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






                                                       Calendar No. 527
107th CONGRESS
  2d Session
                                S. 1961

                          [Report No. 107-228]

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, Mr. Warner, Mr. 
 Miller, Mr. Smith of Oregon, and Mr. Allen) introduced the following 
bill; which was read twice and referred to the Committee on Environment 
                            and Public Works

                             July 29, 2002

              Reported by Mr. Jeffords, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 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,

<DELETED>SECTION 1. SHORT TITLE; TABLE OF CONTENTS.</DELETED>

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

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

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

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

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

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

<DELETED>SEC. 2. PURPOSES.</DELETED>

<DELETED>    The purposes of this Act are--</DELETED>
        <DELETED>    (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;</DELETED>
        <DELETED>    (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;</DELETED>
        <DELETED>    (3) to provide additional structure to the water 
        supply research conducted in the United States; and</DELETED>
        <DELETED>    (4) to ensure that the Federal Government is 
        performing the appropriate role in analyzing regional and 
        national water supply trends.</DELETED>

         <DELETED>TITLE I--FEDERAL WATER POLLUTION CONTROL ACT 
                        MODIFICATIONS</DELETED>

<DELETED>SEC. 101. DEFINITIONS.</DELETED>

<DELETED>    Section 502 of the Federal Water Pollution Control Act (33 
U.S.C. 1362) is amended by adding at the end the following:</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.''.</DELETED>

<DELETED>SEC. 102. FUNDING FOR INDIAN PROGRAMS.</DELETED>

<DELETED>    Section 518 of the Federal Water Pollution Control Act (33 
U.S.C. 1377) is amended by striking subsection (c) and inserting the 
following:</DELETED>
<DELETED>    ``(c) Reservation of Funds.--</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(A) Indian tribes;</DELETED>
                <DELETED>    ``(B) former Indian reservations in 
                Oklahoma (as determined by the Secretary of the 
                Interior); and</DELETED>
                <DELETED>    ``(C) Native villages (as defined in 
                section 3 of the Alaska Native Claims Settlement Act 
                (43 U.S.C. 1602)).''.</DELETED>

<DELETED>SEC. 103. REQUIREMENTS FOR RECEIPT OF FUNDS.</DELETED>

<DELETED>    (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).''.</DELETED>
<DELETED>    (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:</DELETED>
<DELETED>    ``(c) Projects Eligible for Assistance.--</DELETED>
        <DELETED>    ``(1) In general.--Funds available to each State 
        water pollution control revolving fund shall be used only for--
        </DELETED>
                <DELETED>    ``(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);</DELETED>
                <DELETED>    ``(B) implementation of a management 
                program established under section 319;</DELETED>
                <DELETED>    ``(C) development and implementation of a 
                conservation and management plan under section 
                320;</DELETED>
                <DELETED>    ``(D) water conservation projects or 
                activities that provide 1 or more water quality 
                benefits; or</DELETED>
                <DELETED>    ``(E) reuse, reclamation, or recycling 
                projects that provide 1 or more water quality 
                benefits.</DELETED>
        <DELETED>    ``(2) Maintenance of fund.--</DELETED>
                <DELETED>    ``(A) In general.--The fund shall be 
                established, maintained, and credited with 
                repayments.</DELETED>
                <DELETED>    ``(B) Availability.--Any balances in the 
                fund shall be available in perpetuity for providing 
                financial assistance described in paragraph 
                (1).</DELETED>
        <DELETED>    ``(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).''.</DELETED>
<DELETED>    (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--</DELETED>
        <DELETED>    (1) in paragraph (1)--</DELETED>
                <DELETED>    (A) in subparagraph (A), by striking ``, 
                at terms not to exceed 20 years'';</DELETED>
                <DELETED>    (B) by striking subparagraph (B) and 
                inserting the following:</DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(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;'';</DELETED>
                <DELETED>    (C) by redesignating subparagraphs (C) and 
                (D) as subparagraphs (D) and (E), 
                respectively;</DELETED>
                <DELETED>    (D) by inserting after subparagraph (B) 
                the following:</DELETED>
                <DELETED>    ``(C) in the case of a disadvantaged 
                community, a State may provide an extended term for a 
                loan if the extended term--</DELETED>
                        <DELETED>    ``(i) terminates not later than 
                        the date that is 30 years after the date of 
                        completion of the project; and</DELETED>
                        <DELETED>    ``(ii) does not exceed the 
                        expected design life of the 
                        project.'';</DELETED>
                <DELETED>    (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</DELETED>
                <DELETED>    (F) in subparagraph (E) (as redesignated 
                by subparagraph (C)), by inserting ``State loan'' 
                before ``fund'';</DELETED>
        <DELETED>    (2) in paragraph (6), by striking ``and'' at the 
        end;</DELETED>
        <DELETED>    (3) by redesignating paragraph (7) as paragraph 
        (10);</DELETED>
        <DELETED>    (4) by inserting after paragraph (6) the 
        following:</DELETED>
        <DELETED>    ``(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);</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(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;</DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(C) a community that receives assistance 
                as a disadvantaged community under paragraph (9) shall 
                not be eligible for assistance under this 
                paragraph;</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    (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''.</DELETED>
<DELETED>    (d) Limitations.--Section 603(e) of the Federal Water 
Pollution Control Act (33 U.S.C. 1383(e)) is amended--</DELETED>
        <DELETED>    (1) by striking ``(e)'' and all that follows 
        through ``If a State'' and inserting the following:</DELETED>
<DELETED>    ``(e) Limitations.--</DELETED>
        <DELETED>    ``(1) Prevention of double benefits.--If a 
        State''; and</DELETED>
        <DELETED>    (2) by adding at the end the following:</DELETED>
        <DELETED>    ``(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.''.</DELETED>
<DELETED>    (e) Consistency With Planning Requirements.--Section 
603(f) of the Federal Water Pollution Control Act (33 U.S.C. 1383(f)) 
is amended--</DELETED>
        <DELETED>    (1) by striking ``A State may'' and inserting the 
        following:</DELETED>
        <DELETED>    ``(1) In general.--A State may'';</DELETED>
        <DELETED>    (2) by striking ``320 of this Act.'' and inserting 
        ``320.''; and</DELETED>
        <DELETED>    (3) by adding at the end the following:</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(A) local land use plans;</DELETED>
                <DELETED>    ``(B) regional transportation improvement 
                and long-range transportation plans; and</DELETED>
                <DELETED>    ``(C) State, regional, and municipal 
                watershed plans.''.</DELETED>
<DELETED>    (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:</DELETED>
<DELETED>    ``(g) Priority System Requirement.--</DELETED>
        <DELETED>    ``(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).</DELETED>
        <DELETED>    ``(2) Development.--</DELETED>
                <DELETED>    ``(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).</DELETED>
                <DELETED>    ``(B) Requirements.--In developing the 
                project priority system, a State agency shall--
                </DELETED>
                        <DELETED>    ``(i) take into consideration all 
                        available water quality data for the State; 
                        and</DELETED>
                        <DELETED>    ``(ii) provide for public notice 
                        and opportunity for comment, including 
                        significant public outreach.</DELETED>
        <DELETED>    ``(3) Summary of projects.--</DELETED>
                <DELETED>    ``(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.</DELETED>
                <DELETED>    ``(B) Inclusions.--The summary under 
                subparagraph (A) shall include--</DELETED>
                        <DELETED>    ``(i) the priority assigned to 
                        each project under the priority system of the 
                        State developed under paragraph (2); 
                        and</DELETED>
                        <DELETED>    ``(ii) the funding schedule for 
                        each project, to the extent that such 
                        information is available.</DELETED>
        <DELETED>    ``(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.''.</DELETED>
<DELETED>    (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:</DELETED>
<DELETED>    ``(i) Technical, Managerial, and Financial Capacity for 
Optimal Performance.--</DELETED>
        <DELETED>    ``(1) Definition of state agency.--In this 
        subsection, the term `State agency' has the meaning given the 
        term in subsection (g)(1).</DELETED>
        <DELETED>    ``(2) Strategy.--</DELETED>
                <DELETED>    ``(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--</DELETED>
                        <DELETED>    ``(i) attaining and maintaining 
                        technical, managerial, operations, maintenance, 
                        and capital investments; and</DELETED>
                        <DELETED>    ``(ii) meeting and sustaining 
                        compliance with applicable Federal and State 
                        laws.</DELETED>
                <DELETED>    ``(B) Requirements.--In preparing the 
                strategy described in subparagraph (A), the State shall 
                consider, solicit public comment on, and include in the 
                strategy--</DELETED>
                        <DELETED>    ``(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</DELETED>
                        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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--
        </DELETED>
                <DELETED>    ``(A) withhold 20 percent of each 
                capitalization grant made to the State under this title 
                after the date of the determination; and</DELETED>
                <DELETED>    ``(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).</DELETED>
        <DELETED>    ``(4) Reallotment of funds.--</DELETED>
                <DELETED>    ``(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).</DELETED>
                <DELETED>    ``(B) Requirements for reallotment.--The 
                Administrator shall reallot funds under subparagraph 
                (A)--</DELETED>
                        <DELETED>    ``(i) only to States that the 
                        Administrator determines to be in compliance 
                        with this subsection; and</DELETED>
                        <DELETED>    ``(ii) in the same ratio provided 
                        under the most recent formula for the allotment 
                        of funds under this title.</DELETED>
        <DELETED>    ``(5) Condition for receipt of assistance.--
        </DELETED>
                <DELETED>    ``(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--</DELETED>
                        <DELETED>    ``(i) conforms to generally 
                        accepted industry practices; and</DELETED>
                        <DELETED>    ``(ii) includes--</DELETED>
                                <DELETED>    ``(I) an inventory of 
                                existing assets (including an estimate 
                                of the useful life of those assets); 
                                and</DELETED>
                                <DELETED>    ``(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.</DELETED>
                <DELETED>    ``(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.</DELETED>
<DELETED>    ``(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--</DELETED>
        <DELETED>    ``(1) has considered--</DELETED>
                <DELETED>    ``(A) consolidating management functions 
                or ownership with another facility;</DELETED>
                <DELETED>    ``(B) forming public-private partnerships 
                or other cooperative partnerships; and</DELETED>
                <DELETED>    ``(C) using nonstructural alternatives or 
                technologies that may be more environmentally 
                sensitive; and</DELETED>
        <DELETED>    ``(2) has in effect a plan to achieve, within a 
        reasonable period of time, a rate structure that, to the 
        maximum extent practicable--</DELETED>
                <DELETED>    ``(A) reflects the actual cost of service 
                provided by the recipient; and</DELETED>
                <DELETED>    ``(B) addresses capital replacement funds; 
                and</DELETED>
        <DELETED>    ``(3) has in effect, or will have in effect on 
        completion of the project, an asset management plan described 
        in subsection (i)(5).</DELETED>
<DELETED>    ``(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.</DELETED>
<DELETED>    ``(l) Technical Assistance.--</DELETED>
        <DELETED>    ``(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--</DELETED>
                <DELETED>    ``(A) serve not more than 3,300 users; 
                and</DELETED>
                <DELETED>    ``(B) are located in a rural 
                area.</DELETED>
        <DELETED>    ``(2) Grant program.--</DELETED>
                <DELETED>    ``(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).</DELETED>
                <DELETED>    ``(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.</DELETED>
                <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(m) Competition Requirements.--</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.</DELETED>
<DELETED>    ``(n) No Judicial Review.--A determination by a State to 
provide financial assistance under this title shall not be subject to 
judicial review.''.</DELETED>
<DELETED>    (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:</DELETED>
<DELETED>    ``(a) Formula.--</DELETED>
        <DELETED>    ``(1) Allocation.--</DELETED>
                <DELETED>    ``(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:</DELETED>
                        <DELETED>    ``(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.</DELETED>
                        <DELETED>    ``(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--</DELETED>
                                <DELETED>    ``(I) the amount received 
                                under clause (i); and</DELETED>
                                <DELETED>    ``(II) the amount that the 
                                State would have received under section 
                                205(c);</DELETED>
                        <DELETED>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).</DELETED>
                        <DELETED>    ``(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.</DELETED>
                <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.''.</DELETED>
<DELETED>    (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--</DELETED>
        <DELETED>    (1) in subsection (c)--</DELETED>
                <DELETED>    (A) by inserting ``(including significant 
                public outreach)'' after ``review''; and</DELETED>
                <DELETED>    (B) by striking paragraph (1) and 
                inserting the following:</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    (2) in subsection (d)--</DELETED>
                <DELETED>    (A) in the subsection heading, by striking 
                ``Report'' and inserting ``Reports'';</DELETED>
                <DELETED>    (B) by striking ``Beginning the'' and 
                inserting the following:</DELETED>
        <DELETED>    ``(1) In general.--Beginning in the''; 
        and</DELETED>
                <DELETED>    (C) by adding at the end the 
                following:</DELETED>
        <DELETED>    ``(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).</DELETED>
        <DELETED>    ``(3) Availability.--A State that submits a report 
        under this subsection shall make the report available to the 
        public.''.</DELETED>
<DELETED>    (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:</DELETED>

<DELETED>``SEC. 607. AUTHORIZATION OF APPROPRIATIONS.</DELETED>

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

   <DELETED>TITLE II--SAFE DRINKING WATER ACT MODIFICATIONS</DELETED>

<DELETED>SEC. 201. PLANNING, DESIGN, AND PRECONSTRUCTION 
              COSTS.</DELETED>

<DELETED>    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''.</DELETED>

<DELETED>SEC. 202. STATE REVOLVING LOAN FUND.</DELETED>

<DELETED>    (a) In General.--Section 1/452(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''.</DELETED>
<DELETED>    (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.</DELETED>
<DELETED>    (c) Types of Assistance.--Section 1452(f) of the Safe 
Drinking Water Act (42 U.S.C. 300j-12(f)) is amended--</DELETED>
        <DELETED>    (1) in paragraph (1)--</DELETED>
                <DELETED>    (A) in subparagraph (C), by striking 
                ``and'' at the end; and</DELETED>
                <DELETED>    (B) by adding at the end the 
                following:</DELETED>
                <DELETED>    ``(E) the recipient of the loan funds 
                considers, during the planning and engineering phase of 
                each project for which the loan funds are received--
                </DELETED>
                        <DELETED>    ``(i) consolidating management 
                        functions or ownership with another 
                        facility;</DELETED>
                        <DELETED>    ``(ii) forming public-private 
                        partnerships or other cooperative partnerships; 
                        and</DELETED>
                        <DELETED>    ``(iii) using nonstructural 
                        alternatives or technologies that may be more 
                        environmentally sensitive;</DELETED>
                <DELETED>    ``(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--</DELETED>
                        <DELETED>    ``(i) reflects the actual cost of 
                        service provided by the recipient; 
                        and</DELETED>
                        <DELETED>    ``(ii) addresses capital 
                        replacement funds; and</DELETED>
                <DELETED>    ``(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--</DELETED>
                        <DELETED>    ``(i) conforms to generally 
                        accepted industry practices; and</DELETED>
                        <DELETED>    ``(ii) includes--</DELETED>
                                <DELETED>    ``(I) an inventory of 
                                existing assets (including an estimate 
                                of the useful life of the assets); 
                                and</DELETED>
                                <DELETED>    ``(II) an optimal schedule 
                                of operations, maintenance, and capital 
                                investment required to meet and sustain 
                                performance objectives;'';</DELETED>
        <DELETED>    (2) in paragraph (4), by striking ``and'' at the 
        end;</DELETED>
        <DELETED>    (3) in paragraph (5), by striking the period at 
        the end and inserting ``; and''; and</DELETED>
        <DELETED>    (4) by adding at the end the following:</DELETED>
        <DELETED>    ``(6) to reduce costs incurred by a municipality 
        in issuing bonds.''.</DELETED>
<DELETED>    (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:</DELETED>
        <DELETED>    ``(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--
        </DELETED>
                <DELETED>    ``(A) local land use plans;</DELETED>
                <DELETED>    ``(B) regional transportation improvement 
                and long-range transportation plans; and</DELETED>
                <DELETED>    ``(C) State, regional, and municipal 
                watershed plans.</DELETED>
        <DELETED>    ``(6) No judicial review.--A determination by a 
        State to provide financial assistance under this section shall 
        not be subject to judicial review.''.</DELETED>
<DELETED>    (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:</DELETED>
                <DELETED>    ``(D) Make expenditures for the 
                development and implementation of source water 
                protection programs.</DELETED>
                <DELETED>    ``(E) Provide assistance for consolidation 
                among community water systems for the purpose of--
                </DELETED>
                        <DELETED>    ``(i) meeting national primary 
                        drinking water standards; or</DELETED>
                        <DELETED>    ``(ii) making more efficient use 
                        of funds made available under subsection 
                        (a)(2).''.</DELETED>

<DELETED>SEC. 203. ADDITIONAL SUBSIDIZATION.</DELETED>

<DELETED>    Section 1452(d)(1) of the Safe Drinking Water Act (42 
U.S.C. 300j-12(d)(1)) is amended--</DELETED>
        <DELETED>    (1) by striking ``Notwithstanding any other 
        provision'' and inserting the following:</DELETED>
                <DELETED>    ``(A) In general.--Notwithstanding any 
                other provision''; and</DELETED>
        <DELETED>    (2) by adding at the end the following:</DELETED>
                <DELETED>    ``(B) Subsidization for disadvantaged 
                users.--</DELETED>
                        <DELETED>    ``(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).</DELETED>
                        <DELETED>    ``(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.</DELETED>
                        <DELETED>    ``(iii) Guidance.--The 
                        Administrator may publish guidance to assist 
                        States in identifying disadvantaged users 
                        described in clause (i).''.</DELETED>

<DELETED>SEC. 204. PRIVATE UTILITIES.</DELETED>

<DELETED>    Section 1452(h) of the Safe Drinking Water Act (42 U.S.C. 
300j-12(h)) is amended--</DELETED>
        <DELETED>    (1) by striking ``The Administrator'' and 
        inserting the following:</DELETED>
        <DELETED>    ``(1) In general.--The Administrator''; 
        and</DELETED>
        <DELETED>    (2) by adding at the end the following:</DELETED>
        <DELETED>    ``(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.''.</DELETED>

<DELETED>SEC. 205. COMPETITION REQUIREMENTS.</DELETED>

<DELETED>    Section 1452 of the Safe Drinking Water Act (42 U.S.C. 
300j-12) is amended by adding at the end the following:</DELETED>
<DELETED>    ``(s) Competition Requirements.--</DELETED>
        <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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.''.</DELETED>

<DELETED>SEC. 206. TECHNICAL ASSISTANCE FOR SMALL SYSTEMS.</DELETED>

<DELETED>    (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--</DELETED>
        <DELETED>    (1) in paragraph (2), by inserting ``technology 
        verification, pilot and field testing of innovative 
        technologies, and'' after ``shall include''; and</DELETED>
        <DELETED>    (2) by striking paragraph (6) and inserting the 
        following:</DELETED>
        <DELETED>    ``(6) Review and evaluation.--</DELETED>
                <DELETED>    ``(A) In general.--Not less often than 
                every 2 years, the Administrator shall review and 
                evaluate the program carried out under this 
                subsection.</DELETED>
                <DELETED>    ``(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--</DELETED>
                        <DELETED>    ``(i) shall notify the center of 
                        the determination of the Administrator; 
                        and</DELETED>
                        <DELETED>    ``(ii) not later than 180 days 
                        after the date of the notification, may 
                        terminate the provision of funds to the 
                        center.</DELETED>
        <DELETED>    ``(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.''.</DELETED>
<DELETED>    (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:</DELETED>
        <DELETED>    ``(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.''.</DELETED>

<DELETED>SEC. 207. AUTHORIZATION OF APPROPRIATIONS.</DELETED>

<DELETED>    Section 1452 of the Safe Drinking Water Act (42 U.S.C. 
300j-12) is amended by striking subsection (m) and inserting the 
following:</DELETED>
<DELETED>    ``(m) Authorization of Appropriations.--</DELETED>
        <DELETED>    ``(1) In general.--There are authorized to be 
        appropriated to carry out this section--</DELETED>
                <DELETED>    ``(A) $1,500,000 for fiscal year 
                2003;</DELETED>
                <DELETED>    ``(B) $2,000,000 for each of fiscal years 
                2004 and 2005;</DELETED>
                <DELETED>    ``(C) $3,500,000 for fiscal year 2006; 
                and</DELETED>
                <DELETED>    ``(D) $6,000,000 for fiscal year 
                2007.</DELETED>
        <DELETED>    ``(2) Availability.--Amounts made available under 
        this subsection shall remain available until 
        expended.</DELETED>
        <DELETED>    ``(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).''.</DELETED>

       <DELETED>TITLE III--INNOVATIONS IN FUND AND WATER QUALITY 
                          MANAGEMENT</DELETED>

<DELETED>SEC. 301. TRANSFER OF FUNDS.</DELETED>

<DELETED>    (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:</DELETED>
<DELETED>    ``(i) Transfer of Funds.--</DELETED>
        <DELETED>    ``(1) In general.--A Governor of the State may--
        </DELETED>
                <DELETED>    ``(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</DELETED>
                <DELETED>    ``(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.</DELETED>
        <DELETED>    ``(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)).''.</DELETED>
<DELETED>    (b) Safe Drinking Water Fund.--Section 1452(g) of the Safe 
Drinking Water Act (42 U.S.C. 300j-12(g)) is amended--</DELETED>
        <DELETED>    (1) in paragraph (2), by striking ``4'' and 
        inserting ``5''; and</DELETED>
        <DELETED>    (2) by adding at the end the following:</DELETED>
        <DELETED>    ``(5) Transfer of funds.--</DELETED>
                <DELETED>    ``(A) In general.--A Governor of the State 
                may--</DELETED>
                        <DELETED>    ``(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</DELETED>
                        <DELETED>    ``(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.</DELETED>
                <DELETED>    ``(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)).''.</DELETED>

<DELETED>SEC. 302. DEMONSTRATION PROGRAM FOR WATER QUALITY ENHANCEMENT 
              AND MANAGEMENT.</DELETED>

<DELETED>    (a) Establishment.--</DELETED>
        <DELETED>    (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--</DELETED>
                <DELETED>    (A) promote innovations in technology and 
                alternative approaches to water quality management or 
                water supply; and</DELETED>
                <DELETED>    (B) reduce costs to municipalities 
                incurred in complying with--</DELETED>
                        <DELETED>    (i) the Federal Water Pollution 
                        Control Act (33 U.S.C. 1251 et seq.); 
                        and</DELETED>
                        <DELETED>    (ii) the Safe Drinking Water Act 
                        (42 U.S.C. 300f et seq.).</DELETED>
        <DELETED>    (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).</DELETED>
<DELETED>    (b) Selection of Municipalities.--</DELETED>
        <DELETED>    (1) Application.--A municipality that seeks to be 
        selected to participate in the demonstration program shall 
        submit to the Administrator a plan that--</DELETED>
                <DELETED>    (A) is developed in coordination with--
                </DELETED>
                        <DELETED>    (i) the agency of the State having 
                        jurisdiction over water quality or water supply 
                        matters; and</DELETED>
                        <DELETED>    (ii) interested 
                        stakeholders;</DELETED>
                <DELETED>    (B) describes water impacts specific to 
                urban and rural areas;</DELETED>
                <DELETED>    (C) includes a strategy under which the 
                municipality, through participation in the 
                demonstration program, could effectively--</DELETED>
                        <DELETED>    (i) address those problems; 
                        and</DELETED>
                        <DELETED>    (ii) achieve the same water 
                        quality goals as those goals that--</DELETED>
                                <DELETED>    (I) could be achieved 
                                using more traditional methods; 
                                or</DELETED>
                                <DELETED>    (II) are mandated under--
                                </DELETED>
                                        <DELETED>    (aa) the Federal 
                                        Water Pollution Control Act (33 
                                        U.S.C. 1251 et seq.); 
                                        and</DELETED>
                                        <DELETED>    (bb) the Safe 
                                        Drinking Water Act (42 U.S.C. 
                                        300f et seq.); and</DELETED>
                <DELETED>    (D) includes a schedule for achieving the 
                goals of the municipality.</DELETED>
        <DELETED>    (2) Types of projects.--In carrying out the 
        demonstration program, the Administrator may select projects 
        relating to such matters as--</DELETED>
                <DELETED>    (A) excessive nutrient growth;</DELETED>
                <DELETED>    (B) urban or rural pressure;</DELETED>
                <DELETED>    (C) a lack of an alternative water 
                supply;</DELETED>
                <DELETED>    (D) difficulties in water conservation and 
                efficiency;</DELETED>
                <DELETED>    (E) a lack of support tools and 
                technologies to rehabilitate and replace water 
                supplies;</DELETED>
                <DELETED>    (F) a lack of monitoring and data analysis 
                for distribution systems;</DELETED>
                <DELETED>    (G) nonpoint source water 
                pollution;</DELETED>
                <DELETED>    (H) sanitary overflows;</DELETED>
                <DELETED>    (I) combined sewer overflows;</DELETED>
                <DELETED>    (J) problems with naturally-occurring 
                constituents of concern; or</DELETED>
                <DELETED>    (K) problems with erosion and excess 
                sediment.</DELETED>
        <DELETED>    (3) Responsibilities of administrator.--In 
        selecting municipalities under this subsection, the 
        Administrator shall--</DELETED>
                <DELETED>    (A) ensure, to the maximum extent 
                practicable--</DELETED>
                        <DELETED>    (i) the inclusion in the 
                        demonstration program of a variety of projects 
                        with respect to--</DELETED>
                                <DELETED>    (I) geographic 
                                distribution;</DELETED>
                                <DELETED>    (II) innovative 
                                technologies used for the projects; 
                                and</DELETED>
                                <DELETED>    (III) nontraditional 
                                approaches (including low-impact 
                                development technologies) used for the 
                                projects; and</DELETED>
                        <DELETED>    (ii) that each category of project 
                        described in paragraph (2) is adequately 
                        represented;</DELETED>
                <DELETED>    (B) give higher priority to projects 
                that--</DELETED>
                        <DELETED>    (i) address multiple problems; 
                        and</DELETED>
                        <DELETED>    (ii) are regionally 
                        applicable;</DELETED>
                <DELETED>    (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</DELETED>
                <DELETED>    (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.</DELETED>
        <DELETED>    (4) Cost sharing.--</DELETED>
                <DELETED>    (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.</DELETED>
                <DELETED>    (B) Waiver.--The Administrator may reduce 
                or eliminate the non-Federal share of the cost of a 
                project for reasons of affordability.</DELETED>
<DELETED>    (c) Reports.--</DELETED>
        <DELETED>    (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.</DELETED>
        <DELETED>    (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.</DELETED>
<DELETED>    (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.</DELETED>
<DELETED>    (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.</DELETED>

<DELETED>SEC. 303. RATE STUDY.</DELETED>

<DELETED>    (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).</DELETED>
<DELETED>    (b) Required Elements.--</DELETED>
        <DELETED>    (1) Rates.--The study shall, at a minimum--
        </DELETED>
                <DELETED>    (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;</DELETED>
                <DELETED>    (B) identify the manner in which the 
                public water system and treatment works rates were 
                determined;</DELETED>
                <DELETED>    (C) determine the manner in which cost of 
                service is measured;</DELETED>
                <DELETED>    (D)(i) survey existing practices for 
                establishing public water system and treatment works 
                rates; and</DELETED>
                <DELETED>    (ii) identify any commonalities in factors 
                and processes used to evaluate rate systems and make 
                related decisions; and</DELETED>
                <DELETED>    (E) recommend a set of best industry 
                practices for public water systems and treatment works 
                for use in establishing a rate structure that--
                </DELETED>
                        <DELETED>    (i) adequately addresses the true 
                        cost of service; and</DELETED>
                        <DELETED>    (ii) takes into consideration the 
                        needs of disadvantaged individuals and 
                        communities.</DELETED>
        <DELETED>    (2) Affordability.--The study shall, at a 
        minimum--</DELETED>
                <DELETED>    (A) identify existing standards for 
                affordability;</DELETED>
                <DELETED>    (B) determine the manner in which those 
                standards are determined and defined;</DELETED>
                <DELETED>    (C) determine the manner in which 
                affordability varies with respect to communities of 
                different sizes and in different regions; and</DELETED>
                <DELETED>    (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).</DELETED>
        <DELETED>    (3) Disadvantaged communities.--The study shall, 
        at a minimum--</DELETED>
                <DELETED>    (A) survey a cross-section of States 
                representing different sizes, demographics, and 
                geographical regions;</DELETED>
                <DELETED>    (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.);</DELETED>
                <DELETED>    (C) review other means of identifying the 
                meaning of the term ``disadvantaged'', as that term 
                applies to communities;</DELETED>
                <DELETED>    (D) determine which factors and 
                characteristics are required for a community to be 
                considered ``disadvantaged''; and</DELETED>
                <DELETED>    (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.</DELETED>
<DELETED>    (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.</DELETED>
<DELETED>    (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.</DELETED>
<DELETED>    (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.</DELETED>

<DELETED>SEC. 304. EFFECTS ON POLICIES AND RIGHTS.</DELETED>

<DELETED>    (a) In General.--Nothing in this Act--</DELETED>
        <DELETED>    (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;</DELETED>
        <DELETED>    (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</DELETED>
        <DELETED>    (3) supersedes or abrogates any right to any 
        quantity or use of water that has been established by any 
        State.</DELETED>
<DELETED>    (b) State Water Rights.--Notwithstanding any other 
provision of law, with respect to the implementation of this Act and 
amendments made by this Act--</DELETED>
        <DELETED>    (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;</DELETED>
        <DELETED>    (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</DELETED>
        <DELETED>    (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.</DELETED>

          <DELETED>TITLE IV--WATER RESOURCE PLANNING</DELETED>

<DELETED>SEC. 401. FINDINGS.</DELETED>

<DELETED>    Congress finds that--</DELETED>
        <DELETED>    (1) there is ever-growing demand and competition 
        for water from many segments of society, including municipal 
        users, agriculture, and critical ecosystems;</DELETED>
        <DELETED>    (2) population growth in the United States will 
        continue to place increasing pressure on the water supply of 
        the United States;</DELETED>
        <DELETED>    (3) because sources of water do not follow 
        political boundaries--</DELETED>
                <DELETED>    (A) the availability of water is 
                increasingly becoming a regional issue; and</DELETED>
                <DELETED>    (B) it is more difficult to take action--
                </DELETED>
                        <DELETED>    (i) to monitor the state of water 
                        resources;</DELETED>
                        <DELETED>    (ii) to prepare for water 
                        shortages or surpluses;</DELETED>
                        <DELETED>    (iii) to prevent the occurrence of 
                        water shortages or surpluses; or</DELETED>
                        <DELETED>    (iv) to respond to emergency 
                        situations;</DELETED>
        <DELETED>    (4)(A) water shortages or surpluses can--
        </DELETED>
                <DELETED>    (i) impact public health;</DELETED>
                <DELETED>    (ii) limit economic and agricultural 
                development; and</DELETED>
                <DELETED>    (iii) damage ecosystems; and</DELETED>
        <DELETED>    (B) the United States often suffers serious 
        economic and environmental losses from water shortages or 
        surpluses;</DELETED>
        <DELETED>    (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;</DELETED>
        <DELETED>    (6) periodic assessments of the water resources of 
        the United States are necessary; and</DELETED>
        <DELETED>    (7)(A) Congress has recognized and deferred to the 
        States the authority to allocate and administer water within 
        the borders of the States;</DELETED>
        <DELETED>    (B) the courts have confirmed that this is an 
        appropriate role for the States; and</DELETED>
        <DELETED>    (C) Congress should continue to defer to States on 
        laws and regulations governing the appropriation, distribution, 
        and control or use of water.</DELETED>

<DELETED>SEC. 402. DEFINITION OF SECRETARY.</DELETED>

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

<DELETED>SEC. 403. ACTIONS.</DELETED>

<DELETED>    (a) Assessment.--</DELETED>
        <DELETED>    (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.</DELETED>
        <DELETED>    (2) Components.--The assessment shall, at a 
        minimum--</DELETED>
                <DELETED>    (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--
                </DELETED>
                        <DELETED>    (i) the short term (1 through 10 
                        years);</DELETED>
                        <DELETED>    (ii) the middle term (11 through 
                        20 years); and</DELETED>
                        <DELETED>    (iii) the long term (21 through 50 
                        years); and</DELETED>
                <DELETED>    (B) identify areas in each category 
                described in subparagraph (A) in which water resource 
                issues cross political boundaries.</DELETED>
        <DELETED>    (3) Report.--On completion of the assessment, the 
        Secretary shall submit to Congress a report that describes the 
        results of the assessment.</DELETED>
<DELETED>    (b) Water Resource Research Priorities.--</DELETED>
        <DELETED>    (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--</DELETED>
                <DELETED>    (A) monitoring; and</DELETED>
                <DELETED>    (B) improving the quality of the 
                information available to State, tribal, and local water 
                resource managers.</DELETED>
        <DELETED>    (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.</DELETED>
<DELETED>    (c) Information Delivery System.--</DELETED>
        <DELETED>    (1) In general.--The Secretary shall coordinate a 
        process to develop an effective information delivery system to 
        communicate information described in paragraph (2) to--
        </DELETED>
                <DELETED>    (A) decisionmakers at the Federal, 
                regional, State, tribal, and local levels;</DELETED>
                <DELETED>    (B) the private sector; and</DELETED>
                <DELETED>    (C) the general public.</DELETED>
        <DELETED>    (2) Types of information.--The information 
        referred to in paragraph (1) may include--</DELETED>
                <DELETED>    (A) the results of the national water 
                resource assessment;</DELETED>
                <DELETED>    (B) a summary of the Federal water 
                research priorities developed under subsection 
                (b);</DELETED>
                <DELETED>    (C) near real-time data and other 
                information on water shortages and surpluses;</DELETED>
                <DELETED>    (D) planning models for water shortages or 
                surpluses (at various levels, such as State, river 
                basin, and watershed levels);</DELETED>
                <DELETED>    (E) streamlined procedures for States and 
                localities to interact with and obtain assistance from 
                Federal agencies that perform water resource functions; 
                and</DELETED>
                <DELETED>    (F) other materials, as determined by the 
                Secretary.</DELETED>

<DELETED>SEC. 404. REPORT TO CONGRESS.</DELETED>

<DELETED>    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.</DELETED>

<DELETED>SEC. 405. AUTHORIZATION OF APPROPRIATIONS.</DELETED>

<DELETED>    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.</DELETED>

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.
Sec. 104. Sewer overflow control grants.

            TITLE II--SAFE DRINKING WATER ACT MODIFICATIONS

     Subtitle A--State Revolving Loan Fund Projects and Activities

Sec. 201. New York City watershed protection program.
Sec. 202. Labor standards.
Sec. 203. Planning, design, and preconstruction costs.
Sec. 204. State Revolving Loan Fund.
Sec. 205. Additional subsidization.
Sec. 206. Private utilities.
Sec. 207. Technical assistance for small systems.
Sec. 208. Authorization of appropriations.

            Subtitle B--Small Public Water System Assistance

Sec. 211. Short title.
Sec. 212. Findings and purpose.
Sec. 213. Small public water system assistance program.

      TITLE III--INNOVATIONS IN FUND AND WATER QUALITY MANAGEMENT

Sec. 301. Definitions.
Sec. 302. Demonstration grant program for water quality enhancement and 
                            management.
Sec. 303. Rate study.
Sec. 304. State revolving fund review process.
Sec. 305. Transfer of funds.

                   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.

                         TITLE V--MISCELLANEOUS

Sec. 501. Nutrient control technology grant program.
Sec. 502. Effects on policies and rights.
Sec. 503. Effective date.

SEC. 2. PURPOSES.

    The purposes of this Act are--
            (1) to improve the quality of the water, and the safety of 
        the drinking water, in the United States through the repair and 
        improvement of critical water infrastructure;
            (2) to modernize State water pollution control revolving 
        funds and the allocation for those funds to ensure that the 
        funds distributed reflect water quality needs;
            (3) to maximize use of Federal funds and encourage maximum 
        efficiency for States and localities;
            (4) to provide additional structure to the water supply 
        research conducted in the United States;
            (5) to ensure that the Federal Government is performing an 
        appropriate role in analyzing regional and national water 
        supply trends; and
            (6) to facilitate nontraditional projects (such as projects 
        relating to land conservation, low-impact development 
        technologies, beneficial reuse of brownfields, watershed 
        management actions, decentralized wastewater treatment 
        innovations, and other nonpoint best management practices) the 
        primary purpose of which is the protection, preservation, or 
        enhancement of water quality.

       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) Disadvantaged user.--The term `disadvantaged user' 
        means a person that meets affordability criteria established, 
        after public review and comment, by the State in which the 
        person resides.
            ``(26) Small treatment works.--The term `small treatment 
        works' means a treatment works (as defined in section 212) 
        serving a population of 10,000 or fewer individuals.''.

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 607.
            ``(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) Requirements for Construction of Treatment Works.--
            (1) In general.--Section 602(b) of the Federal Water 
        Pollution Control Act (33 U.S.C. 1382(b)) is amended by 
        striking paragraph (6) and inserting the following:
            ``(6) treatment works eligible under section 603(c)(1) that 
        are constructed, in whole or in part, using funds made 
        available by a State water pollution control revolving loan 
        fund under this title and section 205(m) will meet the 
        requirements of sections 211, 511(c)(1), and 513 in the same 
        manner as treatment works constructed using assistance provided 
        under title II;''.
            (2) Conforming amendments.--Section 211 of the Federal 
        Water Pollution Control Act (33 U.S.C. 1291) is amended--
                    (A) by striking the section heading and all that 
                follows through subsection (a) and inserting the 
                following:

``SEC. 211. SEWAGE COLLECTION SYSTEMS.

    ``(a) In General.--No grant shall be made for a sewage collection 
system under this title unless the grant--
            ``(1) is for replacement or major rehabilitation of a 
        sewage collection system that is--
                    ``(A) in existence as of February 15, 2002; and
                    ``(B) necessary to the total integrity and 
                performance of the waste treatment works serving the 
                community served by the collection system; or
            ``(2) is for a new sewage collection system for a community 
        that--
                    ``(A) is in existence as of February 15, 2002; and
                    ``(B) has sufficient existing or planned capacity 
                to treat collected sewage.'';
                    (B) in subsection (b), by striking ``(b) If'' and 
                inserting the following:
    ``(b) Population Density.--If''; and
                    (C) in subsection (c), by striking ``(c) No'' and 
                inserting the following:
    ``(c) Prohibition on Grants.--No''.
    (c) 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 in 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 that principally treats 
                municipal wastewater or domestic sewage, 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 the 
                primary purpose of which is the protection, 
                preservation, or enhancement of water quality;
                    ``(E) reuse, reclamation, or recycling projects the 
                primary purpose of which is the protection, 
                preservation, or enhancement of water quality;
                    ``(F) water conservation improvement projects the 
                primary purpose of which (as determined by the State) 
                is the protection, preservation, or enhancement of 
                water quality, including through--
                            ``(i) piping or lining of an irrigation 
                        canal;
                            ``(ii) recovery or recycling of wastewater 
                        or tailwater;
                            ``(iii) irrigation scheduling;
                            ``(iv) measurement or metering of water 
                        use; or
                            ``(v) improvement of on-field irrigation 
                        efficiency;
                    ``(G) projects to increase the security of 
                wastewater treatment works (excluding any expenditure 
                for operations or maintenance); or
                    ``(H) measures to control municipal stormwater, the 
                primary purpose of which is the preservation, 
                protection, or enhancement of water quality.
            ``(2) Maintenance of fund.--
                    ``(A) In general.--Each fund shall be established, 
                maintained, and credited with repayments.
                    ``(B) Availability.--Any balances in a fund shall 
                be available in perpetuity for providing financial 
                assistance described in paragraph (1).
            ``(3) Approaches.--A project eligible under paragraph (1) 
        to receive assistance from a State water pollution control 
        revolving fund under this title may include a project that uses 
        1 or more nontraditional approaches (such as land conservation, 
        low-impact development technologies, beneficial reuse of  
brownfields, watershed management actions, decentralized wastewater 
treatment innovations, and other nonpoint best management practices), 
if the primary purpose of the project is the preservation, protection, 
or enhancement of water quality.''.
    (d) 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)(I) annual principal and interest payments 
                will commence not later than 1 year after the date of 
                completion of any project for which the loan was 
                provided;
                    ``(II) each loan will be fully amortized not later 
                than 30 years after the date of completion of the 
                project for which the loan is provided; and
                    ``(III) the term of each loan will not exceed the 
                expected design life of the project for which the loan 
                was provided; and
                    ``(ii) in the case of a loan provided to a 
                disadvantaged community, a State may provide an 
                extended term for the loan if the extended term--
                            ``(I) terminates not later than the date 
                        that is 40 years after the date of completion 
                        of the project for which the loan was provided; 
                        and
                            ``(II) does not exceed the expected design 
                        life of the project;'';
                    (C) in subparagraph (C), by inserting ``, or, in 
                the case of a privately owned treatment works, 
                demonstrate that adequate security for the loan 
                exists,'' after ``revenue''; and
                    (D) in subparagraph (D), by inserting ``State water 
                pollution control revolving loan'' before ``fund'';
            (2) in paragraph (6), by striking ``and'' at the end;
            (3) by redesignating paragraph (7) as paragraph (11);
            (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)--
                    ``(A) to 1 or more treatment works, for use in 
                developing capacity described in subsection (i)(2)(A) 
                in accordance with subsection (i); or
                    ``(B) for a project described in subsection (c)(3);
            ``(8) subject to subsection (e)(2), 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 under 
                this title;
                    ``(B) notwithstanding section 204(b)(1)--
                            ``(i) as a condition of receiving 
                        additional subsidization under this paragraph, 
                        each recipient of assistance shall demonstrate 
                        and document to the State that additional 
                        subsidization provided under this paragraph 
                        will be directed, to the maximum extent 
                        practicable, through the user charge rate 
                        system or a similar program, to disadvantaged 
                        users within the residential user class of the 
                        community in which the treatment works is 
                        located; and
                            ``(ii) the Administrator may provide 
                        information to assist States in identifying 
                        disadvantaged users described in clause (i); 
                        and
                    ``(C) a disadvantaged user located within 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;
            ``(10) to provide to small treatment works (in an amount 
        not to exceed, in the aggregate, 2 percent of the amount of all 
        capitalization grants received by the State for the fiscal year 
        under this title)--
                    ``(A) technical and planning assistance; and
                    ``(B) assistance in--
                            ``(i) financial management;
                            ``(ii) user fee analysis;
                            ``(iii) budgeting;
                            ``(iv) capital improvement planning;
                            ``(v) repair scheduling; and
                            ``(vi) other similar activities relating to 
                        water quality improvement; and''; and
            (5) in paragraph (11) (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 6''.
    (e) 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 used by a State under paragraphs (7), (8), 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.''.
    (f) 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.--As a condition of receiving 
        assistance under this section, a recipient shall demonstrate 
        and document to the State that the recipient, in using the 
        assistance, will consult and coordinate with, as appropriate, 
        agencies with authority to develop--
                    ``(A) local land use plans;
                    ``(B) regional transportation improvement and long-
                range transportation plans; and
                    ``(C) State, regional, and municipal watershed 
                plans.''.
    (g) 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 chemical, 
                        physical, and biological data (including data 
                        relating to subsections (d) and (e) of section 
                        303 and section 305(b)) that are--
                                    ``(I) reasonably available to the 
                                State from public and private sources; 
                                and
                                    ``(II) determined by the State to 
                                be of sufficient quality; and
                            ``(ii) provide for public notice and 
                        opportunity for comment.
            ``(3) Summary of projects.--
                    ``(A) In general.--Each State agency, after public 
                notice and opportunity for comment, shall biennially 
                publish a description, in summary form, 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 the United 
        States 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, as determined by the State, is designed to 
        achieve optimum water quality management, consistent with the 
        public health and water quality goals and requirements of this 
        Act.''.
    (h) 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 section, 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 develop and 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 
                        financial capacity; and
                            ``(ii) meeting and sustaining compliance 
                        with applicable Federal and State laws.
                    ``(B) Requirements.--In developing the strategy 
                under this paragraph, the State shall consider, solicit 
                public comment on, and include in the strategy 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 the 
                capacity described in subparagraph (A)(i).
            ``(3) Condition for receipt of assistance.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B) and subsection (k), beginning on the 
                date that is 4 years after the date of enactment of 
                this subsection, each treatment works shall, as a 
                condition of receiving assistance under this title, 
                demonstrate and document to the State that provides the 
                assistance adequate capacity described in paragraph 
                (2)(A)(i), including, for each treatment works that 
                receives, in the aggregate, more than $500,000 under 
                this title for any fiscal year, 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 this Act and other 
                                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 capacity 
                described in paragraph (2)(A)(i).
                    ``(C) Noncompliance.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), no assistance, except for 
                        assistance that is to be used by a treatment 
                        works solely for planning, design, or security 
                        purposes, shall be provided under this title to 
                        a treatment works that is in significant 
                        noncompliance with any requirement of this Act, 
                        unless the treatment works is in compliance 
                        with, or has entered into, an enforceable 
                        administrative or judicial order to effect 
                        compliance with those requirements.
                            ``(ii) Exception.--A treatment works that 
                        is determined under clause (i) to be in 
                        significant noncompliance with the requirements 
                        described in clause (i) may receive assistance 
                        under this title if the State providing the 
                        assistance determines that the use of 
                        assistance would enable the treatment works to 
                        take corrective action sufficient to remedy the 
                        violations on which the determination of 
                        significant noncompliance was based.
    ``(j) Restructuring.--Notwithstanding section 204(b)(1), except as 
provided in subsection (k), as a condition of receiving assistance 
under this section, a treatment works shall demonstrate and document to 
the State that the treatment works--
            ``(1) has considered--
                    ``(A) consolidating management functions or 
                ownership with another facility;
                    ``(B) forming cooperative partnerships; and
                    ``(C) using methodologies or technologies that may 
                be more environmentally sensitive; and
            ``(2) if the treatment works receives, in the aggregate, 
        more than $500,000 under this title for any fiscal year, 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 treatment works; 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)(3)(A).
    ``(k) Exemptions for Assistance.--Subsections (i)(3) and (j) shall 
not apply to assistance provided under this title that is to be used by 
a treatment works solely for--
            ``(1) planning;
            ``(2) design;
            ``(3) security measures that do not result in significant 
        capital expenditures (as defined by a State in accordance with 
        guidance provided by the Administrator); or
            ``(4) 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 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 that is qualified to provide technical 
                assistance on a broad range of approaches described in 
                subsection (c) 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.''.
    (i) Allotment of Funds.--Section 604 of the Federal Water Pollution 
Control Act (33 U.S.C. 1384) is amended by striking subsection (a) and 
inserting the following:
    ``(a) Allocation Formula.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Existing formula.--The term `existing 
                formula' means a formula for the allotment of funds 
                made available to carry out this section for a fiscal 
                year to States in accordance with section 205(c)(3).
                    ``(B) Needs formula.--The term `needs formula' 
                means a formula for the allotment of  funds made 
available to carry out this section for a fiscal year to States--
                            ``(i) in amounts determined by the 
                        Administrator based on the ratio that--
                                    ``(I) the needs of a State 
                                described in categories I through VI of 
                                the most recent needs survey conducted 
                                under section 516(2); bears to
                                    ``(II) the needs of all States 
                                described in categories I through VI of 
                                the most recent needs survey conducted 
                                under section 516(2); but
                            ``(ii) under which the minimum 
                        proportionate share of each State is 0.7 
                        percent.
            ``(2) Allocation.--
                    ``(A) Amounts less than or equal to 
                $1,350,000,000.--Except as provided in subparagraph (B) 
                and subject to paragraph (4), funds made available to 
                carry out this section for a fiscal year, not to exceed 
                $1,350,000,000, shall be allocated by the Administrator 
                as follows:
                            ``(i) Fiscal year 2003.--For fiscal year 
                        2003--
                                    ``(I) 50 percent shall be allocated 
                                in accordance with the existing 
                                formula; and
                                    ``(II) 50 percent shall be 
                                allocated in accordance with the needs 
                                formula.
                            ``(ii) Fiscal year 2004.--For fiscal year 
                        2004--
                                    ``(I) 37.5 percent shall be 
                                allocated in accordance with the 
                                existing formula; and
                                    ``(II) 62.5 percent shall be 
                                allocated in accordance with the needs 
                                formula.
                            ``(iii) Fiscal year 2005.--For fiscal year 
                        2005--
                                    ``(I) 25 percent shall be allocated 
                                in accordance with the existing 
                                formula; and
                                    ``(II) 75 percent shall be 
                                allocated in accordance with the needs 
                                formula.
                            ``(iv) Fiscal year 2006.--For fiscal year 
                        2006--
                                    ``(I) 12.5 percent shall be 
                                allocated in accordance with the 
                                existing formula; and
                                    ``(II) 87.5 percent shall be 
                                allocated in accordance with the needs 
                                formula.
                            ``(v) Fiscal year 2007.--For fiscal year 
                        2007 and each fiscal year thereafter, 100 
                        percent shall be allocated in accordance with 
                        the needs formula.
                    ``(B) Transition exception.--If, for any fiscal 
                year, the allocation of funds under subparagraph (A) 
                would result in any other State's receiving, for the 
                fiscal year, an amount of funds under this section that 
                is less than 80 percent or more than 120 percent of the 
                amount of funds received by the State under this 
                section for the preceding fiscal year, all funds made 
                available to carry out this section for the applicable 
                year through fiscal year 2007 shall be allocated in 
                accordance with the formula described in subparagraph 
                (C).
                    ``(C) Transition formula.--The formula described in 
                this subparagraph is a formula for the allotment of 
                funds made available to carry out this section for a 
                fiscal year to each State in an amount that, subject to 
                section 518(c)(1) and paragraphs (3) and (4), is equal 
                to the product obtained by multiplying the amount of 
                funds made available to carry out this section for the 
                fiscal year and the sum of--
                            ``(i) the product obtained by multiplying--
                                    ``(I) the percentage of funds made 
                                available to carry out this section 
                                that the State would receive under the 
                                needs formula for the fiscal year; by
                                    ``(II) the greatest percentage of 
                                funds that--
                                            ``(aa) could be received by 
                                        the State under the needs 
                                        formula for the fiscal year; 
                                        but
                                            ``(bb) would not result in 
                                        any State's receiving, for the 
                                        fiscal year, an amount of funds 
                                        under this section that is less 
                                        than 80 percent or more than 
                                        120 percent of the amount of 
                                        funds received by the State 
                                        under this section in the 
                                        preceding fiscal year; and
                            ``(ii) the product obtained by 
                        multiplying--
                                    ``(I) the percentage of funds made 
                                available to carry out this section 
                                that the State would receive under the 
                                existing formula for the fiscal year; 
                                by
                                    ``(II) the percentage of funds that 
                                the State would receive under the 
                                existing formula, which is equal to the 
                                difference between--
                                            ``(aa) 100 percent; and
                                            ``(bb) the percentage 
                                        described in clause (i)(II).
                    ``(D) Amounts greater than $1,350,000,000.--Any 
                amount in excess of $1,350,000,000 that is made 
                available to carry out this section for any fiscal year 
                shall be allocated in accordance with the needs 
                formula.
            ``(3) Small state protection.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this subsection, the minimum proportionate 
                share of a State described in subparagraph (B) shall be 
                1 percent.
                    ``(B) Description of state.--A State described in 
                this subparagraph is a State that--
                            ``(i) for fiscal year 2002, would receive 
                        under the existing formula more than 1 percent 
                        of the amounts made available to carry out this 
                        section; and
                            ``(ii) but for the minimum proportionate 
                        share required under the needs formula, would 
                        receive for any fiscal year under paragraph (2) 
                        an allotment in an amount that is less than 0.7 
                        percent of the total amount of funds made 
                        available to carry out this section for that 
                        fiscal year.
            ``(4) Territories and possessions.--Of the funds made 
        available to carry out this section for a fiscal year, a total 
        of 0.25 percent shall be allocated to Guam, the United States 
        Virgin Islands, American Samoa, and the Commonwealth of the 
        Northern Mariana Islands, to be allocated among those 
        territories and possessions as determined by the Administrator.
            ``(5) Private utilities.--If a State (or a territory or 
        possession described in paragraph (4)) elects to include the 
        needs of private utilities in the needs survey used to develop 
        the needs formula, the private utilities shall be eligible to 
        receive funds under this title.''.
    (j) Reservation of Funds for Planning.--Section 604(b) of the 
Federal Water Pollution Control Act (33 U.S.C.  1384(b)) is amended by 
striking ``1 percent'' and inserting ``2 percent''.
    (k) 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) in the first sentence, by inserting 
                ``(including public outreach)'' after ``review''; and
                    (B) in the second sentence, by striking paragraph 
                (1) and inserting the following:
            ``(1) a description, in summary form, 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(i)(2), and annually thereafter, the State shall submit to 
        the Administrator a report on the progress made in improving 
        the capacity described in section 603(i)(2)(A)(i) 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.''.
    (l) Authorization of Appropriations.--Section 607 of the Federal 
Water Pollution Control Act (33 U.S.C. 1387) is amended to read as 
follows:

``SEC. 607. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) In General.--There are authorized to be appropriated to carry 
out this title--
            ``(1) $3,200,000,000 for each of fiscal years 2003 and 
        2004;
            ``(2) $3,600,000,000 for fiscal year 2005;
            ``(3) $4,000,000,000 for fiscal year 2006; and
            ``(4) $6,000,000,000 for fiscal year 2007.
    ``(b) Availability.--Amounts made available under this section 
shall remain available until expended.
    ``(c) Needs Surveys.--Of the amount made available under subsection 
(a) to carry out this title for a fiscal year, the Administrator may 
use not more than $1,000,000 for the fiscal year to pay the costs of 
conducting needs surveys under section 516(2).''.
    (m) 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.

SEC. 104. SEWER OVERFLOW CONTROL GRANTS.

    (a) In General.--Section 221(f) of the Federal Water Pollution 
Control Act (33 U.S.C. 1301(f)) is amended by striking ``section 
$750,000,000'' and all that follows and inserting ``section, to remain 
available until expended--
            ``(1) $750,000,000 for each of fiscal years 2002 and 2003; 
        and
            ``(2) $250,000,000 for each of fiscal years 2004 through 
        2007.''.
    (b) Technical Correction.--Title I of the Federal Water Pollution 
Control Act is amended by redesignating the second section 121 (33 
U.S.C. 1274) as section 122.

            TITLE II--SAFE DRINKING WATER ACT MODIFICATIONS

     Subtitle A--State Revolving Loan Fund Projects and Activities

SEC. 201. NEW YORK CITY WATERSHED PROTECTION PROGRAM.

    Section 1443(d)(4) of the Safe Drinking Water Act (42 U.S.C. 300j-
2(d)(4)) is amended by striking ``1997 through 2003, $15,000,000'' and 
inserting ``2003 through 2010, $25,000,000''.

SEC. 202. LABOR STANDARDS.

    Section 1450(e) of the Safe Drinking Water Act (42 U.S.C. 300j-
9(e)) is amended by striking ``(e) The Administrator'' and all that 
follows through ``The Secretary of Labor'' in the second sentence and 
inserting the following:
    ``(e) Labor Standards.--
            ``(1) In general.--The Administrator shall take such action 
        as is necessary to ensure that all laborers and mechanics 
        employed by contractors and subcontractors on construction 
        projects financed, in whole or in part, by a grant, loan, loan 
        guarantee, refinancing, or any other form of assistance 
        provided under this title (including assistance provided from 
        the State drinking water revolving fund under section 1452) are 
        paid wages at rates that are not less than the rates prevailing 
        for the same type of work for similar construction in the 
        immediate locality, as determined by the Secretary of Labor in 
        accordance with the Act of March 3, 1931 (40 U.S.C. 276a et 
        seq.).
            ``(2) Authority and functions.--The Secretary of Labor''.

SEC. 203. 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--
            (1) in the second sentence, by inserting before the period 
        at the end the following: ``, including planning, design, and 
        associated preconstruction expenditures and projects for 
        consolidation among community water systems''; and
            (2) in the third sentence, by inserting before the period 
        at the end the following: ``or carrying out any project or 
        activity to increase the security of a public water system''.

SEC. 204. 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 of the Safe Drinking Water 
Act (42 U.S.C. 300j-12) is amended by striking subsection (f) and 
inserting the following:
    ``(f) Types of Assistance.--
            ``(1) In general.--Except as otherwise limited by State 
        law, the amounts deposited into a State loan fund under this 
        section may be used only--
                    ``(A) to make loans, on the condition that--
                            ``(i) the interest rate for each loan is 
                        less than or equal to the market interest rate 
                        (including an interest-free loan);
                            ``(ii)(I) principal and interest payments 
                        on each loan will commence not later than 1 
                        year after completion of the project for which 
                        the loan was made, and each loan will be fully 
                        amortized not later than 30 years after the 
                        completion of the project, except that in the 
                        case of a disadvantaged community (as defined 
                        in subsection (d)(3)), a State may provide an 
                        extended term of not more than 40 years for a 
                        loan; and
                            ``(II) the term of any loan described in 
                        subclause (I) will not exceed the expected 
                        design life of the project;
                            ``(iii) the recipient of each loan will 
                        establish a dedicated source of revenue (or, in 
                        the case of a privately owned system, 
                        demonstrate that there is adequate security) 
                        for the repayment of the loan;
                            ``(iv) the State loan fund will be credited 
                        with all payments of principal and interest on 
                        each loan;
                            ``(v) the recipient of the loan funds 
                        demonstrates and documents to the State that 
                        the recipient has considered, 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 cooperative 
                                partnerships; and
                                    ``(III) using methodologies or 
                                technologies that may be more 
                                environmentally sensitive;
                            ``(vi) if the recipient of the loan funds 
                        receives, in the aggregate, more than $500,000 
                        under this section for any fiscal year, the 
                        recipient demonstrates and documents to the 
                        State that the recipient 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
                            ``(vii) the recipient of each loan that 
                        receives, in the aggregate, more than $500,000 
                        under this section for any fiscal year, 
                        demonstrates and documents to the State that 
                        the recipient 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--
                                            ``(aa) an inventory of 
                                        existing assets (including an 
                                        estimate of the useful life of 
                                        the assets); and
                                            ``(bb) an optimal schedule 
                                        of operations, maintenance, and 
                                        capital investment required to 
                                        meet and sustain performance 
                                        objectives;
                    ``(B) to buy or refinance the debt obligation of a 
                municipality or an intermunicipal or interstate agency 
                within the State at an interest rate that is less than 
                or equal to the market interest rate in any case in 
                which a debt obligation is incurred after July 1, 1993;
                    ``(C) to guarantee, or purchase insurance for, a 
                local obligation (all of the proceeds of which finance 
                a project eligible for assistance under this section) 
                if the guarantee or purchase would improve credit 
                market access or reduce the interest rate applicable to 
                the obligation;
                    ``(D) as a source of revenue or security for the 
                payment of principal and interest on revenue or general 
                obligation bonds issued by the State if the proceeds of 
                the sale of the bonds will be deposited into the State 
                loan fund; and
                    ``(E) to earn interest on the amounts deposited 
                into the State loan fund.
            ``(2) Exemption.--Clauses (v), (vi), and (vii) of paragraph 
        (1)(A) shall not apply to assistance provided under this title 
        that is to be used solely for--
                    ``(A) planning;
                    ``(B) design; or
                    ``(C) security measures that do not result in 
                significant capital expenditures (as defined by a State 
                in accordance with guidance provided by the 
                Administrator).''.
    (d) Consultation and Coordination With State Agencies.--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.--
        As a condition of receiving assistance under this section, a 
        recipient shall demonstrate and document to the State that the 
        recipient, in using the assistance, will consult and coordinate 
        with, as appropriate, agencies with authority to develop--
                    ``(A) local land use plans;
                    ``(B) regional transportation improvement and long-
                range transportation plans; and
                    ``(C) State, regional, and municipal watershed 
                plans.''.
    (e) Other Authorized Activities.--Section 1452(k) of the Safe 
Drinking Water Act (42 U.S.C. 300j-12(k)) is amended--
            (1) in paragraph (1), by striking subparagraph (D) and 
        inserting the following:
                    ``(D) Subject to paragraph (2)(E), make 
                expenditures for the development and implementation of 
                source water protection programs (including wellhead 
                protection programs under section 1428).''; and
            (2) in paragraph (2), by striking subparagraph (E) and 
        inserting the following:
                    ``(E) To make expenditures to develop and implement 
                source water protection programs (including wellhead 
                protection programs under section 1428) under paragraph 
                (1)(D).''.

SEC. 205. ADDITIONAL SUBSIDIZATION.

    (a) In General.--Section 1452(d) of the Safe Drinking Water Act (42 
U.S.C. 300j-12(d)) is amended--
            (1) by redesignating paragraphs (1), (2), and (3) as 
        paragraphs (2), (3), and (1), respectively, and  moving the 
paragraphs so as to appear in numerical order;
            (2) in paragraph (1) (as redesignated by paragraph (1))--
                    (A) by striking ``(1) Definition of disadvantaged 
                community.--In this subsection, the term'' and 
                inserting the following:
            ``(1) Definitions.--In this subsection:
                    ``(A) Disadvantaged community.--The term''; and
                    (B) by adding at the end the following:
                    ``(B) Disadvantaged user.--The term `disadvantaged 
                user' means a person that meets affordability criteria 
                established, after public review and comment, by the 
                State in which the person resides.'';
            (3) in paragraph (2) (as redesignated by paragraph (1))--
                    (A) by striking ``Notwithstanding any other 
                provision'' and inserting the following:
                    ``(A) In general.--Notwithstanding any other 
                provision''; and
                    (B) 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 recipient of 
                        the assistance demonstrates and documents to 
                        the State that the recipient, in using the 
                        assistance, directed the additional 
                        subsidization, to the maximum extent 
                        practicable, through the user charge rate 
                        system or a similar program to disadvantaged 
                        users within the residential user class of the 
                        community.
                            ``(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 
                        under this section.
                            ``(iii) Information.--The Administrator may 
                        provide information to assist States in 
                        identifying disadvantaged users described in 
                        clause (i).
                            ``(iv) No duplicate assistance.--A 
                        disadvantaged user within a community that 
                        receives assistance as a disadvantaged 
                        community under this subsection shall not be 
                        eligible for assistance under this 
                        paragraph.''; and
            (4) in paragraph (3) (as redesignated by paragraph (1)), by 
        striking ``paragraph (1)'' and inserting ``paragraph (2)''.
    (b) Conforming Amendments.--Section 1452(f)(1)(B) of the Safe 
Drinking Water Act (42 U.S.C. 300j-12(f)(1)(B)) is amended by striking 
``(d)(3)'' and inserting ``(d)(1)''.

SEC. 206. 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 private utilities shall be eligible to receive funds 
        under this title.''.

SEC. 207. 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 $6,000,000 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 $2,000,000 for 
        each of fiscal years 2003 through 2007.''.

SEC. 208. 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) $1,500,000,000 for fiscal year 2003;
                    ``(B) $2,000,000,000 for each of fiscal years 2004 
                and 2005;
                    ``(C) $3,500,000,000 for fiscal year 2006; and
                    ``(D) $6,000,000,000 for fiscal year 2007.
            ``(2) Availability.--Amounts made available under this 
        subsection shall remain available until expended.
            ``(3) Needs surveys.--Of the amount made available under 
        paragraph (1) to carry out this section for a fiscal year, the 
        Administrator may use not more than $1,000,000 for the fiscal 
        year to pay the costs of conducting needs surveys under 
        subsections (h) and (i).''.

            Subtitle B--Small Public Water System Assistance

SEC. 211. SHORT TITLE.

    This subtitle may be cited as the ``Small Community Drinking Water 
Funding Act''.

SEC. 212. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds that--
            (1) in some cases, existing and proposed drinking water 
        standards as of the date of enactment of this Act can place 
        large financial burdens on public water systems, especially 
        systems that serve fewer than a few thousand people;
            (2) some small public water systems have experienced water 
        contamination problems that may pose a significant risk to the 
        health of water consumers;
            (3) small communities are concerned about improving 
        drinking water quality;
            (4) the limited scientific, technical, and professional 
        resources of many small communities make understanding and 
        implementing regulatory requirements very difficult;
            (5) small communities often struggle to meet water quality 
        standards because of difficulty in securing funding;
            (6) small communities often lack a tax base or 
        opportunities to benefit from economics of scale and therefore 
        face very high per capita costs in improving drinking water 
        quality;
            (7) the smallest public water systems, which serve fewer 
        than 3,300 people, represent 85 percent of all public water 
        systems;
            (8) small public water systems serving fewer than 10,000 
        people represent 94 percent of all public water systems;
            (9) small communities would benefit from a grant program 
        designed to provide funding for water quality projects without 
        a substantial matching requirement; and
            (10) Federal programs in effect as of the date of enactment 
        of this Act do not adequately meet the needs of small 
        communities with respect to public water systems.
    (b) Purpose.--The purpose of this subtitle is to establish a 
program to provide grants for public water systems to--
            (1) meet applicable national primary drinking water 
        regulations under the Safe Drinking Water Act (42 U.S.C. 300f 
        et seq.);
            (2) maintain water costs at a reasonable level for 
        communities served by small public water systems; and
            (3) obtain technical assistance to develop the capacity to 
        sustain operations over the long term.

SEC. 213. SMALL PUBLIC WATER SYSTEM ASSISTANCE PROGRAM.

    (a) Establishment of Program.--The Safe Drinking Water Act (42 
U.S.C. 300f et seq.) is amended by adding at the end the following:

             ``PART G--SMALL PUBLIC WATER SYSTEM ASSISTANCE

``SEC. 1471. DEFINITIONS.

    ``In this part:
            ``(1) Eligible activity.--
                    ``(A) In general.--The term `eligible activity' 
                means an activity that is carried out by an eligible 
                entity for a purpose consistent with section 
                1473(c)(1).
                    ``(B) Exclusion.--The term `eligible activity' does 
                not include any activity to increase the population 
                served by a public water system, except to the extent 
                that the Administrator under section 1473(b)(1) 
                determines an activity to be necessary to--
                            ``(i) achieve compliance with a national 
                        primary drinking water regulation; and
                            ``(ii) provide a water supply to a 
                        population that, as of the date of enactment of 
                        this part, is not served by a safe public water 
                        system.
            ``(2) Eligible entity.--The term `eligible entity' means--
                    ``(A) a small public water system that--
                            ``(i) is located in--
                                    ``(I) a State; or
                                    ``(II) an area governed by an 
                                Indian Tribe;
                            ``(ii) if located in a State, serves a 
                        community that, under affordability criteria 
                        established by the State under section 1452(d), 
                        is determined by the State to be--
                                    ``(I) a disadvantaged community; or
                                    ``(II) a community that would 
                                otherwise become a disadvantaged 
                                community as a result of carrying out 
                                an eligible activity, as determined by 
                                the State; or
                            ``(iii) if located in an area governed by 
                        an Indian Tribe, serves a community that is 
                        determined by the Administrator, under criteria 
                        published by the Administrator under section 
                        1452(d) and in consultation with the Secretary, 
                        to be--
                                    ``(I) a disadvantaged community; or
                                    ``(II) a community that would 
                                otherwise become a disadvantaged 
                                community as a result of carrying out 
                                an eligible activity, as determined by 
                                the State;
                    ``(B) a public water system that--
                            ``(i) would incur a significant increase of 
                        $3,000,000 or more in costs in complying with 
                        national primary drinking water regulations 
                        promulgated under this Act; and
                            ``(ii) is a disadvantaged community or a 
                        community may otherwise become disadvantaged as 
                        a result of carrying out an eligible activity, 
                        as determined by the State; or
                    ``(C) a public water system located in Bernalillo 
                or Sandoval County, New Mexico, Scottsdale, Arizona, or 
                Mesquite or Washoe County, Nevada, that would incur a 
                significant increase in costs in complying with 
                national primary drinking water regulations promulgated 
                under this Act.
            ``(3) Program.--The term `program' means the small public 
        water system assistance program established under section 
        1472(a).
            ``(4) Secretary.--The term `Secretary' means the Secretary 
        of Health and Human Services, acting through the Director of 
        the Indian Health Service.
            ``(5) Small public water system.--The term `small public 
        water system' means a public water system (including a 
        community water system and a noncommunity water system) that 
        serves a population of 15,000 or fewer individuals.

``SEC. 1472. SMALL PUBLIC WATER SYSTEM ASSISTANCE PROGRAM.

    ``(a) Establishment.--Not later than July 1, 2003, the 
Administrator shall establish within the Environmental Protection 
Agency a small public water system assistance program.
    ``(b) Duties.--Under the program, the Administrator shall--
            ``(1) in accordance with section 1473, establish and 
        administer a small public water system assistance program for, 
        and provide grants to, eligible entities for use in carrying 
        out eligible activities; and
            ``(2) identify, and prepare annual prioritized lists of, 
        activities for eligible entities located in areas governed by 
        Indian Tribes that are eligible for grants under section 1473.
    ``(c) Priority.--
            ``(1) In general.--The Administrator shall provide grants 
        to eligible entities for eligible activities that--
                    ``(A) address the most serious risks to human 
                health from lack of compliance with the regulations 
                specified in subparagraph (B);
                    ``(B) are necessary to ensure compliance with 
                national primary drinking water regulations applicable 
                to eligible entities under section 1412; and
                    ``(C) assist systems serving communities that are 
                most in need, as calculated on the basis of median 
                household income, under affordability criteria 
                established by the State under section 1452(d).
            ``(2) Management cooperatives.--The Administrator shall 
        consider giving priority for grants under this section to 
        eligible activities that are carried out by communities that 
        form management cooperatives.
    ``(d) Technical Assistance.--In providing grants under this 
section, the Administrator shall--
            ``(1) use not less than 1.5 percent of funds made available 
        to carry out this section to provide grants to nonprofit 
        technical assistance organizations to be used to assist 
        eligible entities in--
                    ``(A) assessing needs relating to eligible 
                activities;
                    ``(B) identifying additional available sources of 
                funding to meet the cost-sharing requirements under the 
                program;
                    ``(C) planning, implementing, and maintaining any 
                eligible activities of the eligible entities that 
                receive funding under this section;
            ``(2) require that none of the funds provided under 
        paragraph (1) be used to pay for lobbying expenses; and
            ``(3) require that for each fiscal year, not more than 5 
        percent of the funds received by an eligible entity under this 
        section may be used to obtain technical assistance in planning, 
        implementing, and maintaining eligible activities for which 
        funding is provided under this section.
    ``(e) Indian Tribes.--In providing grants under this section, the 
Administrator shall use not less than 3 percent of funds made available 
to carry out this section for each fiscal year to provide grants to 
eligible entities that are located in areas governed by Indian Tribes.
    ``(f) Limitation on Receipt of Funds.--
            ``(1) In general.--Except as provided in paragraph (2), a 
        grant under this section shall not be provided to an eligible 
        entity that, as determined by the Administrator--
                    ``(A) does not have the technical, managerial, 
                operations, maintenance, or financial capacity to 
                ensure compliance with national primary drinking water 
                regulations applicable to the eligible entity under 
                section 1412; or
                    ``(B) is in significant noncompliance with any 
                applicable national primary drinking water regulation.
            ``(2) Exception for receipt of grant.--An eligible entity 
        described in paragraph (1) may receive a grant under this 
        section only--
                    ``(A) if the Administrator determines that use of 
                the grant will ensure compliance with national primary 
                drinking water regulations applicable to the eligible 
                entity under section 1412;
                    ``(B)(i) to restructure or consolidate the facility 
                to achieve compliance with applicable national primary 
                drinking water regulations; or
                    ``(ii) in a case in which restructuring or 
                consolidation of the facility is not practicable, if 
                the Administrator determines that--
                            ``(I) the eligible entity has made a good 
                        faith effort to achieve compliance with 
                        applicable national primary drinking water 
                        regulations; and
                            ``(II) the eligible entity is adhering to 
                        an enforceable schedule for complying with 
                        those regulations; and
                    ``(C) in a case in which paragraph (1)(A) applies 
                to an eligible entity, and the eligible entity agrees 
                to undertake feasible and appropriate changes in 
                operations (including changes in ownership, management, 
                accounting, rates, maintenance, consolidation, 
                provision of an alternative water supply, or other 
                procedures), if the Administrator determines that the 
                measures are necessary to ensure that the eligible 
                entity has the capacity described in (1)(A) to comply 
                with applicable national primary drinking water 
                regulations over the long term.
            ``(3) Review.--Before providing assistance under this 
        section to an eligible entity that is in significant 
        noncompliance with any national primary drinking water 
        regulation applicable to the eligible entity under section 
        1412, the Administrator shall conduct a review to determine 
        whether paragraph (1)(A) applies to the entity.
    ``(g) Cost Sharing.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        share of the total cost of an eligible activity funded by a 
        grant under this section shall not exceed 80 percent.
            ``(2) Waiver of cost-sharing requirement.--The 
        Administrator may waive the requirement of an eligible entity 
        to pay all or a portion of the share of an eligible activity 
        that may not be funded by a grant under this section, based on 
        a determination by the State that the eligible entity is unable 
        to pay any or all of the share.

``SEC. 1473. SMALL PUBLIC WATER SYSTEM ASSISTANCE PROGRAM FOR INDIAN 
              TRIBES.

    ``(a) Establishment.--Not later than July 1, 2003, the 
Administrator shall establish a small public water system assistance 
program for Indian Tribes, through which eligible entities located in 
areas governed by the Indian Tribe may receive grants for eligible 
activities under this part.
    ``(b) Program Priority Requirement.--
            ``(1) List of eligible activities.--
                    ``(A) In general.--The Administrator, in 
                consultation with the Secretary, shall, for each fiscal 
                year, identify, and, using the priority criteria 
                described in paragraph (2) and considering the 
                additional criteria described in paragraph (3), list in 
                descending order of priority, eligible activities for 
                eligible entities located in areas governed by Indian 
                Tribes for which funds provided from a grant under this 
                part may be used.
                    ``(B) Coordination.--
                            ``(i) In general.--To the maximum extent 
                        practicable, the Administrator shall ensure 
                        that the preparation of the list under 
                        subparagraph (A) is coordinated with any needs 
                        assessment conducted under section 1452(i)(4).
                            ``(ii) Additional consideration.--Any 
                        additional financial needs of small public 
                        water systems located in areas governed by 
                        Indian Tribes that are associated with the cost 
                        of complying with a national primary drinking 
                        water regulation (including a regulation 
                        concerning arsenic) that is promulgated after 
                        the then most recent needs survey conducted 
                        under section 1452(i)(4) shall be factored into 
                        the determination of financial need for, and 
                        prioritization of, eligible activities under 
                        this section.
            ``(2) Priority criteria.--In preparing the list under 
        paragraph (1), the Administrator shall give priority for the 
        use of grants to eligible activities that--
                    ``(A) address the most serious risk to human 
                health;
                    ``(B) are necessary to ensure compliance with 
                national primary water regulations applicable to 
                eligible entities under section 1412; and
                    ``(C) assist systems most in need, as calculated on 
                the basis of median household income, under 
                affordability criteria published by the Administrator 
                under section 1452(d).
            ``(3) Additional criteria.--In addition to the priority 
        criteria described in paragraph (2), the Administrator shall, 
        in preparing a list under paragraph (1), consider giving 
        additional priority to any listed eligible activities that are 
        to be carried out by communities that form management 
        cooperatives (including management cooperatives between systems 
        that do not have public water system connections).
    ``(c) Use of Funds.--
            ``(1) In general.--Using funds made available to carry out 
        section 1472, the Administrator shall provide to an eligible 
        entity located in an area governed by an Indian Tribe, on a 
        cost-shared basis (in accordance with subsection (f)), a grant 
        to be used for an eligible activity (including source water 
        protection) the purpose of which is to ensure compliance with 
        national primary drinking water regulations applicable to the 
        eligible entity under section 1412.
            ``(2) Allocation of grant funding.--For each fiscal year, 
        the Administrator, in consultation with the Secretary, shall 
        provide grants under paragraph (1) for the maximum number of 
        eligible activities for which the funding allocation makes 
        assistance available, based on the priority assigned by the 
        Administrator to eligible activities under subsection (b).
    ``(d) Limitation on Use of Funds.--For each fiscal year, not more 
than 5 percent of the funds received by an eligible entity under this 
section may be used to obtain technical assistance in planning, 
implementing, and maintaining eligible activities that are funded under 
this section.
    ``(e) Limitation on Receipt of Funds.--
            ``(1) In general.--Except as provided in paragraph (2), a 
        grant under this section shall not be provided to an eligible 
        entity that, as determined by the Administrator--
                    ``(A) does not have the technical, managerial, 
                operations, maintenance, or financial capacity to 
                ensure compliance with national primary drinking water 
                regulations applicable to the eligible entity under 
                section 1412; or
                    ``(B) is in significant noncompliance with any 
                applicable national primary drinking water regulation.
            ``(2) Exception for receipt of grant.--An eligible entity 
        described in paragraph (1) may receive a grant under this 
        section only--
                    ``(A) if the Administrator determines that use of 
                the grant will ensure compliance with national primary 
                drinking water regulations applicable to the eligible 
                entity under section 1412;
                    ``(B)(i) to restructure or consolidate the facility 
                to achieve compliance with applicable national primary 
                drinking water regulations; or
                    ``(ii) in a case in which restructuring or 
                consolidation of the facility is not practicable, if 
                the Administrator determines that--
                            ``(I) the eligible entity has made a good 
                        faith effort to achieve compliance with 
                        applicable national primary drinking water 
                        regulations; and
                            ``(II) the eligible entity is adhering to 
                        an enforceable schedule for complying with 
                        those regulations; and
                    ``(C) in a case in which paragraph (1)(A) applies 
                to an eligible entity, and the eligible entity agrees 
                to undertake feasible and appropriate changes in 
                operations (including changes in ownership, management, 
                accounting, rates, maintenance, consolidation, 
                provision of an alternative water supply, or other 
                procedures), if the Administrator determines that the 
                measures are necessary to ensure that the eligible 
                entity has the technical, managerial, operations, 
                maintenance, or financial capacity to comply with 
                applicable national primary drinking water regulations 
                over the long term.
            ``(3) Review.--Before providing assistance under this 
        section to an eligible entity that is in significant 
        noncompliance with any national primary drinking water 
        regulation applicable to the eligible entity under section 
        1412, the Administrator shall conduct a review to determine 
        whether paragraph (1)(A) applies to the entity.
    ``(f) Cost Sharing.--
            ``(1) In general.--
                    ``(A) Limit.--Except as provided in paragraph (2), 
                the share of the total cost of an eligible activity 
                funded by a grant under this section shall not exceed 
                80 percent.
                    ``(B) Use of other federal funds.--To pay the 
                portion of an eligible activity that may not be funded 
                by a grant under this section, an eligible entity may 
                use Federal financial assistance other than assistance 
                received under this section.
            ``(2) Waiver of cost-sharing requirement.--
                    ``(A) In general.--The Administrator may waive the 
                requirement of an eligible entity to pay all or a 
                portion of the share of eligible activity that may not 
                be funded by a grant under this section based on a 
                determination by the Administrator that the eligible 
                entity is unable to pay any or all of the share.
                    ``(B) Limitation.--For each fiscal year, the total 
                amount of cost-share waivers provided by the 
                Administrator under subparagraph (A) shall not exceed 
                30 percent of the amount of funding used to provide 
                grants to Indian Tribes under this part.
    ``(g) Unobligated Funds.--Any funds not obligated by the small 
public water system assistance program established under subsection (a) 
for a purpose consistent with the purposes described in section 1472 
and subsection (c) within 1 year after the date on which funds are made 
available to carry out this part shall be returned to the Administrator 
for use in providing new grants under this part.

``SEC. 1474. REPORTS.

    ``(a) Administrator.--Not later than January 1, 2003, and annually 
thereafter through January 1, 2007, the Administrator shall--
            ``(1) submit, to the Committee on Environment and Public 
        Works of the Senate and the Committee on Energy and Commerce of 
        the House of Representatives, a report that, for the preceding 
        fiscal year--
                    ``(A) lists the eligible activities for eligible 
                entities, as prepared under section 1473(b)(1), located 
                in areas governed by Indian Tribes, and in each State, 
                receiving funds under this part;
                    ``(B) identifies the number of grants awarded under 
                this part by the Administrator to eligible entities 
                located in areas governed by Indian Tribes, and in each 
                State, receiving funds under this part;
                    ``(C) identifies each eligible entity that receives 
                a grant to carry out an eligible activity;
                    ``(D) identifies the amount of each grant provided 
                to an eligible entity to carry out an eligible 
                activity; and
                    ``(E) describes each eligible activity funded by 
                such a grant (including the status of the eligible 
                activity); and
            ``(2) make the report under paragraph (1) available to the 
        public.
    ``(b) Indian Tribes.--Not later than November 1 following each 
fiscal year in which an Indian Tribe receives funding under section 
1473, the Indian Tribe shall submit to the Administrator a report that, 
for the preceding fiscal year--
            ``(1) identifies the number of grants awarded to eligible 
        entities located in areas governed by the Indian Tribe;
            ``(2) identifies each such eligible entity that received a 
        grant to carry out an eligible activity;
            ``(3) identifies the amount of each grant provided to such 
        an eligible entity to carry out an eligible activity; and
            ``(4) describes each eligible activity funded by such 
        grants (including the status of the eligible activity).

``SEC. 1475. AUTHORIZATION OF APPROPRIATIONS.

    ``There is authorized to be appropriated to carry out this part 
$1,000,000,000 for each of fiscal years 2003 through 2007.''.
    (b) Conforming Amendment.--Section 1401(14) of the Safe Drinking 
Water Act (42 U.S.C. 300f(14)) is amended in the second sentence by 
striking ``1452,'' and inserting ``1452 and part G,''.

      TITLE III--INNOVATIONS IN FUND AND WATER QUALITY MANAGEMENT

SEC. 301. DEFINITIONS.

    In this title:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Municipality.--The term ``municipality'' has the 
        meaning given the term in section 502 of the Federal Water 
        Pollution Control Act (33 U.S.C. 1362).
            (3) Public water system.--The term ``public water system'' 
        has the meaning given the term in section 1401 of the Safe 
        Drinking Water Act (42 U.S.C. 300f).
            (4) State.--The term ``State'' has the meaning given the 
        term in section 502 of the Federal Water Pollution Control Act 
        (33 U.S.C. 1362).
            (5) Treatment works.--The term ``treatment works'' has the 
        meaning given the term in section 212 of the Federal Water 
        Pollution Control Act (33 U.S.C. 1292).

SEC. 302. DEMONSTRATION GRANT 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 shall establish a 
        nationwide demonstration grant 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 grant 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 grant 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 or 
                rural areas;
                    (C) includes a strategy under which the 
                municipality, through participation in the 
                demonstration grant 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 
        grant program, the Administrator shall provide grants for 
        projects relating to water supply or water quality matters such 
        as--
                    (A) excessive nutrient growth;
                    (B) urban or rural population 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 
                water 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 providing grants 
        for projects 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 community having a population of 10,000 or 
                fewer individuals receives a grant each fiscal 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 total cost of an 
                eligible activity funded by a grant 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 grant recipients.--A recipient of a grant 
        under this section shall submit to the Administrator, on the 
        date of completion of a project of the recipient 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) Research and Development.--
            (1) In general.--As soon as practicable after the date of 
        enactment of this Act, the Administrator shall, through a 
        competitive process, award grants and enter into contracts and 
        cooperative agreements for research and development on the use 
        of innovative and alternative technologies to improve water 
        quality or drinking water supply.
            (2) Types of projects.--In carrying out this subsection, 
        the Administrator may select projects relating to such matters 
        as innovative or alternative technologies, approaches, 
        practices, or methods--
                    (A) to increase the effectiveness and efficiency of 
                public water supply systems, including--
                            (i) source water protection;
                            (ii) water use reduction;
                            (iii) water reuse;
                            (iv) water treatment;
                            (v) water distribution systems; and
                            (vi) water security;
                    (B) to encourage the use of innovative or 
                alternative technologies or approaches relating to 
                water supply or availability; or
                    (C) to increase the effectiveness and efficiency of 
                treatment works, including--
                            (i) methods of collecting, treating, 
                        dispersing, reusing, reclaiming, and recycling 
                        wastewater;
                            (ii) system design;
                            (iii) nonstructural alternatives;
                            (iv) assessment;
                            (v) water efficiency; and
                            (vi) water security.
            (3) Authorization of appropriations.--There is authorized 
        to be appropriated to carry out this subsection $20,000,000 for 
        each of fiscal years 2003 through 2007.
    (f) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section (other than subsection (e)) 
$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 Administrator of the Environmental Protection Agency 
shall enter into a contract with the National Academy of Sciences for, 
and 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 of measuring the cost to 
                consumers of services provided by public water systems 
                and treatment works;
                    (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;
                    (E) identify any incentive rate systems that have 
                been successful in significantly reducing--
                            (i) per capita water demand;
                            (ii) the volume of wastewater flows;
                            (iii) the volume of stormwater runoff; or
                            (iv) the quantity of pollution generated by 
                        stormwater; and
                    (F) 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 
                        services provided to consumers by public water 
                        systems and treatment works; and
                            (ii) takes into consideration the needs of 
                        disadvantaged individuals and communities, as 
                        identified by the Administrator.
            (2) Affordability.--With respect to consumer affordability 
        of services provided by public water systems and treatment 
        works, the study shall--
                    (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--
                    (A) survey a cross-section of States representing 
                various populations, income levels, 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 the characteristics 
described in subsection (b)(3)(A).
    (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. STATE REVOLVING FUND REVIEW PROCESS.

    As soon as practicable after the date of enactment of this Act, the 
Administrator of the Environmental Protection Agency shall--
            (1) consult with States, treatment works, and public water 
        systems to identify ways to streamline and improve the 
        application and review process for the provision of assistance 
        from--
                    (A) the State water pollution revolving fund under 
                title VI of the Federal Water Pollution Control Act (33 
                U.S.C. 1381 et seq.); and
                    (B) the State drinking water revolving fund under 
                section 1452 of the Safe Drinking Water Act (42 U.S.C. 
                300j-12); and
            (2) submit to Congress a report, based on the information 
        identified under paragraph (1), that contains recommendations 
        for streamlining and improving the application and review 
        process described in that paragraph.

SEC. 305. TRANSFER OF FUNDS.

    (a) Water Pollution Control Fund.--Section 603 of the Federal Water 
Pollution Control Act (33 U.S.C. 1383) (as amended by section 103(h)) 
is amended by adding at the end the following:
    ``(m) Transfer of Funds.--
            ``(1) In general.--A Governor of the State may--
                    ``(A)(i) reserve up to 33 percent of a 
                capitalization grant made under this title for a fiscal 
                year;
                    ``(ii) 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
                    ``(iii) use the funds to carry out that section; 
                and
                    ``(B)(i) reserve in any fiscal year an amount up to 
                the amount that may be reserved under subparagraph (A) 
                for that fiscal year from capitalization grants made 
                under section 1452 of that Act (42 U.S.C. 300j-12);
                    ``(ii) add the reserved funds to any funds provided 
                to the State under this title; and
                    ``(iii) use the funds to carry out 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)) (as amended by section 204(d)) is 
amended--
            (1) in paragraph (2), by striking ``4'' and inserting 
        ``6''; and
            (2) by adding at the end the following:
            ``(6) Transfer of funds.--
                    ``(A) In general.--A Governor of the State may--
                            ``(i)(I) reserve up to 33 percent of a 
                        capitalization grant made under this section 
                        for a fiscal year;
                            ``(II) 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
                            ``(III) use the funds to carry out that 
                        section; and
                            ``(ii)(I) reserve in any fiscal year an 
                        amount up to the amount that may be reserved 
                        under clause (i) for that fiscal year from 
                        capitalization grants made under section 601 of 
                        that Act (33 U.S.C. 1381);
                            ``(II) add the reserved funds to any funds 
                        provided to the State under this section; and
                            ``(III) use the funds to carry out 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)).''.

                   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 
        (including 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) provide indicators of the status and trends 
                of--
                            (i) fresh water in rivers and reservoirs;
                            (ii) groundwater levels and volume of fresh 
                        water stored in aquifers; and
                            (iii) fresh water withdrawn from streams 
                        and aquifers in the United States; and
                    (B) provide those indicators for--
                            (i) watersheds defined by the 352 
                        hydrologic accounting units of the United 
                        States; and
                            (ii) major aquifers of the United States, 
                        as identified by the Secretary.
            (3) Report.--Not later than 1 year after the date of 
        completion of the assessment, and every 2 years thereafter, the 
        Secretary shall submit to Congress a report on the status of 
        implementation of any policies or procedures relating to 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.

                         TITLE V--MISCELLANEOUS

SEC. 501. NUTRIENT CONTROL TECHNOLOGY GRANT PROGRAM.

    The Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.) is 
amended by adding at the end the following:

                       ``TITLE VII--MISCELLANEOUS

``SEC. 701. NUTRIENT CONTROL TECHNOLOGY GRANT PROGRAM.

    ``(a) Definition of Eligible Facility.--In this section, the term 
`eligible facility' means a municipal wastewater treatment works that, 
as of the date of enactment of this title, has a permitted design 
capacity to treat an annual average of 500,000 gallons or more of 
wastewater per day.
    ``(b) Grant Program.--
            ``(1) Establishment.--Subject to subsections (c) and (d), 
        not later than 1 year after the date of enactment of this 
        title, the Administrator shall establish within the 
        Environmental Protection Agency a program to provide grants to 
        States and municipalities to upgrade the nutrient removal 
        technologies of eligible facilities.
            ``(2) Priority.--In providing grants under paragraph (1), 
        the Administrator shall give priority to eligible facilities at 
        which nutrient removal technology upgrades would result in the 
        greatest environmental benefits.
            ``(3) Application.--
                    ``(A) In general.--A State or municipality that 
                seeks to receive a grant under this section shall 
                submit to the Administrator an application that is in 
                such form, and that includes such information, as the 
                Administrator may require.
                    ``(B) Provision of assistance.--Subject to 
                subsections (c) and (d), on receipt and approval of an 
                application submitted under subparagraph (A), the 
                Administrator shall provide to the State or 
                municipality that submits the application a grant in an 
                amount that does not exceed the amount requested in the 
                application.
            ``(4) Use of funds.--A State or municipality that receives 
        a grant under this section shall use the funds from the grant 
        to upgrade the nutrient removal technologies of eligible 
        facilities in the State or municipality to nutrient removal 
        technologies that are designed to reduce total nitrogen in 
        discharged wastewater to an average annual concentration of not 
        more than 4 milligrams per liter or the limit of nutrient 
        removal technologies in a particular geographical area, 
        whichever is less.
            ``(5) Cost sharing.--The share of the total cost of 
        upgrading any eligible facility as described in paragraph (1) 
        using funds provided under this section shall not exceed 55 
        percent.
    ``(c) Available Funds.--The Administrator shall carry out the 
program established under subsection (b)(1) for a fiscal year only if 
the amount of funds made available for capitalization grants under 
title VI for the fiscal year exceeds $1,350,000,000.
    ``(d) Authorization of Appropriations.--
            ``(1) In general.--There is authorized to be appropriated 
        to carry out this section $100,000,000 for each of fiscal years 
        2003 through 2007, to remain available until expended.
            ``(2) Administrative costs.--The Administrator may use not 
        to exceed 4 percent of any amount made available under 
        paragraph (1) to pay administrative costs incurred in carrying 
        out this section.''.

SEC. 502. EFFECTS ON POLICIES AND RIGHTS.

    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.

SEC. 503. EFFECTIVE DATE.

    Except as otherwise specifically provided in this Act, this Act and 
the amendments made by this Act take effect on October 1, 2002.




                                                       Calendar No. 527

107th CONGRESS

  2d Session

                                S. 1961

                          [Report No. 107-228]

_______________________________________________________________________

                                 A BILL

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

_______________________________________________________________________

                             July 29, 2002

                       Reported with an amendment