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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 1711 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                S. 1711

 To amend the Internal Revenue Code of 1986 to provide tax incentives 
for making homes more water-efficient, for building new water-efficient 
     homes, for public water conservation, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           September 24, 2009

 Mr. Reid (for himself and Mr. Ensign) 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 tax incentives 
for making homes more water-efficient, for building new water-efficient 
     homes, for public water conservation, and for other purposes.

    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 ``Water Efficiency and Conservation 
Investment Act of 2009''.

SEC. 2. RESIDENTIAL WATER EFFICIENCY CREDIT.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code is amended by inserting after section 30D 
the following new section:

``SEC. 30E. RESIDENTIAL WATER EFFICIENCY CREDIT.

    ``(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 50 percent of the qualified 
water efficiency property expenditures paid or incurred during such 
taxable year.
    ``(b) Limitation.--The credit allowed under this section with 
respect to any taxpayer for any taxable year shall not exceed $750.
    ``(c) Qualified Water Efficiency Property Expenditures.--For 
purposes of this section--
            ``(1) In general.--The term `qualified water efficiency 
        property expenditures' means expenditures for qualified water 
        efficiency property which is--
                    ``(A) installed on or in connection with a dwelling 
                unit located in the United States that is owned by the 
                taxpayer (without regard to whether any other person 
                occupies such dwelling unit as a residence), and
                    ``(B) originally placed in service by the taxpayer.
        Such term includes expenditures for labor costs properly 
        allocable to the onsite preparation, assembly, or original 
        installation of such property.
            ``(2) Qualified water efficiency property.--The term 
        `qualified water efficiency property' means--
                    ``(A) property which meets the national efficiency 
                standards and specifications for residential water-
                using fixtures, appliances, and devices under the 
                WaterSense program of the Environmental Protection 
                Agency that are in effect on the date of purchase of 
                such property, but only if such property improves water 
                efficiency by no less than 20 percent over standard 
                models of similar water-using fixtures and appliances 
                as determined by the Administrator of such Agency, and
                    ``(B) water efficient landscaping which is 
                installed by a landscape irrigation professional 
                certified by such WaterSense program and which reduces 
                water use by no less than 50 percent, as certified by 
                such professional.
            ``(3) State water efficiency standards.--In the case of a 
        State that has mandatory water efficiency standards for any 
        property that are more stringent than the standards and 
        specifications described in paragraph (2), property installed 
        on or in connection with a dwelling unit that is located in 
        such State must meet such water efficiency standards of such 
        State in order to be treated as qualified water efficiency 
        property for purposes of this section.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Joint ownership of water efficiency items.--
                    ``(A) In general.--An expenditure shall not fail to 
                be treated as a qualified water efficiency property 
                expenditure merely because such expenditure was made 
                with respect to 2 or more dwelling units.
                    ``(B) Allocation of expenditures.--In the case of 
                an expenditure made with respect to 2 or more dwelling 
                units, for purposes of determining the credit allowable 
                under this section, such expenditure shall be allocated 
                among such dwelling units in proportion to the amount 
                of the expenditure made for each dwelling unit.
            ``(2) Refunds disregarded in the administration of federal 
        programs and federally assisted programs.--Any credit or refund 
        allowed or made to any individual by reason of this section 
        shall not be taken into account as income and shall not be 
        taken into account as resources, for purposes of determining 
        the eligibility of such individual or any other individual for 
        benefits or assistance, or the amount or extent of benefits or 
        assistance, under any Federal program or under any State or 
        local program financed in whole or in part with Federal funds.
            ``(3) Basis adjustments.--For purposes of this subtitle, if 
        a credit is allowed under subsection (a) 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.
            ``(4) Denial of double benefit.--
                    ``(A) In general.--No deduction or credit under any 
                other provision of this chapter shall be allowed with 
                respect to the amount of any qualified water efficiency 
                property expenditure taken into account under this 
                section.
                    ``(B) Rebate programs.--The amount of any qualified 
                water efficiency property expenditure for which an 
                individual is reimbursed under any Federal government 
                program shall not be taken into account for purposes of 
                determining the credit under subsection (a) with 
                respect such individual.
    ``(e) Application With Other Credits.--
            ``(1) Business credit.--
                    ``(A) Business credit treated as part of general 
                business credit.--So much of the credit which would be 
                allowed under subsection (a) for any taxable year 
                (determined without regard to this subsection) that is 
                attributable to property of a character subject to an 
                allowance for depreciation shall be treated as a credit 
                listed in section 38(b) for such taxable year (and not 
                allowed under subsection (a)).
                    ``(B) Disallowance of depreciation.--In the case of 
                an expenditure for property described in subparagraph 
                (A) with respect to which a credit is allowed under 
                section 38(b) by reason of such subparagraph, the 
                depreciation allowance for such property in all taxable 
                years shall be zero and no deduction shall be available 
                under section 167 with respect to such property.
            ``(2) Personal credit.--
                    ``(A) In general.--For purposes of this title, the 
                credit allowed under subsection (a) for any taxable 
                year (determined after application of paragraph (1)) 
                shall be treated as a credit allowable under subpart A 
                for such taxable year.
                    ``(B) Limitation based on amount of tax.--In the 
                case of a taxable year to which section 26(a)(2) does 
                not apply, the credit allowed under subsection (a) for 
                any taxable year (determined after application of 
                paragraph (1)) shall not exceed the excess of--
                            ``(i) the sum of the regular tax liability 
                        (as defined in section 26(b)), plus
                            ``(ii) the sum of the credits allowable 
                        under subpart A (other than this section and 
                        sections 23, 25D, 30, 30B, and 30D) and section 
                        27 for the taxable year.
    ``(f) Termination.--This section shall not apply with respect to 
any property placed in service after December 31, 2014.''.
    (b) Conforming Amendments.--
            (1) Section 24(b)(3)(B) of the Internal Revenue Code of 
        1986 is amended by striking ``and 30D'' and inserting ``, 30D, 
        and 30E''.
            (2) Section 25(e)(1)(C)(ii) of such Code is amended by 
        inserting ``30E,'' after ``30D,''.
            (3) Section 25B(g)(2) of such Code is amended by striking 
        ``and 30D'' and inserting ``30D, and 30E''.
            (4) Section 904(i) of such Code is amended by striking 
        ``and 30D'' and inserting ``30D, and 30E''.
            (5) Section 1016(a) of such Code is amended by striking 
        ``and'' at the end of paragraph (36), by striking the period at 
        the end of paragraph (37) and inserting ``, and'', and by 
        adding at the end the following new paragraph:
            ``(38) to the extent provided in section 30E(d)(3).''.
            (6) Section 1400C(d)(2) of such Code is amended by striking 
        ``and 30D'' and inserting ``30D, and 30E''.
    (c) Credit To Be Part of Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 is amended by striking ``plus'' at the 
end of paragraph (34), by striking the period at the end of paragraph 
(35) and inserting ``, plus'', and by adding at the end the following 
new paragraph:
            ``(36) the portion of the residential water efficiency 
        credit to which section 30E(e)(1) applies.''.
    (d) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 30D the 
following new item:

``Sec. 30E. Residential water efficiency credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2009.

SEC. 3. NEW WATER EFFICIENT HOME CREDIT.

    (a) In General.--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 section:

``SEC. 45R. NEW WATER EFFICIENT HOME CREDIT.

    ``(a) Allowance of Credit.--For purposes of section 38, in the case 
of an eligible contractor, the new water efficient home credit for the 
taxable year is an amount equal to $1,500 for each qualified new water 
efficient home which is--
            ``(1) constructed by such eligible contractor, and
            ``(2) acquired by a person from such eligible contractor 
        during the taxable year.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Eligible contractor.--The term `eligible contractor' 
        means a person who is certified as a builder partner under the 
        WaterSense program of the Environmental Protection Agency and 
        who is--
                    ``(A) the person who constructed the qualified new 
                water efficient home, or
                    ``(B) in the case of a qualified new energy 
                efficient home which is a manufactured home, the 
                manufactured home producer of such home.
            ``(2) Qualified new water efficient home.--The term 
        `qualified new water efficient home' means a dwelling unit--
                    ``(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) which is certified by the Environmental 
                Protection Agency as complying with the Final Water-
                Efficient Single-Family New Home Specification issued 
                by such Agency.
            ``(3) Construction.--The term `construction' includes 
        substantial reconstruction and rehabilitation.
            ``(4) Acquire.--The term `acquire' includes purchase.
    ``(c) Certification.--
            ``(1) Method of certification.--A certification described 
        in subsection (b)(2)(C) shall be made in accordance with 
        guidance prescribed by the Secretary, after consultation with 
        the Administrator of the Environmental Protection Agency. Such 
        guidance shall specify procedures and methods for calculating 
        water and cost savings.
            ``(2) Form.--Any certification described in subsection 
        (b)(2)(C) shall be made in writing in a manner which specifies 
        in readily verifiable fashion the water efficient components 
        (including toilets, faucets, other plumbing fixtures and 
        appliances, hot water delivery, landscape design, and 
        irrigation systems) installed and their respective rated water 
        efficiency performance.
    ``(d) Basis Adjustment.--For purposes of this subtitle, if a credit 
is allowed under this section in connection with any expenditure for 
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 determined.
    ``(e) Coordination With Other Credits.--Expenditures taken into 
account under section 45L, 47, or 48(a) shall not be taken into account 
under this section.
    ``(f) Rebate Programs.--The amount of the credit allowed under 
subsection (a) to an eligible contractor with respect to any qualified 
new water efficient home shall be reduced, but not below zero, by the 
amount of any reimbursement which such contractor receives under any 
Federal government program for the construction of such home or for 
expenditures relating to such construction.
    ``(g) Termination.--This section shall not apply to any qualified 
new water efficient home acquired after December 31, 2014.''.
    (b) Credit To Be Part of General Business Credit.--Section 38(b) of 
the Internal Revenue Code of 1986, as amended by this Act, is amended 
by striking ``plus'' at the end of paragraph (35), by striking the 
period at the end of paragraph (36) and inserting ``, plus'', and by 
adding at the end the following new paragraph:
            ``(37) the new water efficient home credit determined under 
        section 45R.''.
    (c) 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. 45R. New water efficient home credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to homes acquired after December 31, 2009.

SEC. 4. WATER CONSERVATION BONDS.

    (a) In General.--Section 54D of the Internal Revenue Code of 1986 
is amended--
            (1) by striking ``energy conservation bond'' each place it 
        appears in subsections (a), (b), and (d), and inserting 
        ``energy and water conservation bond'',
            (2) by inserting ``and water'' after ``qualified energy'' 
        in the heading,
            (3) by striking ``State or local government'' in subsection 
        (a)(2) and inserting ``State, local government, or water 
        district'',
            (4) by striking ``$3,200,000,000'' in subsection (d) and 
        inserting ``$4,000,000,000, of which not less than 20 percent 
        shall be used for qualified conservation purposes described in 
        subsection (f)(1)(F)'', and
            (5) by adding at the end of subsection (f)(1) the following 
        new subparagraph:
                    ``(F) Expenditures incurred for purposes of--
                            ``(i) reducing water consumption by a 
                        public building or facility by not less than 30 
                        percent,
                            ``(ii) advanced water metering 
                        infrastructure, including the purchase, 
                        installation, and commissioning of advanced 
                        water meters and related software and 
                        infrastructure,
                            ``(iii) investigation, design, or 
                        construction of a qualified groundwater 
                        remediation, desalination, or recycled water 
                        facility or system,
                            ``(iv) increasing energy efficiency or the 
                        generation and use of renewable energy in the 
                        management, conveyance, or treatment of water, 
                        wastewater, or stormwater,
                            ``(v) reducing water loss in a water 
                        distribution system, including training water 
                        system personnel, annual testing and 
                        calibration of meters, detecting and repairing 
                        leaks, and purchase and installation of related 
                        equipment, or
                            ``(vi) establishing or improving a system 
                        for volumetric billing to enable utilities to 
                        base retail residential customer bills in whole 
                        or in part on the volume of metered water 
                        deliveries.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 5. ARBITRAGE RULES NOT TO APPLY TO PREPAYMENTS FOR ELECTRICITY.

    (a) In General.--Subsection (b) of section 148 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
paragraph:
            ``(5) Safe harbor for prepaid electricity supply 
        contracts.--
                    ``(A) In general.--The term `investment-type 
                property' does not include a prepayment under a 
                qualified electricity supply contract.
                    ``(B) Qualified electricity supply contract.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `qualified electricity 
                        supply contract' means--
                                    ``(I) any contract entered into by 
                                a water or sewer utility to acquire 
                                electricity for the use of such utility 
                                in providing water or sewer services to 
                                its customers, if such contract 
                                provides that the provider of such 
                                electricity under the contract will use 
                                not less than 75 percent of the 
                                prepayment described in subparagraph 
                                (A) to acquire, construct, or improve a 
                                qualified renewable energy facility, 
                                and
                                    ``(II) any contract to acquire 
                                electricity which is not described in 
                                subclause (I) which the Secretary 
                                determines does not constitute property 
                                of the type intended to be described in 
                                paragraph (2)(D).
                            ``(ii) Water or sewer utility.--The term 
                        `water or sewer utility' means a utility which 
                        is a governmental unit or is owned by a 
                        governmental unit and which provides--
                                    ``(I) water for residential, 
                                commercial, irrigation, or industrial 
                                use, or
                                    ``(II) sewer services for 
                                residential, commercial, or industrial 
                                use,
                        to retail or wholesale customers in the service 
                        territory of such utility.
                            ``(iii) Qualified renewable energy 
                        facility.--The term `qualified renewable energy 
                        facility' means a qualified facility within the 
                        meaning of section 45(d) (without regard to 
                        paragraphs (8) and (10) thereof, to the placed 
                        in service date of such facility, and to the 
                        person who owns such facility) which is located 
                        in the United States.
                            ``(iv) Use of water or sewer utility.--For 
                        purposes of clause (i)(I), a contract shall be 
                        treated as providing electricity for the use of 
                        a water or sewer utility if the sum of--
                                    ``(I) the total number of kilowatt 
                                hours of electricity purchased under 
                                such contract and any other contracts 
                                for the purchase of electricity by such 
                                utility in effect on the date of the 
                                execution of such contract, plus
                                    ``(II) the amount of electricity 
                                expected to be generated by any 
                                generating facilities owned and used by 
                                such utility,
                        does not exceed by more than 10 percent the 
                        total kilowatt hours of electricity expected to 
                        be used by such utility during the term of such 
                        contract for the purpose of providing water or 
                        sewer services to its customers or for resale 
                        to other water or sewer utilities for their use 
                        (and not for resale to any entity that is not a 
                        water or sewer utility).
                    ``(C) Other rules.--Rules similar to the rules of 
                subparagraphs (D)(ii), (G), and (I) of paragraph (4) 
                shall apply for purposes of this paragraph.''.
    (b) Private Loan Financing Test Not To Apply to Prepayments for 
Electricity.--Paragraph (2) of section 141(c) of the Internal Revenue 
Code of 1986 is amended--
            (1) by striking ``or'' at the end of subparagraph (B),
            (2) by striking the period at the end of subparagraph (C) 
        and inserting ``, or'', and
            (3) by adding at the end the following new subparagraph:
                    ``(D) is a qualified electricity supply contract 
                (as defined in section 148(b)(5)).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.
                                 <all>
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