[Congressional Record Volume 149, Number 170 (Friday, November 21, 2003)]
[Senate]
[Page S15414]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. HUTCHISON:
  S. 1917. A bill to amend the Internal Revenue Code of 1986 to permit 
the issuance of tax-exempt bonds for certain air and water pollution 
control facilities, and to provide that the volume cap for private 
activity bonds shall not apply to bonds for facilities for the 
furnishing of water, sewage facilities, and air or water pollution 
control facilities; to the Committee on Finance.
  Mrs. HUTCHISON. Mr. President, I am proud to offer the Clean Air and 
Water Investment and Infrastructure Act.
  Texas, like many States, faces increasingly difficult challenges in 
improving air and water quality.
  The Clean Air Act requires the Environmental Protection Agency to set 
air quality standards and establishes deadlines for State and local 
governments to achieve those levels. Today, more than 90 communities 
across the country are out of compliance with the Clean Air Act. These 
so-called ``non-attainment'' areas are threated with regulatory 
sanctions, such as loss of federal highway funding, if they do not meet 
mandated ozone levels by 2007.
  Texas has four non-attainment areas: Beaumont-Port Arthur, Dallas-
Fort Worth, El Paso and Houston. The Houston area alone needs an 
estimated $4.1 billion annually in order to meet Federal air quality 
standards.
  These communities will not achieve compliance without assistance. Too 
many industrial plants need to install expensive equipment. If these 
environmental investments do not become more affordable, communities 
will either suffer sanctions or force industrial facilities to close 
and move offshore, causing substantial economic hardship.
  Texas and many areas of the country, especially in the Southwest and 
West, also face critical water and wastewater problems. Investments in 
sources of clean water must be made or we will face shortages in the 
coming decades. However, necessary water infrastructure improvements 
are extremely expensive. According to the Texas State water plan, the 
cost of water supply acquisition projects, water and wastewater 
treatment, and other infrastructure projects in Texas through 2050 will 
be more than $100 billion.
  Currently, air and water pollution control facilities cannot be 
financed by tax-exempt bonds. Even if they could, they would be limited 
by a cap which sets the total amount of tax-exempt private activity 
bonds issued by a state. Given the demands of other projects, such as 
housing, relatively few of the air and water pollution projects would 
have an opportunity to access this financing option.
  In order to help us meet the challenges, I am introducing the Clear 
Air and Water Investment and Infrastructure Act. My bill will allow 
federal tax-exempt bonds to be used by private firms for air and water 
pollution control projects. Given the importance of these critical 
projects, these bonds also would be issued outside the constraints of 
the private-activity bond caps. The Texas Water Development Board 
estimates this could save 30 percent in financing costs for water 
projects.
  For example, this bill would allow tax-exempt debt to be used to 
finance private systems along the Gulf Coast that desalinate seawater 
and brackish groundwater, and to install air pollution facilities on 
electric utility plants. States and communities would have an important 
new tool for addressing air and water pollution control needs.
  Pollution control is a problem for all of us. It is to everyone's 
benefit to develop ways to promote public and private partnerships 
which can finance projects to improve air and water quality. I hope my 
colleagues will support this effort.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1917

       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 ``Clean Air and Water 
     Investment and Infrastructure Act''.

     SEC. 2. TAX-EXEMPT BONDS FOR AIR AND WATER POLLUTION CONTROL 
                   FACILITIES.

       (a) In General.--Subsection (a) of section 142 of the 
     Internal Revenue Code of 1986 (defining exempt facility bond) 
     is amended by striking ``or'' at the end of paragraph (12), 
     by striking the period at the end of paragraph (13) and 
     inserting ``, or'', and by adding at the end the following 
     new paragraph:
       ``(14) air or water pollution control facilities.''.
       (b) Air or Water Pollution Control Facilities.--Section 142 
     of the Internal Revenue Code of 1986 (relating to exempt 
     facility bond) is amended by adding at the end the following 
     new subsection:
       ``(l) Pollution Control Facilities Acquired by Regional 
     Pollution Control Authorities.--
       ``(1) In general.--For purposes of paragraph (14) of 
     subsection (a), a bond shall be treated as described in such 
     paragraph if it is part of an issue substantially all of the 
     proceeds of which are used by a qualified regional pollution 
     control authority to acquire existing air or water pollution 
     control facilities which the authority itself will operate in 
     order to maintain or improve the control of pollutants.
       ``(2) Restrictions.--Paragraph (1) shall apply only if--
       ``(A) the amount paid, directly or indirectly, for a 
     facility does not exceed the fair market value of the 
     facility,
       ``(B) the fees or charges imposed, directly or indirectly, 
     on the seller for any use of the facility after the sale of 
     such facility are not less than the amounts that would be 
     charged if the facility were financed with obligations the 
     interest on which is not exempt from tax, and
       ``(C) no person other than the qualified regional pollution 
     control authority is considered after the sale as the owner 
     of the facility for the purposes of Federal income taxes.
       ``(3) Qualified regional pollution control authority.--For 
     purposes of this subsection, the term `qualified regional 
     pollution control authority' means an authority which--
       ``(A) is a political subdivision created by State law to 
     control air or water pollution,
       ``(B) has within its jurisdictional boundaries all or part 
     of at least 2 counties (or equivalent political 
     subdivisions), and
       ``(C) operates air or water pollution control 
     facilities.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.

     SEC. 3. EXEMPTION FROM VOLUME CAP FOR FACILITIES FURNISHING 
                   WATER, SEWAGE FACILITIES, AND AIR OR WATER 
                   POLLUTION CONTROL FACILITIES.

       (a) In General.--Paragraph (3) of section 146(g) of the 
     Internal Revenue Code of 1986 (relating to exception for 
     certain bonds) is amended--
       (1) by inserting ``(4), (5),'' after ``(2),'',
       (2) by striking ``or (13)'' and inserting ``(13), or 
     (14)'',
       (3) by inserting ``facilities for the furnishing of water, 
     sewage facilities,'' after ``wharves,'',
       (4) by striking ``and'' before ``qualified'', and
       (5) by inserting ``, and air or water pollution control 
     facilities'' after ``educational facilities''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.
                                 ______