I 

111TH CONGRESS 

1ST SESSION H. R. 3746 

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 HOUSE OF REPRESENTATIVES 

OCTOBER 7, 2009 

Ms. BERKLEY (for herself and Ms. TITUS) 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 provide 

tax incentives for making homes more water-efficient, 

for building new water-efficient homes, for public water 

conservation, and for other purposes. 

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 ‘‘Water Efficiency and 

5 Conservation Investment Act of 2009’’. 

6 SEC. 2. RESIDENTIAL WATER EFFICIENCY CREDIT. 

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


jbell on DSKDVH8Z91PROD with BILLS
2 

•HR 3746 IH

1 amended by inserting after section 30D the following new 

2 section: 

3 ‘‘SEC. 30E. RESIDENTIAL WATER EFFICIENCY CREDIT. 

4 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in5 dividual, there shall be allowed as a credit against the tax 

6 imposed by this chapter for the taxable year an amount 

7 equal to 50 percent of the qualified water efficiency prop8 erty expenditures paid or incurred during such taxable 

9 year. 

10 ‘‘(b) LIMITATION.—The credit allowed under this sec11 tion with respect to any taxpayer for any taxable year shall 

12 not exceed $750. 

13 ‘‘(c) QUALIFIED WATER EFFICIENCY PROPERTY EX14 PENDITURES.—For purposes of this section— 

15 ‘‘(1) IN GENERAL.—The term ‘qualified water 

16 efficiency property expenditures’ means expenditures 

17 for qualified water efficiency property which is— 

18 ‘‘(A) installed on or in connection with a 

19 dwelling unit located in the United States that 

20 is owned by the taxpayer (without regard to 

21 whether any other person occupies such dwell22 ing unit as a residence), and 

23 ‘‘(B) originally placed in service by the tax24 payer. 


jbell on DSKDVH8Z91PROD with BILLS
3 

•HR 3746 IH

1 Such term includes expenditures for labor costs 

2 properly allocable to the onsite preparation, assem3 bly, or original installation of such property. 

4 ‘‘(2) QUALIFIED WATER EFFICIENCY PROP5 ERTY.—The term ‘qualified water efficiency prop6 erty’ means— 

7 ‘‘(A) property which meets the national ef8 ficiency standards and specifications for resi9 dential water-using fixtures, appliances, and de10 vices under the WaterSense program of the En11 vironmental Protection Agency that are in ef12 fect on the date of purchase of such property, 

13 but only if such property improves water effi14 ciency by no less than 20 percent over standard 

15 models of similar water-using fixtures and ap16 pliances as determined by the Administrator of 

17 such Agency, and 

18 ‘‘(B) water efficient landscaping which is 

19 installed by a landscape irrigation professional 

20 certified by such WaterSense program and 

21 which reduces water use by no less than 50 per22 cent, as certified by such professional. 

23 ‘‘(3) STATE WATER EFFICIENCY STANDARDS.— 

24 In the case of a State that has mandatory water ef25 ficiency standards for any property that are more 


jbell on DSKDVH8Z91PROD with BILLS
4 

•HR 3746 IH

1 stringent than the standards and specifications de2 scribed in paragraph (2), property installed on or in 

3 connection with a dwelling unit that is located in 

4 such State must meet such water efficiency stand5 ards of such State in order to be treated as qualified 

6 water efficiency property for purposes of this sec7 tion. 

8 ‘‘(d) SPECIAL RULES.—For purposes of this sec9 tion— 

10 ‘‘(1) JOINT OWNERSHIP OF WATER EFFICIENCY

11 ITEMS.— 

12 ‘‘(A) IN GENERAL.—An expenditure shall 

13 not fail to be treated as a qualified water effi14 ciency property expenditure merely because 

15 such expenditure was made with respect to 2 or 

16 more dwelling units. 

17 ‘‘(B) ALLOCATION OF EXPENDITURES.—In 

18 the case of an expenditure made with respect to 

19 2 or more dwelling units, for purposes of deter20 mining the credit allowable under this section, 

21 such expenditure shall be allocated among such 

22 dwelling units in proportion to the amount of 

23 the expenditure made for each dwelling unit. 

24 ‘‘(2) REFUNDS DISREGARDED IN THE ADMINIS25 TRATION OF FEDERAL PROGRAMS AND FEDERALLY


jbell on DSKDVH8Z91PROD with BILLS
5 

•HR 3746 IH

1 ASSISTED PROGRAMS.—Any credit or refund allowed 

2 or made to any individual by reason of this section 

3 shall not be taken into account as income and shall 

4 not be taken into account as resources, for purposes 

5 of determining the eligibility of such individual or 

6 any other individual for benefits or assistance, or the 

7 amount or extent of benefits or assistance, under 

8 any Federal program or under any State or local 

9 program financed in whole or in part with Federal 

10 funds. 

11 ‘‘(3) BASIS ADJUSTMENTS.—For purposes of 

12 this subtitle, if a credit is allowed under subsection 

13 (a) for any expenditure with respect to any property, 

14 the increase in the basis of such property which 

15 would (but for this subsection) result from such ex16 penditure shall be reduced by the amount of the 

17 credit so allowed. 

18 ‘‘(4) DENIAL OF DOUBLE BENEFIT.— 

19 ‘‘(A) IN GENERAL.—No deduction or credit 

20 under any other provision of this chapter shall 

21 be allowed with respect to the amount of any 

22 qualified water efficiency property expenditure 

23 taken into account under this section. 

24 ‘‘(B) REBATE PROGRAMS.—The amount of 

25 any qualified water efficiency property expendiVerDate Nov 24 2008 05:35 Oct 08, 2009 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3746.IH H3746

jbell on DSKDVH8Z91PROD with BILLS
6 

•HR 3746 IH

1 ture for which an individual is reimbursed 

2 under any Federal government program shall 

3 not be taken into account for purposes of deter4 mining the credit under subsection (a) with re5 spect such individual. 

6 ‘‘(e) APPLICATION WITH OTHER CREDITS.— 

7 ‘‘(1) BUSINESS CREDIT.— 

8 ‘‘(A) BUSINESS CREDIT TREATED AS PART

9 OF GENERAL BUSINESS CREDIT.—So much of 

10 the credit which would be allowed under sub11 section (a) for any taxable year (determined 

12 without regard to this subsection) that is attrib13 utable to property of a character subject to an 

14 allowance for depreciation shall be treated as a 

15 credit listed in section 38(b) for such taxable 

16 year (and not allowed under subsection (a)). 

17 ‘‘(B) DISALLOWANCE OF DEPRECIATION.— 

18 In the case of an expenditure for property de19 scribed in subparagraph (A) with respect to 

20 which a credit is allowed under section 38(b) by 

21 reason of such subparagraph, the depreciation 

22 allowance for such property in all taxable years 

23 shall be zero and no deduction shall be available 

24 under section 167 with respect to such prop25 erty. 


jbell on DSKDVH8Z91PROD with BILLS
7 

•HR 3746 IH

1 ‘‘(2) PERSONAL CREDIT.— 

2 ‘‘(A) IN GENERAL.—For purposes of this 

3 title, the credit allowed under subsection (a) for 

4 any taxable year (determined after application 

5 of paragraph (1)) shall be treated as a credit 

6 allowable under subpart A for such taxable 

7 year. 

8 ‘‘(B) LIMITATION BASED ON AMOUNT OF

9 TAX.—In the case of a taxable year to which 

10 section 26(a)(2) does not apply, the credit al11 lowed under subsection (a) for any taxable year 

12 (determined after application of paragraph (1)) 

13 shall not exceed the excess of— 

14 ‘‘(i) the sum of the regular tax liabil15 ity (as defined in section 26(b)), plus 

16 ‘‘(ii) the sum of the credits allowable 

17 under subpart A (other than this section 

18 and sections 23, 25D, 30, 30B, and 30D) 

19 and section 27 for the taxable year. 

20 ‘‘(f) TERMINATION.—This section shall not apply 

21 with respect to any property placed in service after Decem22 ber 31, 2014.’’. 

23 (b) CONFORMING AMENDMENTS.— 


jbell on DSKDVH8Z91PROD with BILLS
8 

•HR 3746 IH

1 (1) Section 24(b)(3)(B) of the Internal Revenue 

2 Code of 1986 is amended by striking ‘‘and 30D’’ 

3 and inserting ‘‘, 30D, and 30E’’. 

4 (2) Section 25(e)(1)(C)(ii) of such Code is 

5 amended by inserting ‘‘30E,’’ after ‘‘30D,’’. 

6 (3) Section 25B(g)(2) of such Code is amended 

7 by striking ‘‘and 30D’’ and inserting ‘‘30D, and 

8 30E’’. 

9 (4) Section 904(i) of such Code is amended by 

10 striking ‘‘and 30D’’ and inserting ‘‘30D, and 30E’’. 

11 (5) Section 1016(a) of such Code is amended 

12 by striking ‘‘and’’ at the end of paragraph (36), by 

13 striking the period at the end of paragraph (37) and 

14 inserting ‘‘, and’’, and by adding at the end the fol15 lowing new paragraph: 

16 ‘‘(38) to the extent provided in section 

17 30E(d)(3).’’. 

18 (6) Section 1400C(d)(2) of such Code is 

19 amended by striking ‘‘and 30D’’ and inserting 

20 ‘‘30D, and 30E’’. 

21 (c) CREDIT TO BE PART OF BUSINESS CREDIT.— 

22 Section 38(b) of the Internal Revenue Code of 1986 is 

23 amended by striking ‘‘plus’’ at the end of paragraph (34), 

24 by striking the period at the end of paragraph (35) and 


jbell on DSKDVH8Z91PROD with BILLS
9 

•HR 3746 IH

1 inserting ‘‘, plus’’, and by adding at the end the following 

2 new paragraph: 

3 ‘‘(36) the portion of the residential water effi4 ciency credit to which section 30E(e)(1) applies.’’. 

5 (d) CLERICAL AMENDMENT.—The table of sections 

6 for subpart B of part IV of subchapter A of chapter 1 

7 of the Internal Revenue Code of 1986 is amended by in8 serting after the item relating to section 30D the following 

9 new item: 

‘‘Sec. 30E. Residential water efficiency credit.’’. 

10 (e) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to property placed in service after 

12 December 31, 2009. 

13 SEC. 3. NEW WATER EFFICIENT HOME CREDIT. 

14 (a) IN GENERAL.—Subpart D of part IV of sub15 chapter A of chapter 1 of the Internal Revenue Code of 

16 1986 is amended by adding at the end the following new 

17 section: 

18 ‘‘SEC. 45R. NEW WATER EFFICIENT HOME CREDIT. 

19 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec20 tion 38, in the case of an eligible contractor, the new water 

21 efficient home credit for the taxable year is an amount 

22 equal to $1,500 for each qualified new water efficient 

23 home which is— 

24 ‘‘(1) constructed by such eligible contractor, 

25 and 


jbell on DSKDVH8Z91PROD with BILLS
10 

•HR 3746 IH

1 ‘‘(2) acquired by a person from such eligible 

2 contractor during the taxable year. 

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

4 ‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligi5 ble contractor’ means a person who is certified as a 

6 builder partner under the WaterSense program of 

7 the Environmental Protection Agency and who is— 

8 ‘‘(A) the person who constructed the quali9 fied new water efficient home, or 

10 ‘‘(B) in the case of a qualified new energy 

11 efficient home which is a manufactured home, 

12 the manufactured home producer of such home. 

13 ‘‘(2) QUALIFIED NEW WATER EFFICIENT

14 HOME.—The term ‘qualified new water efficient 

15 home’ means a dwelling unit— 

16 ‘‘(A) located in the United States, 

17 ‘‘(B) the construction of which is substan18 tially completed after the date of the enactment 

19 of this section, and 

20 ‘‘(C) which is certified by the Environ21 mental Protection Agency as complying with 

22 the Final Water-Efficient Single-Family New 

23 Home Specification issued by such Agency. 


jbell on DSKDVH8Z91PROD with BILLS
11 

•HR 3746 IH

1 ‘‘(3) CONSTRUCTION.—The term ‘construction’ 

2 includes substantial reconstruction and rehabilita3 tion. 

4 ‘‘(4) ACQUIRE.—The term ‘acquire’ includes 

5 purchase. 

6 ‘‘(c) CERTIFICATION.— 

7 ‘‘(1) METHOD OF CERTIFICATION.—A certifi8 cation described in subsection (b)(2)(C) shall be 

9 made in accordance with guidance prescribed by the 

10 Secretary, after consultation with the Administrator 

11 of the Environmental Protection Agency. Such guid12 ance shall specify procedures and methods for calcu13 lating water and cost savings. 

14 ‘‘(2) FORM.—Any certification described in sub15 section (b)(2)(C) shall be made in writing in a man16 ner which specifies in readily verifiable fashion the 

17 water efficient components (including toilets, fau18 cets, other plumbing fixtures and appliances, hot 

19 water delivery, landscape design, and irrigation sys20 tems) installed and their respective rated water effi21 ciency performance. 

22 ‘‘(d) BASIS ADJUSTMENT.—For purposes of this sub23 title, if a credit is allowed under this section in connection 

24 with any expenditure for any property, the increase in the 

25 basis of such property which would (but for this subVerDate Nov 24 2008 05:35 Oct 08, 2009 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3746.IH H3746

jbell on DSKDVH8Z91PROD with BILLS
12 

•HR 3746 IH

1 section) result from such expenditure shall be reduced by 

2 the amount of the credit so determined. 

3 ‘‘(e) COORDINATION WITH OTHER CREDITS.—Ex4 penditures taken into account under section 45L, 47, or 

5 48(a) shall not be taken into account under this section. 

6 ‘‘(f) REBATE PROGRAMS.—The amount of the credit 

7 allowed under subsection (a) to an eligible contractor with 

8 respect to any qualified new water efficient home shall be 

9 reduced, but not below zero, by the amount of any reim10 bursement which such contractor receives under any Fed11 eral government program for the construction of such 

12 home or for expenditures relating to such construction. 

13 ‘‘(g) TERMINATION.—This section shall not apply to 

14 any qualified new water efficient home acquired after De15 cember 31, 2014.’’. 

16 (b) CREDIT TO BE PART OF GENERAL BUSINESS

17 CREDIT.—Section 38(b) of the Internal Revenue Code of 

18 1986, as amended by this Act, is amended by striking 

19 ‘‘plus’’ at the end of paragraph (35), by striking the period 

20 at the end of paragraph (36) and inserting ‘‘, plus’’, and 

21 by adding at the end the following new paragraph: 

22 ‘‘(37) the new water efficient home credit deter23 mined under section 45R.’’. 

24 (c) CLERICAL AMENDMENT.—The table of sections 

25 for subpart D of part IV of subchapter A of chapter 1 


jbell on DSKDVH8Z91PROD with BILLS
13 

•HR 3746 IH

1 of the Internal Revenue Code of 1986 is amended by add2 ing at the end the following new item: 

‘‘Sec. 45R. New water efficient home credit.’’. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to homes acquired after December 

5 31, 2009. 

6 SEC. 4. WATER CONSERVATION BONDS. 

7 (a) IN GENERAL.—Section 54D of the Internal Rev8 enue Code of 1986 is amended— 

9 (1) by striking ‘‘energy conservation bond’’ each 

10 place it appears in subsections (a), (b), and (d), and 

11 inserting ‘‘energy and water conservation bond’’, 

12 (2) by inserting ‘‘AND WATER’’ after ‘‘QUALI13 FIED ENERGY’’ in the heading, 

14 (3) by striking ‘‘State or local government’’ in 

15 subsection (a)(2) and inserting ‘‘State, local govern16 ment, or water district’’, 

17 (4) by striking ‘‘$3,200,000,000’’ in subsection 

18 (d) and inserting ‘‘$4,000,000,000, of which not less 

19 than 20 percent shall be used for qualified conserva20 tion purposes described in subsection (f)(1)(F)’’, and 

21 (5) by adding at the end of subsection (f)(1) 

22 the following new subparagraph: 

23 ‘‘(F) Expenditures incurred for purposes 

24 of— 


jbell on DSKDVH8Z91PROD with BILLS
14 

•HR 3746 IH

1 ‘‘(i) reducing water consumption by a 

2 public building or facility by not less than 

3 30 percent, 

4 ‘‘(ii) advanced water metering infra5 structure, including the purchase, installa6 tion, and commissioning of advanced water 

7 meters and related software and infra8 structure, 

9 ‘‘(iii) investigation, design, or con10 struction of a qualified groundwater reme11 diation, desalination, or recycled water fa12 cility or system, 

13 ‘‘(iv) increasing energy efficiency or 

14 the generation and use of renewable energy 

15 in the management, conveyance, or treat16 ment of water, wastewater, or stormwater, 

17 ‘‘(v) reducing water loss in a water 

18 distribution system, including training 

19 water system personnel, annual testing and 

20 calibration of meters, detecting and repair21 ing leaks, and purchase and installation of 

22 related equipment, or 

23 ‘‘(vi) establishing or improving a sys24 tem for volumetric billing to enable utilities 

25 to base retail residential customer bills in 


jbell on DSKDVH8Z91PROD with BILLS
15 

•HR 3746 IH

1 whole or in part on the volume of metered 

2 water deliveries.’’. 

3 (b) EFFECTIVE DATE.—The amendments made by 

4 this section shall take effect on the date of the enactment 

5 of this Act. 

6 SEC. 5. ARBITRAGE RULES NOT TO APPLY TO PREPAY7 MENTS FOR ELECTRICITY. 

8 (a) IN GENERAL.—Subsection (b) of section 148 of 

9 the Internal Revenue Code of 1986 is amended by adding 

10 at the end the following new paragraph: 

11 ‘‘(5) SAFE HARBOR FOR PREPAID ELECTRICITY

12 SUPPLY CONTRACTS.— 

13 ‘‘(A) IN GENERAL.—The term ‘investment14 type property’ does not include a prepayment 

15 under a qualified electricity supply contract. 

16 ‘‘(B) QUALIFIED ELECTRICITY SUPPLY

17 CONTRACT.— 

18 ‘‘(i) IN GENERAL.—For purposes of 

19 this paragraph, the term ‘qualified elec20 tricity supply contract’ means— 

21 ‘‘(I) any contract entered into by 

22 a water or sewer utility to acquire 

23 electricity for the use of such utility in 

24 providing water or sewer services to 

25 its customers, if such contract proVerDate Nov 24 2008 05:35 Oct 08, 2009 Jkt 089200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\H3746.IH H3746

jbell on DSKDVH8Z91PROD with BILLS
16 

•HR 3746 IH

1 vides that the provider of such elec2 tricity under the contract will use not 

3 less than 75 percent of the prepay4 ment described in subparagraph (A) 

5 to acquire, construct, or improve a 

6 qualified renewable energy facility, 

7 and 

8 ‘‘(II) any contract to acquire 

9 electricity which is not described in 

10 subclause (I) which the Secretary de11 termines does not constitute property 

12 of the type intended to be described in 

13 paragraph (2)(D). 

14 ‘‘(ii) WATER OR SEWER UTILITY.— 

15 The term ‘water or sewer utility’ means a 

16 utility which is a governmental unit or is 

17 owned by a governmental unit and which 

18 provides— 

19 ‘‘(I) water for residential, com20 mercial, irrigation, or industrial use, 

21 or 

22 ‘‘(II) sewer services for residen23 tial, commercial, or industrial use, 

24 to retail or wholesale customers in the 

25 service territory of such utility. 


jbell on DSKDVH8Z91PROD with BILLS
17 

•HR 3746 IH

1 ‘‘(iii) QUALIFIED RENEWABLE EN2 ERGY FACILITY.—The term ‘qualified re3 newable energy facility’ means a qualified 

4 facility within the meaning of section 45(d) 

5 (without regard to paragraphs (8) and 

6 (10) thereof, to the placed in service date 

7 of such facility, and to the person who 

8 owns such facility) which is located in the 

9 United States. 

10 ‘‘(iv) USE OF WATER OR SEWER UTIL11 ITY.—For purposes of clause (i)(I), a con12 tract shall be treated as providing elec13 tricity for the use of a water or sewer util14 ity if the sum of— 

15 ‘‘(I) the total number of kilowatt 

16 hours of electricity purchased under 

17 such contract and any other contracts 

18 for the purchase of electricity by such 

19 utility in effect on the date of the exe20 cution of such contract, plus 

21 ‘‘(II) the amount of electricity ex22 pected to be generated by any gener23 ating facilities owned and used by 

24 such utility, 


jbell on DSKDVH8Z91PROD with BILLS
18 

•HR 3746 IH

1 does not exceed by more than 10 percent 

2 the total kilowatt hours of electricity ex3 pected to be used by such utility during 

4 the term of such contract for the purpose 

5 of providing water or sewer services to its 

6 customers or for resale to other water or 

7 sewer utilities for their use (and not for re8 sale to any entity that is not a water or 

9 sewer utility). 

10 ‘‘(C) OTHER RULES.—Rules similar to the 

11 rules of subparagraphs (D)(ii), (G), and (I) of 

12 paragraph (4) shall apply for purposes of this 

13 paragraph.’’. 

14 (b) PRIVATE LOAN FINANCING TEST NOT TO APPLY

15 TO PREPAYMENTS FOR ELECTRICITY.—Paragraph (2) of 

16 section 141(c) of the Internal Revenue Code of 1986 is 

17 amended— 

18 (1) by striking ‘‘or’’ at the end of subparagraph 

19 (B), 

20 (2) by striking the period at the end of sub21 paragraph (C) and inserting ‘‘, or’’, and 

22 (3) by adding at the end the following new sub23 paragraph: 

24 ‘‘(D) is a qualified electricity supply con25 tract (as defined in section 148(b)(5)).’’. 


jbell on DSKDVH8Z91PROD with BILLS
19 

•HR 3746 IH

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

2 this section shall apply to obligations issued after the date 

3 of the enactment of this Act. 

Æ 


jbell on DSKDVH8Z91PROD with BILLS