[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4154 Introduced in House (IH)]
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117th CONGRESS
1st Session
H. R. 4154
To amend the Internal Revenue Code of 1986 to provide for direct-pay
credit bonds in the case of certain bonds the proceeds of which are
used for the replacement of lead drinking water service lines.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 24, 2021
Mr. Pascrell (for himself, Ms. Moore of Wisconsin, and Mr. Kildee)
introduced the following bill; which was referred to the Committee on
Ways and Means, and in addition to the Committee on the Budget, 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 amend the Internal Revenue Code of 1986 to provide for direct-pay
credit bonds in the case of certain bonds the proceeds of which are
used for the replacement of lead drinking water service lines.
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 ``Lead-Free America Bonds Act of
2021''.
SEC. 2. CREDIT TO ISSUER FOR LEAD DRINKING WATER SERVICE LINE BONDS.
(a) In General.--Subchapter B of chapter 65 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``SEC. 6431. CREDIT ALLOWED TO ISSUER FOR LEAD DRINKING WATER SERVICE
LINE BONDS.
``(a) In General.--In the case of a qualified lead drinking water
service line bond, the issuer of such bond shall be allowed a credit
with respect to each interest payment under such bond which shall be
payable by the Secretary as provided in subsection (b).
``(b) Payment of Credit.--
``(1) In general.--The Secretary shall pay
(contemporaneously with each date on which interest is so
payable) to the issuer of such bond (or to any person who makes
such interest payments on behalf of such issuer) an amount
equal to so much of such interest that is payable at a rate not
in excess of the applicable interest rate determined under
paragraph (2).
``(2) Applicable interest rate.--
``(A) In general.--The applicable interest rate
determined under this paragraph for any qualified lead
drinking water service line bond shall be the rate
which the Secretary estimates will permit the issuance
of qualified lead drinking water service line bonds
with a specified maturity or redemption date without
discount and without additional interest cost.
``(B) Procedure for rate determinations.--
``(i) In general.--Such rate with respect
to any qualified lead drinking water service
line bond shall be determined as of the first
day on which there is a binding, written
contract for the sale or exchange of the bond.
``(ii) Method and frequency.--For purposes
of this paragraph, the Secretary will determine
and announce credit rates daily for qualified
lead drinking water service line bonds based on
the Secretary's estimate of the yields on
outstanding bonds from market sectors selected
at the discretion of the Secretary that, for
the business day immediately preceding the sale
date of the bonds, have an investment grade
rating of between A and BBB for bonds of a
similar maturity and for which the interest
would be included in gross income.
``(c) Qualified Lead Drinking Water Service Line Bond.--
``(1) In general.--For purposes of this section, the term
`qualified lead drinking water service line bond' means any
bond (other than a private activity bond) issued as part of an
issue if--
``(A) 100 percent of the available project proceeds
of such issue are to be used for replacing lead
components of 1 or more eligible public water systems
that are not lead free, including any publicly or
privately owned portion of a lead service line of the
eligible public water system,
``(B) the interest on such bond would (but for this
section) be excludable from gross income under section
103,
``(C) the issue price has not more than a de
minimis amount (determined under rules similar to the
rules of section 1273(a)(3)) of premium over the stated
principal amount of the bond, and
``(D) prior to the issuance of such bond, the
issuer makes an irrevocable election to have this
section apply.
Except upon approval by the Environmental Protection Agency for
circumstances in which there are emergent public health risks,
none of the available project proceeds of such issue shall be
used for a partial lead service line replacement.
``(2) Applicable rules.--For purposes of applying paragraph
(1)--
``(A) Not treated as federally guaranteed.--For
purposes of section 149(b), a qualified lead drinking
water service line bond shall not be treated as
federally guaranteed by reason of the credit allowed
under this section.
``(B) Application of arbitrage rules.--For purposes
of section 148, the yield on a qualified lead drinking
water service line bond shall be reduced by the credit
allowed under this section.
``(d) Definition and Special Rules.--For purposes of this section--
``(1) Interest includible in gross income.--For purposes of
this title, interest on any qualified lead drinking water
service line bond shall be includible in gross income.
``(2) Eligible public water system.--
``(A) In general.--The term `eligible public water
system' means, with respect to any bond--
``(i) in the case of a public water system
with respect to which the owner or operator
was, during the 6-year period preceding the
date of enactment of the Lead-Free America
Bonds Act of 2021, required to give lead action
level notice, such bond was issued during the
3-year period subsequent to the date of
enactment of such Act, or
``(ii) in the case of a public water system
with respect to which the owner or operator
was, at any time subsequent to the date of
enactment of the Lead-Free America Bonds Act of
2021, required to give lead action level
notice, such bond was issued during the 3-year
period subsequent to such notice.
``(B) Public water system.--The term `public water
system' has the meaning given such term in section
1401(4) of such Act (42 U.S.C. 300f(4)).
``(C) Lead free.--The term `lead free' has the
meaning given such term in section 1417(d) of such Act
(42 U.S.C. 300g-6(d)).
``(D) Lead service line.--The term `lead service
line' has the meaning given such term in section
1459B(a)(4) of such Act (42 U.S.C. 300j-19b(a)(4)).
``(E) Lead action level notice.--The term `lead
action level notice' means notice under section
1414(c)(1)(D) of the Safe Water Drinking Act (42 U.S.C.
300g-3(c)(1)(D)) that the public water system exceeded
the lead action level.
``(3) Failure to spend required amount of bond proceeds
within 5 years.--
``(A) In general.--If at the close of the 5-year
period beginning on the date of issuance less than 100
percent of the available project proceeds of the issue
are expended for the purposes specified in subsection
(c)(1)(A), the issuer shall redeem all of the
nonqualified bonds within 90 days after the end of such
period. For purposes of this paragraph, the amount of
the nonqualified bonds required to be redeemed shall be
determined in the same manner as under section 142.
``(B) Extension of period.--Upon submission of a
request prior to the expiration of the 5-year period
under subparagraph (A), the Secretary may extend such
period if the issuer establishes that the failure to
expend the proceeds within such period is due to
reasonable cause and the expenditures for the purposes
described in subsection (c)(1)(A) will continue to
proceed with due diligence.
``(4) Available project proceeds.--The term `available
project proceeds' means--
``(A) the excess of--
``(i) the proceeds from the sale of an
issue, over
``(ii) the sum of--
``(I) issuance costs financed by
the issue (the extent that such costs
do not exceed 2 percent of such
proceeds), and
``(II) amounts in a reasonably
required reserve (within the meaning of
section 150(a)(3)) with respect to such
issue), and
``(B) the proceeds from any investment of the
excess described in clause (i).
``(5) Current refundings allowed.--
``(A) In general.--In the case of a bond issued to
refund a qualified lead drinking water service line
bond, such refunding bond shall be treated as a
qualified lead drinking water service line bond for
purposes of this section if--
``(i) the average maturity date of the
issue of which the refunding bond is a part is
not later than the average maturity date of the
bonds to be refunded by such issue,
``(ii) the amount of the refunding bond
does not exceed the outstanding amount of the
refunded bond, and
``(iii) the refunded bond is redeemed not
later than 90 days after the date of the
issuance of the refunding bond.
``(B) Determination of average maturity.--For
purposes of subparagraph (A)(i), average maturity shall
be determined in accordance with section 147(b)(2)(A).
``(6) Application of davis-bacon act requirements with
respect to qualified lead drinking water service line bonds.--
Subchapter IV of chapter 31 of title 40, United States Code,
shall apply to projects financed with the proceeds of qualified
lead drinking water service line bonds (other than bonds issued
to refund a bond originally issued before the date of the
enactment of this Act).
``(e) Regulations.--The Secretary may prescribe such regulations
and other guidance as may be necessary or appropriate to carry out this
section.''.
(b) Payments Made Under Section 6431 of the Internal Revenue Code
of 1986.--Section 255(g)(1)(A) of the Balanced Budget and Emergency
Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended by
inserting: ``Payments made under section 6431 of the Internal Revenue
Code of 1986'' after the item related to Payment to Radiation Exposure
Compensation Trust Fund.
(c) Clerical Amendment.--The table of sections for subchapter B of
chapter 65 of the Internal Revenue Code of 1986 is amended by adding at
the end the following new item:
``Sec. 6431. Credit allowed to issuer for qualified lead drinking water
service line bonds.''.
(d) Effective Date.--The amendments made by this section shall
apply to bonds issued more than 30 days after the date of the enactment
of this Act.
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