[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1961 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 1961

To improve the financial and environmental sustainability of the water 
                     programs of the United States.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 15, 2002

Mr. Graham (for himself, Mr. Crapo, Mr. Jeffords, and Mr. Smith of New 
  Hampshire) introduced the following bill; which was read twice and 
       referred to the Committee on Environment and Public Works

_______________________________________________________________________

                                 A BILL


 
To improve the financial and environmental sustainability of the water 
                     programs of the United States.

    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) Short Title.--This Act may be cited as the ``Water Investment 
Act of 2002''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
       TITLE I--FEDERAL WATER POLLUTION CONTROL ACT MODIFICATIONS

Sec. 101. Definitions.
Sec. 102. Funding for Indian programs.
Sec. 103. Requirements for receipt of funds.
            TITLE II--SAFE DRINKING WATER ACT MODIFICATIONS

Sec. 201. Planning, design, and preconstruction costs.
Sec. 202. State Revolving Loan Fund.
Sec. 203. Additional subsidization.
Sec. 204. Private utilities.
Sec. 205. Competition requirements.
Sec. 206. Technical assistance for small systems.
Sec. 207. Authorization of appropriations.
      TITLE III--INNOVATIONS IN FUND AND WATER QUALITY MANAGEMENT

Sec. 301. Transfer of funds.
Sec. 302. Demonstration program for water quality enhancement and 
                            management.
Sec. 303. Rate study.
Sec. 304. Effects on policies and rights.
                   TITLE IV--WATER RESOURCE PLANNING

Sec. 401. Findings.
Sec. 402. Definition of Secretary.
Sec. 403. Actions.
Sec. 404. Report to Congress.
Sec. 405. Authorization of appropriations.

SEC. 2. PURPOSES.

    The purposes of this Act are--
            (1) to modernize State water pollution control revolving 
        funds and the allocation for those funds to ensure that the 
        funds distributed reflect water quality needs;
            (2) to streamline State water pollution control assistance 
        programs and State drinking water treatment assistance programs 
        to maximize use of Federal funds and encourage maximum 
        efficiency for States and localities;
            (3) to provide additional structure to the water supply 
        research conducted in the United States; and
            (4) to ensure that the Federal Government is performing the 
        appropriate role in analyzing regional and national water 
        supply trends.

       TITLE I--FEDERAL WATER POLLUTION CONTROL ACT MODIFICATIONS

SEC. 101. DEFINITIONS.

    Section 502 of the Federal Water Pollution Control Act (33 U.S.C. 
1362) is amended by adding at the end the following:
            ``(24) Disadvantaged community.--The term `disadvantaged 
        community' means a community or entity that meets affordability 
        criteria established, after public review and comment, by the 
        State in which the community or entity is located.
            ``(25) Small treatment works.--The term `small treatment 
        works' means a treatment works (as defined in section 212) 
        serving a population of 10,000 or less.''.

SEC. 102. FUNDING FOR INDIAN PROGRAMS.

    Section 518 of the Federal Water Pollution Control Act (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 nor 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 grants for the development of waste 
        treatment management plans and for the construction of sewage 
        treatment works 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)).''.

SEC. 103. REQUIREMENTS FOR RECEIPT OF FUNDS.

    (a) Grants to States for Establishment of Revolving Funds.--Section 
601(a) of the Federal Water Pollution Control Act (33 U.S.C. 1381(a)) 
is amended by striking ``for providing assistance (1)'' and all that 
follows and inserting the following: ``for providing assistance for 
eligible projects in accordance with section 603(c).''.
    (b) Projects Eligible for Assistance.--Section 603 of the Federal 
Water Pollution Control Act (33 U.S.C. 1383) is amended by striking 
subsection (c) and inserting the following:
    ``(c) Projects Eligible for Assistance.--
            ``(1) In general.--Funds available to each State water 
        pollution control revolving fund shall be used only for--
                    ``(A) providing financial assistance to a 
                municipality, intermunicipal, interstate, or State 
                agency, or private utility, for construction (including 
                costs for planning, design, associated preconstruction, 
                and necessary activities for siting the facility and 
                related elements) of treatment works (as defined in 
                section 212);
                    ``(B) implementation of a management program 
                established under section 319;
                    ``(C) development and implementation of a 
                conservation and management plan under section 320;
                    ``(D) water conservation projects or activities 
                that provide 1 or more water quality benefits; or
                    ``(E) reuse, reclamation, or recycling projects 
                that provide 1 or more water quality benefits.
            ``(2) Maintenance of fund.--
                    ``(A) In general.--The fund shall be established, 
                maintained, and credited with repayments.
                    ``(B) Availability.--Any balances in the fund shall 
                be available in perpetuity for providing financial 
                assistance described in paragraph (1).
            ``(3) Approaches.--Projects eligible to receive assistance 
        from a State water pollution control revolving fund under this 
        title may include projects that use 1 or more nontraditional 
        approaches (such as land conservation, low-impact development 
        technologies, redevelopment of waterfront brownfields, 
        watershed management actions, decentralized wastewater 
        treatment innovations, and other nonpoint best management 
        practices).''.
    (c) Extension of Loans; Types of Assistance.--Section 603(d) of the 
Federal Water Pollution Control Act (33 U.S.C. 1383(d)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A), by striking ``, at terms 
                not to exceed 20 years'';
                    (B) by striking subparagraph (B) and inserting the 
                following:
                    ``(B)(i) annual principal and interest payments 
                shall commence not later than 1 year after the date of 
                completion of any project for which the loan was made; 
                and
                    ``(ii) except as provided in subparagraph (C), each 
                loan shall be fully amortized not later than 20 years 
                after the date of completion of the project for which 
                the loan is made;'';
                    (C) by redesignating subparagraphs (C) and (D) as 
                subparagraphs (D) and (E), respectively;
                    (D) by inserting after subparagraph (B) the 
                following:
                    ``(C) in the case of a disadvantaged community, a 
                State may provide an extended term for a loan if the 
                extended term--
                            ``(i) terminates not later than the date 
                        that is 30 years after the date of completion 
                        of the project; and
                            ``(ii) does not exceed the expected design 
                        life of the project.'';
                    (E) in subparagraph (D) (as redesignated by 
                subparagraph (C)), by inserting ``, or, in the case of 
                a privately owned system, demonstrate that adequate 
                security exists,'' after ``revenue''; and
                    (F) in subparagraph (E) (as redesignated by 
                subparagraph (C)), by inserting ``State loan'' before 
                ``fund'';
            (2) in paragraph (6), by striking ``and'' at the end;
            (3) by redesignating paragraph (7) as paragraph (10);
            (4) by inserting after paragraph (6) the following:
            ``(7) subject to subsection (e)(2), by a State to provide 
        additional subsidization (including forgiveness of principal) 
        to 1 or more treatment works for use in developing technical, 
        managerial, and financial capacity in accordance with 
        subsection (i);
            ``(8) by a State to provide additional subsidization 
        (including forgiveness of principal) to 1 or more treatment 
        works for a purpose other than a purpose specified in paragraph 
        (7) or (9), except that--
                    ``(A) for the first fiscal year that begins after 
                the date of enactment of this paragraph and each fiscal 
                year thereafter, the total amount of subsidization 
                provided by a State under this paragraph shall not 
                exceed 15 percent of the amount of all capitalization 
                grants received by the State for the fiscal year;
                    ``(B) notwithstanding section 204(b)(1), the State, 
                as part of an assistance agreement between the State 
                and each applicable treatment works, shall ensure, to 
                the maximum extent practicable, that additional 
                subsidization provided under this paragraph is directed 
                through the user charge rate system to disadvantaged 
                users within the residential user class of the 
                community (as defined by the State based on 
                affordability criteria and after an opportunity for 
                public review and comment) in which the treatment works 
                is located; and
                    ``(C) a community that receives assistance as a 
                disadvantaged community under paragraph (9) shall not 
                be eligible for assistance under this paragraph;
            ``(9) subject to subsection (e)(2), by the State to provide 
        additional subsidization (including forgiveness of principal) 
        to a disadvantaged community, or to a community or entity that 
        the State expects to become a disadvantaged community as the 
        result of a proposed project, that receives a loan from the 
        State under this title; and''; and
            (5) in paragraph (10) (as redesignated by paragraph (3)), 
        by striking ``that such amounts shall not exceed 4'' and 
        inserting ``that, beginning in fiscal year 2003, those amounts 
        shall not exceed 5''.
    (d) Limitations.--Section 603(e) of the Federal Water Pollution 
Control Act (33 U.S.C. 1383(e)) is amended--
            (1) by striking ``(e)'' and all that follows through ``If a 
        State'' and inserting the following:
    ``(e) Limitations.--
            ``(1) Prevention of double benefits.--If a State''; and
            (2) by adding at the end the following:
            ``(2) Total amount of subsidies.--For each fiscal year, the 
        total amount of loan subsidies made by a State under paragraphs 
        (7) and (9) of subsection (d) may not exceed 30 percent of the 
        amount of all capitalization grants received by the State for 
        the fiscal year.''.
    (e) Consistency With Planning Requirements.--Section 603(f) of the 
Federal Water Pollution Control Act (33 U.S.C. 1383(f)) is amended--
            (1) by striking ``A State may'' and inserting the 
        following:
            ``(1) In general.--A State may'';
            (2) by striking ``320 of this Act.'' and inserting 
        ``320.''; and
            (3) by adding at the end the following:
            ``(2) Community development.--A State that provides 
        financial assistance from the water pollution control revolving 
        fund of the State shall ensure that applicants for the 
        assistance consult and coordinate with, as appropriate, 
        agencies responsible for developing any--
                    ``(A) local land use plans;
                    ``(B) regional transportation improvement and long-
                range transportation plans; and
                    ``(C) State, regional, and municipal watershed 
                plans.''.
    (f) Priority System Requirement.--Section 603 of the Federal Water 
Pollution Control Act (33 U.S.C. 1383) is amended by striking 
subsection (g) and inserting the following:
    ``(g) Priority System Requirement.--
            ``(1) Definition of state agency.--In this subsection, the 
        term `State agency' means the agency of a State having 
        jurisdiction over water quality management (including the 
        establishment of water quality standards).
            ``(2) Development.--
                    ``(A) In general.--Notwithstanding section 216, 
                each State agency shall develop and periodically update 
                a project priority system for use in prioritizing 
                projects that are eligible to receive funding from the 
                water pollution control revolving fund of the State in 
                accordance with subsection (c).
                    ``(B) Requirements.--In developing the project 
                priority system, a State agency shall--
                            ``(i) take into consideration all available 
                        water quality data for the State; and
                            ``(ii) provide for public notice and 
                        opportunity for comment, including significant 
                        public outreach.
            ``(3) Summary of projects.--
                    ``(A) In general.--Each State agency, after public 
                notice and opportunity for comment, shall biennially 
                publish a summary of projects in the State that are 
                eligible for assistance under this title.
                    ``(B) Inclusions.--The summary under subparagraph 
                (A) shall include--
                            ``(i) the priority assigned to each project 
                        under the priority system of the State 
                        developed under paragraph (2); and
                            ``(ii) the funding schedule for each 
                        project, to the extent that such information is 
                        available.
            ``(4) Statement of policy.--It is the policy of Congress 
        that projects in a State that are carried out using assistance 
        provided under this title shall be funded, to the maximum 
        extent practicable, through a project priority system of the 
        State that, in the estimation of the State, is designed to 
        achieve optimum water quality management, consistent with the 
        public health and water quality goals and requirements of this 
        Act.''.
    (g) Additional Requirements for Water Pollution Control Revolving 
Funds.--Section 603 of the Federal Water Pollution Control Act (33 
U.S.C. 1383) is amended by adding at the end the following:
    ``(i) Technical, Managerial, and Financial Capacity for Optimal 
Performance.--
            ``(1) Definition of state agency.--In this subsection, the 
        term `State agency' has the meaning given the term in 
        subsection (g)(1).
            ``(2) Strategy.--
                    ``(A) In general.--Not later than 3 years after the 
                date of enactment of this subsection, each State agency 
                shall implement a strategy to assist treatment works in 
                the State receiving assistance under this title in--
                            ``(i) attaining and maintaining technical, 
                        managerial, operations, maintenance, and 
                        capital investments; and
                            ``(ii) meeting and sustaining compliance 
                        with applicable Federal and State laws.
                    ``(B) Requirements.--In preparing the strategy 
                described in subparagraph (A), the State shall 
                consider, solicit public comment on, and include in the 
                strategy--
                            ``(i) a description of the institutional, 
                        regulatory, financial, tax, or legal factors at 
                        the Federal, State, and local levels that 
                        encourage or impair the development of 
                        technical, managerial, and financial capacity; 
                        and
                            ``(ii) a description of the manner in which 
                        the State intends to use the authorities and 
                        resources of the State to assist treatment 
                        works in attaining and maintaining technical, 
                        managerial, and financial capacity.
            ``(3) Determination by administrator.--Except as provided 
        in subsection (k), if the Administrator determines that a State 
        agency has not developed or implemented a strategy in 
        accordance with paragraph (2), the Administrator shall--
                    ``(A) withhold 20 percent of each capitalization 
                grant made to the State under this title after the date 
                of the determination; and
                    ``(B) permit the State a 1-year period, beginning 
                on the date on which funds are withheld under 
                subparagraph (A), during which the State may implement 
                a strategy in accordance with paragraph (2).
            ``(4) Reallotment of funds.--
                    ``(A) In general.--If, after the 1-year period 
                described in paragraph (3)(B), the Administrator is not 
                satisfied that a State has carried out adequate 
                corrective action relating to the development and 
                implementation of a strategy required under paragraph 
                (2), the Administrator shall reallot all funds of the 
                State withheld by the Administrator as of that date in 
                accordance with subparagraph (B).
                    ``(B) Requirements for reallotment.--The 
                Administrator shall reallot funds under subparagraph 
                (A)--
                            ``(i) only to States that the Administrator 
                        determines to be in compliance with this 
                        subsection; and
                            ``(ii) in the same ratio provided under the 
                        most recent formula for the allotment of funds 
                        under this title.
            ``(5) Condition for receipt of assistance.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B) and subsection (k), beginning on the 
                date that is 3 years after the date of enactment of 
                this subsection, the State shall require each treatment 
                works that receives significant assistance under this 
                title to demonstrate adequate technical, managerial, 
                and financial capacity, including the establishment and 
                implementation by the treatment works of an asset 
                management plan (for which the Administrator may 
                publish information to assist States in determining 
                required content) that--
                            ``(i) conforms to generally accepted 
                        industry practices; and
                            ``(ii) includes--
                                    ``(I) an inventory of existing 
                                assets (including an estimate of the 
                                useful life of those assets); and
                                    ``(II) an optimal schedule of 
                                operations, maintenance, and capital 
                                investment required to meet and sustain 
                                performance objectives for the 
                                treatment works established in 
                                accordance with applicable Federal and 
                                State laws over the useful life of the 
                                treatment works.
                    ``(B) Exception.--Notwithstanding subparagraph (A), 
                a treatment works may receive assistance under this 
                title if the State determines that the assistance would 
                enable the treatment works to attain adequate 
                technical, managerial, and financial capacity.
    ``(j) Restructuring.--Notwithstanding section 204(b)(1), except as 
provided in subsection (k), a State may provide assistance from the 
water pollution control revolving fund of the State for a project only 
if the recipient of the assistance--
            ``(1) has considered--
                    ``(A) consolidating management functions or 
                ownership with another facility;
                    ``(B) forming public-private partnerships or other 
                cooperative partnerships; and
                    ``(C) using nonstructural alternatives or 
                technologies that may be more environmentally 
                sensitive; and
            ``(2) has in effect a plan to achieve, within a reasonable 
        period of time, a rate structure that, to the maximum extent 
        practicable--
                    ``(A) reflects the actual cost of service provided 
                by the recipient; and
                    ``(B) addresses capital replacement funds; and
            ``(3) has in effect, or will have in effect on completion 
        of the project, an asset management plan described in 
        subsection (i)(5).
    ``(k) Exemption for Assistance Solely for Planning, Design, and 
Preconstruction Activities.--Subsection (j) and paragraphs (3) and (5) 
of subsection (i) shall not apply to assistance provided under this 
title that is to be used by a treatment works solely for planning, 
design, or preconstruction activities.
    ``(l) Technical Assistance.--
            ``(1) Definition of qualified nonprofit technical 
        assistance provider.--In this subsection, the term `qualified 
        nonprofit technical assistance provider' means a nonprofit 
        entity that provides technical assistance (such as circuit-
        rider programs, training, and preliminary engineering 
        evaluations) to small treatment works that--
                    ``(A) serve not more than 3,300 users; and
                    ``(B) are located in a rural area.
            ``(2) Grant program.--
                    ``(A) In general.--The Administrator may make 
                grants to a qualified nonprofit technical assistance 
                provider for use in assisting small treatment works in 
                planning, developing, and obtaining financing for 
                eligible projects described in subsection (c).
                    ``(B) Distribution of grants.--In carrying out this 
                subsection, the Administrator shall ensure, to the 
                maximum extent practicable, that technical assistance 
                provided using funds from a grant under subparagraph 
                (A) is made available in each State.
                    ``(C) Consultation.--As a condition of receiving a 
                grant under this subsection, a qualified nonprofit 
                technical assistance provider shall consult with each 
                State in which grant funds are to be expended or 
                otherwise made available before the grant funds are 
                expended or made available in the State.
            ``(3) Authorization of appropriations.--There is authorized 
        to be appropriated to carry out this subsection $7,000,000 for 
        each of fiscal years 2003 through 2007.
    ``(m) Competition Requirements.--
            ``(1) In general.--The requirements described in section 
        204(a)(6) shall apply to each specification for bids for 
        projects receiving assistance under this title.
            ``(2) Single bids.--Nothing in this subsection prohibits a 
        recipient of assistance under this title that receives only 1 
        bid for a project described in paragraph (1) from accepting the 
        bid and carrying out the project.
    ``(n) No Judicial Review.--A determination by a State to provide 
financial assistance under this title shall not be subject to judicial 
review.''.
    (h) Allotment of Funds.--Section 604(a) of the Federal Water 
Pollution Control Act (33 U.S.C. 1384(a)) is amended by striking 
subsection (a) and inserting the following:
    ``(a) Formula.--
            ``(1) Allocation.--
                    ``(A) In general.--Except as provided in paragraph 
                (2) and subject to subsection (b), funds made available 
                to carry out this title for each of fiscal years 2003 
                through 2006 shall be allocated by the Administrator as 
                follows:
                            ``(i) Amounts of $1,350,000,000 or less.--
                        $1,350,000,000 (or, if the total amount made 
                        available for the fiscal year is less than that 
                        amount, the total amount made available) shall 
                        be allocated in accordance with a formula that 
                        allocates to each State the proportional share 
                        of the State needs identified in the most 
                        recent survey conducted under section 516(2), 
                        except that the minimum proportionate share 
                        provided to each State shall be 1.1 percent of 
                        available funds.
                            ``(ii) Amounts between $1,350,000,000 and 
                        $1,550,000,000.--Amounts greater than 
                        $1,350,000,000 but less than $1,550,000,000 
                        made available for the fiscal year shall be 
                        allocated by the Administrator in accordance 
                        with a formula that allocates to each State a 
                        proportionate share equal to the difference 
                        between--
                                    ``(I) the amount received under 
                                clause (i); and
                                    ``(II) the amount that the State 
                                would have received under section 
                                205(c);
                        in cases in which an amount received by the 
                        State under clause (i) is less than the amount 
                        that would have been received by the State 
                        under section 205(c).
                            ``(iii) Amounts greater than 
                        $1,550,000,000.--Any amounts equal to or 
                        greater than $1,550,000,000 that are made 
                        available for the fiscal year shall be 
                        allocated in accordance with a formula that 
                        allocates to each State the proportional share 
                        of the State needs identified in the most 
                        recent survey conducted under section 516(2), 
                        except that the minimum proportionate share 
                        provided to each State shall be 1.1 percent of 
                        available funds.
                    ``(B) Subsequent fiscal years.--For fiscal year 
                2007 and each fiscal year thereafter, funds shall be 
                allocated in accordance with a formula that allocates 
                to each State the proportional share of the State needs 
                identified in the most recent survey conducted pursuant 
                to section 516(2), except that the minimum 
                proportionate share provided to each State shall be 1 
                percent of available funds.
            ``(2) Private utilities.--If a State elects to include the 
        needs of private utilities in the needs survey used to develop 
        the allocation formula described in paragraph (1), the State 
        shall ensure that the private utilities are eligible to receive 
        funds under this title.''.
    (i) Audits, Reports, and Fiscal Controls; Intended Use Plan.--
Section 606 of the Federal Water Pollution Control Act (33 U.S.C. 1386) 
is amended--
            (1) in subsection (c)--
                    (A) by inserting ``(including significant public 
                outreach)'' after ``review''; and
                    (B) by striking paragraph (1) and inserting the 
                following:
            ``(1) a summary of the priority projects developed under 
        section 603(g) for which the State intends to provide 
        assistance from the water pollution control revolving fund of 
        the State for the year covered by the plan;''; and
            (2) in subsection (d)--
                    (A) in the subsection heading, by striking 
                ``Report'' and inserting ``Reports'';
                    (B) by striking ``Beginning the'' and inserting the 
                following:
            ``(1) In general.--Beginning in the''; and
                    (C) by adding at the end the following:
            ``(2) Report on technical, managerial, and financial 
        capacity.--Not later than 2 years after the date on which a 
        State first adopts a strategy in accordance with section 
        603(j)(2), and annually thereafter, the State shall submit to 
        the Administrator a report on the progress made in improving 
        the technical, managerial, and financial capacity of treatment 
        works in the State (including the progress of the State in 
        complying with the amendments to section 603 made by the Water 
        Investment Act of 2002).
            ``(3) Availability.--A State that submits a report under 
        this subsection shall make the report available to the 
        public.''.
    (j) Authorization of Appropriations.--The Federal Water Pollution 
Control Act is amended by striking section 607 (33 U.S.C. 1387) and 
inserting the following:

``SEC. 607. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) In General.--There are authorized to be appropriated to carry 
out this title--
            ``(1) $3,200,000 for each of fiscal years 2003 and 2004;
            ``(2) $3,600,000 for fiscal year 2005;
            ``(3) $4,000,000 for fiscal year 2006; and
            ``(4) $6,000,000 for fiscal year 2007.
    ``(b) Availability.--Amounts made available under this section 
shall remain available until expended.
    ``(c) Reservation for Needs Surveys.--Of the amount made available 
under subsection (a) to carry out this title for a fiscal year, the 
Administrator may reserve not more than $1,000,000 per year to pay the 
costs of conducting needs surveys under section 516(2).''.
    (k) Conforming Amendment.--Section 216 of the Federal Water 
Pollution Control Act (33 U.S.C. 1296) is amended--
            (1) in the first sentence, by inserting ``in accordance 
        with section 603(g)'' before ``the determination''; and
            (2) by striking the ``Not less than 25 per centum'' and all 
        that follows.

            TITLE II--SAFE DRINKING WATER ACT MODIFICATIONS

SEC. 201. PLANNING, DESIGN, AND PRECONSTRUCTION COSTS.

    Section 1452(a)(2) of the Safe Drinking Water Act (42 U.S.C. 300j-
12(a)(2)) is amended in the second sentence by striking ``(not'' and 
inserting ``(including planning, design, and associated preconstruction 
expenditures but not''.

SEC. 202. STATE REVOLVING LOAN FUND.

    (a) In General.--Section 1452(a)(3)(B)(ii) of the Safe Drinking 
Water Act (42 U.S.C. 300j-12(a)(3)(B)(ii)) is amended by inserting 
``and the formation of regional partnerships'' after ``procedures''.
    (b) Public Outreach.--Section 1452(b) of the Safe Drinking Water 
Act (42 U.S.C. 300j-12(b)) is amended in paragraphs (1) and (3)(B) by 
inserting ``(including significant public outreach)'' after ``comment'' 
each place it appears.
    (c) Types of Assistance.--Section 1452(f) of the Safe Drinking 
Water Act (42 U.S.C. 300j-12(f)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (C), by striking ``and'' at the 
                end; and
                    (B) by adding at the end the following:
                    ``(E) the recipient of the loan funds considers, 
                during the planning and engineering phase of each 
                project for which the loan funds are received--
                            ``(i) consolidating management functions or 
                        ownership with another facility;
                            ``(ii) forming public-private partnerships 
                        or other cooperative partnerships; and
                            ``(iii) using nonstructural alternatives or 
                        technologies that may be more environmentally 
                        sensitive;
                    ``(F) the recipient of the loan funds has in effect 
                a plan to achieve, within a reasonable period of time, 
                a rate structure that, to the maximum extent 
                practicable--
                            ``(i) reflects the actual cost of service 
                        provided by the recipient; and
                            ``(ii) addresses capital replacement funds; 
                        and
                    ``(G) the recipient of each loan that reflects a 
                significant capital investment has in effect, or will 
                have in effect on completion of the project, an asset 
                management plan (for which the Administrator may 
                publish information to assist States in determining 
                required content) that--
                            ``(i) conforms to generally accepted 
                        industry practices; and
                            ``(ii) includes--
                                    ``(I) an inventory of existing 
                                assets (including an estimate of the 
                                useful life of the assets); and
                                    ``(II) an optimal schedule of 
                                operations, maintenance, and capital 
                                investment required to meet and sustain 
                                performance objectives;'';
            (2) in paragraph (4), by striking ``and'' at the end;
            (3) in paragraph (5), by striking the period at the end and 
        inserting ``; and''; and
            (4) by adding at the end the following:
            ``(6) to reduce costs incurred by a municipality in issuing 
        bonds.''.
    (d) Consultation and Coordination With State Agencies; Judicial 
Review.--Section 1452(g) of the Safe Drinking Water Act (42 U.S.C. 
300j-12(g)) is amended by adding at the end the following:
            ``(5) Consultation and coordination with state agencies.--A 
        State that provides financial assistance from the drinking 
        water revolving fund of the State shall ensure that applicants 
        for the assistance consult and coordinate with, as appropriate, 
        agencies responsible for developing any--
                    ``(A) local land use plans;
                    ``(B) regional transportation improvement and long-
                range transportation plans; and
                    ``(C) State, regional, and municipal watershed 
                plans.
            ``(6) No judicial review.--A determination by a State to 
        provide financial assistance under this section shall not be 
        subject to judicial review.''.
    (e) Other Authorized Activities.--Section 1452(k)(1) of the Safe 
Drinking Water Act (42 U.S.C. 300j-12(k)(1)) is amended by striking 
subparagraph (D) and inserting the following:
                    ``(D) Make expenditures for the development and 
                implementation of source water protection programs.
                    ``(E) Provide assistance for consolidation among 
                community water systems for the purpose of--
                            ``(i) meeting national primary drinking 
                        water standards; or
                            ``(ii) making more efficient use of funds 
                        made available under subsection (a)(2).''.

SEC. 203. ADDITIONAL SUBSIDIZATION.

    Section 1452(d)(1) of the Safe Drinking Water Act (42 U.S.C. 300j-
12(d)(1)) is amended--
            (1) by striking ``Notwithstanding any other provision'' and 
        inserting the following:
                    ``(A) In general.--Notwithstanding any other 
                provision''; and
            (2) by adding at the end the following:
                    ``(B) Subsidization for disadvantaged users.--
                            ``(i) In general.--Subject to clause (ii), 
                        a State may provide additional subsidization 
                        under subparagraph (A) for a fiscal year for a 
                        community that does not meet the definition of 
                        a disadvantaged community if the State, as part 
                        of the assistance agreement between the State 
                        and the recipient of the assistance, ensures 
                        that the additional subsidization provided 
                        under this paragraph is directed through 
the user charge rate system to disadvantaged users within the 
residential user class of the community (as defined by the State based 
on affordability criteria).
                            ``(ii) Maximum amount.--Assistance provided 
                        by a State under clause (i) shall not exceed 15 
                        percent of the amount of the capitalization 
                        grant received by the State for the fiscal 
                        year.
                            ``(iii) Guidance.--The Administrator may 
                        publish guidance to assist States in 
                        identifying disadvantaged users described in 
                        clause (i).''.

SEC. 204. PRIVATE UTILITIES.

    Section 1452(h) of the Safe Drinking Water Act (42 U.S.C. 300j-
12(h)) is amended--
            (1) by striking ``The Administrator'' and inserting the 
        following:
            ``(1) In general.--The Administrator''; and
            (2) by adding at the end the following:
            ``(2) Private utilities.--If a State elects to include the 
        needs of private utilities in the needs survey under paragraph 
        (1), the State shall ensure that the private utilities are 
        eligible to receive funds under this title.''.

SEC. 205. COMPETITION REQUIREMENTS.

    Section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12) is 
amended by adding at the end the following:
    ``(s) Competition Requirements.--
            ``(1) In general.--Except as provided in paragraph (2), as 
        a condition of receipt of funds under this section, no 
        specification for bids prepared for projects to be carried out 
        using the funds shall be written in such a manner as to contain 
        any proprietary, exclusionary, or discriminatory requirement, 
        other than requirements based on performance, unless such 
        requirements are necessary to test or demonstrate a specific 
        thing or to provide for necessary interchangeability of parts 
        and equipment. If, in the judgment of a recipient of funds, it 
        is impractical or uneconomical to make a clear and accurate 
        description of the technical requirements, a `brand name or 
        equal' description may be used as a means to define the 
        performance or other salient requirements of a procurement, and 
        in doing so the recipient need not establish the existence of 
        any source other than the brand or source so named.
            ``(2) Single bids.--Nothing in this subsection prohibits a 
        recipient of assistance under this title that receives only 1 
        bid for a project described in paragraph (1) from accepting the 
        bid and carrying out the project.''.

SEC. 206. TECHNICAL ASSISTANCE FOR SMALL SYSTEMS.

    (a) Small Public Water Systems Technology Assistance Centers.--
Section 1420(f) of the Safe Drinking Water Act (42 U.S.C. 300g-9(f)) is 
amended--
            (1) in paragraph (2), by inserting ``technology 
        verification, pilot and field testing of innovative 
        technologies, and'' after ``shall include''; and
            (2) by striking paragraph (6) and inserting the following:
            ``(6) Review and evaluation.--
                    ``(A) In general.--Not less often than every 2 
                years, the Administrator shall review and evaluate the 
                program carried out under this subsection.
                    ``(B) Disqualification.--If, in carrying out this 
                subsection, the Administrator determines that a small 
                public water system technology assistance center is not 
                carrying out the duties of the center, the 
                Administrator--
                            ``(i) shall notify the center of the 
                        determination of the Administrator; and
                            ``(ii) not later than 180 days after the 
                        date of the notification, may terminate the 
                        provision of funds to the center.
            ``(7) Authorization of appropriations.--There is authorized 
        to be appropriated to carry out this subsection $5,000,000 for 
        each of fiscal years 2003 through 2007, to be distributed to 
        the centers in accordance with this subsection.''.
    (b) Environmental Finance Centers.--Section 1420(g) of the Safe 
Drinking Water Act (42 U.S.C. 300g-9(g)) is amended by striking 
paragraph (4) and inserting the following:
            ``(4) Authorization of appropriations.--There is authorized 
        to be appropriated to carry out this subsection $1,500,000 for 
        each of fiscal years 2003 through 2007.''.

SEC. 207. AUTHORIZATION OF APPROPRIATIONS.

    Section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12) is 
amended by striking subsection (m) and inserting the following:
    ``(m) Authorization of Appropriations.--
            ``(1) In general.--There are authorized to be appropriated 
        to carry out this section--
                    ``(A) $1,500,000 for fiscal year 2003;
                    ``(B) $2,000,000 for each of fiscal years 2004 and 
                2005;
                    ``(C) $3,500,000 for fiscal year 2006; and
                    ``(D) $6,000,000 for fiscal year 2007.
            ``(2) Availability.--Amounts made available under this 
        subsection shall remain available until expended.
            ``(3) Reservation for needs surveys.--Of the amount made 
        available under paragraph (1) to carry out this section for a 
        fiscal year, the Administrator may reserve not more than 
        $1,000,000 per year to pay the costs of conducting needs 
        surveys under subsection (h).''.

      TITLE III--INNOVATIONS IN FUND AND WATER QUALITY MANAGEMENT

SEC. 301. TRANSFER OF FUNDS.

    (a) Water Pollution Control Fund.--Section 603 of the Federal Water 
Pollution Control Act (33 U.S.C. 1383) is amended by adding at the end 
the following:
    ``(i) Transfer of Funds.--
            ``(1) In general.--A Governor of the State may--
                    ``(A) reserve up to 33 percent of a capitalization 
                grant made under this title and add the funds reserved 
                to any funds provided to the State under section 1452 
                of the Safe Drinking Water Act (42 U.S.C. 300j-12); and
                    ``(B) reserve in any year an amount up to the 
                amount that may be reserved under subparagraph (A) for 
                that year from capitalization grants made under section 
                1452 of that Act (42 U.S.C. 300j-12) and add the 
                reserved funds to any funds provided to the State under 
                this title.
            ``(2) State match.--Funds reserved under this subsection 
        shall not be considered to be a State contribution for a 
        capitalization grant required under this title or section 
        1452(b) of the Safe Drinking Water Act (42 U.S.C. 300j-
        12(b)).''.
    (b) Safe Drinking Water Fund.--Section 1452(g) of the Safe Drinking 
Water Act (42 U.S.C. 300j-12(g)) is amended--
            (1) in paragraph (2), by striking ``4'' and inserting 
        ``5''; and
            (2) by adding at the end the following:
            ``(5) Transfer of funds.--
                    ``(A) In general.--A Governor of the State may--
                            ``(i) reserve up to 33 percent of a 
                        capitalization grant made under this section 
                        and add the funds reserved to any funds 
                        provided to the State under section 601 of the 
                        Federal Water Pollution Control Act (33 U.S.C. 
                        1381); and
                            ``(ii) reserve in any year an amount up to 
                        the amount that may be reserved under clause 
                        (i) for that year from capitalization grants 
                        made under section 601 of that Act (33 U.S.C. 
                        1381) and add the reserved funds to any funds 
                        provided to the State under this section.
                    ``(B) State match.--Funds reserved under this 
                paragraph shall not be considered to be a State match 
                of a capitalization grant required under this section 
                or section 602(b) of the Federal Water Pollution 
                Control Act (33 U.S.C. 1382(b)).''.

SEC. 302. DEMONSTRATION PROGRAM FOR WATER QUALITY ENHANCEMENT AND 
              MANAGEMENT.

    (a) Establishment.--
            (1) In general.--As soon as practicable after the date of 
        enactment of this Act, the Administrator of the Environmental 
        Protection Agency (referred to in this section as the 
        ``Administrator'') shall establish a nationwide demonstration 
        program to--
                    (A) promote innovations in technology and 
                alternative approaches to water quality management or 
                water supply; and
                    (B) reduce costs to municipalities incurred in 
                complying with--
                            (i) the Federal Water Pollution Control Act 
                        (33 U.S.C. 1251 et seq.); and
                            (ii) the Safe Drinking Water Act (42 U.S.C. 
                        300f et seq.).
            (2) Scope.--The demonstration program shall consist of 10 
        projects per year, to be carried out in municipalities selected 
        by the Administrator under subsection (b).
    (b) Selection of Municipalities.--
            (1) Application.--A municipality that seeks to be selected 
        to participate in the demonstration program shall submit to the 
        Administrator a plan that--
                    (A) is developed in coordination with--
                            (i) the agency of the State having 
                        jurisdiction over water quality or water supply 
                        matters; and
                            (ii) interested stakeholders;
                    (B) describes water impacts specific to urban and 
                rural areas;
                    (C) includes a strategy under which the 
                municipality, through participation in the 
                demonstration program, could effectively--
                            (i) address those problems; and
                            (ii) achieve the same water quality goals 
                        as those goals that--
                                    (I) could be achieved using more 
                                traditional methods; or
                                    (II) are mandated under--
                                            (aa) the Federal Water 
                                        Pollution Control Act (33 
                                        U.S.C. 1251 et seq.); and
                                            (bb) the Safe Drinking 
                                        Water Act (42 U.S.C. 300f et 
                                        seq.); and
                    (D) includes a schedule for achieving the goals of 
                the municipality.
            (2) Types of projects.--In carrying out the demonstration 
        program, the Administrator may select projects relating to such 
        matters as--
                    (A) excessive nutrient growth;
                    (B) urban or rural pressure;
                    (C) a lack of an alternative water supply;
                    (D) difficulties in water conservation and 
                efficiency;
                    (E) a lack of support tools and technologies to 
                rehabilitate and replace water supplies;
                    (F) a lack of monitoring and data analysis for 
                distribution systems;
                    (G) nonpoint source water pollution;
                    (H) sanitary overflows;
                    (I) combined sewer overflows;
                    (J) problems with naturally-occurring constituents 
                of concern; or
                    (K) problems with erosion and excess sediment.
            (3) Responsibilities of administrator.--In selecting 
        municipalities under this subsection, the Administrator shall--
                    (A) ensure, to the maximum extent practicable--
                            (i) the inclusion in the demonstration 
                        program of a variety of projects with respect 
                        to--
                                    (I) geographic distribution;
                                    (II) innovative technologies used 
                                for the projects; and
                                    (III) nontraditional approaches 
                                (including low-impact development 
                                technologies) used for the projects; 
                                and
                            (ii) that each category of project 
                        described in paragraph (2) is adequately 
                        represented;
                    (B) give higher priority to projects that--
                            (i) address multiple problems; and
                            (ii) are regionally applicable;
                    (C) ensure, to the maximum extent practicable, that 
                at least 1 small community having a population of 
                10,000 or less receives a grant each year; and
                    (D) ensure that, for each fiscal year, no 
                municipality receives more than 25 percent of the total 
                amount of funds made available for the fiscal year to 
                provide grants under this section.
            (4) Cost sharing.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the non-Federal share of the cost of a project 
                carried out under this section shall be at least 20 
                percent.
                    (B) Waiver.--The Administrator may reduce or 
                eliminate the non-Federal share of the cost of a 
                project for reasons of affordability.
    (c) Reports.--
            (1) Reports from municipalities.--A municipality that is 
        selected for participation in the demonstration program shall 
        submit to the Administrator, on the date of completion of a 
        project of the municipality and on each of the dates that is 1, 
        2, and 3 years after that date, a report that describes the 
        effectiveness of the project.
            (2) Reports to congress.--Not later than 2 years after the 
        date of enactment of this Act, and every 2 years thereafter, 
        the Administrator shall compile, and submit to the Committee on 
        Environment and Public Works of the Senate, and the Committee 
        on Transportation and Infrastructure and the Committee on 
        Energy and Commerce of the House of Representatives, a report 
        that describes the status and results of the demonstration 
        program.
    (d) Incorporation of Results and Information.--To the maximum 
extent practicable, the Administrator shall incorporate the results of, 
and information obtained from, successful projects under this section 
into programs administered by the Administrator.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $20,000,000 for each of fiscal 
years 2003 through 2007.

SEC. 303. RATE STUDY.

    (a) In General.--Not later than 2 years after the date of enactment 
of this Act, the National Academy of Sciences shall complete a study of 
the public water system and treatment works rate structures for 
communities in the United States selected by the Academy in accordance 
with subsection (c).
    (b) Required Elements.--
            (1) Rates.--The study shall, at a minimum--
                    (A) determine whether public water system and 
                treatment works rates for communities included in the 
                study adequately address the cost of service, including 
                funds necessary to replace infrastructure;
                    (B) identify the manner in which the public water 
                system and treatment works rates were determined;
                    (C) determine the manner in which cost of service 
                is measured;
                    (D)(i) survey existing practices for establishing 
                public water system and treatment works rates; and
                    (ii) identify any commonalities in factors and 
                processes used to evaluate rate systems and make 
                related decisions; and
                    (E) recommend a set of best industry practices for 
                public water systems and treatment works for use in 
                establishing a rate structure that--
                            (i) adequately addresses the true cost of 
                        service; and
                            (ii) takes into consideration the needs of 
                        disadvantaged individuals and communities.
            (2) Affordability.--The study shall, at a minimum--
                    (A) identify existing standards for affordability;
                    (B) determine the manner in which those standards 
                are determined and defined;
                    (C) determine the manner in which affordability 
                varies with respect to communities of different sizes 
                and in different regions; and
                    (D) determine the extent to which affordability 
                affects the decision of a community to increase public 
                water system and treatment works rates (including the 
                decision relating to the percentage by which those 
                rates should be increased).
            (3) Disadvantaged communities.--The study shall, at a 
        minimum--
                    (A) survey a cross-section of States representing 
                different sizes, demographics, and geographical 
                regions;
                    (B) describe, for each State described in 
                subparagraph (A), the definition of ``disadvantaged 
                community'' used in the State in carrying out projects 
                and activities under the Safe Drinking Water Act (42 
                U.S.C. 300f et seq.);
                    (C) review other means of identifying the meaning 
                of the term ``disadvantaged'', as that term applies to 
                communities;
                    (D) determine which factors and characteristics are 
                required for a community to be considered 
                ``disadvantaged''; and
                    (E) evaluate the degree to which factors such as a 
                reduction in the tax base over a period of time, a 
                reduction in population, the loss of an industrial 
                base, and the existence of areas of concentrated 
                poverty are taken into account in determining whether a 
                community is a disadvantaged community.
    (c) Selection of Communities.--The National Academy of Sciences 
shall select communities, the public water system and treatment works 
rate structures of which are to be studied under this section, that 
include a cross section of communities representing various 
populations, income levels, demographics, and geographical regions.
    (d) Report to Congress.--On completion of the study under this 
section, the National Academy of Sciences shall submit to Congress a 
report that describes the results of the study.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $1,000,000 for each of fiscal 
years 2003 and 2004.

SEC. 304. EFFECTS ON POLICIES AND RIGHTS.

    (a) In General.--Nothing in this Act--
            (1) impairs or otherwise affects in any way, any right or 
        jurisdiction of any State with respect to the water (including 
        boundary water) of the State;
            (2) supersedes, abrogates, or otherwise impairs the 
        authority of any State to allocate quantities of water within 
        areas under the jurisdiction of the State; or
            (3) supersedes or abrogates any right to any quantity or 
        use of water that has been established by any State.
    (b) State Water Rights.--Notwithstanding any other provision of 
law, with respect to the implementation of this Act and amendments made 
by this Act--
            (1) the management of and control over water in a State 
        shall be subject to and in accordance with the laws of the 
        State in which the water is located;
            (2) Congress delegates to each State the authority to 
        regulate water of the State, including the authority to 
        regulate water in interstate commerce (including regulation of 
        usufructuary rights, trade, and transportation); and
            (3) the United States, and any agency or officer on behalf 
        of the United States, may exercise management and control over 
        water in a State only in compliance with the laws of the State 
        in which the water is located.

                   TITLE IV--WATER RESOURCE PLANNING

SEC. 401. FINDINGS.

    Congress finds that--
            (1) there is ever-growing demand and competition for water 
        from many segments of society, including municipal users, 
        agriculture, and critical ecosystems;
            (2) population growth in the United States will continue to 
        place increasing pressure on the water supply of the United 
        States;
            (3) because sources of water do not follow political 
        boundaries--
                    (A) the availability of water is increasingly 
                becoming a regional issue; and
                    (B) it is more difficult to take action--
                            (i) to monitor the state of water 
                        resources;
                            (ii) to prepare for water shortages or 
                        surpluses;
                            (iii) to prevent the occurrence of water 
                        shortages or surpluses; or
                            (iv) to respond to emergency situations;
            (4)(A) water shortages or surpluses can--
                    (i) impact public health;
                    (ii) limit economic and agricultural development; 
                and
                    (iii) damage ecosystems; and
            (B) the United States often suffers serious economic and 
        environmental losses from water shortages or surpluses;
            (5) there is no national policy to ensure an integrated and 
        coordinated Federal strategy to monitor the state of the water 
        resources of the United States;
            (6) periodic assessments of the water resources of the 
        United States are necessary; and
            (7)(A) Congress has recognized and deferred to the States 
        the authority to allocate and administer water within the 
        borders of the States;
            (B) the courts have confirmed that this is an appropriate 
        role for the States; and
            (C) Congress should continue to defer to States on laws and 
        regulations governing the appropriation, distribution, and 
        control or use of water.

SEC. 402. DEFINITION OF SECRETARY.

    In this title, the term ``Secretary'' means the Secretary of the 
Interior, acting through the Director of the United States Geological 
Survey.

SEC. 403. ACTIONS.

    (a) Assessment.--
            (1) In general.--Not later than 2 years after the date of 
        enactment of this Act, the Secretary shall conduct an 
        assessment of the state of water resources in the United 
        States.
            (2) Components.--The assessment shall, at a minimum--
                    (A) identify areas in the United States that are at 
                significant risk for water shortages or water 
                surpluses, as those shortages or surpluses pertain to 
                support of human or ecosystem needs, in--
                            (i) the short term (1 through 10 years);
                            (ii) the middle term (11 through 20 years); 
                        and
                            (iii) the long term (21 through 50 years); 
                        and
                    (B) identify areas in each category described in 
                subparagraph (A) in which water resource issues cross 
                political boundaries.
            (3) Report.--On completion of the assessment, the Secretary 
        shall submit to Congress a report that describes the results of 
        the assessment.
    (b) Water Resource Research Priorities.--
            (1) In general.--The Secretary shall coordinate a process 
        among Federal agencies (including the Environmental Protection 
        Agency) to develop and publish, not later than 1 year after the 
        date of enactment of this Act, a list of water resource 
        research priorities that focuses on--
                    (A) monitoring; and
                    (B) improving the quality of the information 
                available to State, tribal, and local water resource 
                managers.
            (2) Use of list.--The list published under paragraph (1) 
        shall be used by Federal agencies as a guide in making 
        decisions on the allocation of water research funding.
    (c) Information Delivery System.--
            (1) In general.--The Secretary shall coordinate a process 
        to develop an effective information delivery system to 
        communicate information described in paragraph (2) to--
                    (A) decisionmakers at the Federal, regional, State, 
                tribal, and local levels;
                    (B) the private sector; and
                    (C) the general public.
            (2) Types of information.--The information referred to in 
        paragraph (1) may include--
                    (A) the results of the national water resource 
                assessment;
                    (B) a summary of the Federal water research 
                priorities developed under subsection (b);
                    (C) near real-time data and other information on 
                water shortages and surpluses;
                    (D) planning models for water shortages or 
                surpluses (at various levels, such as State, river 
                basin, and watershed levels);
                    (E) streamlined procedures for States and 
                localities to interact with and obtain assistance from 
                Federal agencies that perform water resource functions; 
                and
                    (F) other materials, as determined by the 
                Secretary.

SEC. 404. REPORT TO CONGRESS.

    Not later than 2 years after the date of enactment of this Act, and 
every 2 years thereafter through fiscal year 2007, the Secretary shall 
submit to Congress a report on the implementation of this title.

SEC. 405. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to the Secretary to carry 
out this title $3,000,000 for each of fiscal years 2003 through 2007, 
to remain available until expended.
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