E–QUIP Act

I 117TH CONGRESS 1ST SESSION H. R. 2346 To amend the Internal Revenue Code of 1986 to allow 10-year straight line depreciation for energy efficient qualified improvement property, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 1, 2021 Mr. SCHNEIDER (for himself and Mr. RICE of South Carolina) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to allow 10- year straight line depreciation for energy efficient quali- fied improvement property, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Energy Efficient 4 Qualified Improvement Property Act of 2021’’ or the ‘‘E– 5 QUIP Act’’. 6 VerDate Sep 11 2014 04:48 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2346.IH H2346 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 2346 IH SEC. 2. DEPRECIATION OF ENERGY EFFICIENT QUALIFIED 1 IMPROVEMENT PROPERTY. 2 (a) 10-YEAR PROPERTY.—Section 168(e)(3)(D) of 3 the Internal Revenue Code of 1986 is amended by striking 4 ‘‘and’’ at the end of clause (iii), by striking the period 5 at the end of clause (iv) and inserting ‘‘, and’’, and by 6 adding at the end the following new clause: 7 ‘‘(vi) energy efficient qualified im- 8 provement property.’’. 9 (b) STRAIGHT LINE METHOD.—Section 168(b)(3) of 10 such Code is amended by adding at the end the following 11 new subparagraph: 12 ‘‘(H) Energy efficient qualified improve- 13 ment property described in subsection (e)(7).’’. 14 (c) ENERGY EFFICIENT QUALIFIED IMPROVEMENT 15 PROPERTY DEFINED.—Section 168(e) of such Code is 16 amended by adding at the end the following new para- 17 graph: 18 ‘‘(7) ENERGY EFFICIENT QUALIFIED IMPROVE- 19 MENT PROPERTY.— 20 ‘‘(A) IN GENERAL.—The term ‘energy effi- 21 cient qualified improvement property’ means 22 any improvement— 23 ‘‘(i) to a building which is nonresiden- 24 tial real property, or multifamily residen- 25 tial rental property, first placed in service 26 VerDate Sep 11 2014 04:48 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2346.IH H2346 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 2346 IH more than 10 years before the date of the 1 enactment of this subparagraph, 2 ‘‘(ii) which is installed as part of— 3 ‘‘(I) the lighting system, 4 ‘‘(II) the heating, cooling, ven- 5 tilation, or hot water systems, or 6 ‘‘(III) the building envelope, 7 ‘‘(iii) which meets the performance re- 8 quirements of subparagraph (B), 9 ‘‘(iv) which, in the case of an improve- 10 ment described in subclause (I) or (II) of 11 clause (ii)— 12 ‘‘(I) is audited, commissioned, or 13 managed by a professional with a cre- 14 dential that is recognized by the De- 15 partment of Energy through its Bet- 16 ter Buildings Workforce Guidelines, 17 or such other credential programs 18 identified by the Secretary of Energy 19 (following an opportunity for, and 20 consideration of, public input), and 21 ‘‘(II) is subject to an ongoing op- 22 erations and maintenance plan under 23 such certification during the applica- 24 ble recovery period, 25 VerDate Sep 11 2014 04:48 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2346.IH H2346 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 2346 IH ‘‘(v) which, in the case of an improve- 1 ment described in clause (ii)(III), the de- 2 sign and installation has been completed, 3 observed, or approved by an individual 4 qualified by industry-recognized profes- 5 sional credential programs in building en- 6 velope quality assurance, as identified by 7 the Secretary of Energy (following an op- 8 portunity for, and consideration of, public 9 input), 10 ‘‘(vi) which is placed in service before 11 January 1, 2026, and 12 ‘‘(vii) with respect to which the tax- 13 payer elects the application of this sub- 14 paragraph. 15 ‘‘(B) PERFORMANCE REQUIREMENTS.—An 16 improvement meets the performance require- 17 ments of this subparagraph if— 18 ‘‘(i) in the case of lighting, it meets 19 the lighting power allowances, densities, 20 and control specifications in the prescrip- 21 tive option of the International Green Con- 22 struction Code (2018), 23 ‘‘(ii) in the case of a unitary air- 24 cooled air conditioner, it meets or exceeds 25 VerDate Sep 11 2014 04:48 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2346.IH H2346 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 2346 IH Consortium for Energy Efficiency Tier 2, 1 as in effect on January 1, 2019, 2 ‘‘(iii) in the case of a unitary water- 3 cooled and evaporatively cooled air condi- 4 tioner, it meets or exceeds Consortium for 5 Energy Efficiency Tier 1, as in effect on 6 January 1, 2019, 7 ‘‘(iv) in the case of a unitary heat 8 pump— 9 ‘‘(I) with a capacity of less than 10 65,000 Btu per hour, it meets or ex- 11 ceeds Consortium for Energy Effi- 12 ciency Tier 2, as in effect on January 13 1, 2019, or 14 ‘‘(II) with a capacity of 65,000 15 Btu per hour or greater, it meets or 16 exceeds Consortium of Energy Effi- 17 ciency Tier 1, as in effect on January 18 1, 2019, 19 ‘‘(v) in the case of a variable refrig- 20 erant flow multisplit air conditioner or 21 variable refrigerant flow multisplit heat 22 pump— 23 ‘‘(I) with a capacity of less than 24 65,000 Btu per hour, it meets or ex- 25 VerDate Sep 11 2014 04:48 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2346.IH H2346 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 2346 IH ceeds Consortium for Energy Effi- 1 ciency Tier 2, as in effect on January 2 12, 2016, or 3 ‘‘(II) with a capacity of 65,000 4 Btu per hour or greater, it meets or 5 exceeds Consortium of Energy Effi- 6 ciency Tier 1, as in effect on January 7 12, 2016, 8 ‘‘(vi) in the case of a boiler, it meets 9 or exceeds Consortium for Energy Effi- 10 ciency Tier 1, as in effect on September 1, 11 2015, 12 ‘‘(vii) in the case of a hot water heat- 13 er— 14 ‘‘(I) that is gas-fired, it meets or 15 exceeds Consortium of Energy Effi- 16 ciency Tier 1, as in effect on June 5, 17 2012, or 18 ‘‘(II) that runs on electricity, it 19 has a Coefficient of Performance of 3 20 or more, 21 ‘‘(viii) in the case of a water-cooled 22 centrifugal chiller package, it meets the 23 prescriptive option of the International 24 Green Construction Code (2018), 25 VerDate Sep 11 2014 04:48 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2346.IH H2346 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 2346 IH ‘‘(ix) in the case of insulation for 1 heating and cooling supply and return 2 ducts, it meets the prescriptive option for 3 duct insulation of the International Green 4 Construction Code (2018) and its applica- 5 ble Normative Appendix, 6 ‘‘(x) in the case of roofing, walls, and 7 associated insulation, it meets the prescrip- 8 tive option for building envelope opaque 9 elements of the International Green Con- 10 struction Code (2018) and its applicable 11 Normative Appendix, 12 ‘‘(xi) in the case of piping insulation, 13 it meets the prescriptive option for piping 14 insulation of ANSI/ASHRAE/IES Stand- 15 ard 90.1–2019, 16 ‘‘(xii) in the case of windows, doors, 17 and skylights, they meet the prescriptive 18 option for building envelope fenestration 19 and skylights of the International Green 20 Construction Code (2018) and its applica- 21 ble Informative Appendix, 22 ‘‘(xiii) in the case of sensors and con- 23 trols, it is a device that automatically con- 24 trols the operation of other qualified equip- 25 VerDate Sep 11 2014 04:48 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2346.IH H2346 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 2346 IH ment without manual operation of a 1 switch, using technology such as motion or 2 occupancy detection, infrared, ultrasonic, 3 microwave, audio-based, image-processing, 4 temperature, humidity, time-scheduling, bi- 5 level, or demand-response, and 6 ‘‘(xiv) in the case of a variable speed 7 or frequency drive, it is a drive— 8 ‘‘(I) added to adjust the speed 9 and torque of an operational motor 10 that powers pump, fan, exhaust, ven- 11 tilation, air-handling, or compressor 12 equipment, and 13 ‘‘(II) controlled automatically by 14 a building automation system, process 15 control system, or local controller 16 driven by differential pressure flow, 17 temperature or another variable sig- 18 nal. 19 ‘‘(C) UPDATING OF PERFORMANCE STAND- 20 ARDS.—The most recent version of each per- 21 formance standard described in subparagraph 22 (B) shall be affirmed by the Secretary (after 23 consultation with the Secretary of Energy) and 24 shall apply with respect to any property for 25 VerDate Sep 11 2014 04:48 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2346.IH H2346 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 2346 IH purposes of this paragraph not later than the 1 date that is 2 years before the date that the im- 2 provement to such property begins.’’. 3 (d) ALTERNATIVE DEPRECIATION SYSTEM.—The 4 table in section 168(g)(3)(B) of such Code is amended by 5 inserting after the item relating to subparagraph (D)(v) 6 the following new item: 7 ‘‘(D)(vi) ........................................................................................ 10’’. (e) EFFECTIVE DATE.—The amendments made by 8 this section shall apply to property placed in service after 9 December 31, 2020. 10 SEC. 3. REPORT RELATING TO DEPRECIATION OF ENERGY 11 EFFICIENT QUALIFIED IMPROVEMENT PROP- 12 ERTY. 13 (a) IN GENERAL.—Not later than 30 days after the 14 date that is 3 years after the date of the enactment of 15 this Act, the Secretary of the Treasury, in consultation 16 with the Secretary of Energy, shall submit to Congress 17 a report on energy efficient qualified improvement prop- 18 erty (as defined in section 168(e)(7) of the Internal Rev- 19 enue Code of 1986). 20 (b) CONTENTS.—Such report shall include the fol- 21 lowing: 22 (1) The number of times over such 3-year pe- 23 riod energy efficient qualified improvement property 24 VerDate Sep 11 2014 04:48 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2346.IH H2346 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 2346 IH was placed in service and treated as 10-year prop- 1 erty under section 168(e)(3)(D) of such Code. 2 (2) A summary of the types of such energy effi- 3 cient qualified improvement property placed in serv- 4 ice during such period. 5 (3) An estimate of the energy use savings, and 6 reduction in greenhouse gas emissions, attributable 7 to such property. 8 (4) An estimate of the number of jobs created 9 which are attributable to the enactment of the En- 10 ergy Efficient Qualified Improvement Property Act 11 of 2020. 12 (5) Any recommendations for updated efficiency 13 requirements for energy efficient qualified improve- 14 ment property or rules for the depreciation thereof. 15 Æ VerDate Sep 11 2014 04:48 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\H2346.IH H2346 pbinns on DSKJLVW7X2PROD with BILLS