Water Affordability, Transparency, Equity, and Reliability Act of 2016

Summary: Water Affordability, Transparency, Equity, and Reliability Act of 2016 This bill amends the Internal Revenue Code to: (1) establish a Water Affordability, Transparency, Equity, and Reliability Trust Fund; (2) modify the definition of subpart F income (i.e., income of a controlled foreign corporation earned outside the United States that is not tax-deferred) to include income of a controlled foreign corporation derived from a foreign country; and (3) transfer that income to the fund. The Environmental Protection Agency (EPA) must allocate funds from the trust fund to specified clean water programs and drinking water programs, including the grant programs authorized or established by this bill. The bill amends Federal Water Pollution Control Act (commonly known as the Clean Water Act) by authorizing the EPA to make grants for providing technical assistance concerning water and sanitation infrastructure and drinking water systems to rural and small municipalities and tribal governments. The EPA must establish a grant program for repairing, replacing, or upgrading septic tanks and drainage fields. The bill revises requirements concerning the clean water state revolving fund (SRF) and the drinking water SRF. The bill revises the Safe Drinking Water Act by requiring the EPA to establish a program to make grants to local educational agencies for: (1) installing, repairing, or replacing the infrastructure necessary for drinking water coolers, drinking water fountains, or bottle filling station; and (2) testing the quality of drinking water at schools in such local education agency.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Water 
Affordability, Transparency, Equity, and Reliability Act of 2016''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Water Affordability, Transparency, Equity, and Reliability 
                            Trust Fund.
Sec. 3. Report on affordability, discrimination and civil rights 
                            violations, public participation in 
                            regionalization, and data collection.
Sec. 4. Technical assistance to rural and small municipalities and 
                            tribal governments.
Sec. 5. Residential onsite sewage disposal system improvement.
Sec. 6. State water pollution control revolving funds.
Sec. 7. Use of State revolving loan funds under the Safe Drinking Water 
                            Act.
Sec. 8. Drinking water grant programs.

SEC. 2. WATER AFFORDABILITY, TRANSPARENCY, EQUITY, AND RELIABILITY 
              TRUST FUND.

    (a) Establishment.--
            (1) In general.--Subchapter A of chapter 98 of the Internal 
        Revenue Code of 1986 is amended by adding at the end the 
        following:

``SEC. 9512. WATER AFFORDABILITY, TRANSPARENCY, EQUITY, AND RELIABILITY 
              TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Water 
Affordability, Transparency, Equity, and Reliability Trust Fund' 
(referred to in this section as the `Trust Fund'), consisting of such 
amounts as may be appropriated or credited to such Trust Fund as 
provided in this section or section 9602(b).
    ``(b) Transfers to Fund.--
            ``(1) In general.--There are hereby appropriated to the 
        Trust Fund such amounts as the Secretary from time to time 
        estimates are equal to the increase in Federal revenues 
        attributable to the application of section 952(e).
            ``(2) Limitation.--The sum of the amounts appropriated 
        under paragraph (1) during any fiscal year shall not exceed 
        $34,850,000,000.
    ``(c) Expenditures.--Amounts in the Trust Fund are available, 
without further appropriation and without fiscal year limitation, for 
the purposes described in section 2(c) of the Water Affordability, 
Transparency, Equity, and Reliability Act of 2016.''.
            (2) Clerical amendment.--The table of parts for subchapter 
        A of chapter 98 of such Code is amended by inserting after the 
        item relating to section 9511 the following new item:

``Sec. 9512. Water Affordability, Transparency, Equity, and Reliability 
                            Trust Fund.''.
    (b) Imposition of Tax.--
            (1) In general.--Section 952 of the Internal Revenue Code 
        of 1986 is amended by adding at the end the following:
    ``(e) Special Application of Subpart.--
            ``(1) In general.--Notwithstanding any other provision of 
        this subpart, the term `subpart F income' means, in the case of 
        any controlled foreign corporation, the income of such 
        corporation derived from any foreign country.
            ``(2) Applicable rules.--Rules similar to the rules under 
        the last sentence of subsection (a) and subsection (d) shall 
        apply to this subsection.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years of foreign corporations beginning 
        after the date of the enactment of this Act, and to taxable 
        years of United States shareholders with or within which such 
        taxable years of foreign corporations end.
    (c) Allocation of Funds.--The Administrator of the Environmental 
Protection Agency shall allocate, for a fiscal year, the funds 
available, at the beginning of such fiscal year, in the Water 
Affordability, Transparency, Equity, and Reliability Trust Fund, 
established by section 9512 of the Internal Revenue Code of 1986, as 
follows:
            (1) Clean water programs.--Of such amount, the 
        Administrator shall make available--
                    (A) 0.5 percent for making grants under section 
                104(b)(8) of the Federal Water Pollution Control Act;
                    (B) 1.5 percent for making grants under section 106 
                of such Act (33 U.S.C. 1256);
                    (C) 2.5 percent for making grants under section 222 
                of such Act;
                    (D) 2.5 percent for making grants under section 319 
                of such Act (33 U.S.C. 1329); and
                    (E) 45 percent for making capitalization grants 
                under section 601 of such Act (33 U.S.C. 1381).
            (2) Safe drinking water funding.--Of such amount, the 
        Administrator shall make available--
                    (A) 0.5 percent for providing technical assistance 
                under section 1442(e) of the Safe Drinking Water Act 
                (42 U.S.C. 300j-1(e));
                    (B) 44.5 percent for making capitalization grants 
                under section 1452 of such Act (42 U.S.C. 300j-12); and
                    (C) 3 percent for making grants under section 1465 
                of such Act.

SEC. 3. REPORT ON AFFORDABILITY, DISCRIMINATION AND CIVIL RIGHTS 
              VIOLATIONS, PUBLIC PARTICIPATION IN REGIONALIZATION, AND 
              DATA COLLECTION.

    (a) Study.--
            (1) In general.--The Administrator of the Environmental 
        Protection Agency shall conduct a study on water and sewer 
        services, in accordance with this subsection.
            (2) Affordability.--In conducting the study under paragraph 
        (1), the Administrator shall study water affordability 
        nationwide, including--
                    (A) rates for water and sewer services, increases 
                in such rates during the ten-year period preceding such 
                study, and water service disconnections due to unpaid 
                water service charges; and
                    (B) the effectiveness of funding under section 1452 
                of the Safe Drinking Water Act and under section 601 of 
                the Federal Water Pollution Control Act for promoting 
                affordable, equitable, transparent, and reliable water 
                and sewer service.
            (3) Discrimination and civil rights.--In conducting the 
        study under paragraph (1), the Administrator, in collaboration 
        with the Civil Rights Division of the United States Department 
        of Justice, shall study--
                    (A) discriminatory practices of water and sewer 
                service providers; and
                    (B) violations by such service providers that 
                receive Federal assistance of civil rights under title 
                VI of the Civil Rights Act of 1964 with regard to equal 
                access to water and sewer services.
            (4) Public participation in regionalization.--In conducting 
        the study under paragraph (1), the Administrator shall evaluate 
        efforts to regionalize public water systems, as defined in 
        section 1401 of the Safe Water Drinking Act, and sewer services 
        with respect to public participation in--
                    (A) the decision to undergo such regionalization; 
                and
                    (B) decisionmaking by the board of directors (or 
                other governing body) of the entity that provides, or 
                oversees or coordinates the provision of, water by the 
                public water systems subject to such regionalization.
            (5) Data collection.--In conducting the study under 
        paragraph (1), the Administrator shall collect information, 
        assess the availability of information, and evaluate the 
        methodologies used to collect information, related to--
                    (A) people living without water or sewer services;
                    (B) water service disconnections due to unpaid 
                water service charges, including disconnections 
                experienced by households containing children, elderly 
                persons, disabled persons, chronically ill persons, or 
                other vulnerable populations; and
                    (C) disparate effects, on the basis of race, 
                gender, or socioeconomic status, of water service 
                disconnections and the lack of public water service.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Administrator of the Environmental Protection Agency 
shall submit to Congress a report that contains--
            (1) the results of the study conducted under subsection 
        (a)(1); and
            (2) recommendations for utility companies, Federal 
        agencies, and States relating to such results.

SEC. 4. TECHNICAL ASSISTANCE TO RURAL AND SMALL MUNICIPALITIES AND 
              TRIBAL GOVERNMENTS.

    Section 104(b) of the Federal Water Pollution Control Act (33 
U.S.C. 1254(b)) is amended--
            (1) in paragraph (6), by striking ``and'' at the end;
            (2) in paragraph (7), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(8) make grants to nonprofit organizations to--
                    ``(A) provide technical assistance to rural and 
                small municipalities and tribal governments for the 
                purpose of assisting, in consultation with the State in 
                which the assistance is provided, such municipalities 
                and governments in the planning, development, and 
                acquisition of financing for projects and activities 
                eligible for assistance under section 603(c);
                    ``(B) provide technical assistance and training to 
                rural and small municipalities and tribal governments 
                responsible for publicly owned treatment works and 
                decentralized wastewater treatment systems for the 
                purpose of enabling such works and systems to protect 
                water quality and achieve and maintain compliance with 
                the requirements of this Act; and
                    ``(C) disseminate information to rural and small 
                municipalities, tribal governments, and municipalities 
                that meet the affordability criteria established under 
                section 603(i)(2) by the State in which the 
                municipality is located, that pertains to the planning, 
                design, construction, and operation of publicly owned 
                treatment works and decentralized wastewater treatment 
                systems.''.

SEC. 5. RESIDENTIAL ONSITE SEWAGE DISPOSAL SYSTEM IMPROVEMENT.

    Title II of the Federal Water Pollution Control Act (33 U.S.C. 1281 
et seq.) is amended by adding at the end the following:

``SEC. 222. RESIDENTIAL ONSITE SEWAGE DISPOSAL SYSTEMS.

    ``Not later than the date that is 1 year after the date of the 
enactment of this section, the Administrator shall establish a grant 
program to make grants to users of a septic tank and drainage field for 
costs associated with repairing, replacing, or upgrading such tank and 
such field.''.

SEC. 6. STATE WATER POLLUTION CONTROL REVOLVING FUNDS.

    (a) Specific Requirements.--Section 602(b) of the Federal Water 
Pollution Control Act (33 U.S.C. 1382(b)) is amended--
            (1) in paragraph (13), by striking ``and'' at the end;
            (2) in paragraph (14), by striking the period at the end 
        and inserting a semicolon; and
            (3) by adding at the end the following:
            ``(15) the State will not provide financial assistance 
        using amounts from the fund for any project that will provide 
        substantial direct benefits to new communities, lots, or 
        subdivisions, other than a project to construct an advanced 
        decentralized wastewater system; and
            ``(16) the requirements of section 513 will apply to the 
        construction of treatment works carried out in whole or in part 
        with assistance made available by a State water pollution 
        control revolving fund as authorized under this title, or with 
        assistance made available under section 205(m), or both, in the 
        same manner as treatment works for which grants are made under 
        this Act.''.
    (b) Projects and Activities Eligible for Assistance.--Section 
603(c) of the Federal Water Pollution Control Act (33 U.S.C. 1383(c)) 
is amended--
            (1) in paragraph (10), by striking ``and'' at the end;
            (2) in paragraph (11)(B), by striking the period at the end 
        and inserting ``; and''; and
            (3) by adding at the end the following:
            ``(12) to any municipality or intermunicipal, interstate, 
        or State agency for--
                    ``(A) purchasing from a willing or unwilling seller 
                a privately owned treatment works; and
                    ``(B) expenses related to canceling a contract for 
                the operation or management of a publicly owned 
                treatment works.''.
    (c) Increasing the Limit of Additional Subsidization by the 
State.--Section 603(i)(3)(B) of the Federal Water Pollution Control Act 
(33 U.S.C. 1383(i)(3)(B)) is amended to read as follows:
                    ``(B) Additional limitation.--A State may use not 
                more than 50 percent of the total amount received by 
                the State in capitalization grants under this title for 
                a fiscal year for providing additional subsidization 
                under this subsection.''.

SEC. 7. USE OF STATE REVOLVING LOAN FUNDS UNDER THE SAFE DRINKING WATER 
              ACT.

    Section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12) is 
amended--
            (1) in subsection (a)--
                    (A) in paragraph (2)--
                            (i) by inserting ``publicly owned, 
                        operated, and managed'' before ``community 
                        water systems''; and
                            (ii) by striking ``The funds shall not be 
                        used for the acquisition of real property or 
                        interests therein, unless the acquisition is 
                        integral to a project authorized by this 
                        paragraph and the purchase is from a willing 
                        seller.'' and inserting ``The funds may also be 
                        used for purchasing from a willing or unwilling 
                        seller a privately owned community water 
                        system, or for the expenses related to 
                        canceling a contract for the operation or 
                        management of a community water system.''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(4) Exception to public ownership, operation, and 
        management requirement.--Notwithstanding the first sentence of 
        paragraph (2), public water systems which regularly serve fewer 
        than 10,000 persons and which are not owned, operated, or 
        managed by any person which owns, operates, or manages any 
        other public water system may receive assistance under this 
        section.'';
            (2) in subsection (d)(2), by striking ``30 percent'' and 
        inserting ``50 percent'';
            (3) in subsection (g)(3)--
                    (A) in paragraph (B), by striking ``and'' at the 
                end;
                    (B) in paragraph (C), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by inserting after subparagraph (C) the 
                following:
                    ``(D) guidance to ensure affordable, equitable, 
                transparent and reliable water and sewer service 
                provision, to provide protections for households facing 
                service disconnection due to unpaid water service 
                charges, and to promote universal equal access to water 
                and sewer services.''; and
            (4) in subsection (k)(1), by adding at the end the 
        following:
                    ``(E) Provide assistance in the form of a grant to 
                owners of private properties for the purpose of 
                replacing lead service lines, as defined in section 
                141.2 of title 40, Code of Federal Regulations, with 
                service lines that are lead-free, as defined in section 
                1417(d).''.

SEC. 8. DRINKING WATER GRANT PROGRAMS.

    (a) School Drinking Water Improvement.--Section 1465 of the Safe 
Drinking Water Act (42 U.S.C. 300j-24) is amended to read as follows:

``SEC. 1465. FEDERAL ASSISTANCE.

    ``Not later than the date that is 1 year after the date of the 
enactment of this section, the Administrator shall establish a grant 
program to make grants to local educational agencies for costs 
associated with--
            ``(1) installing, repairing, or replacing the 
        infrastructure necessary for drinking water coolers, drinking 
        water fountains, or bottle filling stations; and
            ``(2) testing the quality of drinking water at schools in 
        such local education agency.''.
    (b) Tribal Drinking Water.--Section 1452(i)(1) of the Safe Drinking 
Water Act (42 U.S.C. 300j-12(i)(1)) is amended--
            (1) by striking ``1 1/2'' and inserting ``Three''; and
            (2) by striking ``may'' and inserting ``shall''.