I 

111TH CONGRESS 

1ST SESSION H. R. 4132 

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

water supply bonds. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 19, 2009 

Mr. BECERRA (for himself, Ms. GINNY BROWN-WAITE of Florida, Ms. ROYBAL-ALLARD, Mr. PUTNAM, and Ms. RICHARDSON) 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 

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 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) the bond is issued— 

14 ‘‘(A) pursuant to an allocation by the Sec15 retary to such issuer of a portion of the na16 tional clean renewable water supply bond limita17 tion under subsection (b), and 

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

19 date that such qualified issuer receives an allo20 cation under subsection (b). 

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

22 6-month period described in paragraph (4)(B) shall be ap23 plied to increase the national clean renewable water supply 

24 bond limitation for the next succeeding application period 

25 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. Such limitation is— 

6 ‘‘(A) $100,000,000 for 2010, 

7 ‘‘(B) $150,000,000 for 2011, 

8 ‘‘(C) $200,000,000 for 2012, 

9 ‘‘(D) $250,000,000 for 2013, 

10 ‘‘(E) $500,000,000 for 2014, 

11 ‘‘(F) $750,000,000 for 2015, 

12 ‘‘(G) $1,000,000,000 for 2016, 

13 ‘‘(H) $1,500,000,000 for 2017, 

14 ‘‘(I) $1,750,000,000 for 2018, and 

15 ‘‘(J) $0 for 2019 and thereafter. 

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 for which there is a national 

23 clean renewable water supply bond limitation 

24 greater than zero, the Secretary shall publish a 

25 notice soliciting applications by qualified issuers 


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1 for allocations of such limitation to qualified 

2 projects. Such notice shall specify a 3-month 

3 application period in the calendar year during 

4 which the Secretary will accept such applica5 tions. Within 30 days after the end of such ap6 plication period, and subject to the require7 ments of subparagraph (C), the Secretary shall 

8 allocate such limitation to qualified projects on 

9 a first-come, first-served basis, based on the 

10 order in which such applications are received 

11 from qualified 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.—The Sec5 retary shall not allocate— 

6 ‘‘(aa) more than 60 percent 

7 of the national clean renewable 

8 water supply bond limitation for 

9 a calendar year to 1 or more 

10 large projects, 

11 ‘‘(bb) more than 18 percent 

12 of the amount of the national 

13 clean renewable water supply 

14 bond limitation for a calendar 

15 year to any single project that is 

16 a large project, 

17 ‘‘(cc) more than 12 percent 

18 of the national clean renewable 

19 water supply bond limitation for 

20 a calendar year to any single 

21 project that is not a large 

22 project, or 

23 ‘‘(dd) more than 

24 $95,000,000 for all calendar 

25 years for any single project. 


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1 ‘‘(II) DEFINITION OF LARGE

2 PROJECT.—For purposes of subclause 

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

4 qualified project that is designed to 

5 deliver more than 10,000,000 gallons 

6 of water per day. 

7 ‘‘(III) EXCEPTION TO RESTRIC8 TION.—Subclause (I) shall not apply 

9 to the extent its application would 

10 cause any portion of the national 

11 clean renewable water supply bond 

12 limitation for the calendar year to re13 main unallocated, based on applica14 tions for allocations of such limitation 

15 received by the Secretary during the 

16 application period referred to in sub17 paragraph (B). 

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

19 the clean renewable water supply bond limitation for 

20 any calendar year exceeds the aggregate amount al21 located under paragraph (2) for such year, such lim22 itation for the succeeding calendar year shall be in23 creased by the amount of such excess. 

24 ‘‘(c) MATURITY LIMITATION.— 


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

2 as a clean renewable water supply bond if the matu3 rity of such bond exceeds 20 years. 

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

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

6 apply to any clean renewable water supply bond. 

7 ‘‘(d) DEFINITIONS.—For purposes of this section— 

8 ‘‘(1) GOVERNMENTAL BODY.—The term ‘gov9 ernmental body’ means any State or Indian tribal 

10 government, or any political subdivision thereof. 

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

12 water company’ means any entity responsible for 

13 providing water service to the general public (includ14 ing electric utility, industrial, agricultural, commer15 cial, or residential users) pursuant to State or tribal 

16 law. 

17 ‘‘(3) QUALIFIED BORROWER.—The term ‘quali18 fied borrower’ means a governmental body or a local 

19 water company. 

20 ‘‘(4) QUALIFIED DESALINATION FACILITY.— 

21 The term ‘qualified desalination facility’ means any 

22 facility that is used to produce new water supplies 

23 by desalinating seawater, groundwater, or surface 

24 water if the facility’s source water includes chlorides 

25 or total dissolved solids that, either continuously or 


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1 seasonally, exceed maximum permitted levels for pri2 mary or secondary drinking water under Federal or 

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

4 issue). 

5 ‘‘(5) QUALIFIED GROUNDWATER REMEDIATION

6 FACILITY.—The term ‘qualified groundwater remedi7 ation facility’ means any facility that is used to re8 claim contaminated or naturally impaired ground9 water for direct delivery for potable use if the facili10 ty’s source water includes constituents that exceed 

11 maximum contaminant levels regulated under the 

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

13 of the enactment of this section). 

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

15 issuer’ means— 

16 ‘‘(A) a governmental body, or 

17 ‘‘(B) in the case of a State or political sub18 division thereof (as defined for purposes of sec19 tion 103), any entity qualified to issue tax-ex20 empt bonds under section 103 on behalf of such 

21 State or political subdivision. 

22 ‘‘(7) QUALIFIED PROJECT.— 

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

24 project’ means any facility owned by a qualified 

25 borrower which is a— 


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1 ‘‘(i) qualified desalination facility, 

2 ‘‘(ii) qualified recycled water facility, 

3 ‘‘(iii) qualified groundwater remedi4 ation facility, or 

5 ‘‘(iv) facility that is functionally re6 lated or subordinate to a facility described 

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

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

9 shall not be treated as a qualified project under 

10 subparagraph (A) unless such project is de11 signed to comply with regulations issued under 

12 subsection (e) relating to the minimization of 

13 the environmental impact of the project. 

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

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

16 recycled water facility’ means any wastewater 

17 treatment facility, distribution facility, or dis18 tribution system which— 

19 ‘‘(i) exceeds the requirements for the 

20 treatment and disposal of wastewater 

21 under the Clean Water Act and any other 

22 Federal or State water pollution control 

23 standards for the discharge and disposal of 

24 wastewater to surface water, land, or 

25 groundwater (as such requirements and 


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1 standards are in effect on the date of 

2 issuance of the issue), and 

3 ‘‘(ii) except as provided in subpara4 graph (B), is used to reclaim wastewater 

5 produced by the general public (including 

6 electric utility, industrial, agricultural, 

7 commercial, or residential users) to the ex8 tent such reclaimed wastewater is used for 

9 a beneficial use that the issuer reasonably 

10 expects as of the date of issuance of the 

11 issue otherwise would have been satisfied 

12 with potable water supplies. 

13 ‘‘(B) IMPERMISSIBLE USES.—Reclaimed 

14 wastewater is not used for a use described in 

15 subparagraph (A)(ii) to the extent such re16 claimed wastewater is— 

17 ‘‘(i) discharged into a waterway or 

18 used to meet waterway discharge permit 

19 requirements and not used to supplement 

20 potable water supplies, 

21 ‘‘(ii) used to restore habitat, 

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

23 cooling for an electric generation facility, 

24 or 


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1 ‘‘(iv) intentionally introduced into the 

2 groundwater and not used to supplement 

3 potable water supplies. 

4 ‘‘(e) REGULATIONS.—The Secretary shall prescribe 

5 such regulations as are necessary to carry out the pur6 poses of this section, including regulations promulgated in 

7 consultation with the Administrator of the Environmental 

8 Protection Agency to ensure the environmental impact of 

9 qualified facilities is minimized.’’. 

10 (b) STUDY ON ALLOCATION METHOD.— 

11 (1) IN GENERAL.—The Secretary of the Treas12 ury shall conduct a study on the method of alloca13 tion for the national limitation provided under sec14 tion 54G(b)(2) of the Internal Revenue Code of 

15 1986 (as added by subsection (a)) in order to deter16 mine whether a different allocation method would 

17 better result in the development of projects to pro18 vide new supplies of water in a more efficient man19 ner. In assessing the advisability of a different allo20 cation method, the study shall take into account— 

21 (A) the administrative burdens on the Fed22 eral government and issuers, and 

23 (B) the environmental impact of such 

24 projects, and 


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1 (C) the cost effectiveness of the projects 

2 funded. 

3 The study shall include an examination of at least 

4 three rounds of allocations. 

5 (2) CONSULTATION AND PUBLIC COMMENT.— 

6 Such study shall be conducted in consultation with 

7 the Secretary of the Interior and the Administrator 

8 of the Environmental Protection Agency and shall 

9 allow for public comment. 

10 (3) SUBMISSION TO CONGRESS.—The study, 

11 and any recommended changes to the allocation 

12 method, shall be submitted to the Committee on 

13 Ways and Means of the House of Representatives 

14 and the Committee on Finance of the Senate before 

15 July 1, 2014. 

16 (c) CONFORMING AMENDMENTS.— 

17 (1) Paragraph (1) of section 54A(d) of the In18 ternal Revenue Code of 1986 is amended by striking 

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

20 ‘‘or’’ at the end of subparagraph (E), and by insert21 ing after subparagraph (E) the following new sub22 paragraph: 

23 ‘‘(F) a clean renewable water supply 

24 bond,’’. 


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

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

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

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

5 the end the following new clause: 

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

7 water supply bond, a purpose specified in 

8 section 54G(a)(1).’’. 

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

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

11 amended by adding at the end the following new 

12 item: 

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

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

14 this section shall apply to obligations issued after Decem15 ber 31, 2009. 

Æ 


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