[Congressional Record Volume 151, Number 62 (Thursday, May 12, 2005)]
[Senate]
[Pages S5154-S5156]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SMITH (for himself, Mrs. Lincoln, and Mr. Grassley):
  S. 1022. A bill to amend the Internal Revenue Code of 1986 to allow 
for an energy efficient appliance credit; to the Committee on Finance.
  Mr. SMITH. Mr. President, water and energy are precious resources 
that we must manage as efficiently as possible. That is why I am 
joining with my colleagues Senator Lincoln and Finance Chairman 
Grassley to introduce the ``Resource Efficient Appliance Incentives Act 
of 2005.'' This bill would provide for manufacturers' tax credits of 
varying levels for certain energy and water efficient home appliances.
  Under this bill, for the first time, water efficiency is included in 
the eligibility criteria for the tax credits for clothes washers. This 
bill provides graduated credits to appliance manufacturers. The more 
efficient the dishwasher, clothes washer or refrigerator, the higher 
the credit.
  To spur increased production, the bill provides that these tax 
credits would apply only to production that exceeds historical 
production levels, and requires a three-year rolling average to 
calculated this production baseline. The bill only applies to 
appliances manufactured in the United States. This will encourage 
innovation and investment in domestic manufacturing facilities, which 
employ about 95,000 Americans.
  Energy savings from this bill would be significant. Super-energy 
efficient and water conserving clothes washers would have to use at 
least 65 percent less energy than the 2004 federal standard to qualify 
for the higher credit. Refrigerators must exceed the 2001 energy 
conservation standards for comparably sized models by at least 15 
percent to receive a credit under this bill.
  This bill will not only save energy, and reduce the consumers' energy 
bills over the life of the appliance. It is estimated that, over twenty 
years, the credit would reduce the amount of water used to wash clothes 
by approximately a trillion gallons, the amount used in two years by a 
city the size of Phoenix, Arizona.
  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.
  As Benjamin Franklin observed, ``When the well is dry, we know the 
worth of water.'' In many parts of the arid west, the well is running 
dry on a regular basis. The 10-year drought in the Colorado River 
Basin, which has seen relief this year, had produced the lowest flows 
on record last year, straining an important resource for millions of 
people. The Columbia River Basin has also experienced below average 
flows in recent years.
  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 88 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.
  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 legislation be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

[[Page S5155]]

                                S. 1022

       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 ``Resource Efficient Appliance 
     Incentives Act of 2005.''.

     SEC. 2. 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) is amended by adding at the end the 
     following new section:

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

       ``(a) General Rule.--
       ``(1) In general.--For purposes of section 38, the energy 
     efficient appliance credit determined under this section for 
     any taxable year is an amount equal to the sum of the credit 
     amounts determined under paragraph (2) for each type of 
     qualified energy efficient appliance produced by the taxpayer 
     during the calendar year ending with or within the taxable 
     year.
       ``(2) Credit amounts.--The credit amount determined for any 
     type of qualified energy efficient appliance is--
       ``(A) the applicable amount determined under subsection (b) 
     with respect to such type, multiplied by
       ``(B) the eligible production for such type.
       ``(b) Applicable Amount.--
       ``(1) In general.--For purposes of subsection (a)--
       ``(A) Dishwashers.--The applicable amount is the energy 
     savings amount in the case of a dishwasher which--
       ``(i) is manufactured in calendar year 2006 or 2007, and
       ``(ii) meets the requirements of the Energy Star program 
     which are in effect for dishwashers in 2007.
       ``(B) Clothes washers.--The applicable amount is--
       ``(i) $50, in the case of a clothes washer which--

       ``(I) is manufactured in calendar year 2005, and
       ``(II) has an MEF of at least 1.42,

       ``(ii) $100, in the case of a clothes washer which--

       ``(I) is manufactured in calendar year 2005, 2006, or 2007, 
     and
       ``(II) meets the requirements of the Energy Star program 
     which are in effect for clothes washers in 2007, and

       ``(iii) the energy and water savings amount, in the case of 
     a clothes washer which--

       ``(I) is manufactured in calendar year 2008, 2009, or 2010, 
     and
       ``(II) meets the requirements of the Energy Star program 
     which are in effect for clothes washers in 2010.

       ``(C) Refrigerators.--
       ``(i) 15 percent savings.--The applicable amount is $75 in 
     the case of a refrigerator which--

       ``(I) is manufactured in calendar year 2005 or 2006, and
       ``(II) consumes at least 15 percent less kilowatt hours per 
     year than the 2001 energy conservation standard.

       ``(ii) 20 percent savings.--In the case of a refrigerator 
     which consumes at least 20 percent less kilowatt hours per 
     year than the 2001 energy conservation standards, the 
     applicable amount is--

       ``(I) $125 for a refrigerator which is manufactured in 
     calendar year 2005, 2006, or 2007, and
       ``(II) $100 for a refrigerator which is manufactured in 
     calendar year 2008.

       ``(iii) 25 percent savings.--In the case of a refrigerator 
     which consumes at least 25 percent less kilowatt hours per 
     year than the 2001 energy conservation standards, the 
     applicable amount is--

       ``(I) $175 for a refrigerator which is manufactured in 
     calendar year 2005, 2006, or 2007, and
       ``(II) $150 for a refrigerator which is manufactured in 
     calendar year 2008, 2009, or 2010.

       ``(2) Energy savings amount.--For purposes of paragraph 
     (1)(A)--
       ``(A) In general.--The energy savings amount is the lesser 
     of--
       ``(i) the product of--

       ``(I) $3, and
       ``(II) 100 multiplied by the energy savings percentage, or

       ``(ii) $100.
       ``(B) Energy savings percentage.--For purposes of 
     subparagraph (A), the energy savings percentage is the ratio 
     of--
       ``(i) the EF required by the Energy Star program for 
     dishwashers in 2007 minus the EF required by the Energy Star 
     program for dishwashers in 2005, to
       ``(ii) the EF required by the Energy Star program for 
     dishwashers in 2007.
       ``(3) Energy and water savings amount.--For purposes of 
     paragraph (1)(B)(iii)--
       ``(A) In general.--The energy and water savings amount is 
     the lesser of--
       ``(i) the product of--

       ``(I) $10, and
       ``(II) 100 multiplied by the energy and water savings 
     percentage, or

       ``(ii) $200.
       ``(B) Energy and water savings percentage.--For purposes of 
     subparagraph (A), the energy and water savings percentage is 
     the average of the MEF savings percentage and the WF savings 
     percentage.
       ``(C) Mef savings percentage.--For purposes of this 
     subparagraph, the MEF savings percentage is the ratio of--
       ``(i) the MEF required by the Energy Star program for 
     clothes washers in 2010 minus the MEF required by the Energy 
     Star program for clothes washers in 2007, to
       ``(ii) the MEF required by the Energy Star program for 
     clothes washers in 2010.
       ``(D) Wf savings percentage.--For purposes of this 
     subparagraph, the WF savings percentage is the ratio of--
       ``(i) the WF required by the Energy Star program for 
     clothes washers in 2010 minus the WF required by the Energy 
     Star program for clothes washers in 2007, to
       ``(ii) the WF required by the Energy Star program for 
     clothes washers in 2010.
       ``(c) Eligible Production.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the eligible production in a calendar year with respect 
     to each type of energy efficient appliance is the excess of--
       ``(A) the number of appliances of such type which are 
     produced by the taxpayer in the United States during such 
     calendar year, over
       ``(B) the average number of appliances of such type which 
     were produced by the taxpayer (or any predecessor) in the 
     United States during the preceding 3-calendar year period.
       ``(2) Special rule for refrigerators.--The eligible 
     production in a calendar year with respect to each type of 
     refrigerator described in subsection (b)(1)(C) is the excess 
     of--
       ``(A) the number of appliances of such type which are 
     produced by the taxpayer in the United States during such 
     calendar year, over
       ``(B) 110 percent of the average number of appliances of 
     such type which were produced by the taxpayer (or any 
     predecessor) in the United States during the preceding 3-
     calendar year period.
       ``(3) Special rule for 2005 production.--For purposes of 
     determining eligible production for calendar year 2005--
       ``(A) only production after the date of enactment of this 
     section shall be taken into account under paragraphs (1)(A) 
     and (2)(A), and
       ``(B) the amount taken into account under paragraphs (1)(B) 
     and (2)(B) shall be an amount which bears the same ratio to 
     the amount which would (but for this paragraph) be taken into 
     account under such paragraph as--
       ``(i) the number of days in calendar year 2005 after the 
     date of enactment of this section, bears to
       ``(ii) 365.
       ``(d) Types of Energy Efficient Appliance.--For purposes of 
     this section, the types of energy efficient appliances are--
       ``(1) dishwashers described in subsection (b)(1)(A),
       ``(2) clothes washers described in subsection (b)(1)(B)(i),
       ``(3) clothes washers described in subsection 
     (b)(1)(B)(ii),
       ``(4) clothes washers described in subsection 
     (b)(1)(B)(iii),
       ``(5) refrigerators described in subsection (b)(1)(C)(i),
       ``(6) refrigerators described in subsection 
     (b)(1)(C)(ii)(I),
       ``(7) refrigerators described in subsection 
     (b)(1)(C)(ii)(II),
       ``(8) refrigerators described in subsection 
     (b)(1)(C)(iii)(I), and
       ``(9) refrigerators described in subsection 
     (b)(1)(C)(iii)(II).
       ``(e) Limitations.--
       ``(1) Aggregate credit amount allowed.--The aggregate 
     amount of credit allowed under subsection (a) with respect to 
     a taxpayer for any taxable year shall not exceed $75,000,000 
     reduced by the amount of the credit allowed under subsection 
     (a) to the taxpayer (or any predecessor) for all prior 
     taxable years.
       ``(2) Amount allowed for certain appliances.--
       ``(A) In general.--In the case of appliances described in 
     subparagraph (C), the aggregate amount of the credit allowed 
     under subsection (a) with respect to a taxpayer for any 
     taxable year shall not exceed $20,000,000 reduced by the 
     amount of the credit allowed under subsection (a) to the 
     taxpayer (or any predecessor) for all prior taxable years 
     with respect to such appliances.
       ``(B) Election to increase allowable credit.--In the case 
     of any taxpayer who makes an election under this 
     subparagraph--
       ``(i) subparagraph (A) shall be applied by substituting 
     `$25,000,000' for `$20,000,000', and
       ``(ii) the aggregate amount of the credit allowed under 
     subsection (a) with respect to such taxpayer for any taxable 
     year for appliances described in subparagraph (C) and the 
     additional appliances described in subparagraph (D) shall not 
     exceed $50,000,000 reduced by the amount of the credit 
     allowed under subsection (a) to the taxpayer (or any 
     predecessor) for all prior taxable years with respect to such 
     appliances.
       ``(C) Appliances described.--The appliances described in 
     this subparagraph are--
       ``(i) clothes washers described in subsection (b)(1)(B)(i), 
     and
       ``(ii) refrigerators described in subsection (b)(1)(C)(i).
       ``(D) Additional appliances.--The additional appliances 
     described in this subparagraph are--
       ``(i) refrigerators described in subsection 
     (b)(1)(C)(ii)(I), and
       ``(ii) refrigerators described in subsection 
     (b)(1)(C)(ii)(II).
       ``(3) Limitation based on gross receipts.--The credit 
     allowed under subsection

[[Page S5156]]

     (a) with respect to a taxpayer for the taxable year shall not 
     exceed an amount equal to 2 percent of the average annual 
     gross receipts of the taxpayer for the 3 taxable years 
     preceding the taxable year in which the credit is determined.
       ``(4) Gross receipts.--For purposes of this subsection, the 
     rules of paragraphs (2) and (3) of section 448(c) shall 
     apply.
       ``(f) Definitions.--For purposes of this section--
       ``(1) Qualified energy efficient appliance.--The term 
     `qualified energy efficient appliance' means--
       ``(A) any dishwasher described in subsection (b)(1)(A),
       ``(B) any clothes washer described in subsection (b)(1)(B), 
     and
       ``(C) any refrigerator described in subsection (b)(1)(C).
       ``(2) Dishwasher.--The term `dishwasher' means a 
     residential dishwasher subject to the energy conservation 
     standards established by the Department of Energy.
       ``(3) Clothes washer.--The term `clothes washer' means a 
     residential model clothes washer, including a residential 
     style coin operated washer.
       ``(4) Refrigerator.--The term `refrigerator' means a 
     residential model automatic defrost refrigerator-freezer 
     which has an internal volume of at least 16.5 cubic feet.
       ``(5) Mef.--The term `MEF' means the modified energy factor 
     established by the Department of Energy for compliance with 
     the Federal energy conservation standards.
       ``(6) Ef.--The term `EF' means the energy factor 
     established by the Department of Energy for compliance with 
     the Federal energy conservation standards.
       ``(7) Wf.--The term `WF' means Water Factor (as determined 
     by the Secretary of Energy).
       ``(8) Produced.--The term `produced' includes manufactured.
       ``(9) 2001 energy conservation standard.--The term `2001 
     energy conservation standard' means the energy conservation 
     standards promulgated by the Department of Energy and 
     effective July 1, 2001.
       ``(g) 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 group.--
       ``(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 producer.
       ``(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.
       ``(3) Verification.--No amount shall be allowed as a credit 
     under subsection (a) with respect to which the taxpayer has 
     not submitted such information or certification as the 
     Secretary, in consultation with the Secretary of Energy, 
     determines necessary.''.
       (b) Conforming Amendment.--Section 38(b) of the Internal 
     Revenue Code of 1986 (relating to general business credit) is 
     amended by striking ``plus'' at the end of paragraph (18), by 
     striking the period at the end of paragraph (19) and 
     inserting ``, plus'', and by adding at the end the following 
     new paragraph:
       ``(20) the energy efficient appliance credit determined 
     under section 45J(a).''.
       (c) 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. 45J. Energy efficient appliance credit''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to appliances produced after the date of the 
     enactment of this Act, in taxable years ending after such 
     date.
                                 ______