(b) Jurisdiction and Applicability.--(1) The Commission shall
have jurisdiction, within the United States, over the ERO certified by
the Commission under subsection (c), any regional entities, and all
users, owners and operators of the bulk-power system, including but not
limited to the entities described in section 201(f), for purposes of
approving reliability standards established under this section and
enforcing compliance with this section. All users, owners and operators
of the bulk-power system shall comply with reliability standards that
take effect under this section.
``(2) The Commission shall issue a final rule to implement the
requirements of this section not later than 180 days after the date of
enactment of this section.
``(c) Certification.--Following the issuance of a Commission rule
under subsection (b)(2), any person may submit an application to the
Commission for certification as the Electric Reliability Organization.
The Commission may certify 1 such ERO if the Commission determines that
such ERO--
``(1) has the ability to develop and enforce, subject to
subsection (e)(2), reliability standards that provide for an
adequate level of reliability of the bulk-power system; and
``(2) has established rules that--
``(A) assure its independence of the users and
owners and operators of the bulk-power system, while
assuring fair stakeholder representation in the
selection of its directors and balanced decisionmaking
in any ERO committee or subordinate organizational
structure;
``(B) allocate equitably reasonable dues, fees, and
other charges among end users for all activities under
this section;
``(C) provide fair and impartial procedures for
enforcement of reliability standards through the
imposition of penalties in accordance with subsection
(e) (including limitations on activities, functions, or
operations, or other appropriate sanctions);
``(D) provide for reasonable notice and opportunity
for public comment, due process, openness, and balance
of interests in developing reliability standards and
otherwise exercising its duties; and
``(E) provide for taking, after certification,
appropriate steps to gain recognition in Canada and
Mexico.
``(d) Reliability Standards.--(1) The Electric Reliability
Organization shall file each reliability standard or modification to a
reliability standard that it proposes to be made effective under this
section with the Commission.
``(2) The Commission may approve, by rule or order, a proposed
reliability standard or modification to a reliability standard if it
determines that the standard is just, reasonable, not unduly
discriminatory or preferential, and in the public interest. The
Commission shall give due weight to the technical expertise of the
Electric Reliability Organization with respect to the content of a
proposed standard or modification to a reliability standard and to the
technical expertise of a regional entity organized on an
Interconnection-wide basis with respect to a reliability standard to be
applicable within that Interconnection, but shall not defer with
respect to the effect of a standard on competition. A proposed standard
or modification shall take effect upon approval by the Commission.
``(3) The Electric Reliability Organization shall rebuttably
presume that a proposal from a regional entity organized on an
Interconnection-wide basis for a reliability standard or modification
to a reliability standard to be applicable on an Interconnection-wide
basis is just, reasonable, and not unduly discriminatory or
preferential, and in the public interest.
``(4) The Commission shall remand to the Electric Reliability
Organization for further consideration a proposed reliability standard
or a modification to a reliability standard that the Commission
disapproves in whole or in part.
``(5) The Commission, upon its own motion or upon complaint, may
order the Electric Reliability Organization to submit to the Commission
a proposed reliability standard or a modification to a reliability
standard that addresses a specific matter if the Commission considers
such a new or modified reliability standard appropriate to carry out
this section.
``(6) The final rule adopted under subsection (b)(2) shall include
fair processes for the identification and timely resolution of any
conflict between a reliability standard and any function, rule, order,
tariff, rate schedule, or agreement accepted, approved, or ordered by
the Commission applicable to a transmission organization. Such
transmission organization shall continue to comply with such function,
rule, order, tariff, rate schedule or agreement accepted approved, or
ordered by the Commission until--
``(A) the Commission finds a conflict exists between a
reliability standard and any such provision;
``(B) the Commission orders a change to such provision
pursuant to section 206 of this part; and
``(C) the ordered change becomes effective under this part.
If the Commission determines that a reliability standard needs to be
changed as a result of such a conflict, it shall order the ERO to
develop and file with the Commission a modified reliability standard
under paragraph (4) or (5) of this subsection.
``(e) Enforcement.--(1) The ERO may impose, subject to paragraph
(2), a penalty on a user or owner or operator of the bulk-power system
for a violation of a reliability standard approved by the Commission
under subsection (d) if the ERO, after notice and an opportunity for a
hearing--
``(A) finds that the user or owner or operator has violated
a reliability standard approved by the Commission under
subsection (d); and
``(B) files notice and the record of the proceeding with
the Commission.
``(2) A penalty imposed under paragraph (1) may take effect not
earlier than the 31st day after the ERO files with the Commission
notice of the penalty and the record of proceedings. Such penalty shall
be subject to review by the Commission, on its own motion or upon
application by the user, owner or operator that is the subject of the
penalty filed within 30 days after the date such notice is filed with
the Commission. Application to the Commission for review, or the
initiation of review by the Commission on its own motion, shall not
operate as a stay of such penalty unless the Commission otherwise
orders upon its own motion or upon application by the user, owner or
operator that is the subject of such penalty. In any proceeding to
review a penalty imposed under paragraph (1), the Commission, after
notice and opportunity for hearing (which hearing may consist solely of
the record before the ERO and opportunity for the presentation of
supporting reasons to affirm, modify, or set aside the penalty), shall
by order affirm, set aside, reinstate, or modify the penalty, and, if
appropriate, remand to the ERO for further proceedings. The Commission
shall implement expedited procedures for such hearings.
``(3) On its own motion or upon complaint, the Commission may order
compliance with a reliability standard and may impose a penalty against
a user or owner or operator of the bulk-power system if the Commission
finds, after notice and opportunity for a hearing, that the user or
owner or operator of the bulk-power system has engaged or is about to
engage in any acts or practices that constitute or will constitute a
violation of a reliability standard.
``(4) The Commission shall issue regulations authorizing the ERO to
enter into an agreement to delegate authority to a regional entity for
the purpose of proposing reliability standards to the ERO and enforcing
reliability standards under paragraph (1) if--
``(A) the regional entity is governed by--
``(i) an independent board;
``(ii) a balanced stakeholder board; or
``(iii) a combination independent and balanced
stakeholder board;
``(B) the regional entity otherwise satisfies the
provisions of subsection (c)(1) and (2); and
``(C) the agreement promotes effective and efficient
administration of bulk-power system reliability.
The Commission may modify such delegation. The ERO and the Commission
shall rebuttably presume that a proposal for delegation to a regional
entity organized on an Interconnection-wide basis promotes effective
and efficient administration of bulk-power system reliability and
should be approved. Such regulation may provide that the Commission may
assign the ERO's authority to enforce reliability standards under
paragraph (1) directly to a regional entity consistent with the
requirements of this paragraph.
``(5) The Commission may take such action as is necessary or
appropriate against the ERO or a regional entity to ensure compliance
with a reliability standard or any Commission order affecting the ERO
or a regional entity.
``(6) Any penalty imposed under this section shall bear a
reasonable relation to the seriousness of the violation and shall take
into consideration the efforts of such user, owner, or operator to
remedy the violation in a timely manner.
``(f) Changes in Electric Reliability Organization Rules.--The
Electric Reliability Organization shall file with the Commission for
approval any proposed rule or proposed rule change, accompanied by an
explanation of its basis and purpose. The Commission, upon its own
motion or complaint, may propose a change to the rules of the ERO. A
proposed rule or proposed rule change shall take effect upon a finding
by the Commission, after notice and opportunity for comment, that the
change is just, reasonable, not unduly discriminatory or preferential,
is in the public interest, and satisfies the requirements of subsection
(c).
``(g) Reliability Reports.--The ERO shall conduct periodic
assessments of the reliability and adequacy of the bulk-power system in
North America.
``(h) Coordination With Canada and Mexico.--The President is urged
to negotiate international agreements with the governments of Canada
and Mexico to provide for effective compliance with reliability
standards and the effectiveness of the ERO in the United States and
Canada or Mexico.
``(i) Savings Provisions.--(1) The ERO shall have authority to
develop and enforce compliance with reliability standards for only the
bulk-power system.
``(2) This section does not authorize the ERO or the Commission to
order the construction of additional generation or transmission
capacity or to set and enforce compliance with standards for adequacy
or safety of electric facilities or services.
``(3) Nothing in this section shall be construed to preempt any
authority of any State to take action to ensure the safety, adequacy,
and reliability of electric service within that State, as long as such
action is not inconsistent with any reliability standard.
``(4) Within 90 days of the application of the Electric Reliability
Organization or other affected party, and after notice and opportunity
for comment, the Commission shall issue a final order determining
whether a State action is inconsistent with a reliability standard,
taking into consideration any recommendation of the ERO.
``(5) The Commission, after consultation with the ERO and the State
taking action, may stay the effectiveness of any State action, pending
the Commission's issuance of a final order.
``(j) Regional Advisory Bodies.--The Commission shall establish a
regional advisory body on the petition of at least \2/3\ of the States
within a region that have more than \1/2\ of their electric load served
within the region. A regional advisory body shall be composed of 1
member from each participating State in the region, appointed by the
Governor of each State, and may include representatives of agencies,
States, and provinces outside the United States. A regional advisory
body may provide advice to the Electric Reliability Organization, a
regional entity, or the Commission regarding the governance of an
existing or proposed regional entity within the same region, whether a
standard proposed to apply within the region is just, reasonable, not
unduly discriminatory or preferential, and in the public interest,
whether fees proposed to be assessed within the region are just,
reasonable, not unduly discriminatory or preferential, and in the
public interest and any other responsibilities requested by the
Commission. The Commission may give deference to the advice of any such
regional advisory body if that body is organized on an Interconnection-
wide basis.
``(k) Alaska and Hawaii.--The provisions of this section do not
apply to Alaska or Hawaii.''.
(b) Status of ERO.--The Electric Reliability Organization certified
by the Federal Energy Regulatory Commission under section 215(c) of the
Federal Power Act and any regional entity delegated enforcement
authority pursuant to section 215(e)(4) of that Act are not
departments, agencies, or instrumentalities of the United States
Government.
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