SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Sewer and Water Fee
Deductibility Act of 1993’’.
SEC. 2. DEDUCTION FOR LOCAL SEWER AND WATER FEES.
(a) IN GENERAL.—Subsection (b) of section 164 of
the Internal Revenue Code of 1986 is amended by redesig-
nating paragraphs (3) and (4) as paragraphs (4) and (5),
respectively, and by inserting after paragraph (2) the fol-
lowing new paragraph:
‘‘(3) DEDUCTION ALLOWED FOR LOCAL SEWER
AND WATER FEES.—
‘‘(A) IN GENERAL.—To the extent that the
amount of local sewer and water fees paid or
accrued during any taxable year exceeds 1 per-
cent of adjusted gross income, such fees shall
be allowed as a deduction under subsection (a)
in the same manner as local real property taxes.
‘‘(B) DEFINITION.—For purposes of sub-
paragraph (A), the term ‘local sewer and water
fees’ means any amount imposed by a local gov-
ernment, State government (or any agency or
instrumentality thereof), or by the District of
Columbia as a charge for sewer or water serv-
ice. Such term shall not include any amount al-
lowable as a deduction without regard to this
paragraph.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1993.
SEC. 3. DENIAL OF DEDUCTION FOR PAYMENTS UNDER
SETTLEMENT AGREEMENTS AND FOR COM-
PENSATORY DAMAGES UNDER CERTAIN EN-
VIRONMENTAL LAWS.
(a) GENERAL RULE.—Part IX of subchapter B of the
Internal Revenue Code of 1986 (relating to certain items
not deductible) is amended by adding at the end thereof
the following new section:
‘‘SEC. 280I. DISALLOWANCE OF PAYMENTS UNDER SETTLE-
MENT 
AGREEMENTS 
AND 
FOR 
COMPEN-
SATORY DAMAGES UNDER CERTAIN ENVI-
RONMENTAL LAWS.
‘‘(a) GENERAL RULE.—No deduction shall be allowed
for amounts paid—
‘‘(1) to any agency of the United States pursu-
ant to any environmental settlement,
‘‘(2) for costs of activities carried out pursuant
to any environmental settlement, or
‘‘(3) to any person or government as a payment
in the nature of compensatory damages relating to
a violation or potential violation under any applica-
ble environmental law.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) 
ENVIRONMENTAL
SETTLEMENT.—The
term ‘environmental settlement’ means any settle-
ment of a claim (or potential claim) of a violation of
any provision of an applicable environmental law if
the payment of any fine or penalty for such violation
would not be allowed as a deduction under this
chapter.
‘‘(2) APPLICABLE ENVIRONMENTAL LAW.—The
term ‘applicable environmental law’ means—
‘‘(A) the Oil Pollution Act of 1990,
‘‘(B) the Federal Water Pollution Control
Act,
‘‘(C) the Comprehensive Environmental
Response, Compensation, and Liability Act of
1980,
‘‘(D) the Solid Waste Disposal Act,
‘‘(E) the Marine Protection, Research and
Sanctuaries Act,
‘‘(F) the Clean Air Act, and
‘‘(G) the Emergency Planning and Com-
munity Right-To-Know Act.
‘‘(3) SETTLEMENT.—The term ‘settlement’ in-
cludes any consent decree and any contractual un-
derstanding.’’
(b) PROHIBITION AGAINST OFFSET BY NET OPERAT-
ING LOSS DEDUCTION.—Section 172 of such Code is
amended by redesignating subsection (i) as subsection (j)
and by inserting after subsection (h) the following new
subsection:
‘‘(i) LIMITATION ON USE TO OFFSET DEDUCTIONS
DISALLOWED UNDER SECTION 280I.—The deduction al-
lowed under this section shall not reduce taxable income
for any taxable year to an amount less than the amount
disallowed under section 280I for such taxable year. Ap-
propriate adjustments in the application of subsection
(b)(2) shall be made to take into account the provisions
of this subsection.’’.
(c) CLERICAL AMENDMENT.—The table of sections
for part IX of subchapter B of chapter 1 of such Code
is amended by adding at the end thereof the following new
item:
‘‘Sec. 280I. Disallowance of payments under settlement agree-
ments and for compensatory damages under certain
environmental laws.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid after the date of
the enactment of this Act.
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