[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 507 Introduced in Senate (IS)]
108th CONGRESS
1st Session
S. 507
To amend the Internal Revenue Code of 1986 to provide incentives to
introduce new technologies to reduce energy consumption in buildings.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 4, 2003
Ms. Snowe (for herself, Mrs. Feinstein, Mr. McCain, Mr. Kerry, Mr.
Smith, and Mr. Reid) introduced the following bill; which was read
twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide incentives to
introduce new technologies to reduce energy consumption in buildings.
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 ``Efficient Energy through Certified
Technologies (EFFECT) Act of 2003''.
SEC. 2. 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,
``(2) the energy efficient commercial building property
deduction determined under subsection (e), and
``(3) the energy efficient residential rental building
property deduction determined under subsection (f).
``(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.
Tier 2 energy-efficient building $900.
property.
Tier 1 energy-efficient building $450.
property (other than an advanced
main air circulating fan.
------------------------------------------------------------------------
``(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 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 Commercial Building Property Deduction.--
``(1) Deduction allowed.--For purposes of subsection (a)--
``(A) In general.--The energy efficient commercial
building property deduction determined under this
subsection is an amount equal to energy efficient
commercial building property expenditures made by a
taxpayer for the taxable year.
``(B) Maximum amount of deduction.--Except as
otherwise provided in this subsection, the amount of
energy efficient commercial building property
expenditures taken into account under subparagraph (A)
shall not exceed an amount equal to the product of--
``(i) $2.25, and
``(ii) the square footage of the building
with respect to which the expenditures are
made.
``(C) Year deduction allowed.--The deduction under
subparagraph (A) shall be allowed in the taxable year
in which the construction, reconstruction, or erection
of the building is completed.
``(2) Energy efficient commercial building property
expenditures.--For purposes of this subsection, the term
`energy efficient commercial building property expenditures'
means an amount paid or incurred for energy efficient
commercial building property installed on or in connection with
new construction, reconstruction, or erection of property--
``(A) for which depreciation is allowable under
section 167,
``(B) which is located in the United States, and
``(C) the construction, reconstruction, or erection
of which is completed by the taxpayer.
Such property includes all residential rental property,
including low-rise multifamily structures and single family
housing property which is not within the scope of ASHRAE
Standard 90.1-2001 (described in paragraph (3)). Such term
includes expenditures for labor costs properly allocable to the
onsite preparation, assembly, or original installation of the
property.
``(3) Energy efficient commercial building property.--For
purposes of paragraph (2)--
``(A) In general.--The term `energy efficient
commercial building property' means any building
property which reduces total annual energy and power
costs with respect to the lighting, heating, cooling,
ventilation, and hot water supply systems of the
building by at least 50 percent in comparison to a
reference building which meets the requirements of
ASHRAE Standard 90.1-2001 of the American Society of
Heating, Refrigerating, and Air Conditioning Engineers
and the Illuminating Engineering Society of North
America using methods of calculation under subparagraph
(B) and certified by qualified professionals as
provided under paragraph (6).
``(B) Methods of calculation.--The Secretary, in
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
2001 California Nonresidential Alternative Calculation
Method Approval Manual or, in the case of residential
property, the 2001 California Residential Alternative
Calculation Method Approval Manual. These regulations
shall meet the following requirements:
``(i) 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.
``(ii) The calculational methodology shall
require that compliance be demonstrated for a
whole building. If some systems of the
building, such as lighting, are designed later
than other systems of the building, the method
shall provide that 1 of the following shall
apply:
``(I) The expenditures taken into
account under paragraph (1) shall not
occur until the date designs for all
energy-using systems of the building
are completed.
``(II) The energy performance of
all systems and components not yet
designed shall be assumed to comply
minimally with the requirements of such
ASHRAE Standard 90.1-2001.
``(III) The expenditures taken into
account under paragraph (1) shall be a
fraction of such expenditures based on
the energy cost savings performance of
less than all energy-using systems in
accordance with clause (iii) and shall
be limited to $0.75 per square foot
for each of the energy-using systems.
``(iii) The expenditures in connection with
the design of subsystems in the building, such
as the envelope, the heating, ventilation, air
conditioning and water heating system, and the
lighting system, and the limitation under
paragraph (2), shall be allocated to the
appropriate building subsystem based on a
demonstration of compliance with system-
specific energy cost savings targets
established in regulations promulgated by the
Secretary of Energy which are equivalent, using
the calculation methodology, to the whole
building requirement of 50 percent savings.
``(iv) The calculational methods under this
subparagraph need not comply fully with section
11 of such ASHRAE Standard 90.1-2001.
``(v) The calculational methods shall be
fuel neutral, such that the same energy
efficiency features shall qualify a building
for the deduction under this subsection
regardless of whether the heating source is a
gas or oil furnace or an electric heat pump.
``(vi) The calculational methods shall
provide appropriate calculated energy savings
for design methods and technologies not
otherwise credited in either such ASHRAE
Standard 90.1-2001 or in the 2001 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 calculational 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.
``(C) Computer software.--
``(i) In general.--Any calculation under
this paragraph shall be prepared by qualified
computer software.
``(ii) Qualified computer software.--For
purposes of this subparagraph, 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 subsection, 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
subsection.
``(5) Notice to owner.--The qualified individual shall
provide an explanation to the owner of the building regarding
the energy efficiency features of the building and its
projected annual energy costs as provided in the notice under
paragraph (3)(C)(ii)(III).
``(6) Certification.--
``(A) In general.--Except as provided in this
paragraph, the Secretary shall prescribe procedures for
the inspection and testing for compliance of buildings
which are comparable, given the difference between
commercial and residential buildings, to the
requirements in the Mortgage Industry National
Accreditation Procedures for Home Energy Rating
Systems.
``(B) 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. The Secretary may qualify
a Home Ratings Systems Organization, a local building
code agency, a State or local energy office, a utility,
or any other organization which meets the requirements
prescribed under this section.
``(C) Proficiency of qualified individuals.--The
Secretary shall consult with nonprofit organizations
and State agencies with expertise in energy efficiency
calculations and inspections to develop proficiency
tests and training programs to qualify individuals to
determine compliance.
``(f) 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 the
amount specified in the following table:
Deduction
``In the case of: amount:
30-percent property........................... $600
50-percent property........................... $1,500.
``(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 at least 50
percent in the case of 50-percent property or
at least 30 percent in the case of 30-percent
property in comparison to the projected energy
cost of such property without such
expenditures. Such comparison shall be made
using the procedures under clause (ii).
``(ii) Procedures.--
``(I) In general.--For purposes of
clause (i), energy usage and costs
shall be demonstrated either by
component-based compliance or
performance-based compliance.
``(II) Component-based
compliance.--Component-based compliance
shall be demonstrated if all of the
components of the dwelling unit comply
with the requirements of prescriptive
packages established by the Secretary
of Energy, in consultation with the
Administrator of the Environmental
Protection Agency, such that the
buildings which use such approach
achieve energy cost reductions
equivalent to the results of using
performance-based compliance under
subclause (III).
``(III) Performance-based
compliance.--Performance-based
compliance shall be demonstrated if the
30 percent or 50 percent energy cost
savings for heating and cooling, as
applicable, are met with respect to a
dwelling unit when compared to the
original condition of the dwelling
unit.
``(IV) Computer software.--Computer
software shall be used in support of
performance-based compliance under
subclause (III) 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 2001 California Residential
Alternative Calculation Method Approval
Manual.
``(V) 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.
``(VI) Approval of software
submissions.--The Secretary shall
approve software submissions which
comply with the requirements of
subclause (IV).
``(VII) 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,
in 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.--Individuals
qualified to determine compliance shall
be only those individuals who are
recognized by an organization certified
by the Secretary for such purposes. The
Secretary may qualify a home energy
rating systems organization, a local
building code agency, a State or local
energy office, a utility, or any other
organization which meets the
requirements prescribed under this
subsection.
``(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.
``(g) 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.
``(h) 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.
``(i) 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 I energy-
efficient building property),
``(2) any energy efficient commercial building property
expenditures in connection with property--
``(A) the plans for which are not certified under
subsection (e)(6) on or before December 31, 2008, and
``(B) the construction, reconstruction, or erection
of which is not completed on or before December 31,
2010, and
``(3) any energy efficient residential rental building
property expenditures in connection with property--
``(A) placed in service after December 31, 2008, or
``(B) the construction, reconstruction, erection,
or rehabilitation of which is not completed on or
before December 31, 2008.''.
(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 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
inserting the following new paragraph:
``(29) 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, 2002.
SEC. 3. CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT HOME.
(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, the credit determined under this section for the
taxable year is an amount equal to the aggregate adjusted bases of all
energy efficient property installed in a qualifying new home during
construction of such home.
``(b) Limitations.--
``(1) Maximum credit.--
``(A) In general.--The credit allowed by this
section with respect to a qualifying new home shall not
exceed--
``(i) in the case of a 30-percent home,
$600, and
``(ii) in the case of a 50-percent home,
$2,000.
``(B) 30- or 50-percent home.--For purposes of
subparagraph (A)--
``(i) 30-percent home.--The term `30-
percent home' means a qualifying new home which
is certified to have a projected level of
annual heating and cooling energy consumption,
measured in terms of average annual energy cost
to the homeowner, which is at least 30 percent
less than the annual level of heating and
cooling energy consumption of the standard
design reference home.
``(ii) 50-percent home.--The term `50-
percent home' means a qualifying new home which
is certified to have a projected level of
annual heating and cooling energy consumption,
measured in terms of average annual energy cost
to the homeowner, which is at least 50 percent
less than the annual level of heating and
cooling energy consumption of the standard
design reference home.
``(C) Prior credit amounts on same home taken into
account.--If a credit was allowed under subsection (a)
with respect to a qualifying new home in 1 or more
prior taxable years, the amount of the credit otherwise
allowable for the taxable year with respect to such
home shall not exceed the amount under clause (i) or
(ii) of subparagraph (A) (as the case may be), reduced
by the sum of the credits allowed under subsection (a)
with respect to the home for all prior taxable years.
``(2) Coordination with rehabilitation and energy
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 the
rehabilitation credit (as determined under section
47(a)) or to the energy percentage of energy property
(as determined under section 48(a)), and
``(B) expenditures taken into account under either
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 the person who constructed the qualifying new home, or in
the case of a manufactured home which conforms to Federal
Manufactured Home Construction and Safety Standards (24 C.F.R.
3280), the manufactured home producer of such home.
``(2) Energy efficient property.--
``(A) In general.--The term `energy efficient
property' means any energy efficient building envelope
component, and any energy efficient heating or cooling
equipment, and any other materials and systems which
are specifically designed to reduce heat loss or gain
or the heating or cooling energy use of a dwelling,
which can, individually or in combination with other
components, meet the requirements of this section.
``(B) Building envelope component.--The term
`building envelope component' means--
``(i) any insulation material or system
which is specifically and primarily designed to
reduce the heat loss or gain of a qualifying
new home when installed in or on such home, and
``(ii) exterior windows (including
skylights) and doors.
``(3) Qualifying new home.--The term `qualifying new home'
means a dwelling--
``(A) located in the United States,
``(B) the construction of which is substantially
completed after the date of the enactment of this
section, and
``(C) the first use of which after construction is
as a principal residence (within the meaning of section
121, determined without regard to ownership).
``(4) Standard design reference home.--The term `standard
design reference home' means a dwelling which conforms with the
standards of chapter 4 of the 2000 International Energy
Conservation Code of the International Code Council and the
minimum equipment efficiency standards promulgated by the
Department of Energy under the National Appliance Energy
Conservation Act.
``(5) Energy efficient reference home.--The term `energy
efficient reference home' means a design of a dwelling which
uses the same heating fuel type as the proposed design, as
required by the Department of Energy under the National
Appliance Energy Conservation Act and which achieves, on
average over fuel type and home geometry, the required 30
percent or 50 percent reductions in annual energy cost as
calculated using the procedures under subsection (d)(1)(C)(i).
``(6) Construction.--The term `construction' includes
reconstruction, erection, and rehabilitation.
``(7) Manufactured home included.--The term `qualifying new
home' includes a manufactured home conforming to Federal
Manufactured Home Construction and Safety Standards (24 C.F.R.
3280).
``(d) Certification.--
``(1) Method of certification.--
``(A) In general.--A certification described in
subsection (b)(1)(B) shall be determined either by a
component-based method or a performance-based method.
``(B) Component-based method.--A component-based
method is a method in which compliance is achieved when
all of the components of the home comply with the
requirements of prescriptive packages using the
applicable technical energy efficiency specifications
or ratings (including product labeling requirements)
for the energy efficient building envelope component or
energy efficient heating or cooling equipment. The
Secretary shall, in consultation with the Administrator
of the Environmental Protection Agency, develop
prescriptive component-based packages which are
equivalent in energy performance (when modeled with 50
percent of the windows of such packages facing west, 25
percent facing east, 12.5 percent facing south, and
12.5 percent facing north) to properties which qualify
under subparagraph (C).
``(C) Performance-based method.--
``(i) In general.--A performance-based
method is a method which calculates projected
energy usage and cost reductions in the
qualifying new home in relation to an energy
efficient reference home--
``(I) heated by the same fuel type,
and
``(II) constructed in accordance
with the requirements for the
applicable 30 percent or 50 percent
energy efficient reference home.
``(ii) Computer software.--
``(I) In general.--Computer
software shall be used in support of a
performance-based method certification
under clause (i). Such software shall
meet procedures and methods for
calculating energy and cost savings in
regulations promulgated by the
Secretary of Energy. Such regulations
on the specifications for software and
verification protocols shall be based
on the 2001 California Residential
Alternative Calculation Method Approval
Manual.
``(II) Approval of software
submissions.--The Secretary shall
approve software submissions which
comply with the calculation
requirements of subclause (I).
``(iii) 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 this section.
``(2) Provider.--A certification described in subsection
(b)(1)(B) shall be provided by an individual recognized by an
organization designated by the Secretary for such purposes.
``(3) Form.--
``(A) In general.--A certification described in
subsection (b)(1)(B) shall be made in writing in a
manner that 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 in the case of a performance-based
method, accompanied by a written analysis documenting
the proper application of a permissible energy
performance calculation method to the specific
circumstances of the qualifying new home.
``(B) Form provided to buyer.--A form documenting
the energy efficient building envelope components and
energy efficient heating or cooling equipment installed
and their rated energy efficiency performance shall be
provided to the buyer of the qualifying new home. The
form shall include labeled R-value for insulation
products, NFRC-labeled U-factor and Solar Heat Gain
Coefficient for windows, skylights, and doors, labeled
AFUE ratings for furnaces and boilers, labeled HSPF
ratings for electric heat pumps, and labeled SEER
ratings for air conditioners.
``(C) Ratings label affixed in dwelling.--A
permanent label documenting the ratings in subparagraph
(B) shall be affixed to the front of the electrical
distribution panel of the qualifying new home, or shall
be otherwise permanently displayed in a readily
inspectable location in such home.
``(4) Regulations.--
``(A) In general.--In prescribing regulations under
this subsection for performance-based certification
methods, the Secretary, after examining the
requirements of the 2001 California Residential
Alternative Calculation Method Approval Manual, shall
prescribe procedures for calculating annual energy
usage and cost reductions for heating and cooling and
for the reporting of the results. Such regulations
shall--
``(i) provide for fuel parity in the case
of both the component-based and the
performance-based approaches, and any software
used in support of either such approach,
``(ii) require that any computer software
allow for the printing of the Federal tax forms
necessary for the credit under this section and
for the printing of forms for disclosure to the
homebuyer, and
``(iii) establish 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, dependent on time of usage.
``(B) Fuel parity.--For purposes of subparagraph
(A)(i), the Secretary shall assure fuel parity by
requiring both the energy efficient reference home and
the prescriptive package under paragraph (1) to employ
the same envelope energy efficiency measures for a home
heated by a gas furnace as for a home heated by an
electric air source heat pump or by an oil furnace or
boiler; and, for equipment efficiency, to employ
electric, oil, or gas equipment efficiency of
corresponding efficiency improvement. Such
determination of corresponding efficiency improvement
shall be made on a linear scale between the minimum
standard equipment efficiency and the best available
marketplace technology efficiency as determined by the
Secretary based upon the information provided by the
Air Conditioning and Refrigeration Institute (ARI) and
the Gas Appliance Manufacturers Association (GAMA)
guides for the respective electric, oil, and natural
gas equipment of such type (such as heating and
cooling). For homes heated electrically, the baseline
of the linear scale shall be the latest NAECA minimum
efficiency required for air-source heat pumps. For
homes heated by direct combustion fossil fuels, the
baseline of the linear scale shall be the latest NAECA
minimum efficiency for furnaces.
``(C) Time of usage.--For purposes of subparagraph
(A)(iii), time of usage costs shall be determined based
on regional or State utility and fuel costs. 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.
``(D) Providers.--For purposes of paragraph (2),
the Secretary shall establish requirements for the
designation of individuals based on the requirements
for energy consultants and home energy raters specified
by the Mortgage Industry National Home Energy Rating
Standards. The Secretary shall qualify an independent
home energy rating system organization, a local
building code agency, a State or local energy office, a
utility, a manufactured home production inspection
agency (IPIA), or any other organization which meets
the requirements prescribed under this section.
``(E) Determinations of compliance.--A
determination of compliance with respect to energy
efficient property made for the purposes of this
subsection 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.
``(e) Termination.--Subsection (a) shall apply to qualifying new
homes purchased during the period beginning on the date of the
enactment of this section and ending on December 31, 2005, for 30-
percent homes and December 31, 2008, for 50-percent homes.''.
(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) Denial of Double Benefit.--Section 280C of the Internal Revenue
Code of 1986 (relating to certain expenses for which credits are
allowable) is amended by adding at the end the following new
subsection:
``(d) New Energy Efficient Home Expenses.--No deduction shall be
allowed for that portion of expenses for a qualifying new home
otherwise allowable as a deduction for the taxable year which is equal
to the amount of the credit determined for such taxable year under
section 45G(a).''.
(d) Limitation on Carryback.--Section 39(d) of the Internal Revenue
Code of 1986 (relating to transitional 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 credit
determined under section 45G may be carried back to any taxable
year ending on or before the date of the enactment of section
45G.''.
(e) Deduction for Certain Unused Business Credits.--Section 196(c)
of the Internal Revenue Code of 1986 (defining qualified business
credit) is amended by striking ``and'' at the end of paragraph (9), by
striking the period at the end of paragraph (10) and inserting ``,
and'', and by adding at the end the following new paragraph:
``(11) 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 the date of the enactment of this
Act.
SEC. 4. 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.--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--
``(1) the amount determined under subsection (b) for each
qualified energy property of the taxpayer placed in service
during such taxable year, and
``(2) so much of the credit amount specified in the
following table 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:
``Highly energy-efficient principal Credit amount:
residence:
30-percent property.................................... $200
50-percent property.................................... $500.
For purposes of paragraph (2), the expenditures may include labor costs
properly allocable to the onsite preparation, assembly, or original
installation of such property.
``(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.
Tier 1 energy-efficient building $150.
property (other than an advanced
main air circulating fan).
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) such property is certified as being
50-percent property or 30-percent property.
``(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) 50- or 30-percent property.--
``(i) In general.--For purposes of
subparagraph (A), property is 50-percent
property or 30-percent property if the
projected heating and cooling energy usage of
such property, measured in terms of average
annual energy cost to taxpayer, is reduced by
50 percent, or 30 percent, respectively, 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. Such comparison
shall be determined using the procedures under
clause (ii).
``(ii) Procedures.--
``(I) In general.--For purposes of
clause (i), energy usage shall be
demonstrated either by component-based
compliance or performance-based
compliance.
``(II) Component-based
compliance.--Component-based compliance
shall be demonstrated if all of the
components of the dwelling unit comply
with the requirements of prescriptive
packages established by the Secretary
of Energy, in consultation with the
Administrator of the Environmental
Protection Agency, such that the
buildings which use this method achieve
energy cost reductions equivalent to
the results using the performance-based
compliance method under subclause
(III).
``(III) Performance-based
compliance.--Performance-based
compliance shall be demonstrated if the
30 percent or the 50 percent energy
cost savings for heating and cooling,
as applicable, are met with respect to
a dwelling unit when compared to the
original condition of the dwelling
unit.
``(IV) Computer software.--Computer
software shall be used in support of
performance-based compliance under
subclause (III) 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 2001 California Residential
Alternative Calculation Method Approval
Manual.
``(V) 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.
``(VI) Approval of software
submissions.--The Secretary shall
approve software submissions which
comply with the calculation
requirements of subclause (IV).
``(VII) 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 subclause (IV) 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, in 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.--Individuals qualified to determine
compliance shall be only those individuals who are
recognized by an organization certified by the
Secretary for such purposes. The Secretary may qualify
a home energy rating systems organization, a local
building code agency, a State or local energy office, a
utility, or any other organization which meets the
requirements prescribed under this section.
``(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
principal residence is certified as 50-percent property or 30-
percent property.
``(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.--
``(1) In general.--Except as provided in paragraph (2),
this section shall not apply with respect to any taxable years
beginning after December 31, 2008.
``(2) Tier 1 energy-efficient building property
expenditures.--This section shall not apply to expenditures for
tier 1 energy-efficient building property in taxable years
beginning after December 31, 2005.''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 1016 of the Internal Revenue
Code of 1986 as amended by section 1(b)(3), 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 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, 2002.
(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.
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