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[Senate Report 110-509]
[From the U.S. Government Publishing Office]

                                                      Calendar No. 1092
110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-509

======================================================================

 
               WATER INFRASTRUCTURE FINANCING ACT OF 2008

                                _______
                                

  September 26 (legislative day, September 17), 2008.--Ordered to be 
                                printed

                                _______
                                

    Mrs. Boxer, from the Committee on Environment and Public Works, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

       [Including an estimate by the Congressional Budget Office]

    The Committee on Environment and Public Works considered an 
original bill to amend the Federal Water Pollution Control Act 
and the Safe Drinking Water Act to improve water and wastewater 
infrastructure in the United States, and reports favorably 
thereon and recommends that the bill, as amended, do pass.

                      Purposes of the Legislation

    The Water Infrastructure Financing Act of 2008 would 
reauthorize the Clean Water Act State Revolving Fund and the 
Safe Drinking Water Act State Revolving Fund to improve 
wastewater and drinking water infrastructure in America. It 
also makes improvements to these and related programs.

                    General Statement and Background

    The nationwide need for investment in water and wastewater 
infrastructure through the State Revolving Funds continues to 
far outpace the amount of funding that is available on all 
levels of government. The EPA estimates that the capital 
investment shortfall for wastewater infrastructure ranges from 
$73 billion to $177 billion over 20 years.
    A 2000 EPA report, entitled Progress in Water Quality, 
states that ``without continued improvements in wastewater 
treatment infrastructure, future population growth will erode 
away many of the Clean Water Act achievements in effluent 
loading reduction.'' EPA projects that given the expansion of 
the U.S. population forecast over the next 20 years, even with 
expected increases in wastewater treatment efficiencies, 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 removed from the 
enactment of the Clean Water Act.
    This legislation would authorize $19.6 billion in 
appropriations from 2008 through 2012 for the EPA to give 
capitalization grants for the Clean Water State Revolving Fund 
(SRF) program. The bill would authorize appropriations of $14.7 
billion over the 2008-2012 period for the EPA to provide grants 
within the Safe Drinking Water Act SRF program. Grants within 
the SRF programs are used to help States in making low-interest 
loans to local communities to build wastewater treatment 
facilities to treat wastewater and drinking water. The bill 
also makes programmatic changes to the SRFs and establishes and 
improves other related grant and technical assistance programs.

                      Section-by-Section Analysis

Section 1. Short title; table of contents

    This section provides that the Act may be cited as the 
``Water Infrastructure Financing Act''.

                TITLE I--WATER POLLUTION INFRASTRUCTURE

Section 101. Technical assistance for rural small treatment works and 
        medium treatment works

    This section would authorize the Administrator of the 
Environmental Protection Agency to make grants on a competitive 
basis to nonprofit organizations that are qualified to provide 
technical assistance on wastewater and stormwater approaches to 
owners and operators of small and medium treatment works.
    This section would authorize annual appropriations for each 
of fiscal years 2009-2013 of $25,000,000 for grants for small 
treatment works and $15,000,000 for grants for medium treatment 
works.

Section 102. Projects eligible for assistance

    This section describes the projects eligible for assistance 
from the State Water Pollution Control Revolving Loan Fund.

Section 103. Affordability

    This section would amend section 603 of the Clean Water Act 
(33 U.S.C. 1383) to make the program more affordable to States 
and municipalities, including by extending the terms of loans 
made under section 603 of the Clean Water Act to the lesser of 
30 years or the design life of the project; increasing the 
State's allowable administrative costs to 6 percent; providing 
additional assistance to disadvantaged communities with loan 
subsidies, including loan forgiveness and negative interest 
rates, up to 30 percent of the capitalization grant received by 
the State in a fiscal year.
    This section would authorize a State to forgive repayment 
of up to 5 percent of loans for the percentage of a project 
that treats or minimizes sewage or urban stormwater discharges 
using: decentralized stormwater or wastewater controls; low-
impact development technologies; stream buffers; wetland 
restoration and enhancement; actions to minimize impervious 
surfaces; use of vegetation and other permeable materials; and 
actions to increase efficient water use, conservation, and 
reuse.

Section 104. Water Pollution Control Revolving Fund

    This section would establish a priority system for each 
State in implementing the State Water Pollution Control 
Revolving Loan Fund, including giving greater weight to an 
application that proposes approaches other than the traditional 
waste water approach (which consists of collection sewers, 
centralized treatment works, and a direct point source 
discharge to surface water) using decentralized stormwater or 
wastewater controls; low-impact development technologies; 
stream buffers; wetland restoration and enhancement; actions to 
minimize impervious surfaces; use of vegetation and other 
permeable materials; and actions to increase efficient water 
use, conservation, and reuse.

Section 105. Transferability of funds

    This section would authorize the Governor of a State to 
reserve up to 33 percent of a capitalization grant under title 
II of the Clean Water Act and add those funds to funds provided 
to the State under section 1452 of the Safe Drinking Water Act 
(42 U.S.C. 300j-12), and to reserve up to that amount from 
capitalization grants made under section 1452 of the Safe 
Drinking Water Act and add those funds to any funds the State 
received under title II of the Clean Water Act. The reserved 
funds would not be considered for purposes of the State's 
matching funds for a capitalization grant under title II of the 
Clean Water Act.

Section 106. Noncompliance

    This section would generally prohibit assistance (other 
than for purposes of planning, design, or security) to an owner 
or operator of a treatment works that has been in significant 
noncompliance with the Clean Water Act, unless the 
Administrator and the State determines that the enforcement 
agency has determined that the assistance will enable the owner 
to take corrective action or would assist the owner in making 
progress toward compliance.

Section 107. Negotiation of contracts

    This section would require that certain contracts to be 
carried out with funds directly made available by a 
capitalization grant be negotiated in the same manner as a 
contract for architectural and engineering services under 
chapter 11 of title 40, United States Code, or equivalent State 
qualifications-based requirement. Small communities of 10,000 
or fewer would be exempted from this requirement.

Section 108. Allotment of funds

    This section would allow each State to reserve the greater 
of 2 percent or $100,000 from its fiscal year allotment to 
carry out planning under sections 205(j) and 303(e) of the 
Clean Water Act, and requires 1.5 percent of those funds be 
allocated to Indian Tribes.

Section 109. Authorization of appropriations

    This section would authorize appropriations of $16.8 
billion over 5 years for the capitalization of state revolving 
funds as follows: $3.2 billion in each of fiscal years 2008 and 
2009, $3.6 billion in fiscal year 2010, $4 billion in fiscal 
year 2011, and $6 billion in fiscal year 2012. Section 109 
would authorize the Administrator to reserve not more than 
$100,000 of the amounts made available in each fiscal year to 
conduct needs surveys.

Section 110. Sewer overflow control grants

    This section would authorize the Administrator to make 
grants for fiscal years 2008-2012 to prevent sewer overflows. 
Projects that receive grants under this section would be 
subject to the same requirements as a project that receives 
assistance from a State water pollution control revolving fund.
    This section would authorize appropriations of $2 billion 
over 5 years for sewer overflow control grants as follows: $375 
million for each of fiscal years 2008-2011, and $500 million 
for fiscal year 2012. For each of fiscal years 2008 and 2009, 
the Administrator is required to use the priority criteria in 
section 221(b) (33 U.S.C. 1301(b)), with additional priority 
given to projects that use nonstructural, low-impact 
development, water conservation, efficiency or reuse, or other 
decentralized stormwater or wastewater approaches. Starting in 
fiscal year 2010, the Administrator would be required to 
provide sewer overflow control grants in accordance with the 
needs survey required conducted under section 210 (33 U.S.C. 
1290).

Section 111. Capitalization grant agreements

    This section would provide that treatment works 
constructed, in whole or in part, using State loan funds must 
meet the requirements of section 513 of the Clean Water Act (33 
U.S.C. 1372) relating to labor standards.

Section 112. Critical water infrastructure projects

    This section would require the Administrator to establish a 
watershed restoration grant program to protect or improve water 
quality. Section 112 would authorize the Administrator to enter 
into agreements with one or more non-Federal entities to carry 
watershed restoration projects, which may include projects that 
are included in a State's intended use plan developed under 
section 606(c) of the Clean Water Act (33 U.S.C. 1386(c)). The 
non-Federal entities would be required to pay 45 percent of the 
total project costs, which may include in-kind contributions. 
The Administrator may waive the cost-sharing requirement based 
on financial hardship.
    This section would authorize appropriations of $50 million 
for each fiscal year 2008 through 2012.

              TITLE II--SAFE DRINKING WATER INFRASTRUCTURE

Section 201. Contaminant prevention, detection, and response

    This section would require the Administrator to submit a 
report to Congress, within 180 days of enactment, concerning 
progress in implementing section 1434 of the Safe Drinking 
Water Act (42 U.S.C. 300i-3). Section 201 would also require 
the Administrator to develop and carry our an implementation 
plan for section 1434, incorporating results of the report.

Section 202. Drinking water technical assistance for communities

    This section would reauthorize and amend the form of 
assistance, priorities, and other requirements for technical 
assistance under section 1442(e) of the Safe Drinking Water 
Act. This section would allow for well system nonprofit 
technical assistance to be included under section 1442(e) of 
the Safe Drinking Water Act.

Section 203. Preservation of employee labor standards

    This section would require that contractors financed, in 
whole or in part, with financial assistance provided under the 
Safe Drinking Water Act, including State loan funds under 
section 1452, pay workers the prevailing wage.

Section 204. Preconstruction work

    This section would amend section 1452(a)(2) of the Safe 
Drinking Water Act (42 U.S.C. 300j-12(a)(2)) to allow the use 
of State loan funds for replacing or rehabilitating aging 
treatment, storage, or distribution facilities or to upgrade 
security of public water systems. Section 204 also allows the 
use of loan funds for payment of certain costs of general 
obligation bonds issued by the State to provide matching funds.

Section 205. Priority system requirements

    This section would establish a priority system to be used 
for funding projects that addresses the most serious risks to 
human health, are necessary to ensure compliance with the Act, 
and assist the public water systems in the most need.

Section 206. Affordability

    This section would amend section 1452(d)(3) of the Safe 
Drinking Water Act (42 U.S.C. 300j-12(d)(3)) to expand the 
definition of a ``disadvantaged community'' to include a 
portion of a service area.

Section 207. Safe drinking water revolving loan funds

    This section would authorize a State to reserve up to 33 
percent of the capitalization grant made under section 1452(g) 
of the Safe Drinking Water Act (42 U.S.C. 300j-12(g)) and 
transfer those funds to any funds provided the State under 
section 601 of the Clean Water Act (33 U.S.C. 1381), and to 
reserve up to that amount from capitalization grants made under 
section 601 of the Clean Water Act and add those funds to any 
funds the State received under section 1452(g) of the Safe 
Drinking Water Act. The reserved funds would not be considered 
for purposes of the State's matching funds for a capitalization 
grant under 602(b) of the Clean Water Act.
    Section 207 also would make certain technical corrections 
to section 1452(g)) of the Safe Drinking Water Act.

Section 208. Other authorized activities

    This section authorizes the use of capitalization grant 
funds to implement source water protection plans.

Section 209. Authorization of appropriations

    Section 208 would authorize appropriations of $13 billion 
over 5 years for the capitalization of state revolving funds as 
follows: $1.5 billion in fiscal years 2008, $2 billion in each 
of fiscal years 2009 and 2010, $3.5 billion in fiscal year 
2011, and $6 billion in fiscal year 2012. Section 209 would 
authorize the Administrator to reserve not more than $100,000 
of the amounts made available in each fiscal year to conduct 
needs surveys.

Section 210. Negotiation of contracts

    Section 209 would require that certain contracts to be 
carried out with funds directly made available by a 
capitalization grant under Section 1452 of the Safe Drinking 
Water Act be negotiated in the same manner as a contract for 
architectural and engineering services under chapter 11 of 
title 40, United States Code, or equivalent State 
qualifications-based requirement. Small communities of 10,000 
or fewer would be exempted from this requirement.

Section 211. Critical drinking water infrastructure projects

    This section requires the Administrator to establish a 
grant program to eligible entities for use in carrying out 
project and activities to assist community water systems in 
meeting the requirements of the Safe Drinking Water Act. The 
section authorizes $300 million for each of fiscal years 2008 
through 2012.

Section 212. District of Columbia lead service line replacement

    This section authorizes $30 million to carry out lead 
service line replacement in the District of Columbia and 
establishes certain conditions and limitations of lead service 
line replacement.

                        TITLE III--MISCELLANEOUS

Section 301. Definitions

    This section defines certain terms within this title.

Section 302. Program for water quality enhancement and management

    This section requires the Administrator to establish a 
program for water quality enhancement and management within the 
EPA. It also requires the Administrator to establish a 
nationwide demonstration grant program on innovative and 
nontraditional water technologies. It authorizes $20 million 
for fiscal years 2008-2012.

Section 303. Agricultural Pollution Control Technology Grant Program

    This section requires the Administrator to provide 
capitalization grants of no more than $1 million per State to 
establish an agricultural pollution control technology State 
revolving fund. The section establishes state eligibility 
requirements and other conditions. The section authorizes $50 
million in appropriations to carry out this section.

Section 304. State revolving fund review process

    This section requires the Administrator to consult with 
States, utilities, nonprofit organizations, and other Federal 
agencies providing financial assistance to identify ways to 
expedite and improve the application and review process, for 
the provision of assistance from the Clean Water Act and Safe 
Drinking Water Act State Revolving Funds. It also requires the 
Administrator to take administrative action necessary to 
expedite and improve the process, and collect information 
relating to innovative approaches taken by any State to simply 
the application process.

Section 305. Cost of service study

    This section requires the Administrator to enter into an 
agreement with the National Academy of Sciences to conduct a 
study regarding public water systems and treatment works and 
the costs associated with operations, maintenance, capital 
replacement, and regulatory requirements.

Section 306. Water management study

    This section requires the Administrator to enter into an 
agreement with the National Academy of Sciences to conduct a 
study looking at innovative, effective, and systematic 
approaches for the management of water supply, wastewater, and 
stormwater in urban areas and surrounding communities 
throughout the United States and other countries.

Section 307. Reduction in authorization of appropriations

    This section requires that each amount authorized to be 
appropriated under this Act will be reduced by 2 percent.

                          Legislative History

    The Water Infrastructure Investment Act was an original 
bill sponsored by Senator Lautenberg, drafted in cooperation 
with Senators Boxer, Inhofe, and Vitter. On September 17, 2008 
the Committee on Environment and Public Works held a Business 
Meeting, at which Senator Lautenberg offered an amendment 
making certain technical changes to the bill, and the amendment 
was agreed to by voice vote. Senator Lautenberg also offered an 
amendment applying Davis-Bacon prevailing wage requirements to 
contract negotiations under these programs--that amendment was 
passed by a roll call vote, 11 ayes, 7 nays, and 1 Not 
Recorded. Senator Inhofe also offered an amendment requiring 
that each amount authorized to be appropriated under this Act 
shall be reduced by 2 percent. That amendment passed by voice 
vote. S. 3500 was ordered favorably reported as amended by 
voice vote.

                             Rollcall Votes

    There was one rollcall vote during the consideration of the 
Water Infrastructure Financing Act of 2008. Senator 
Lautenberg's Amendment #1, which would apply Davis-Bacon 
prevailing wage requirements to contract negotiations under the 
SRF programs was approved with 11 ayes, 7 nays, and 1 Not 
Recorded vote.

                      Regulatory Impact Statement

    In compliance with section 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes evaluation of 
the regulatory impact of the reported bill. The Committee finds 
that this legislation, which provides grants and financial 
assistance to communities, wastewater and drinking water 
utilities, certain technical assistance providers and others, 
does not have substantial regulatory impacts.

                          Mandates Assessment

    In compliance with the Unfunded Mandates Reform Act of 1995 
(Pub. L. 104-4), the Committee finds that this legislation does 
not impose intergovernmental mandates or private sector 
mandates as those terms are defined in UMRA. The Congressional 
Budget Office concurs, finding ``This legislation contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments.''

Water Infrastructure Financing Act

    Summary: This bill would authorize the appropriation of $33 
billion for the Environmental Protection Agency (EPA) to 
provide grants to states and nonprofit organizations to support 
a wide range of water quality projects and programs. CBO 
estimates that implementing this legislation would cost about 
$19 billion over the next five years and an additional $14 
billion after 2013, assuming appropriation of the authorized 
amounts.
    The Joint Committee on Taxation (JCT) estimates that 
enacting the bill would reduce revenues by $1.3 billion over 
the next 10 years. Enacting the bill would not affect direct 
spending.
    This legislation contains no intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act 
(UMRA) and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of this legislation is summarized in Table 1. 
The costs of this legislation fall within budget function 300 
(natural resources and environment).

                                     TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF THE WATER INFRASTRUCTURE FINANCING ACT
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             By fiscal year, in millions of dollars--
                                        ----------------------------------------------------------------------------------------------------------------
                                           2009     2010     2011     2012      2013     2014     2015     2016     2017     2018   2009-2013  2009-2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level....................    5,994    6,337    8,198    12,730       81        0        0        0        0        0     33,340     33,340
Estimated Outlays......................      564    1,977    3,746     5,597    6,912    6,098    3,681    1,740      829      370     18,796     31,514

                                                                   CHANGES IN REVENUES

Estimated Revenues\1\..................        *       -4      -15       -42      -87     -147     -209     -253     -278     -289       -148     -1,324
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: * = revenue of less than $500,000.
\1\Estimate provided by the Joint Committee on Taxation.

    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted near the beginning of 2009, that the full 
amounts authorized will be appropriated for each year, and that 
outlays will follow the historical patterns of spending for 
existing and similar programs. Components of the estimated 
costs are described below.

Spending subject to appropriation

    This legislation would authorize appropriations totaling 
about $33 billion over the next five years for EPA's water 
infrastructure and grant programs. Amounts authorized to be 
appropriated for individual programs are shown in Table 2.
    The bill would authorize the appropriation of nearly $30 
billion over the 2009-2012 period for EPA to provide 
capitalization grants for the State Revolving Fund (SRF) 
program (about $16 billion for the clean water SRF program and 
about $13 billion for the safe drinking water SRF program). In 
2008, the combined appropriation for these SRF programs was 
about $1.5 billion. States would use such grants along with 
their own funds to make low-interest loans to communities for 
wastewater treatment and drinking water facilities. Indian 
tribes would use such grants to construct wastewater treatment 
facilities and to fund projects that would improve the quality 
of drinking water. This bill would make several revisions to 
those grant programs, including expanding the types of projects 
eligible for assistance, changing the formulas used to allocate 
grant money among the states and tribes, and extending the 
repayment terms for loans made by states.

  Table 2.--AMOUNTS AUTHORIZED TO BE APPROPRIATED FOR EPA PROGRAMS UNDER THE WATER INFRASTRUCTURE FINANCING ACT
----------------------------------------------------------------------------------------------------------------
                                                                   By fiscal year, in millions of dollars--
                                                            ----------------------------------------------------
                                                              2009    2010    2011     2012     2013   2009-2013
----------------------------------------------------------------------------------------------------------------
Clean Water SRF Grants.....................................   3,136   3,528   3,920    5,880        0    16,464
Safe Drinking Water SRF Grants.............................   1,960   1,960   3,430    5,880        0    13,230
Sewer Overflow Grants......................................     368     368     368      490        0     1,594
Critical Drinking Water Infrastructure Grant Program.......     294     294     294      294        0     1,176
Critical Water Infrastructure Grant Program................      49      49      49       49        0       196
Grants for Lead Service Line Replacement in the District of      29      29      29       29        0       116
 Columbia..................................................
Technical Assistance for Nonprofits........................      42      42      42       42       42       210
EPA Safe Drinking Water Implementation Plan................       7       7       7        7        0        28
Technical Assistance for Small and Medium Treatment Works..      39      39      39       39       39       195
Agricultural Pollution Control Technology Grant Program....      49       0       0        0        0        49
Grants for Water Quality Enhancement and Management........      20      20      20       20        0        80
National Academy of Sciences Studies.......................       1       1       0        0        0         2
                                                            ----------------------------------------------------
    Total Authorization Level..............................   5,994   6,337   8,198   12,730       81    33,340
----------------------------------------------------------------------------------------------------------------
NOTE: SRF = state revolving fund; EPA = Environmental Protection Agency.

    This legislation also would authorize the appropriation of 
about $1.6 billion over the 2009-2012 period for EPA to make 
grants to states to remedy sewage overflows (that is, the 
discharge of untreated wastewater into waterways). This bill 
also would authorize the appropriation of about $1.2 billion 
for the Critical Drinking Water Infrastructure Grant Program 
and about $200 million for the Critical Water Infrastructure 
Grant Program over the same period. These grant programs would 
allow EPA to make grants to small public water systems to 
address the cost of complying with drinking water regulations 
and to make grants to entities to carry out projects related to 
watershed restoration.
    All of the remaining authorizations in the bill would total 
about $680 million over the next five years. That funding would 
be used for various other purposes, including a grant program 
to assist small and medium treatment works in a broad range of 
approaches to wastewater and stormwater management, grant 
programs aimed at promoting innovations in technology and 
alternative approaches to water quality management, and a grant 
program to address the replacement of lead drinking water 
service lines in the District of Columbia.

Revenues

    This bill would authorize the appropriation of funds for 
EPA's clean water SRF and the safe drinking water SRF programs, 
as well as appropriations for the agricultural pollution 
control technology grant program. The JCT expects that some of 
those funds would be used by states to leverage additional 
funds by issuing tax-exempt bonds. The JCT estimates that the 
consequent reductions in revenue from issuing additional tax-
exempt bonds would total about $1.3 billion over the next 10 
years.
    Intergovernmental and private-sector impact: This 
legislation contains no intergovernmental or private-sector 
mandates as defined in UMRA and would impose no costs on state, 
local, or tribal governments. The bill would benefit state, 
local, and tribal governments by authorizing grants for water 
and sewer projects.
    Estimate prepared by: Federal Spending: Susanne S. Mehlman. 
Federal Revenues: Mark Booth. Impact on State, Local, and 
Tribal Governments: Burke Doherty. Impact on the Private 
Sector: Amy Petz.
    Estimate approved by: Peter H. Fontaine, Assistant Director 
for Budget Analysis.

                            ADDITIONAL VIEWS

    The integration of Davis-Bacon with the SRF program is 
antithetical to its purpose of lowering the costs incurred by 
state and local governments for constructing facilities to 
clean up water. Davis-Bacon has consistently inflated the cost 
of public construction projects anywhere from 5 percent to 38 
percent over what they would be if they were to be bid upon 
competitively in the private sector. As a former Mayor, I am 
sensitive to the budgetary concerns of state and local 
governments especially during such lean economic times. This 
country faces tens of billions of dollars in infrastructure 
needs, and the inclusion of Davis-Bacon will certainly delay 
and potentially prohibit infrastructure construction and 
compliance progress. I regret that this provision will 
ultimately lead to a legislative impasse and that communities 
in need won't receive the resources this bill could provide.

                                                   James M. Inhofe.

                        Changes in Existing Law

    In compliance with section 12 of rule XXVI of the Standing 
Rules of the Senate, 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:

           *       *       *       *       *       *       *

          TITLE II--GRANTS FOR CONSTRUCTION OF TREATMENT WORKS

                                PURPOSE

      Sec. 201. (a) * * *

           *       *       *       *       *       *       *

SEC. 221. SEWER OVERFLOW CONTROL GRANTS.

  [(a) In General.--In any fiscal year in which the 
Administrator has available for obligation at least 
$1,350,000,000 for the purposes of section 601--
          [(1) the Administrator may make grants to States for 
        the purpose of providing grants to a municipality or 
        municipal entity for planning, design, and construction 
        of treatment works to intercept, transport, control, or 
        treat municipal combined sewer overflows and sanitary 
        sewer overflows; and
          [(2) subject to subsection (g), the Administrator 
        may]
    (a) In General.--The Administrator may--
          (1) make grants to States for the purpose of 
        providing grants to a municipality or municipal entity 
        for planning, design, and construction of treatment 
        works to intercept, transport, control, or treat 
        municipal combined sewer overflows and sanitary sewer 
        overflows; and
          (2) subject to subsection (g), make a direct grant to 
        a municipality or municipal entity for the purposes 
        described in paragraph (1).

           *       *       *       *       *       *       *

  (d) Cost-Sharing.--The Federal share of the cost of 
activities carried out using amounts from a grant made under 
subsection (a) shall be not less than 55 percent of the cost. 
The non-Federal share of the cost may include, in any amount, 
public and private funds and in-kind services, and may include, 
notwithstanding section [603(h)] 603(j), financial assistance, 
including loans, from a State water pollution control revolving 
fund.

                  FEDERAL WATER POLLUTION CONTROL ACT

  [(e) Administrative Reporting Requirements.--If a project 
receives grant assistance under subsection (a) and loan 
assistance from a State water pollution control revolving fund 
and the loan assistance is for 15 percent or more of the cost 
of the project, the project may be administered in accordance 
with State water pollution control revolving fund 
administrative reporting requirements for the purposes of 
streamlining such requirements.
  [(f) Authorization of Appropriations.--There is authorized to 
be appropriated to carry out this section $750,000,000 for each 
of fiscal years 2002 and 2003. Such sums shall remain available 
until expended.
  [(g) Allocation of Funds.--
          [(1) Fiscal year 2002.--Subject to subsection (h), 
        the Administrator shall use the amounts appropriated to 
        carry out this section for fiscal year 2002 for making 
        grants to municipalities and municipal entities under 
        subsection (a)(2), in accordance with the criteria set 
        forth in subsection (b).
          [(2) Fiscal year 2003.--Subject to subsection (h), 
        the Administrator shall use the amounts appropriated to 
        carry out this section for fiscal year 2003 as follows:
                  [(A) Not to exceed $250,000,000 for making 
                grants to municipalities and municipal entities 
                under subsection (a)(2), in accordance with the 
                criteria set forth in subsection (b).
                  [(B) All remaining amounts for making grants 
                to States under subsection (a)(1), in 
                accordance with a formula to be established by 
                the Administrator, after providing notice and 
                an opportunity for public comment, that 
                allocates to each State a proportional share of 
                such amounts based on the total needs of the 
                State for municipal combined sewer overflow 
                controls and sanitary sewer overflow controls 
                identified in the most recent survey conducted 
                pursuant to section 516(b)(1).]
  (e) Administrative Requirements.--
          (1) In general.--Subject to paragraph (2), a project 
        that receives grant assistance under subsection (a) 
        shall be carried out subject to the same requirements 
        as a project that receives assistance from a State 
        water pollution control revolving fund established 
        pursuant to title VI.
          (2) Determination of governor.--The requirement 
        described in paragraph (1) shall not apply to a project 
        that receives grant assistance under subsection (a) to 
        the extent that the Governor of the State in which the 
        project is located determines that a requirement 
        described in title VI is inconsistent with the purposes 
        of this section.
  (f) Authorization of Appropriations.--There are authorized to 
be appropriated to carry out this section, to remain available 
until expended--
          (1) $375,000,000 for fiscal year 2008;
          (2) $375,000,000 for fiscal year 2009;
          (3) $375,000,000 for fiscal year 2010;
          (4) $375,000,000 for fiscal year 2011; and
          (5) $500,000,000 for fiscal year 2012.
  (g) Allocation of Funds.--
          (1) Fiscal year 2008 and 2009.--For each of fiscal 
        years 2008 and 2009, subject to subsection (h), the 
        Administrator shall use the amounts made available to 
        carry out this section to provide grants to 
        municipalities and municipal entities under subsection 
        (a)(2)--
                  (A) in accordance with the priority criteria 
                described in subsection (b); and
                  (B) with additional priority given to 
                proposed projects that involve the use of--
                          (i) nonstructural, low-impact 
                        development;
                          (ii) water conservation, efficiency, 
                        or reuse; or
                          (iii) other decentralized stormwater 
                        or wastewater approaches to minimize 
                        flows into the sewer systems.
          (2) Fiscal year 2010 and thereafter.--For fiscal year 
        2010 and each fiscal year thereafter, subject to 
        subsection (h), the Administrator shall use the amounts 
        made available to carry out this section to provide 
        grants to States under subsection (a)(1) in accordance 
        with a formula that--
                  (A) shall be established by the 
                Administrator, after providing notice and an 
                opportunity for public comment; and
                  (B) allocates to each State a proportional 
                share of the amounts based on the total needs 
                of the State for municipal combined sewer 
                overflow controls and sanitary sewer overflow 
                controls, as identified in the most recent 
                survey--
                          (i) conducted under section 210; and
                          (ii) included in a report required 
                        under section 516(b)(1)(B).

           *       *       *       *       *       *       *

  (i) Reports.--Not later than December 31, [2003] 2010, and 
periodically thereafter, the Administrator shall transmit to 
Congress a report containing recommended funding levels for 
grants under this section. The recommended funding levels shall 
be sufficient to ensure the continued expeditious 
implementation of municipal combined sewer overflow and 
sanitary sewer overflow controls nationwide.

SEC. 222. TECHNICAL ASSISTANCE FOR RURAL SMALL TREATMENT WORKS AND 
                    MEDIUM TREATMENT WORKS.

  (a) Definitions.--In this section:
          (1) Decentralized wastewater system.--
                  (A) In general.--The term ``decentralized 
                wastewater system'' means a wastewater 
                treatment system that is at or near a site at 
                which wastewater is generated.
                  (B) Inclusions.--The term ``decentralized 
                wastewater system'' includes a system that 
                provides for--
                          (i) nonpotable reuse of treated 
                        effluent; or
                          (ii) energy and nutrient recovery 
                        from wastewater constituents.
          (2) Medium treatment works.--The term ``medium 
        treatment works'' means a publicly owned treatment 
        works serving more than 10,000 but fewer than 100,000 
        individuals.
          (3) Qualified nonprofit technical assistance 
        provider.--The term ``qualified nonprofit technical 
        assistance provider'' means a qualified nonprofit 
        technical assistance provider of water and wastewater 
        services to small or medium-sized communities that 
        provides technical assistance (including circuit rider, 
        multi-State regional assistance programs, and training 
        and preliminary engineering evaluations) to owners and 
        operators of small treatment works or medium treatment 
        works that may include State agencies.
          (4) Small treatment works.--The term ``small 
        treatment works'' means a publicly owned treatment 
        works serving not more than 10,000 individuals.
  (b) Grant Program.--
          (1) In general.--The Administrator may make grants on 
        a competitive basis to qualified nonprofit technical 
        assistance providers that are qualified to provide 
        assistance on a broad range of wastewater and 
        stormwater approaches--
                  (A) to assist owners and operators of small 
                treatment works and medium treatment works to 
                plan, develop, and obtain financing for 
                eligible projects described in section 603(c) 
                or 518(c);
                  (B) to provide financial assistance, in 
                consultation with the State in which the 
                assistance is provided, to owners and operators 
                of small treatment works and medium treatment 
                works for predevelopment costs (including costs 
                for planning, design, and associated 
                preconstruction activities, such as activities 
                relating directly to the siting of the facility 
                and related elements) associated with 
                stormwater or wastewater infrastructure 
                projects or short-term costs incurred for 
                equipment replacement that is not part of 
                regular operation and maintenance activities 
                for existing stormwater or wastewater systems, 
                if the amount of assistance for any single 
                project does not exceed $50,000;
                  (C) to provide technical assistance and 
                training for owners and operators of small 
                treatment works and medium treatment works to 
                enable those treatment works and systems to 
                protect water quality and achieve and maintain 
                compliance with this Act; and
                  (D) to disseminate information to owners and 
                operators of small treatment works and medium 
                treatment works, with respect to planning, 
                design, construction, and operation of 
                treatment works, small municipal separate storm 
                sewer systems, and decentralized wastewater 
                treatment systems.
          (2) Distribution of grant.--In carrying out this 
        subsection, the Administrator shall ensure, to the 
        maximum extent practicable, that technical assistance 
        provided using funds from a grant under paragraph (1) 
        is made available in each State.
          (3) Consultation.--As a condition of receiving a 
        grant under this subsection, a qualified nonprofit 
        technical assistance provider shall agree to consult 
        with each State in which grant funds are to be expended 
        before the grant funds are expended in the State.
          (4) Annual report.--Not later than 60 days after the 
        end of each fiscal year, a qualified nonprofit 
        technical assistance provider that receives a grant 
        under this subsection shall submit to the Administrator 
        a report that--
                  (A) describes the activities of the qualified 
                nonprofit technical assistance provider using 
                grant funds received under this subsection for 
                the fiscal year; and
                  (B) specifies--
                          (i) the number of communities served;
                          (ii) the sizes of those communities; 
                        and
                          (iii) the type of assistance provided 
                        by the qualified nonprofit technical 
                        assistance provider.
  (c) Authorization of Appropriations.--There are authorized to 
be appropriated to carry out this section--
          (1) for grants for small treatment works, $25,000,000 
        for each of fiscal years 2009 through 2013; and
          (2) for grants for medium treatment works, 
        $15,000,000 for each of fiscal years 2009 through 2013.

           *       *       *       *       *       *       *

SEC. 602. CAPITALIZATION GRANT AGREEMENTS.

      (a) General Rule.--* * *

           *       *       *       *       *       *       *

      (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) * * *

           *       *       *       *       *       *       *

          [(6) treatment works eligible under section 603(c)(1) 
        of this Act which will be constructed in whole or in 
        part before fiscal year 1995 with funds directly made 
        available by capitalization grants under this title and 
        section 205(m) of this Act will meet the requirements 
        of, or otherwise be treated (as determined by the 
        Governor of the State) under sections 201(b), 
        201(g)(1), 201(g)(2), 201(g)(3), 201(g)(5), 201(g)(6), 
        201(n)(1), 201(o), 204(a)(1), 204(a)(2), 204(b)(1), 
        204(d)(2), 211, 218, 511(c)(1), and 513 of this Act in 
        the same manner as treatment works constructed with 
        assistance under title II of this Act;]
          (6) treatment works eligible under section 603(c) 
        that are constructed, in whole or in part, using funds 
        made available by a State loan fund under this title 
        shall meet the requirements of section 513 in the same 
        manner as treatment works constructed using assistance 
        provided under title II;
  (c) Guidance for Small Systems.--
          (1) Definition of small system.--In this subsection, 
        the term ``small system'' means a system--
                  (A) for which a municipality or 
                intermunicipal, interstate, or State agency 
                seeks assistance under this title; and
                  (B) that serves a population of not more than 
                10,000 individuals.
          (2) Simplified procedures.--Not later than 1 year 
        after the date of enactment of this subsection, the 
        Administrator shall assist the States in establishing 
        simplified procedures for small systems to obtain 
        assistance under this title.
          (3) Publication of manual.--Not later than 1 year 
        after the date of enactment of this subsection, after 
        providing notice and opportunity for public comment, 
        the Administrator shall publish--
                  (A) a manual to assist small systems in 
                obtaining assistance under this title; and
                  (B) in the Federal Register, notice of the 
                availability of the manual.

           *       *       *       *       *       *       *

SEC. 603. WATER POLLUTION CONTROL REVOLVING LOAN FUNDS.

      (a) Requirements for Obligation of Grant Funds.--Before a 
State may receive a capitalization grant with funds made 
available under this title and section 205(m) of this Act, the 
State shall first establish a water pollution control revolving 
fund which complies with the requirements of this section.
      (b) Administrator.--Each State water pollution control 
revolving fund shall be administered by an instrumentality of 
the State with such powers and limitations as may be required 
to operate such fund in accordance with the requirements and 
objectives of this Act.
      [(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 Eligible for Assistance.--Funds in each State 
water pollution control revolving fund shall be used only by a 
municipality or an intermunicipal, interstate, or State agency 
(or, for the purpose of paragraph (1), by either of those 
entities or a private treatment works or decentralized 
wastewater system that principally treats municipal wastewater 
or domestic sewage)--
          (1) to provide financial assistance for construction 
        activities (such as expansion to meet needs of existing 
        development), including planning design, and associated 
        preconstruction planning activities (as defined in 
        section 212)--
                  (A) to implement a management program 
                established under section 319; and
                  (B) to develop and implement a conservation 
                and management plan under section 320;
          (2) to increase the security of wastewater treatment 
        works (excluding any expenditure for operations or 
        maintenance);
          (3) to implement measures to control, manage, reduce, 
        treat, infiltrate, or reuse municipal stormwater, the 
        primary purpose of which is the protection, 
        preservation, or enhancement of water quality to 
        support public purposes, including procurement and use 
        of equipment to support minimum measures such as street 
        sweeping and storm drain system cleaning;
          (4) to carry out water conservation or efficiency 
        projects, the primary purpose of which is the 
        protection, preservation, or enhancement of water 
        quality to support public purposes;
          (5) to implement measures to integrate water resource 
        management planning and implementation;
          (6) to carry out water and wastewater reuse, 
        reclamation, and recycling projects, the primary 
        purpose of which is the protection, preservation, or 
        enhancement of water quality to support public 
        purposes; and
          (7) for capital costs associated with monitoring 
        equipment for combined or sanitary sewer overflows.
      (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;
                  (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;
          (2) to buy or refinance the debt obligation of 
        municipalities and intermunicipal and interstate 
        agencies within the State at or below market rates, 
        where such debt obligations were incurred after March 
        7, 1985;
          (3) to guarantee, or purchase insurance for, local 
        obligations where such action would improve credit 
        market access or reduce interest rates;
          (4) as a source of revenue or security for the 
        payment of principal and interest on revenue or general 
        obligation bonds issued by the State if the proceeds of 
        the sale of such bonds will be deposited in the fund;
          (5) to provide loan guarantees for similar revolving 
        funds established by municipalities or intermunicipal 
        agencies;
          (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.] title, 
        except that--
                  (A) such amounts shall not exceed 6 percent 
                of all grant awards to the fund under this 
                title; and
                  (B) if there is no appropriation for a fiscal 
                year, the total amount of the reasonable cost 
                of administering the fund and conducting 
                activities under this title shall not exceed 6 
                percent of all grant loan awards made by the 
                State for that fiscal year; and
          (8) as a source of revenue (restricted solely to 
        interest earnings of the fund) or security for payment 
        of the principal and interest on revenue or general 
        obligation bonds issued by the State to provide 
        matching funds under section 602(b)(2), if the proceeds 
        of the sale of the bonds will be deposited in the fund.
  (e) Additional Assistance for Disadvantaged Communities.--
          (1) Definition of disadvantaged community.--In this 
        subsection, the term ``disadvantaged community'' means 
        a community with a service area, or portion of a 
        service area, of a treatment works that meets 
        affordability criteria established after public review 
        and comment by the State in which the treatment works 
        is located.
          (2) Loan subsidy.--Notwithstanding any other 
        provision of this section, in a case in which the State 
        makes a loan from the water pollution control revolving 
        loan fund in accordance with subsection (c) to a 
        disadvantaged community or a community that the State 
        expects to become a disadvantaged community as the 
        result of a proposed project, the State may provide 
        additional subsidization, including--
                  (A) the forgiveness of all or a portion of 
                the principal of the loan; and
                  (B) a negative interest rate on the loan.
          (3) Total amount of subsidies.--For each fiscal year, 
        the total amount of loan subsidies made by the State 
        pursuant to this subsection may not exceed 30 percent 
        of the amount of the capitalization grant received by 
        the State for the fiscal year.
          (4) Information.--The Administrator may publish 
        information to assist States in establishing 
        affordability criteria described in paragraph (1).
  (f) Cost-Saving Water Treatment and Efficiency 
Improvements.--Subject to subsection (e)(3), in providing a 
loan for a project under this section, a State may forgive 
repayment of such portion of the loan amount, not to exceed 5 
percent, as is equal to the percentage of the project that is 
devoted to alternative approaches to wastewater and stormwater 
controls (including nonstructural methods) such as projects 
that treat or minimize sewage or urban stormwater discharges 
using--
          (1) decentralized or distributed stormwater controls;
          (2) decentralized wastewater treatment;
          (3) low-impact development technologies and 
        nonstructural approaches;
          (4) stream buffers;
          (5) wetland restoration and enhancement;
          (6) actions to minimize the quantity of and direct 
        connections to impervious surfaces;
          (7) soil and vegetation, or other permeable 
        materials;
          (8) actions that increase efficient water use, water 
        conservation, or water reuse.
      [(e)] (g) Limitation To Prevent Double Benefits.--If a 
State makes, from its water pollution revolving fund, a loan 
which will finance the cost of facility planning and the 
preparation of plans, specifications, and estimates for 
construction of publicly owned treatment works, the State shall 
ensure that if the recipient of such loan receives a grant 
under section 201(g) of this Act for construction of such 
treatment works and an allowance under section 201(l)(1) of 
this Act for non-federal funds expended for such planning and 
preparation, such recipient will promptly repay such loan to 
the extent of such allowance.
      [(f)] (h) Consistency With Planning Requirements.--A 
State may provide financial assistance from its water pollution 
control revolving fund only with respect to a project which is 
consistent with plans, if any, developed under sections 205(j), 
208, 303(e), 319, and 320 of this Act.
      [(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.]
  (i) Priority System Requirement.--
          (1) Definitions.--In this subsection:
                  (A) Restructuring.--The term 
                ``restructuring'' means--
                          (i) the consolidation of management 
                        functions or ownership with another 
                        facility; or
                          (ii) the formation of cooperative 
                        partnerships.
                  (B) Traditional wastewater approach.--The 
                term ``traditional wastewater approach'' means 
                a managed system used to collect and treat 
                wastewater from an entire service area 
                consisting of--
                          (i) collection sewers;
                          (ii) a centralized treatment plant 
                        using biological, physical, or chemical 
                        treatment processes; and
                          (iii) a direct point source discharge 
                        to surface water.
          (2) Priority system.--In providing financial 
        assistance from the water pollution control revolving 
        fund of the State, the State shall establish a priority 
        system that--
                  (A) gives greater weight to an application 
                for assistance by the owner or operator of a 
                treatment works if the application includes--
                          (i) an inventory of assets, including 
                        a description of the condition of those 
                        assets;
                          (ii) a schedule for replacement of 
                        the assets;
                          (iii) a financing plan that factors 
                        in all lifecycle costs indicating 
                        sources of revenue from ratepayers, 
                        grants, bonds, other loans, and other 
                        sources to meet the costs;
                          (iv) a review of options for 
                        restructuring the treatment works; or
                          (v) approaches other than a 
                        traditional wastewater approach that 
                        treat or minimize sewage or urban 
                        stormwater discharges using--
                                  (I) decentralized or 
                                distributed stormwater 
                                controls;
                                  (II) decentralized wastewater 
                                treatment;
                                  (III) low-impact development 
                                technologies and nonstructural 
                                approaches;
                                  (IV) stream buffers;
                                  (V) wetland restoration and 
                                enhancement;
                                  (VI) actions to minimize the 
                                quantity of and direct 
                                connections to impervious 
                                surfaces;
                                  (VII) soil and vegetation, or 
                                other permeable materials; or
                                  (VIII) actions that increase 
                                efficient water use, water 
                                conservation, or water reuse;
                          (vi) a demonstration of consistency 
                        with State, regional, and municipal 
                        watershed plans, water conservation and 
                        efficiency plans, or integrated water 
                        resource management plans;
                          (vii) a proposal by the applicant 
                        demonstrating flexibility through 
                        alternative means to carry out 
                        responsibilities under Federal 
                        regulations, that may include watershed 
                        permitting and other innovative 
                        management approaches, while achieving 
                        results that--
                                  (I) the State, in the case of 
                                a permit program approved under 
                                section 402, determines will 
                                meet permit requirements; or
                                  (II) the Administrator 
                                determines are measurably 
                                superior when compared to 
                                regulatory standards;
                  (B) takes into consideration appropriate 
                chemical, physical, and biological data 
                relating to water quality that the State 
                considers reasonably available and of 
                sufficient quality;
                  (C) provides for public notice and 
                opportunity to comment on the establishment of 
                the priority system and the summary under 
                subparagraph (D);
                  (D) provides for the publication, not less 
                than biennially in summary form, of a 
                description of projects in the State that are 
                eligible for assistance under this title that 
                indicates--
                          (i) the priority assigned to each 
                        project under the priority system of 
                        the State; and
                          (ii) the funding schedule for each 
                        project, to that extent the information 
                        is available; and
                  (E) ensures that projects undertaken with 
                assistance under this title are designed to 
                achieve, as determined by the State, the 
                optimum water quality management, consistent 
                with the public health and water quality goals 
                and requirements of this Act.
  [(h)] (j) Eligibility of Non-Federal Share of Construction 
Grant Projects.--A State water pollution control revolving fund 
may provide assistance (other than under subsection (d)(1) of 
this section) to a municipality or intermunicipal or interstate 
agency with respect to the non-Federal share of the costs of a 
treatment works project for which such municipality or agency 
is receiving assistance from the Administrator under any other 
authority only if such assistance is necessary to allow such 
project to proceed.
  (k) Transfer of Funds.--
          (1) In general.--The Governor of a State may--
                  (A)(i) reserve not more than 33 percent of a 
                capitalization grant made under this title; and
                  (ii) add the funds reserved to any funds 
                provided to the State under section 1452 of the 
                Safe Drinking Water Act (42 U.S.C. 300j-12); 
                and
                  (B)(i) reserve for any year an amount that 
                does not exceed the amount that may be reserved 
                under subparagraph (A) for that year from 
                capitalization grants made under section 1452 
                of that Act (42 U.S.C. 300j-12); and
                  (ii) add the reserved funds to any funds 
                provided to the State under this title.
          (2) State match.--Funds reserved under this 
        subsection shall not be considered to be a State 
        contribution for a capitalization grant required under 
        this title or section 1452(b) of the Safe Drinking 
        Water Act (42 U.S.C. 300j-12(b)).
  (l) Noncompliance.--
          (1) In general.--Except as provided in paragraph (2), 
        no assistance (other than assistance that is to be used 
        by a treatment works solely for planning, design, or 
        security purposes) shall be provided under this title 
        to the owner or operator of a treatment works that has 
        been in significant noncompliance with any requirement 
        of this Act for any of the 4 quarters during the 
        preceding 8 quarters, unless the treatment works is in 
        compliance with an enforceable administrative order to 
        effect compliance with the requirement.
          (2) Exception.--An owner or operator of a treatment 
        works that is determined under paragraph (1) to be in 
        significant noncompliance with a requirement described 
        in that paragraph may receive assistance under this 
        title if the Administrator and the State providing the 
        assistance determine that--
                  (A) the entity conducting the enforcement 
                action on which the determination of 
                significant noncompliance is based has 
                determined that the use of assistance would 
                enable the owner or operator of the treatment 
                works to take corrective action toward 
                resolving the violations; or
                  (B) the entity conducting the enforcement 
                action on which the determination of 
                significant noncompliance is based has 
                determined that the assistance would be used by 
                the owner or operator of the treatment works in 
                order to assist owners and operators in making 
                progress towards compliance.
  (m) Negotiation of Contracts.--
          (1) In general.--A contract to be carried out using 
        funds directly made available by a capitalization grant 
        under this section for program management, construction 
        management, feasibility studies, preliminary 
        engineering, design, engineering, surveying, mapping, 
        or architectural or related services shall be 
        negotiated in the same manner as--
                  (A) a contract for architectural and 
                engineering services is negotiated under 
                chapter 11 of title 40, United States Code; or
                  (B) an equivalent State qualifications-based 
                requirement (as determined by the Governor of 
                the State).
          (2) Exemption for small communities.--Paragraph (1) 
        shall not apply to a contract described in that 
        paragraph for program management, construction 
        management, feasibility studies, preliminary 
        engineering, design, engineering, surveying, mapping, 
        or architectural or related services for a community of 
        10,000 or fewer individuals.

           *       *       *       *       *       *       *

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.
    [(b) Reservation of Funds for Planning.--Each State shall 
reserve each fiscal year 1 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.]
  (b) Reservation of Funds.--
          (1) Planning.--Each State may reserve for each fiscal 
        year the greater of 2 percent of the sums allotted to 
        the State under this section for the fiscal year, or 
        $100,000, to carry out planning under sections 205(j) 
        and 303(e).
          (2) Indian tribes.--Of the total amount of funds made 
        available under paragraph (1), 1.5 percent shall be 
        allocated to Indian tribes (as defined in section 
        518(h)).

           *       *       *       *       *       *       *

[SEC. 607. 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.]

SEC. 607. AUTHORIZATION OF APPROPRIATIONS.

  (a) In General.--There are authorized to be appropriated to 
carry out this title--
          (1) $3,200,000,000 for each of fiscal years 2008 and 
        2009;
          (2) $3,600,000,000 for fiscal year 2010;
          (3) $4,000,000,000 for fiscal year 2011; and
          (4) $6,000,000,000 for fiscal year 2012.
  (b) Availability.--Amounts made available under this section 
shall remain available until expended.
  (c) Reservation for Needs Surveys.--Of the amount made 
available under subsection (a) to carry out this title for a 
fiscal year, the Administrator may reserve not more than 
$1,000,000 for the fiscal year, to remain available until 
expended, to pay the costs of conducting needs surveys under 
section 516(b)(1)(B).

SAFETY OF PUBLIC WATER SYSTEMS (SAFE DRINKING WATER ACT)

           *       *       *       *       *       *       *

SEC. 1434. CONTAMINANT PREVENTION, DETECTION AND RESPONSE.

  (a) In General.--* * *

           *       *       *       *       *       *       *

  [(b) Funding.--For the authorization of appropriations to 
carry out this section, see section 1435(e).]
  (b) Report.--Not later than 180 days after the date of 
enactment of the Water Infrastructure Financing Act, the 
Administrator shall submit to Congress a report that includes--
          (1) a description of the progress made as of that 
        date in implementing this section; and
          (2) a description of any impediments to that 
        implementation identified by the Administrator, 
        including--
                  (A) difficulty in coordinating the 
                implementation with other Federal, State, or 
                local agencies or organizations;
                  (B) insufficient funding for effective 
                implementation;
                  (C) a lack of authorization to take certain 
                actions (including the authority to hire 
                necessary personnel) required to carry out the 
                implementation; and
                  (D) technological impediments to developing 
                the methods, means, and equipment specified in 
                subsection (a)(1).
  (c) Implementation Plan.--The Administrator shall develop and 
carry out an implementation plan for this section consistent 
with actions taken to date and incorporating the results of the 
report under subsection (b).
  (d) Funding.--There is authorized to be appropriated to carry 
out this section $7,500,000 for each of fiscal years 2008 
through 2012.

           *       *       *       *       *       *       *

  Sec. 1442. (a)(1) The Administrator may conduct research, 
studies, and demonstrations relating to the causes, diagnosis, 
treatment, control, and prevention of physical and mental 
diseases and other impairments of man resulting directly or 
indirectly from contaminants in water, or to the provision of a 
dependably safe supply of drinking water, including--
          (A) improved methods (i) to identify and measure the 
        existence of contaminants in drinking water (including 
        methods which may be used by State and local health and 
        water officials), and (ii) to identify the source of 
        such contaminants;
          (B) * * *

           *       *       *       *       *       *       *

  (e) Technical Assistance.--[The Administrator may provide]
          (1) Public water systems.--The Administrator may 
        provide technical assistance to small public water 
        systems to enable such systems to achieve and maintain 
        compliance with applicable national primary drinking 
        water regulations. [Such assistance]
          (2) Types of assistance.--Such assistance may include 
        circuit-rider and multi-State regional technical 
        assistance programs, training, and preliminary 
        engineering evaluations. [The Administrator shall 
        ensure]
          (3) Availability.--The Administrator shall ensure 
        that technical assistance pursuant to this subsection 
        is available in each State. [Each nonprofit]
          (4) Requirement applicable to nonprofit 
        organizations.--Each nonprofit organization receiving 
        assistance under this subsection shall consult with the 
        State in which the assistance is to be expended or 
        otherwise made available before using assistance to 
        undertake activities to carry out this subsection. 
        [There are authorized to be appropriated to the 
        Administrator to be used for such technical assistance 
        $15,000,000 for each of the fiscal years 1997 through 
        2003. No portion of any State loan fund established 
        under section 1452 (relating to State loan funds) and 
        no portion of any funds made available under this 
        subsection may be used for lobbying expenses. Of the 
        total amount appropriated under this subsection, 3 
        percent shall be used for technical assistance to 
        public water systems owned or operated by Indian 
        Tribes.]
          (5) Priority.--In providing grants under this 
        section, the Administrator shall give priority to small 
        systems organizations that, as determined by the 
        Administrator, are qualified and will be the most 
        effective at assisting those small systems that have 
        the greatest need (or a majority of need) in the 
        States.
          (6) Wells and well systems.--
                  (A) In general.--The Administrator shall 
                provide grants to nonprofit organizations to 
                provide technical assistance to communities and 
                individuals regarding the design, operation, 
                construction, and maintenance of household 
                wells and small shared well-systems that 
                provide drinking water.
                  (B) Form of assistance.--Technical assistance 
                referred to in subparagraph (A) may include--
                          (i) training and education;
                          (ii) operation of a hotline; and
                          (iii) the conduct of other activities 
                        relating to the design and construction 
                        of household, shared, and small water 
                        well systems in rural areas.
                  (C) Priority.--Subject to paragraph (5), in 
                providing grants under this section, the 
                Administrator shall give priority to applicants 
                that, as determined by the Administrator--
                          (i) are qualified; and
                          (ii) have demonstrated experience in 
                        providing similar technical assistance 
                        and in developing similar projects.
                  (D) Authorization of appropriations.--There 
                is authorized to be appropriated to carry out 
                this paragraph $7,500,000 for each of fiscal 
                years 2009 through 2013.
          (7) Funding.--
                  (A) Authorization of appropriations.--There 
                is authorized to be appropriated to the 
                Administrator to carry out this subsection 
                (other than paragraph (6)) $35,000,000 for each 
                of fiscal years 2009 through 2013.
                  (B) Lobbying expenses.--No portion of any 
                State loan fund established under section 1452 
                and no portion of any funds made available 
                under this subsection may be used for lobbying 
                expenses.
                  (C) Indian tribes.--Of the total amount made 
                available under this section for each fiscal 
                year, 3 percent shall be used for technical 
                assistance to public water systems owned or 
                operated by Indian Tribes.

           *       *       *       *       *       *       *

  Sec. 1450. (a)(1) The Administrator is authorized to 
prescribe such regulations as are necessary or appropriate to 
carry out his functions under this title.
  (2) * * *

           *       *       *       *       *       *       *

  [(e) The Administrator shall take such action as may be 
necessary to assure compliance with provisions of the Act of 
March 3, 1931 (known as the Davis-Bacon Act; 40 U.S.C. 276a-
276a(5)). The Secretary of Labor shall have, with respect to 
the labor standards specified in this subsection, the authority 
and functions set forth in Reorganization Plan Numbered 14 of 
1950 (15 F.R. 3176; 64 Stat. 1267) and section 2 of the Act of 
June 13, 1934 (40 U.S.C. 276c).]
  (e) Labor Standards.--
          (1) In general.--The Administrator shall take such 
        action as the Administrator determines to be necessary 
        to ensure that each laborer and mechanic employed by a 
        contractor or subcontractor of a construction project 
        financed, in whole or in part, by a grant, loan, loan 
        guarantee, refinancing, or any other form of financial 
        assistance provided under this Act (including 
        assistance provided by a State loan fund established 
        under section 1452) is paid wages at a rate of not less 
        than the wages prevailing for the same type of work on 
        similar construction in the immediate locality, as 
        determined by the Secretary of Labor in accordance with 
        subchapter IV of chapter 31 of title 40, United States 
        Code.
          (2) Authority of secretary of labor.--With respect to 
        the labor standards specified in this subsection, the 
        Secretary of Labor shall have the authority and 
        functions established in Reorganization Plan Numbered 
        14 of 1950 (5 U.S.C. App.) and section 3145 of title 
        40, United States Code.

           *       *       *       *       *       *       *

  Sec. 1452. (a) General Authority.--
          (1) Grants to states to establish state loan funds.--
                  (A) In general.--* * *

           *       *       *       *       *       *       *

          (2) Use of funds.--
                  (A) Except as otherwise authorized by this 
                title, amounts deposited in a State loan fund, 
                including loan repayments and interest earned 
                on such amounts, shall be used only for 
                providing loans or loan guarantees, or as a 
                source of reserve and security for leveraged 
                loans, the proceeds of which are deposited in a 
                State loan fund established under paragraph 
                (1), or other financial assistance authorized 
                under this section to community water systems 
                and nonprofit noncommunity water systems, other 
                than systems owned by Federal agencies.
                  (B) Financial assistance under this section 
                may be used by a public water system only for 
                expenditures [(not] (including expenditures for 
                planning, design, and associated 
                preconstruction activities, including 
                activities relating to the siting of the 
                facility, but not including monitoring, 
                operation, and maintenance expenditures) of a 
                type or category which the Administrator has 
                determined, through guidance, will facilitate 
                compliance with national primary drinking water 
                regulations applicable to the system under 
                section 1412 or otherwise significantly further 
                the health protection objectives of this 
                titleor to replace or rehabilitate aging 
                treatment, storage (including reservoirs), or 
                distribution facilities of public water systems 
                or provide for capital projects to upgrade the 
                security of public water systems.
                  (C) Sale of bonds.--Funds may also be used by 
                a public water system to increase security at 
                the public water system (excluding any 
                expenditure for operations and maintenance), or 
                as a source of revenue (restricted solely to 
                interest earnings of the applicable State loan 
                fund) or security for payment of the principal 
                and interest on revenue or general obligation 
                bonds issued by the State to provide matching 
                funds under subsection (e), if the proceeds of 
                the sale of the bonds will be deposited in the 
                State loan fund.
                  (D) The funds may also be used to provide 
                loans to a system referred to in section 
                1401(4)(B) for the purpose of providing the 
                treatment described in section 
                1401(4)(B)(i)(III).
                  (E) The funds shall not be used for the 
                acquisition of real property or interests 
                therein, unless the acquisition is integral to 
                a project authorized by this paragraph and the 
                purchase is from a willing seller.
                  (F) Of the amount credited to any State loan 
                fund established under this section in any 
                fiscal year, 15 percent shall be available 
                solely for providing loan assistance to public 
                water systems which regularly serve fewer than 
                10,000 persons to the extent such funds can be 
                obligated for eligible projects of public water 
                systems.

           *       *       *       *       *       *       *

  (b) Intended Use Plans.--
          (1) In general.--After providing for public review 
        and comment, each State that has entered into a 
        capitalization agreement pursuant to this section shall 
        annually prepare a plan that identifies the intended 
        uses of the amounts available to the State loan fund of 
        the State.
          (2) Contents.--* * *

           *       *       *       *       *       *       *

          (3) Use of funds.--
                  [(A) In general.--An intended use plan shall 
                provide, to the maximum extent practicable, 
                that priority for the use of funds be given to 
                projects that--
                          [(i) address the most serious risk to 
                        human health;
                          [(ii) are necessary to ensure 
                        compliance with the requirements of 
                        this title (including requirements for 
                        filtration); and
                          [(iii) assist systems most in need on 
                        a per household basis according to 
                        State affordability criteria.]
                  (A) Definition of restructuring.--In this 
                paragraph, the term ``restructuring'' means 
                changes in operations (including ownership, 
                cooperative partnerships, asset management, 
                consolidation, and alternative water supply).
                  (B) Priority system.--An intended use plan 
                shall provide, to the maximum extent 
                practicable, that priority for the use of funds 
                be given to projects that--
                          (i) address the most serious risk to 
                        human health;
                          (ii) are necessary to ensure 
                        compliance with this title (including 
                        requirements for filtration); and
                          (iii) assist systems most in need on 
                        a per-household basis according to 
                        State affordability criteria.
                  (C) Weight given to applications.--After 
                determining project priorities under 
                subparagraph (B), an intended use plan shall 
                further provide that the State shall give 
                greater weight to an application for assistance 
                by a community water system if the application 
                includes such information as the State 
                determines to be necessary, including--
                          (i) an inventory of assets, including 
                        a description of the condition of the 
                        assets;
                          (ii) a schedule for replacement of 
                        assets;
                          (iii) a financing plan that factors 
                        in all life-cycle costs indicating 
                        sources of revenue from ratepayers, 
                        grants, bonds, other loans, and other 
                        sources to meet the costs;
                          (iv) a review of options for 
                        restructuring the public water system;
                          (v) demonstration of consistency with 
                        State, regional, and municipal 
                        watershed plans; and
                          (vi) a water conservation plan 
                        consistent with guidelines developed 
                        for those plans by the Administrator 
                        under section 1455(a).
                  [(B)] (D) List of projects.--Each State 
                shall, after notice and opportunity for public 
                comment, publish and [periodically] at least 
                biennially update a list of projects in the 
                State that are eligible for assistance under 
                this section, including the priority assigned 
                to each project and, to the extent known, the 
                expected funding schedule for each project.

           *       *       *       *       *       *       *

  (d) Assistance for Disadvantaged Communities.--
          (1) Loan subsidy.--Notwithstanding any other 
        provision of this section, in any case in which the 
        State makes a loan pursuant to subsection (a)(2) to a 
        disadvantaged community or to a community that the 
        State expects to become a disadvantaged community as 
        the result of a proposed project, the State may provide 
        additional subsidization (including forgiveness of 
        principal).
          (2) Total amount of subsidies.--For each fiscal year, 
        the total amount of loan subsidies made by a State 
        pursuant to paragraph (1) may not exceed 30 percent of 
        the amount of the capitalization grant received by the 
        State for the year.
          (3) Definition of disadvantaged community.--In this 
        subsection, the term ``disadvantaged community'' means 
        the service area, or portion of a service area, of a 
        public water system that meets affordability criteria 
        established after public review and comment by the 
        State in which the public water system is located. The 
        Administrator may publish information to assist States 
        in establishing affordability criteria.

           *       *       *       *       *       *       *

  (g) Administration of State Loan Funds.--
          (1) Combined financial administration.--* * *

           *       *       *       *       *       *       *

          (2) Cost of administering fund.--Each State may 
        annually use up to [4] 6 percent of the funds allotted 
        to the State under this section to cover the reasonable 
        costs of administration of the programs under this 
        section, including the recovery of reasonable costs 
        expended to establish a State loan fund which are 
        incurred after the date of enactment of this section, 
        and to provide technical assistance to public water 
        systems within the State. For fiscal year 1995 and each 
        fiscal year thereafter, each State may use up to an 
        additional 10 percent of the funds allotted to the 
        State under this section--
                  (A) for public water system supervision 
                programs under section 1443(a);
                  (B) to administer or provide technical 
                assistance through source water protection 
                programs;
                  (C) to develop and implement a capacity 
                development strategy under section 1420(c); and
                  (D) for an operator certification program for 
                purposes of meeting the requirements of section 
                [1419,
        if the State matches the expenditures with at least an 
        equal amount of State funds. At least half of the match 
        must be additional to the amount expended by the State 
        for public water supervision in fiscal year 1993.] 
        1419. An additional 2 percent of the funds annually 
        allotted to each State under this section may be used 
        by the State to provide technical assistance to public 
        water systems serving 10,000 or fewer persons in the 
        State. Funds utilized under subparagraph (B) shall not 
        be used for enforcement actions.
          (3) Guidance and regulations.--The Administrator 
        shall publish guidance and promulgate regulations as 
        may be necessary to carry out the provisions of this 
        section, including--
                  (A) provisions to ensure that each State 
                commits and expends funds allotted to the State 
                under this section as efficiently as possible 
                in accordance with this title and applicable 
                State laws;
                  (B) guidance to prevent waste, fraud, and 
                abuse; and
                  (C) guidance to avoid the use of funds made 
                available under this section to finance the 
                expansion of any public water system in 
                anticipation of future population growth.
        The guidance and regulations shall also ensure that the 
        States, and public water systems receiving assistance 
        under this section, use accounting, audit, and fiscal 
        procedures that conform to generally accepted 
        accounting standards.
          (4) State report.--Each State administering a loan 
        fund and assistance program under this subsection shall 
        publish and submit to the Administrator a report every 
        2 years on its activities under this section, including 
        the findings of the most recent audit of the fund and 
        the entire State allotment. The Administrator shall 
        periodically audit all State loan funds established by, 
        and all other amounts allotted to, the States pursuant 
        to this section in accordance with procedures 
        established by the Comptroller General.
          (5) Transfer of funds.--
                  (A) In general.--The Governor of a State 
                may--
                          (i)(I) reserve not more than 33 
                        percent of a capitalization grant made 
                        under this section; and
                          (II) add the funds reserved to any 
                        funds provided to the State under 
                        section 601 of the Federal Water 
                        Pollution Control Act (33 U.S.C. 1381); 
                        and
                          (ii)(I) reserve for any fiscal year 
                        an amount that does not exceed the 
                        amount that may be reserved under 
                        clause (i)(I) for that year from 
                        capitalization grants made under 
                        section 601 of that Act (33 U.S.C. 
                        1381); and
                          (II) add the reserved funds to any 
                        funds provided to the State under this 
                        section.
                  (B) State match.--Funds reserved under this 
                paragraph shall not be considered to be a State 
                match of a capitalization grant required under 
                this section or section 602(b) of the Federal 
                Water Pollution Control Act (33 U.S.C. 
                1382(b)).

           *       *       *       *       *       *       *

  (k) Other Authorized Activities.--
          (1) In general.--Notwithstanding subsection (a)(2), a 
        State may take each of the following actions:
                  (A) * * *

           *       *       *       *       *       *       *

          (2) Limitation.--For each fiscal year, the total 
        amount of assistance provided and expenditures made by 
        a State under this subsection may not exceed 15 percent 
        of the amount of the capitalization grant received by 
        the State for that year and may not exceed 10 percent 
        of that amount for any one of the following activities:
                  (A) To acquire land or conservation easements 
                pursuant to paragraph (1)(A)(i).
                  (B) To provide funding to implement 
                voluntary, incentive-based source water quality 
                protection measures pursuant to clauses (ii) 
                and (iii) of paragraph (1)(A).
                  (C) To provide assistance through a capacity 
                development strategy pursuant to paragraph 
                (1)(B).
                  (D) To make expenditures to delineate or 
                assess source water protection areas pursuant 
                to paragraph (1)(C) (including implementation 
                of source water protection plans).

           *       *       *       *       *       *       *

  [(m) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out the purposes of this section 
$599,000,000 for the fiscal year 1994 and $1,000,000,000 for 
each of the fiscal years 1995 through 2003. To the extent 
amounts authorized to be appropriated under this subsection in 
any fiscal year are not appropriated in that fiscal year, such 
amounts are authorized to be appropriated in a subsequent 
fiscal year (prior to the fiscal year 2004). Such sums shall 
remain available until expended.]
  (m) Authorization of Appropriations.--
          (1) In general.--There are authorized to be 
        appropriated to carry out this section--
                  (A) $1,500,000,000 for fiscal year 2008;
                  (B) $2,000,000,000 for each of fiscal years 
                2009 and 2010;
                  (C) $3,500,000,000 for fiscal year 2011; and
                  (D) $6,000,000,000 for fiscal year 2012.
          (2) Availability.--Amounts made available under this 
        subsection shall remain available until expended.
          (3) Reservation for needs surveys.--Of the amount 
        made available under paragraph (1) to carry out this 
        section for a fiscal year, the Administrator may 
        reserve not more than $1,000,000 per year to pay the 
        costs of conducting needs surveys under subsection (h).

           *       *       *       *       *       *       *

  (s) Negotiation of Contracts.--
          (1) In general.--A contract to be carried out using 
        funds directly made available by a capitalization grant 
        under this section for program management, construction 
        management, feasibility studies, preliminary 
        engineering, design, engineering, surveying, mapping, 
        or architectural or related services shall be 
        negotiated in the same manner as--
                  (A) a contract for architectural and 
                engineering services is negotiated under 
                chapter 11 of title 40, United States Code; or
                  (B) an equivalent State qualifications-based 
                requirement (as determined by the Governor of 
                the State).
          (2) Exemption for small communities.--Paragraph (1) 
        shall not apply to a contract described in that 
        paragraph for program management, construction 
        management, feasibility studies, preliminary 
        engineering, design, engineering, surveying, mapping, 
        or architectural or related services for a community of 
        10,000 or fewer individuals.

           *       *       *       *       *       *       *

                                    
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