[Congressional Record Volume 162, Number 17 (Thursday, January 28, 2016)]
[Senate]
[Pages S392-S396]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 3132. Mr. CARDIN submitted an amendment intended to be proposed to
amendment SA 2953 proposed by Ms. Murkowski to the bill S. 2012, to
provide for the modernization of the energy policy of the United
States, and for other purposes; which was ordered to lie on the table;
as follows:
At the end of subtitle A of title I, add the following:
SEC. 10__. PERMANENT EXTENSION AND MODIFICATION OF DEDUCTION
FOR ENERGY-EFFICIENT COMMERCIAL BUILDINGS.
(a) Extension and Modification.--
(1) Extension.--Section 179D of the Internal Revenue Code
of 1986 is amended by striking subsection (h).
(2) Inclusion of multifamily buildings.--
(A) In general.--Subparagraph (B) of section 179D(c)(1) of
such Code is amended by striking ``building'' and inserting
``commercial building or multifamily building''.
(B) Definitions.--Subsection (c) of section 179D of such
Code is amended by adding at the end the following new
paragraphs:
``(3) Commercial building.--The term `commercial building'
means a building with a primary use or purpose other than as
residential housing.
``(4) Multifamily building.--The term `multifamily
building' means a structure of 5 or more dwelling units with
a primary use as residential housing, and includes such
buildings owned and operated as a condominium, cooperative,
or other common interest community.''.
(b) Increase in Maximum Amount of Deduction.--
(1) In general.--Subparagraph (A) of section 179D(b)(1) of
the Internal Revenue Code of 1986 is amended by striking
``$1.80'' and inserting ``$3.00''.
(2) Partial allowance.--Paragraph (1) of section 179D(d) of
such Code is amended to read as follows:
``(1) Partial allowance.--
``(A) In general.--Except as provided in subsection (f),
if--
``(i) the requirement of subsection (c)(1)(D) is not met,
but
``(ii) there is a certification in accordance with
paragraph (6) that--
``(I) any system referred to in subsection (c)(1)(C)
satisfies the energy-savings targets established by the
Secretary under subparagraph (B) with respect to such system,
or
``(II) the systems referred to in subsection (c)(1)(C)(ii)
and subsection (c)(1)(C)(iii) together satisfy the energy-
savings targets established by the Secretary under
subparagraph (B) with respect to such systems,
then the requirement of subsection (c)(1)(D) shall be treated
as met with respect to such system or systems, 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 described in clause (ii)(I) by substituting `$1.00'
for `$3.00' and to such property described in clause (ii)(II)
by substituting `$2.20' for `$3.00'.
``(B) Regulations.--
``(i) In general.--The Secretary, after consultation with
the Secretary of Energy, shall promulgate regulations
establishing a target for each system described in subsection
(c)(1)(C) which, if such targets were met for all such
systems, the property would meet the requirements of
subsection (c)(1)(D).
``(ii) Safe harbor for combined systems.--The Secretary,
after consultation with the Secretary of Energy, and not
later than 6 months after the date of the enactment of the
Energy Policy Modernization
[[Page S393]]
Act of 2015, shall promulgate regulations regarding combined
envelope and mechanical system performance that detail
appropriate components, efficiency levels, or other relevant
information for the systems referred to in subsection
(c)(1)(C)(ii) and subsection (c)(1)(C)(iii) together to be
deemed to have achieved two-thirds of the requirements of
subsection (c)(1)(D).''.
(c) Denial of Double Benefit Rules.--
(1) In general.--Section 179D of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(h) Tax Incentives Not Available.--Energy-efficient
measures for which a deduction is allowed under this section
shall not be eligible for a deduction under section 179F.''.
(2) Low-income housing exception to basis reduction.--
Subsection (e) of section 179D of such Code is amended by
inserting ``(other than property placed in service in a
qualified low-income building (within the meaning of section
42))'' after ``building property''.
(d) Allocation of Deduction.--Paragraph (4) of section
179D(d) of the Internal Revenue Code of 1986 is amended to
read as follows:
``(4) Allocation of deduction.--
``(A) In general.--Not later than 180 days after the date
of the enactment of the Energy Policy Modernization Act of
2015, the Secretary, in consultation with the Secretary of
Energy, shall promulgate a regulation to allow the owner of a
commercial or multifamily building, including a government,
tribal, or non-profit owner, to allocate any deduction
allowed under this section, or a portion thereof, to the
person primarily responsible for designing the property in
lieu of the owner or to a commercial tenant that leases or
otherwise occupies space in such building pursuant to a
written agreement. Such person shall be treated as the
taxpayer for purposes of this section.
``(B) Form of allocation.--An allocation made under this
paragraph shall be in writing and in a form that meets the
form of allocation requirements in Notice 2008-40 of the
Internal Revenue Service.
``(C) Provision of allocation.--Not later than 30 days
after receipt of a written request from a person eligible to
receive an allocation under this paragraph, the owner of a
building that makes an allocation under this paragraph shall
provide the form of allocation (as described in subparagraph
(B)) to such person.
``(D) Allocation from public owner of building.--In the
case of a commercial building or multifamily building that is
owned by a Federal, State, or local government or a
subdivision thereof, Notice 2006-52 of the Internal Revenue
Service, as amplified by Notice 2008-40, shall apply to any
allocation.''.
(e) Treatment of Basis in Context of Allocation.--
Subsection (e) of section 179D of the Internal Revenue Code
of 1986, as amended by subsection (c)(2), is amended by
inserting ``or so allocated'' after ``so allowed''.
(f) Earnings and Profits Conformity for Real Estate
Investment Trusts.--Subparagraph (B) of section 312(k)(3) of
the Internal Revenue Code of 1986 is amended--
(1) by striking ``.--For purposes of'' and inserting ``.--
``(i) In general.--Except as provided in clause (ii), for
purposes of'', and
(2) by adding at the end the following new clause:
``(ii) Earnings and profits conformity for real estate
investment trusts.--
``(I) In general.--For purposes of computing the earnings
and profits of a real estate investment trust (other than a
captive real estate investment trust), the entire amount
deductible under section 179D shall be allowed as deductions
in the taxable years for which such amounts are claimed under
such section.
``(II) Captive real estate investment trust.--The term
`captive real estate investment trust' means a real estate
investment trust the shares or beneficial interests of which
are not regularly traded on an established securities market
and more than 50 percent of the voting power or value of the
beneficial interests or shares of which are owned or
controlled, directly or indirectly, or constructively, by a
single entity that is treated as an association taxable as a
corporation under this title and is not exempt from taxation
pursuant to the provisions of section 501(a).
``(III) Rules of application.--For purposes of this clause,
the constructive ownership rules of section 318(a), as
modified by section 856(d)(5), shall apply in determining the
ownership of stock, assets, or net profits of any person, and
the following entities are not considered an association
taxable as a corporation:
``(aa) Any real estate investment trust other than a
captive real estate investment trust.
``(bb) Any qualified real estate investment trust
subsidiary under section 856, other than a qualified REIT
subsidiary of a captive real estate investment trust.
``(cc) Any Listed Australian Property Trust (meaning an
Australian unit trust registered as a `Managed Investment
Scheme' under the Australian Corporations Act in which the
principal class of units is listed on a recognized stock
exchange in Australia and is regularly traded on an
established securities market), or an entity organized as a
trust, provided that a Listed Australian Property Trust owns
or controls, directly or indirectly, 75 percent or more of
the voting power or value of the beneficial interests or
shares of such trust.
``(dd) Any corporation, trust, association, or partnership
organized outside the laws of the United States and which
satisfies the criteria described in subclause (IV).
``(IV) Criteria.--The criteria described in this subclause
are as follows:
``(aa) At least 75 percent of the entity's total asset
value at the close of its taxable year is represented by real
estate assets (as defined in section 856(c)(5)(B)), cash and
cash equivalents, and United States Government securities.
``(bb) The entity is not subject to tax on amounts
distributed to its beneficial owners, or is exempt from
entity-level taxation.
``(cc) The entity distributes at least 85 percent of its
taxable income (as computed in the jurisdiction in which it
is organized) to the holders of its shares or certificates of
beneficial interest on an annual basis.
``(dd) Not more than 10 percent of the voting power or
value in such entity is held directly or indirectly or
constructively by a single entity or individual, or the
shares or beneficial interests of such entity are regularly
traded on an established securities market.
``(ee) The entity is organized in a country which has a tax
treaty with the United States.''.
(g) Rules for Lighting Systems.--Subsection (f) of section
179D of the Internal Revenue Code of 1986 is amended to read
as follows:
``(f) Rules for Lighting Systems.--
``(1) In general.--With respect to property that is part of
a lighting system, the deduction allowed under subsection (a)
shall be equal to--
``(A) for a lighting system that includes installation of a
lighting control described in paragraph (2)(A), the
applicable amount determined under paragraph (3)(A),
``(B) for a lighting system that includes installation of a
lighting control described in paragraph (2)(B), the
applicable amount determined under paragraph (3)(B), or
``(C) for a lighting system that does not include
installation of any lighting controls described in
subparagraph (A) or (B) of paragraph (2), the applicable
amount determined under paragraph (3)(C).
``(2) Energy saving controls.--
``(A) Lighting controls in certain spaces.--For purposes of
paragraph (1)(A), the lighting controls described in this
subparagraph are the following:
``(i) Occupancy sensors (as described in paragraph (4)(I))
in spaces not greater than 800 square feet.
``(ii) Bi-level controls (as described in paragraph
(4)(A)).
``(iii) Continuous or step dimming controls (as described
in subparagraphs (B) and (K) of paragraph (4)).
``(iv) Daylight dimming where sufficient daylight is
available (as described in paragraph (4)(C)).
``(v) A multi-scene controller (as described in paragraph
(4)(H)).
``(vi) Time scheduling controls (as described in paragraph
(4)(L)), provided that such controls are not required by
Standard 90.1-2010.
``(vii) Such other lighting controls as the Secretary, in
consultation with the Secretary of Energy, determines
appropriate.
``(B) Other control types.--For purposes of paragraph
(1)(B), the lighting controls described in this subparagraph
are the following:
``(i) Occupancy sensors (as described in paragraph (4)(I))
in spaces greater than 800 square feet.
``(ii) Demand responsive controls (as described in
paragraph (4)(D)).
``(iii) Lumen maintenance controls (as described in
paragraph (4)(F)) where solid state lighting is used.
``(iv) Such other lighting controls as the Secretary, in
consultation with the Secretary of Energy, determines
appropriate.
``(3) Applicable amount.--
``(A) Lighting controls in certain spaces.--For purposes of
paragraph (1)(A), the applicable amount shall be determined
in accordance with the following table:
``If the percentage of reduction in lighting power density is not less
The amount of the deduction per square foot is:
15 percent.....................................................$0.30
20 percent.....................................................$0.44
25 percent.....................................................$0.58
30 percent.....................................................$0.72
35 percent.....................................................$0.86
40 percent.....................................................$1.00.
``(B) Lighting controls in larger spaces and where solid
lighting is used.--For purposes of paragraph (1)(B), the
applicable amount shall be determined in accordance with the
following table:
``If the percentage of reduction in lighting power density is not less
The amount of the deduction per square foot is:
20 percent.....................................................$0.30
25 percent.....................................................$0.44
30 percent.....................................................$0.58
35 percent.....................................................$0.72
40 percent.....................................................$0.86
45 percent.....................................................$1.00.
``(C) No qualified lighting controls.--For purposes of
paragraph (1)(C), the applicable amount shall be determined
in accordance with the following table:
``If the percentage of reduction in lighting power density is not less
The amount of the deduction per square foot is:
25 percent.....................................................$0.30
[[Page S394]]
30 percent.....................................................$0.44
35 percent.....................................................$0.58
40 percent.....................................................$0.72
45 percent.....................................................$0.86
50 percent.....................................................$1.00.
``(4) Definitions.--For purposes of this subsection:
``(A) Bi-level control.--
``(i) In general.--Subject to clause (ii), the term `bi-
level control' means a lighting control strategy that
provides for 2 different levels of lighting.
``(ii) Full-off setting.--For purposes of clause (i), a bi-
level control shall also provide for a full-off setting.
``(B) Continuous dimming.--The term `continuous dimming'
means a lighting control strategy that adjusts the light
output of a lighting system between minimum and maximum light
output in a manner that is not perceptible.
``(C) Daylight dimming; sufficient daylight.--
``(i) Daylight dimming.--The term `daylight dimming' means
any device that--
``(I) adjusts electric lighting power in response to the
amount of daylight that is present in an area, and
``(II) provides for separate control of the lamps for
general lighting in the daylight area by not less than 1
multi-level photocontrol, including continuous dimming
devices, that satisfies the following requirements:
``(aa) The light sensor for the multi-level photocontrol is
remote from where calibration adjustments are made.
``(bb) The calibration adjustments are readily accessible.
``(cc) The multi-level photocontrol reduces electric
lighting power in response to the amount of daylight with--
``(AA) not less than 1 control step that is between 50
percent and 70 percent of design lighting power, and
``(BB) not less than 1 control step that is not less than
35 percent of design lighting power.
``(ii) Sufficient daylight.--
``(I) In general.--The term `sufficient daylight' means--
``(aa) in the case of toplighted areas, when the total
daylight area under skylights plus the total daylight area
under rooftop monitors in an enclosed space is greater than
900 square feet (as defined in Standard 90.1-2010), and
``(bb) in the case of sidelighted areas, when the combined
primary sidelight area in an enclosed space is not less than
250 square feet (as defined in Standard 90.1-2010).
``(II) Exceptions.--Sufficient daylight shall be deemed to
not be available if--
``(aa) in the case of areas described in subclause
(I)(aa)--
``(AA) for daylighted areas under skylights, it is
documented that existing adjacent structures or natural
objects block direct beam sunlight for more than 1500 daytime
hours (after 8 a.m. and before 4 p.m., local time) per year,
``(BB) for daylighted areas, the skylight effective
aperture is less than 0.006, or
``(CC) for buildings in climate zone 8, as defined under
Standard 90.1-2010, the daylight areas total less than 1500
square feet in an enclosed space, and
``(bb) in the case of primary sidelighted areas described
in subclause (I)(bb)--
``(AA) the top of the existing adjacent structures are at
least twice as high above the windows as the distance from
the window, or
``(BB) the sidelighting effective aperture is less than
0.1.
``(iii) Daylight, sidelighting, and other related terms.--
The terms `daylight area', `daylight area under skylights',
`daylight area under rooftop monitors', `daylighted area',
`enclosed space', `primary sidelighted areas', `sidelighting
effective aperture', and `skylight effective aperture' have
the same meaning given such terms under Standard 90.1-2010.
``(D) Demand responsive control.--
``(i) In general.--The term `demand responsive control'
means a control device that receives and automatically
responds to a demand response signal and--
``(I) in the case of space-conditioning systems, conducts a
centralized demand shed for non-critical zones during a
demand response period and that has the capability to, on a
signal from a centralized contract or software point within
an Energy Management Control System--
``(aa) remotely increase the operating cooling temperature
set points in such zones by not less than 4 degrees,
``(bb) remotely decrease the operating heating temperature
set points in such zones by not less than 4 degrees,
``(cc) remotely reset temperatures in such zones to
originating operating levels, and
``(dd) provide an adjustable rate of change for any
temperature adjustment and reset, and
``(II) in the case of lighting power, has the capability to
reduce lighting power by not less than 30 percent during a
demand response period.
``(ii) Demand response period.--The term `demand response
period' means a period in which short-term adjustments in
electricity usage are made by end-use customers from normal
electricity consumption patterns, including adjustments in
response to--
``(I) the price of electricity, and
``(II) participation in programs or services that are
designed to modify electricity usage in response to wholesale
market prices for electricity or when reliability of the
electrical system is in jeopardy.
``(iii) Demand response signal.--The term `demand response
signal' means a signal sent to an end-use customer by a local
utility, independent system operator, or designated
curtailment service provider or aggregator that--
``(I) indicates an adjustment in the price of electricity,
or
``(II) is a request to modify electricity consumption.
``(E) Lamp.--The term `lamp' means an artificial light
source that produces optical radiation (including ultraviolet
and infrared radiation).
``(F) Lumen maintenance control.--The term `lumen
maintenance control' means a lighting control strategy that
maintains constant light output by adjusting lamp power to
compensate for age and cleanliness of luminaires.
``(G) Luminaire.--The term `luminaire' means a complete
lighting unit for the production, control, and distribution
of light that consists of--
``(i) not less than 1 lamp, and
``(ii) any of the following items:
``(I) Optical control devices designed to distribute light.
``(II) Sockets or mountings for the positioning,
protection, and operation of the lamps.
``(III) Mechanical components for support or attachment.
``(IV) Electrical and electronic components for operation
and control of the lamps.
``(H) Multi-scene control.--The term `multi-scene control'
means a lighting control device or system that allows for--
``(i) not less than 2 predetermined lighting settings,
``(ii) a setting that turns off all luminaires in an area,
and
``(iii) a recall of the settings described in clauses (i)
and (ii) for any luminaires or groups of luminaires to adjust
to multiple activities within the area.
``(I) Occupancy sensor.--The term `occupancy sensor' means
a control device that--
``(i) detects the presence or absence of individuals within
an area and regulates lighting, equipment, or appliances
according to a required sequence of operation,
``(ii) shuts off lighting when an area is unoccupied,
``(iii) except in areas designated as emergency egress and
using less than 0.2 watts per square foot of floor area,
provides for manual shut-off of all luminaires regardless of
the status of the sensor and allows for--
``(I) independent control in each area enclosed by ceiling-
height partitions,
``(II) controls that are readily accessible, and
``(III) operation by a manual switch that is located in the
same area as the lighting that is subject to the control
device.
``(J) Standard 90.1-2010.--The term `Standard 90.1-2010'
means Standard 90.1-2010 of the American Society of Heating,
Refrigerating, and Air Conditioning Engineers and the
Illuminating Engineering Society of North America.
``(K) Step dimming.--The term `step dimming' means a
lighting control strategy that adjusts the light output of a
lighting system by 1 or more predetermined amounts of greater
than 1 percent of full output in a manner that may be
perceptible.
``(L) Time scheduling control.--The term `time scheduling
control' means a control strategy that automatically controls
lighting, equipment, or systems based on a particular time of
day or other daily event (including sunrise and sunset).''.
(h) Treatment of Lighting Systems.--Section 179D(c)(1) of
the Internal Revenue Code of 1986 is amended by striking
``interior'' each place it appears.
(i) Reporting Program.--Section 179D of the Internal
Revenue Code of 1986, as amended by subsection (c)(1), is
amended by adding at the end the following new subsection:
``(i) Reporting Program.--For purposes of the report
required under section 179F(l), the Secretary, in
consultation with the Secretary of Energy, shall--
``(1) develop a program to collect a statistically valid
sample of energy consumption data from taxpayers that
received full deductions under this section, regardless of
whether such taxpayers allocated all or a portion of such
deduction, and
``(2) include such data in the report, with such redactions
as deemed necessary to protect the personally identifiable
information of such taxpayers.''.
(j) Special Rule for Partnerships and S Corporations.--
Section 179D of the Internal Revenue Code of 1986, as amended
by subsection (i), is amended by adding at the end the
following new subsection:
``(j) Special Rule for Partnerships and S Corporations.--In
the case of a partnership or S corporation, this section
shall be applied at the partner or shareholder level, subject
to such reporting requirements as are determined appropriate
by the Secretary.''.
(k) Effective Date.--The amendments made by this section
shall apply to property placed in service in taxable years
beginning after the date of the enactment of this Act.
SEC. 10__. DEDUCTION FOR RETROFITS OF EXISTING COMMERCIAL AND
MULTIFAMILY BUILDINGS.
(a) In General.--Part VI of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by inserting
after section 179E the following new section:
[[Page S395]]
``SEC. 179F. DEDUCTION FOR RETROFITS OF EXISTING COMMERCIAL
AND MULTIFAMILY BUILDINGS.
``(a) Allowance of Deduction.--
``(1) In general.--With respect to each certified retrofit
plan, there shall be allowed as a deduction an amount equal
to the lesser of--
``(A) the sum of--
``(i) the design deduction, and
``(ii) the realized deduction, or
``(B) the total cost to develop and implement such
certified retrofit plan.
``(2) Exception.--For purposes of the amount described in
paragraph (1)(B), if such amount is taken as a design
deduction, no realized deduction shall be allowed.
``(b) Deduction Amounts.--For purposes of this section--
``(1) Design deduction.--A design deduction shall be--
``(A) based on projected source energy savings as
calculated in accordance with subsection (c)(3)(B),
``(B) correlated to the percent of source energy savings
set forth in the general scale in paragraph (3)(A) that a
certified retrofit plan is projected to achieve when energy-
efficient measures are placed in service, and
``(C) equal to 60 percent of the amount allowed under the
general scale.
``(2) Realized deduction.--
``(A) In general.--A realized deduction shall be--
``(i) based on realized source energy savings as calculated
in accordance with subsection (c)(3)(C),
``(ii) correlated to the percent of source energy savings
set forth in the general scale in paragraph (3)(A) as
realized by a certified retrofit plan, and
``(iii) equal to 40 percent of the amount allowed under the
general scale.
``(B) Adjustment of source energy savings.--The percent of
source energy savings for purposes of any realized deduction
may vary from such savings projected when energy-efficient
measures were placed in service for purposes of a design
deduction under paragraph (1).
``(C) No recapture of design deduction.--Notwithstanding
the regulations prescribed under subsection (f), no recapture
of a design deduction shall be required where the owner of
the commercial or multifamily building--
``(i) claims or allocates a design deduction when energy-
efficient measures are placed into service pursuant to the
terms and conditions of a certified retrofit plan, and
``(ii) is not eligible for or does not subsequently claim
or allocate a realized deduction.
``(3) General scale.--
``(A) In general.--The scale for deductions allowed under
this section shall be--
``(i) $1.00 per square foot of retrofit floor area for 20
to 24 percent source energy savings,
``(ii) $1.50 per square foot of retrofit floor area for 25
to 29 percent source energy savings,
``(iii) $2.00 per square foot of retrofit floor area for 30
to 34 percent source energy savings,
``(iv) $2.50 per square foot of retrofit floor area for 35
to 39 percent source energy savings,
``(v) $3.00 per square foot of retrofit floor area for 40
to 44 percent source energy savings,
``(vi) $3.50 per square foot of retrofit floor area for 45
to 49 percent source energy savings, and
``(vii) $4.00 per square foot of retrofit floor area for 50
percent or more source energy savings.
``(B) Historic buildings.--
``(i) In general.--With respect to energy-efficient
measures placed in service as part of a certified retrofit
plan in a commercial building or multifamily building on or
eligible for the National Register of Historic Places, the
respective dollar amounts set forth in the general scale
under subparagraph (A) shall--
``(I) each be increased by 20 percent, for the purposes of
calculating any applicable design deduction and realized
deduction, and
``(II) not exceed the total cost to develop and implement
such certified retrofit plan.
``(ii) Exception.--If the amount described in clause
(i)(II) is taken as a design deduction, then no realized
deduction shall be allowed.
``(c) Calculation of Energy Savings.--
``(1) In general.--For purposes of the design deduction and
the realized deduction, source energy savings shall be
calculated with reference to a baseline of the annual source
energy consumption of the commercial or multifamily building
before energy-efficient measures were placed in service.
``(2) Baseline benchmark.--The baseline under paragraph (1)
shall be determined using a building energy performance
benchmarking tool designated by the Administrator of the
Environmental Protection Agency, and based upon 1 year of
source energy consumption data prior to the date upon which
the energy-efficient measures are placed in service.
``(3) Design and realized source energy savings.--
``(A) In general.--In certifying a retrofit plan as a
certified retrofit plan, a licensed engineer or architect
shall calculate source energy savings by utilizing the
baseline benchmark defined in paragraph (2) and determining
percent improvements from such baseline.
``(B) Design deduction.--For purposes of claiming a design
deduction, the regulations issued under subsection (f)(1)
shall prescribe the standards and process for a licensed
engineer or architect to calculate and certify source energy
savings projected from the design of a certified retrofit
plan as of the date energy-efficient measures are placed in
service.
``(C) Realized deduction.--For purposes of claiming a
realized deduction, a licensed engineer or architect shall
calculate and certify source energy savings realized by a
certified retrofit plan 2 years after a design deduction is
allowed by utilizing energy consumption data after energy-
efficient measures are placed in service, and adjusting for
climate, building occupancy hours, density, or other factors
deemed appropriate in the benchmarking tool designated under
paragraph (2).
``(d) Certified Retrofit Plan and Other Definitions.--For
purposes of this section--
``(1) Certified retrofit plan.--The term `certified
retrofit plan' means a plan that--
``(A) is designed to reduce the annual source energy costs
of a commercial building, or a multifamily building, through
the installation of energy-efficient measures,
``(B) is certified under penalty of perjury by a licensed
engineer or architect, who is not a direct employee of the
owner of the commercial building or multifamily building that
is the subject of the plan, and is licensed in the State in
which such building is located,
``(C) describes the square footage of retrofit floor area
covered by such a plan,
``(D) specifies that it is designed to achieve a final
source energy usage intensity after energy-efficient measures
are placed in service in a commercial building or a
multifamily building that does not exceed on a square foot
basis the average level of energy usage intensity of other
similar buildings, as described in paragraph (2),
``(E) requires that after the energy-efficient measures are
placed in service, the commercial building or multifamily
building meets the applicable State and local building code
requirements for the area in which such building is located,
``(F) satisfies the regulations prescribed under subsection
(f), and
``(G) is submitted to the Secretary of Energy after energy-
efficient measures are placed in service, for the purpose of
informing the report to Congress required by subsection (l).
``(2) Average level of energy usage intensity.--
``(A) In general.--The maximum average level of energy
usage intensity under paragraph (1)(D) shall not exceed
300,000 British thermal units per square foot.
``(B) Regulations.--
``(i) In general.--The Secretary, in consultation with the
Administrator of the Environmental Protection Agency, shall
develop distinct standards for categories and subcategories
of buildings with respect to maximum average level of energy
usage intensity based on the best available information used
by the ENERGY STAR program.
``(ii) Review.--The standards developed pursuant to clause
(i) shall be reviewed and updated by the Secretary, in
consultation with the Administrator of the Environmental
Protection Agency, not later than every 3 years.
``(3) Commercial building.--
``(A) In general.--The term `commercial building' means a
building located in the United States--
``(i) that is in existence and occupied on the date of the
enactment of this section,
``(ii) for which a certificate of occupancy has been issued
at least 10 years before energy efficiency measures are
placed in service, and
``(iii) with a primary use or purpose other than as
residential housing.
``(B) Shopping centers.--In the case of a retail shopping
center, the term `commercial building' shall include an area
within such building that is--
``(i) 50,000 square feet or larger that is covered by a
separate utility grade meter to record energy consumption in
such area, and
``(ii) under the day-to-day management and operation of--
``(I) the owner of such building as common space areas, or
``(II) a retail tenant, lessee, or other occupant.
``(4) Energy-efficient measures.--The term `energy-
efficient measures' means a measure, or combination of
measures, placed in service through a certified retrofit
plan--
``(A) on or in a commercial building or multifamily
building,
``(B) as part of--
``(i) the lighting systems,
``(ii) the heating, cooling, ventilation, refrigeration, or
hot water systems,
``(iii) building transportation systems, such as elevators
and escalators,
``(iv) the building envelope, which may include an energy-
efficient cool roof,
``(v) a continuous commissioning contract under the
supervision of a licensed engineer or architect, or
``(vi) building operations or monitoring systems, including
utility-grade meters and submeters, and
``(C) including equipment, materials, and systems within
subparagraph (B) with respect to which depreciation (or
amortization in lieu of depreciation) is allowed.
``(5) Energy savings.--The term `energy savings' means
source energy usage intensity reduced on a per square foot
basis
[[Page S396]]
through design and implementation of a certified retrofit
plan.
``(6) Multifamily building.--The term `multifamily
building'--
``(A) means--
``(i) a structure of 5 or more dwelling units located in
the United States--
``(I) that is in existence and occupied on the date of the
enactment of this section,
``(II) for which a certificate of occupancy has been issued
at least 10 years before energy efficiency measures are
placed in service, and
``(III) with a primary use as residential housing, and
``(B) includes such buildings owned and operated as a
condominium, cooperative, or other common interest community.
``(7) Source energy.--The term `source energy' means the
total amount of raw fuel that is required to operate a
commercial building or multifamily building, and accounts for
losses that are incurred in the generation, storage,
transport, and delivery of fuel to such a building.
``(e) Timing of Claiming Deductions.--Deductions allowed
under this section may be claimed as follows:
``(1) Design deduction.--In the case of a design deduction,
in the taxable year that energy efficiency measures are
placed in service.
``(2) Realized deduction.--In the case of a realized
deduction, in the second taxable year following the taxable
year described in paragraph (1).
``(f) Regulations.--
``(1) In general.--Not later than 180 days after the date
of the enactment of this section, and after notice and
opportunity for public comment, the Secretary, in
consultation with the Secretary of Energy and the
Administrator of the Environmental Protection Agency, shall
prescribe regulations--
``(A) for the manner and method for a licensed engineer or
architect to certify retrofit plans, model projected energy
savings, and calculate realized energy savings, and
``(B) notwithstanding subsection (b)(2)(C), to provide, as
appropriate, for a recapture of the deductions allowed under
this section if a retrofit plan is not fully implemented, or
a retrofit plan and energy savings are not certified or
verified in accordance with regulations prescribed under this
subsection.
``(2) Reliance on established protocols, etc.--To the
maximum extent practicable and available, such regulations
shall rely upon established protocols and documents used in
the ENERGY STAR program, and industry best practices and
existing guidelines, such as the Building Energy Modeling
Guidelines of the Commercial Energy Services Network
(COMNET).
``(3) Allowance of deductions pending issuance of
regulations.--Pending issuance of the regulations under
paragraph (1), the owner of a commercial building or a
multifamily building shall be allowed to claim or allocate a
deduction allowed under this section.
``(g) Notice to Owner.--Each certification of a retrofit
plan and calculation of energy savings required under this
section shall include an explanation to the owner of a
commercial building or a multifamily building regarding the
energy-efficient measures placed in service and their
projected and realized annual energy costs.
``(h) Allocation of Deduction.--
``(1) In general.--Not later than 180 days after the date
of the enactment of this section, the Secretary, in
consultation with the Secretary of Energy, shall promulgate a
regulation to allow the owner of a commercial building or a
multifamily building, including a government, tribal, or non-
profit owner, to allocate any deduction allowed under this
section, or a portion thereof, to the person primarily
responsible for funding, financing, designing, leasing,
operating, or placing in service energy-efficient measures.
Such person shall be treated as the taxpayer for purposes of
this section and shall include a building tenant, financier,
architect, professional engineer, licensed contractor, energy
services company, or other building professional.
``(2) Form of allocation.--An allocation made under this
paragraph shall be in writing and in a form that meets the
form of allocation requirements in Notice 2008-40 of the
Internal Revenue Service.
``(3) Provision of allocation.--Not later than 30 days
after receipt of a written request from a person eligible to
receive an allocation under this paragraph, the owner of a
building that makes an allocation under this paragraph shall
provide the form of allocation (as described in paragraph
(2)) to such person.
``(4) Allocation from public owner of building.--In the
case of a commercial building or a multifamily building that
is owned by a Federal, State, or local government or a
subdivision thereof, Notice 2006-52 of the Internal Revenue
Service, as amplified by Notice 2008-40, shall apply to any
allocation.
``(i) Basis Reduction.--For purposes of this subtitle, if a
deduction is allowed under this section with respect to any
energy-efficient measures placed in service under a certified
retrofit plan other than in a qualified low-income building
(within the meaning of section 42), the basis of such
measures shall be reduced by the amount of the deduction so
allowed or so allocated.
``(j) Special Rule for Partnerships and S Corporations.--In
the case of a partnership or S corporation, this section
shall be applied at the partner or shareholder level, subject
to such reporting requirements as are determined appropriate
by the Secretary.
``(k) Tax Incentives Not Available.--
``(1) Energy efficient commercial buildings deduction.--
Energy-efficient measures for which a deduction is allowed
under this section shall not be eligible for a deduction
under section 179D.
``(2) New energy efficient home credit.--No deduction shall
be allowed under this section with respect to any building or
dwelling unit with respect to which a credit under section
45L was allowed.
``(l) Report to Congress.--
``(1) In general.--Biennially, beginning with the first
year after the enactment of this section, the Secretary, in
conjunction with the Secretary of Energy, shall submit a
report to Congress that--
``(A) explains the energy saved, the energy-efficient
measures implemented, the realization of energy savings
projected, and records the amounts and types of deductions
allowed under this section,
``(B) explains the energy saved, the energy efficient
measures implemented, and records the amount of deductions
allowed under section 179D, based on the data collected
pursuant to subsection (i) of such section,
``(C) determines the number of jobs created as a result of
the deduction allowed under this section,
``(D) determines how the use of any deduction allowed under
this section may be improved, based on the information
provided to the Secretary of Energy,
``(E) provides aggregated data with respect to the
information described in subparagraphs (A) through (D), and
``(F) provides statutory recommendations to Congress that
would reduce energy consumption in new and existing
commercial buildings located in the United States, including
recommendations on providing energy-efficient tax incentives
for subsections of buildings that operate with specific
utility-grade metering.
``(2) Protection of taxpayer information.--The Secretary
and the Secretary of Energy shall share information on
deductions allowed under this section and related reports
submitted, as requested by each agency to fulfill its
obligations under this section, with such redactions as
deemed necessary to protect the personally identifiable
financial information of a taxpayer.
``(3) Incorporation into department of energy programs.--
The Secretary of Energy shall, to the maximum extent
practicable, incorporate conclusions of the report under this
subsection into current Department of Energy building
performance and energy efficiency data collection and other
reporting programs.''.
(b) Effect on Depreciation on Earnings and Profits.--
Subparagraph (B) of section 312(k)(3) of the Internal Revenue
Code of 1986, as amended by this Act, is amended--
(1) by striking ``or 179E'' both places it appears in
clause (i) and inserting ``179E, or 179F'',
(2) by striking ``or 179e'' in the heading and inserting
``179e, or 179f'', and
(3) by inserting ``or 179F'' after ``section 179D'' in
clause (ii)(I).
(c) Conforming 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 the item relating to
section 179E the following new item:
``Sec. 179F. Deduction for retrofits of existing commercial and
multifamily buildings.''.
(d) Effective Date.--The amendments made by this section
shall apply to property placed in service in taxable years
beginning after the date of the enactment of this Act.
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