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[House Report 110-30]
[From the U.S. Government Publishing Office]

110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     110-30

======================================================================
 
                  WATER QUALITY FINANCING ACT OF 2007

                                _______
                                

 March 5, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Oberstar, from the Committee on Transportation and Infrastructure, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 720]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Transportation and Infrastructure, to whom 
was referred the bill (H.R. 720) to amend the Federal Water 
Pollution Control Act to authorize appropriations for State 
water pollution control revolving funds, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) In General.--This Act may be cited as the ``Water Quality 
Financing Act of 2007''.
    (b) Table of Contents.--

Sec. 1. Short title; table of contents.
Sec. 2. Amendment of Federal Water Pollution Control Act.

              TITLE I--TECHNICAL AND MANAGEMENT ASSISTANCE

Sec. 101. Technical assistance.
Sec. 102. State management assistance.
Sec. 103. Watershed pilot projects.

               TITLE II--CONSTRUCTION OF TREATMENT WORKS

Sec. 201. Sewage collection systems.
Sec. 202. Treatment works defined.
Sec. 203. Policy on cost effectiveness.

        TITLE III--STATE WATER POLLUTION CONTROL REVOLVING FUNDS

Sec. 301. General authority for capitalization grants.
Sec. 302. Capitalization grant agreements.
Sec. 303. Water pollution control revolving loan funds.
Sec. 304. Allotment of funds.
Sec. 305. Intended use plan.
Sec. 306. Annual reports.
Sec. 307. Technical assistance.
Sec. 308. Authorization of appropriations.

                      TITLE IV--GENERAL PROVISIONS

Sec. 401. Definition of treatment works.
Sec. 402. Funding for Indian programs.

                            TITLE V--STUDIES

Sec. 501. Study of long-term, sustainable, clean water funding.
Sec. 502. Feasibility study of supplemental and alternative clean water 
funding mechanisms.

                        TITLE VI--TONNAGE DUTIES

Sec. 601. Tonnage duties.

SEC. 2. AMENDMENT OF FEDERAL WATER POLLUTION CONTROL ACT.

    Except as otherwise expressly provided, whenever in this Act an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Federal Water Pollution 
Control Act (33 U.S.C. 1251 et seq.).

              TITLE I--TECHNICAL AND MANAGEMENT ASSISTANCE

SEC. 101. TECHNICAL ASSISTANCE.

    (a) Technical Assistance for Rural and Small Treatment Works.--
Section 104(b) (33 U.S.C. 1254(b)) is amended--
          (1) by striking ``and'' at the end of paragraph (6);
          (2) by striking the period at the end of paragraph (7) and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(8) make grants to nonprofit organizations--
                  ``(A) to provide technical assistance to rural and 
                small municipalities for the purpose of assisting, in 
                consultation with the State in which the assistance is 
                provided, such municipalities in the planning, 
                developing, and acquisition of financing for wastewater 
                infrastructure assistance;
                  ``(B) to provide technical assistance and training 
                for rural and small publicly owned treatment works and 
                decentralized wastewater treatment systems to enable 
                such treatment works and systems to protect water 
                quality and achieve and maintain compliance with the 
                requirements of this Act; and
                  ``(C) to disseminate information to rural and small 
                municipalities and municipalities that meet the 
                affordability criteria established under section 
                603(i)(2) by the State in which the municipality is 
                located with respect to planning, design, construction, 
                and operation of publicly owned treatment works and 
                decentralized wastewater treatment systems.''.
    (b) Authorization of Appropriations.--Section 104(u) (33 U.S.C. 
1254(u)) is amended--
          (1) by striking ``and (6)'' and inserting ``(6)''; and
          (2) by inserting before the period at the end the following: 
        ``; and (7) not to exceed $75,000,000 for each of fiscal years 
        2008 through 2012 for carrying out subsections (b)(3) and 
        (b)(8), except that not less than 20 percent of the amounts 
        appropriated pursuant to this paragraph in a fiscal year shall 
        be used for carrying out subsection (b)(8)''.
    (c) Competitive Procedures for Awarding Grants.--Section 104 (33 
U.S.C. 1254(b)) is amended by adding at the end the following:
    ``(w) Competitive Procedures for Awarding Grants.--The 
Administrator shall establish procedures that, to the maximum extent 
practicable, promote competition and openness in the award of grants to 
nonprofit private agencies, institutions, and organizations under this 
section.''.

SEC. 102. STATE MANAGEMENT ASSISTANCE.

    Section 106(a) (33 U.S.C. 1256(a)) is amended--
          (1) by striking ``and'' at the end of paragraph (1);
          (2) by striking the semicolon at the end of paragraph (2) and 
        inserting ``; and''; and
          (3) by inserting after paragraph (2) the following:
          ``(3) such sums as may be necessary for each of fiscal years 
        1991 through 2007, and $300,000,000 for each of fiscal years 
        2008 through 2012;''.

SEC. 103. WATERSHED PILOT PROJECTS.

    (a) Pilot Projects.--Section 122 (33 U.S.C. 1274) is amended--
          (1) in the section heading by striking ``wet 
        weather''; and
          (2) in subsection (a)--
                  (A) in the matter preceding paragraph (1) by striking 
                ``wet weather discharge'';
                  (B) in paragraph (2) by inserting ``, including low-
                impact development technologies'' before the period at 
                the end; and
                  (C) by adding at the end the following:
          ``(3) Watershed partnerships.--Efforts of municipalities and 
        property owners to demonstrate cooperative ways to address 
        nonpoint sources of pollution to reduce adverse impacts on 
        water quality.''.
    (b) Authorization of Appropriations.--Section 122(c)(1) is amended 
by striking ``for fiscal year 2004'' and inserting ``for each of fiscal 
years 2004 through 2012''.
    (c) Report to Congress.--Section 122(d) is amended by striking ``5 
years'' and inserting ``10 years''.

               TITLE II--CONSTRUCTION OF TREATMENT WORKS

SEC. 201. SEWAGE COLLECTION SYSTEMS.

    Section 211 (33 U.S.C. 1291) is amended--
          (1) by striking the section designation and all that follows 
        through ``(a) No'' and inserting the following:

``SEC. 211. SEWAGE COLLECTION SYSTEMS.

    ``(a) In General.--No'';
          (2) in subsection (b) by inserting ``Population Density.--'' 
        after ``(b)''; and
          (3) by striking subsection (c) and inserting the following:
    ``(c) Exceptions.--
          ``(1) Replacement and major rehabilitation.--Notwithstanding 
        the requirement of subsection (a)(1) concerning the existence 
        of a collection system as a condition of eligibility, a project 
        for replacement or major rehabilitation of a collection system 
        existing on January 1, 2007, shall be eligible for a grant 
        under this title if the project otherwise meets the 
        requirements of subsection (a)(1) and meets the requirement of 
        paragraph (3).
          ``(2) New systems.--Notwithstanding the requirement of 
        subsection (a)(2) concerning the existence of a community as a 
        condition of eligibility, a project for a new collection system 
        to serve a community existing on January 1, 2007, shall be 
        eligible for a grant under this title if the project otherwise 
        meets the requirements of subsection (a)(2) and meets the 
        requirement of paragraph (3).
          ``(3) Requirement.--A project meets the requirement of this 
        paragraph if the purpose of the project is to accomplish the 
        objectives, goals, and policies of this Act by addressing an 
        adverse environmental condition existing on the date of 
        enactment of this paragraph.''.

SEC. 202. TREATMENT WORKS DEFINED.

    Section 212(2)(A) (33 U.S.C. 1292(2)(A)) is amended--
          (1) by striking ``any works, including site'';
          (2) by striking ``is used for ultimate'' and inserting ``will 
        be used for ultimate''; and
          (3) by inserting before the period at the end the following: 
        ``and acquisition of other lands, and interests in lands, which 
        are necessary for construction''.

SEC. 203. POLICY ON COST EFFECTIVENESS.

    Section 218(a) (33 U.S.C. 1298(a)) is amended by striking 
``combination of devices and systems'' and all that follows through the 
period at the end and inserting ``treatment works that meets the 
requirements of this Act. The system may include water efficiency 
measures and devices.''.

        TITLE III--STATE WATER POLLUTION CONTROL REVOLVING FUNDS

SEC. 301. GENERAL AUTHORITY FOR CAPITALIZATION GRANTS.

    Section 601(a) (33 U.S.C. 1381(a)) is amended by striking ``for 
providing assistance'' and all that follows through the period at the 
end and inserting the following: ``to accomplish the objectives, goals, 
and policies of this Act by providing assistance for projects and 
activities identified in section 603(c).''.

SEC. 302. CAPITALIZATION GRANT AGREEMENTS.

    (a) Reporting Infrastructure Assets.--Section 602(b)(9) (33 U.S.C. 
1382(b)(9)) is amended by striking ``standards'' and inserting 
``standards, including standards relating to the reporting of 
infrastructure assets''.
    (b) Additional Requirements.--Section 602(b) (33 U.S.C. 1382(b)) is 
amended--
          (1) by striking ``and'' at the end of paragraph (9);
          (2) by striking the period at the end of paragraph (10) and 
        inserting a semicolon; and
          (3) by adding at the end the following:
          ``(11) the State will establish, maintain, invest, and credit 
        the fund with repayments, such that the fund balance will be 
        available in perpetuity for providing financial assistance in 
        accordance with this title;
          ``(12) any fees charged by the State to recipients of 
        assistance will be used for the purpose of financing the cost 
        of administering the fund or financing projects or activities 
        eligible for assistance from the fund;
          ``(13) beginning in fiscal year 2009, the State will include 
        as a condition of providing assistance to a municipality or 
        intermunicipal, interstate, or State agency that the recipient 
        of such assistance certify, in a manner determined by the 
        Governor of the State, that the recipient--
                  ``(A) has studied and evaluated the cost and 
                effectiveness of innovative and alternative processes, 
                materials, techniques, and technologies for carrying 
                out the proposed project or activity for which 
                assistance is sought under this title, and has 
                selected, to the extent practicable, a project or 
                activity that may result in greater environmental 
                benefits or equivalent environmental benefits when 
                compared to standard processes, materials, techniques, 
                and technologies and more efficiently uses energy and 
                natural and financial resources; and
                  ``(B) has considered the cost and effectiveness of 
                alternative management and financing approaches for 
                carrying out a project or activity for which assistance 
                is sought under this title, taking into account the 
                cost of operating and maintaining the project or 
                activity over its life, as well as the cost of 
                constructing the project or activity;
          ``(14) the State will use at least 15 percent of the amount 
        of each capitalization grant received by the State under this 
        title after September 30, 2007, to provide assistance to 
        municipalities of fewer than 10,000 individuals that meet the 
        affordability criteria established by the State under section 
        603(i)(2) for activities included on the State's priority list 
        established under section 603(g), to the extent that there are 
        sufficient applications for such assistance;
          ``(15) treatment works eligible under section 603(c)(1) which 
        will be constructed in whole or in part with funds made 
        available under section 205(m) or by a State water pollution 
        control revolving fund under this title, or both, will meet the 
        requirements of, or otherwise be treated (as determined by the 
        Governor of the State) under sections 204(b)(1), 211, 218, and 
        511(c)(1) in the same manner as treatment works constructed 
        with assistance under title II of this Act;
          ``(16) a contract to be carried out using funds directly made 
        available by a capitalization grant under this title for 
        program management, construction management, feasibility 
        studies, preliminary engineering, design, engineering, 
        surveying, mapping, or architectural related services shall be 
        negotiated in the same manner as a contract for architectural 
        and engineering services is negotiated under chapter 11 of 
        title 40, United States Code, or an equivalent State 
        qualifications-based requirement (as determined by the Governor 
        of the State); and
          ``(17) the requirements of section 513 will apply to the 
        construction of treatment works carried out in whole or in part 
        with assistance made available by a State water pollution 
        control revolving fund as authorized under this title, or with 
        assistance made available under section 205(m), or both, in the 
        same manner as treatment works for which grants are made under 
        this Act.''.

SEC. 303. WATER POLLUTION CONTROL REVOLVING LOAN FUNDS.

    (a) Projects and Activities Eligible for Assistance.--Section 
603(c) (33 U.S.C. 1383(c)) is amended to read as follows:
    ``(c) Projects and Activities Eligible for Assistance.--The amounts 
of funds available to each State water pollution control revolving fund 
shall be used only for providing financial assistance--
          ``(1) to any municipality or intermunicipal, interstate, or 
        State agency for construction of publicly owned treatment 
        works;
          ``(2) for the implementation of a management program 
        established under section 319;
          ``(3) for development and implementation of a conservation 
        and management plan under section 320;
          ``(4) for the implementation of lake protection programs and 
        projects under section 314;
          ``(5) for repair or replacement of decentralized wastewater 
        treatment systems that treat domestic sewage;
          ``(6) for measures to manage or reduce municipal stormwater 
        runoff;
          ``(7) to any municipality or intermunicipal, interstate, or 
        State agency for measures to reduce the demand for publicly 
        owned treatment works capacity through water conservation, 
        efficiency, or reuse;
          ``(8) for measures to increase the security of publicly owned 
        treatment works; and
          ``(9) for the development and implementation of watershed 
        projects meeting the criteria set forth in section 122.''.
    (b) Extended Repayment Period.--Section 603(d)(1) (33 U.S.C. 
1383(d)(1)) is amended--
          (1) in subparagraph (A) by striking ``20 years'' and 
        inserting ``the lesser of 30 years or the design life of the 
        project to be financed with the proceeds of the loan''; and
          (2) in subparagraph (B) by striking ``not later than 20 years 
        after project completion'' and inserting ``upon the expiration 
        of the term of the loan''.
    (c) Fiscal Sustainability Plan.--Section 603(d)(1) (33 U.S.C. 
1383(d)(1)) is further amended--
          (1) by striking ``and'' at the end of subparagraph (C);
          (2) by inserting ``and'' at the end of subparagraph (D); and
          (3) by adding at the end the following:
                  ``(E) for any portion of a treatment works proposed 
                for repair, replacement, or expansion, and eligible for 
                assistance under section 603(c)(1), the recipient of a 
                loan will develop and implement a fiscal sustainability 
                plan that includes--
                          ``(i) an inventory of critical assets that 
                        are a part of that portion of the treatment 
                        works;
                          ``(ii) an evaluation of the condition and 
                        performance of inventoried assets or asset 
                        groupings; and
                          ``(iii) a plan for maintaining, repairing, 
                        and, as necessary, replacing that portion of 
                        the treatment works and a plan for funding such 
                        activities;''.
    (d) Administrative Expenses.--Section 603(d)(7) (33 U.S.C. 
1383(d)(7)) is amended by inserting before the period at the end the 
following: ``, $400,000 per year, or \1/5\ percent per year of the 
current valuation of the fund, whichever amount is greatest, plus the 
amount of any fees collected by the State for such purpose regardless 
of the source''.
    (e) Technical and Planning Assistance for Small Systems.--Section 
603(d) (33 U.S.C. 1383(d)) is amended--
          (1) by striking ``and'' at the end of paragraph (6);
          (2) by striking the period at the end of paragraph (7) and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(8) to provide owners and operators of treatment works that 
        serve a population of 10,000 or fewer with technical and 
        planning assistance and assistance in financial management, 
        user fee analysis, budgeting, capital improvement planning, 
        facility operation and maintenance, equipment replacement, 
        repair schedules, and other activities to improve wastewater 
        treatment plant management and operations; except that such 
        amounts shall not exceed 2 percent of grant awards to such fund 
        under this title.''.
    (f) Additional Subsidization.--Section 603 (33 U.S.C. 1383) is 
amended by adding at the end the following:
    ``(i) Additional Subsidization.--
          ``(1) In general.--In any case in which a State provides 
        assistance to a municipality or intermunicipal, interstate, or 
        State agency under subsection (d), the State may provide 
        additional subsidization, including forgiveness of principal 
        and negative interest loans--
                  ``(A) to benefit a municipality that--
                          ``(i) meets the State's affordability 
                        criteria established under paragraph (2); or
                          ``(ii) does not meet the State's 
                        affordability criteria if the recipient--
                                  ``(I) seeks additional subsidization 
                                to benefit individual ratepayers in the 
                                residential user rate class;
                                  ``(II) demonstrates to the State that 
                                such ratepayers will experience a 
                                significant hardship from the increase 
                                in rates necessary to finance the 
                                project or activity for which 
                                assistance is sought; and
                                  ``(III) ensures, as part of an 
                                assistance agreement between the State 
                                and the recipient, that the additional 
                                subsidization provided under this 
                                paragraph is directed through a user 
                                charge rate system (or other 
                                appropriate method) to such ratepayers; 
                                or
                  ``(B) to implement an innovative or alternative 
                process, material, technique, or technology (including 
                nonstructural protection of surface waters, a new or 
                improved method of waste treatment, and pollutant 
                trading) that may result in greater environmental 
                benefits, or equivalent environmental benefits at 
                reduced cost, when compared to a standard process, 
                material, technique, or technology.
          ``(2) Affordability criteria.--
                  ``(A) Establishment.--On or before September 30, 
                2008, and after providing notice and an opportunity for 
                public comment, a State shall establish affordability 
                criteria to assist in identifying municipalities that 
                would experience a significant hardship raising the 
                revenue necessary to finance a project or activity 
                eligible for assistance under section 603(c)(1) if 
                additional subsidization is not provided. Such criteria 
                shall be based on income data, population trends, and 
                other data determined relevant by the State.
                  ``(B) Existing criteria.--If a State has previously 
                established, after providing notice and an opportunity 
                for public comment, affordability criteria that meet 
                the requirements of subparagraph (A), the State may use 
                the criteria for the purposes of this subsection. For 
                purposes of this Act, any such criteria shall be 
                treated as affordability criteria established under 
                this paragraph.
                  ``(C) Information to assist states.--The 
                Administrator may publish information to assist States 
                in establishing affordability criteria under 
                subparagraph (A).
          ``(3) Priority.--A State may give priority to a recipient for 
        a project or activity eligible for funding under section 
        603(c)(1) if the recipient meets the State's affordability 
        criteria.
          ``(4) Set-aside.--
                  ``(A) In general.--In any fiscal year in which the 
                Administrator has available for obligation more than 
                $1,000,000,000 for the purposes of this title, a State 
                shall provide additional subsidization under this 
                subsection in the amount specified in subparagraph (B) 
                to eligible entities described in paragraph (1) for 
                projects and activities identified in the State's 
                intended use plan prepared under section 606(c) to the 
                extent that there are sufficient applications for such 
                assistance.
                  ``(B) Amount.--In a fiscal year described in 
                subparagraph (A), a State shall set aside for purposes 
                of subparagraph (A) an amount not less than 25 percent 
                of the difference between--
                          ``(i) the total amount that would have been 
                        allotted to the State under section 604 for 
                        such fiscal year if the amount available to the 
                        Administrator for obligation under this title 
                        for such fiscal year had been equal to 
                        $1,000,000,000; and
                          ``(ii) the total amount allotted to the State 
                        under section 604 for such fiscal year.
          ``(5) Limitation.--The total amount of additional 
        subsidization provided under this subsection by a State may not 
        exceed 30 percent of the total amount of capitalization grants 
        received by the State under this title in fiscal years 
        beginning after September 30, 2007.''.

SEC. 304. ALLOTMENT OF FUNDS.

    (a) In General.--Section 604(a) (33 U.S.C. 1384(a)) is amended to 
read as follows:
    ``(a) Allotments.--
          ``(1) Fiscal years 2008 and 2009.--Sums appropriated to carry 
        out this title for each of fiscal years 2008 and 2009 shall be 
        allotted by the Administrator in accordance with the formula 
        used to allot sums appropriated to carry out this title for 
        fiscal year 2007.
          ``(2) Fiscal year 2010 and thereafter.--Sums appropriated to 
        carry out this title for fiscal year 2010 and each fiscal year 
        thereafter shall be allotted by the Administrator as follows:
                  ``(A) Amounts that do not exceed $1,350,000,000 shall 
                be allotted in accordance with the formula described in 
                paragraph (1).
                  ``(B) Amounts that exceed $1,350,000,000 shall be 
                allotted in accordance with the formula developed by 
                the Administrator under subsection (d).''.
    (b) Planning Assistance.--Section 604(b) (33 U.S.C. 1384(b)) is 
amended by striking ``1 percent'' and inserting ``2 percent''.
    (c) Formula.--Section 604 (33 U.S.C. 1384) is amended by adding at 
the end the following:
    ``(d) Formula Based on Water Quality Needs.--Not later than 
September 30, 2009, and after providing notice and an opportunity for 
public comment, the Administrator shall publish an allotment formula 
based on water quality needs in accordance with the most recent survey 
of needs developed by the Administrator under section 516(b).''.

SEC. 305. INTENDED USE PLAN.

    (a) Integrated Priority List.--Section 603(g) (33 U.S.C. 1383(g)) 
is amended to read as follows:
    ``(g) Priority List.--
          ``(1) In general.--For fiscal year 2009 and each fiscal year 
        thereafter, a State shall establish or update a list of 
        projects and activities for which assistance is sought from the 
        State's water pollution control revolving fund. Such projects 
        and activities shall be listed in priority order based on the 
        methodology established under paragraph (2). The State may 
        provide financial assistance from the State's water pollution 
        control revolving fund only with respect to a project or 
        activity included on such list. In the case of projects and 
        activities eligible for assistance under section 603(c)(2), the 
        State may include a category or subcategory of nonpoint sources 
        of pollution on such list in lieu of a specific project or 
        activity.
          ``(2) Methodology.--
                  ``(A) In general.--Not later than 1 year after the 
                date of enactment of this paragraph, and after 
                providing notice and opportunity for public comment, 
                each State (acting through the State's water quality 
                management agency and other appropriate agencies of the 
                State) shall establish a methodology for developing a 
                priority list under paragraph (1).
                  ``(B) Priority for projects and activities that 
                achieve greatest water quality improvement.--In 
                developing the methodology, the State shall seek to 
                achieve the greatest degree of water quality 
                improvement, taking into consideration the requirements 
                of section 602(b)(5) and section 603(i)(3) and whether 
                such water quality improvements would be realized 
                without assistance under this title.
                  ``(C) Considerations in selecting projects and 
                activities.--In determining which projects and 
                activities will achieve the greatest degree of water 
                quality improvement, the State shall consider--
                          ``(i) information developed by the State 
                        under sections 303(d) and 305(b);
                          ``(ii) the State's continuing planning 
                        process developed under section 303(e);
                          ``(iii) the State's management program 
                        developed under section 319; and
                          ``(iv) conservation and management plans 
                        developed under section 320.
                  ``(D) Nonpoint sources.--For categories or 
                subcategories of nonpoint sources of pollution that a 
                State may include on its priority list under paragraph 
                (1), the State may consider the cumulative water 
                quality improvements associated with projects or 
                activities in such categories or subcategories.
                  ``(E) Existing methodologies.--If a State has 
                previously developed, after providing notice and an 
                opportunity for public comment, a methodology that 
                meets the requirements of this paragraph, the State may 
                use the methodology for the purposes of this 
                subsection.''.
    (b) Intended Use Plan.--Section 606(c) (33 U.S.C. 1386(c)) is 
amended--
          (1) in the matter preceding paragraph (1) by striking ``each 
        State shall annually prepare'' and inserting ``each State 
        (acting through the State's water quality management agency and 
        other appropriate agencies of the State) shall annually prepare 
        and publish'';
          (2) by striking paragraph (1) and inserting the following:
          ``(1) the State's priority list developed under section 
        603(g);'';
          (3) in paragraph (4)--
                  (A) by striking ``and (6)'' and inserting ``(6), 
                (15), and (17)''; and
                  (B) by striking ``and'' at the end;
          (4) by striking the period at the end of paragraph (5) and 
        inserting ``; and''; and
          (5) by adding at the end the following:
          ``(6) if the State does not fund projects and activities in 
        the order of the priority established under section 603(g), an 
        explanation of why such a change in order is appropriate.''.
    (c) Transitional Provision.--Before completion of a priority list 
based on a methodology established under section 603(g) of the Federal 
Water Pollution Control Act (as amended by this section), a State shall 
continue to comply with the requirements of sections 603(g) and 606(c) 
of such Act, as in effect on the day before the date of enactment of 
this Act.

SEC. 306. ANNUAL REPORTS.

    Section 606(d) (33 U.S.C. 1386(d)) is amended by inserting ``the 
eligible purpose under section 603(c) for which the assistance is 
provided,'' after ``loan amounts,''.

SEC. 307. TECHNICAL ASSISTANCE.

    Title VI (33 U.S.C. 1381 et seq.) is amended--
          (1) by redesignating section 607 as section 608; and
          (2) by inserting after section 606 the following:

``SEC. 607. TECHNICAL ASSISTANCE.

    ``(a) Simplified Procedures.--Not later than 1 year after the date 
of enactment of this section, the Administrator shall assist the States 
in establishing simplified procedures for treatment works to obtain 
assistance under this title.
    ``(b) Publication of Manual.--Not later than 2 years after the date 
of the enactment of this section, and after providing notice and 
opportunity for public comment, the Administrator shall publish a 
manual to assist treatment works in obtaining assistance under this 
title and publish in the Federal Register notice of the availability of 
the manual.
    ``(c) Compliance Criteria.--At the request of any State, the 
Administrator, after providing notice and an opportunity for public 
comment, shall assist in the development of criteria for a State to 
determine compliance with the conditions of funding assistance 
established under sections 602(b)(13) and 603(d)(1)(E).''.

SEC. 308. AUTHORIZATION OF APPROPRIATIONS.

    Section 608 (as redesignated by section 307 of this Act) is amended 
by striking paragraphs (1) through (5) and inserting the following:
          ``(1) $2,000,000,000 for fiscal year 2008;
          ``(2) $3,000,000,000 for fiscal year 2009;
          ``(3) $4,000,000,000 for fiscal year 2010; and
          ``(4) $5,000,000,000 for fiscal year 2011.''.

                      TITLE IV--GENERAL PROVISIONS

SEC. 401. DEFINITION OF TREATMENT WORKS.

    Section 502 (33 U.S.C. 1362) is amended by adding at the end the 
following:
          ``(25) Treatment works.--The term `treatment works' has the 
        meaning given that term in section 212.''.

SEC. 402. FUNDING FOR INDIAN PROGRAMS.

    Section 518(c) (33 U.S.C. 1377) is amended--
          (1) by striking ``The Administrator'' and inserting the 
        following:
          ``(1) Fiscal years 1987-2006.--The Administrator'';
          (2) in paragraph (1) (as so designated)--
                  (A) by inserting ``and ending before October 1, 
                2006,'' after ``1986,''; and
                  (B) by striking the second sentence; and
          (3) by adding at the end the following:
          ``(2) Fiscal year 2007 and thereafter.--For fiscal year 2007 
        and each fiscal year thereafter, the Administrator shall 
        reserve, before allotments to the States under section 604(a), 
        not less than 0.5 percent and not more than 1.5 percent of the 
        funds made available to carry out title VI.
          ``(3) Use of funds.--Funds reserved under this subsection 
        shall be available only for grants for projects and activities 
        eligible for assistance under section 603(c) to serve--
                  ``(A) Indian tribes;
                  ``(B) former Indian reservations in Oklahoma (as 
                determined by the Secretary of the Interior); and
                  ``(C) Native villages (as defined in section 3 of the 
                Alaska Native Claims Settlement Act (43 U.S.C. 
                1602)).''.

                            TITLE V--STUDIES

SEC. 501. STUDY OF LONG-TERM, SUSTAINABLE, CLEAN WATER FUNDING.

    (a) Study.--Not later than 30 days after the date of enactment of 
this Act, the Comptroller General shall commence a study of the funding 
mechanisms and funding sources available to establish a Clean Water 
Trust Fund.
    (b) Contents.--The study shall include an analysis of potential 
revenue sources that can be efficiently collected, are broad based, are 
related to water quality, and that support the annual funding levels 
authorized by the amendments made by this Act.
    (c) Consultation.--In conducting the study, the Comptroller 
General, at a minimum, shall consult with Federal, State, and local 
agencies, representatives of business and industry, representatives of 
entities operating publicly owned treatment works, and other interested 
groups.
    (d) Report.--Not later than January 1, 2008, the Comptroller 
General shall submit to the Committee on Transportation and 
Infrastructure of the House of Representatives and the Committee on 
Environment and Public Works of the Senate a report on the results of 
the study.

SEC. 502. FEASIBILITY STUDY OF SUPPLEMENTAL AND ALTERNATIVE CLEAN WATER 
                    FUNDING MECHANISMS.

    (a) Study.--Not later than 30 days after the date of enactment of 
this Act, the Comptroller General shall commence a study of funding 
mechanisms and funding sources potentially available for wastewater 
infrastructure and other water pollution control activities under the 
Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.).
    (b) Contents.--The study shall include an analysis of funding and 
investment mechanisms and revenue sources from other potential 
supplemental or alternative public or private sources that could be 
used to fund wastewater infrastructure and other water pollution 
control activities under the Federal Water Pollution Control Act.
    (c) Consultation.--In conducting the study, the Comptroller 
General, at a minimum, shall consult with Federal, State, and local 
agencies, representatives of business, industry, and financial 
investment entities, representatives of entities operating treatment 
works, and other interested groups.
    (d) Report.--Not later than January 1, 2008, the Comptroller 
General shall submit to the Committee on Transportation and 
Infrastructure of the House of Representatives and the Committee on 
Environment and Public Works of the Senate a report on the results of 
the study.

                        TITLE VI--TONNAGE DUTIES

SEC. 601. TONNAGE DUTIES.

    (a) In General.--Section 60301 of title 46, United State Code, is 
amended--
          (1) in the section heading by striking ``taxes'' and 
        inserting ``duties'';
          (2) by amending subsections (a) and (b) to read as follows:
    ``(a) Lower Rate.--
          ``(1) Imposition of duty.--A duty is imposed at the rate 
        described in paragraph (2) at each entry in a port of the 
        United States of--
                  ``(A) a vessel entering from a foreign port or place 
                in North America, Central America, the West Indies 
                Islands, the Bahama Islands, the Bermuda Islands, or 
                the coast of South America bordering the Caribbean Sea; 
                or
                  ``(B) a vessel returning to the same port or place in 
                the United States from which it departed, and not 
                entering the United States from another port or place, 
                except--
                          ``(i) a vessel of the United States;
                          ``(ii) a recreational vessel (as defined in 
                        section 2101 of this title); or
                          ``(iii) a barge.
          ``(2) Rate.--The rate referred to in paragraph (1) shall be--
                  ``(A) 4.5 cents per ton (but not more than a total of 
                22.5 cents per ton per year) for fiscal years 2006 
                through 2007;
                  ``(B) 9.0 cents per ton (but not more than a total of 
                45 cents per ton per year) for fiscal years 2008 
                through 2017; and
                  ``(C) 2 cents per ton (but not more than a total of 
                10 cents per ton per year) for each fiscal year 
                thereafter.
    ``(b) Higher Rate.--
          ``(1) Imposition of duty.--A duty is imposed at the rate 
        described in paragraph (2) on a vessel at each entry in a port 
        of the United States from a foreign port or place not named in 
        subsection (a)(1).
          ``(2) Rate.--The rate referred to in paragraph (1) shall be--
                  ``(A) 13.5 cents per ton (but not more than a total 
                of 67.5 cents per ton per year) for fiscal years 2006 
                through 2007;
                  ``(B) 27 cents per ton (but not more than a total of 
                $1.35 per ton per year) for fiscal years 2008 through 
                2017, and
                  ``(C) 6 cents per ton (but not more than a total of 
                30 cents per ton per year) for each fiscal year 
                thereafter.''; and
          (3) in subsection (c) by striking ``taxes'' and inserting 
        ``duties''.
    (b) Conforming Amendments.--Such title is further amended--
          (1) by striking the heading for subtitle VI and inserting the 
        following:

             ``Subtitle VI--Clearance and Tonnage Duties'';

          (2) in the headings of sections in chapter 603, by striking 
        ``taxes'' and inserting ``duties'';
          (3) in the heading for subsection (a) of section 60303, by 
        striking ``Tax'' and inserting ``Duty'';
          (4) in the text of sections in chapter 603, by striking 
        ``taxes'' each place it appears and inserting ``duties''; and
          (5) in the text of sections in chapter 603, by striking 
        ``tax'' each place it appears and inserting ``duty''.
    (c) Clerical Amendments.--Such title is further amended--
          (1) in the title analysis by striking the item relating to 
        subtitle VI and inserting the following:

``VI. CLEARANCE AND TONNAGE DUTIES.........................60101''; and

          (2) in the analysis for chapter 603--
                  (A) by striking the items relating to sections 60301 
                and 60302 and inserting the following:

``60301. Regular tonnage duties.
``60302. Special tonnage duties.''; and

                  (B) by striking the item relating to section 60304 
                and inserting the following:

``60304. Presidential suspension of tonnage duties and light money.''.

                       Purpose of the Legislation

    H.R. 720 amends the Federal Water Pollution Control Act 
(``Clean Water Act'' or ``Act'') to reauthorize appropriations 
for capitalization grants to states for state water pollution 
control revolving funds.

                  Background and Need for Legislation

    The Subcommittee on Water Resources and Environment of the 
Committee on Transportation and Infrastructure has jurisdiction 
over water quality and wastewater infrastructure programs 
administered by the Environmental Protection Agency (``EPA'') 
under the Federal Water Pollution Control Act, commonly known 
as the Clean Water Act.

The importance of investment in wastewater infrastructure

    To a great extent, improvements in water quality since the 
passage of the 1972 Clean Water Act have resulted from a 
significant investment in wastewater infrastructure 
improvements throughout the country. Since 1972, the Federal 
government has provided more than $82 billion for wastewater 
infrastructure and other assistance, which has dramatically 
improved water quality and the health of the economy and the 
environment. During the same time period, overall investment in 
the nation's wastewater infrastructure, from Federal, State, 
and local sources, has been over $250 billion. Today, the 
nationwide system of wastewater infrastructure includes 16,000 
publicly owned wastewater treatment plants, 100,000 major 
pumping stations, 600,000 miles of sanitary sewers, and 200,000 
miles of storm sewers.
    Investment in wastewater infrastructure has provided 
significant environmental, public health, and economic benefits 
to the nation. First through the Federal construction grants 
program, and now the Clean Water State Revolving Fund (``Clean 
Water SRF'') program, the investment in water infrastructure 
has been integral to improving the quality of the nation's 
waters. The improvements to water quality realized through 
Federal, State, and local investment in wastewater 
infrastructure have been significant, helping to increase the 
number of fishable and swimmable waters throughout the nation. 
As a result of dramatic improvements in wastewater 
infrastructure, effluent discharges have decreased by one-half 
since 1970, despite the fact that waste loads grew by more than 
one-third due to population growth and an expanded economy. 
Today, the nation's farmers, fishermen, and manufacturing and 
tourism industries rely on clean water to carry out activities 
that contribute more than $300 billion to our economy each 
year.
    However, these achievements are now at risk. According to a 
2000 EPA report, entitled Progress in Water Quality, ``without 
continued improvements in wastewater treatment infrastructure, 
future population growth will erode away many of the Clean 
Water Act achievements in effluent loading reduction.''
    Given the expansion of the U.S. population forecast over 
the next 20 years, EPA projects that by 2016, wastewater 
treatment plants nationwide may discharge pollutants into U.S. 
waters at levels similar to those that existed in the mid-
1970s, only a few years after the enactment of the Clean Water 
Act. In addition, if these population forecasts are projected 
further to the year 2025, without significant investment in 
additional treatment capacity, the level of pollution being 
discharged into the nation's waters would reach rates not seen 
since 1968, four years before the enactment of the Act, when 
they reached the maximum level ever recorded.
    Without increased investment in wastewater infrastructure, 
in less than a generation, the U.S. could lose much of the 
gains it has made thus far in improving water quality as a 
result of the 1972 Clean Water Act.
    An additional concern is that much of the wastewater 
infrastructure in this country is rapidly approaching or has 
already exceeded its projected useful life. Many cities and 
communities throughout the United States are currently facing a 
critical juncture in the age and reliability of their water 
infrastructure. For example, several major U.S. cities still 
rely on sewer pipes that were installed more than 100 years ago 
to collect and treat domestic sewage. In addition, many of the 
wastewater treatment facilities constructed soon after 
enactment of the Act are now reaching the end of their expected 
useful life and are in need of repair or replacement.
    Another looming need centers on upgrading aging 
infrastructure to control and eliminate combined sewer 
overflows. Combined sewer systems were among the earliest 
sewers built in the United States and continued to be built 
into the middle of the 20th century. These systems were 
designed to carry both domestic sewage and industrial 
wastewater, along with stormwater, to treatment facilities 
before being discharged downstream. However, during heavy 
rainfall or snowmelt, the volume of wastewater entering the 
combined sewer system often exceeds its conveying capacity. To 
prevent damage to the infrastructure, combined sewer systems 
were designed to flow directly to surface waters when their 
capacity is exceeded, discharging large volumes of untreated or 
partially treated sewage wastes, directly into local waters. An 
estimated 850 billion gallons of untreated or partially treated 
sewage is discharged annually from combined sewer systems. 
Because combined sewer overflows contain raw or partially-
treated sewage and contribute pathogens, solids, debris, and 
toxic pollutants to receiving waters, they create serious 
public health and water quality concerns. In addition, combined 
sewer overflows are often the direct cause of (or significantly 
contribute to) beach closures, shellfish bed closures, 
contamination of drinking water supplies, and other 
environmental and public health problems.
    Combined sewers are found in 33 States across the U.S. and 
the District of Columbia. The majority of combined sewers are 
located in communities in the Northeast or Great Lakes regions, 
where much of the oldest water infrastructure in the nation is 
found. However, combined sewer overflows have also occurred in 
the West, including the States of Washington, Oregon, and 
California. To eliminate combined sewer overflows, communities 
must redesign their sewer systems to separate sewage flows from 
stormwater flows or provide significant additional capacity to 
eliminate the possibility that combined flows will exceed the 
limits of the infrastructure. Either way, this will be a 
massive undertaking, estimated by EPA to cost more than $50 
billion.
    In the near future, many communities will need to repair or 
replace large portions of their wastewater infrastructure or 
face the likelihood of increased failures in their ability to 
treat wastewater, posing a significant threat to the country's 
quality of life, economic prosperity, and the health and safety 
of both human populations and environmental quality.
    Moreover, following the terrorist attacks of September 11, 
2001, the identification and protection of critical 
infrastructure has become a national priority, and protection 
of critical wastewater infrastructure has become important to 
homeland security. Utilities need to increase security and 
implement measures to protect their wastewater treatment and 
collection systems, which is placing a further demand for 
resources on utilities.
    The Clean Water Act requires EPA to report to Congress 
every two years with a detailed estimate of the costs of needed 
water infrastructure in each State. This report, which is 
compiled through a survey of the States, includes estimates of 
needed projects to achieve the improvements in water quality 
necessary to meet the goals of the Clean Water Act, including 
publicly owned municipal wastewater collection and treatment 
facilities, facilities for the control of combined sewer 
overflows, activities to control stormwater runoff and nonpoint 
source pollution, and programs designed to protect the nation's 
estuaries.
    These state surveys show that the financial resources 
necessary for wastewater infrastructure improvements are 
substantial. According to EPA's most recent assessment of 
wastewater infrastructure needs, the Clean Watersheds Needs 
Survey 2000: Report to Congress, the existing documented needs 
for the nation are $181.2 billion. In addition, according to 
EPA's Clean Water and Drinking Water Infrastructure Gap 
Analysis, between $300 billion and $400 billion in capital 
investment is needed over the next 20 years for restoration and 
replacement of the nation's aging wastewater infrastructure. 
Considering that the average annual investment to the SRFs by 
EPA over the past few years has trended downward from the 
recent long-term average of $1.35 billion, the level of 
investment necessary to address these needs and close the 
current funding gap requires a renewed and expanded commitment 
from all levels of government, including the Federal 
Government.
    Other organizations, including the Congressional Budget 
Office (``CBO'') and a coalition of industry and other 
stakeholders, all have estimated that significant increases in 
investments are needed to address wastewater needs over the 
next 20 years--as much as twice the current level of investment 
by all levels of government. These estimates fall between CBO's 
low-cost estimate of a $3.2 billion annual gap, and CBO's high-
cost estimate of an $11.1 billion annual gap. The needs are 
especially urgent for areas trying to remedy the problem of 
combined sewer overflows and sanitary sewer overflows, and for 
small communities lacking sufficient independent financing 
ability.
    EPA is also examining how improved technologies and 
innovative financing options might help close the gap between 
projected needs and current expenditures. However, even if 
wastewater systems are able to implement cost savings and 
improved efficiencies, significant increases in investment from 
all levels of government will be needed to meet projected 
needs.
    In addition, a significant number of small, rural, and 
disadvantaged communities throughout the nation face challenges 
financing wastewater infrastructure, either because of a lack 
of sufficient financial resources or a declining ratepayer base 
to address stranded infrastructure needs. In many of these 
communities, even with the assistance of below-market rate 
loans from the state revolving fund, communities still face 
difficulties affording the increase in local wastewater rates 
that would otherwise be necessary to finance wastewater 
infrastructure needs. In many cases, addressing these 
affordability issues may require an increased level of Federal 
assistance through additional technical assistance, financial 
flexibility, or subsidization to targeted communities or 
ratepayers.

The Clean Water Act program

    Titles II and VI of the Clean Water Act provide authority 
for grants to States and municipalities and the establishment 
of Clean Water SRFs, respectively, for the construction of 
treatment works. The Construction Grants program, contained in 
Title II of the Act, funded approximately $60 billion in 
wastewater improvements over the life of the program. This 
program was phased out in favor of state revolving loan funds 
in the Water Quality Act of 1987 (P.L. 100-4).
    Title VI of the Clean Water Act provides for the 
establishment and capitalization of Clean Water SRFs to aid in 
funding the construction of wastewater infrastructure for the 
improvement of water quality throughout the nation.
    Since 1987, the majority of Federal assistance for 
wastewater infrastructure improvements has been through the 
Clean Water SRF program. Through this program, individual 
states and territories maintain revolving loan funds to provide 
low-cost financing for approved infrastructure projects. Funds 
to capitalize the Clean Water SRF programs are provided through 
Federal capitalization grants and state matching funds (equal 
to 20 percent of Federal Government grants). Since 1987, 
Congress has appropriated more than $24 billion in 
capitalization grants funded through general taxpayer revenues. 
Clean Water SRF revenues also include receipts from the sale of 
bonds, loan repayments, and interest earnings. From all 
sources, more than $55 billion has been deposited into the 
state revolving funds.
    EPA has approved 57 states and territories for funding 
under the Clean Water SRF program. Clean Water SRFs are 
available to make low interest loans, buy or refinance local 
debt, subsidize or insure local bonds, make loan guarantees, 
act as security or guarantee of state debt, earn interest, and 
pay administrative expenses. Clean Water SRF monies also may be 
used to implement certain other water pollution control 
programs such as nonpoint source pollution management and 
national estuary programs. All projects must be those that will 
assure maintenance of progress toward the goals of the Clean 
Water Act and meet the standards and enforceable requirements 
of the Act.
    Through fiscal year 2005, the Clean Water SRFs have 
provided $52.7 billion in loans for wastewater projects, 
including $4.9 billion in loans in FY 2005 alone. Yet, the 
demand for financial assistance from the Clean Water SRFs 
continues to exceed available funds, forcing communities to 
look elsewhere for the additional capital necessary for 
wastewater infrastructure, or to defer wastewater 
infrastructure improvements.
    Communities raise the rest of the capital they may require 
from other sources, primarily from banks and issuing municipal 
bonds. Communities use revenues collected from rate-payers to 
fund both operation and maintenance and repayment of the debt 
they have incurred. Very few communities have sufficient 
capital resources to fund infrastructure improvements without 
incurring debt. Small, rural, and disadvantaged communities 
face a shrinking pool of financing resources, and are 
especially at a disadvantage in financing water and wastewater 
infrastructure.

                       Summary of the Legislation

Section 1. Short title; table of contents

    This section designates the title of the bill as the 
``Water Quality Financing Act of 2007''.

Section 2. Amendment of Federal Water Pollution Control Act

    This section provides that, unless otherwise expressly 
provided, an amendment made by this legislation shall be 
considered to be made to the Federal Water Pollution Control 
Act (33 U.S.C. 1251 et seq.).

              Title I. Technical and Management Assistance

Section 101. Technical assistance for rural and small treatment works

    This section amends section 104 of the Clean Water Act to 
authorize appropriations of $75 million annually through 2012 
for an existing program within the Environmental Protection 
Agency to fund research, demonstrations, and studies relating 
to the causes, effects, extent, prevention, reduction, and 
elimination of pollution; authorize appropriations of $15 
million annually for a new program to provide financial and 
technical assistance to rural and small communities; and 
require EPA to develop procedures for competition and openness 
in awarding grants to nonprofit agencies, institutions, and 
organizations under section 104 of the Act.
    Subsection (a) amends section 104(b) of the Act to 
authorize EPA to make grants to nonprofit organizations to 
assist rural and small municipalities in planning, developing, 
and obtaining financing for projects and activities eligible 
for assistance under this Act; provide technical assistance and 
training for rural and small publicly owned treatment works and 
decentralized wastewater treatment systems to enable them to 
protect water quality and achieve and maintain compliance with 
the requirements of the Act; and disseminate information to 
rural and small municipalities and municipalities that meet a 
state's affordability criteria with respect to planning, 
design, construction, and operation of publicly owned treatment 
works and decentralized wastewater treatment systems. The 
Administrator of EPA (``Administrator'') is to ensure that, to 
the maximum extent practicable, grants are made available to 
each state, and to prioritize grants to rural and small 
municipalities of 10,000 users or fewer. This subsection seeks 
to address the concern that certain rural and small 
municipalities may require additional technical assistance or 
resources to apply for wastewater infrastructure assistance 
under this Act.
    Subsection (b) reauthorizes appropriations of $75 million 
through 2012 for carrying out existing section 104(b)(3) and 
new section 104(b)(8) of the Act, and requires that at least 20 
percent of amounts appropriated pursuant to this paragraph are 
used to carry out subsection 104(b)(8).
    Subsection (c) amends section 104 of the Act to require EPA 
to develop procedures for competition and openness in awarding 
grants to nonprofit agencies, institutions, and organizations 
under section 104 of the Act.

Section 102. State management assistance

    This section amends section 106 of the Act to authorize 
appropriations of $300 million annually through 2012 for an 
existing EPA program that provides financial assistance to 
state water quality management programs.

Section 103. Watershed pilot projects

    This section authorizes appropriations of $20 million 
annually through 2012 for an existing EPA pilot project program 
that provides technical assistance and grants for treatment 
works to carry out projects related to the management of 
combined sewer overflows, sanitary sewer overflows, and 
stormwater discharges, on a watershed or subwatershed basis. 
Section 103 broadens the existing authority (section 122 of the 
Act) to ensure that the Administrator considers the use of low-
impact development technologies in evaluating pilot projects 
carried out under this section to demonstrate stormwater best 
management practices, and to authorize pilot projects that 
demonstrate cooperative ways to address nonpoint sources of 
pollution and reduce adverse impacts on water quality, on a 
watershed basis.
    Section 103(c) amends section 122(d) of the Act to extend 
the date for the submission of a report by the Administrator to 
Congress on the results of pilot projects carried out under 
this section until December 21, 2010.

               Title II. Construction of Treatment Works

Section 201. Sewage collection systems

    This section amends section 211 of the Act to clarify that 
a community seeking financial assistance from the state 
revolving fund for the replacement and rehabilitation of a 
collection system in existence on January 1, 2007, or for the 
construction of a new collection system for a community in 
existence on January 1, 2007, that is otherwise eligible for 
such assistance under section 211, shall be eligible for such 
assistance, provided that the replacement and rehabilitation of 
the existing collection system, or the new collection system is 
to address an adverse environmental condition that exists as of 
the date of enactment of this paragraph.
    The Committee intends the pre-existing adverse 
environmental condition language to provide a balance between 
the need to address existing water quality concerns resulting 
from population growth through increased collection system 
capacity and the concern that collection system expansion could 
result in increased sprawl. The Committee is aware of efforts 
by several states to address similar water quality concerns 
through the expanded use of decentralized wastewater treatment 
systems, without the need to construct new collection systems 
or expand existing collection systems. The Committee does not 
intend the amendments made by section 201 to affect these 
efforts, and encourages states to address ongoing water quality 
concerns in a manner that does not rely solely on collection 
systems or promote sprawl.

Section 202. Treatment works defined

    This section amends the definition of treatment works in 
section 212 of the Act to include, as an eligible cost, the 
acquisition of lands and interests in land, necessary for 
construction of the treatment works.

Section 203. Policy on cost effectiveness

    This section amends section 218 of the Act to eliminate the 
redundant restatement of the definition of treatment works. The 
Committee does not intend to alter the underlying meaning of 
section 218, and this amendment is viewed merely as a technical 
amendment.

        Title III. State Water Pollution Control Revolving Funds

Section 301. General authority for capitalization grants

    This section amends section 601(a) of the Act to expand the 
general statement of authority for use of a state water 
pollution control revolving fund.

Section 302. Capitalization grant agreements

    (a) Reporting Infrastructure Assets.--
    Subsection (a) requires loan recipients to comply with 
Federal accounting standards governing the reporting of 
infrastructure assets.
    (b) Additional Requirements.--
    Subsection (b) amends section 602(b) of the Act to add or 
renew several requirements as a condition of eligibility for a 
state to receive a capitalization grant for its revolving fund.
    New section 602(b)(11) requires a state to establish and 
maintain its revolving fund in perpetuity. This requirement 
exists in current law as the second sentence of existing 
section 603(c), but is added to section 602(b) to consolidate 
the list of conditions for state eligibility to receive a 
capitalization grant.
    New section 602(b)(12) requires states to use any fees 
charged to loan applicants only for the purpose of financing 
administrative costs or financing projects or activities 
eligible for assistance from the fund.
    New section 602(b)(13) directs states, beginning in fiscal 
year 2009, to require loan applicants to evaluate innovative 
and alternative processes, materials, techniques, and 
technologies for carrying out the purposes of the Act, and 
alternative ways to finance and manage water infrastructure 
projects.
    The Committee is aware that communities are feeling 
considerable pressure to improve the management of their 
wastewater systems to reduce costs and maintain sustainable 
systems. Some communities are looking at innovative ways of 
integrating decentralized, distributed, and nonstructural 
wastewater management approaches, including the use of trees or 
vegetation in urban areas (``green infrastructure''), to reduce 
the need for expanded publicly owned treatment works 
infrastructure, and to better manage, reduce, or reuse 
stormwater. Other communities are exploring alternative ways to 
design, finance, or manage wastewater infrastructure projects 
to reduce their overall capital and operation and maintenance 
costs, while providing the same or potentially greater water 
quality improvement benefits. Yet, communities may be reluctant 
to implement these innovative approaches or methods for various 
reasons.
    The Committee has received testimony on the importance of 
encouraging communities to explore alternative means to address 
wastewater treatment needs, including alternative approaches to 
respond to local water quality needs, such as the use of 
decentralized, distributed, and nonstructural wastewater 
management approaches, addressing wastewater infrastructure 
needs on a regional basis, or the consolidation of smaller 
systems into larger treatment works. The Committee also has 
received testimony on the importance of addressing the need for 
additional funding for wastewater infrastructure projects, 
including through alternative financing approaches, such as 
increased leveraging of state revolving funds, rate structures, 
or encouraging additional capital investment, both public and 
private, to close the overall funding gap in wastewater 
infrastructure needs.
    New section 602(b)(13) seeks to encourage loan recipients 
to explore additional options for processes, materials, 
techniques, and technologies for improving water quality, and, 
where possible, achieving greater environmental benefits and 
more efficiently using energy and natural and financial 
resources. This paragraph also seeks to encourage loan 
recipients to consider alternative approaches for designing, 
financing, and managing projects (including, where appropriate, 
rate structure, issuance of bonds, restructuring, regional 
alternatives, consolidation, and cooperation between the public 
and private sectors) for which assistance is sought under the 
Clean Water SRF program. This paragraph does not require that 
any particular option be selected or that every option need be 
analyzed, but encourages loan recipients to consider an array 
of options that are appropriate to meet their local needs and 
improve local water quality.
    New section 602(b)(14) directs states to use at least 15 
percent of its annual capitalization grant to assist small 
municipalities serving fewer than 10,000 individuals that meet 
a state's affordability criteria, to the extent that there are 
sufficient applications for such assistance.
    New section 602(b)(15) reinstates several Title II 
requirements that were applied to projects for the construction 
of publicly owned treatment works prior to October 1, 1994, 
under existing 602(b)(6). New section 602(b)(15) reinstates 
requirements related to the assurance that recipients of 
financing under this Act for publicly owned treatment works 
will adopt a system of charges, including ad valorem taxes or 
user charges, to ensure adequate construction, operation, and 
maintenance of the treatment works; a limitation on the 
replacement of existing sewage collection systems or the 
construction of new sewage collection systems; the policy of 
Congress that treatment work systems constructed with funding 
under this Act constitute the most economic and cost-effective 
means of meeting the requirements of this Act; and the 
application of the National Environmental Policy Act of 1969.
    New section 602(b)(16) requires a state to utilize a 
Federal or equivalent state qualifications-based selection 
process for the negotiation of architectural and engineering 
services on the basis of demonstrated performance and 
qualification for the type of professional services required at 
a fair and reasonable price. A qualifications-based selection 
process is a competitive procedure that takes into account 
qualifications and experience, as well as cost, in relation to 
the work performed.
    New section 602(b)(17) establishes the Davis-Bacon 
prevailing wage requirement for the construction of treatment 
works carried out with assistance made available by the state 
revolving fund, section 205(m), or both. Section 513 of the Act 
provides that ``all laborers and mechanics employed by 
contractors or subcontractors on treatment works for which 
grants are made under this Act shall be paid wages at rates not 
less than those prevailing for the same type of work on similar 
construction in the immediate locality.'' New section 
602(b)(17) requires the application of the Davis-Bacon 
requirements for the construction of treatment works carried 
out in whole or in part with assistance made available from 
state revolving loan funds under Title VI, funds from section 
205(m) of the Act, or both. This amendment authorizes the 
application of the prevailing wage requirements to construction 
projects carried out with any financial assistance from the 
state revolving fund, whether the source of assistance 
originates from Federal capitalization grant funds, state 
matching funds, repayments to the fund, interest payments, or 
other sources of income to the state revolving fund, and 
whether the character of the assistance is through loans, loan 
guarantees, or other types of assistance authorized by section 
603(d).
    By establishing the Davis-Bacon prevailing wage requirement 
for the construction of treatment works, the Committee 
continues its long-standing practice of ensuring the 
application of Davis-Bacon where Federal funds are provided for 
construction, such as the State Infrastructure Banks (SIBs) 
established under the Transportation Equity Act for the 21st 
Century, and reauthorized in the Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users. For 
the Clean Water SRFs, the most significant source of revenue in 
the state revolving funds is the Federal capitalization grant. 
As Congress has done in 63 separate instances for Federally-
funded construction, the Davis-Bacon Act should apply to the 
reauthorization of the Clean Water SRFs.
    Prevailing wage laws are intended to provide a fair wage 
for publicly funded construction. By requiring prevailing 
wages, lower cost, out-of-state contractors are prevented from 
having an unfair ability to compete for local publicly funded 
construction. Local interests are better able to compete when 
on equal footing with out-of-state competitors, and local 
construction workers are protected.
    In addition, the Committee believes that the Davis-Bacon 
Act protects communities by ensuring that prevailing wage 
determinations for individual counties are based solely on the 
local workforce costs where the construction projects are to be 
undertaken. In 1981, the U.S. Department of Labor specifically 
amended the implementing regulations for the Davis-Bacon Act to 
prohibit the Department from including any wage data collected 
from urban areas, and applying the data in a wage determination 
for a nearby rural county.
    As noted in the Code of Federal Regulations, ``In making a 
wage determination . . . projects in metropolitan counties may 
not be used as a source of data for a wage determination in a 
rural county, and projects in rural counties may not be used as 
a source of data for a wage determination for a metropolitan 
county.'' (29 CFR Subtitle A 1.7 (a) and (b)).
    Also, studies have shown that the application of the 
prevailing wage requirements of the Davis-Bacon Act attract 
more experienced and better trained workers who are often more 
productive than workers with less training and experience. This 
increase in productivity often results in the completion of 
construction project ahead of schedule, reducing the overall 
cost of the project, and offsetting any increased costs dues to 
higher hourly wage rates. Labor costs, traditionally speaking, 
account for less than one-third of total construction costs, 
with the costs of land and materials having a much larger 
impact on the total costs of projects.

Section 303. Water pollution control revolving loan funds

    (a) Projects and Activities Eligible for Assistance.--
    Subsection (a) amends section 603(c) of the Act to expand 
the types of projects and activities eligible for assistance 
through each state revolving fund. Current law authorizes funds 
from the state revolving fund to be used for providing 
financial assistance (1) to any municipality or intermunicipal, 
interstate, or state agency for construction of publicly owned 
treatment works; (2) for the implementation of a nonpoint 
source management program under section 319 of the Act; and (3) 
for the development and implementation of a conservation and 
management plan under the National Estuary Program (section 320 
of the Act). Subsection (a) expands the types of projects and 
activities eligible for assistance to include: (1) the 
implementation of lake protection programs and projects under 
section 314 of the Act; (2) the repair and replacement of 
decentralized wastewater treatment systems that treat domestic 
sewage; (3) measures to manage or reduce municipal stormwater 
runoff; (4) projects for water conservation, efficiency, or 
reuse; (5) increased security measures at publicly owned 
treatment works; and (6) the development and implementation of 
watershed pilot projects under section 122 of the Act (as 
amended by this legislation).
    (b) Extended Repayment Period.--
    Subsection (b) amends section 603(d)(1) of the Act to 
authorize states to extend the repayment period for a loan from 
the state revolving fund from the current statutory limit of 20 
years to 30 years or the expected design life of the project 
financed with the proceeds of the loan, whichever period is 
shorter. A longer repayment period should assist in increasing 
the affordability of wastewater infrastructure projects.
    (c) Fiscal Sustainability Plan.--
    Subsection (c) amends section 603(d)(1) of the Act to 
require, as a condition of eligibility for a loan from the 
state revolving fund, that the loan recipient develop and 
implement, for any portion of the treatment works proposed for 
repair, replacement, or expansion, a fiscal sustainability plan 
for that portion. The fiscal sustainability plan shall include: 
an inventory of the critical assets for that portion of the 
treatment works proposed for repair, replacement, or expansion; 
an evaluation of the condition and performance of the 
inventory; and a plan for maintaining, repairing, and, as 
necessary, replacing that portion, including a plan for funding 
such activities. Implementation of a fiscal sustainability plan 
should encourage communities to more efficiently manage and 
maintain their wastewater infrastructure.
    (d) Administrative Expenses.--
    Subsection (d) amends section 603(d)(7) of the Act to 
authorize states to utilize either four percent of the 
capitalization grant (current law), $400,000 a year, or up to 
one-fifth of one percent of the total valuation of the state 
revolving fund, whichever amount is greatest, for 
administrative expenses, plus any fees collected for such 
purposes.
    (e) Technical, Planning, and Equipment Replacement Expenses 
for Small Systems.--
    Subsection (e) amends section 603(d) of the Act to 
authorize states to use up to two percent of the annual 
capitalization grant for the state revolving fund to provide 
technical, planning, and equipment replacement assistance to 
treatment works servicing communities of fewer than 10,000 
individuals. This subsection should assist communities of fewer 
than 10,000 individuals plan, manage, and maintain their 
wastewater infrastructure.
    (f) Additional Subsidization.--
    Subsection (f) amends section 603 of the Act to authorize 
states to provide increased financial flexibility in the form 
of additional subsidization, including forgiveness of principal 
and negative interest loans to municipalities: (1) that are 
economically disadvantaged based on affordability criteria 
established by the state; (2) that do not meet a state's 
affordability criteria as a whole, but have discrete, definable 
subpopulations or neighborhoods that will experience a 
significant hardship from increased rates, provided that any 
additional subsidization will directly benefit those 
ratepayers; or (3) that implement an innovative or alternative 
process, material, technique, or technology (including the use 
of nonstructural protection of surface waters, a new or 
improved method of waste treatment, and pollutant trading) that 
may result in greater environmental benefits, or equivalent 
environmental benefits at a reduced cost.
    The Committee has received testimony on the existence of 
disadvantaged communities throughout the nation that are 
experiencing significant challenges financing the wastewater 
infrastructure improvements necessary to achieve improvements 
in water quality, even with the advantage of below-market rates 
offered by the Clean Water SRF. Subsection 303(f) authorizes a 
state revolving fund to provide certain disadvantaged 
communities, and targeted populations within communities, with 
additional financial subsidizations to assist them in meeting 
their wastewater infrastructure needs.
    As noted in the discussion on section 302(b), the Committee 
has also received testimony on the efforts of communities to 
reduce the need for expanded publicly owned treatment works 
infrastructure through the use of innovative and alternative 
means to respond to local water quality needs. Subsection 
303(f) also authorizes a state revolving fund to provide 
increased financial flexibility to implement these innovative 
and alternative processes, materials, techniques, and 
technologies, including the use of decentralized, distributed, 
and nonstructural wastewater management approaches, innovative 
pipe replacement technologies, and pollutant trading of 
nutrients, to encourage communities to pursue other options to 
address local water quality concerns.
    Moreover, subsection (f) requires states to establish 
affordability criteria on or before September 30, 2008, to 
assist in identifying municipalities that would experience 
significant hardship from rate increases necessary to finance 
the construction of publicly owned treatment works. Subsection 
(f) allows states to use existing criteria that meet the 
requirements of this subsection.
    New section 603(i)(3) of the Act, as amended by this 
legislation, authorizes states to give priority to a project by 
a municipality, or an intermunicipal, interstate, or state 
agency for the construction of a publicly owned treatment work 
if the recipient of the funds meets a state's affordability 
criteria.
    New section 603(i)(4) of the Act, as amended by this 
subsection, requires states to use 25 percent of any increases 
in a Federal capitalization grant allotted to a state in fiscal 
years where the Administrator has available for obligation 
funds of more than $1 billion to provide additional 
subsidization, provided that eligible projects are identified 
for funding on a state's priority list. This subsection places 
an overall cap of 30 percent of the total amount of 
capitalization grants received by the state on the amount of 
additional subsidization that a state may provide.

Section 304. Allotment of funds

    Subsection (a)(1) preserves the current statutory state 
revolving fund allotment formula for capitalization grants 
(section 205 of the Act, as modified) for the first $1.35 
billion of any future fiscal year appropriation. Subsection (c) 
directs the Administrator, after notice and public comment, to 
publish a new allotment formula based on water quality needs in 
accordance with the most recent state survey of needs. For 
fiscal year 2010 and thereafter, subsection (a)(2) directs the 
Administrator to allocate any appropriated funds for the state 
revolving fund in excess of $1.35 billion in accordance with 
the revised formula.
    Subsection (b) amends section 604(b) of the Act to increase 
the amount a state may reserve for water quality management 
planning (section 205(j) of the Act) and state continuing 
planning processes (section 303(e) of the Act) from the current 
statutory limit of one percent of the annual state 
capitalization grant to two percent.

Section 305. Intended use plan

    (a) Integrated Priority List.--
    Section 305(a) requires states to develop, after notice and 
comment and within one year, a methodology for prioritizing 
wastewater infrastructure projects and activities based on the 
greatest degree of water quality improvement, while taking into 
consideration whether funds will be used toward compliance with 
the enforceable deadlines, goals, and requirements of the Act, 
and the affordability of projects and activities to individual 
communities. This subsection requires states to use this 
methodology to develop, for each future fiscal year beginning 
in fiscal year 2009, an integrated priority list for all 
projects and activities for which financial assistance is 
sought from the state revolving fund.
    To address the potential that smaller, individual projects 
or activities to address nonpoint sources of pollution may not 
rank sufficiently high on a state's priority list, this 
subsection authorizes a state to group categories or 
subcategories of projects or activities to address nonpoint 
sources of pollution on the state's priority list in lieu of 
specific projects or activities.
    (b) Intended Use Plan.--
    Section 305(b) amends section 606(c) of the Act to require 
a state to annually prepare and publish its intended use plan, 
to provide notice and comment on the state's priority list, as 
part of the state's intended use plan, and to provide an 
explanation if the state does not fund projects on its intended 
use plan in priority order.
    (c) Transitional Provision.--
    Section 305(c) allows states to use existing statutory 
provisions governing priority lists and intended use plans 
until the methodology required under this legislation is 
developed.

Section 306. Annual reports

    This section amends section 606(d) of the Act to require 
that a state include, as part of its existing reporting 
requirements to EPA, a list of the eligible purposes for which 
state revolving funds are provided.

Section 307. Technical assistance

    This section directs the Administrator to assist states in 
establishing simplified procedures for obtaining financial 
assistance from the state revolving fund. This section requires 
the Administrator, after notice and comment, to publish a 
manual to assist eligible recipients in obtaining financial 
assistance from the state revolving fund. This section directs 
the Administrator, at the request of a state and after notice 
and comment, to assist in the development of criteria for a 
state to determine compliance with the conditions of funding 
assistance under sections 602(b)(13) and 603(d)(1)(E) of the 
Act.

Section 308. Authorization of appropriations

    This section authorizes appropriations of $14 billion over 
four years for the capitalization of state revolving funds, as 
follows: $2 billion in fiscal year 2008, $3 billion in fiscal 
year 2009, $4 billion in fiscal year 2010, and $5 billion in 
fiscal year 2011.

                      Title IV. General Provisions

Section 401. Definition of treatment works

    This section amends the definitions section of the Act 
(section 502) to make the definition of ``treatment works'' 
found in section 212 of the Act applicable to the entire Act.

Section 402. Funding for Indian programs

    This section increases the authorized set-aside from state 
revolving loan funding for Indian Programs from the current law 
amount of one-half of one percent to not more than 1.5 percent 
of the total Federal appropriation for the capitalization of 
state revolving funds.

                            Title V. Studies

Section 501. Study of long-term, sustainable, clean water funding

    This section directs the Comptroller General of the 
Government Accountability Office to conduct a study of 
potential funding mechanisms and revenue sources for the 
establishment and financing of a Clean Water Trust Fund. 
Section 501 directs the Comptroller General to report to 
Congress by January 1, 2008, on the results of the study.

Section 502. Feasibility study of supplemental and alternative clean 
        water funding mechanisms

    This section directs the Comptroller General of the 
Government Accountability Office to conduct a study of 
potential funding and investment mechanisms and revenue sources 
from other potential public or private sources that could be 
used to fund wastewater infrastructure and other water 
pollution control activities. Section 502 directs the 
Comptroller General to report to Congress by January 1, 2008, 
on the results of the study.

                        Title VI. Tonnage Duties

Section 601. Tonnage duties

    This section restores the Vessel Tonnage Duties to the 
rates that were in effect from 1990 to 2002. Vessel Tonnage 
Duties are imposed on the cargo-carrying capacity of vessels 
that enter the United States from any foreign port or place, or 
depart from and return to a United States Port or place on a 
``voyage to nowhere''. The Duties are assessed regardless of 
whether the vessel is empty or carrying cargo. These fees are 
intended to offset the cost of activities performed by the U.S. 
Coast Guard that benefit these vessels, such as marine safety, 
search and rescue, and aids to navigation. The Coast Guard 
spends far more on these activities than is currently being 
collected by this fee.
    Beginning in 1909, a tonnage duty of two cents per ton, not 
to exceed ten cents per ton in a single year, was imposed on 
vessels arriving in the United States from a foreign port in 
North America, Central America, the West Indian Islands, the 
Bahaman Islands, and Newfoundland. A duty of six cents per ton, 
not to exceed 30 cents per ton in a single year, was imposed 
for vessels arriving in the United States from foreign ports 
anywhere else in the world.
    In 1990, Congress adjusted the tonnage duties to reflect 
the inflation increase from 1915 to 1990. Congress extended the 
fees at the 1990-adjusted rates in 1993 and 1997. These tonnage 
duties remained in effect from fiscal years 1990 through 2002. 
In 2005, Congress partially reinstated the 1990-adjusted 
tonnage duties through fiscal year 2010.
    Specifically, section 601 increases the 4.5-cent-per-ton 
duty to nine cents per ton, not to exceed in the aggregate 45 
cents per ton in any year, and the 13.5-cent-per-ton duty to 27 
cents per ton, not to exceed $1.35 per ton in a year. The 
tonnage duty applies to the first five entries into the United 
States each year by a vessel. These rates would be in effect 
for fiscal years 2008 through 2017.

            Legislative History and Committee Consideration

    The Subcommittee on Water Resources and Environment has 
held numerous hearings on the nation's wastewater 
infrastructure needs and the importance of a renewed commitment 
to addressing these needs. On March 28, 2001, the Subcommittee 
held a hearing entitled ``Water Infrastructure Needs''. On 
March 19, 2003, the Subcommittee held a hearing entitled 
``Meeting the Nation's Wastewater Infrastructure Needs''. On 
April 28, 2004, the Subcommittee held a hearing entitled 
``Aging Water Supply Infrastructure''. On June 8 and 14, 2005, 
the Subcommittee held a series of hearings entitled ``Financing 
Water Infrastructure Projects''. On January 19, 2007, the 
Subcommittee held a hearing entitled ``The Need for Renewed 
Investment in Clean Water Infrastructure''.
    In prior Congresses, the Subcommittee has also developed 
and considered numerous bills to reauthorize increasing 
appropriations for the Clean Water State Revolving Fund.
    In the 107th Congress, the bipartisan leadership of the 
Subcommittee introduced H.R. 3930, the Water Quality Financing 
Act of 2002. On March 13, 2002, the Subcommittee held a 
legislative hearing on H.R. 3930. On March 20, 2002, the 
Committee on Transportation and Infrastructure met in open 
session, and ordered H.R. 3930 reported, as amended, to the 
House by voice vote. No further action was taken on this bill.
    In the 108th Congress, the then-Chairman of the 
Subcommittee introduced H.R. 1560, the Water Quality Financing 
Act of 2003. This bill was largely based on H.R. 3930 from the 
107th Congress. On July 17, 2003, the Subcommittee on Water 
Resources and Environment met in open session, and ordered H.R. 
1560 reported, as amended, to the Committee on Transportation 
and Infrastructure by voice vote. No further action was taken 
on this bill.
    In the 109th Congress, the then-Chairman of the 
Subcommittee introduced H.R. 4560, the Clean Water Trust Act of 
2005, to create a national clean water trust fund as a means 
for financing wastewater infrastructure needs. No further 
action was taken on this legislation.
    On January 30, 2007, Chairman James L. Oberstar, 
Representative Don Young, Chairwoman Eddie Bernice Johnson, and 
Representative Ellen O. Tauscher introduced H.R. 720, the Water 
Quality Financing Act of 2007. On January 31, 2007, the 
Subcommittee on Water Resources and Environment met in open 
session to markup several bills related to renewing the Federal 
commitment to repairing and replacing the nation's wastewater 
infrastructure, including H.R. 720. The Subcommittee adopted, 
by voice vote, an amendment to authorize a study of additional 
potential revenue sources, including public and private 
sources, to address wastewater infrastructure needs. The 
Subcommittee recommended the bill, as amended, favorably to the 
Committee on Transportation and Infrastructure, by voice vote. 
On February 7, 2007, the Committee on Transportation and 
Infrastructure met in open session, and ordered the bill, as 
amended by the Subcommittee, reported favorably to the House by 
recorded vote of 55-13.
    On March 1, 2007, the Committee on Transportation and 
Infrastructure met in open session, to reconsider H.R. 720, as 
ordered reported on February 7, 2007, to address a budget 
scoring issue with the bill. The Committee agreed by voice vote 
to a motion to reconsider the vote on ordering H.R. 720 
reported favorably to the House as adopted by the Committee on 
February 7, 2007. By unanimous consent, the Committee vacated 
the question of ordering the bill reported and considered the 
bill for amendment. The Committee approved, by voice vote, an 
amendment in the nature of a substitute that made two changes 
to the bill ordered reported on February 7, 2007. First, the 
amendment reduced the authorization of appropriations for the 
Clean Water SRF program from $20 billion over five years to $14 
billion over four years, as follows: $2 billion in fiscal year 
2008, $3 billion in fiscal year 2009, $4 billion in fiscal year 
2010, and $5 billion in fiscal year 2011. Second, the amendment 
restored the United States Coast Guard Vessel Tonnage Duties to 
the levels that were in effect in the 1990s to offset the cost 
of H.R. 720, as amended. The Committee ordered the bill, as 
amended by the Committee, reported favorably to the House by 
voice vote.

                              Record Votes

    Clause 3(b) of rule XIII of the House of Representatives 
requires each committee report to include the total number of 
votes cast for and against on each record vote on a motion to 
report and on any amendment offered to the measure or matter, 
and the names of those members voting for and against. On 
February 7, 2007, the Committee on Transportation and 
Infrastructure met in open session, and ordered the bill, as 
amended by the Subcommittee, reported favorably to the House by 
record vote of 55-13.

Ordering H.R. 720, as Amended, Reported Favorably to the House (55-13) 
                            February 7, 2007

    On March 1, 2007, the Committee on Transportation and 
Infrastructure met in open session, to reconsider H.R. 720, as 
ordered reported on February 7, 2007, to address a budget 
scoring issue with the bill. The Committee agreed by voice vote 
to a motion to reconsider the vote on ordering H.R. 720 
reported favorably to the House as adopted by the Committee on 
February 7, 2007. By unanimous consent, the Committee vacated 
the question of ordering the bill reported and considered the 
bill for amendment. The Committee approved, by voice vote, an 
amendment in the nature of a substitute that made two changes 
to the bill ordered reported on February 7, 2007. The Committee 
ordered the bill, as amended by the Committee, reported 
favorably to the House by voice vote.

                      Committee Oversight Findings

    With respect to the requirements of clause 3(c)(I) of rule 
XIII of the Rules of the House of Representatives, the 
Committee's oversight findings and recommendations are 
reflected in this report.

                          Cost of Legislation

    Clause 3( c)(2) of rule XIII of the Rules of the House of 
Representatives does not apply where a cost estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974 has been timely submitted prior to the filing of the 
report and is included in the report. Such a cost estimate is 
included in this report.

                    Compliance With House Rule XIII

    1. With respect to the requirement of clause 3(c)(2) of 
rule XIII of the Rules of the House of Representatives, and 
308(a) of the Congressional Budget Act of 1974, the Committee 
references the report of the Congressional Budget Office 
included below.
    2. With respect to the requirement of clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, the 
performance goals and objective of this legislation are to 
accomplish the objectives, goals, and policies of the Federal 
Water Pollution Control Act by providing assistance: for the 
construction of publicly owned treatment works; for the 
implementation of a nonpoint source management program under 
section 319 of the Act; for the development and implementation 
of a conservation and management plan under the National 
Estuary Program; for the implementation of lake protection 
programs and projects under section 314 of the Act; for the 
repair and replacement of decentralized wastewater treatment 
systems that treat domestic sewage; for measures to manage or 
reduce municipal stormwater runoff; for water conservation 
projects; for increased security measures at publicly owned 
treatment works; and for the development and implementation of 
watershed pilot projects under section 122, as amended by this 
legislation.
    3. With respect to the requirement of clause 3(c)(3) of 
rule XIII of the Rules of the House of Representatives and 
section 402 of the Congressional Budget Act of 1974, the 
Committee has received the following cost estimate for H.R. 720 
from the Director of the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, March 5, 2007.
Hon. James L. Oberstar,
Chairman, Committee on Transportation and Infrastructure,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 720, the Water 
Quality Financing Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Susanne S. 
Mehlman and Deborah Reis.
            Sincerely,
                                           Peter R. Orszag,
                                                          Director.
    Enclosure.

H.R. 720--Water Quality Financing Act of 2007

    Summary: CBO estimates that implementing this legislation 
would cost about $9.2 billion over the next five years, 
assuming the appropriation of the necessary amounts, for the 
Environmental Protection Agency (EPA) to provide various types 
of grants to states and nonprofit organizations to support 
water quality projects and programs. The Joint Committee on 
Taxation (JCT) estimates that enacting H.R. 720 would reduce 
revenues by $50 million over the 2008-2012 period and by $541 
million over the next 10 years. CBO estimates that enacting 
title VI would increase vessel tonnage charges on vessels 
entering the United States from any foreign port or place, 
effective for fiscal years 2008-2017. Those charges would 
increase offsetting receipts, which are credits against direct 
spending, by $615 million over the 2008-2017 period.
    H.R. 720 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments.
    H.R. 720 contains private-sector mandates, as defined in 
UMRA on operators of vessels entering the United States from 
any foreign port or place by increasing certain vessel tonnage 
duties over the 2008-2017 period. CBO estimates that the 
incremental direct costs of complying with those mandates would 
fall below the annual threshold established by UMRA for 
private-sector mandates ($131 million in 2007, adjusted 
annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 720 is shown in the following table. 
The costs of this legislation fall within budget function 300 
(natural resources and environment).

                                     TABLE 1.--BUDGETARY EFFECTS OF H.R. 720
----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2007     2008     2009     2010     2011     2012
----------------------------------------------------------------------------------------------------------------
                                               CHANGES IN REVENUES

Changes to Tax-Exempt Financing:
    Estimated Revenues \1\................................        0        *       -1       -4      -13      -31

                                       CHANGES IN SPENDING DIRECT SPENDING

Vessel Tonnage Charges:
    Estimated Budget Authority............................        0      -40      -41      -41      -67      -68
    Estimated Outlays.....................................        0      -40      -41      -41      -67      -68

                                        SPENDING SUBJECT TO APPROPRIATION

Spending Under Current Law:
    Budget Authority \2\..................................    1,300        0        0        0        0        0
    Estimated Outlays.....................................    1,412    1,211      781      562      430      409
Proposed Changes:
    Clean Water SRF Grants:
        Authorization Level...............................        0    2,000    3,000    4,000    5,000        0
        Estimated Outlays.................................        0      100      450     1250    2,350    3,150
    Technical Assistance and Research Grants:
        Estimated Authorization Level.....................        0       75       75       75       75       75
        Estimated Outlays.................................        0       38       60       71       75       75
    State Management Assistance Grants:
        Authorization Level...............................        0      300      300      300      300      300
        Estimated Outlays.................................        0      285      300      300      300      300
    Watershed Pilot Projects:
        Authorization Level...............................        0       20       20       20       20       20
        Estimated Outlays.................................        0       10       16       19       20       20
        Total Proposed Changes \3\:
            Estimated Authorization Level.................        0    2,396    3,395    4,395    5,395      395
            Estimated Outlays.............................        0      434      826    1,640    2,745    3,545
Spending Under H.R. 720:
    Estimated Authorization Level.........................   1,300,   2,396,   3,395,   4,395,   5,395,      395
    Estimated Outlays.....................................    1,412    1,645    1,607    2,202    3,175   3,954
----------------------------------------------------------------------------------------------------------------
Note.--*= revenue loss of less than $500,000.
\1\ Estimate provided by JCT.
\2\ The 2007 level is the amount appropriated for that year to EPA to support its grant programs related to
  waste water.
\3\ H.R. 720 also would require the Government Accountability Office to prepare two studies required under the
  bill. CBO estimates that those studies would cost about $1 million.

    Basis of estimate: For this estimate, CBO assumes that H.R. 
720 will be enacted in fiscal year 2007, that the full amounts 
authorized will be appropriated, and that outlays will follow 
the historical patterns of similar EPA programs. Components of 
the estimated costs are described below.

Revenues

    This bill would increase the funds available under the 
clean water State Revolving Fund (SRF) program, which could 
result in some states leveraging their funds by issuing 
additional tax-exempt bonds. The JCT estimates that consequent 
reductions in revenue would total $50 million over the 2008-
2012 period, and $541 million over the next 10 years (see Table 
2).

Direct spending

    Title VI would increase, through fiscal year 2017, per-ton 
duties on vessels arriving at U.S. ports from foreign ports. On 
vessels arriving from such ports in the Western 
Hemisphere,vessels arriving from other foreign ports, the rate would 
rise to 27 cents (with a maximum of $1.35 per year). Under existing law 
(as amended by Public Law 109-171 on February 8, 2006), the rates for 
vessels from Western Hemisphere ports are 4.5 cents per ton (with a 
maximum of 22.5 cents per ton per year) through fiscal year 2010 and 2 
cents per ton (with a maximum of 10 cents per ton per year) each year 
thereafter. Per-ton rates for vessels from other foreign ports are 13.5 
cents (with a maximum of 67.5 cents per ton per year) through fiscal 
2010 and 6 cents (with a maximum of 30 cents per ton per year) each 
year thereafter.
    CBO estimates that enacting this legislation would increase 
offsetting receipts from tonnage duties by about $40 million a 
year between 2008 and 2012 and by about $70 million each year 
thereafter through 2017. Total estimated collections over the 
2008-2017 period would be $615 million (see Table 2). This 
estimate is based on receipts collected from tonnage duties 
before fiscal year 2002 (when those rates were temporarily 
increased), adjusted for changes in shipping traffic 
experienced since that time. For this estimate, CBO assumes 
that shipping traffic at U.S. ports continues to grow at the 
rates experienced in recent years. Like collections from the 
existing duties, amounts received as a result of the proposed 
increases would be deposited in the general fund of the U.S. 
Treasury as offsetting receipts.

                                              TABLE 2.--H.R. 720's CHANGES IN REVENUES AND DIRECT SPENDING
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                         2007     2008     2009     2010     2011     2012     2013     2014     2015     2016     2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CHANGES IN REVENUES

Estimated Revenues...................................        0        *       -1       -4      -13      -31      -57      -86     -108     -119     -121

                                                               CHANGES IN DIRECT SPENDING

Vessel Tonnage Charges Under Current Law:
    Estimated Budget Authority.......................      -34      -40      -41      -42      -18      -19      -19      -19      -20      -20      -20
    Estimated Outlays................................      -34      -40      -41      -42      -18      -19      -19      -19      -20      -20      -20
Proposed Changes:
    Estimated Budget Authority.......................        0      -40      -41      -41      -67      -67      -69      -71      -71      -73      -75
    Estimated Outlays................................        0      -40      -41      -41      -67      -67      -69      -71      -71      -73      -75
Vessel Tonnage Charges Under H.R. 720:
    Estimated Budget Authority.......................      -34      -80      -82      -83      -85      -86      -88      -90      -91      -93      -95
    Estimated Outlays................................      -34      -80      -82      -83      -85      -86      -88      -90      -91      -93     -95
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--* = revenue loss of less than $500,000.

Spending subject to appropriation

    H.R. 720 would authorize the appropriation of $14 billion 
over the 2008-2012 period for EPA to provide capitalization 
grants for the clean water (SRF) program. States would use such 
grants along with their own funds to make low-interest loans to 
communities and grants to Indian tribes to construct wastewater 
treatment facilities and to fund other related projects. This 
bill would make several revisions to this grant program, 
including extending loan repayment terms and expanding the 
types of projects eligible for assistance.
    This legislation also would authorize the appropriation of 
up to $375 million over the next five years for EPA to make 
grants to nonprofit organizations to provide technical 
assistance, such as training, to rural and small communities, 
and to support research on the technologies and practices used 
to treat wastewater. In addition, H.R. 720 would authorize the 
appropriation of $1.5 billion over the 2008-2012 period for EPA 
to make grants to states to support various activities 
associated with implementing state clean water programs; this 
would include paying the salaries of personnel working on water 
quality issues and establishing regulations and enforcing clean 
water laws.
    Enacting this legislation also would authorize the 
appropriation of $100 million over the 2008-2012 period for EPA 
to provide technical assistance and grants for treatment 
facilities to carry out pilot projects related to watershed 
management.
    H.R. 720 also would require the Government Accountability 
Office to conduct two studies. One study would address the 
funding sources available to establish a Clean Water Trust 
Fund, and the other study would address alternative financing 
for water infrastructure projects. CBO estimates that 
completing the two studies would cost about $1 million over the 
next two years, assuming the availability of appropriated 
funds.
    Estimated impact on state, local, and tribal governments: 
H.R. 720 contains no intergovernmental mandates as defined in 
UMRA. The bill would authorize grants and loans to assist 
state, local, and tribal governments in protecting water 
quality and enhancing water systems. Any costs that they might 
incur, including matching funds, would result from complying 
with conditions of federal assistance.
    Estimated impact on the private sector: H.R. 720 would 
impose private-sector mandates on operators of vessels entering 
the United States from any foreign port or place by increasing 
certain vessel tonnage duties over the 2008-2017 period. The 
direct costs of complying with those mandates would be the 
incremental amounts collected by the federal government as a 
result of the higher rates. CBO estimates that the annual 
incremental cost of those mandates would reach $68 million in 
2012 and thus would fall below the annual threshold established 
by UMRA ($131 million in 2007, adjusted annually for inflation) 
in the first five years the mandates are in effect.
    Estimate prepared by: Federal Spending: Susanne S. Mehlman 
and Deborah Reis. Federal Revenues: Thomas Holtmann, Joint 
Committee on Taxation. Impact on State, Local, and Tribal 
Governments: Lisa Ramirez-Branum. Impact on the Private Sector: 
Amy Petz.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                     Compliance With House Rule XXI

    Pursuant to clause 9 of rule XXI of the Rules of the House 
of Representatives, H.R. 720, the Water Quality Financing Act 
of 2007, does not contain any congressional earmarks, limited 
tax benefits, or limited tariff benefits as defined in clause 
9(d), 9(e), or 9(f) of rule XXI of the Rules of the House of 
Representatives.

                   Constitutional Authority Statement

    Pursuant to clause (3)(d)(1) of rule XIII of the Rules of 
the House of Representatives, committee reports on a bill or 
joint resolution of a public character shall include a 
statement citing the specific powers granted to the Congress in 
the Constitution to enact the measure. The Committee on 
Transportation and Infrastructure finds that Congress has the 
authority to enact this measure pursuant to its powers granted 
under Article I, section 8 of the Constitution.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act (Public Law 104-4).

                        Preemption Clarification

    Section 423 of the Congressional Budget Act of 1974 
requires the report of any Committee on a bill or joint 
resolution to include a statement on the extent to which the 
bill or joint resolution is intended to preempt state, local, 
or tribal law. The Committee states that H.R. 720 does not 
preempt any state, local, or tribal law.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act are created by this 
legislation.

                Applicability to the Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Public Law 
104-1).

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                  FEDERAL WATER POLLUTION CONTROL ACT

TITLE I--RESEARCH AND RELATED PROGRAMS

           *       *       *       *       *       *       *

          RESEARCH, INVESTIGATIONS, TRAINING, AND INFORMATION

Sec. 104. (a) * * *
  (b) In carrying out the provisions of subsection (a) of this 
section the Administrator is authorized to--
          (1) * * *

           *       *       *       *       *       *       *

          (6) collect and disseminate, in cooperation with 
        other Federal departments and agencies, and with other 
        public or private agencies, institutions, and 
        organizations having related responsibilities, basic 
        data on chemical, physical, and biological effects of 
        varying water quality and other information pertaining 
        to pollution and the prevention, reduction, and 
        elimination thereof; [and]
          (7) develop effective and practical processes, 
        methods, and prototype devices for the prevention, 
        reduction, and elimination of pollution[.]; and
          (8) make grants to nonprofit organizations--
                  (A) to provide technical assistance to rural 
                and small municipalities for the purpose of 
                assisting, in consultation with the State in 
                which the assistance is provided, such 
                municipalities in the planning, developing, and 
                acquisition of financing for wastewater 
                infrastructure assistance;
                  (B) to provide technical assistance and 
                training for rural and small publicly owned 
                treatment works and decentralized wastewater 
                treatment systems to enable such treatment 
                works and systems to protect water quality and 
                achieve and maintain compliance with the 
                requirements of this Act; and
                  (C) to disseminate information to rural and 
                small municipalities and municipalities that 
                meet the affordability criteria established 
                under section 603(i)(2) by the State in which 
                the municipality is located with respect to 
                planning, design, construction, and operation 
                of publicly owned treatment works and 
                decentralized wastewater treatment systems.

           *       *       *       *       *       *       *

  (u) There is authorized to be appropriated (1) not to exceed 
$100,000,000 per fiscal year for the fiscal year ending June 
30, 1973, the fiscal year ending June 30, 1974, and the fiscal 
year ending June 30, 1975, not to exceed $14,039,000 for the 
fiscal year ending September 30, 1980, not to exceed 
$20,697,000 for the fiscal year ending September 30, 1981, not 
to exceed $22,770,000 for the fiscal year ending September 30, 
1982, such sums as may be necessary for fiscal years 1983 
through 1985, and not to exceed $22,770,000 per fiscal year for 
each of the fiscal years 1986 through 1990, for carrying out 
the provisions of this section, other than subsections (g)(1) 
and (2), (p), (r), and (t), except that such authorizations are 
not for any research, development, or demonstration activity 
pursuant to such provisions; (2) not to exceed $7,500,000 for 
fiscal years 1973, 1974, and 1975, $2,000,000 for fiscal year 
1977, $3,000,000 for fiscal year 1978, $3,000,000 for fiscal 
year 1979, $3,000,000 for fiscal year 1980, $3,000,000 for 
fiscal year 1981, $3,000,000 for fiscal year 1982, such sums as 
may be necessary for fiscal years 1983 through 1985, and 
$3,000,000 per fiscal year for each of the fiscal years 1986 
through 1990, for carrying out the provisions of subsection 
(g)(1); (3) not to exceed $2,500,000 for fiscal years 1973, 
1974, and 1975, $1,000,000 for fiscal year 1977, $1,500,000 for 
fiscal year 1978, $1,500,000 for fiscal year 1979, $1,500,000 
for fiscal year 1980, $1,500,000 for fiscal year 1981, 
$1,500,000 for fiscal year 1982, such sums as may be necessary 
for fiscal years 1983 through 1985, and $1,500,000 per fiscal 
year for each of the fiscal years 1986 through 1990, for 
carrying out the provisions of subsection (g)(2); (4) not to 
exceed $10,000,000 for each of the fiscal years ending June 30, 
1973, June 30, 1974, and June 30, 1975, for carrying out the 
provisions of subsection (p); (5) not to exceed $15,000,000 per 
fiscal year for the fiscal years ending June 30, 1973, June 30, 
1974, and June 30, 1975, for carrying out the provisions of 
subsection (r); [and (6)] (6) not to exceed $10,000,000 per 
fiscal year for the fiscal years ending June 30, 1973, June 30, 
1974, and June 30, 1975, for carrying out the provisions of 
subsection (t); and (7) not to exceed $75,000,000 for each of 
fiscal years 2008 through 2012 for carrying out subsections 
(b)(3) and (b)(8), except that not less than 20 percent of the 
amounts appropriated pursuant to this paragraph in a fiscal 
year shall be used for carrying out subsection (b)(8).

           *       *       *       *       *       *       *

  (w) Competitive Procedures for Awarding Grants.--The 
Administrator shall establish procedures that, to the maximum 
extent practicable, promote competition and openness in the 
award of grants to nonprofit private agencies, institutions, 
and organizations under this section.

           *       *       *       *       *       *       *

                 GRANTS FOR POLLUTION CONTROL PROGRAMS

Sec. 106. (a) There are hereby authorized to be appropriated 
the following sums, to remain available until expended, to 
carry out the purposes of this section--
          (1) $60,000,000 for the fiscal year ending June 30, 
        1973; [and]
          (2) $75,000,000 for the fiscal year ending June 30, 
        1974, and the fiscal year ending June 30, 1975, 
        $100,000,000 per fiscal year for the fiscal years 1977, 
        1978, 1979, and 1980, $75,000,000 per fiscal year for 
        the fiscal years 1981 and 1982, such sums as may be 
        necessary for fiscal years 1983 through 1985, and 
        $75,000,000 per fiscal year for each of the fiscal 
        years 1986 through 1990; and
          (3) such sums as may be necessary for each of fiscal 
        years 1991 through 2007, and $300,000,000 for each of 
        fiscal years 2008 through 2012;
for grants to States and to interstate agencies to assist them 
in administering programs for the prevention, reduction, and 
elimination of pollution, including enforcement directly or 
through appropriate State law enforcement officers or agencies.

           *       *       *       *       *       *       *

SEC. 122. [WET WEATHER] WATERSHED PILOT PROJECTS.

  (a) In General.--The Administrator, in coordination with the 
States, may provide technical assistance and grants for 
treatment works to carry out pilot projects relating to the 
following areas of [wet weather discharge] control:
          (1)  * * *
          (2) Stormwater best management practices.--The 
        control of pollutants from municipal separate storm 
        sewer systems for the purpose of demonstrating and 
        determining controls that are cost-effective and that 
        use innovative technologies in reducing such pollutants 
        from stormwater discharges, including low-impact 
        development technologies.
          (3) Watershed partnerships.--Efforts of 
        municipalities and property owners to demonstrate 
        cooperative ways to address nonpoint sources of 
        pollution to reduce adverse impacts on water quality.

           *       *       *       *       *       *       *

  (c) Funding.--
          (1) In general.--There is authorized to be 
        appropriated to carry out this section $10,000,000 for 
        fiscal year 2002, $15,000,000 for fiscal year 2003, and 
        $20,000,000 [for fiscal year 2004] for each of fiscal 
        years 2004 through 2012. Such funds shall remain 
        available until expended.

           *       *       *       *       *       *       *

  (d) Report to Congress.--Not later than [5] 10 years after 
the date of enactment of this section, the Administrator shall 
transmit to Congress a report on the results of the pilot 
projects conducted under this section and their possible 
application nationwide.

TITLE II--GRANTS FOR CONSTRUCTION OF TREATMENT WORKS

           *       *       *       *       *       *       *

                       [SEWAGE COLLECTION SYSTEMS

[Sec. 211. (a) No]

SEC. 211. SEWAGE COLLECTION SYSTEMS.

  (a) In General.--No grant shall be made for a sewage 
collection system under this title unless such grant (1) is for 
replacement or major rehabilitation of an existing collection 
system and is necessary to the total integrity and performance 
of the waste treatment works serving such community, or (2) is 
for a new collection system in an existing community with 
sufficient existing or planned capacity adequately to treat 
such collected sewage and is consistent with section 201 of 
this Act.
  (b) Population Density._If the Administrator uses population 
density as a test for determining the eligibility of a 
collector sewer for assistance it shall be only for the purpose 
of evaluating alternatives and determining the needs for such 
system in relation to ground or surface water quality impact.
  [(c) No grant shall be made under this title from funds 
authorized for any fiscal year during the period beginning 
October 1, 1977, and ending September 30, 1990, for treatment 
works for control of pollutant discharges from separate storm 
sewer systems.]
  (c) Exceptions.--
          (1) Replacement and major rehabilitation.--
        Notwithstanding the requirement of subsection (a)(1) 
        concerning the existence of a collection system as a 
        condition of eligibility, a project for replacement or 
        major rehabilitation of a collection system existing on 
        January 1, 2007, shall be eligible for a grant under 
        this title if the project otherwise meets the 
        requirements of subsection (a)(1) and meets the 
        requirement of paragraph (3).
          (2) New systems.--Notwithstanding the requirement of 
        subsection (a)(2) concerning the existence of a 
        community as a condition of eligibility, a project for 
        a new collection system to serve a community existing 
        on January 1, 2007, shall be eligible for a grant under 
        this title if the project otherwise meets the 
        requirements of subsection (a)(2) and meets the 
        requirement of paragraph (3).
          (3) Requirement.--A project meets the requirement of 
        this paragraph if the purpose of the project is to 
        accomplish the objectives, goals, and policies of this 
        Act by addressing an adverse environmental condition 
        existing on the date of enactment of this paragraph.

                              DEFINITIONS

Sec. 212. As used in this title--
  (1) * * *
  (2)(A) The term ``treatment works'' means any devices and 
systems used in the storage, treatment, recycling, and 
reclamation of municipal sewage or industrial wastes of a 
liquid nature to implement section 201 of this act, or 
necessary to recycle or reuse water at the most economical cost 
over the estimated life of the works, including intercepting 
sewers, outfall sewers, sewage collection systems, pumping, 
power, and other equipment, and their appurtenances; 
extensions, improvements, remodeling, additions, and 
alterations thereof; elements essential to provide a reliable 
recycled supply such as standby treatment units and clear well 
facilities; and [any works, including site] acquisition of the 
land that will be an integral part of the treatment process 
(including land use for the storage of treated wastewater in 
land treatment systems prior to land application) or [is used 
for ultimate] will be used for ultimate disposal of residues 
resulting from such treatment and acquisition of other lands, 
and interests in lands, which are necessary for construction.

           *       *       *       *       *       *       *

                           COST EFFECTIVENESS

Sec. 218. (a) It is the policy of Congress that a project for 
waste treatment and management undertaken with Federal 
financial assistance under this Act by any State, municipality, 
or intermunicipal or interstate agency shall be considered as 
an overall waste treatment system for waste treatment and 
management, and shall be that system which constitutes the most 
economical and cost-effective [combination of devices and 
systems used in the storage, treatment, recycling, and 
reclamation of municipal sewage or industrial wastes of a 
liquid nature to implement section 201 of this Act, or 
necessary to recycle or reuse water at the most economical cost 
over the estimated life of the works, including intercepting 
sewers, outfall sewers, sewage collection systems, pumping 
power, and other equipment, and their appurtenances; extension, 
improvements, remodeling, additions, and alterations thereof; 
elements essential to provide a reliable recycled supply such 
as standby treatment units and clear well facilities; and any 
works, including site acquisition of the land that will be an 
integral part of the treatment process (including land use for 
the storage of treated wastewater in land treatment systems 
prior to land application) or which is used for ultimate 
disposal of residues resulting from such treatment; water 
efficiency measures and devices; and any other method or system 
for preventing, abating, reducing, storing, treating, 
separating, or disposing of municipal waste, including storm 
water runoff, or industrial waste, including waste in combined 
storm water and sanitary sewer systems; to meet the 
requirements of this Act.] treatment works that meets the 
requirements of this Act. The system may include water 
efficiency measures and devices.

           *       *       *       *       *       *       *

TITLE V--GENERAL PROVISIONS

           *       *       *       *       *       *       *

                          GENERAL DEFINITIONS

Sec. 502. Except as otherwise specifically provided, when used 
in this Act:
  (1) * * *

           *       *       *       *       *       *       *

  (25) Treatment works.--The term ``treatment works'' has the 
meaning given that term in section 212.

           *       *       *       *       *       *       *

SEC. 518. INDIAN TRIBES.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Reservation of Funds.--[The Administrator]
          (1) Fiscal years 1987-2006.--The Administrator shall 
        reserve each fiscal year beginning after September 30, 
        1986, and ending before October 1, 2006, before 
        allotments to the States under section 205(e), one-half 
        of one percent of the sums appropriated under section 
        207. [Sums reserved under this subsection shall be 
        available only for grants for the develoment of waste 
        treatment management plans and for the construction of 
        sewage treatment works to serve Indian tribes, as 
        defined in subsection (h) and former Indian 
        reservations in Oklahoma (as determined by the 
        Secretary of the Interior) and Alaska Native Villages 
        as defined in Public Law 92-203.]
          (2) Fiscal year 2007 and thereafter.--For fiscal year 
        2007 and each fiscal year thereafter, the Administrator 
        shall reserve, before allotments to the States under 
        section 604(a), not less than 0.5 percent and not more 
        than 1.5 percent of the funds made available to carry 
        out title VI.
          (3) Use of funds.--Funds reserved under this 
        subsection shall be available only for grants for 
        projects and activities eligible for assistance under 
        section 603(c) to serve--
                  (A) Indian tribes;
                  (B) former Indian reservations in Oklahoma 
                (as determined by the Secretary of the 
                Interior); and
                  (C) Native villages (as defined in section 3 
                of the Alaska Native Claims Settlement Act (43 
                U.S.C. 1602)).

           *       *       *       *       *       *       *

        TITLE VI--STATE WATER POLLUTION CONTROL REVOLVING FUNDS

SEC. 601. GRANTS TO STATES FOR ESTABLISHMENT OF REVOLVING FUNDS.

  (a) General Authority.--Subject to the provisions of this 
title, the Administrator shall make capitalization grants to 
each State for the purpose of establishing a water pollution 
control revolving fund [for providing assistance (1) for 
construction of treatment works (as defined in section 212 of 
this Act) which are publicly owned, (2) for implementing a 
management program under section 319, and (3) for developing 
and implementing a conservation and management plan under 
section 320.] to accomplish the objectives, goals, and policies 
of this Act by providing assistance for projects and activities 
identified in section 603(c).

           *       *       *       *       *       *       *

SEC. 602. CAPITALIZATION GRANT AGREEMENTS.

  (a) * * *
  (b) Specific Requirements.--The Administrator shall enter 
into an agreement under this section with a State only after 
the State has established to the satisfaction of the 
Administrator that--
          (1) * * *

           *       *       *       *       *       *       *

          (9) the State will require as a condition of making a 
        loan or providing other assistance, as described in 
        section 603(d) of this Act, from the fund that the 
        recipient of such assistance will maintain project 
        accounts in accordance with generally accepted 
        government accounting [standards; and] standards, 
        including standards relating to the reporting of 
        infrastructure assets;
          (10) the State will make annual reports to the 
        Administrator on the actual use of funds in accordance 
        with section 606(d) of this Act[.];
          (11) the State will establish, maintain, invest, and 
        credit the fund with repayments, such that the fund 
        balance will be available in perpetuity for providing 
        financial assistance in accordance with this title;
          (12) any fees charged by the State to recipients of 
        assistance will be used for the purpose of financing 
        the cost of administering the fund or financing 
        projects or activities eligible for assistance from the 
        fund;
          (13) beginning in fiscal year 2009, the State will 
        include as a condition of providing assistance to a 
        municipality or intermunicipal, interstate, or State 
        agency that the recipient of such assistance certify, 
        in a manner determined by the Governor of the State, 
        that the recipient--
                  (A) has studied and evaluated the cost and 
                effectiveness of innovative and alternative 
                processes, materials, techniques, and 
                technologies for carrying out the proposed 
                project or activity for which assistance is 
                sought under this title, and has selected, to 
                the extent practicable, a project or activity 
                that may result in greater environmental 
                benefits or equivalent environmental benefits 
                when compared to standard processes, materials, 
                techniques, and technologies and more 
                efficiently uses energy and natural and 
                financial resources; and
                  (B) has considered the cost and effectiveness 
                of alternative management and financing 
                approaches for carrying out a project or 
                activity for which assistance is sought under 
                this title, taking into account the cost of 
                operating and maintaining the project or 
                activity over its life, as well as the cost of 
                constructing the project or activity;
          (14) the State will use at least 15 percent of the 
        amount of each capitalization grant received by the 
        State under this title after September 30, 2007, to 
        provide assistance to municipalities of fewer than 
        10,000 individuals that meet the affordability criteria 
        established by the State under section 603(i)(2) for 
        activities included on the State's priority list 
        established under section 603(g), to the extent that 
        there are sufficient applications for such assistance;
          (15) treatment works eligible under section 603(c)(1) 
        which will be constructed in whole or in part with 
        funds made available under section 205(m) or by a State 
        water pollution control revolving fund under this 
        title, or both, will meet the requirements of, or 
        otherwise be treated (as determined by the Governor of 
        the State) under sections 204(b)(1), 211, 218, and 
        511(c)(1) in the same manner as treatment works 
        constructed with assistance under title II of this Act;
          (16) a contract to be carried out using funds 
        directly made available by a capitalization grant under 
        this title for program management, construction 
        management, feasibility studies, preliminary 
        engineering, design, engineering, surveying, mapping, 
        or architectural related services shall be negotiated 
        in the same manner as a contract for architectural and 
        engineering services is negotiated under chapter 11 of 
        title 40, United States Code, or an equivalent State 
        qualifications-based requirement (as determined by the 
        Governor of the State); and
          (17) the requirements of section 513 will apply to 
        the construction of treatment works carried out in 
        whole or in part with assistance made available by a 
        State water pollution control revolving fund as 
        authorized under this title, or with assistance made 
        available under section 205(m), or both, in the same 
        manner as treatment works for which grants are made 
        under this Act.

SEC. 603. WATER POLLUTION CONTROL REVOLVING LOAN FUNDS.

  (a) * * *

           *       *       *       *       *       *       *

  [(c) Projects Eligible for Assistance.--The amounts of funds 
available to each State water pollution control revolving fund 
shall be used only for providing financial assistance (1) to 
any municipality, intermunicipal, interstate, or State agency 
for construction of publicly owned treatment works (as defined 
in section 212 of this Act), (2) for the implementation of a 
management program established under section 319 of this Act, 
and (3) for development and implementation of a conservation 
and management plan under section 320 of this Act. The fund 
shall be established, maintained, and credited with repayments, 
and the fund balance shall be available in perpetuity for 
providing such financial assistance.]
  (c) Projects and Activities Eligible for Assistance.--The 
amounts of funds available to each State water pollution 
control revolving fund shall be used only for providing 
financial assistance--
          (1) to any municipality or intermunicipal, 
        interstate, or State agency for construction of 
        publicly owned treatment works;
          (2) for the implementation of a management program 
        established under section 319;
          (3) for development and implementation of a 
        conservation and management plan under section 320;
          (4) for the implementation of lake protection 
        programs and projects under section 314;
          (5) for repair or replacement of decentralized 
        wastewater treatment systems that treat domestic 
        sewage;
          (6) for measures to manage or reduce municipal 
        stormwater runoff;
          (7) to any municipality or intermunicipal, 
        interstate, or State agency for measures to reduce the 
        demand for publicly owned treatment works capacity 
        through water conservation, efficiency, or reuse;
          (8) for measures to increase the security of publicly 
        owned treatment works; and
          (9) for the development and implementation of 
        watershed projects meeting the criteria set forth in 
        section 122.
  (d) Types of Assistance.--Except as otherwise limited by 
State law, a water pollution control revolving fund of a State 
under this section may be used only--
          (1) to make loans, on the condition that--
                  (A) such loans are made at or below market 
                interest rates, including interest free loans, 
                at terms not to exceed [20 years] the lesser of 
                30 years or the design life of the project to 
                be financed with the proceeds of the loan;
                  (B) annual principal and interest payments 
                will commence not later than 1 year after 
                completion of any project and all loans will be 
                fully amortized [not later than 20 years after 
                project completion] upon the expiration of the 
                term of the loan;
                  (C) the recipient of a loan will establish a 
                dedicated source of revenue for repayment of 
                loans; [and]
                  (D) the fund will be credited with all 
                payments of principal and interest on all 
                loans; and
                  (E) for any portion of a treatment works 
                proposed for repair, replacement, or expansion, 
                and eligible for assistance under section 
                603(c)(1), the recipient of a loan will develop 
                and implement a fiscal sustainability plan that 
                includes--
                          (i) an inventory of critical assets 
                        that are a part of that portion of the 
                        treatment works;
                          (ii) an evaluation of the condition 
                        and performance of inventoried assets 
                        or asset groupings; and
                          (iii) a plan for maintaining, 
                        repairing, and, as necessary, replacing 
                        that portion of the treatment works and 
                        a plan for funding such activities;
          (6) to earn interest on fund accounts; [and]
          (7) for the reasonable costs of administering the 
        fund and conducting activities under this title, except 
        that such amounts shall not exceed 4 percent of all 
        grant awards to such fund under this title[.], $400,000 
        per year, or \1/5\ percent per year of the current 
        valuation of the fund, whichever amount is greatest, 
        plus the amount of any fees collected by the State for 
        such purpose regardless of the source; and
          (8) to provide owners and operators of treatment 
        works that serve a population of 10,000 or fewer with 
        technical and planning assistance and assistance in 
        financial management, user fee analysis, budgeting, 
        capital improvement planning, facility operation and 
        maintenance, equipment replacement, repair schedules, 
        and other activities to improve wastewater treatment 
        plant management and operations; except that such 
        amounts shall not exceed 2 percent of grant awards to 
        such fund under this title.

           *       *       *       *       *       *       *

  [(g) Priority List Requirement.--The State may provide 
financial assistance from its water pollution control revolving 
fund only with respect to a project for construction of a 
treatment works described in subsection (c)(1) if such project 
is on the State's priority list under section 216 of this Act. 
Such assistance may be provided regardless of the rank of such 
project on such list.]
  (g) Priority List.--
          (1) In general.--For fiscal year 2009 and each fiscal 
        year thereafter, a State shall establish or update a 
        list of projects and activities for which assistance is 
        sought from the State's water pollution control 
        revolving fund. Such projects and activities shall be 
        listed in priority order based on the methodology 
        established under paragraph (2). The State may provide 
        financial assistance from the State's water pollution 
        control revolving fund only with respect to a project 
        or activity included on such list. In the case of 
        projects and activities eligible for assistance under 
        section 603(c)(2), the State may include a category or 
        subcategory of nonpoint sources of pollution on such 
        list in lieu of a specific project or activity.
          (2) Methodology.--
                  (A) In general.--Not later than 1 year after 
                the date of enactment of this paragraph, and 
                after providing notice and opportunity for 
                public comment, each State (acting through the 
                State's water quality management agency and 
                other appropriate agencies of the State) shall 
                establish a methodology for developing a 
                priority list under paragraph (1).
                  (B) Priority for projects and activities that 
                achieve greatest water quality improvement.--In 
                developing the methodology, the State shall 
                seek to achieve the greatest degree of water 
                quality improvement, taking into consideration 
                the requirements of section 602(b)(5) and 
                section 603(i)(3) and whether such water 
                quality improvements would be realized without 
                assistance under this title.
                  (C) Considerations in selecting projects and 
                activities.--In determining which projects and 
                activities will achieve the greatest degree of 
                water quality improvement, the State shall 
                consider--
                          (i) information developed by the 
                        State under sections 303(d) and 305(b);
                          (ii) the State's continuing planning 
                        process developed under section 303(e);
                          (iii) the State's management program 
                        developed under section 319; and
                          (iv) conservation and management 
                        plans developed under section 320.
                  (D) Nonpoint sources.--For categories or 
                subcategories of nonpoint sources of pollution 
                that a State may include on its priority list 
                under paragraph (1), the State may consider the 
                cumulative water quality improvements 
                associated with projects or activities in such 
                categories or subcategories.
                  (E) Existing methodologies.--If a State has 
                previously developed, after providing notice 
                and an opportunity for public comment, a 
                methodology that meets the requirements of this 
                paragraph, the State may use the methodology 
                for the purposes of this subsection.

           *       *       *       *       *       *       *

  (i) Additional Subsidization.--
          (1) In general.--In any case in which a State 
        provides assistance to a municipality or 
        intermunicipal, interstate, or State agency under 
        subsection (d), the State may provide additional 
        subsidization, including forgiveness of principal and 
        negative interest loans--
                  (A) to benefit a municipality that--
                          (i) meets the State's affordability 
                        criteria established under paragraph 
                        (2); or
                          (ii) does not meet the State's 
                        affordability criteria if the 
                        recipient--
                                  (I) seeks additional 
                                subsidization to benefit 
                                individual ratepayers in the 
                                residential user rate class;
                                  (II) demonstrates to the 
                                State that such ratepayers will 
                                experience a significant 
                                hardship from the increase in 
                                rates necessary to finance the 
                                project or activity for which 
                                assistance is sought; and
                                  (III) ensures, as part of an 
                                assistance agreement between 
                                the State and the recipient, 
                                that the additional 
                                subsidization provided under 
                                this paragraph is directed 
                                through a user charge rate 
                                system (or other appropriate 
                                method) to such ratepayers; or
                  (B) to implement an innovative or alternative 
                process, material, technique, or technology 
                (including nonstructural protection of surface 
                waters, a new or improved method of waste 
                treatment, and pollutant trading) that may 
                result in greater environmental benefits, or 
                equivalent environmental benefits at reduced 
                cost, when compared to a standard process, 
                material, technique, or technology.
          (2) Affordability criteria.--
                  (A) Establishment.--On or before September 
                30, 2008, and after providing notice and an 
                opportunity for public comment, a State shall 
                establish affordability criteria to assist in 
                identifying municipalities that would 
                experience a significant hardship raising the 
                revenue necessary to finance a project or 
                activity eligible for assistance under section 
                603(c)(1) if additional subsidization is not 
                provided. Such criteria shall be based on 
                income data, population trends, and other data 
                determined relevant by the State.
                  (B) Existing criteria.--If a State has 
                previously established, after providing notice 
                and an opportunity for public comment, 
                affordability criteria that meet the 
                requirements of subparagraph (A), the State may 
                use the criteria for the purposes of this 
                subsection. For purposes of this Act, any such 
                criteria shall be treated as affordability 
                criteria established under this paragraph.
                  (C) Information to assist states.--The 
                Administrator may publish information to assist 
                States in establishing affordability criteria 
                under subparagraph (A).
          (3) Priority.--A State may give priority to a 
        recipient for a project or activity eligible for 
        funding under section 603(c)(1) if the recipient meets 
        the State's affordability criteria.
          (4) Set-aside.--
                  (A) In general.--In any fiscal year in which 
                the Administrator has available for obligation 
                more than $1,000,000,000 for the purposes of 
                this title, a State shall provide additional 
                subsidization under this subsection in the 
                amount specified in subparagraph (B) to 
                eligible entities described in paragraph (1) 
                for projects and activities identified in the 
                State's intended use plan prepared under 
                section 606(c) to the extent that there are 
                sufficient applications for such assistance.
                  (B) Amount.--In a fiscal year described in 
                subparagraph (A), a State shall set aside for 
                purposes of subparagraph (A) an amount not less 
                than 25 percent of the difference between--
                          (i) the total amount that would have 
                        been allotted to the State under 
                        section 604 for such fiscal year if the 
                        amount available to the Administrator 
                        for obligation under this title for 
                        such fiscal year had been equal to 
                        $1,000,000,000; and
                          (ii) the total amount allotted to the 
                        State under section 604 for such fiscal 
                        year.
          (5) Limitation.--The total amount of additional 
        subsidization provided under this subsection by a State 
        may not exceed 30 percent of the total amount of 
        capitalization grants received by the State under this 
        title in fiscal years beginning after September 30, 
        2007.

SEC. 604. ALLOTMENT OF FUNDS.

  [(a) Formula.--Sums authorized to be appropriated to carry 
out this section for each of fiscal years 1989 and 1990 shall 
be allotted by the Administrator in accordance with section 
205(c) of this Act.]
  (a) Allotments.--
          (1) Fiscal years 2008 and 2009.--Sums appropriated to 
        carry out this title for each of fiscal years 2008 and 
        2009 shall be allotted by the Administrator in 
        accordance with the formula used to allot sums 
        appropriated to carry out this title for fiscal year 
        2007.
          (2) Fiscal year 2010 and thereafter.--Sums 
        appropriated to carry out this title for fiscal year 
        2010 and each fiscal year thereafter shall be allotted 
        by the Administrator as follows:
                  (A) Amounts that do not exceed $1,350,000,000 
                shall be allotted in accordance with the 
                formula described in paragraph (1).
                  (B) Amounts that exceed $1,350,000,000 shall 
                be allotted in accordance with the formula 
                developed by the Administrator under subsection 
                (d).
  (b) Reservation of Funds for Planning.--Each State shall 
reserve each fiscal year [1 percent] 2 percent of the sums 
allotted to such State under this section for such fiscal year, 
or $100,000, whichever amount is greater, to carry out planning 
under sections 205(j) and 303(e) of this Act.

           *       *       *       *       *       *       *
-
  (d) Formula Based on Water Quality Needs.--Not later than 
September 30, 2009, and after providing notice and an 
opportunity for public comment, the Administrator shall publish 
an allotment formula based on water quality needs in accordance 
with the most recent survey of needs developed by the 
Administrator under section 516(b).-

           *       *       *       *       *       *       *

SEC. 606. AUDITS, REPORTS, AND FISCAL CONTROLS; INTENDED USE PLAN.

  (a)  * * *
          

           *       *       *       *       *       *       *

  (c) Intended Use Plan.--After providing for public comment 
and review, [each State shall annually prepare] each State 
(acting through the State's water quality management agency and 
other appropriate agencies of the State) shall annually prepare 
and publish a plan identifying the intended uses of the amounts 
available to its water pollution control revolving fund. Such 
intended use plan shall include, but not be limited to--
          [(1) a list of those projects for construction of 
        publicly owned treatment works on the State's priority 
        list developed pursuant to section 216 of this Act and 
        a list of activities eligible for assistance under 
        sections 319 and 320 of this Act;]-
          (1) the State's priority list developed under section 
        603(g);

           *       *       *       *       *       *       *
-
          (4) assurances and specific proposals for meeting the 
        requirements of paragraphs (3), (4), (5), [and (6)] 
        (6), (15), and (17) of section 602(b) of this Act; 
        [and]
          (5) the criteria and method established for the 
        distribution of funds[.]; and
          (6) if the State does not fund projects and 
        activities in the order of the priority established 
        under section 603(g), an explanation of why such a 
        change in order is appropriate.-
  (d) Annual Report.--Beginning the first fiscal year after the 
receipt of payments under this title, the State shall provide 
an annual report to the Administrator describing how the State 
has met the goals and objectives for the previous fiscal year 
as identified in the plan prepared for the previous fiscal year 
pursuant to subsection (c), including identification of loan 
recipients, loan amounts, the eligible purpose under section 
603(c) for which the assistance is provided, and loan terms and 
similar details on other forms of financial assistance provided 
from the water pollution control revolving fund.

           *       *       *       *       *       *       *
-

SEC. 607. TECHNICAL ASSISTANCE.

  (a) Simplified Procedures.--Not later than 1 year after the 
date of enactment of this section, the Administrator shall 
assist the States in establishing simplified procedures for 
treatment works to obtain assistance under this title.
  (b) Publication of Manual.--Not later than 2 years after the 
date of the enactment of this section, and after providing 
notice and opportunity for public comment, the Administrator 
shall publish a manual to assist treatment works in obtaining 
assistance under this title and publish in the Federal Register 
notice of the availability of the manual.
  (c) Compliance Criteria.--At the request of any State, the 
Administrator, after providing notice and an opportunity for 
public comment, shall assist in the development of criteria for 
a State to determine compliance with the conditions of funding 
assistance established under sections 602(b)(13) and 
603(d)(1)(E).

SEC. [607.] 608. AUTHORIZATION OF APPROPRIATIONS.

   There is authorized to be appropriated to carry out the 
purposes of this title the following sums:
          [(1) $1,200,000,000 per fiscal year for each of 
        fiscal year 1989 and 1990;
          [(2) $2,400,000,000 for fiscal year 1991;
          [(3) $1,800,000,000 for fiscal year 1992;
          [(4) $1,200,000,000 for fiscal year 1993; and
          [(5) $600,000,000 for fiscal year 1994.]
          (1) $2,000,000,000 for fiscal year 2008;
          (2) $3,000,000,000 for fiscal year 2009;
          (3) $4,000,000,000 for fiscal year 2010; and
          (4) $5,000,000,000 for fiscal year 2011.
                              ----------                              

                      TITLE 46, UNITED STATES CODE

Subtitle                                                           Sec. 
      GENERAL.......................................................101 
     * * * * * * *
      [CLEARANCE, TONNAGE TAXES, AND DUTIES......................60101] 
      CLEARANCE AND TONNAGE DUTIES.................................60101
          * * * * * * *

          [Subtitle VI--Clearance, Tonnage Taxes, and Duties]

Subtitle VI--Clearance and Tonnage Duties

           *       *       *       *       *       *       *

               CHAPTER 603--TONNAGE TAXES AND LIGHT MONEY

Sec.
[60301.  Regular tonnage taxes.
[60302.  Special tonnage taxes.]
60301.  Regular tonnage duties.
60302.  Special tonnage duties.
     * * * * * * *
[60304.  Presidential suspension of tonnage taxes and light money.]
60304. Presidential suspension of tonnage duties and light money.

           *       *       *       *       *       *       *

Sec. 60301. Regular tonnage [taxes] duties

  [(a) Lower Rate.--A tax is imposed at the rate of 2 cents per 
ton (but not more than a total of 10 cents per ton per year) at 
each entry in a port of the United States of--
          [(1) a vessel entering from a foreign port or place 
        in North America, Central America, the West Indies 
        Islands, the Bahama Islands, the Bermuda Islands, or 
        the coast of South America bordering the Caribbean Sea; 
        or
          [(2) a vessel returning to the same port or place in 
        the United States from which it departed, and not 
        entering the United States from another port or place, 
        except--
                  [(A) a vessel of the United States;
                  [(B) a recreational vessel (as defined in 
                section 2101 of this title); or
                  [(C) a barge.
  [(b) Higher Rate.--A tax is imposed at the rate of 6 cents 
per ton (but not more than a total of 30 cents per ton per 
year) on a vessel at each entry in a port of the United States 
from a foreign port or place not named in subsection (a)(1).]
  (a) Lower Rate.--
          (1) Imposition of duty.--A duty is imposed at the 
        rate described in paragraph (2) at each entry in a port 
        of the United States of--
                  (A) a vessel entering from a foreign port or 
                place in North America, Central America, the 
                West Indies Islands, the Bahama Islands, the 
                Bermuda Islands, or the coast of South America 
                bordering the Caribbean Sea; or
                  (B) a vessel returning to the same port or 
                place in the United States from which it 
                departed, and not entering the United States 
                from another port or place, except--
                          (i) a vessel of the United States;
                          (ii) a recreational vessel (as 
                        defined in section 2101 of this title); 
                        or
                          (iii) a barge.
          (2) Rate.--The rate referred to in paragraph (1) 
        shall be--
                  (A) 4.5 cents per ton (but not more than a 
                total of 22.5 cents per ton per year) for 
                fiscal years 2006 through 2007;
                  (B) 9.0 cents per ton (but not more than a 
                total of 45 cents per ton per year) for fiscal 
                years 2008 through 2017; and
                  (C) 2 cents per ton (but not more than a 
                total of 10 cents per ton per year) for each 
                fiscal year thereafter.
  (b) Higher Rate.--
          (1) Imposition of duty.--A duty is imposed at the 
        rate described in paragraph (2) on a vessel at each 
        entry in a port of the United States from a foreign 
        port or place not named in subsection (a)(1).
          (2) Rate.--The rate referred to in paragraph (1) 
        shall be--
                  (A) 13.5 cents per ton (but not more than a 
                total of 67.5 cents per ton per year) for 
                fiscal years 2006 through 2007;
                  (B) 27 cents per ton (but not more than a 
                total of $1.35 per ton per year) for fiscal 
                years 2008 through 2017, and
                  (C) 6 cents per ton (but not more than a 
                total of 30 cents per ton per year) for each 
                fiscal year thereafter.-
  (c) Exception for Vessels Entering Other Than by Sea.--
Subsection (a) does not apply to a vessel entering other than 
by sea from a foreign port or place at which tonnage, 
lighthouse, or other equivalent [taxes] duties are not imposed 
on vessels of the United States.

Sec. 60302. Special tonnage [taxes] duties

  (a) Entry From Foreign Port or Place.--Regardless of whether 
a [tax] duty is imposed under section 60301 of this title, a 
[tax] duty is imposed on a vessel at each entry in a port of 
the United States from a foreign port or place at the following 
rates:
          (1)  * * *

           *       *       *       *       *       *       *

  (b) Vessels Not of the United States Transporting Property 
Between Districts.--Regardless of whether a [tax] duty is 
imposed under section 60301 of this title, a [tax] duty of 50 
cents per ton is imposed on a vessel not of the United States 
at each entry in one customs district from another district 
when transporting goods loaded in one district to be delivered 
in another district.
  (c) Exception for Vessels Becoming Documented.--The [tax] 
duty of 50 cents per ton under this section does not apply to a 
vessel that--
          (1) is owned only by citizens of the United States; 
        and
          (2) after entering a port of the United States, 
        becomes documented as a vessel of the United States 
        before leaving that port.

           *       *       *       *       *       *       *

Sec. 60303. Light money

  (a) Imposition of [Tax] Duty.--A [tax] duty of 50 cents per 
ton, to be called ``light money'', is imposed on a vessel not 
of the United States at each entry in a port of the United 
States. This [tax] duty shall be imposed and collected under 
the same regulations that apply to tonnage [taxes] duties.

           *       *       *       *       *       *       *

Sec. 60304. Presidential suspension of tonnage [taxes] duties and light 
                    money

  If the President is satisfied that the government of a 
foreign country does not impose discriminating or 
countervailing duties to the disadvantage of the United States, 
the President shall suspend the imposition of special tonnage 
[taxes] duties and light money under sections 60302 and 60303 
of this title on vessels of that country.

Sec. 60305. Vessels in distress

  A vessel is exempt from tonnage [taxes] duties and light 
money when it enters because it is in distress.

Sec. 60306. Vessels not engaged in trade

  A vessel is exempt from tonnage [taxes] duties and light 
money when not engaged in trade.

Sec. 60307. Vessels engaged in coastwise trade or the fisheries

  A vessel with a registry endorsement or a coastwise 
endorsement, trading from one port in the United States to 
another port in the United States or employed in the bank, 
whale, or other fisheries, is exempt from tonnage [taxes] 
duties and light money.

Sec. 60308. Vessels engaged in Great Lakes trade

  A documented vessel with a registry endorsement, engaged in 
foreign trade on the Great Lakes or their tributary or 
connecting waters in trade with Canada, does not become subject 
to tonnage [taxes] duties or light money because of that trade.

Sec. 60309. Passenger vessels making trips between ports of the united 
                    states and foreign ports

  A passenger vessel making at least 3 trips per week between a 
port of the United States and a foreign port is exempt from 
tonnage [taxes] duties and light money.

Sec. 60310. Vessels making daily trips on interior waters

  A vessel making regular daily trips between a port of the 
United States and a port of Canada only on interior waters not 
navigable to the ocean is exempt from tonnage [taxes] duties 
and light money, except on its first clearing each year.

Sec. 60311. Hospital vessels in time of war

  In time of war, a hospital vessel is exempt from tonnage 
[taxes] duties, light money, and pilotage charges in the ports 
of the United States if the vessel is one for which the 
conditions of the international convention for the exemption of 
hospital ships from taxation in time of war, concluded at The 
Hague on December 21, 1904, are satisfied. The President by 
proclamation shall name the vessels for which the conditions 
are satisfied and state when the exemption begins and ends.

Sec. 60312. Rights under treaties preserved

  This chapter and chapter 605 of this title do not affect a 
right or privilege of a foreign country relating to tonnage 
[taxes] duties or other duties on vessels under a law or treaty 
of the United States.

           *       *       *       *       *       *       *

                             MINORITY VIEWS

                              ----------                              

DISSENTING VIEWS OF MR. MICA, MR. BAKER, MR. BOOZMAN, MR. BOUSTANY, MR. 
   BROWN (OF SOUTH CAROLINA), MR. COBLE, MR. EHLERS, MS. FALLIN, MR. 
HAYES, MR. MACK, MR. MARCHANT, MR. GARY G. MILLER (OF CALIFORNIA), AND 
                         MR. MORAN (OF KANSAS).

    We recognize the important role clean water plays in our 
Nation and the need for improving our critical and aging 
wastewater infrastructure. By reauthorizing the Clean Water 
State Revolving Loan Fund (SRF) Program, H.R. 720 takes an 
important step toward addressing this need. We also welcome the 
environmental improvements that this bill would bring. However, 
while H.R. 720 represents an important step forward for clean 
water in many respects, it also takes a significant step 
backwards by mandating and expanding upon the past application 
of Davis-Bacon Act prevailing wage requirements in the SRF 
program.
    For this reason, we opposed the bill as reported out of 
Committee. These new mandated Davis-Bacon requirements are not 
based on a desire to deliver clean water to communities across 
the country. Rather, they would inflate the cost of clean water 
projects and ultimately result in fewer projects being built, 
fewer jobs being created, and less clean water being achieved. 
By adding to the cost of public construction, the Davis-Bacon 
Act disproportionately impacts small, rural, and disadvantaged 
communities, which can least afford to pay the higher cost of 
projects.
    We find it difficult to comprehend how a vital national 
interest and essential public health and human safety issue 
could be saddled by expanding a costly component of the SRF 
program that since 1987 was never intended to be applied to 
non-federal funds. What we are experiencing is a pattern of 
policy decisions concerning the expanded application of Davis-
Bacon to federal and non-federal programs that is more focused 
on placing the interests of the public on hold and at risk, 
unless an unprecedented expansion of Davis-Bacon is applied. In 
the end, state's rights and local control are only further 
restricted from helping solve important issues affecting 
communities across America.
    The Davis-Bacon Act also is discriminatory. Few small and 
minority-owned firms can afford to pay the higher wages that 
the Davis-Bacon Act requires. As a result, they are rarely 
awarded Davis-Bacon contracts, and many of them stop applying 
for those contracts. Moreover, projects operating under Davis-
Bacon requirements cannot hire local, lesser-skilled workers to 
work on these infrastructure projects, thereby limiting job 
opportunities for these workers and hindering state and local 
efforts to provide entry-level jobs.
    Prior to expiration of the Clean Water SRF authorization in 
1995, only the initial Federal seed money was subject to Davis-
Bacon prevailing wage requirements. State money, including the 
State match, loan repayments, interest, and other non-federal 
funds were not subject to Davis-Bacon requirements. There is no 
precedent here for applying the Davis-Bacon Act to state funds, 
and the program has operated more efficiently and effectively 
since the expiration of the prevailing wage requirements on the 
Clean Water SRF. To impose such requirements on states now 
would be an unnecessary and unwarranted Federal mandate on how 
state funds can be spent.
    For these reasons, we oppose the imposition of Davis-Bacon 
Act prevailing wage requirements on the Clean Water SRF 
Program, and we voted against having the Committee report H.R. 
720 to the House.
                                   Vernon J. Ehlers.
                                   Jerry Moran.
                                   John L. Mica.
                                   Kenny Marchant.
                                   Henry E. Brown, Jr.
                                   C.W. Boustany, Jr.
                                   Mary Fallin.
                                   John Boozman.
                                   Connie Mack.
                                   Robin Hayes.
                                   Richard H. Baker.
                                   Gary G. Miller.
                                   Howard Coble.
                                   
                                   
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