I 
117TH CONGRESS 
1ST SESSION H. R. 5438 
To provide incentives for the purchase of water-efficient products, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 30, 2021 
Mr. CARTWRIGHT (for himself, Mr. BLUMENAUER, Ms. BROWNLEY, Mr. CON-
NOLLY, Ms. ESHOO, Mr. EVANS, Mr. GARCI´A of Illinois, Mr. HUFFMAN, 
Mr. KHANNA, Mr. LOWENTHAL, Ms. NORTON, Ms. PINGREE, Mr. 
RASKIN, Mr. TAKANO, Ms. VELA´ZQUEZ, and Mr. WELCH) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committees on Energy and Commerce, and Over-
sight and Reform, for a period to be subsequently determined by the 
Speaker, in each case for consideration of such provisions as fall within 
the jurisdiction of the committee concerned 
A BILL 
To provide incentives for the purchase of water-efficient 
products, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Water Advanced Tech-
nologies for Efficient Resource Use Act of 2021’’. 
SEC. 2. DEFINITIONS. 
In this Act: 
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(1) ADMINISTRATOR.—The term ‘‘Adminis-
trator’’ means the Administrator of the Environ-
mental Protection Agency. 
(2) AGENCY.—The term ‘‘agency’’ has the 
meaning given such term in section 7902(a) of title 
5, United States Code. 
(3) COVERED CONSUMER.—The term ‘‘covered 
consumer’’ means an individual served by an eligible 
entity. 
(4) ELIGIBLE ENTITY.—The term ‘‘eligible enti-
ty’’ means— 
(A) a State, local, or Tribal government; 
(B) a drinking water utility or wastewater 
utility; 
(C) a municipal water authority or a re-
gional water authority; or 
(D) a nonprofit organization. 
(5) INCENTIVE.—The term ‘‘incentive’’ in-
cludes— 
(A) rebates, vouchers, and other financial 
incentives; and 
(B) the direct installation of a WaterSense 
product. 
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(6) NONPROFIT
ORGANIZATION.—The term 
‘‘nonprofit organization’’ means an organization 
that— 
(A) is described in section 501(c)(3) of the 
Internal Revenue Code of 1986 (26 U.S.C. 
501(c)(3)); and 
(B) is exempt from taxation under section 
501(a) of such Code. 
(7) PRODUCT.—The term ‘‘product’’ means a 
product, building, landscape, facility, process, or 
service. 
(8) STATE.—The term ‘‘State’’ means each of 
the several States of the United States, the District 
of Columbia, Puerto Rico, the United States Virgin 
Islands, Guam, American Samoa, and the Common-
wealth of the Northern Mariana Islands. 
(9) 
WATERSENSE
PRODUCT.—The 
term 
‘‘WaterSense product’’ means a product that is cer-
tified to display the WaterSense label under the 
WaterSense program established under section 324B 
of the Energy Policy and Conservation Act (42 
U.S.C. 6294b). 
SEC. 3. FEDERAL PROCUREMENT OF WATERSENSE PROD-
UCTS. 
(a) PROCUREMENT.— 
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(1) IN GENERAL.—Except as provided in para-
graph (2), in procuring any water-consuming prod-
uct, the head of an agency shall procure a 
WaterSense product. 
(2) EXCEPTIONS.—Paragraph (1) does not 
apply if— 
(A) with respect to the type of water-con-
suming product being procured, the head of an 
agency finds, in writing, that— 
(i) no WaterSense product is cost-ef-
fective over the life of such type of prod-
uct, taking current and future water and 
wastewater cost savings into account; or 
(ii) no WaterSense product of such 
type is reasonably available to meet the 
functional requirements of the agency; or 
(B) the water-consuming product being 
procured is designed for use in combat or com-
bat-related missions. 
(b) INSTALLATION AND MAINTENANCE.—As applica-
ble, the head of an agency that procures a WaterSense 
product under subsection (a)(1) shall use a certified pro-
fessional (including a licensed plumber or a licensed me-
chanical contractor, as appropriate) to install and main-
tain such product. 
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(c) MEASURES
TO
REDUCE
WATER
CONSUMP-
TION.—The head of each agency shall consider adopting 
measures to reduce agency water consumption, including 
such measures as the use of— 
(1) water reuse, reclamation, or recycling tech-
nology; 
(2) water leak detection technology; and 
(3) products that— 
(A) do not consume water; and 
(B) perform similar functions as com-
parable water-consuming products. 
(d) LISTING OF WATERSENSE PRODUCTS.—The Ad-
ministrator of General Services shall clearly identify and 
prominently display, in a listing of water-consuming prod-
ucts, WaterSense products. 
(e) REGULATIONS.—Not later than 180 days after 
the date of enactment of this section, the Administrator 
of the Environmental Protection Agency and the Director 
of the Office of Management and Budget shall issue regu-
lations to carry out this section. 
SEC. 4. INCENTIVES FOR THE PURCHASE OF WATERSENSE 
PRODUCTS. 
(a) ESTABLISHMENT.—The Administrator shall es-
tablish a program to provide grants to eligible entities to 
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provide incentives to covered consumers for the purchase 
of a WaterSense product. 
(b) ELIGIBILITY.—To be eligible to receive a grant 
under this section, an eligible entity shall— 
(1) submit an application to the Administrator 
at such time, in such form, and containing such in-
formation as the Administrator may require; and 
(2) provide assurances, which the Administrator 
determines are satisfactory, that the eligible entity 
will use such grant to supplement, but not supplant, 
other incentives that are available to a covered con-
sumer for the purchase of a WaterSense product. 
(c) EVALUATION CRITERIA FOR APPLICATIONS.— 
(1) IN GENERAL.—In evaluating an application 
submitted under subsection (b)(1), the Adminis-
trator shall consider— 
(A) the estimated effect of providing incen-
tives; 
(B) if the eligible entity previously received 
a grant under this section— 
(i) the degree to which the use of such 
grant 
encouraged 
the 
purchase 
of 
WaterSense products; and 
(ii) whether there are amounts of such 
grant that remain unused; and 
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(C) whether the eligible entity promotes or 
implements a program to recycle or manage the 
disposal of any products that are replaced as a 
result of the provision of incentives under this 
section. 
(2) 
PRIORITY.—The 
Administrator 
shall 
prioritize providing grants under this section to eligi-
ble entities that will provide incentives to low- and 
middle-income households. 
(d) USE OF GRANT.— 
(1) IN GENERAL.—An eligible entity that re-
ceives a grant under this section shall— 
(A) use such grant to provide incentives to 
covered consumers that purchase a WaterSense 
product; or 
(B) with approval from the Administrator, 
provide some, or all, of such grant to another 
eligible entity for use in accordance with sub-
paragraph (A). 
(2) ADMINISTRATIVE COSTS.—Not more than 
50 percent of each grant provided under this section 
may be used to pay for the administrative cost of 
providing incentives in accordance with paragraph 
(1). 
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(3) INCENTIVE AMOUNTS.—With respect to re-
bates, vouchers, and other such financial incentives, 
an eligible entity shall determine the amount to pro-
vide based on the following: 
(A) The amount of the grant provided to 
the eligible entity under this section. 
(B) The amount of any other incentives 
that are available to a covered consumer for the 
purchase of a WaterSense product. 
(C) The estimated amount necessary to en-
courage a covered consumer to purchase a 
WaterSense product. 
(D) As applicable, the costs to a covered 
consumer for onsite preparation, assembly, and 
installation of a WaterSense product. 
(e) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this sec-
tion— 
(1) $50,000,000 for fiscal year 2022; 
(2) $100,000,000 for fiscal year 2023; 
(3) $150,000,000 for fiscal year 2024; 
(4) $100,000,000 for fiscal year 2025; and 
(5) $50,000,000 for fiscal year 2026. 
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SEC. 5. EXCLUSION FROM GROSS INCOME OF AMOUNTS RE-
CEIVED AS INCENTIVES FOR THE PURCHASE 
OF WATERSENSE PRODUCTS. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting before section 140 the following new section: 
‘‘SEC. 
139I. 
INCENTIVES 
FOR 
THE 
PURCHASE 
OF 
WATERSENSE PRODUCTS. 
‘‘(a) IN GENERAL.—In the case of an individual, 
gross income does not include any amount received as an 
incentive under section 3 of the Water Advanced Tech-
nologies for Efficient Resource Use Act of 2021. 
‘‘(b) DENIAL OF DOUBLE BENEFIT.— 
‘‘(1) DEDUCTIONS AND CREDITS.—No deduc-
tion or credit under this subtitle shall be allowed for 
any expenditure with respect to which any amount 
excluded under subsection (a) was provided. 
‘‘(2) BASIS ADJUSTMENT.—The adjusted basis 
of any property with respect to which an amount ex-
cluded under subsection (a) is provided shall be re-
duced by the amount so excluded.’’. 
(b) CONFORMING AMENDMENT.—The table of sec-
tions for part III of subchapter B of chapter 1 of such 
Code is amended by inserting before the item relating to 
section 140 the following new item: 
‘‘Sec. 139I. Incentives for the purchase of WaterSense products.’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this section. 
SEC. 6. MODIFICATIONS TO INCOME EXCLUSION FOR CON-
SERVATION SUBSIDIES. 
(a) IN GENERAL.—Subsection (a) of section 136 of 
the Internal Revenue Code of 1986 is amended— 
(1) by striking ‘‘any subsidy provided’’ and in-
serting ‘‘any subsidy— 
‘‘(1) provided’’, 
(2) by striking the period at the end and insert-
ing a comma, and 
(3) by adding at the end the following new 
paragraphs: 
‘‘(2) provided (directly or indirectly) by a public 
utility to a customer, or by a State or local govern-
ment to a resident of such State or locality, for the 
purchase or installation of any water conservation or 
efficiency measure, or 
‘‘(3) provided (directly or indirectly) by a storm 
water management provider to a customer, or by a 
State or local government to a resident of such State 
or locality, for the purchase or installation of any 
storm water management measure.’’. 
(b) CONFORMING AMENDMENTS.— 
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(1) DEFINITION OF WATER CONSERVATION OR 
EFFICIENCY MEASURE AND STORM WATER MANAGE-
MENT
MEASURE.—Section 136(c) of the Internal 
Revenue Code of 1986 is amended— 
(A) by striking ‘‘ENERGY CONSERVATION 
MEASURE’’ in the heading thereof and inserting 
‘‘DEFINITIONS’’, 
(B) by striking ‘‘IN
GENERAL’’ in the 
heading of paragraph (1) and inserting ‘‘EN-
ERGY CONSERVATION MEASURE’’, and 
(C) by redesignating paragraph (2) as 
paragraph (4) and by inserting after paragraph 
(1) the following: 
‘‘(2) WATER
CONSERVATION
OR
EFFICIENCY 
MEASURE.—For purposes of this section, the term 
‘water conservation or efficiency measure’ means any 
evaluation of water use, or any installation or modi-
fication of property, the primary purpose of which is 
to reduce consumption of water or to improve the 
management of water demand with respect to one or 
more dwelling units. 
‘‘(3) STORM WATER MANAGEMENT MEASURE.— 
For purposes of this section, the term ‘storm water 
management measure’ means any installation or 
modification of property primarily designed to re-
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duce or manage amounts of storm water with re-
spect to one or more dwelling units.’’. 
(2) DEFINITION OF PUBLIC UTILITY.—Section 
136(c)(4) of such Code (as redesignated by para-
graph (1)(C)) is amended by striking subparagraph 
(B) and inserting the following: 
‘‘(B) PUBLIC UTILITY.—The term ‘public 
utility’ means a person engaged in the sale of 
electricity, natural gas, or water to residential, 
commercial, or industrial customers for use by 
such customers. 
‘‘(C) STORM
WATER
MANAGEMENT
PRO-
VIDER.—The term ‘storm water management 
provider’ means a person engaged in the provi-
sion of storm water management measures to 
the public. 
‘‘(D) PERSON.—For purposes of subpara-
graphs (B) and (C), the term ‘person’ includes 
the Federal Government, a State or local gov-
ernment or any political subdivision thereof, or 
any instrumentality of any of the foregoing.’’. 
(3) CLERICAL AMENDMENTS.— 
(A) The heading of section 136 of such 
Code is amended— 
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(i) by inserting ‘‘AND WATER’’ after 
‘‘ENERGY’’, and 
(ii) by striking ‘‘PROVIDED BY PUB-
LIC UTILITIES’’. 
(B) The item relating to section 136 in the 
table of sections of part III of subchapter B of 
chapter 1 of such Code is amended— 
(i) by inserting ‘‘and water’’ after 
‘‘energy’’, and 
(ii) by striking ‘‘provided by public 
utilities’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of enactment of this section. 
(d) NO INFERENCE.—Nothing in this section or the 
amendments made by this section shall be construed to 
create any inference with respect to the proper tax treat-
ment of any subsidy received directly or indirectly from 
a public utility, a storm water management provider, or 
a State or local government for any water conservation 
measure or storm water management measure before the 
date of the enactment of this section. 
Æ 
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