[Congressional Record Volume 155, Number 97 (Thursday, June 25, 2009)]
[Senate]
[Pages S7087-S7089]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. NELSON, of Florida (for himself, Mr. Ensign, and Mr. 
        Martinez):
  S. 1371. A bill to amend the Internal Revenue Code of 1986 to provide 
for clean renewable water supply bonds; to the Committee on Finance.
  Mr. NELSON of Florida. Mr. President, I rise today to introduce, with 
my colleagues Senators Ensign and Martinez, the Clean Renewable Water 
Supply Bond Act of 2009.
  While many of us do not think twice when we turn on the faucet, State 
and local authorities anticipate widespread water shortages in the near 
future, and the consequences may be severe, if not catastrophic. Rising 
demand and dwindling sources of fresh water raise serious questions 
about our ability to ensure every community has access to a clean, 
safe, and affordable water supply. The U.S. population has grown more 
than 50 percent in the last 30 years. At the same time, the amount of 
water used by each of us has tripled. In many States, particularly 
fast-growing States, water consumption nears or exceeds the renewable 
water supply.
  Several parts of the country have experienced drought or near-drought 
conditions requiring authorities to impose water user strictions. 
According to a comprehensive Government Accountability Office study, 
even under normal conditions, 36 States expect water shortages by 2013. 
Compounding the problem, the Environmental Protection Agency estimates 
a shortfall of $224 billion in funding for water projects over the next 
20 years.
  Water shortages also have implications for the environment. The 
Everglades is a prime example. Over the years, diminished flows into 
the Everglades have reduced the ecosystem to half its original size. As 
a result of less water, the Everglades experienced a 90 percent 
reduction in the population of wading birds. The effects of climate 
change--including salt water intrusion and higher sea levels--mean our 
recent experiences will only intensify over the next couple decades.
  There is a growing consensus on the need for new investments in water 
supply and treatment projects. Advanced technologies offer 
extraordinary promise and can provide new sources of clean water, but 
the cost of the initial capital investment is often prohibitive. States 
are primarily responsible for managing the development, allocation, and 
use of freshwater supplies. A single advanced water project can cost as 
much as $400 million, an amount difficult to finance with conventional 
tax-exempt bonds, which require principal and interest payments by the 
issuer.
  The bipartisan legislation we are introducing today would authorize 
public water agencies at the State and local level to issue tax credit 
bonds as a financing vehicle for innovative new water supply 
technologies. The legislation would create a new category of Clean 
Renewable Water Supply Bonds, to finance innovative projects such as 
water recycling, desalination, and groundwater contamination clean-up. 
Tax credit bonds such as CREWS provide a deeper and more efficient 
subsidy than tax-exempt bonds. The Federal Government provides a tax 
credit to the bondholder in lieu of an interest payment. As a result, a 
public agency financing a $100 million project with CREWS would save an 
estimated $62 million in interest payments over the life of the bond. 
The issuer remains responsible for repayment of the principal. The 
bonds would be issued by public agencies in the same way that they 
issue conventional tax-exempt bonds.
  A project would not be eligible for CREWS unless the issuer has 
received all Federal and State regulatory approvals necessary to 
construct the project. Qualifying projects must be designed to comply 
with regulations that minimize negative environmental impacts. In order 
to limit the revenue loss to $1 billion over ten years, the bill caps 
the amount of annual CREWS bonding authority.
  Tax credit bonds are a proven and effective financing mechanism. 
Congress has authorized the issuance of tax credit bonds for the 
construction of inner city schools, renewable energy projects, energy 
conservation measures, forestry conservation programs, and post-Katrina 
and Rita reconstruction. According to an analysis prepared for the New 
Water Supply Coalition, an investment of $6.2 billion in construction 
for desalination, recycling and groundwater recovery would generate a 
national economic impact of $19.5 billion and approximately 143,000 
jobs. Most importantly, if enacted and fully funded, the Coalition 
projects that over 1.8 billion gallons of water per day would be 
created by the new investment resulting from the Clean Renewable Water 
Supply Bond Act--enough new water to meet the needs of over four 
million families of four.
  Addressing the challenges of our growing water needs will require a 
concerted effort that involves all levels of government--Federal, 
State, and local. The Clean Renewable Water Supply Bond Act would 
create an effective tool for the shared Federal-State financing of 
advanced, innovative clean water supply projects. I encourage my 
colleagues to support the legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.

[[Page S7088]]

  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1371

       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 Renewable Water Supply 
     Bond Act of 2009''.

     SEC. 2. CLEAN RENEWABLE WATER SUPPLY BONDS.

       (a) In General.--Subpart I of Part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following new section:

     ``SEC. 54G. CLEAN RENEWABLE WATER SUPPLY BONDS.

       ``(a) Clean Renewable Water Supply Bonds.--For purposes of 
     this subpart, the term `clean renewable water supply bond' 
     means any bond issued as part of an issue if--
       ``(1) 100 percent of the available project proceeds of such 
     issue are to be used for capital expenditures incurred by 
     qualified borrowers for 1 or more qualified projects,
       ``(2) the bond is issued by a qualified issuer,
       ``(3) the issuer designates such bond for purposes of this 
     section, and
       ``(4) in the case of a bond issued by a qualified issuer 
     before 2019, the bond is issued--
       ``(A) pursuant to an allocation by the Secretary to such 
     issuer of a portion of the national clean renewable water 
     supply bond limitation under subsection (b), and
       ``(B) not later than 6 months after the date that such 
     qualified issuer receives an allocation under subsection (b).

     ``Any allocation under subsection (b) not used within the 6-
     month period described in paragraph (4)(B) shall be applied 
     to increase the national clean renewable water supply bond 
     limitation for the next succeeding application period under 
     subsection (b)(2)(B).
       ``(b) National Limitation on Amount of Bonds Designated.--
       ``(1) In general.--There is a national clean renewable 
     water supply bond limitation for each calendar year before 
     2019. Such limitation is--
       ``(A) $0 for 2009,
       ``(B) $100,000,000 for 2010,
       ``(C) $150,000,000 for 2011,
       ``(D) $200,000,000 for 2012,
       ``(E) $250,000,000 for 2013,
       ``(F) $500,000,000 for 2014,
       ``(G) $750,000,000 for 2015,
       ``(H) $1,000,000,000 for 2016,
       ``(I) $1,500,000,000 for 2017, and
       ``(J) $1,750,000,000 for 2018.
       ``(2) Allocation of limitation.--
       ``(A) In general.--The limitation under paragraph (1) shall 
     be allocated by the Secretary among qualified projects as 
     provided in this paragraph.
       ``(B) Method of allocation.--For each calendar year after 
     2009 for which there is a national clean renewable water 
     supply bond limitation, the Secretary shall publish a notice 
     soliciting applications by qualified issuers for allocations 
     of such limitation to qualified projects. Such notice shall 
     specify a 3-month application period in the calendar year 
     during which the Secretary will accept such applications. 
     Within 30 days after the end of such application period, and 
     subject to the requirements of subparagraph (C), the 
     Secretary shall allocate such limitation to qualified 
     projects on a first-come, first-served basis, based on the 
     order in which such applications are received from qualified 
     issuers.
       ``(C) Allocation requirements.--
       ``(i) Certifications regarding regulatory approvals.--No 
     portion of the national clean renewable water supply bond 
     limitation shall be allocated to a qualified project unless 
     the qualified issuer has certified in its application for 
     such allocation that as of the date of such application the 
     qualified issuer or qualified borrower has received all 
     Federal and State regulatory approvals necessary to construct 
     the qualified project.
       ``(ii) Restriction on allocations to large projects or to 
     individual projects.--

       ``(I) In general.--Except as provided in subclause (III), 
     for any calendar year the Secretary shall not allocate more 
     than 60 percent of the national clean renewable water supply 
     bond limitation to 1 or more large projects, more than 18 
     percent of such limitation to any single project that is a 
     large project, or more than 12 percent of such limitation to 
     any single project that is not a large project.
       ``(II) Definition of large project.--For purposes of 
     subclause (I), the term `large project' means a qualified 
     project that is designed to deliver more than 10,000,000 
     gallons of water per day.
       ``(III) Exception to restriction.--Subclause (I) shall not 
     apply to the extent its application would cause any portion 
     of the national clean renewable water supply bond limitation 
     for the calendar year to remain unallocated, based on 
     applications for allocations of such limitation received by 
     the Secretary during the application period referred to in 
     subparagraph (B).

       ``(3) Carryover of unused limitation.--If the clean 
     renewable water supply bond limitation for any calendar year 
     exceeds the aggregate amount allocated under paragraph (2) 
     for such year, such limitation for the succeeding calendar 
     year shall be increased by the amount of such excess.
       ``(c) Maturity Limitation.--
       ``(1) In general.--A bond shall not be treated as a clean 
     renewable water supply bond if the maturity of such bond 
     exceeds 20 years.
       ``(2) Coordination with section 54a.--The maturity 
     limitation in section 54A(d)(5) shall not apply to any clean 
     renewable water supply bond.
       ``(d) Refinancing Rules.--For purposes of paragraph (a)(1), 
     a qualified project may be refinanced with proceeds of a 
     clean renewable water supply bond only if the indebtedness 
     being refinanced (including any obligation directly or 
     indirectly refinanced by such indebtedness) was originally 
     incurred by a qualified borrower after the date of the 
     enactment of this section.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Governmental body.--The term `governmental body' 
     means any State or Indian tribal government, or any political 
     subdivision thereof.
       ``(2) Local water company.--The term `local water company' 
     means any entity responsible for providing water service to 
     the general public (including electric utility, industrial, 
     agricultural, commercial, or residential users) pursuant to 
     State or tribal law.
       ``(3) Qualified borrower.--The term `qualified borrower' 
     means a governmental body or a local water company.
       ``(4) Qualified desalination facility.--The term `qualified 
     desalination facility' means any facility that is used to 
     produce new water supplies by desalinating seawater, 
     groundwater, or surface water if the facility's source water 
     includes chlorides or total dissolved solids that, either 
     continuously or seasonally, exceed maximum permitted levels 
     for primary or secondary drinking water under Federal or 
     State law (as in effect on the date of issuance of the 
     issue).
       ``(5) Qualified groundwater remediation facility.--The term 
     `qualified groundwater remediation facility' means any 
     facility that is used to reclaim contaminated or naturally 
     impaired groundwater for direct delivery for potable use if 
     the facility's source water includes constituents that exceed 
     maximum contaminant levels regulated under the Safe Drinking 
     Water Act (as in effect on the date of the enactment of this 
     section).
       ``(6) Qualified issuer.--The term `qualified issuer' 
     means--
       ``(A) a governmental body, or
       ``(B) in the case of a State or political subdivision 
     thereof (as defined for purposes of section 103), any entity 
     qualified to issue tax-exempt bonds under section 103 on 
     behalf of such State or political subdivision.
       ``(7) Qualified project.--
       ``(A) In general.--The term `qualified project' means any 
     facility owned by a qualified borrower which is a--
       ``(i) qualified desalination facility,
       ``(ii) qualified recycled water facility,
       ``(iii) qualified groundwater remediation facility, or
       ``(iv) facility that is functionally related or subordinate 
     to a facility described in clause (i), (ii), or (iii).
       ``(B) Environmental impact.--A project shall not be treated 
     as a qualified project under subparagraph (A) unless such 
     project is designed to comply with regulations issued under 
     subsection (f) relating to the minimization of the 
     environmental impact of the project.
       ``(8) Qualified recycled water facility.--
       ``(A) In general.--The term `qualified recycled water 
     facility' means any wastewater treatment or distribution 
     facility which--
       ``(i) exceeds the requirements for the treatment and 
     disposal of wastewater under the Clean Water Act and any 
     other Federal or State water pollution control standards for 
     the discharge and disposal of wastewater to surface water, 
     land, or groundwater (as such requirements and standards are 
     in effect on the date of issuance of the issue), and
       ``(ii) except as provided in subparagraph (B), is used to 
     reclaim wastewater produced by the general public (including 
     electric utility, industrial, agricultural, commercial, or 
     residential users) to the extent such reclaimed wastewater is 
     used for a beneficial use that the issuer reasonably expects 
     as of the date of issuance of the issue otherwise would have 
     been satisfied with potable water supplies.
       ``(B) Impermissible uses.--Reclaimed wastewater is not used 
     for a use described in subparagraph (A)(ii) to the extent 
     such reclaimed wastewater is--
       ``(i) discharged into a waterway or used to meet waterway 
     discharge permit requirements and not used to supplement 
     potable water supplies,
       ``(ii) used to restore habitat,
       ``(iii) used to provide once-through cooling for an 
     electric generation facility, or
       ``(iv) intentionally introduced into the groundwater and 
     not used to supplement potable water supplies.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as are necessary to carry out the purposes of 
     this section, including regulations promulgated in 
     consultation with the Administrator of the Environmental 
     Protection Agency to ensure the environmental impact of 
     qualified facilities is minimized.''.
       (b) Conforming Amendments.--
       (1) Paragraph (1) of section 54A(d) of the Internal Revenue 
     Code of 1986 is amended by striking ``or'' at the end of 
     subparagraph (D), by inserting ``or'' at the end of 
     subparagraph (E), and by inserting after subparagraph (E) the 
     following new subparagraph:

[[Page S7089]]

       ``(F) a clean renewable water supply bond,''.
       (2) Subparagraph (C) of section 54A(d)(2) of such Code is 
     amended by striking ``and'' at the end of clause (iv), by 
     striking the period at the end of clause (v) and inserting 
     ``, and'', and by adding at the end the following new clause:
       ``(vi) in the case of a clean renewable water supply bond, 
     a purpose specified in section 54G(a)(1).''.
       (3) The table of sections for subpart I of part IV of 
     subchapter A of chapter 1 of such Code is amended by adding 
     at the end the following new item:

``Sec. 54G. Clean renewable water supply bonds.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after December 31, 2008.
                                 ______