II 

111TH CONGRESS 

1ST SESSION S. 1371 

To amend the Internal Revenue Code of 1986 to provide for clean renewable 

water supply bonds. 

IN THE SENATE OF THE UNITED STATES 

JUNE 25, 2009 

Mr. NELSON of Florida (for himself, Mr. ENSIGN, and Mr. MARTINEZ) 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 

for clean renewable water supply bonds. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Clean Renewable 

5 Water Supply Bond Act of 2009’’. 

6 SEC. 2. CLEAN RENEWABLE WATER SUPPLY BONDS. 

7 (a) IN GENERAL.—Subpart I of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 

9 1986 is amended by adding at the end the following new 

10 section: 


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1 ‘‘SEC. 54G. CLEAN RENEWABLE WATER SUPPLY BONDS. 

2 ‘‘(a) CLEAN RENEWABLE WATER SUPPLY BONDS.— 

3 For purposes of this subpart, the term ‘clean renewable 

4 water supply bond’ means any bond issued as part of an 

5 issue if— 

6 ‘‘(1) 100 percent of the available project pro7 ceeds of such issue are to be used for capital expend8 itures incurred by qualified borrowers for 1 or more 

9 qualified projects, 

10 ‘‘(2) the bond is issued by a qualified issuer, 

11 ‘‘(3) the issuer designates such bond for pur12 poses of this section, and 

13 ‘‘(4) in the case of a bond issued by a qualified 

14 issuer before 2019, the bond is issued— 

15 ‘‘(A) pursuant to an allocation by the Sec16 retary to such issuer of a portion of the na17 tional clean renewable water supply bond limita18 tion under subsection (b), and 

19 ‘‘(B) not later than 6 months after the 

20 date that such qualified issuer receives an allo21 cation under subsection (b). 

22 ‘‘Any allocation under subsection (b) not used within the 

23 6-month period described in paragraph (4)(B) shall be ap24 plied to increase the national clean renewable water supply 

25 bond limitation for the next succeeding application period 

26 under subsection (b)(2)(B). 


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1 ‘‘(b) NATIONAL LIMITATION ON AMOUNT OF BONDS

2 DESIGNATED.— 

3 ‘‘(1) IN GENERAL.—There is a national clean 

4 renewable water supply bond limitation for each cal5 endar year before 2019. Such limitation is— 

6 ‘‘(A) $0 for 2009, 

7 ‘‘(B) $100,000,000 for 2010, 

8 ‘‘(C) $150,000,000 for 2011, 

9 ‘‘(D) $200,000,000 for 2012, 

10 ‘‘(E) $250,000,000 for 2013, 

11 ‘‘(F) $500,000,000 for 2014, 

12 ‘‘(G) $750,000,000 for 2015, 

13 ‘‘(H) $1,000,000,000 for 2016, 

14 ‘‘(I) $1,500,000,000 for 2017, and 

15 ‘‘(J) $1,750,000,000 for 2018. 

16 ‘‘(2) ALLOCATION OF LIMITATION.— 

17 ‘‘(A) IN GENERAL.—The limitation under 

18 paragraph (1) shall be allocated by the Sec19 retary among qualified projects as provided in 

20 this paragraph. 

21 ‘‘(B) METHOD OF ALLOCATION.—For each 

22 calendar year after 2009 for which there is a 

23 national clean renewable water supply bond lim24 itation, the Secretary shall publish a notice so25 liciting applications by qualified issuers for alloVerDate Nov 24 2008 04:21 Jun 26, 2009 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1371.IS S1371

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1 cations of such limitation to qualified projects. 

2 Such notice shall specify a 3-month application 

3 period in the calendar year during which the 

4 Secretary will accept such applications. Within 

5 30 days after the end of such application pe6 riod, and subject to the requirements of sub7 paragraph (C), the Secretary shall allocate such 

8 limitation to qualified projects on a first-come, 

9 first-served basis, based on the order in which 

10 such applications are received from qualified 

11 issuers. 

12 ‘‘(C) ALLOCATION REQUIREMENTS.— 

13 ‘‘(i) CERTIFICATIONS REGARDING

14 REGULATORY APPROVALS.—No portion of 

15 the national clean renewable water supply 

16 bond limitation shall be allocated to a 

17 qualified project unless the qualified issuer 

18 has certified in its application for such al19 location that as of the date of such appli20 cation the qualified issuer or qualified bor21 rower has received all Federal and State 

22 regulatory approvals necessary to construct 

23 the qualified project. 


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1 ‘‘(ii) RESTRICTION ON ALLOCATIONS

2 TO LARGE PROJECTS OR TO INDIVIDUAL

3 PROJECTS.— 

4 ‘‘(I) IN GENERAL.—Except as 

5 provided in subclause (III), for any 

6 calendar year the Secretary shall not 

7 allocate more than 60 percent of the 

8 national clean renewable water supply 

9 bond limitation to 1 or more large 

10 projects, more than 18 percent of 

11 such limitation to any single project 

12 that is a large project, or more than 

13 12 percent of such limitation to any 

14 single project that is not a large 

15 project. 

16 ‘‘(II) DEFINITION OF LARGE

17 PROJECT.—For purposes of subclause 

18 (I), the term ‘large project’ means a 

19 qualified project that is designed to 

20 deliver more than 10,000,000 gallons 

21 of water per day. 

22 ‘‘(III) EXCEPTION TO RESTRIC23 TION.—Subclause (I) shall not apply 

24 to the extent its application would 

25 cause any portion of the national 


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1 clean renewable water supply bond 

2 limitation for the calendar year to re3 main unallocated, based on applica4 tions for allocations of such limitation 

5 received by the Secretary during the 

6 application period referred to in sub7 paragraph (B). 

8 ‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If 

9 the clean renewable water supply bond limitation for 

10 any calendar year exceeds the aggregate amount al11 located under paragraph (2) for such year, such lim12 itation for the succeeding calendar year shall be in13 creased by the amount of such excess. 

14 ‘‘(c) MATURITY LIMITATION.— 

15 ‘‘(1) IN GENERAL.—A bond shall not be treated 

16 as a clean renewable water supply bond if the matu17 rity of such bond exceeds 20 years. 

18 ‘‘(2) COORDINATION WITH SECTION 54A.—The 

19 maturity limitation in section 54A(d)(5) shall not 

20 apply to any clean renewable water supply bond. 

21 ‘‘(d) REFINANCING RULES.—For purposes of para22 graph (a)(1), a qualified project may be refinanced with 

23 proceeds of a clean renewable water supply bond only if 

24 the indebtedness being refinanced (including any obliga25 tion directly or indirectly refinanced by such indebtedness) 


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1 was originally incurred by a qualified borrower after the 

2 date of the enactment of this section. 

3 ‘‘(e) DEFINITIONS.—For purposes of this section— 

4 ‘‘(1) GOVERNMENTAL BODY.—The term ‘gov5 ernmental body’ means any State or Indian tribal 

6 government, or any political subdivision thereof. 

7 ‘‘(2) LOCAL WATER COMPANY.—The term ‘local 

8 water company’ means any entity responsible for 

9 providing water service to the general public (includ10 ing electric utility, industrial, agricultural, commer11 cial, or residential users) pursuant to State or tribal 

12 law. 

13 ‘‘(3) QUALIFIED BORROWER.—The term ‘quali14 fied borrower’ means a governmental body or a local 

15 water company. 

16 ‘‘(4) QUALIFIED DESALINATION FACILITY.— 

17 The term ‘qualified desalination facility’ means any 

18 facility that is used to produce new water supplies 

19 by desalinating seawater, groundwater, or surface 

20 water if the facility’s source water includes chlorides 

21 or total dissolved solids that, either continuously or 

22 seasonally, exceed maximum permitted levels for pri23 mary or secondary drinking water under Federal or 

24 State law (as in effect on the date of issuance of the 

25 issue). 


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1 ‘‘(5) QUALIFIED GROUNDWATER REMEDIATION

2 FACILITY.—The term ‘qualified groundwater remedi3 ation facility’ means any facility that is used to re4 claim contaminated or naturally impaired ground5 water for direct delivery for potable use if the facili6 ty’s source water includes constituents that exceed 

7 maximum contaminant levels regulated under the 

8 Safe Drinking Water Act (as in effect on the date 

9 of the enactment of this section). 

10 ‘‘(6) QUALIFIED ISSUER.—The term ‘qualified 

11 issuer’ means— 

12 ‘‘(A) a governmental body, or 

13 ‘‘(B) in the case of a State or political sub14 division thereof (as defined for purposes of sec15 tion 103), any entity qualified to issue tax-ex16 empt bonds under section 103 on behalf of such 

17 State or political subdivision. 

18 ‘‘(7) QUALIFIED PROJECT.— 

19 ‘‘(A) IN GENERAL.—The term ‘qualified 

20 project’ means any facility owned by a qualified 

21 borrower which is a— 

22 ‘‘(i) qualified desalination facility, 

23 ‘‘(ii) qualified recycled water facility, 

24 ‘‘(iii) qualified groundwater remedi25 ation facility, or 


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1 ‘‘(iv) facility that is functionally re2 lated or subordinate to a facility described 

3 in clause (i), (ii), or (iii). 

4 ‘‘(B) ENVIRONMENTAL IMPACT.—A project 

5 shall not be treated as a qualified project under 

6 subparagraph (A) unless such project is de7 signed to comply with regulations issued under 

8 subsection (f) relating to the minimization of 

9 the environmental impact of the project. 

10 ‘‘(8) QUALIFIED RECYCLED WATER FACILITY.— 

11 ‘‘(A) IN GENERAL.—The term ‘qualified 

12 recycled water facility’ means any wastewater 

13 treatment or distribution facility which— 

14 ‘‘(i) exceeds the requirements for the 

15 treatment and disposal of wastewater 

16 under the Clean Water Act and any other 

17 Federal or State water pollution control 

18 standards for the discharge and disposal of 

19 wastewater to surface water, land, or 

20 groundwater (as such requirements and 

21 standards are in effect on the date of 

22 issuance of the issue), and 

23 ‘‘(ii) except as provided in subpara24 graph (B), is used to reclaim wastewater 

25 produced by the general public (including 


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1 electric utility, industrial, agricultural, 

2 commercial, or residential users) to the ex3 tent such reclaimed wastewater is used for 

4 a beneficial use that the issuer reasonably 

5 expects as of the date of issuance of the 

6 issue otherwise would have been satisfied 

7 with potable water supplies. 

8 ‘‘(B) IMPERMISSIBLE USES.—Reclaimed 

9 wastewater is not used for a use described in 

10 subparagraph (A)(ii) to the extent such re11 claimed wastewater is— 

12 ‘‘(i) discharged into a waterway or 

13 used to meet waterway discharge permit 

14 requirements and not used to supplement 

15 potable water supplies, 

16 ‘‘(ii) used to restore habitat, 

17 ‘‘(iii) used to provide once-through 

18 cooling for an electric generation facility, 

19 or 

20 ‘‘(iv) intentionally introduced into the 

21 groundwater and not used to supplement 

22 potable water supplies. 

23 ‘‘(f) REGULATIONS.—The Secretary shall prescribe 

24 such regulations as are necessary to carry out the pur25 poses of this section, including regulations promulgated in 


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1 consultation with the Administrator of the Environmental 

2 Protection Agency to ensure the environmental impact of 

3 qualified facilities is minimized.’’. 

4 (b) CONFORMING AMENDMENTS.— 

5 (1) Paragraph (1) of section 54A(d) of the In6 ternal Revenue Code of 1986 is amended by striking 

7 ‘‘or’’ at the end of subparagraph (D), by inserting 

8 ‘‘or’’ at the end of subparagraph (E), and by insert9 ing after subparagraph (E) the following new sub10 paragraph: 

11 ‘‘(F) a clean renewable water supply 

12 bond,’’. 

13 (2) Subparagraph (C) of section 54A(d)(2) of 

14 such Code is amended by striking ‘‘and’’ at the end 

15 of clause (iv), by striking the period at the end of 

16 clause (v) and inserting ‘‘, and’’, and by adding at 

17 the end the following new clause: 

18 ‘‘(vi) in the case of a clean renewable 

19 water supply bond, a purpose specified in 

20 section 54G(a)(1).’’. 

21 (3) The table of sections for subpart I of part 

22 IV of subchapter A of chapter 1 of such Code is 

23 amended by adding at the end the following new 

24 item: 

‘‘Sec. 54G. Clean renewable water supply bonds.’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to obligations issued after Decem3 ber 31, 2008. 

Æ 


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