[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3930 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 3930

     To amend the Federal Water Pollution Control Act to authorize 
 appropriations for State water pollution control revolving funds, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 12, 2002

Mr. Duncan (for himself and Mr. DeFazio) introduced the following bill; 
       which was referred to the Committee on Transportation and 
Infrastructure, and in addition to the Committee on Ways and Means, 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 Federal Water Pollution Control Act to authorize 
 appropriations for State water pollution control revolving funds, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) In General.--This Act may be cited as the ``Water Quality 
Financing Act of 2002''.
    (b) Table of Contents.--

Sec. 1. Short title; table of contents.
             TITLE I--FINANCING WATER QUALITY IMPROVEMENTS

Sec. 101. Amendment of Federal Water Pollution Control Act.
            Subtitle A--Technical and Management Assistance

Sec. 111. Technical assistance.
Sec. 112. State management assistance.
       Subtitle B--State Water Pollution Control Revolving Funds

Sec. 121. General authority for capitalization grants.
Sec. 122. Capitalization grant agreements.
Sec. 123. Water pollution control revolving loan funds.
Sec. 124. Allotment of funds.
Sec. 125. Intended use plan.
Sec. 126. Annual Federal oversight review.
Sec. 127. Technical assistance.
Sec. 128. Authorization of appropriations.
                     Subtitle C--General Provisions

Sec. 151. Definition of treatment works.
Sec. 152. Funding for Indian programs.
            TITLE II--PRESERVATION OF REPORTING REQUIREMENTS

Sec. 201. Preservation of reporting requirements.
                       TITLE III--TAX PROVISIONS

Sec. 301. Bonds for water and sewage facilities exempt from volume cap 
                            on private activity bonds.
Sec. 302. Amounts from certain Federal revolving funds not treated as 
                            bond proceeds or replacement for bond 
                            proceeds for purposes of arbitrage bond 
                            rules.

             TITLE I--FINANCING WATER QUALITY IMPROVEMENTS

SEC. 101. AMENDMENT OF FEDERAL WATER POLLUTION CONTROL ACT.

    Except as otherwise expressly provided, whenever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Federal Water Pollution 
Control Act (33 U.S.C. 1251 et seq.).

            Subtitle A--Technical and Management Assistance

SEC. 111. TECHNICAL ASSISTANCE.

    (a) Technical Assistance for Rural and Small Treatment Works.--
Section 104(b) (33 U.S.C. 1254(b)) is amended--
            (1) by striking ``and'' at the end of paragraph (6);
            (2) by striking the period at the end of paragraph (7) and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(8) make grants to nonprofit organizations to provide 
        technical assistance to rural and small municipalities for the 
        purpose of assisting, in consultation with the State in which 
        the assistance is provided, such municipalities to plan, 
        develop, and gain financing for wastewater infrastructure 
        assistance;
            ``(9) make grants to nonprofit organizations to provide 
        technical assistance and training to rural and small publicly 
        owned treatment works and decentralized wastewater treatment 
        systems to enable such treatment works and systems to protect 
        water quality and achieve and maintain compliance with the 
        requirements of this Act; and
            ``(10) make grants to nonprofit organizations to 
        disseminate information to rural municipalities, small 
        municipalities, and municipalities that meet the affordability 
        criteria established under section 603(i)(2) by the State in 
        which the municipality is located with respect to planning, 
        design, construction, and operation of publicly owned treatment 
        works and decentralized wastewater treatment systems.''.
    (b) Authorization of Appropriations.--Section 104(u) (33 U.S.C. 
1254(u)) is amended--
            (1) by striking ``and (6)'' and inserting ``(6)''; and
            (2) by inserting before the period at the end the 
        following: ``(7) not to exceed $75,000,000 for each of fiscal 
        years 2003 through 2007 for carrying out subsections (b)(3), 
        (b)(8), (b)(9), and (b)(10), except that not less than 20 
        percent of the amounts appropriated pursuant to this paragraph 
        in a fiscal year shall be used for carrying out subsections 
        (b)(8), (b)(9), and (b)(10)''.
    (c) Competitive Procedures for Awarding Grants.--Section 104 (33 
U.S.C. 1254(b)) is amended by adding at the end the following:
    ``(v) Competitive Procedures for Awarding Grants.--The 
Administrator shall establish procedures that, to the maximum extent 
practicable, promote competition and openness in the award of grants to 
nonprofit private agencies, institutions, and organizations under this 
section.''.

SEC. 112. STATE MANAGEMENT ASSISTANCE.

    Section 106(a) (33 U.S.C. 1256(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (1);
            (2) by striking the semicolon at the end of paragraph (2) 
        and inserting ``; and''; and
            (3) by inserting after paragraph (2) the following:
            ``(3) such sums as may be necessary for each of fiscal 
        years 1991 through 2002, and $250,000,000 for each of fiscal 
        years 2003 through 2007;''.

       Subtitle B--State Water Pollution Control Revolving Funds

SEC. 121. GENERAL AUTHORITY FOR CAPITALIZATION GRANTS.

    Section 601(a) (33 U.S.C. 1381(a)) is amended by striking ``for 
providing assistance'' and all that follows through the period at the 
end and inserting the following: ``to accomplish the objectives, goals, 
and policies of this Act by providing assistance for projects and 
activities identified in section 603(c).''.

SEC. 122. CAPITALIZATION GRANT AGREEMENTS.

    (a) Requirements for Construction of Treatment Works.--Section 
602(b)(6) (33 U.S.C. 1382(b)(6)) is amended--
            (1) by striking ``before fiscal year 1995''; and
            (2) by striking ``201(b)'' and all that follows through 
        ``513'' and inserting ``211, 218, and 511(c)(1)''.
    (b) Reporting Infrastructure Assets.--Section 602(b)(9) (33 U.S.C. 
1382(b)(9)) is amended by striking ``standards'' and inserting 
``standards, including standards relating to the reporting of 
infrastructure assets''.
    (c) Additional Requirements.--Section 602(b) (33 U.S.C. 1382(b)) is 
amended--
            (1) by striking ``and'' at the end of paragraph (9);
            (2) by striking the period at the end of paragraph (10) and 
        inserting a semicolon; and
            (3) by adding at the end the following:
            ``(11) the State will establish, maintain, invest, and 
        credit the fund with repayments, such that the fund balance 
        will be available in perpetuity for providing financial 
        assistance in accordance with this title;
            ``(12) any fees charged by the State to recipients of 
        assistance will be deposited in the fund for the sole purpose 
        of financing the cost of administering the fund;
            ``(13) beginning in fiscal year 2004, the State will 
        include as a condition of providing assistance under section 
        603(c)(1) that the recipient of such assistance--
                    ``(A) conduct a physical and operational analysis 
                of any system proposed for repair, replacement, or 
                expansion;
                    ``(B) study and evaluate the cost and effectiveness 
                of innovative and alternative processes, materials, and 
                techniques for carrying out projects and activities 
                eligible for such assistance under section 603(c), and 
                select, to the extent practicable, projects and 
                activities that more efficiently use energy and natural 
                and financial resources or provide greater 
                environmental benefits;
                    ``(C) analyze the cost and effectiveness of 
                alternative management and financing approaches 
                (including rate structures, issuance of bonds, 
                restructuring, regional alternatives, consolidation, 
                and public-private partnerships) for carrying out a 
                project or activity for which assistance is provided 
                under this title, taking into account the cost of 
                operating and maintaining the project or activity over 
                its life, as well as the cost of constructing the 
                project or activity; and
                    ``(D) develop and implement a plan for maintaining, 
                repairing, and, as necessary, replacing any 
                infrastructure to be constructed with assistance under 
                this title, and for funding such maintenance, repair, 
                and replacement;
            ``(14) the State will not provide assistance under this 
        title for the construction of publicly owned treatment works 
        unless the recipient of such assistance has adopted or will 
        adopt a system of charges or dedicated ad valorem taxes 
        sufficient to pay, at a minimum, the costs of operation and 
        maintenance (including replacement) of any wastewater service 
        provided by the recipient, and will otherwise comply with 
        section 204(b)(1);
            ``(15) the State will not provide assistance under this 
        title for the construction of publicly owned treatment works 
        unless the recipient of such assistance has the legal, 
        institutional, managerial, and financial capability to ensure 
        adequate construction, operation, and maintenance of treatment 
        works throughout the recipient's jurisdiction; and
            ``(16) the State will use at least 15 percent of the amount 
        of each capitalization grant received by the State under this 
        title after September 30, 2003, to provide assistance to 
        municipalities of fewer than 20,000 individuals that meet the 
        affordability criteria established by the State under section 
        603(i)(2) for activities included on the State's priority list 
        established under section 603(g), to the extent that there are 
        sufficient applications for such assistance.''.

SEC. 123. WATER POLLUTION CONTROL REVOLVING LOAN FUNDS.

    (a) Projects and Activities Eligible for Assistance.--Section 
603(c) (33 U.S.C. 1383(c)) is amended to read as follows:
    ``(c) Projects and Activities Eligible for Assistance.--The amounts 
of funds available to each State water pollution control revolving fund 
shall be used only for providing financial assistance--
            ``(1) to any municipality, intermunicipal, interstate, or 
        State agency for construction of publicly owned treatment 
        works;
            ``(2) for the implementation of a management program 
        established under section 319;
            ``(3) for development and implementation of a conservation 
        and management plan under section 320;
            ``(4) for the implementation of lake protection programs 
        and projects under section 314;
            ``(5) for decentralized wastewater treatment systems that 
        treat domestic sewage;
            ``(6) for measures to reduce municipal stormwater runoff;
            ``(7) for measures to reduce the demand for publicly owned 
        treatment works capacity through water conservation;
            ``(8) for measures to increase the security of publicly 
        owned treatment works; and
            ``(9) for the development and implementation of watershed 
        projects meeting the criteria set forth in section 121.''.
    (b) Extended Repayment Period.--Section 603(d)(1) (33 U.S.C. 
1383(d)(1)) is amended--
            (1) in subparagraph (A) by inserting after ``20 years'' the 
        following: ``or, in the case of a municipality that meets the 
        affordability criteria established under section 603(i)(2) by 
        the State in which the municipality is located, the lesser of 
        30 years or the design life of the project to be financed with 
        the proceeds of the loan''; and
            (2) in subparagraph (B) by striking ``not later than 20 
        years after project completion'' and inserting ``upon the 
        expiration of the term of the loan''.
    (c) Administrative Expenses.--Section 603(d)(7) (33 U.S.C. 
1383(d)(7)) is amended by inserting before the period at the end the 
following: ``, $400,000 per year, or \1/5\ percent per year of the 
current valuation of the fund, whichever amount is greatest, plus the 
amount of any fees collected by the State for such purpose''.
    (d) Technical and Planning Assistance for Small Systems.--Section 
603(d) (33 U.S.C. 1383(d)) is amended--
            (1) by striking ``and'' at the end of paragraph (6);
            (2) by striking the period at the end of paragraph (7) and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(8) to provide to small treatment works (as defined in 
        section 607) technical and planning assistance and assistance 
        in financial management, user fee analysis, budgeting, capital 
        improvement planning, facility operation and maintenance, 
        repair schedules, and other activities to improve wastewater 
        treatment plant management and operations; except that such 
        amounts shall not exceed 2 percent of grant awards to such fund 
        under this title.''.
    (e) Additional Subsidization.--Section 603 (33 U.S.C. 1383) is 
amended by adding at the end the following:
    ``(i) Additional Subsidization.--
            ``(1) In general.--In any case in which a State provides 
        assistance under subsection (d), the State may provide 
        additional subsidization, including forgiveness of principal 
        and negative interest loans, for projects and activities 
        eligible for assistance under section 603(c)(1)--
                    ``(A) to benefit a municipality that meets the 
                State's affordability criteria established under 
                paragraph (2);
                    ``(B) to benefit a municipality that does not meet 
                the State's affordability criteria if the recipient--
                            ``(i) seeks additional subsidization to 
                        benefit individual ratepayers in the 
                        residential user rate class;
                            ``(ii) demonstrates to the State that such 
                        ratepayers will experience a significant 
                        hardship from the increase in rates necessary 
                        to finance the activity; and
                            ``(iii) ensures, as part of an assistance 
                        agreement between the State and the recipient, 
                        that the additional subsidization provided 
                        under this paragraph is directed through a user 
                        charge rate system (or other appropriate 
                        method) to such ratepayers; or
                    ``(C) to implement alternative processes, 
                materials, and techniques (including nonstructural 
                protection of surface waters, new or improved methods 
                of waste treatment, and pollutant trading) that may 
                result in cost savings or increased environmental 
                benefit when compared to standard processes, materials, 
                and techniques.
            ``(2) Affordability criteria.--
                    ``(A) Establishment.--On or before September 30, 
                2003, and after providing notice and an opportunity for 
                public comment, a State shall establish affordability 
                criteria to assist in identifying municipalities that 
                would experience a significant hardship raising the 
                revenue necessary to finance a project or activity 
                eligible for assistance under section 603(c)(1) if 
                additional subsidization is not provided. Such criteria 
                shall be based on income data, population trends, and 
                other data determined relevant by the State.
                    ``(B) Existing criteria.--If a State has previously 
                established, after providing notice and an opportunity 
                for public comment, affordability criteria that meet 
                the requirements of subparagraph (A), the State may use 
                the criteria for the purposes of this subsection. For 
                purposes of this Act, any such criteria shall 
be treated as affordability criteria established under this paragraph.
                    ``(C) Information to assist states.--The 
                Administrator may publish information to assist States 
                in establishing affordability criteria under 
                subparagraph (A).
            ``(3) Priority.--A State may give priority to a recipient 
        for a project or activity eligible for funding under section 
        603(c)(1) if the recipient meets the State's affordability 
        criteria.
            ``(4) Set-aside.--
                    ``(A) In general.--In any fiscal year in which the 
                Administrator has available for obligation more than 
                $1,400,000,000 for the purposes of this title, a State 
                shall provide additional subsidization under this 
                subsection in the amount specified in subparagraph (B) 
                to eligible entities described in paragraph (1) for 
                projects and activities identified in the State's 
                intended use plan prepared under section 606(c) as 
                projects and activities to be supported, to the extent 
                that there are sufficient applications for such 
                assistance.
                    ``(B) Amount.--In a fiscal year described in 
                subparagraph (A), a State shall set aside for purposes 
                of subparagraph (A) an amount not less than 25 percent 
                of the difference between--
                            ``(i) the total amount that would have been 
                        allotted to the State under section 604 for 
                        such fiscal year if the amount available to the 
                        Administrator for obligation under this title 
                        for such fiscal year had been equal to 
                        $1,400,000,000; and
                            ``(ii) the total amount allotted to the 
                        State under section 604 for such fiscal year.
            ``(5) Limitation.--The total amount of additional 
        subsidization provided under this subsection by a State may not 
        exceed 30 percent of the total amount of capitalization grants 
        received by the State under this title in fiscal years 
        beginning after September 30, 2002.''.

SEC. 124. ALLOTMENT OF FUNDS.

    (a) In General.--Section 604(a) (33 U.S.C. 1384(a)) is amended to 
read as follows:
    ``(a) Allotments.--
            ``(1) Fiscal years 2002 and 2003.--Sums appropriated to 
        carry out this title for each of fiscal years 2002 and 2003 
        shall be allotted by the Administrator in accordance with 
        section 205(c).
            ``(2) Fiscal year 2004 and thereafter.--Sums appropriated 
        to carry out this title for fiscal year 2004 and each fiscal 
        year thereafter shall be allotted by the Administrator as 
        follows:
                    ``(A) Amounts up to $1,350,000,000 shall be 
                allotted in accordance with section 205(c).
                    ``(B) Amounts that exceed $1,350,000,000 shall be 
                allotted in accordance with the formula developed by 
                the Administrator under subsection (d).''.
    (b) Formula.--Section 604 (33 U.S.C. 1384) is amended by adding at 
the end the following:
    ``(d) Formula Based on Water Quality Needs.--Not later than 
September 30, 2003, and after providing notice and an opportunity for 
public comment, the Administrator shall publish an allotment formula 
based on water quality needs in accordance with the most recent survey 
of needs developed by the Administrator under section 516(b).''.

SEC. 125. INTENDED USE PLAN.

    (a) Integrated Priority List.--Section 603(g) (33 U.S.C. 1383(g)) 
is amended to read as follows:
    ``(g) Priority List.--
            ``(1) In general.--For fiscal year 2004 and each fiscal 
        year thereafter, a State shall establish or update a list of 
        projects and activities for which assistance is sought from the 
        State's water pollution control revolving fund. Such projects 
        and activities shall be listed in priority order based on the 
        methodology established under paragraph (2). The State may 
        provide financial assistance from the State's water pollution 
        control revolving fund only with respect to a project or 
        activity included on such list.
            ``(2) Methodology.--
                    ``(A) In general.--Not later than 1 year after the 
                date of enactment of this paragraph, and after 
                providing notice and opportunity for public comment, 
                each State (acting through the State's water quality 
                management agency and other appropriate agencies of the 
                State) shall establish a methodology for developing a 
                priority list under paragraph (1).
                    ``(B) Priority for projects and activities that 
                achieve greatest water quality improvement.--In 
                developing the methodology, the State shall seek to 
                achieve the greatest degree of water quality 
                improvement, taking into consideration section 
                602(b)(5), section 603(i)(3), and whether such water 
                quality improvements would be realized without 
                assistance under this title.
                    ``(C) Considerations in selecting projects and 
                activities.--In determining which projects and 
                activities will achieve the greatest degree of water 
                quality improvement, the State shall consider--
                            ``(i) information developed by the State 
                        under sections 303(d) and 305(b);
                            ``(ii) the State's continuing planning 
                        process developed under section 303(e); and
                            ``(iii) the State's management program 
                        developed under section 319.
                    ``(D) Existing methodologies.--If a State has 
                previously developed, after providing notice and an 
                opportunity for public comment, a methodology that 
                meets the requirements of this paragraph, the State may 
                use the methodology for the purposes of this 
                subsection.''.
    (b) Intended Use Plan.--Section 606(c) (33 U.S.C. 1386(c)) is 
amended--
            (1) in the matter preceding paragraph (1) by striking 
        ``each State shall annually prepare'' and inserting ``each 
        State (acting through the State's water quality management 
        agency and other appropriate agencies of the State) shall 
        annually prepare and publish'';
            (2) by striking paragraph (1) and inserting the following:
            ``(1) the State's priority list developed under section 
        603(g);'';
            (3) by striking ``and'' at the end of paragraph (4);
            (4) by striking the period at the end of paragraph (5) and 
        inserting ``; and''; and
            (5) by adding at the end the following:
            ``(6) if the State does not fund projects and activities in 
        the order of the priority established under section 603(g), an 
        explanation of why such a change in priority is appropriate.''.
    (c) Transitional Provision.--Before completion of a priority list 
based on a methodology established under section 603(g) of the Federal 
Water Pollution Control Act (as amended by this section), a State shall 
continue to comply with the requirements of sections 603(g) and 606(c) 
of such Act, as in effect on the day before the date of enactment of 
this Act.

SEC. 126. ANNUAL FEDERAL OVERSIGHT REVIEW.

    Section 606(e) (33 U.S.C. 1386(e)) is amended by adding at the end 
the following: ``In carrying out an oversight review under this 
subsection, the Administrator may allow a State to certify, with 
supporting documentation, its compliance with the requirements of this 
title.''.

SEC. 127. TECHNICAL ASSISTANCE.

    Title VI (33 U.S.C. 1381 et seq.) is amended--
            (1) by redesignating section 607 as section 608; and
            (2) by inserting after section 607 the following:

``SEC. 607. TECHNICAL ASSISTANCE.

    ``(a) Assistance for Small Treatment Works.--
            ``(1) Simplified procedures.--Not later than 1 year after 
        the date of enactment of this section, the Administrator shall 
        assist the States in establishing simplified procedures for 
        small treatment works to obtain assistance under this title.
            ``(2) Publication of manual.--Not later than 2 years after 
        the date of the enactment of this section, and after providing 
        notice and opportunity for public comment, the Administrator 
        shall publish a manual to assist small treatment works in 
        obtaining assistance under this title and publish in the 
        Federal Register notice of the availability of the manual.
            ``(3) Small treatment works defined.--For purposes of this 
        title, the term `small treatment works' means a treatment works 
        for which a municipality or intermunicipal, interstate, or 
        State agency seeks assistance under this title and which serves 
        a population of 20,000 or fewer.
    ``(b) Assistance for Improving the Management of Water Quality 
Infrastructure and Increasing Cost-Effectiveness of Infrastructure 
Improvements.--At the request of any State, the Administrator shall 
assist in the development of criteria for a State to determine 
compliance with the conditions of funding assistance established under 
section 602(b)(13).''.

SEC. 128. AUTHORIZATION OF APPROPRIATIONS.

    Section 608 (as redesignated by section 127 of this Act) is amended 
by striking paragraphs (1) through (5) and inserting the following:
            ``(1) $2,000,000,000 for fiscal year 2003;
            ``(2) $3,000,000,000 for fiscal year 2004;
            ``(3) $4,000,000,000 for fiscal year 2005;
            ``(4) $5,000,000,000 for fiscal year 2006; and
            ``(5) $6,000,000,000 for fiscal year 2007.''.

                     Subtitle C--General Provisions

SEC. 151. DEFINITION OF TREATMENT WORKS.

    Section 502 (33 U.S.C. 1362) is amended by adding at the end the 
following:
            ``(21) The term `treatment works' has the meaning given 
        that term in section 212.''.

SEC. 152. FUNDING FOR INDIAN PROGRAMS.

    Section 518 (33 U.S.C. 1377) is amended by striking subsection (c) 
and inserting the following:
    ``(c) Reservation of Funds.--
            ``(1) In general.--For fiscal year 1987 and each fiscal 
        year thereafter, the Administrator shall reserve, before 
        allotments to the States under section 604(a), not less than 
        0.5 percent and not more than 1.5 percent of the funds made 
        available under section 207.
            ``(2) Use of funds.--Funds reserved under this subsection 
        shall be available only for projects and activities eligible 
        for assistance under section 603(c) to serve--
                    ``(A) Indian tribes;
                    ``(B) former Indian reservations in Oklahoma (as 
                determined by the Secretary of the Interior); and
                    ``(C) Native villages (as defined in section 3 of 
                the Alaska Native Claims Settlement Act (43 U.S.C. 
                1602)).''.

            TITLE II--PRESERVATION OF REPORTING REQUIREMENTS

SEC. 201. PRESERVATION OF REPORTING REQUIREMENTS.

    Section 3003(a)(1) of the Federal Reports Elimination and Sunset 
Act of 1995 (31 U.S.C. 1113 note) does not apply to any report required 
to be submitted under any of the following provisions of law:
            (1) Exemptions from water pollution control requirements 
        for executive agencies.--Section 313(a) of the Federal Water 
        Pollution Control Act (33 U.S.C. 1323(a)).
            (2) Great lakes resources on which research is needed.--
        Section 118(d)(2) of the Federal Water Pollution Control Act 
        (33 U.S.C. 1268(d)(2)).
            (3) National estuary program activities.--Section 320(j)(2) 
        of the Federal Water Pollution Control Act (33 U.S.C. 
        1330(j)(2)).
            (4) Comprehensive conservation and management plan for long 
        island sound.--Section 119(c)(7) of the Federal Water Pollution 
        Control Act (33 U.S.C. 1269(c)(7)).
            (5) Implementation of great lakes water quality agreement 
        of 1978.--Section 118(c)(10) of the Federal Water Pollution 
        Control Act (33 U.S.C. 1268(c)(10)).
            (6) Effects of pollution on nation's estuaries.--Section 
        104(n)(3) of the Federal Water Pollution Control Act (33 U.S.C. 
        1254(n)(3)).
            (7) National requirements and costs of water pollution 
        control.--Section 516 of the Federal Water Pollution Control 
        Act (33 U.S.C. 1375).
            (8) Status of water quality in united states lakes.--
        Section 314(a)(3) of the Federal Water Pollution Control Act 
        (33 U.S.C. 1324(a)(3)).
            (9) State reports on water quality of all navigable 
        waters.--Section 305(b) of the Federal Water Pollution Control 
        Act (33 U.S.C. 1315(b)).
            (10) Level b plan on all river basins.--Section 209(b) of 
        the Federal Water Pollution Control Act (33 U.S.C. 1289(b)).
            (11) Reports on contracts entered into relating to 
        procurement from violators of water quality standards.--Section 
        508(e) of the Federal Water Pollution Control Act (33 U.S.C. 
        1368(e)).

                       TITLE III--TAX PROVISIONS

SEC. 301. BONDS FOR WATER AND SEWAGE FACILITIES EXEMPT FROM VOLUME CAP 
              ON PRIVATE ACTIVITY BONDS.

    (a) In General.--Paragraph (3) of section 146(g) of the Internal 
Revenue Code of 1986 (relating to exception for certain bonds) is 
amended--
            (1) by inserting ``(4), (5),'' after ``(2),'', and
            (2) by inserting ``facilities for the furnishing of water, 
        sewage facilities,'' after ``wharves,''.
    (b) Effective Date.--The amendment made by this section shall apply 
to obligations issued after the date of the enactment of this Act.

SEC. 302. AMOUNTS FROM CERTAIN FEDERAL REVOLVING FUNDS NOT TREATED AS 
              BOND PROCEEDS OR REPLACEMENT FOR BOND PROCEEDS FOR 
              PURPOSES OF ARBITRAGE BOND RULES.

    (a) In General.--Subsection (a) of section 148 of the Internal 
Revenue Code of 1986 (defining arbitrage bond) is amended by adding at 
the end the following: ``For purposes of this section, proceeds of an 
issue, and amounts used to replace proceeds of an issue, shall not 
include any amount derived from a Federal grant or related State 
contribution made in connection with a revolving fund established in 
accordance with title VI of the Federal Water Pollution Control Act or 
section 1452 of the Safe Drinking Water Act.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to obligations issued or outstanding after the date of the enactment of 
this Act, but shall not apply for purposes of determining the amount of 
any payment required to be made on or before such date to the United 
States under section 148 of the Internal Revenue Code of 1986.
                                 <all>