What This Bill Does
This bill changes federal tax law to clarify that replacing lead service lines (pipes that carry drinking water to homes) does not count as private business use. It allows governments to issue bonds (borrowed money) to pay for replacing the privately-owned portions of lead service lines while still getting special tax breaks.
Who It Affects
Public water systems and the communities they serve. Bond investors who purchase these special government bonds. Homeowners with lead service lines connected to public water systems.
Key Provisions
• Qualified lead service line replacement use is not considered private business use for bond purposes (Sec. 2(a))
• Bonds can fund replacement of privately-owned portions of lead service lines connected to public water systems to meet federal drinking water safety rules for lead (Sec. 2(a))
What Changes
Governments can now issue bonds to replace privately-owned lead service line portions without losing the tax benefits these bonds normally receive. Previously, the law was unclear whether this type of work counted as private business use, which could have disqualified the bonds from tax advantages.
Important Definitions
Lead service line: As defined in the Safe Drinking Water Act, the pipes that carry water from a public water system to individual properties.
Public water system: As defined in the Safe Drinking Water Act, a system that supplies water to the public.
Effective Date
Obligations issued after December 31, 2022.
I
118TH CONGRESS
1ST SESSION H. R. 1407
To amend the Internal Revenue Code of 1986 to modify the private business
use requirements for bonds issued for lead service line replacement projects.
IN THE HOUSE OF REPRESENTATIVES
MARCH 7, 2023
Mr. KILDEE (for himself, Ms. TENNEY, Ms. MOORE of Wisconsin, Mr. KELLY
of Pennsylvania, and Mr. PASCRELL) introduced the following bill; which
was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to modify
the private business use requirements for bonds issued
for lead service line replacement projects.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Financing Lead Out
4
of Water Act of 2022’’.
5
VerDate Sep 11 2014
02:13 Mar 21, 2023
Jkt 039200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H1407.IH
H1407
kjohnson on DSK79L0C42PROD with BILLS
2
•HR 1407 IH
SEC. 2. MODIFICATION OF PRIVATE BUSINESS USE RE-
1
QUIREMENTS FOR CERTAIN BONDS.
2
(a) IN GENERAL.—Section 141(b)(6) of the Internal
3
Revenue Code of 1986 is amended by adding at the end
4
the following new subparagraph:
5
‘‘(D) CLARIFICATION RELATING TO QUALI-
6
FIED
LEAD
SERVICE
LINE
REPLACEMENT
7
USE.—
8
‘‘(i) IN
GENERAL.—For purposes of
9
this subsection, qualified lead service line
10
replacement use shall not constitute pri-
11
vate business use.
12
‘‘(ii) DEFINITIONS.—For purposes of
13
this subparagraph—
14
‘‘(I) QUALIFIED
LEAD
SERVICE
15
LINE REPLACEMENT USE.—The term
16
‘qualified lead service line replacement
17
use’ means, with respect to any public
18
water system, use of the proceeds of
19
an issue to replace any privately-
20
owned portion of a lead service line
21
connected to such system to facilitate,
22
achieve or maintain compliance with a
23
national primary drinking water regu-
24
lation for lead.
25
VerDate Sep 11 2014
02:13 Mar 21, 2023
Jkt 039200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H1407.IH
H1407
kjohnson on DSK79L0C42PROD with BILLS
3
•HR 1407 IH
‘‘(II) LEAD SERVICE LINE.—The
1
term ‘lead service line’ has the mean-
2
ing given such term in section
3
1459B(a)(4) of the Safe Drinking
4
Water Act, as amended.
5
‘‘(III)
NATIONAL
PRIMARY
6
DRINKING
WATER
REGULATION
FOR
7
LEAD.—The term ‘national primary
8
drinking water regulation for lead’
9
means a national primary drinking
10
water regulation for lead promulgated
11
under section 1412 of such Act.
12
‘‘(IV) PUBLIC WATER SYSTEM.—
13
The term ‘public water system’ has
14
the meaning given such term in sec-
15
tion 1401(4) of such Act.’’.
16
(b) EFFECTIVE DATE.—The amendments made by
17
this section shall apply to obligations issued after Decem-
18
ber 31, 2022.
19
Æ
VerDate Sep 11 2014
02:13 Mar 21, 2023
Jkt 039200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6301
E:\BILLS\H1407.IH
H1407
kjohnson on DSK79L0C42PROD with BILLS