[United States Statutes at Large, Volume 120, 109th Congress, 2nd Session]
[From the U.S. Government Publishing Office, www.gpo.gov]

120 STAT. 3345

Public Law 109-451
109th Congress

An Act


 
To authorize the Secretary of the Interior to carry out a rural water
supply program in the Reclamation States to provide a clean, safe,
affordable, and reliable water supply to rural residents.  NOTE: Dec.
22, 2006 -  [S. 895]

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress  NOTE: Rural Water Supply Act of
2006.  assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a)  NOTE: 43 USC 2401 note.  Short Title.--This Act may be cited
as the ``Rural Water Supply Act of 2006''.

(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 2006

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. Reports.
Sec. 109. Authorization of appropriations.
Sec. 110. Termination of authority.

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. Defaults.
Sec. 206. Operations, maintenance, and replacement costs.
Sec. 207. Title to newly constructed facilities.
Sec. 208. Water rights.
Sec. 209. Interagency coordination and cooperation.
Sec. 210. Records; audits.
Sec. 211. Full faith and credit.
Sec. 212. Report.
Sec. 213. Effect on the reclamation laws.
Sec. 214. Authorization of appropriations.
Sec. 215. Termination of authority.

TITLE III--REPORT ON TRANSFER OF RECLAMATION FACILITIES

Sec. 301. Report.

[[Page 3346]]
120 STAT. 3346

TITLE  NOTE: Reclamation Rural Water Supply Act of 2006.  I--
RECLAMATION RURAL WATER SUPPLY ACT OF 2006

SEC. 101.  NOTE: 43 USC 2401 note.  SHORT TITLE.

This title may be cited as the ``Reclamation Rural Water Supply Act
of 2006''.

SEC. 102.  NOTE: 43 USC 2401.  DEFINITIONS.

In this title:
(1) Construction.--The term ``construction'' means the
installation of 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 carried out 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

[[Page 3347]]
120 STAT. 3347

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.  NOTE: 43 USC 2402.  RURAL WATER SUPPLY PROGRAM.

(a) In General.--The Secretary, in cooperation with non-Federal
project entities and consistent with this title, may 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  NOTE: Deadline. Federal Register,
publication.  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.

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120 STAT. 3348

(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 pre-existing 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.  NOTE: 43 USC 2403.  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;
(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

[[Page 3349]]
120 STAT. 3349

(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.  NOTE: 43 USC 2404.  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;

[[Page 3350]]
120 STAT. 3350

(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)  NOTE: Deadline.  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)  NOTE: Deadline.  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.

[[Page 3351]]
120 STAT. 3351

(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)  NOTE: Public information.  make available to the
public, on request, the appraisal report prepared under this
title; and
(3)  NOTE: Federal Register,
publication. Notice.  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.  NOTE: 43 USC 2405.  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

[[Page 3352]]
120 STAT. 3352

(B) submitted to the Secretary by the non-Federal
project entity; or
(3)(A)  NOTE: Grants. Contracts.  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--
(i) the non-Federal entity is qualified to complete
the feasibility study in accordance with the criteria
promulgated under subsection (d); and
(ii) using the non-Federal project entity to conduct
the feasibility study is a cost-effective alternative
for completing the appraisal investigation; or
(B) if the Secretary determines not to provide a grant to,
or enter into a cooperative agreement with, a non-Federal
project entity under subparagraph (A), provide to the non-
Federal project entity notice of the determination, including an
explanation of the reason for the determination.

(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)  NOTE: Notification.  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 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

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120 STAT. 3353

(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)  NOTE: Deadline.  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--

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120 STAT. 3354

(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)  NOTE: Federal Register,
publication. Notice.  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.

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120 STAT. 3355

(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.  NOTE: 43 USC 2406.  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.--

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120 STAT. 3356

(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.  NOTE: 43 USC 2407.  REPORTS.

Beginning in fiscal year 2007, and each fiscal year thereafter
through fiscal year 2012, 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 an annual report that
describes the number and type of full-time equivalent positions in the
Department of the Interior and the amount of overhead costs of the
Department of the Interior that are allocated to carrying out this title
for the applicable fiscal year.

SEC. 109.  NOTE: 43 USC 2408.  AUTHORIZATION OF APPROPRIATIONS.

(a) In General.--There is authorized to be appropriated to carry out
this title $15,000,000 for each of fiscal years 2007 through 2016, 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 2007 and 2008.
(c) Construction Costs.--No amounts made available under this
section shall be used to pay construction costs associated with any
rural water supply project.

SEC. 110. TERMINATION OF AUTHORITY.

The authority of the Secretary to carry out this title terminates on
September 30, 2016.

TITLE  NOTE: Twenty-First Century Water Works Act.  II--TWENTY-FIRST
CENTURY WATER WORKS ACT

SEC. 201.  NOTE: 43 USC 2401 note.  SHORT TITLE.

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

SEC. 202.  NOTE: 43 USC 2421.  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--
(A) a 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.)); or

[[Page 3357]]
120 STAT. 3357

(B) a clean renewable energy bond lender (as defined
in section 54(j)(2) of the Internal Revenue Code of 1986
(as in effect on the date of enactment of this Act)).
(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));
(B) an extraordinary operation and maintenance
activity for, or the rehabilitation or replacement 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;
or
(C) an improvement to water infrastructure directly
associated with a reclamation project that, based on a
determination of the Secretary--
(i) improves water management; and
(ii) fulfills other Federal goals.
(7) Secretary.--The term ``Secretary'' means the Secretary
of the Interior.

SEC. 203.  NOTE: 43 USC 2422.  PROJECT ELIGIBILITY.

(a) Eligibility Criteria.--
(1)  NOTE: Federal Register, publication.  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

[[Page 3358]]
120 STAT. 3358

(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.  NOTE: 43 USC 2423.  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.  NOTE: 43 USC 2424.  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.

[[Page 3359]]
120 STAT. 3359

(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 (notwithstanding 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 borrower 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.

[[Page 3360]]
120 STAT. 3360

SEC. 206.  NOTE: 43 USC 2425.  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.  NOTE: 43 USC 2426.  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.  NOTE: 43 USC 2427.  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. 209.  NOTE: 43 USC 2428.  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 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. 210.  NOTE: 43 USC 2429.  RECORDS; AUDITS.

(a)  NOTE: Regulations.  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.  NOTE: 43 USC 2430.  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.

[[Page 3361]]
120 STAT. 3361

SEC. 212.  NOTE: 43 USC 2431.  REPORT.

Not later than 1 year after the date on which the eligibility
criteria are published in the Federal Register under section 203(a), and
every 2 years thereafter, 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 report that describes the
implementation of the loan guarantee program under section 204.

SEC. 213.  NOTE: 43 USC 2432.  EFFECT ON THE RECLAMATION LAWS.

(a) Reclamation Projects.--Nothing in this title supersedes or
amends any Federal law associated with a project, or a portion of a
project, constructed under the reclamation laws.
(b) No New or Supplemental Benefits.--Any assistance provided under
this title shall not--
(1) be considered to be a new or supplemental benefit for
purposes of the Reclamation Reform Act of 1982 (43 U.S.C. 390aa
et seq.); or
(2) affect any contract in existence on the date of
enactment of this Act that is executed under the reclamation
laws.

SEC. 214.  NOTE: 43 USC 2433.  AUTHORIZATION OF APPROPRIATIONS.

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

SEC. 215.  NOTE: 43 USC 2434.  TERMINATION OF AUTHORITY.

(a) In General.--Subject to subsection (b), the authority of the
Secretary to carry out this title terminates on the date that is 10
years after the date of enactment of this Act.
(b) Exception.--The termination of authority under subsection (a)
shall have no effect on--
(1) any loans guaranteed by the United States under this
title; or
(2) the administration of any loan guaranteed under this
title before the effective date of the termination of authority.

TITLE III--REPORT ON TRANSFER OF RECLAMATION FACILITIES

SEC. 301. REPORT.

(a) In General.--Not later than 180 days 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 report that describes any impediments and
activities that significantly delay the ability of the Secretary to
complete timely transfers of title to reclamation facilities to
qualified non-Federal entities under laws authorizing the transfers.

[[Page 3362]]
120 STAT. 3362

(b) Consultation.--In preparing the report under subsection (a), the
Secretary shall consult with any appropriate non-Federal parties,
including reclamation water and power customers.

Approved December 22, 2006.

LEGISLATIVE HISTORY--S. 895:
---------------------------------------------------------------------------

SENATE REPORTS: No. 109-148 (Comm. on Energy and Natural Resources).
CONGRESSIONAL RECORD:
Vol. 151 (2005):
Nov. 16, considered and passed
Senate.
Vol. 152 (2006):
Dec. 6, considered and passed House,
amended.
Dec. 8, Senate concurred in House
amendment.