[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2813 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 2813

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 29, 2002

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

_______________________________________________________________________

                                 A BILL


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

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

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

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

Sec. 201. Planning, design, and preconstruction costs; use of State 
                            loan funds for security purposes.
Sec. 202. State loan fund.
Sec. 203. Assistance for disadvantaged communities.
Sec. 204. Private utilities.
Sec. 205. Technical assistance for small systems.
Sec. 206. Authorization of appropriations.
      TITLE III--INNOVATIONS IN FUND AND WATER QUALITY MANAGEMENT

Sec. 301. Transfer of funds.
Sec. 302. Demonstration program for water quality enhancement and 
                            management.
Sec. 303. Rate study.
Sec. 304. State loan fund review process.
Sec. 305. Effects on policies and rights.
                   TITLE IV--WATER RESOURCE PLANNING

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

SEC. 2. PURPOSES.

    The purposes of this Act are--
            (1) to modernize State water pollution control revolving 
        funds and the allocation for those funds to ensure that the 
        funds distributed reflect water quality needs;
            (2) to maximize use of Federal funds and encourage maximum 
        efficiency for States and localities; and
            (3) to recognize the national environmental and public 
        health importance of maintaining the drinking water and waste 
        water infrastructure of the United States.

       TITLE I--FEDERAL WATER POLLUTION CONTROL ACT MODIFICATIONS

SEC. 101. DEFINITIONS.

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

SEC. 102. FUNDING FOR INDIAN PROGRAMS.

    Section 518 of the Federal Water Pollution Control Act (33 U.S.C. 
1377) is amended by striking subsection (c) and inserting the 
following:
    ``(c) Reservation of Funds.--
            ``(1) In general.--For fiscal year 1987 and each fiscal 
        year thereafter, the Administrator shall reserve, before 
        allocations to the States under section 604(a), not less than 
        0.5 percent nor more than 1.5 percent of the funds made 
        available under section 207.
            ``(2) Use of funds.--Funds reserved under this subsection 
        shall be available only for grants for the development of waste 
        treatment management plans and for the construction of sewage 
        treatment works to serve--
                    ``(A) Indian tribes;
                    ``(B) former Indian reservations in Oklahoma (as 
                determined by the Secretary of the Interior); and
                    ``(C) Native villages (as defined in section 3 of 
                the Alaska Native Claims Settlement Act (43 U.S.C. 
                1602)).''.

SEC. 103. REQUIREMENTS FOR RECEIPT OF FUNDS.

    (a) Grants to States for Establishment of Revolving Funds.--Section 
601(a) of the Federal Water Pollution Control Act (33 U.S.C. 1381(a)) 
is amended by striking ``for providing assistance (1)'' and all that 
follows and inserting the following: ``for providing assistance for 
eligible projects in accordance with section 603(c).''.
    (b) Projects Eligible for Assistance.--Section 603 of the Federal 
Water Pollution Control Act (33 U.S.C. 1383) is amended by striking 
subsection (c) and inserting the following:
    ``(c) Projects Eligible for Assistance.--
            ``(1) In general.--Funds available to each State water 
        pollution control revolving fund shall be used only for--
                    ``(A) providing financial assistance to a 
                municipality, intermunicipal, interstate, or State 
                agency, or private utility, for construction (including 
                costs for planning, design, associated preconstruction) 
                of treatment works (as defined in section 212);
                    ``(B) implementation of a management program 
                established under section 319;
                    ``(C) development and implementation of a 
                conservation and management plan under section 320;
                    ``(D) water conservation projects or activities 
                that provide a water quality benefit;
                    ``(E) reuse, reclamation, or recycling projects 
                that provide a water quality benefit; or
                    ``(F) improvements to the security of 
                infrastructure systems and treatment works.
            ``(2) Maintenance of fund.--
                    ``(A) In general.--The fund shall be established, 
                maintained, and credited with repayments.
                    ``(B) Availability.--Any balances in the fund shall 
                be available in perpetuity for providing financial 
                assistance described in paragraph (1).
            ``(3) Approaches.--Projects eligible to receive assistance 
        from a State water pollution control revolving fund under this 
        title may include projects that--
                    ``(A) provide a water quality benefit; and
                    ``(B) use 1 or more nontraditional approaches (such 
                as low-impact development technologies, redevelopment 
                of waterfront brownfields, watershed management 
                actions, decentralized wastewater treatment 
                innovations, and other nonpoint best management 
                practices).''.
    (c) Extension of Loans; Types of Assistance.--Section 603(d) of the 
Federal Water Pollution Control Act (33 U.S.C. 1383(d)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A), by striking ``, at terms 
                not to exceed 20 years'';
                    (B) by striking subparagraph (B) and inserting the 
                following:
                    ``(B)(i) annual principal and interest payments 
                shall commence not later than 1 year after the date of 
                completion of any project for which the loan was made; 
                and
                    ``(ii) except as provided in subparagraph (C), each 
                loan shall be fully amortized not later than 30 years 
                after the date of completion of the project for which 
                the loan is made;'';
                    (C) by redesignating subparagraphs (C) and (D) as 
                subparagraphs (D) and (E), respectively;
                    (D) by inserting after subparagraph (B) the 
                following:
                    ``(C) in the case of a disadvantaged community, a 
                State may provide an extended term for a loan if the 
                extended term--
                            ``(i) terminates not later than the date 
                        that is 30 years after the date of completion 
                        of the project; and
                            ``(ii) does not exceed the expected design 
                        life of the project.'';
                    (E) in subparagraph (D) (as redesignated by 
                subparagraph (C)), by inserting ``, or, in the case of 
                a privately owned system, demonstrate that adequate 
                security exists,'' after ``revenue''; and
                    (F) in subparagraph (E) (as redesignated by 
                subparagraph (C)), by inserting ``State loan'' before 
                ``fund'';
            (2) in paragraph (6), by striking ``and'' at the end;
            (3) by redesignating paragraph (7) as paragraph (8);
            (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 technical, managerial, and financial 
                capacity in accordance with subsection (i); or
                    ``(B) to a disadvantaged community, or to a 
                community or entity that the State expects to 
                experience significant financial difficulties and 
                unaffordable rate increases in order to meet the 
                requirements of this Act (including regulations 
                promulgated under this Act), that receives a loan from 
                the State under this title; and''; and
            (5) in paragraph (8) (as redesignated by paragraph (3)), by 
        striking ``that such amounts shall not exceed 4'' and inserting 
        ``that, beginning in fiscal year 2003, those amounts shall not 
        exceed 5''.
    (d) Limitations.--Section 603(e) of the Federal Water Pollution 
Control Act (33 U.S.C. 1383(e)) is amended--
            (1) by striking ``(e)'' and all that follows through ``If a 
        State'' and inserting the following:
    ``(e) Limitations.--
            ``(1) Prevention of double benefits.--If a State''; and
            (2) by adding at the end the following:
            ``(2) Total amount of subsidies.--For each fiscal year, the 
        total amount of loan subsidies made by a State under subsection 
        (d)(7) may not exceed 30 percent of the amount of all 
        capitalization grants received by the State for the fiscal 
        year.''.
    (e) Additional Requirements for Water Pollution Control Revolving 
Funds.--Section 603 of the Federal Water Pollution Control Act (33 
U.S.C. 1383) is amended by adding at the end the following:
    ``(i) Technical, Managerial, and Financial Capacity for Optimal 
Performance.--
            ``(1) Definition of state agency.--In this subsection, the 
        term `State agency' means the agency of a State having 
        jurisdiction over water quality management (including the 
        establishment of water quality standards).
            ``(2) Strategy.--
                    ``(A) In general.--Not later than 3 years after the 
                date of enactment of this subsection, each State agency 
                shall implement a strategy to assist treatment works, 
                as needed in the State receiving assistance under this 
                title, in--
                            ``(i) attaining and maintaining technical, 
                        managerial, operations, maintenance, and 
                        capital investments; and
                            ``(ii) meeting and sustaining compliance 
                        with applicable Federal and State laws.
                    ``(B) Requirements.--In preparing the strategy 
                described in subparagraph (A), the State shall 
                consider, solicit public comment on, and include in the 
                strategy a description of the manner in which the State 
                intends to use the authorities and resources of the 
                State to assist  treatment works in attaining and 
maintaining technical, managerial, and financial capacity.
            ``(3) Condition for receipt of assistance.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B) and subsection (l), 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, in the aggregate, more than 
                $500,000 under this title in any fiscal year to certify 
                to the State that the treatment works has adequate 
                technical, managerial, and financial capacity, 
                including the establishment and implementation by the 
                treatment works of an asset management plan that--
                            ``(i) conforms to generally accepted 
                        industry practices; and
                            ``(ii) includes--
                                    ``(I) an inventory of existing 
                                assets (including an estimate of the 
                                useful life of those assets); and
                                    ``(II) an optimal schedule of 
                                operations, maintenance, and capital 
                                investment required to meet and sustain 
                                performance objectives for the 
                                treatment works established in 
                                accordance with applicable Federal and 
                                State laws over the useful life of the 
                                treatment works.
                    ``(B) Exception.--Notwithstanding subparagraph (A), 
                a treatment works may receive assistance under this 
                title if the State determines that the assistance would 
                enable the treatment works to attain adequate 
                technical, managerial, and financial capacity.
    ``(j) Restructuring.--Notwithstanding section 204(b)(1), except as 
provided in subsections (k) and (l), 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 certifies to the State 
that the recipient has considered--
            ``(1) consolidating management functions or ownership with 
        another facility;
            ``(2) forming cooperative partnerships; and
            ``(3) using nonstructural alternatives or technologies that 
        may be more environmentally sensitive.
    ``(k) Rate Structure.--As a condition of the receipt of funds for a 
project under this title, a recipient shall certify to the State that 
the recipient has in effect--
            ``(1) a plan to achieve, within a reasonable period of 
        time, a rate structure that, to the maximum extent 
        practicable--
                    ``(A) reflects the actual cost of service provided 
                by the recipient; and
                    ``(B) addresses capital replacement funds; and
            ``(2) not later than the date of completion of the project, 
        an asset management plan described in subsection (i)(3).
    ``(l) Exemption for Assistance Solely for Planning, Design, 
Preconstruction, and Security Activities.--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 planning, design, preconstruction, 
or security activities.
    ``(m) 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, preliminary engineering evaluations, 
        and rural community assistance programs) 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 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 $10,000,000 for 
        each of fiscal years 2003 through 2007.
    ``(n) Priority.--In making a loan under this section, a State may 
give priority to a disadvantaged community.''.
    (f) Allotment of Funds.--Section 604(a) of the Federal Water 
Pollution Control Act (33 U.S.C. 1384(a)) is amended by striking 
subsection (a) and inserting the following:
    ``(a) Formula.--
            ``(1) Definition of state.--In this subsection, the term 
        `State' means--
                    ``(A) a State; and
                    ``(B) the District of Columbia.
            ``(2) Allocation.--Funds made available to carry out this 
        title for each of fiscal years 2003 through 2006 shall be 
        allocated by the Administrator 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 percent of available 
        funds.
            ``(3) Private utilities.--If a State elects to include the 
        needs of private utilities in a needs survey used to develop 
        the allocation formula described in paragraph (2), the State 
shall include projects of the private utilities on the list of projects 
of the State that are eligible to receive funds under this title for 
each year covered by the needs survey.''.
    (g) 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), by striking paragraph (1) and 
        inserting the following:
            ``(1) a summary of the priority projects developed under 
        section 603(g) for which the State intends to provide 
        assistance from the water pollution control revolving fund of 
        the State for the year covered by the plan;''; and
            (2) in subsection (d)--
                    (A) in the subsection heading, by striking 
                ``Report'' and inserting ``Reports'';
                    (B) by striking ``Beginning the'' and inserting the 
                following:
            ``(1) In general.--Beginning in the''; and
                    (C) by adding at the end the following:
            ``(2) Report on technical, managerial, and financial 
        capacity.--Not later than 2 years after the date on which a 
        State first adopts a strategy in accordance with section 
        603(j)(2), the State shall submit to the Administrator a report 
        on the progress made in improving the technical, managerial, 
        and financial capacity of treatment works in the State 
        (including the progress of the State in complying with the 
        amendments to section 603 made by the Water Investment Act of 
        2002).
            ``(3) Availability.--A State that submits a report under 
        this subsection shall make the report available to the 
        public.''.
    (h) Authorization of Appropriations.--The Federal Water Pollution 
Control Act is amended by striking section 607 (33 U.S.C. 1387) and 
inserting the following:

``SEC. 607. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) In General.--There are authorized to be appropriated to carry 
out this title--
            ``(1) $3,200,000,000 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) 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 $500,000 per year to pay the 
costs of conducting needs surveys under section 516(2).''.
    (i) Conforming Amendment.--Section 216 of the Federal Water 
Pollution Control Act (33 U.S.C. 1296) is amended by striking ``Not 
less than 25 per centum'' and all that follows.
    (j) No New Cause of Action.--Nothing in this section or in any 
amendment made by this section establishes any new cause of action, or 
affects any cause of action in existence as of the date of enactment of 
this Act, for the purposes of judicial review under the Federal Water 
Pollution Control Act (33 U.S.C. 1251 et seq.).

            TITLE II--SAFE DRINKING WATER ACT MODIFICATIONS

SEC. 201. PLANNING, DESIGN, AND PRECONSTRUCTION COSTS; USE OF STATE 
              LOAN FUNDS FOR SECURITY PURPOSES.

    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 striking ``(not'' and 
        inserting ``(including planning, design, and associated 
        preconstruction expenditures but not''; and
            (2) in the third sentence, by inserting before the period 
        at the end the following: ``, or used by any public water 
        system for the purpose of carrying out a project or activity to 
        increase the security of the public water system''.

SEC. 202. STATE 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) Types of Assistance.--Section 1452(f) of the Safe Drinking 
Water Act (42 U.S.C. 300j-12(f)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (B)--
                            (i) by striking ``20'' and inserting 
                        ``30''; and
                            (ii) by striking ``project, except'' and 
                        all that follows and inserting the following: 
                        ``project, except that in the case of a 
                        disadvantaged community (as defined in 
                        subsection (d)(3)), a State may provide an 
                        extended term for a loan, if the extended term 
                        does not exceed the expected life of the 
                        project; and'';
                    (B) in subparagraph (C), by striking ``and'' at the 
                end; and
                    (C) by adding at the end the following:
                    ``(E) during the planning and engineering phase of 
                each project for which the loan funds are received, the 
                recipient of the loan funds certifies to the State that 
                the recipient of the loan funds has considered--
                            ``(i) consolidating management functions or 
                        ownership with another facility;
                            ``(ii) forming cooperative partnerships; 
                        and
                            ``(iii) using nonstructural alternatives or 
                        technologies that may be more environmentally 
                        sensitive; and
                    ``(F) during the planning and engineering phase of 
                each project for which a recipient receives loan funds 
                in excess of $500,000, the recipient certifies to the 
                State that the recipient has in effect--
                            ``(i) 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
                            ``(ii) an asset management plan (for which 
                        the Administrator may provide information to 
                        assist States in determining plan 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;'';
            (2) in paragraph (4), by striking ``and'' at the end;
            (3) in paragraph (5), by striking the period at the end and 
        inserting ``; and''; and
            (4) by adding at the end the following:
            ``(6) to reduce costs incurred by a municipality in issuing 
        bonds.''.
    (c) Other Authorized Activities.--Section 1452(k)(1) of the Safe 
Drinking Water Act (42 U.S.C. 300j-12(k)(1)) is amended by striking 
subparagraph (D) and inserting the following:
                    ``(D) Make expenditures for the development of 
                source water protection programs (including wellhead 
                protection programs under section 1428).''.
    (d) No New Cause of Action.--Nothing in this section or in any 
amendment made by this section establishes any new cause of action, or 
affects any cause of action in existence as of the date of enactment of 
this Act, for the purposes of judicial review under the Safe Drinking 
Water Act (42 U.S.C. 300f et seq.).
    (e) Planning, Design, and Security Assistance.--Nothing in this 
section or in any amendment made by this section applies to assistance 
provided under section 1452 of the Safe Drinking Water Act (42 U.S.C. 
300j-12) that is to be used solely for any planning, design, or 
security measure (as defined by a State in coordination with guidance 
issued by the Administrator of the Environmental Protection Agency) 
carried out with respect to a public water system under section 1452 of 
that Act.

SEC. 203. ASSISTANCE FOR DISADVANTAGED COMMUNITIES.

    Section 1452(d)(1) of the Safe Drinking Water Act (42 U.S.C. 300j-
12(d)(1)) is amended by striking ``to a community that the State 
expects to become a disadvantaged community as the result of a proposed 
project'' and inserting the following: ``a community or entity that the 
State expects to experience significant financial difficulties and 
unaffordable rate increases in order to meet the requirements of this 
title (including regulations promulgated under this title), that 
receives a loan from the State under this title''.

SEC. 204. PRIVATE UTILITIES.

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

SEC. 205. 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 $8,000,000 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 $8,000,000 for 
        each of fiscal years 2003 through 2007.''.

SEC. 206. 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) 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 
        $500,000 per year to pay the costs of conducting needs surveys 
        under subsection (h).''.

      TITLE III--INNOVATIONS IN FUND AND WATER QUALITY MANAGEMENT

SEC. 301. TRANSFER OF FUNDS.

    (a) Water Pollution Control Fund.--Section 603 of the Federal Water 
Pollution Control Act (33 U.S.C. 1383) (as amended by section 103(e)) 
is amended by adding at the end the following:
    ``(o) Transfer of Funds.--
            ``(1) In general.--A Governor of the State may--
                    ``(A) reserve up to 33 percent of a capitalization 
                grant made under this title and add the funds reserved 
                to any funds provided to the State under section 1452 
                of the Safe Drinking Water Act (42 U.S.C. 300j-12); and
                    ``(B) reserve in any year an amount up to the 
                amount that may be reserved under subparagraph (A) for 
                that year from capitalization grants made under section 
                1452 of that Act (42 U.S.C. 300j-12) and add the 
                reserved funds to any funds provided to the State under 
                this title.
            ``(2) State match.--Funds reserved under this subsection 
        shall not be considered to be a State contribution for a 
        capitalization grant required under this title or section 
        1452(b) of the Safe Drinking Water Act (42 U.S.C. 300j-
        12(b)).''.
    (b) Safe Drinking Water Fund.--Section 1452(g) of the Safe Drinking 
Water Act (42 U.S.C. 300j-12(g)) (as amended by section 202(c)) is 
amended--
            (1) in paragraph (2), by striking ``4'' and inserting 
        ``5''; and
            (2) by adding at the end the following:
            ``(6) Transfer of funds.--
                    ``(A) In general.--A Governor of the State may--
                            ``(i) reserve up to 33 percent of a 
                        capitalization grant made under this section 
                        and add the funds reserved to any funds 
                        provided to the State under section 601 of the 
                        Federal Water Pollution Control Act (33 U.S.C. 
                        1381); and
                            ``(ii) reserve in any year an amount up to 
                        the amount that may be reserved under clause 
                        (i) for that year from capitalization grants 
                        made under section 601 of that Act (33 U.S.C. 
                        1381) and add the reserved funds to any funds 
                        provided to the State under this section.
                    ``(B) State match.--Funds reserved under this 
                paragraph shall not be considered to be a State match 
                of a capitalization grant required under this section 
                or section 602(b) of the Federal Water Pollution 
                Control Act (33 U.S.C. 1382(b)).''.

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

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

SEC. 303. RATE STUDY.

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

SEC. 304. STATE LOAN 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 that, based on the 
        information identified under paragraph (1), contains 
        recommendations for streamlining and improving the application 
        and review process described in that paragraph.

SEC. 305. EFFECTS ON POLICIES AND RIGHTS.

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

                   TITLE IV--WATER RESOURCE PLANNING

SEC. 401. FINDINGS.

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

SEC. 402. DEFINITION OF SECRETARY.

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

SEC. 403. ACTIONS.

    (a) Assessment.--
            (1) In general.--Not later than 2 years after the date of 
        enactment of this Act and periodically thereafter, the 
        Secretary shall conduct an assessment of the state of water 
        resources in the United States.
            (2) Components.--An assessment under paragraph (1) shall, 
        at a minimum, determine the status and trends of--
                    (A) fresh water in waterways and reservoirs;
                    (B)(i) groundwater; and
                    (ii) fresh water stored in aquifers; and
                    (C) withdrawals of fresh water from waterways and 
                aquifers.
            (3) Report.--On completion of each assessment under 
        paragraph (1), the Secretary shall submit to Congress a report 
        that describes the results of the assessment.
    (b) Water Resource Research Priorities.--
            (1) In general.--The Secretary shall coordinate a process 
        among Federal agencies (including the Environmental Protection 
        Agency) to develop and publish, not later than 1 year after the 
        date of enactment of this Act, a list of water resource 
        research priorities that focuses on--
                    (A) monitoring; and
                    (B) improving the quality of the information 
                available to State, tribal, and local water resource 
                managers.
            (2) Use of list.--The list published under paragraph (1) 
        shall be used by Federal agencies as a guide in making 
        decisions on the allocation of water research funding.
    (c) Information Delivery System.--
            (1) In general.--The Secretary shall coordinate a process 
        to develop an effective information delivery system to 
        communicate information described in paragraph (2) to--
                    (A) decisionmakers at the Federal, regional, State, 
                tribal, and local levels;
                    (B) the private sector; and
                    (C) the general public.
            (2) Types of information.--The information referred to in 
        paragraph (1) may include--
                    (A) the results of the national water resource 
                assessment;
                    (B) a summary of the Federal water research 
                priorities developed under subsection (b);
                    (C) near real-time data and other information on 
                water shortages and surpluses;
                    (D) planning models for water shortages or 
                surpluses (at various levels, such as State, river 
                basin, and watershed levels);
                    (E) streamlined procedures for States and 
                localities to interact with and obtain assistance from 
                Federal agencies that perform water resource functions; 
                and
                    (F) other materials, as determined by the 
                Secretary.

SEC. 404. REPORT TO CONGRESS.

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

SEC. 405. AUTHORIZATION OF APPROPRIATIONS.

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