SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Water Conservation and Quality 
Incentives Act''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) in many parts of the United States, water supplies are 
        insufficient to meet current or expected future demand during 
        certain times of the year;
            (2) a number of factors (including growing populations, 
        increased demands for food and fiber production, and new 
        environmental demands for water) are placing increased demands 
        on existing water supply sources;
            (3) increased water conservation, water quality 
        enhancement, and more efficient use of water supplies could 
        help meet increased demands on water sources;
            (4) in States that recognize rights to conserved water for 
        persons who conserve it, irrigation suppliers, farmers, 
        ranchers, and other users could gain rights to use conserved 
        water while also increasing the quantity of water available for 
        other beneficial uses by implementing measures to reduce water 
        loss during transport to, or application on, the fields;
            (5) reducing the quantity of water lost during transport to 
        the fields and improving water quality can help areas better 
        meet changing population and economic needs; and
            (6) the role of the Federal Government in helping meet 
        those changing water needs should be to provide financial 
        assistance to help irrigators, farmers, and ranchers implement 
        practical, cost-effective water quality and conservation 
        measures.

SEC. 3. USE OF STATE REVOLVING LOAN FUNDS FOR WATER CONSERVATION 
              IMPROVEMENTS.

    Section 603 of the Federal Water Pollution Control Act (33 U.S.C. 
1383) is amended--
            (1) in the first sentence of subsection (c)--
                    (A) by striking ``and (3)'' and inserting ``(3)''; 
                and
                    (B) by inserting before the period at the end the 
                following: ``, (4) for construction of water 
                conservation improvements by eligible recipients under 
                subsection (i)''; and
            (2) by adding at the end the following:
    ``(i) Water Conservation Improvements.--
            ``(1) Definition of eligible recipient.--In this 
        subsection, the term `eligible recipient' means a municipality, 
        quasi-municipality, municipal corporation, special district, 
        conservancy district, irrigation district, water users' 
        association, tribal authority, intermunicipal, interstate, or 
        State agency, nonprofit private organization, a member of such 
        an association, authority, agency, or organization, or a 
        lending institution, located in a State that has enacted laws 
        that--
                    ``(A) provide a water user who invests in a water 
                conservation improvement with a right to use water 
                conserved by the improvement, as allowed by State law;
                    ``(B) provide authority to reserve minimum flows of 
                streams in the State; and
                    ``(C) prohibit transactions that adversely affect 
                existing water rights.
            ``(2) Financial assistance.--A State may provide financial 
        assistance from its water pollution control revolving fund to 
        an eligible recipient to construct a water conservation 
        improvement, including--
                    ``(A) piping or lining of an irrigation canal;
                    ``(B) wastewater and tailwater recovery or 
                recycling;
                    ``(C) irrigation scheduling;
                    ``(D) water use measurement or metering;
                    ``(E) on-field irrigation efficiency improvements; 
                and
                    ``(F) any other improvement that the State 
                determines will provide water conservation benefits.
            ``(3) Voluntary participation.--The participation of an 
        eligible recipient in the water conservation improvement shall 
        be voluntary.
            ``(4) Use of conserved water.--The quantity of water 
        conserved through the water conservation improvement shall be 
        allocated in accordance with applicable State law, including 
        any applicable State law requiring a portion of the conserved 
        water to be used for instream flow enhancement or other 
        conservation purposes.
            ``(5) Limitation on use for irrigated agriculture.--
        Conserved water made available under paragraph (4) shall not be 
        used to irrigate land that has not previously been irrigated 
        unless the use is authorized by State law and will not diminish 
        water quality.''.

SEC. 4. USE OF STATE REVOLVING LOAN FUNDS FOR WATER QUALITY 
              IMPROVEMENTS.

    Section 603 of the Federal Water Pollution Control Act (33 U.S.C. 
1383) (as amended by section 3) is amended--
            (1) in the first sentence of subsection (c), by inserting 
        before the period at the end the following: ``, and (5) for 
        construction of water quality improvements or practices by 
        eligible recipients under subsection (j)''; and
            (2) by adding at the end the following:
    ``(j) Water Quality Improvements.--
            ``(1) Definition of eligible recipient.--In this 
        subsection, the term `eligible recipient' means a municipality, 
        quasi-municipality, municipal corporation, special district, 
        conservancy district, irrigation district, water users' 
        association or member of such an association, tribal authority, 
        intermunicipal, interstate, or State agency, nonprofit private 
        organization, or lending institution.
            ``(2) Financial assistance.--A State may provide financial 
        assistance from its water pollution control revolving fund to 
        an eligible recipient to construct or establish water quality 
        improvements or practices that the State determines will 
        provide water quality benefits.
            ``(3) Voluntary participation.--The participation of an 
        eligible recipient in the water quality improvements or 
        practices shall be voluntary.''.

SEC. 5. CONFORMING AMENDMENTS.

    Section 601(a) of the Federal Water Pollution Control Act (33 
U.S.C. 1381(a)) is amended--
            (1) by striking ``and (3)'' and inserting ``(3)''; and
            (2) by inserting before the period at the end the 
        following: ``, and (4) for construction of water conservation 
        and quality improvements by eligible recipients under 
        subsections (i) and (j) of section 603''.
Water Conservation and Quality Incentives Act - Amends the Federal Water Pollution Control Act to authorize the use of State water pollution control revolving funds for assistance to eligible recipients for construction of water conservation improvements and of water quality improvements or practices.  Defines "eligible recipients," for purposes of assistance for water conservation improvements, as specified parties located in a State that has enacted laws that:  (1) provide a water user who invests in such an improvement with a right to use water conserved by the improvement; (2) provide authority to reserve minimum flows of streams; and (3) prohibit transactions that adversely affect existing water rights. 
Bars the use of water conserved through such improvements for the irrigation of land that has not been previously irrigated.
Water Conservation and Quality Incentives Act