[Congressional Record Volume 155, Number 136 (Thursday, September 24, 2009)]
[Senate]
[Pages S9843-S9845]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REID (for himself and Mr. Ensign):
  S. 1711. A bill to amend the Internal Revenue Code of 1986 to provide 
tax incentives for making homes more water-efficient, for building new 
water-efficient homes, for public water conservation, and for other 
purposes; to the Committee on Finance.
  Mr. REID. Mr. President, I rise today to introduce three pieces of 
legislation: the Water Efficiency and Conservation Investment Act, S. 
1711, the Water Efficiency, Conservation and Adaptation Act, S. 1712, 
and the Water Efficiency via Carbon Harvesting and Restoration Act, S. 
1713.
  Water is our world's most precious and important limited natural 
resource--access to water is vital for every person and life form on 
this planet. Albert Szent-Gyorgyi, a Hungarian Nobel Prize winning 
doctor, once said that ``water is life's mater and matrix, mother and 
medium. There is no life without water.''
  While Nevada is blessed with beautiful desert landscapes and 
tremendous clean energy resources, we are not blessed with abundant 
water supplies. That is why I am introducing legislation together with 
my friend Senator Ensign and others that will: encourage Americans to 
use water more efficiently; ensure that future generations have access 
to adequate supplies of clean water; and convert water stealing 
invasive weeds to sequestered carbon and clean-burning fuels.
  A lengthy drought is taking its toll on the Colorado River Basin 
states, especially Nevada, Arizona, and California. More than 30 
million people rely on water from the Colorado River, which supplies 
Southern Nevada with 90 percent of its water. Water levels at Lake 
Mead, where water used by 1.9 million Nevadans is stored, have dropped 
by roughly 100 feet. If the drought in the Southwest continues the lake 
could dry up in the next 12 years, according to a study by the Scripps 
Institution of Oceanography.
  Growing population, rising water demand, climate change induced 
disruptions to the water cycle, aging infrastructure, and water 
disputes all necessitate early action so the water resources we rely on 
today can be enjoyed by the next generation.
  Even without considering the effects of climate change, the U.S. 
Global Change Research Program has identified many serious water supply 
conflicts in the Colorado River Basin states by 2025. Factoring in the 
USGCRP's projection that precipitation runoff will decrease in the 
Southwest by up to 40 percent in some areas over the next half century 
as a result of a changing climate, it is clear that immediate and 
constant attention is and will be necessary to address these water 
supply problems.
  Legislation is urgently needed to promote greater water efficiency 
and create better financing options for improving our infrastructure to 
save, recycle and reuse water. Strong tax incentives to make our homes 
and yards more water efficient and to increase investments in extending 
the life of our existing water supplies will help secure water scarce 
regions against the economic and health catastrophes that would occur 
if their water supplies were to run dry.
  We need to invest meaningfully in planning for, adapting to and 
mitigating the effects of climate change on water supplies and water 
infrastructure with which Nevadans are becoming all too familiar. It is 
important that we start planning right away for a more secure water 
supply future.
  Investing in water efficiency and adapting our water systems to a 
changing climate not only prepares us for the future, it also can save 
consumers hundreds of dollars on their water bills. Additionally, 
adequate funding for the legislation I am introducing today could 
create tens of thousands of jobs. A $1 million direct investment in 
water efficiency is estimated to create between 15 and 22 jobs--more 
than double the jobs created by coal or oil investments.
  Together, the Water Efficiency and Conservation Investment Act and 
the Water Efficiency, Conservation and Adaptation Act provide the right 
balance of tax incentives, financing and grant programs to begin 
formulating a national strategy to address these pressing needs and 
ensure that current and future Nevadans will have greater and more 
sustainable economic growth opportunities.
  The Water Efficiency via Carbon Harvesting and Restoration Act also 
helps protect our water resources, and does much more. Invasive weeds 
and dangerous fuels buildup in Western landscapes have become recipes 
for disaster on a seemingly annual basis. The Bureau of Land Management 
has estimated that a single acre of salt cedar robs our watersheds of 
nearly a million gallons of water each year. The National Park Service 
has found that the infestation at Lake Mead National Recreation Area 
alone covers almost 7,000 acres. Removing the salt cedar from this one 
area would restore enough water to satisfy the needs of 72,000 Las 
Vegas residents.
  At the same time, expansion of pinyon and juniper now covers up to 9 
million acres of the public lands in the Great Basin, forming dense 
thickets impenetrable to most wildlife, and creating enormous wildland 
fire hazards.
  Using biochar production technology, we can restore these impacted 
landscapes, while producing valuable products that can help address 
climate change through long term carbon sequestration, benefit 
agriculture and the environment by reducing the need for chemical 
fertilizers, and produce cleaner-burning fuels to help meet our 
Nation's energy needs. All of this can be achieved while saving 
billions of gallons of water, reducing the risks of hotter and more 
difficult to extinguish wildfires, and creating rural economic 
development opportunities.
  Let me offer a brief description of how biochar technology works: the

[[Page S9844]]

woody material in invasive plants is heated in the absence of oxygen to 
produce biochar, as well as bio-oil and syngas which can then be used 
to power the production process. Biochar is nearly pure carbon, and 
when applied to landscapes and agricultural fields it has long-lasting 
benefits. It significantly improves soil quality, decreases fertilizer 
runoff, and increases plant health and crop yields. Studies have found 
that biochar is stable for hundreds if not thousands of years, keeping 
this carbon from being released into the atmosphere where it would 
contribute to climate change.
  These bills will do much to extend the life of our water resources in 
the face of growing water demand and climate disruptions, while 
improving the health of ecosystems. Under these bills, Nevadans would 
have new options to save money on their water bills and new ways to 
make money by eliminating water-hungry invasive species. And, the low-
cost financing options that will help communities adapt to drought and 
water scarcity due to global climate change will ensure sustainable 
economic growth and stimulate more green job creation.
  As these bills move through the legislative process, I look forward 
to working with my colleagues to ensure that adequate attention is paid 
to the tremendous work our Nation must do so that future generations 
may enjoy a more secure and predictable clean water future.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1711

       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 ``Water Efficiency and 
     Conservation Investment Act of 2009''.

     SEC. 2. RESIDENTIAL WATER EFFICIENCY CREDIT.

       (a) In General.--Subpart B of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code is amended by 
     inserting after section 30D the following new section:

     ``SEC. 30E. RESIDENTIAL WATER EFFICIENCY CREDIT.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year an amount equal to 50 
     percent of the qualified water efficiency property 
     expenditures paid or incurred during such taxable year.
       ``(b) Limitation.--The credit allowed under this section 
     with respect to any taxpayer for any taxable year shall not 
     exceed $750.
       ``(c) Qualified Water Efficiency Property Expenditures.--
     For purposes of this section--
       ``(1) In general.--The term `qualified water efficiency 
     property expenditures' means expenditures for qualified water 
     efficiency property which is--
       ``(A) installed on or in connection with a dwelling unit 
     located in the United States that is owned by the taxpayer 
     (without regard to whether any other person occupies such 
     dwelling unit as a residence), and
       ``(B) originally placed in service by the taxpayer.

     Such term includes expenditures for labor costs properly 
     allocable to the onsite preparation, assembly, or original 
     installation of such property.
       ``(2) Qualified water efficiency property.--The term 
     `qualified water efficiency property' means--
       ``(A) property which meets the national efficiency 
     standards and specifications for residential water-using 
     fixtures, appliances, and devices under the WaterSense 
     program of the Environmental Protection Agency that are in 
     effect on the date of purchase of such property, but only if 
     such property improves water efficiency by no less than 20 
     percent over standard models of similar water-using fixtures 
     and appliances as determined by the Administrator of such 
     Agency, and
       ``(B) water efficient landscaping which is installed by a 
     landscape irrigation professional certified by such 
     WaterSense program and which reduces water use by no less 
     than 50 percent, as certified by such professional.
       ``(3) State water efficiency standards.--In the case of a 
     State that has mandatory water efficiency standards for any 
     property that are more stringent than the standards and 
     specifications described in paragraph (2), property installed 
     on or in connection with a dwelling unit that is located in 
     such State must meet such water efficiency standards of such 
     State in order to be treated as qualified water efficiency 
     property for purposes of this section.
       ``(d) Special Rules.--For purposes of this section--
       ``(1) Joint ownership of water efficiency items.--
       ``(A) In general.--An expenditure shall not fail to be 
     treated as a qualified water efficiency property expenditure 
     merely because such expenditure was made with respect to 2 or 
     more dwelling units.
       ``(B) Allocation of expenditures.--In the case of an 
     expenditure made with respect to 2 or more dwelling units, 
     for purposes of determining the credit allowable under this 
     section, such expenditure shall be allocated among such 
     dwelling units in proportion to the amount of the expenditure 
     made for each dwelling unit.
       ``(2) Refunds disregarded in the administration of federal 
     programs and federally assisted programs.--Any credit or 
     refund allowed or made to any individual by reason of this 
     section shall not be taken into account as income and shall 
     not be taken into account as resources, for purposes of 
     determining the eligibility of such individual or any other 
     individual for benefits or assistance, or the amount or 
     extent of benefits or assistance, under any Federal program 
     or under any State or local program financed in whole or in 
     part with Federal funds.
       ``(3) Basis adjustments.--For purposes of this subtitle, if 
     a credit is allowed under subsection (a) for any expenditure 
     with respect to any property, the increase in the basis of 
     such property which would (but for this subsection) result 
     from such expenditure shall be reduced by the amount of the 
     credit so allowed.
       ``(4) Denial of double benefit.--
       ``(A) In general.--No deduction or credit under any other 
     provision of this chapter shall be allowed with respect to 
     the amount of any qualified water efficiency property 
     expenditure taken into account under this section.
       ``(B) Rebate programs.--The amount of any qualified water 
     efficiency property expenditure for which an individual is 
     reimbursed under any Federal government program shall not be 
     taken into account for purposes of determining the credit 
     under subsection (a) with respect such individual.
       ``(e) Application With Other Credits.--
       ``(1) Business credit.--
       ``(A) Business credit treated as part of general business 
     credit.--So much of the credit which would be allowed under 
     subsection (a) for any taxable year (determined without 
     regard to this subsection) that is attributable to property 
     of a character subject to an allowance for depreciation shall 
     be treated as a credit listed in section 38(b) for such 
     taxable year (and not allowed under subsection (a)).
       ``(B) Disallowance of depreciation.--In the case of an 
     expenditure for property described in subparagraph (A) with 
     respect to which a credit is allowed under section 38(b) by 
     reason of such subparagraph, the depreciation allowance for 
     such property in all taxable years shall be zero and no 
     deduction shall be available under section 167 with respect 
     to such property.
       ``(2) Personal credit.--
       ``(A) In general.--For purposes of this title, the credit 
     allowed under subsection (a) for any taxable year (determined 
     after application of paragraph (1)) shall be treated as a 
     credit allowable under subpart A for such taxable year.
       ``(B) Limitation based on amount of tax.--In the case of a 
     taxable year to which section 26(a)(2) does not apply, the 
     credit allowed under subsection (a) for any taxable year 
     (determined after application of paragraph (1)) shall not 
     exceed the excess of--
       ``(i) the sum of the regular tax liability (as defined in 
     section 26(b)), plus
       ``(ii) the sum of the credits allowable under subpart A 
     (other than this section and sections 23, 25D, 30, 30B, and 
     30D) and section 27 for the taxable year.
       ``(f) Termination.--This section shall not apply with 
     respect to any property placed in service after December 31, 
     2014.''.
       (b) Conforming Amendments.--
       (1) Section 24(b)(3)(B) of the Internal Revenue Code of 
     1986 is amended by striking ``and 30D'' and inserting ``, 
     30D, and 30E''.
       (2) Section 25(e)(1)(C)(ii) of such Code is amended by 
     inserting ``30E,'' after ``30D,''.
       (3) Section 25B(g)(2) of such Code is amended by striking 
     ``and 30D'' and inserting ``30D, and 30E''.
       (4) Section 904(i) of such Code is amended by striking 
     ``and 30D'' and inserting ``30D, and 30E''.
       (5) Section 1016(a) of such Code is amended by striking 
     ``and'' at the end of paragraph (36), by striking the period 
     at the end of paragraph (37) and inserting ``, and'', and by 
     adding at the end the following new paragraph:
       ``(38) to the extent provided in section 30E(d)(3).''.
       (6) Section 1400C(d)(2) of such Code is amended by striking 
     ``and 30D'' and inserting ``30D, and 30E''.
       (c) Credit to Be Part of Business Credit.--Section 38(b) of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``plus'' at the end of paragraph (34), by striking the period 
     at the end of paragraph (35) and inserting ``, plus'', and by 
     adding at the end the following new paragraph:
       ``(36) the portion of the residential water efficiency 
     credit to which section 30E(e)(1) applies.''.
       (d) Clerical Amendment.--The table of sections for subpart 
     B of part IV of subchapter A of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by inserting after the item 
     relating to section 30D the following new item:

``Sec. 30E. Residential water efficiency credit.''.


[[Page S9845]]


       (e) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2009.

     SEC. 3. NEW WATER EFFICIENT HOME CREDIT.

       (a) In General.--Subpart D 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. 45R. NEW WATER EFFICIENT HOME CREDIT.

       ``(a) Allowance of Credit.--For purposes of section 38, in 
     the case of an eligible contractor, the new water efficient 
     home credit for the taxable year is an amount equal to $1,500 
     for each qualified new water efficient home which is--
       ``(1) constructed by such eligible contractor, and
       ``(2) acquired by a person from such eligible contractor 
     during the taxable year.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Eligible contractor.--The term `eligible contractor' 
     means a person who is certified as a builder partner under 
     the WaterSense program of the Environmental Protection Agency 
     and who is--
       ``(A) the person who constructed the qualified new water 
     efficient home, or
       ``(B) in the case of a qualified new energy efficient home 
     which is a manufactured home, the manufactured home producer 
     of such home.
       ``(2) Qualified new water efficient home.--The term 
     `qualified new water efficient home' means a dwelling unit--
       ``(A) located in the United States,
       ``(B) the construction of which is substantially completed 
     after the date of the enactment of this section, and
       ``(C) which is certified by the Environmental Protection 
     Agency as complying with the Final Water-Efficient Single-
     Family New Home Specification issued by such Agency.
       ``(3) Construction.--The term `construction' includes 
     substantial reconstruction and rehabilitation.
       ``(4) Acquire.--The term `acquire' includes purchase.
       ``(c) Certification.--
       ``(1) Method of certification.--A certification described 
     in subsection (b)(2)(C) shall be made in accordance with 
     guidance prescribed by the Secretary, after consultation with 
     the Administrator of the Environmental Protection Agency. 
     Such guidance shall specify procedures and methods for 
     calculating water and cost savings.
       ``(2) Form.--Any certification described in subsection 
     (b)(2)(C) shall be made in writing in a manner which 
     specifies in readily verifiable fashion the water efficient 
     components (including toilets, faucets, other plumbing 
     fixtures and appliances, hot water delivery, landscape 
     design, and irrigation systems) installed and their 
     respective rated water efficiency performance.
       ``(d) Basis Adjustment.--For purposes of this subtitle, if 
     a credit is allowed under this section in connection with any 
     expenditure for any property, the increase in the basis of 
     such property which would (but for this subsection) result 
     from such expenditure shall be reduced by the amount of the 
     credit so determined.
       ``(e) Coordination With Other Credits.--Expenditures taken 
     into account under section 45L, 47, or 48(a) shall not be 
     taken into account under this section.
       ``(f) Rebate Programs.--The amount of the credit allowed 
     under subsection (a) to an eligible contractor with respect 
     to any qualified new water efficient home shall be reduced, 
     but not below zero, by the amount of any reimbursement which 
     such contractor receives under any Federal government program 
     for the construction of such home or for expenditures 
     relating to such construction.
       ``(g) Termination.--This section shall not apply to any 
     qualified new water efficient home acquired after December 
     31, 2014.''.
       (b) Credit to Be Part of General Business Credit.--Section 
     38(b) of the Internal Revenue Code of 1986, as amended by 
     this Act, is amended by striking ``plus'' at the end of 
     paragraph (35), by striking the period at the end of 
     paragraph (36) and inserting ``, plus'', and by adding at the 
     end the following new paragraph:
       ``(37) the new water efficient home credit determined under 
     section 45R.''.
       (c) Clerical Amendment.--The table of sections for subpart 
     D 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 item:

``Sec. 45R. New water efficient home credit.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to homes acquired after December 31, 2009.

     SEC. 4. WATER CONSERVATION BONDS.

       (a) In General.--Section 54D of the Internal Revenue Code 
     of 1986 is amended--
       (1) by striking ``energy conservation bond'' each place it 
     appears in subsections (a), (b), and (d), and inserting 
     ``energy and water conservation bond'',
       (2) by inserting ``AND WATER'' after ``QUALIFIED ENERGY'' 
     in the heading,
       (3) by striking ``State or local government'' in subsection 
     (a)(2) and inserting ``State, local government, or water 
     district'',
       (4) by striking ``$3,200,000,000'' in subsection (d) and 
     inserting ``$4,000,000,000, of which not less than 20 percent 
     shall be used for qualified conservation purposes described 
     in subsection (f)(1)(F)'', and
       (5) by adding at the end of subsection (f)(1) the following 
     new subparagraph:
       ``(F) Expenditures incurred for purposes of--
       ``(i) reducing water consumption by a public building or 
     facility by not less than 30 percent,
       ``(ii) advanced water metering infrastructure, including 
     the purchase, installation, and commissioning of advanced 
     water meters and related software and infrastructure,
       ``(iii) investigation, design, or construction of a 
     qualified groundwater remediation, desalination, or recycled 
     water facility or system,
       ``(iv) increasing energy efficiency or the generation and 
     use of renewable energy in the management, conveyance, or 
     treatment of water, wastewater, or stormwater,
       ``(v) reducing water loss in a water distribution system, 
     including training water system personnel, annual testing and 
     calibration of meters, detecting and repairing leaks, and 
     purchase and installation of related equipment, or
       ``(vi) establishing or improving a system for volumetric 
     billing to enable utilities to base retail residential 
     customer bills in whole or in part on the volume of metered 
     water deliveries.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 5. ARBITRAGE RULES NOT TO APPLY TO PREPAYMENTS FOR 
                   ELECTRICITY.

       (a) In General.--Subsection (b) of section 148 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new paragraph:
       ``(5) Safe harbor for prepaid electricity supply 
     contracts.--
       ``(A) In general.--The term `investment-type property' does 
     not include a prepayment under a qualified electricity supply 
     contract.
       ``(B) Qualified electricity supply contract.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `qualified electricity supply contract' means--

       ``(I) any contract entered into by a water or sewer utility 
     to acquire electricity for the use of such utility in 
     providing water or sewer services to its customers, if such 
     contract provides that the provider of such electricity under 
     the contract will use not less than 75 percent of the 
     prepayment described in subparagraph (A) to acquire, 
     construct, or improve a qualified renewable energy facility, 
     and
       ``(II) any contract to acquire electricity which is not 
     described in subclause (I) which the Secretary determines 
     does not constitute property of the type intended to be 
     described in paragraph (2)(D).

       ``(ii) Water or sewer utility.--The term `water or sewer 
     utility' means a utility which is a governmental unit or is 
     owned by a governmental unit and which provides--

       ``(I) water for residential, commercial, irrigation, or 
     industrial use, or
       ``(II) sewer services for residential, commercial, or 
     industrial use,

     to retail or wholesale customers in the service territory of 
     such utility.
       ``(iii) Qualified renewable energy facility.--The term 
     `qualified renewable energy facility' means a qualified 
     facility within the meaning of section 45(d) (without regard 
     to paragraphs (8) and (10) thereof, to the placed in service 
     date of such facility, and to the person who owns such 
     facility) which is located in the United States.
       ``(iv) Use of water or sewer utility.--For purposes of 
     clause (i)(I), a contract shall be treated as providing 
     electricity for the use of a water or sewer utility if the 
     sum of--

       ``(I) the total number of kilowatt hours of electricity 
     purchased under such contract and any other contracts for the 
     purchase of electricity by such utility in effect on the date 
     of the execution of such contract, plus
       ``(II) the amount of electricity expected to be generated 
     by any generating facilities owned and used by such utility,

     does not exceed by more than 10 percent the total kilowatt 
     hours of electricity expected to be used by such utility 
     during the term of such contract for the purpose of providing 
     water or sewer services to its customers or for resale to 
     other water or sewer utilities for their use (and not for 
     resale to any entity that is not a water or sewer utility).
       ``(C) Other rules.--Rules similar to the rules of 
     subparagraphs (D)(ii), (G), and (I) of paragraph (4) shall 
     apply for purposes of this paragraph.''.
       (b) Private Loan Financing Test Not to Apply to Prepayments 
     for Electricity.--Paragraph (2) of section 141(c) of the 
     Internal Revenue Code of 1986 is amended--
       (1) by striking ``or'' at the end of subparagraph (B),
       (2) by striking the period at the end of subparagraph (C) 
     and inserting ``, or'', and
       (3) by adding at the end the following new subparagraph:
       ``(D) is a qualified electricity supply contract (as 
     defined in section 148(b)(5)).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after the date of the 
     enactment of this Act.
                                 ______