[Congressional Record (Bound Edition), Volume 151 (2005), Part 19]
[Senate]
[Pages 26240-26248]
[From the U.S. Government Publishing Office, www.gpo.gov]


                     RURAL WATER SUPPLY ACT OF 2005

  The Senate proceeded to consider the bill (S. 895) to direct the 
Secretary of the Interior to establish a rural water supply program in 
the Reclamation States to provide a clean, safe, affordable, and 
reliable water supply to rural residents, which had been reported from 
the Committee on Energy and Natural Resources, with an amendment, as 
follows:
  [Strike the parts shown in black brackets and insert the parts shown 
in italic.]

                                 S. 895

       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 ``Rural 
     Water Supply Act of 2005''.
       [(b) Table of Contents.--The table of contents of this Act 
     is as follows:

[Sec. 1. Short title; table of contents.

          [TITLE I--RECLAMATION RURAL WATER SUPPLY ACT OF 2005

[Sec. 101. Short title.
[Sec. 102. Definitions.
[Sec. 103. Rural water supply program.
[Sec. 104. Rural water programs assessment.
[Sec. 105. Appraisal investigations.
[Sec. 106. Feasibility studies.
[Sec. 107. Miscellaneous.
[Sec. 108. Authorization of appropriations.

            [TITLE II--TWENTY-FIRST CENTURY WATER WORKS ACT

[Sec. 201. Short title.
[Sec. 202. Definitions.
[Sec. 203. Project eligibility.
[Sec. 204. Loan guarantees.
[Sec. 205. Operations, maintenance, and replacement costs.
[Sec. 206. Title to newly constructed facilities.
[Sec. 207. Water rights.
[Sec. 208. Interagency coordination and cooperation.
[Sec. 209. Authorization of appropriations.

          [TITLE I--RECLAMATION RURAL WATER SUPPLY ACT OF 2005

     [SEC. 101. SHORT TITLE.

       [This title may be cited as the ``Reclamation Rural Water 
     Supply Act of 2005''.

     [SEC. 102. DEFINITIONS.

       [In this title:
       [(1) Federal reclamation law.--The term ``Federal 
     reclamation law'' means the Act of June 17, 1902 (32 Stat. 
     388, chapter 1093), and Acts supplemental to and amendatory 
     of that Act (43 U.S.C. 371 et seq.).
       [(2) Indian.--The term ``Indian'' means an individual who 
     is a member of an Indian tribe.
       [(3) Indian tribe.--The term ``Indian tribe'' has the 
     meaning given the term in section 4 of the Indian Self-
     Determination and Education Assistance Act (25 U.S.C. 450b).
       [(4) Non-federal project entity.--The term ``non-Federal 
     project entity'' means a State, regional, or local authority, 
     Indian tribe or tribal organization, or other qualifying 
     entity, such as a water conservation district, water 
     conservancy district, or rural water district or association.
       [(5) Operations, maintenance, and replacement costs.--
       [(A) In general.--The term ``operations, maintenance, and 
     replacement costs'' means all costs for the operation of a 
     rural water supply project that are necessary for the safe, 
     efficient, and continued functioning of the project to 
     produce the benefits described in a feasibility study.
       [(B) Inclusions.--The term ``operations, maintenance, and 
     replacement costs'' includes--
       [(i) repairs of a routine nature that maintain a rural 
     water supply project in a well kept condition;
       [(ii) replacement of worn-out project elements; and
       [(iii) rehabilitation activities necessary to bring a 
     deteriorated project back to the original condition of the 
     project.
       [(C) Exclusion.--The term ``operations, maintenance, and 
     replacement costs'' does not include construction costs.
       [(6) Program.--The term ``program'' means the rural water 
     supply program established under section 103.
       [(7) Reclamation states.--The term ``reclamation States'' 
     means the States and areas referred to in the first section 
     of the Act of June 17, 1902 (43 U.S.C. 391).
       [(8) Rural water supply project.--
       [(A) In general.--The term ``rural water supply project'' 
     means a project that is designed to serve a group of 
     communities, which may include Indian tribes and tribal 
     organizations, dispersed homesites, or rural areas with 
     domestic, industrial, municipal, and residential water, each 
     of which has a population of not more than 50,000 
     inhabitants.
       [(B) Inclusion.--The term ``rural water supply project'' 
     includes--
       [(i) incidental noncommercial livestock watering and 
     noncommercial irrigation of vegetation and small gardens of 
     less than 1 acre; and
       [(ii) a project to improve rural water infrastructure, 
     including--

       [(I) pumps, pipes, wells, and other diversions;
       [(II) storage tanks and small impoundments;
       [(III) water treatment facilities for potable water 
     supplies;
       [(IV) equipment and management tools for water 
     conservation, groundwater recovery, and water recycling; and
       [(V) appurtenances.

       [(C) Exclusion.--The term ``rural water supply project'' 
     does not include--
       [(i) commercial irrigation; or
       [(ii) major impoundment structures.
       [(9) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.

[[Page 26241]]

       [(10) Tribal organization.--The term ``tribal 
     organization'' means--
       [(A) the recognized governing body of an Indian tribe; and
       [(B) any legally established organization of Indians that 
     is controlled, sanctioned, or chartered by the governing body 
     or democratically elected by the adult members of the Indian 
     community to be served by the organization.

     [SEC. 103. RURAL WATER SUPPLY PROGRAM.

       [(a) In General.--The Secretary, in cooperation with non-
     Federal project entities and consistent with this title, 
     shall establish and carry out a rural water supply program in 
     reclamation States to--
       [(1) investigate and identify opportunities to ensure safe 
     and adequate rural water supply projects for municipal and 
     industrial use in small communities and rural areas of the 
     reclamation States; and
       [(2) plan the design and construction, through the conduct 
     of appraisal investigations and feasibility studies, of rural 
     water supply projects in reclamation States.
       [(b) Non-Federal Project Entity.--Any activity carried out 
     under this title shall be carried out in cooperation with a 
     qualifying non-Federal project entity, consistent with this 
     title.
       [(c) Eligibility Criteria.--Not later than 1 year after the 
     date of enactment of this Act, the Secretary shall, 
     consistent with this title, develop and publish in the 
     Federal Register criteria for--
       [(1) determining the eligibility of a rural community for 
     assistance under the program; and
       [(2) prioritizing requests for assistance under the 
     program.
       [(d) Factors.--The criteria developed under subsection (c) 
     shall take into account such factors as whether--
       [(1) a rural water supply project--
       [(A) serves--
       [(i) rural areas and small communities; or
       [(ii) Indian tribes; or
       [(B) promotes and applies a regional or watershed 
     perspective to water resources management;
       [(2) there is an urgent and compelling need for a rural 
     water supply project that would--
       [(A) improve the health or aesthetic quality of water;
       [(B) result in continuous, measurable, and significant 
     water quality benefits; or
       [(C) address current or future water supply needs;
       [(3) a rural water supply project helps meet applicable 
     requirements established by law; and
       [(4) a rural water supply project is cost effective.
       [(e) Inclusions.--The Secretary may include--
       [(1) to the extent that connection provides a reliable 
     water supply, a connection to preexisting infrastructure 
     (including dams and conveyance channels) as part of a rural 
     water supply project; and
       [(2) notwithstanding the limitation in section 102(8), a 
     town or community with a population in excess of 50,000 
     inhabitants in an area served by a rural water supply project 
     if, at the discretion of the Secretary, the town or community 
     is considered to be a critical partner in the rural supply 
     project.

     [SEC. 104. RURAL WATER PROGRAMS ASSESSMENT.

       [(a) In General.--In consultation with the Secretary of 
     Agriculture, the Administrator of the Environmental 
     Protection Agency, and the Director of the Indian Health 
     Service, the Secretary shall develop an assessment of--
       [(1) the status of all rural water supply projects under 
     the jurisdiction of the Secretary authorized but not 
     completed prior to the date of enactment of this Act, 
     including appropriation amounts, the phase of development, 
     total anticipated costs, and obstacles to completion;
       [(2) the current plan (including projected financial and 
     workforce requirements) for the completion of the rural water 
     supply projects within the time frames established under the 
     provisions of law authorizing the projects or the final 
     engineering reports for the projects;
       [(3) the demand for rural water supply projects;
       [(4) programs within other agencies that can, and a 
     description of the extent to which the programs, provide 
     support for rural water supply projects and water treatment 
     programs in reclamation States, including an assessment of 
     the requirements, funding levels, and conditions for 
     eligibility for the programs assessed; and
       [(5) the extent of the unmet needs that the Secretary can 
     meet with the program that complements activities undertaken 
     under the authorities already within the jurisdiction of the 
     Secretary and the heads of the agencies with whom the 
     Secretary consults.
       [(b) Report.--Not later than 2 years after the date of 
     enactment of this Act, the Secretary shall submit to the 
     Committee on Energy and Natural Resources of the Senate and 
     the Committee on Resources of the House of Representatives a 
     detailed report on the assessment conducted under subsection 
     (a).

     [SEC. 105. APPRAISAL INVESTIGATIONS.

       [(a) In General.--On request of a non-Federal project 
     entity with respect to a proposed rural water supply project 
     that meets the eligibility criteria published under section 
     103(c) and subject to the availability of appropriations, the 
     Secretary may--
       [(1) receive and review an appraisal investigation that 
     is--
       [(A) developed by the non-Federal project entity 
     independent of support from the Secretary; and
       [(B) submitted to the Secretary by the non-Federal project 
     entity;
       [(2) conduct an appraisal investigation; or
       [(3) provide a grant to, or enter into a cooperative 
     agreement with, the non-Federal project entity to conduct an 
     appraisal investigation, if the Secretary determines that--
       [(A) the non-Federal project entity is qualified to 
     complete the appraisal investigation in accordance with the 
     criteria published under section 103(c); and
       [(B) using the non-Federal project entity to conduct the 
     appraisal investigation is the lowest cost alternative for 
     completing the appraisal investigation.
       [(b) Deadline.--An appraisal investigation conducted under 
     subsection (a) shall be scheduled for completion not later 
     than 2 years after the date on which the appraisal 
     investigation is initiated.
       [(c) Appraisal Report.--As soon as practicable after an 
     appraisal investigation is submitted to the Secretary under 
     subsection (a)(1) or completed under paragraph (2) or (3) of 
     subsection (a), the Secretary shall prepare an appraisal 
     report that--
       [(1) considers--
       [(A) whether the project meets--
       [(i) the appraisal criteria developed under subsection (d); 
     and
       [(ii) the eligibility criteria developed under section 
     103(c);
       [(B) whether viable water supplies and water rights exist 
     to supply the project, including all practicable water 
     sources such as lower quality waters, nonpotable waters, and 
     water reuse-based water supplies;
       [(C) whether the project has a positive effect on public 
     health and safety;
       [(D) whether the project will meet water demand, including 
     projected future needs;
       [(E) the extent to which the project provides environmental 
     benefits, including source water protection;
       [(F) the ability of the project to supply water consistent 
     with Indian trust responsibilities, as appropriate;
       [(G) whether the project applies a regional or watershed 
     perspective and promotes benefits in the region in which the 
     project is carried out;
       [(H) whether the project--
       [(i)(I) implements an integrated resources management 
     approach; or
       [(II) enhances water management flexibility, including 
     providing for--

       [(aa) local control to manage water supplies under varying 
     water supply conditions; and
       [(bb) participation in water banking and markets for 
     domestic and environmental purposes; and

       [(ii) promotes long-term protection of water supplies;
       [(I) preliminary cost estimates for the project; and
       [(J) whether the non-Federal project entity has the 
     capability to pay 100 percent of the costs associated with 
     the operations, maintenance, and replacement of the 
     facilities constructed or developed as part of the rural 
     water supply project; and
       [(2) provides recommendations on whether a feasibility 
     study should be initiated under section 106(a).
       [(d) Appraisal Criteria.--
       [(1) In general.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary shall promulgate 
     criteria (including appraisal factors listed under subsection 
     (c)) against which the appraisal investigations shall be 
     assessed for completeness and appropriateness for a 
     feasibility study.
       [(2) Inclusions.--To minimize the cost of a rural water 
     supply project to a non-Federal project entity, the Secretary 
     shall include in the criteria methods to scale the level of 
     effort needed to complete the appraisal investigation 
     relative to the total size and cost of the proposed rural 
     water supply project.
       [(e) Review of Appraisal Investigation.--Not later than 180 
     days after the date of submission of an appraisal 
     investigation under subsection (a)(1) or the completion of an 
     appraisal investigation under paragraph (2) or (3) of 
     subsection (a), the Secretary shall--
       [(1) with respect to an appraisal investigation conducted 
     by a non-Federal project entity under subsection (a)(1), 
     provide to the non-Federal entity an evaluation of whether 
     the appraisal investigation satisfies the criteria 
     promulgated under subsection (d);
       [(2) make available to the public, on request, the results 
     of each appraisal investigation conducted under this title; 
     and
       [(3) promptly publish in the Federal Register a notice of 
     the availability of the results.
       [(f) Costs.--
       [(1) Federal share.--The Federal share of an appraisal 
     investigation conducted under subsection (a) shall be 100 
     percent of the total cost of the appraisal investigation, up 
     to $200,000.
       [(2) Non-federal share.--
       [(A) In general.--Except as provided in subparagraph (B), 
     if the cost of conducting an appraisal investigation is more 
     than

[[Page 26242]]

     $200,000, the non-Federal share of the costs in excess of 
     $200,000 shall be 50 percent.
       [(B) Exception.--The Secretary may reduce the non-Federal 
     share required under subparagraph (A) if the Secretary 
     determines that there is an overwhelming Federal interest in 
     the appraisal investigation.
       [(g) Consultation; Identification of Funding Sources.--In 
     conducting an appraisal investigation under subsection 
     (a)(2), the Secretary shall--
       [(1) consult and cooperate with the non-Federal project 
     entity and appropriate State, tribal, regional, and local 
     authorities;
       [(2) consult with the heads of appropriate Federal agencies 
     to--
       [(A) ensure that the proposed rural water supply project 
     does not duplicate a project carried out under the authority 
     of the agency head; and
       [(B) if a duplicate project is being carried out, identify 
     the authority under which the duplicate project is being 
     carried out; and
       [(3) identify what funding sources are available for the 
     proposed rural water supply project.

     [SEC. 106. FEASIBILITY STUDIES.

       [(a) In General.--On completion of an appraisal report 
     under section 105(c) that recommends undertaking a 
     feasibility study and subject to the availability of 
     appropriations, the Secretary shall--
       [(1) in cooperation with a non-Federal project entity, 
     carry out a study to determine the feasibility of the 
     proposed rural water supply project;
       [(2) receive and review a feasibility study that is--
       [(A) developed by the non-Federal project entity 
     independent of support from the Secretary; and
       [(B) submitted to the Secretary by the non-Federal project 
     entity; or
       [(3) provide a grant to, or enter into a cooperative 
     agreement with, a non-Federal project entity to conduct a 
     feasibility study, for submission to the Secretary, if the 
     Secretary determines that--
       [(A) the non-Federal entity is qualified to complete the 
     feasibility study in accordance with the criteria promulgated 
     under subsection (d); and
       [(B) using the non-Federal project entity to conduct the 
     feasibility study is the lowest cost alternative for 
     completing the appraisal investigation.
       [(b) Review of Non-Federal Feasibility Studies.--
       [(1) In general.--In conducting a review of a feasibility 
     study submitted under paragraph (2) or (3) of subsection (a), 
     the Secretary shall--
       [(A) in accordance with the feasibility factors described 
     in subsection (c) and the criteria promulgated under 
     subsection (d), assess the completeness of the feasibility 
     study; and
       [(B) if the Secretary determines that a feasibility study 
     is not complete, notify the non-Federal entity of the 
     determination.
       [(2) Revisions.--If the Secretary determines under 
     paragraph (1)(B) that a feasibility study is not complete, 
     the non-Federal entity shall pay any costs associated with 
     revising the feasibility study.
       [(c) Feasibility Factors.--Feasibility studies authorized 
     or reviewed under this title shall include an assessment of--
       [(1) near- and long-term water demand in the region to be 
     served by the rural water supply project;
       [(2) advancement of public health and safety of any 
     existing rural water supply project and other benefits of the 
     proposed rural water supply project;
       [(3) alternative new water supplies in the study area, 
     including any opportunities to treat and use low-quality 
     water, nonpotable water, water reuse-based supplies, and 
     brackish and saline waters through innovative and 
     economically viable treatment technologies;
       [(4) environmental quality and source water protection 
     issues related to the rural water supply project;
       [(5) innovative opportunities for water conservation in the 
     study area to reduce water use and water system costs, 
     including--
       [(A) nonstructural approaches to reduce the need for the 
     project; and
       [(B) demonstration technologies;
       [(6) the extent to which the project and alternatives take 
     advantage of economic incentives and the use of market-based 
     mechanisms;
       [(7)(A) the construction costs and projected operations, 
     maintenance, and replacement costs of all alternatives; and
       [(B) the economic feasibility and lowest cost method of 
     obtaining the desired results of each alternative, taking 
     into account the Federal cost-share;
       [(8) the availability of guaranteed loans for a proposed 
     rural water supply project;
       [(9) the financial capability of the non-Federal project 
     entity to pay the non-Federal project entity's proportionate 
     share of the design and construction costs and 100 percent of 
     operations, maintenance, and replacement costs, including the 
     allocation of costs to each non-Federal project entity in the 
     case of multiple entities;
       [(10) whether the non-Federal project entity has developed 
     an operations, management, and replacement plan to assist the 
     non-Federal project entity in establishing rates and fees for 
     beneficiaries of the rural water supply project;
       [(11)(A) the non-Federal project entity administrative 
     organization that would implement construction, operations, 
     maintenance, and replacement activities; and
       [(B) the fiscal, administrative, and operational controls 
     to be implemented to manage the project;
       [(12) the extent to which the project addresses Indian 
     trust responsibilities, as appropriate;
       [(13) the extent to which assistance for rural water supply 
     is available under other Federal authorities;
       [(14) the engineering, environmental, and economic 
     activities to be undertaken to carry out the study;
       [(15) the extent to which the project involves partnerships 
     with other State, local, or tribal governments or Federal 
     entities; and
       [(16) in the case of a project intended for Indian tribes 
     and tribal organizations, the extent to which the project 
     addresses the goal of economic self-sufficiency.
       [(d) Feasibility Study Criteria.--
       [(1) In general.--Not later than 18 months after the date 
     of enactment of this Act, the Secretary shall promulgate 
     criteria (including the feasibility factors listed under 
     subsection (c)) under which the feasibility studies shall be 
     assessed for completeness and appropriateness.
       [(2) Inclusions.--The Secretary shall include in the 
     criteria promulgated under paragraph (1) methods to scale the 
     level of effort needed to complete the feasibility assessment 
     relative to the total size and cost of the proposed rural 
     water supply project and reduce total costs to non-Federal 
     entities.
       [(e) Feasibility Report.--
       [(1) In general.--After completion of appropriate 
     feasibility studies for rural water supply projects that 
     address the factors described in subsection (c) and the 
     criteria promulgated under subsection (d), the Secretary 
     shall--
       [(A) develop a feasibility report that includes--
       [(i) a recommendation of the Secretary on--

       [(I) whether the rural water supply project should be 
     authorized for construction; and
       [(II) the appropriate non-Federal share of construction 
     costs, which shall be--

       [(aa) at least 25 percent of the total construction costs; 
     and
       [(bb) determined based on an analysis of the capability-to-
     pay information considered under subsections (c)(9) and (f); 
     and
       [(ii) if the Secretary recommends that the project should 
     be authorized for construction--

       [(I) what amount of grants, loan guarantees, or combination 
     of grants and loan guarantees should be used to provide the 
     Federal cost share;
       [(II) a schedule that identifies the annual operations, 
     maintenance, and replacement costs that should be allocated 
     to each non-Federal entity participating in the rural water 
     supply project; and
       [(III) an assessment of the financial capability of each 
     non-Federal entity participating in the rural water supply 
     project to pay the allocated annual operation, maintenance, 
     and replacement costs for the rural water supply project;

       [(B) submit the report to the Committee on Energy and 
     Natural Resources of the Senate and the Committee on 
     Resources of the House of Representatives;
       [(C) make the report publicly available, along with 
     associated study documents; and
       [(D) publish in the Federal Register a notice of the 
     availability of the results.
       [(f) Capability-To-Pay.--
       [(1) In general.--In evaluating a proposed rural water 
     supply project under this section, the Secretary shall--
       [(A) consider the financial capability of any non-Federal 
     project entities participating in the rural water supply 
     project to pay the capital construction costs of the rural 
     water supply project; and
       [(B) recommend an appropriate Federal share and non-Federal 
     share of the capital construction costs, as determined by the 
     Secretary.
       [(2) Factors.--In determining the financial capability of 
     non-Federal project entities to pay for a rural water supply 
     project under paragraph (1), the Secretary shall evaluate 
     factors for the project area, relative to the State and 
     county average, including--
       [(A) per capita income;
       [(B) median household income;
       [(C) the poverty rate;
       [(D) the ability of the non-Federal project entity to raise 
     tax revenues or assess fees;
       [(E) the strength of the balance sheet of the non-Federal 
     project entity; and
       [(F) the existing cost of water in the region.
       [(3) Indian tribes.--In determining the capability-to-pay 
     of Indian tribe project beneficiaries, the Secretary may 
     consider deferring the collection of all or part of the non-
     Federal construction costs apportioned to Indian tribe 
     project beneficiaries unless or until the Secretary 
     determines that the Indian tribe project beneficiaries should 
     pay--
       [(A) the costs allocated to the beneficiaries; or
       [(B) an appropriate portion of the costs.

[[Page 26243]]

       [(g) Cost-Sharing Requirement.--
       [(1) In general.--Except as otherwise provided in this 
     subsection, the Federal share of the cost of a feasibility 
     study carried out under this section shall not exceed 50 
     percent of the study costs.
       [(2) Form.--The non-Federal share under paragraph (1) may 
     be in the form of any in-kind services that the Secretary 
     determines would contribute substantially toward the conduct 
     and completion of the study.
       [(3) Financial hardship.--The Secretary may increase the 
     Federal share of the costs of a feasibility study if the 
     Secretary determines, based on a demonstration of financial 
     hardship, that the non-Federal participant is unable to 
     contribute at least 50 percent of the costs of the study.
       [(4) Larger communities.--In conducting a feasibility study 
     of a rural water supply system that includes a community with 
     a population in excess of 50,000 inhabitants, the Secretary 
     may require the community to pay a greater percentage of the 
     non-Federal share than that required for communities with 
     less than 50,000 inhabitants.
       [(h) Consultation and Cooperation.--In addition to the non-
     Federal project entity, the Secretary shall consult and 
     cooperate with appropriate Federal, State, tribal, regional, 
     and local authorities during the conduct of each feasibility 
     assessment and development of the feasibility report 
     conducted under this title.

     [SEC. 107. MISCELLANEOUS.

       [(a) Authority of Secretary.--The Secretary may enter into 
     contracts, financial assistance agreements, and such other 
     agreements, and promulgate such regulations, as are necessary 
     to carry out this title.
       [(b) Transfer of Projects.--Nothing in this title 
     authorizes the transfer of pre-existing facilities or pre-
     existing components of any water system from Federal to 
     private ownership or from private to Federal ownership.
       [(c) Federal Reclamation Law.--Nothing in this title 
     supersedes or amends any Federal law associated with a 
     project, or portion of a project, constructed under Federal 
     reclamation law.
       [(d) Interagency Coordination.--The Secretary shall 
     coordinate the program carried out under this title with 
     existing Federal and State rural water and wastewater 
     programs to facilitate the most efficient and effective 
     solution to meeting the water needs of the non-Federal 
     project sponsors.
       [(e) Multiple Indian Tribes.--In any case in which a 
     contract is entered into with, or a grant is made, to an 
     organization to perform services benefitting more than 1 
     Indian tribe under this title, the approval of each such 
     Indian tribe shall be a prerequisite to entering into the 
     contract or making the grant.
       [(f) Ownership of Facilities.--Title to any facility 
     planned, designed, and recommended for construction under 
     this title is intended to be held by the non-Federal project 
     entity.
       [(g) Effect on State Water Law.--
       [(1) In general.--Nothing in this title preempts or affects 
     State water law or an interstate compact governing water.
       [(2) Compliance required.--The Secretary shall comply with 
     State water laws in carrying out this title.
       [(h) No Additional Requirements.--Nothing in this title 
     requires a feasibility study for, or imposes any other 
     additional requirements with respect to, rural water supply 
     projects or programs that are authorized before the date of 
     enactment of this Act.

     [SEC. 108. AUTHORIZATION OF APPROPRIATIONS.

       [(a) In General.--There is authorized to be appropriated to 
     carry out this title $20,000,000 for the period of fiscal 
     years 2006 through 2015, to remain available until expended.
       [(b) Rural Water Programs Assessment.--Of the amounts made 
     available under subsection (a), not more than $1,000,000 may 
     be made available to carry out section 104 for each of fiscal 
     years 2006 and 2007.
       [(c) Limitation.--No amounts made available under this 
     section shall be used to pay construction costs associated 
     with any rural water supply project.

            [TITLE II--TWENTY-FIRST CENTURY WATER WORKS ACT

     [SEC. 201. SHORT TITLE.

       [This title may be cited as the ``Twenty-First Century 
     Water Works Act''.

     [SEC. 202. DEFINITIONS.

       [In this title:
       [(1) Indian tribe.--The term ``Indian tribe'' has the 
     meaning given the term in section 4 of the Indian Self-
     Determination and Education Assistance Act (25 U.S.C. 450b).
       [(2) Lender.--The term ``lender'' means any non-Federal 
     qualified institutional buyer (as defined in section 
     230.144A(a) of title 17, Code of Federal Regulation (or any 
     successor regulation), known as Rule 144A(a) of the 
     Securities and Exchange Commission and issued under the 
     Securities Act of 1933 (15 U.S.C. 77a et seq.)).
       [(3) Loan guarantee.--The term ``loan guarantee'' means any 
     guarantee, insurance, or other pledge by the Secretary to pay 
     all or part of the principal of, and interest on, a loan or 
     other debt obligation of a non-Federal borrower to a lender.
       [(4) Non-federal borrower.--The term ``non-Federal 
     borrower'' means--
       [(A) a State (including a department, agency, or political 
     subdivision of a State); or
       [(B) a conservancy district, irrigation district, canal 
     company, water users' association, Indian tribe, an agency 
     created by interstate compact, or any other entity that has 
     the capacity to contract with the United States under Federal 
     reclamation law.
       [(5) Project.--The term ``project'' means--
       [(A) a rural water supply project (as defined in section 
     102(8)); or
       [(B) an extraordinary operation and maintenance activity 
     for, or the rehabilitation of, a facility--
       [(i) that is authorized by Federal reclamation law and 
     constructed by the United States under such law; or
       [(ii) in connection with which there is a repayment or 
     water service contract executed by the United States under 
     Federal reclamation law.
       [(6) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.

     [SEC. 203. PROJECT ELIGIBILITY.

       [(a) Eligibility Criteria.--
       [(1) In general.--The Secretary shall develop and publish 
     in the Federal Register criteria for determining the 
     eligibility of a project for financial assistance under 
     section 204.
       [(2) Inclusions.--Eligibility criteria shall include--
       [(A) submission of an application by the lender to the 
     Secretary;
       [(B) demonstration of the creditworthiness of the project, 
     including a determination by the Secretary that any financing 
     for the project has appropriate security features to ensure 
     repayment;
       [(C) demonstration by the non-Federal borrower, to the 
     satisfaction of the Secretary, of the ability of the non-
     Federal borrower to repay the project financing from user 
     fees or other dedicated revenue sources;
       [(D) demonstration by the non-Federal borrower, to the 
     satisfaction of the Secretary, of the ability of the non-
     Federal borrower to pay all operations, maintenance, and 
     replacement costs of the project facilities; and
       [(E) such other criteria as the Secretary determines to be 
     appropriate.
       [(b) Waiver.--The Secretary may waive any of the criteria 
     in subsection (a)(2) that the Secretary determines to be 
     duplicative or rendered unnecessary because of an action 
     already taken by the United States.
       [(c) Projects Previously Authorized.--A project that was 
     authorized for construction under Federal reclamation laws 
     prior to the date of enactment of this Act shall be eligible 
     for assistance under this title, subject to the criteria 
     established by the Secretary under subsection (a).
       [(d) Criteria for Rural Water Supply Projects.--A rural 
     water supply project that is determined to be feasible under 
     section 106 is eligible for a loan guarantee under section 
     204.

     [SEC. 204. LOAN GUARANTEES.

       [(a) Authority.--Subject to the availability of 
     appropriations, the Secretary may make available to lenders 
     for a project meeting the eligibility criteria established in 
     section 203 loan guarantees to supplement private-sector or 
     lender financing for the project.
       [(b) Terms and Limitations.--
       [(1) In general.--Loan guarantees under this section for a 
     project shall be on such terms and conditions and contain 
     such covenants, representations, warranties, and requirements 
     as the Secretary determines to be appropriate to protect the 
     financial interests of the United States.
       [(2) Maximum amount.--The amount of a loan guarantee shall 
     not exceed 90 percent of the reasonably anticipated eligible 
     project costs.
       [(3) Interest rate.--The interest rate on a loan guarantee 
     shall be negotiated between the non-Federal borrower and the 
     lender with the consent of the Secretary.
       [(4) Amortization.--A loan guarantee under this section 
     shall provide for complete amortization of the loan guarantee 
     within not more than 40 years.
       [(5) Non-subordination.--In case of bankruptcy, insolvency, 
     or liquidation of the non-Federal borrower, a loan guarantee 
     shall not be subordinated to the claims of any holder of 
     project obligations.
       [(c) Prepayment and Refinancing.--Any prepayment or 
     refinancing terms on a loan guarantee shall be negotiated 
     between the non-Federal borrower and the lender with the 
     consent of the Secretary.

     [SEC. 205. OPERATIONS, MAINTENANCE, AND REPLACEMENT COSTS.

       [(a) In General.--The non-Federal share of operations, 
     maintenance, and replacement costs for a project receiving 
     Federal assistance under this title shall be 100 percent.
       [(b) Plan.--On request of the non-Federal borrower, the 
     Secretary may assist in the development of an operation, 
     maintenance, and replacement plan to provide the necessary 
     framework to assist the non-Federal borrower in establishing 
     rates and fees for project beneficiaries.

     [SEC. 206. TITLE TO NEWLY CONSTRUCTED FACILITIES.

       [(a) New Projects and Facilities.--All new projects or 
     facilities constructed in accordance with this title shall 
     remain under the jurisdiction and control of the non-Federal 
     borrower subject to the terms of the repayment agreement.

[[Page 26244]]

       [(b) Existing Projects and Facilities.--Nothing in this 
     title affects the title of--
       [(1) reclamation projects authorized prior to the date of 
     enactment of this Act;
       [(2) works supplemental to existing reclamation projects; 
     or
       [(3) works constructed to rehabilitate existing reclamation 
     projects.

     [SEC. 207. WATER RIGHTS.

       [(a) In General.--Nothing in this title preempts or affects 
     State water law or an interstate compact governing water.
       [(b) Compliance Required.--The Secretary shall comply with 
     State water laws in carrying out this title. Nothing in this 
     title affects or preempts State water law or an interstate 
     compact governing water.

     [SEC. 208. INTERAGENCY COORDINATION AND COOPERATION.

       [The Secretary and the Secretary of Agriculture shall enter 
     into a memorandum of agreement providing for Department of 
     Agriculture financial appraisal functions and loan guarantee 
     administration for activities carried out under this title.

     [SEC. 209. AUTHORIZATION OF APPROPRIATIONS.

       [There are authorized to be appropriated such sums as are 
     necessary to carry out this title, to remain available until 
     expended. ]

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Rural 
     Water Supply Act of 2005''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

          TITLE I--RECLAMATION RURAL WATER SUPPLY ACT OF 2005

Sec. 101. Short title.
Sec. 102. Definitions.
Sec. 103. Rural water supply program.
Sec. 104. Rural water programs assessment.
Sec. 105. Appraisal investigations.
Sec. 106. Feasibility studies.
Sec. 107. Miscellaneous.
Sec. 108. Authorization of appropriations.

             TITLE II--TWENTY-FIRST CENTURY WATER WORKS ACT

Sec. 201. Short title.
Sec. 202. Definitions.
Sec. 203. Project eligibility.
Sec. 204. Loan guarantees.
Sec. 205. Operations, maintenance, and replacement costs.
Sec. 206. Title to newly constructed facilities.
Sec. 207. Water rights.
Sec. 208. Interagency coordination and cooperation.
Sec. 209. Authorization of appropriations.

          TITLE I--RECLAMATION RURAL WATER SUPPLY ACT OF 2005

     SEC. 101. SHORT TITLE.

       This title may be cited as the ``Reclamation Rural Water 
     Supply Act of 2005''.

     SEC. 102. DEFINITIONS.

       In this title:
       (1) Construction.--The term ``construction'' means the 
     installation of new infrastructure and the upgrading of 
     existing facilities in locations in which the infrastructure 
     or facilities are associated with the new infrastructure of a 
     rural water project recommended by the Secretary pursuant to 
     this title.
       (2) Federal reclamation law.--The term ``Federal 
     reclamation law'' means the Act of June 17, 1902 (32 Stat. 
     388, chapter 1093), and Acts supplemental to and amendatory 
     of that Act (43 U.S.C. 371 et seq.).
       (3) Indian.--The term ``Indian'' means an individual who is 
     a member of an Indian tribe.
       (4) Indian tribe.--The term ``Indian tribe'' has the 
     meaning given the term in section 4 of the Indian Self-
     Determination and Education Assistance Act (25 U.S.C. 450b).
       (5) Non-federal project entity.--The term ``non-Federal 
     project entity'' means a State, regional, or local authority, 
     Indian tribe or tribal organization, or other qualifying 
     entity, such as a water conservation district, water 
     conservancy district, or rural water district or association.
       (6) Operations, maintenance, and replacement costs.--
       (A) In general.--The term ``operations, maintenance, and 
     replacement costs'' means all costs for the operation of a 
     rural water supply project that are necessary for the safe, 
     efficient, and continued functioning of the project to 
     produce the benefits described in a feasibility study.
       (B) Inclusions.--The term ``operations, maintenance, and 
     replacement costs'' includes--
       (i) repairs of a routine nature that maintain a rural water 
     supply project in a well kept condition;
       (ii) replacement of worn-out project elements; and
       (iii) rehabilitation activities necessary to bring a 
     deteriorated project back to the original condition of the 
     project.
       (C) Exclusion.--The term ``operations, maintenance, and 
     replacement costs'' does not include construction costs.
       (7) Program.--The term ``Program'' means the rural water 
     supply program established under section 103.
       (8) Reclamation states.--The term ``Reclamation States'' 
     means the States and areas referred to in the first section 
     of the Act of June 17, 1902 (43 U.S.C. 391).
       (9) Rural water supply project.--
       (A) In general.--The term ``rural water supply project'' 
     means a project that is designed to serve a community or 
     group of communities, each of which has a population of not 
     more than 50,000 inhabitants, which may include Indian tribes 
     and tribal organizations, dispersed homesites, or rural areas 
     with domestic, industrial, municipal, and residential water.
       (B) Inclusion.--The term ``rural water supply project'' 
     includes--
       (i) incidental noncommercial livestock watering and 
     noncommercial irrigation of vegetation and small gardens of 
     less than 1 acre; and
       (ii) a project to improve rural water infrastructure, 
     including--

       (I) pumps, pipes, wells, and other diversions;
       (II) storage tanks and small impoundments;
       (III) water treatment facilities for potable water 
     supplies, including desalination facilities;
       (IV) equipment and management tools for water conservation, 
     groundwater recovery, and water recycling; and
       (V) appurtenances.

       (C) Exclusion.--The term ``rural water supply project'' 
     does not include--
       (i) commercial irrigation; or
       (ii) major impoundment structures.
       (10) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.
       (11) Tribal organization.--The term ``tribal organization'' 
     means--
       (A) the recognized governing body of an Indian tribe; and
       (B) any legally established organization of Indians that is 
     controlled, sanctioned, or chartered by the governing body or 
     democratically elected by the adult members of the Indian 
     community to be served by the organization.

     SEC. 103. RURAL WATER SUPPLY PROGRAM.

       (a) In General.--The Secretary, in cooperation with non-
     Federal project entities and consistent with this title, 
     shall establish and carry out a rural water supply program in 
     Reclamation States to--
       (1) investigate and identify opportunities to ensure safe 
     and adequate rural water supply projects for domestic, 
     municipal, and industrial use in small communities and rural 
     areas of the Reclamation States;
       (2) plan the design and construction, through the conduct 
     of appraisal investigations and feasibility studies, of rural 
     water supply projects in Reclamation States; and
       (3) oversee, as appropriate, the construction of rural 
     water supply projects in Reclamation States that are 
     recommended by the Secretary in a feasibility report 
     developed pursuant to section 106 and subsequently authorized 
     by Congress.
       (b) Non-Federal Project Entity.--Any activity carried out 
     under this title shall be carried out in cooperation with a 
     qualifying non-Federal project entity, consistent with this 
     title.
       (c) Eligibility Criteria.--Not later than 1 year after the 
     date of enactment of this Act, the Secretary shall, 
     consistent with this title, develop and publish in the 
     Federal Register criteria for--
       (1) determining the eligibility of a rural community for 
     assistance under the Program; and
       (2) prioritizing requests for assistance under the Program.
       (d) Factors.--The criteria developed under subsection (c) 
     shall take into account such factors as whether--
       (1) a rural water supply project--
       (A) serves--
       (i) rural areas and small communities; or
       (ii) Indian tribes; or
       (B) promotes and applies a regional or watershed 
     perspective to water resources management;
       (2) there is an urgent and compelling need for a rural 
     water supply project that would--
       (A) improve the health or aesthetic quality of water;
       (B) result in continuous, measurable, and significant water 
     quality benefits; or
       (C) address current or future water supply needs;
       (3) a rural water supply project helps meet applicable 
     requirements established by law; and
       (4) a rural water supply project is cost effective.
       (e) Inclusions.--The Secretary may include--
       (1) to the extent that connection provides a reliable water 
     supply, a connection to preexisting infrastructure (including 
     impoundments and conveyance channels) as part of a rural 
     water supply project; and
       (2) notwithstanding the limitation on population under 
     section 102(9)(A), a town or community with a population in 
     excess of 50,000 inhabitants in an area served by a rural 
     water supply project if, at the discretion of the Secretary, 
     the town or community is considered to be a critical partner 
     in the rural supply project.

     SEC. 104. RURAL WATER PROGRAMS ASSESSMENT.

       (a) In General.--In consultation with the Secretary of 
     Agriculture, the Administrator of the Environmental 
     Protection Agency, the Director of the Indian Health Service, 
     the Secretary of Housing and Urban Development, and the 
     Secretary of the Army, the Secretary shall develop an 
     assessment of--
       (1) the status of all rural water supply projects under the 
     jurisdiction of the Secretary authorized but not completed 
     prior to the date of enactment of this Act, including 
     appropriation amounts, the phase of development, total 
     anticipated costs, and obstacles to completion;
       (2) the current plan (including projected financial and 
     workforce requirements) for the completion of the projects 
     identified in paragraph (1) within the time frames 
     established under the provisions of law authorizing the 
     projects or the final engineering reports for the projects;
       (3) the demand for new rural water supply projects;

[[Page 26245]]

       (4) rural water programs within other agencies and a 
     description of the extent to which those programs provide 
     support for rural water supply projects and water treatment 
     programs in Reclamation States, including an assessment of 
     the requirements, funding levels, and conditions of 
     eligibility for the programs assessed;
       (5) the extent of the demand that the Secretary can meet 
     with the Program;
       (6) how the Program will complement authorities already 
     within the jurisdiction of the Secretary and the heads of the 
     agencies with whom the Secretary consults; and
       (7) improvements that can be made to coordinate and 
     integrate the authorities of the agencies with programs 
     evaluated under paragraph (4), including any recommendations 
     to consolidate some or all of the activities of the agencies 
     with respect to rural water supply.
       (b) Consultation With States.--Before finalizing the 
     assessment developed under subsection (a), the Secretary 
     shall solicit comments from States with identified rural 
     water needs.
       (c) Report.--Not later than 2 years after the date of 
     enactment of this Act, the Secretary shall submit to the 
     Committee on Energy and Natural Resources of the Senate and 
     the Committee on Resources of the House of Representatives a 
     detailed report on the assessment conducted under subsection 
     (a).

     SEC. 105. APPRAISAL INVESTIGATIONS.

       (a) In General.--On request of a non-Federal project entity 
     with respect to a proposed rural water supply project that 
     meets the eligibility criteria published under section 103(c) 
     and subject to the availability of appropriations, the 
     Secretary may--
       (1) receive and review an appraisal investigation that is--
       (A) developed by the non-Federal project entity, with or 
     without support from the Secretary; and
       (B) submitted to the Secretary by the non-Federal project 
     entity;
       (2) conduct an appraisal investigation; or
       (3) provide a grant to, or enter into a cooperative 
     agreement with, the non-Federal project entity to conduct an 
     appraisal investigation, if the Secretary determines that--
       (A) the non-Federal project entity is qualified to complete 
     the appraisal investigation in accordance with the criteria 
     published under section 103(c); and
       (B) using the non-Federal project entity to conduct the 
     appraisal investigation is a cost-effective alternative for 
     completing the appraisal investigation.
       (b) Deadline.--An appraisal investigation conducted under 
     subsection (a) shall be scheduled for completion not later 
     than 2 years after the date on which the appraisal 
     investigation is initiated.
       (c) Appraisal Report.--In accordance with subsection (f), 
     after an appraisal investigation is submitted to the 
     Secretary under subsection (a)(1) or completed under 
     paragraph (2) or (3) of subsection (a), the Secretary shall 
     prepare an appraisal report that--
       (1) considers--
       (A) whether the project meets--
       (i) the appraisal criteria developed under subsection (d); 
     and
       (ii) the eligibility criteria developed under section 
     103(c);
       (B) whether viable water supplies and water rights exist to 
     supply the project, including all practicable water sources 
     such as lower quality waters, nonpotable waters, and water 
     reuse-based water supplies;
       (C) whether the project has a positive effect on public 
     health and safety;
       (D) whether the project will meet water demand, including 
     projected future needs;
       (E) the extent to which the project provides environmental 
     benefits, including source water protection;
       (F) whether the project applies a regional or watershed 
     perspective and promotes benefits in the region in which the 
     project is carried out;
       (G) whether the project--
       (i)(I) implements an integrated resources management 
     approach; or
       (II) enhances water management flexibility, including 
     providing for--

       (aa) local control to manage water supplies under varying 
     water supply conditions; and
       (bb) participation in water banking and markets for 
     domestic and environmental purposes; and

       (ii) promotes long-term protection of water supplies;
       (H) preliminary cost estimates for the project; and
       (I) whether the non-Federal project entity has the 
     capability to pay 100 percent of the costs associated with 
     the operations, maintenance, and replacement of the 
     facilities constructed or developed as part of the rural 
     water supply project; and
       (2) provides recommendations on whether a feasibility study 
     should be initiated under section 106(a).
       (d) Appraisal Criteria.--
       (1) In general.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary shall promulgate 
     criteria (including appraisal factors listed under subsection 
     (c)) against which the appraisal investigations shall be 
     assessed for completeness and appropriateness for a 
     feasibility study.
       (2) Inclusions.--To minimize the cost of a rural water 
     supply project to a non-Federal project entity, the Secretary 
     shall include in the criteria methods to scale the level of 
     effort needed to complete the appraisal investigation 
     relative to the total size and cost of the proposed rural 
     water supply project.
       (e) Review of Appraisal Investigation.--
       (1) In general.--Not later than 90 days after the date of 
     submission of an appraisal investigation under paragraph (1) 
     or (3) of subsection (a), the Secretary shall provide to the 
     non-Federal entity that conducted the investigation a 
     determination of whether the investigation has included the 
     information necessary to determine whether the proposed rural 
     water supply project satisfies the criteria promulgated under 
     subsection (d).
       (2) No satisfaction of criteria.--If the Secretary 
     determines that the appraisal investigation submitted by a 
     non-Federal entity does not satisfy the criteria promulgated 
     under subsection (d), the Secretary shall inform the non-
     Federal entity of the reasons why the appraisal investigation 
     is deficient.
       (3) Responsibility of secretary.--If an appraisal 
     investigation as first submitted by a non-Federal entity does 
     not provide all necessary information, as defined by the 
     Secretary, the Secretary shall have no obligation to conduct 
     further analysis until the non-Federal project entity 
     submitting the appraisal study conducts additional 
     investigation and resubmits the appraisal investigation under 
     this subsection.
       (f) Appraisal Report.--Once the Secretary has determined 
     that an investigation provides the information necessary 
     under subsection (e), the Secretary shall--
       (1) complete the appraisal report required under subsection 
     (c);
       (2) make available to the public, on request, the appraisal 
     report prepared under this title; and
       (3) promptly publish in the Federal Register a notice of 
     the availability of the results.
       (g) Costs.--
       (1) Federal share.--The Federal share of an appraisal 
     investigation conducted under subsection (a) shall be 100 
     percent of the total cost of the appraisal investigation, up 
     to $200,000.
       (2) Non-federal share.--
       (A) In general.--Except as provided in subparagraph (B), if 
     the cost of conducting an appraisal investigation is more 
     than $200,000, the non-Federal share of the costs in excess 
     of $200,000 shall be 50 percent.
       (B) Exception.--The Secretary may reduce the non-Federal 
     share required under subparagraph (A) if the Secretary 
     determines that there is an overwhelming Federal interest in 
     the appraisal investigation.
       (C) Form.--The non-Federal share under subparagraph (A) may 
     be in the form of any in-kind services that the Secretary 
     determines would contribute substantially toward the conduct 
     and completion of the appraisal investigation.
       (h) Consultation; Identification of Funding Sources.--In 
     conducting an appraisal investigation under subsection 
     (a)(2), the Secretary shall--
       (1) consult and cooperate with the non-Federal project 
     entity and appropriate State, tribal, regional, and local 
     authorities;
       (2) consult with the heads of appropriate Federal agencies 
     to--
       (A) ensure that the proposed rural water supply project 
     does not duplicate a project carried out under the authority 
     of the agency head; and
       (B) if a duplicate project is being carried out, identify 
     the authority under which the duplicate project is being 
     carried out; and
       (3) identify what funding sources are available for the 
     proposed rural water supply project.

     SEC. 106. FEASIBILITY STUDIES.

       (a) In General.--On completion of an appraisal report under 
     section 105(c) that recommends undertaking a feasibility 
     study and subject to the availability of appropriations, the 
     Secretary shall--
       (1) in cooperation with a non-Federal project entity, carry 
     out a study to determine the feasibility of the proposed 
     rural water supply project;
       (2) receive and review a feasibility study that is--
       (A) developed by the non-Federal project entity, with or 
     without support from the Secretary; and
       (B) submitted to the Secretary by the non-Federal project 
     entity; or
       (3) provide a grant to, or enter into a cooperative 
     agreement with, a non-Federal project entity to conduct a 
     feasibility study, for submission to the Secretary, if the 
     Secretary determines that--
       (A) the non-Federal entity is qualified to complete the 
     feasibility study in accordance with the criteria promulgated 
     under subsection (d); and
       (B) using the non-Federal project entity to conduct the 
     feasibility study is a cost-effective alternative for 
     completing the appraisal investigation.
       (b) Review of Non-Federal Feasibility Studies.--
       (1) In general.--In conducting a review of a feasibility 
     study submitted under paragraph (2) or (3) of subsection (a), 
     the Secretary shall--
       (A) in accordance with the feasibility factors described in 
     subsection (c) and the criteria promulgated under subsection 
     (d), assess the completeness of the feasibility study; and
       (B) if the Secretary determines that a feasibility study is 
     not complete, notify the non-Federal entity of the 
     determination.
       (2) Revisions.--If the Secretary determines under paragraph 
     (1)(B) that a feasibility study is not complete, the non-
     Federal entity shall pay any costs associated with revising 
     the feasibility study.
       (c) Feasibility Factors.--Feasibility studies authorized or 
     reviewed under this title shall include an assessment of--

[[Page 26246]]

       (1) near- and long-term water demand in the area to be 
     served by the rural water supply project;
       (2) advancement of public health and safety of any existing 
     rural water supply project and other benefits of the proposed 
     rural water supply project;
       (3) alternative new water supplies in the study area, 
     including any opportunities to treat and use low-quality 
     water, nonpotable water, water reuse-based supplies, and 
     brackish and saline waters through innovative and 
     economically viable treatment technologies;
       (4) environmental quality and source water protection 
     issues related to the rural water supply project;
       (5) innovative opportunities for water conservation in the 
     study area to reduce water use and water system costs, 
     including--
       (A) nonstructural approaches to reduce the need for the 
     project; and
       (B) demonstration technologies;
       (6) the extent to which the project and alternatives take 
     advantage of economic incentives and the use of market-based 
     mechanisms;
       (7)(A) the construction costs and projected operations, 
     maintenance, and replacement costs of all alternatives; and
       (B) the economic feasibility and lowest cost method of 
     obtaining the desired results of each alternative, taking 
     into account the Federal cost-share;
       (8) the availability of guaranteed loans for a proposed 
     rural water supply project;
       (9) the financial capability of the non-Federal project 
     entity to pay the non-Federal project entity's proportionate 
     share of the design and construction costs and 100 percent of 
     operations, maintenance, and replacement costs, including the 
     allocation of costs to each non-Federal project entity in the 
     case of multiple entities;
       (10) whether the non-Federal project entity has developed 
     an operations, management, and replacement plan to assist the 
     non-Federal project entity in establishing rates and fees for 
     beneficiaries of the rural water supply project that includes 
     a schedule identifying the annual operations, maintenance, 
     and replacement costs that should be allocated to each non-
     Federal entity participating in the project;
       (11)(A) the non-Federal project entity administrative 
     organization that would implement construction, operations, 
     maintenance, and replacement activities; and
       (B) the fiscal, administrative, and operational controls to 
     be implemented to manage the project;
       (12) the extent to which assistance for rural water supply 
     is available under other Federal authorities;
       (13) the engineering, environmental, and economic 
     activities to be undertaken to carry out the proposed rural 
     water supply project;
       (14) the extent to which the project involves partnerships 
     with other State, local, or tribal governments or Federal 
     entities; and
       (15) in the case of a project intended for Indian tribes 
     and tribal organizations, the extent to which the project 
     addresses the goal of economic self-sufficiency.
       (d) Feasibility Study Criteria.--
       (1) In general.--Not later than 18 months after the date of 
     enactment of this Act, the Secretary shall promulgate 
     criteria (including the feasibility factors listed under 
     subsection (c)) under which the feasibility studies shall be 
     assessed for completeness and appropriateness.
       (2) Inclusions.--The Secretary shall include in the 
     criteria promulgated under paragraph (1) methods to scale the 
     level of effort needed to complete the feasibility assessment 
     relative to the total size and cost of the proposed rural 
     water supply project and reduce total costs to non-Federal 
     entities.
       (e) Feasibility Report.--
       (1) In general.--After completion of appropriate 
     feasibility studies for rural water supply projects that 
     address the factors described in subsection (c) and the 
     criteria promulgated under subsection (d), the Secretary 
     shall--
       (A) develop a feasibility report that includes--
       (i) a recommendation of the Secretary on--

       (I) whether the rural water supply project should be 
     authorized for construction; and
       (II) the appropriate non-Federal share of construction 
     costs, which shall be--

       (aa) at least 25 percent of the total construction costs; 
     and
       (bb) determined based on an analysis of the capability-to-
     pay information considered under subsections (c)(9) and (f); 
     and
       (ii) if the Secretary recommends that the project should be 
     authorized for construction--

       (I) what amount of grants, loan guarantees, or combination 
     of grants and loan guarantees should be used to provide the 
     Federal cost share;
       (II) a schedule that identifies the annual operations, 
     maintenance, and replacement costs that should be allocated 
     to each non-Federal entity participating in the rural water 
     supply project; and
       (III) an assessment of the financial capability of each 
     non-Federal entity participating in the rural water supply 
     project to pay the allocated annual operation, maintenance, 
     and replacement costs for the rural water supply project;

       (B) submit the report to the Committee on Energy and 
     Natural Resources of the Senate and the Committee on 
     Resources of the House of Representatives;
       (C) make the report publicly available, along with 
     associated study documents; and
       (D) publish in the Federal Register a notice of the 
     availability of the results.
       (f) Capability-To-Pay.--
       (1) In general.--In evaluating a proposed rural water 
     supply project under this section, the Secretary shall--
       (A) consider the financial capability of any non-Federal 
     project entities participating in the rural water supply 
     project to pay 25 percent or more of the capital construction 
     costs of the rural water supply project; and
       (B) recommend an appropriate Federal share and non-Federal 
     share of the capital construction costs, as determined by the 
     Secretary.
       (2) Factors.--In determining the financial capability of 
     non-Federal project entities to pay for a rural water supply 
     project under paragraph (1), the Secretary shall evaluate 
     factors for the project area, relative to the State average, 
     including--
       (A) per capita income;
       (B) median household income;
       (C) the poverty rate;
       (D) the ability of the non-Federal project entity to raise 
     tax revenues or assess fees;
       (E) the strength of the balance sheet of the non-Federal 
     project entity; and
       (F) the existing cost of water in the region.
       (3) Indian tribes.--In determining the capability-to-pay of 
     Indian tribe project beneficiaries, the Secretary may 
     consider deferring the collection of all or part of the non-
     Federal construction costs apportioned to Indian tribe 
     project beneficiaries unless or until the Secretary 
     determines that the Indian tribe project beneficiaries should 
     pay--
       (A) the costs allocated to the beneficiaries; or
       (B) an appropriate portion of the costs.
       (g) Cost-Sharing Requirement.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the Federal share of the cost of a feasibility 
     study carried out under this section shall not exceed 50 
     percent of the study costs.
       (2) Form.--The non-Federal share under paragraph (1) may be 
     in the form of any in-kind services that the Secretary 
     determines would contribute substantially toward the conduct 
     and completion of the study.
       (3) Financial hardship.--The Secretary may increase the 
     Federal share of the costs of a feasibility study if the 
     Secretary determines, based on a demonstration of financial 
     hardship, that the non-Federal participant is unable to 
     contribute at least 50 percent of the costs of the study.
       (4) Larger communities.--In conducting a feasibility study 
     of a rural water supply system that includes a community with 
     a population in excess of 50,000 inhabitants, the Secretary 
     may require the non-Federal project entity to pay more than 
     50 percent of the costs of the study.
       (h) Consultation and Cooperation.--In addition to the non-
     Federal project entity, the Secretary shall consult and 
     cooperate with appropriate Federal, State, tribal, regional, 
     and local authorities during the conduct of each feasibility 
     assessment and development of the feasibility report 
     conducted under this title.

     SEC. 107. MISCELLANEOUS.

       (a) Authority of Secretary.--The Secretary may enter into 
     contracts, financial assistance agreements, and such other 
     agreements, and promulgate such regulations, as are necessary 
     to carry out this title.
       (b) Transfer of Projects.--Nothing in this title authorizes 
     the transfer of pre-existing facilities or pre-existing 
     components of any water system from Federal to private 
     ownership or from private to Federal ownership.
       (c) Federal Reclamation Law.--Nothing in this title 
     supersedes or amends any Federal law associated with a 
     project, or portion of a project, constructed under Federal 
     reclamation law.
       (d) Interagency Coordination.--The Secretary shall 
     coordinate the Program carried out under this title with 
     existing Federal and State rural water and wastewater 
     programs to facilitate the most efficient and effective 
     solution to meeting the water needs of the non-Federal 
     project sponsors.
       (e) Multiple Indian Tribes.--In any case in which a 
     contract is entered into with, or a grant is made, to an 
     organization to perform services benefitting more than 1 
     Indian tribe under this title, the approval of each such 
     Indian tribe shall be a prerequisite to entering into the 
     contract or making the grant.
       (f) Ownership of Facilities.--Title to any facility 
     planned, designed, and recommended for construction under 
     this title shall be held by the non-Federal project entity.
       (g) Expedited Procedures.--If the Secretary determines that 
     a community to be served by a proposed rural water supply 
     project has urgent and compelling water needs, the Secretary 
     shall, to the maximum extent practicable, expedite appraisal 
     investigations and reports conducted under section 105 and 
     feasibility studies and reports conducted under section 106.
       (h) Effect on State Water Law.--
       (1) In general.--Nothing in this title preempts or affects 
     State water law or an interstate compact governing water.
       (2) Compliance required.--The Secretary shall comply with 
     State water laws in carrying out this title.
       (i) No Additional Requirements.--Nothing in this title 
     requires a feasibility study for, or imposes any other 
     additional requirements with respect to, rural water supply 
     projects or programs that are authorized before the date of 
     enactment of this Act.

     SEC. 108. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--There is authorized to be appropriated to 
     carry out this title $20,000,000 for the period of fiscal 
     years 2006 through 2015, to remain available until expended.
       (b) Rural Water Programs Assessment.--Of the amounts made 
     available under subsection

[[Page 26247]]

     (a), not more than $1,000,000 may be made available to carry 
     out section 104 for each of fiscal years 2006 and 2007.
       (c) Limitation.--No amounts made available under this 
     section shall be used to pay construction costs associated 
     with any rural water supply project.

             TITLE II--TWENTY-FIRST CENTURY WATER WORKS ACT

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Twenty-First Century Water 
     Works Act''.

     SEC. 202. DEFINITIONS.

       In this title:
       (1) Indian tribe.--The term ``Indian tribe'' has the 
     meaning given the term in section 4 of the Indian Self-
     Determination and Education Assistance Act (25 U.S.C. 450b).
       (2) Lender.--The term ``lender'' means any non-Federal 
     qualified institutional buyer (as defined in section 
     230.144A(a) of title 17, Code of Federal Regulation (or any 
     successor regulation), known as Rule 144A(a) of the 
     Securities and Exchange Commission and issued under the 
     Securities Act of 1933 (15 U.S.C. 77a et seq.)).
       (3) Loan guarantee.--The term ``loan guarantee'' has the 
     meaning given the term ``loan guarantee'' in section 502 of 
     the Federal Credit Reform Act of 1990 (2 U.S.C. 661a).
       (4) Non-federal borrower.--The term ``non-Federal 
     borrower'' means--
       (A) a State (including a department, agency, or political 
     subdivision of a State); or
       (B) a conservancy district, irrigation district, canal 
     company, water users' association, Indian tribe, an agency 
     created by interstate compact, or any other entity that has 
     the capacity to contract with the United States under Federal 
     reclamation law.
       (5) Obligation.--The term ``obligation'' means a loan or 
     other debt obligation that is guaranteed under this section.
       (6) Project.--The term ``project'' means--
       (A) a rural water supply project (as defined in section 
     102(9)); or
       (B) an extraordinary operation and maintenance activity 
     for, or the rehabilitation of, a facility--
       (i) that is authorized by Federal reclamation law and 
     constructed by the United States under such law; or
       (ii) in connection with which there is a repayment or water 
     service contract executed by the United States under Federal 
     reclamation law.
       (7) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.

     SEC. 203. PROJECT ELIGIBILITY.

       (a) Eligibility Criteria.--
       (1) In general.--The Secretary shall develop and publish in 
     the Federal Register criteria for determining the eligibility 
     of a project for financial assistance under section 204.
       (2) Inclusions.--Eligibility criteria shall include--
       (A) submission of an application by the lender to the 
     Secretary;
       (B) demonstration of the creditworthiness of the project, 
     including a determination by the Secretary that any financing 
     for the project has appropriate security features to ensure 
     repayment;
       (C) demonstration by the non-Federal borrower, to the 
     satisfaction of the Secretary, of the ability of the non-
     Federal borrower to repay the project financing from user 
     fees or other dedicated revenue sources;
       (D) demonstration by the non-Federal borrower, to the 
     satisfaction of the Secretary, of the ability of the non-
     Federal borrower to pay all operations, maintenance, and 
     replacement costs of the project facilities; and
       (E) such other criteria as the Secretary determines to be 
     appropriate.
       (b) Waiver.--The Secretary may waive any of the criteria in 
     subsection (a)(2) that the Secretary determines to be 
     duplicative or rendered unnecessary because of an action 
     already taken by the United States.
       (c) Projects Previously Authorized.--A project that was 
     authorized for construction under Federal reclamation laws 
     prior to the date of enactment of this Act shall be eligible 
     for assistance under this title, subject to the criteria 
     established by the Secretary under subsection (a).
       (d) Criteria for Rural Water Supply Projects.--A rural 
     water supply project that is determined to be feasible under 
     section 106 is eligible for a loan guarantee under section 
     204.

     SEC. 204. LOAN GUARANTEES.

       (a) Authority.--Subject to the availability of 
     appropriations, the Secretary may make available to lenders 
     for a project meeting the eligibility criteria established in 
     section 203 loan guarantees to supplement private-sector or 
     lender financing for the project.
       (b) Terms and Limitations.--
       (1) In general.--Loan guarantees under this section for a 
     project shall be on such terms and conditions and contain 
     such covenants, representations, warranties, and requirements 
     as the Secretary determines to be appropriate to protect the 
     financial interests of the United States.
       (2) Amount.--Loan guarantees by the Secretary shall not 
     exceed an amount equal to 90 percent of the cost of the 
     project that is the subject of the loan guarantee, as 
     estimated at the time at which the loan guarantee is issued.
       (3) Interest rate.--An obligation shall bear interest at a 
     rate that does not exceed a level that the Secretary 
     determines to be appropriate, taking into account the 
     prevailing rate of interest in the private sector for similar 
     loans and risks.
       (4) Amortization.--A loan guarantee under this section 
     shall provide for complete amortization of the loan guarantee 
     within not more than 40 years.
       (5) Nonsubordination.--An obligation shall be subject to 
     the condition that the obligation is not subordinate to other 
     financing.
       (c) Prepayment and Refinancing.--Any prepayment or 
     refinancing terms on a loan guarantee shall be negotiated 
     between the non-Federal borrower and the lender with the 
     consent of the Secretary.

     SEC. 205. DEFAULTS.

       (a) Payments by Secretary.--
       (1) In general.--If a borrower defaults on the obligation, 
     the holder of the loan guarantee shall have the right to 
     demand payment of the unpaid amount from the Secretary.
       (2) Payment required.--By such date as may be specified in 
     the loan guarantee or related agreements, the Secretary shall 
     pay to the holder of the loan guarantee the unpaid interest 
     on, and unpaid principal of, the obligation with respect to 
     which the borrower has defaulted, unless the Secretary finds 
     that there was not default by the borrower in the payment of 
     interest or principal or that the default has been remedied.
       (3) Forbearance.--Nothing in this subsection precludes any 
     forbearance by the holder of the obligation for the benefit 
     of the non-Federal borrower that may be agreed on by the 
     parties to the obligation and approved by the Secretary.
       (b) Subrogation.--
       (1) In general.--If the Secretary makes a payment under 
     subsection (a), the Secretary shall be subrogated to the 
     rights of the recipient of the payment as specified in the 
     loan guarantee or related agreements, including, as 
     appropriate, the authority (nothwithstanding any other 
     provision of law) to--
       (A) complete, maintain, operate, lease, or otherwise 
     dispose of any property acquired pursuant to the loan 
     guarantee or related agreements; or
       (B) permit the non-Federal borrower, pursuant to an 
     agreement with the Secretary, to continue to pursue the 
     purposes of the project if the Secretary determines the 
     purposes to be in the public interest.
       (2) Superiority of rights.--The rights of the Secretary, 
     with respect to any property acquired pursuant to a loan 
     guarantee or related agreement, shall be superior to the 
     rights of any other person with respect to the property.
       (c) Payment of Principal and Interest by Secretary.--With 
     respect to any obligation guaranteed under this section, the 
     Secretary may enter into a contract to pay, and pay, holders 
     of the obligation, for and on behalf of the non-Federal 
     borrower, from funds appropriated for that purpose, the 
     principal and interest payments that become due and payable 
     on the unpaid balance of the obligation if the Secretary 
     finds that--
       (1)(A) the non-Federal borrower is unable to meet the 
     payments and is not in default;
       (B) it is in the public interest to permit the non-Federal 
     borrower to continue to pursue the purposes of the project; 
     and
       (C) the probable net benefit to the Federal Government in 
     paying the principal and interest will be greater than that 
     which would result in the event of a default;
       (2) the amount of the payment that the Secretary is 
     authorized to pay shall be no greater than the amount of 
     principal and interest that the non-Federal borrower is 
     obligated to pay under the agreement being guaranteed; and
       (3) the borrrower agrees to reimburse the Secretary for the 
     payment (including interest) on terms and conditions that are 
     satisfactory to the Secretary.
       (d) Action by Attorney General.--
       (1) Notification.--If the non-Federal borrower defaults on 
     an obligation, the Secretary shall notify the Attorney 
     General of the default.
       (2) Recovery.--On notification, the Attorney General shall 
     take such action as is appropriate to recover the unpaid 
     principal and interest due from--
       (A) such assets of the defaulting non-Federal borrower as 
     are associated with the obligation; or
       (B) any other security pledged to secure the obligation.

     SEC. 206. OPERATIONS, MAINTENANCE, AND REPLACEMENT COSTS.

       (a) In General.--The non-Federal share of operations, 
     maintenance, and replacement costs for a project receiving 
     Federal assistance under this title shall be 100 percent.
       (b) Plan.--On request of the non-Federal borrower, the 
     Secretary may assist in the development of an operation, 
     maintenance, and replacement plan to provide the necessary 
     framework to assist the non-Federal borrower in establishing 
     rates and fees for project beneficiaries.

     SEC. 207. TITLE TO NEWLY CONSTRUCTED FACILITIES.

       (a) New Projects and Facilities.--All new projects or 
     facilities constructed in accordance with this title shall 
     remain under the jurisdiction and control of the non-Federal 
     borrower subject to the terms of the repayment agreement.
       (b) Existing Projects and Facilities.--Nothing in this 
     title affects the title of--
       (1) reclamation projects authorized prior to the date of 
     enactment of this Act;
       (2) works supplemental to existing reclamation projects; or
       (3) works constructed to rehabilitate existing reclamation 
     projects.

     SEC. 208. WATER RIGHTS.

       (a) In General.--Nothing in this title preempts or affects 
     State water law or an interstate compact governing water.

[[Page 26248]]

       (b) Compliance Required.--The Secretary shall comply with 
     State water laws in carrying out this title. Nothing in this 
     title affects or preempts State water law or an interstate 
     compact governing water.

     SEC. 209. INTERAGENCY COORDINATION AND COOPERATION.

       (a) Consultation.--The Secretary shall consult with the 
     Secretary of Agriculture before promulgating criteria with 
     respect to financial appraisal functions and loan guarantee 
     administration for activities carried out under this title.
       (b) Memorandum of Agreement.--The Secretary and the 
     Secretary of Agriculture may enter into a memorandum of 
     agreement providing for Department of Agriculture financial 
     appraisal functions and loan guarantee administration for 
     activities carried out under this title.

     SEC. 210. RECORDS; AUDITS.

       (a) In General.--A recipient of a loan guarantee shall keep 
     such records and other pertinent documents as the Secretary 
     shall prescribe by regulation, including such records as the 
     Secretary may require to facilitate an effective audit.
       (b) Access.--The Secretary and the Comptroller General of 
     the United States, or their duly authorized representatives, 
     shall have access, for the purpose of audit, to the records 
     and other pertinent documents.

     SEC. 211. FULL FAITH AND CREDIT.

       The full faith and credit of the United States is pledged 
     to the payment of all guarantees issued under this section 
     with respect to principal and interest.

     SEC. 212. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as are 
     necessary to carry out this title, to remain available until 
     expended.

  The committee amendment in the nature of a substitute was agreed to.
  The bill (S. 895), as amended, was read the third time and passed.

                          ____________________