[Congressional Record Volume 150, Number 97 (Wednesday, July 14, 2004)]
[Senate]
[Pages S8131-S8132]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SMITH:
  S. 2655. A bill to amend the Internal Revenue Code of 1986 to provide 
a credit for the production of water and energy efficient appliances; 
to the Committee on Finance.
  Mr. SMITH. Mr. President, water is a precious resource that we must 
begin to manage as efficiently as possible. In several parts of the 
country, development is constrained by the lack of good quality water 
and water infrastructure. Having dealt with the water crisis in the 
Klamath Basin in 2001, when 1,200 farmers and ranchers had their 
irrigation water cut off, I can tell you firsthand that the conflicts 
between competing human and environmental needs are real and are 
growing.
  Benjamin Franklin wrote in Poor Richard's Almanack in 1746, ``When 
the well is dry, we know the worth of water.'' Well, in parts of the 
West, the well is quickly running dry. As the Los Angeles Times 
reported on June 18, 2004, the Western United States may be facing the 
biggest drought in 500 years. The current effects in the Colorado River 
Basin are considerably worse than those experienced during the Dust 
Bowl years of the 1930s. The 10-year drought in the Colorado River 
Basin has produced the lowest flows on record, straining an important 
water supply resource for millions of people.
  One immediate way to stretch available water supplies, as well as 
energy resources, is to provide incentives for water and energy 
efficient appliances. That is why I am introducing a bill to provide 
tax credits for the manufacture of highly efficient residential clothes 
washers, dishwashers and refrigerators. The bill builds on the tax 
credits for energy-efficient appliances pending before the Senate, 
which--if enacted--will expire in 2007. Under this bill, for the first 
time, water efficiency is included in the eligibility criteria for the 
tax credits, and the energy efficiency criteria are higher. This bill 
provides graduated credits to manufacturers. The more efficient the 
dishwasher, clothes washer or refrigerator, the higher the credit.
  The daily per capita water use around the world varies significantly. 
The U.N. Population Fund cites that in the United States, we use an 
estimated 152 gallons per day per person, while in the United Kingdom 
they use 388 gallons. Africans use 12 gallons a day.
  According to the Rocky Mountain Institute, 47 percent of all water 
supplied to communities in the United States by public and private 
utilities is for residential water use. Of that, clothes washers 
account for approximately 22 percent of residential use, while 
dishwashers account for about 3 percent.
  I firmly believe that we can use technology to improve our 
environmental stewardship. Water efficiency can extend our finite water 
supplies, and also reduce the amount of wastewater that communities 
must treat.
  High efficiency clothes washers use 20 to 30 gallons per load, 
compared to the 40 to 45 gallons top-loading machines use. The average 
annual household water savings is estimated to be 3,500 to 6,000 
gallons. Energy savings estimates range from 68 to 70 percent compared 
to older, standard clothes washers. High efficiency dishwashers use 39 
percent less energy to heat the water and 39 percent less water than 
standard models. Refrigerators must use at least 30 percent less energy 
than comparably sized models to receive a credit under this bill.
  While plumbing fixtures such as toilets, showerheads and faucets must 
meet U.S. water efficiency standards, water-using appliances are not 
governed by any water-efficiency standards. We can, however, provide an 
incentive to lower the cost of these water and energy saving 
appliances, which are generally more costly to manufacture than 
standard models.
  Mr. President, I would urge my colleagues to join me in cosponsoring 
this important bill to provide incentives for water and energy 
efficient residential appliances. I ask unanimous consent that the text 
of the legislation be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2655

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Water and Energy Efficient 
     Appliances Act of 2004''.

     SEC. 2. CREDIT FOR WATER AND 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) is amended by adding at the end the 
     following new section:

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

       ``(a) Allowance of Credit.--
       ``(1) In general.--For purposes of section 38, the water 
     and energy efficient appliance credit determined under this 
     section for the taxable year is an amount equal to the sum of 
     the amounts determined under paragraph (2) for qualified 
     water and energy efficient appliances produced by the 
     taxpayer during the calendar year ending with or within the 
     taxable year.
       ``(2) Amount.--The amount determined under this paragraph 
     for any category described in subsection (b)(2)(B) shall be 
     the product of the applicable amount for appliances in the 
     category and the eligible production for the category.
       ``(b) Applicable Amount; Eligible Production.--For purposes 
     of subsection (a)--
       ``(1) Applicable amount.--The applicable amount is--
       ``(A) $25, in the case of a dishwasher manufactured with an 
     EF of at least 0.65,
       ``(B) $50, in the case of a dishwasher manufactured with an 
     EF of at least 0.69,
       ``(C) $75, in the case of a clothes washer which is 
     manufactured with an MEF of at least a 1.80 and a WF of no 
     more than 7.5,
       ``(D) $100, in the case of a refrigerator which consumes at 
     least 30 percent less kilowatt hours per year than the energy 
     conservation standards for refrigerators promulgated by the 
     Department of Energy and effective on July 1, 2001, and
       ``(E) $150, in the case of a clothes washer which is 
     manufactured with an MEF of at least a 1.80 and a WF of no 
     more than 5.5.
       ``(2) Eligible production.--
       ``(A) In general.--The eligible production of each category 
     of qualified water and energy efficient appliances is the 
     excess of--
       ``(i) the number of appliances in such category which are 
     produced by the taxpayer during such calendar year, over
       ``(ii) the average number of appliances in such category 
     which were produced by the taxpayer during calendar years 
     2002, 2003, and 2004.
       ``(B) Categories.--For purposes of subparagraph (A), the 
     categories are--
       ``(i) dishwashers described in paragraph (1)(A),
       ``(ii) dishwashers described in paragraph (1)(B),
       ``(iii) clothes washers described in paragraph (1)(C),
       ``(iv) clothes washers described in paragraph (1)(E), and
       ``(v) refrigerators described in paragraph (1)(D).
       ``(c) Limitation on Maximum Credit.--
       ``(1) In general.--The amount of credit allowed under 
     subsection (a) with respect to a taxpayer for all taxable 
     years shall not exceed $65,000,000, of which not more than 
     $15,000,000 may be allowed with respect to the credit 
     determined by using the applicable amount under subsections 
     (b)(1)(A) and (b)(1)(B).
       ``(2) Limitation based on gross receipts.--The credit 
     allowed under subsection (a) with respect to a taxpayer for 
     the taxable

[[Page S8132]]

     year shall not exceed an amount equal to 2 percent of the 
     average annual gross receipts of the taxpayer for the 3 
     taxable years preceding the taxable year in which the credit 
     is determined.
       ``(3) Gross receipts.--For purposes of this subsection, the 
     rules of paragraphs (2) and (3) of section 448(c) shall 
     apply.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Qualified water and energy efficient appliance.--The 
     term `qualified water and energy efficient appliance' means--
       ``(A) a dishwasher described in subparagraph (A) or (B) or 
     subsection (b)(1),
       ``(B) a clothes washer described in subparagraph (C) or (E) 
     of subsection (b)(1), or
       ``(C) a refrigerator described in subparagraph (D) of 
     subsection (b)(1).
       ``(2) Dishwasher.--The term `dishwasher' means a standard 
     residential dishwasher with a capacity of 8 or more place 
     settings plus 6 serving pieces.
       ``(3) Clothes washer.--The term `clothes washer' means a 
     residential clothes washer, including a residential style 
     coin operated washer.
       ``(4) Refrigerator.--The term `refrigerator' means an 
     automatic defrost refrigerator-freezer which has an internal 
     volume of at least 16.5 cubic feet.
       ``(5) EF.--The term `EF' means Energy Factor (as determined 
     by the Secretary of Energy).
       ``(6) MEF.--The term `MEF' means Modified Energy Factor (as 
     determined by the Secretary of Energy).
       ``(7) WF.--The term `WF' means Water Factor (as determined 
     by the Secretary of Energy).
       ``(e) Special Rules.--
       ``(1) In general.--Rules similar to the rules of 
     subsections (c), (d), and (e) of section 52 shall apply for 
     purposes of this section.
       ``(2) Aggregation rules.--All persons treated as a single 
     employer under subsection (a) or (b) of section 52 or 
     subsection (m) or (o) of section 414 shall be treated as 1 
     person for purposes of subsection (a).
       ``(f) Verification.--The taxpayer shall submit such 
     information or certification as the Secretary, in 
     consultation with the Secretary of Energy, determines 
     necessary to claim the credit amount under subsection (a).
       ``(g) Termination.--This section shall not apply to water 
     and energy efficient appliances produced after December 31, 
     2010.''.
       (b) Credit Made Part of General Business Credit.--Section 
     38(b) of such Code (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 water and energy efficient appliance credit 
     determined under section 45G(a).''.
       (c) Limitation on Carryback.--Section 39(d) of such Code 
     (relating to transition rules) is amended by adding at the 
     end the following new paragraph:
       ``(11) No carryback of water and energy efficient appliance 
     credit before effective date.--No portion of the unused 
     business credit for any taxable year which is attributable to 
     the water and energy efficient appliance credit determined 
     under section 45G may be carried to a taxable year ending 
     before January 1, 2008.''.
       (d) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 of such Code is 
     amended by adding at the end the following new item:

``Sec. 45G. Water and energy efficient appliance credit.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to appliances produced after December 31, 2007, 
     in taxable years ending after such date.
                                 ______