,,ii  #aagth ,,congress  #ast ,session  
,s4 #bbhi  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,june #bd1     
#bjba ,mr4 ,menendez 7for himself and   
,mr4 ,booker7 introduced the following  
bill2 which was read twice and referred 
to the ,committee on ,finance  ,a ,,bill
  ,to amend the ,internal ,revenue ,code
 of #aihf 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 lines4  #a4 ,short title ,this  
,act may be cited as the ,lead-,free    
,america ,bonds ,act of #bjba4  #b4     
,credit to issuer for lead drinking     
water service line bonds  7a7 ,in       
general ,subchapter ,b of chapter #fe of
 the ,internal ,revenue ,code of #aihf  
is amended by adding at the end the     
following new section3  #fdca4 ,credit  
allowed to issuer for lead drinking     
water service line bonds  7a7 ,in       
general ,in the case of a qualified lead
 drinking water service line bond1 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 7b74  7b7 ,payment of credit
  7#a7 ,in general ,the ,secretary shall
 pay 7contemporaneously with each date  
on which interest is so payable7 to the 
issuer of such bond 7or to any person   
who makes such interest payments on     
behalf of such issuer7 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 7#b74  7#b7 ,applicable 
interest rate  7,a7 ,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 cost4  7,b7 

,procedure for rate determinations  7i7 
,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   
binding1 written contract for the sale  
or exchange of the bond4  7ii7 ,method  
and frequency ,for purposes of this     
paragraph1 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 that1  
for the business day immediately        
preceding the sale date of the bonds1   
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     
income4  7c7 ,qualified lead drinking   
water service line bond  7#a7 ,in       
general ,for purposes of this section1  
the term qualified lead drinking water  

service line bond means any bond 7other 
than a private activity bond7 issued as 
part of an issue if--  7,a7 #ajj percent
 of the available project proceeds of   
such issue are to be used for replacing 
lead components of #a or more eligible  
public water systems that are not lead  
free1 including any publicly or         
privately owned portion of a lead       
service line of the eligible public     
water system1  7,b7 the interest on such
 bond would 7but for this section7 be   
excludable from gross income under      
section #ajc1  7,c7 the issue price has 
not more than a de minimis amount       
7determined under rules similar to the  
rules of section #abgc7;a77#c77 of      
premium over the stated principal amount
 of the bond1 and  7,d7 prior to the    
issuance of such bond1 the issuer makes 
an irrevocable election to have this    
section apply4  ,except upon approval by
 the ,environmental ,protection ,agency 
for circumstances in which there are    
emergent public health risks1 none of   

the available project proceeds of such  
issue shall be used for a partial lead  
service line replacement4  7#b7         
,applicable rules ,for purposes of      
applying paragraph 7#a7-- 7,a7 ,not     
treated as federally guaranteed ,for    
purposes of section #adi7;b71 a         
qualified lead drinking water service   
line bond shall not be treated as       
federally guaranteed by reason of the   
credit allowed under this section4  7,b7
 ,application of arbitrage rules ,for   
purposes of section #adh1 the yield on a
 qualified lead drinking water service  
line bond shall be reduced by the credit
 allowed under this section4  7d7       
,definition and special rules ,for      
purposes of this section--  7#a7        
,interest includible in gross income    
,for purposes of this title1 interest on
 any qualified lead drinking water      
service line bond shall be includible in
 gross income4  7#b7 ,eligible public   
water system  7,a7 ,in general ,the term
 eligible public water system means1    

with respect to any bond--  7i7 in the  
case of a public water system with      
respect to which the owner or operator  
was1 during the #f-year period preceding
 the date of enactment of the           
,lead-,free ,america ,bonds ,act of     
#bjba1 required to give lead action     
level notice1 such bond was issued      
during the #c-year period subsequent to 
the date of enactment of such ,act1 or  
7ii7 in the case of a public water      
system with respect to which the owner  
or operator was1 at any time subsequent 
to the date of enactment of the         
,lead-,free ,america ,bonds ,act of     
#bjba1 required to give lead action     
level notice1 such bond was issued      
during the #c-year period subsequent to 
such notice4  7,b7 ,public water system 
,the term public water system has the   
meaning given such term in section      
#adja7d7 of such ,act 7#db ,u4,s4,c4    
#cjj;f7#d774  7,c7 ,lead free ,the term 
lead free has the meaning given such    
term in section #adag7;d7 of such ,act  

7#db ,u4,s4,c4 #cjj;g-#f7;d774  7,d7    
,lead service line ,the term lead       
service line has the meaning given such 
term in section #adei;,b7a77#d7 of such 
,act 7#db ,u4,s4,c4                     
#cjj;j-#ai;b7a77#d774  7,e7 ,lead action
 level notice ,the term lead action     
level notice means notice under section 
#adad7;c77#a77;,d7 of the ,safe ,water  
,drinking ,act 7#db ,u4,s4,c4 #cjj;g-   
#c7;c77#a77;,d77 that the public water  
system exceeded the lead action level4  
7#c7 ,failure to spend required amount  
of bond proceeds within #e years  7,a7  
,in general ,if at the close of the     
#e-year period beginning on the date of 
issuance less than #ajj percent of the  
available project proceeds of the issue 
are expended for the purposes specified 
in subsection 7c77#a77;,a71 the issuer  
shall redeem all of the nonqualified    
bonds within #ij days after the end of  
such period4 ,for purposes of this      
paragraph1 the amount of the            
nonqualified bonds required to be       

redeemed shall be determined in the same
 manner as under section #adb4  7,b7    
,extension of period ,upon submission of
 a request prior to the expiration of   
the #e-year period under subparagraph   
7,a71 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        
7c77#a77;,a7 will continue to proceed   
with due diligence4  7#d7 ,available    
project proceeds ,the term available    
project proceeds means-- 7,a7 the excess
 of--  7i7 the proceeds from the sale of
 an issue1 over  7ii7 the sum of--  7,i7
 issuance costs financed by the issue   
7the extent that such costs do not      
exceed #b percent of such proceeds71 and
  7,,ii7 amounts in a reasonably        
required reserve 7within the meaning of 
section #aej7;a77#c77 with respect to   
such issue71 and  7,b7 the proceeds from
 any investment of the excess described 

in clause 7i74  7#e7 ,current refundings
 allowed  7,a7 ,in general ,in the case 
of a bond issued to refund a qualified  
lead drinking water service line bond1  
such refunding bond shall be treated as 
a qualified lead drinking water service 
line bond for purposes of this section  
if--  7i7 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 issue1  7ii7 the amount
 of the refunding bond does not exceed  
the outstanding amount of the refunded  
bond1 and  7iii7 the refunded bond is   
redeemed not later than #ij days after  
the date of the issuance of the         
refunding bond4  7,b7 ,determination of 
average maturity ,for purposes of       
subparagraph 7,a77i71 average maturity  
shall be determined in accordance with  
section #adg7;b77#b77;,a74  7#f7        
,application of ,davis-,bacon act       
requirements with respect to qualified  
lead drinking water service line bonds  

,subchapter ,,iv of chapter #ca of title
 #dj1 ,united ,states ,code1 shall apply
 to projects financed with the proceeds 
of qualified lead drinking water service
 line bonds 7other than bonds issued to 
refund a bond originally issued before  
the date of the enactment of this ,act74
  7e7 ,regulations ,the ,secretary may  
prescribe such regulations and other    
guidance as may be necessary or         
appropriate to carry out this section4  
4  7b7 ,payments made under section     
#fdca of the ,internal ,revenue ,code of
 #aihf ,section #bee7;g77#a77;,a7 of the
 ,balanced ,budget and ,emergency       
,deficit ,control ,act of #aihe 7#b     
,u4,s4,c4 #ije7;g77#a77;,a77 is amended 
by inserting3 ,payments made under      
section #fdca of the ,internal ,revenue 
,code of #aihf after the item related to
 ,payment to ,radiation ,exposure       
,compensation ,trust ,fund4  7c7        
,clerical amendment ,the table of       
sections for subchapter ,b of chapter   
#fe of the ,internal ,revenue ,code of  

#aihf is amended by adding at the end   
the following new item3  ,sec4 #fdca4   
,credit allowed to issuer for qualified 
lead drinking water service line bonds4 
4  7d7 ,effective date ,the amendments  
made by this section shall apply to     
bonds issued more than #cj days after   
the date of the enactment of this ,act4