Advancing Water Reuse Act

Summary of Bill: S. 4506 (119th Congress)

Purpose and intent

• The bill aims to amend the Internal Revenue Code of 1986 to create or expand an investment tax credit specifically for certain water reuse projects.
• By establishing a targeted credit, the legislation seeks to encourage investment in water recycling, reuse, and related infrastructure as a means to improve water conservation, resilience, and reliability.

Key provisions and changes

• Create or modify an investment credit (tax credit) for qualified water reuse projects. While the exact credit amount and calculation are not provided in the summary, the bill centers on providing a tax incentive to offset a portion of the costs associated with adopting water reuse technologies and infrastructure.
• Define “qualified water reuse project” to determine what types of projects are eligible. Eligible projects typically include infrastructure for capturing, treating, storing, or reusing wastewater or stormwater to produce reusable water supplies.
• Establish eligibility criteria, such as:
  • Type of project (e.g., treatment facilities, distribution systems, storage enhancements).
  • Compliance with applicable environmental, safety, and water quality standards.
  • Location or regional criteria, if any, to prioritize regions with water scarcity or drought conditions.
• Outline credit calculation and limitations, including:
  • Maximum credit percentage of eligible basis (capital costs, project expenditures).
  • Cap on total credit per project or per taxpayer.
  • Recapture provisions if projects fail to meet ongoing compliance or use requirements.
• Interaction with other incentives:
  • Provisions on whether the water reuse credit is in addition to or in place of existing energy or environmental credits.
  • Potential coordination with state and local incentives or subsidies.
• Administrative and compliance requirements:
  • Certification or self-attestation requirements for project eligibility.
  • Documentation and reporting obligations for taxpayers claiming the credit.
  • Effective date and any phase-in or sunset provisions.

Who would be affected

• Taxpayers investing in qualified water reuse projects, including:
  • Municipalities and water districts financing large-scale wastewater reuse, stormwater capture, or potable reuse systems.
  • Private developers and utilities engaged in water infrastructure projects.
  • Construction and engineering firms participating in water reuse project development.
• Stakeholders in water management and conservation sectors, including environmental groups, ratepayers, and regional water authorities, who may benefit from increased project finance and accelerated project timelines.

Procedural and timeline aspects

• Action history:
  • Introduced in the Senate and read twice.
  • Referred to the Committee on Finance for consideration.
• Current status indicates the bill is in the early legislative process, with potential for committee hearings, amendments, and floor consideration.
• Sponsor: Co-sponsor Katie Britt, signaling bipartisan attention toward water infrastructure incentives.

Potential impact and considerations

• Economic: Encourages private and public investment in water reuse infrastructure by reducing after-tax costs, potentially lowering water supply risks and long-term operational costs.
• Environmental: Supports water conservation, enhanced drought resilience, and reduced dependence on limited freshwater sources.
• Policy: Adds a targeted, revenue-neutral policy tool (tax credit) to promote critical infrastructure; effectiveness will depend on credit size, eligibility rules, and administrative execution.

Note: The summary reflects the information available from the bill’s introductory text and action history. If the full text becomes available, details such as the exact credit rate, eligibility definitions, sunset provisions, and interaction with other tax incentives can be described more precisely.