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[Senate Report 109-186]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 304
109th Congress                                                   Report
                                 SENATE
 1st Session                                                    109-186

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

 
                   WATER INFRASTRUCTURE FINANCING ACT

                                _______
                                

                December 8, 2005.--Ordered to be printed

 Filed under authority of the order of the Senate of November 18, 2005

                                _______
                                

    Mr. Inhofe, from the Committee on Environment and Public Works, 
                        submitted the following

                              R E P O R T

                         [to accompany S. 1400]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Environment and Public Works, to which was 
referred a bill (S. 1400) to amend the Federal Water Pollution 
Control Act and the Safe Drinking Water Act to improve water 
and wastewater infrastructure in the United States, having 
considered the same reports favorably thereon with amendments 
and recommends that the bill, as amended, do pass.

                           General Statement

    S. 1400 is a bill that amends the Federal Water Pollution 
Control Act (CWA) and Title XIV of the Public Health Service 
Act (Safe Drinking Water Act) to reauthorize the State 
Revolving Loan Funds (SRF) in each Act. The bill also creates a 
research and demonstration program to develop new water and 
wastewater treatment approaches and technologies; authorizes a 
study of the nation's water resources and creates a clean water 
and a drinking water targeted grant program to address specific 
wastewater and water problems.

                               Background

Clean Water Act Program
    Enacted in 1948 and comprehensively amended in 1972, 1977, 
1981 and 1987, the CWA governs the discharge of pollution into 
the nation's navigable waters. The 1972 amendments strengthened 
the Federal construction grants program (Title II) through 
which the Federal Government provided grants to municipalities 
to construct publicly owned wastewater treatment plants 
(POTWs). The Federal share of the projects was increased from 
55 percent to 75 percent of the total project cost. Five years 
later, in 1977, Congress increased the role of States in 
managing the construction grants program and provided new 
incentives to address wastewater needs with innovative or 
alternative treatment technologies. Congress continued to 
transition the program to the States by returning the Federal 
cost share to 55 percent in its 1981 amendments to the Act.
    The 1987 amendments further reformed the way the Federal 
Government assisted local governments in meeting the costs of 
water infrastructure projects. Recognizing a need to extend the 
life of each dollar in the system, Congress adapted an 
innovative approach, called the State Revolving Loan Fund (SRF) 
through which States would receive an annual grant with which 
they would capitalize revolving loan funds. Once a town repaid 
a loan, the money could then be loaned again to another 
community. The construction grants program was phased-out over 
the next 5 years giving States ample time to get their SRFs 
fully operational. The authorization for the construction 
grants program ended in 1990. The authorization for the SRF 
ended in 1994, after a sharp decline in its authorization level 
from $1.2 billion in 1993 to $600 million in 1994. This decline 
and eventual elimination of the authorization level is a clear 
signal that Congress intended for the Federal contribution to 
end and for the States and localities to assume full 
responsibility for the cost of building their treatment 
works.\1\
---------------------------------------------------------------------------
    \1\ ``Water Infrastructure Needs and Investment: Review and 
Analysis of Key Issues.'' congressional Research Service Report for 
Congress, RL3116. May 5, 2005; page 6.
---------------------------------------------------------------------------
    The 1987 amendments also created an allocation formula 
according to which States would receive their annual share of 
the Federal appropriation. The formula gave each State a 
prescribed percentage that except for a few minor adjustments 
in the 1990's to account for the end of financing to three of 
the U.S. territories has remained the same for the past 18 
years. There is growing concern that the current formula is no 
longer reflective of which States have the greatest need for 
infrastructure funds.
    In order to receive their share of the Federal pot of 
money, each State signs a capitalization agreement with the 
Environmental Protection Agency (EPA) that includes a 
commitment to match 20 percent of the Federal grant. States are 
further required to create a priority list of projects that are 
eligible for funding using criteria chosen by the State. The 
State is not required to fund according to the order projects 
appear on the list largely because at any one time a 
particularly large project may not have the local funds in 
place. Further, a State may place those projects along a 
particular water body highest on its priority list but would 
still need to provide funds to projects with perhaps great 
local importance, but less State-wide significance. The loans 
are available at market rates or below and must be repaid 
within 20 years, the typical life of a treatment works. 
Congress envisioned States providing loans expeditiously but 
also leveraging some of money to gain interest and grow their 
individual funds.
    Currently, POTWs, projects contained in a State's nonpoint 
source pollution plan (section 319) and projects contained in a 
State's estuary comprehensive conservation and management plan 
(section 320) are eligible for funding. States have provided 
$1.8 billion for nonpoint source projects and estuary-related 
projects\2\. The Clean Water Act and some State laws do not 
allow privately owned treatment works to access the SRF.
---------------------------------------------------------------------------
    \2\ ``Clean Water State Revolving Fund Programs/2004 Annual 
Report'' Environmental Protection Agency, April 2005. EPA-832-R-05-001. 
Page 11.
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Safe Drinking Water Act Program
    In 1974, the Safe Drinking Water Act (SDWA) was first 
enacted as an amendment to the Public Health Services Act 
through which the EPA had previously regulated contaminants in 
drinking water. The 1974 law provided the EPA with authority to 
regulate drinking water contaminants while providing the States 
with authority over the implementation and enforcement of the 
EPA established standards. The Public Health Service Act 
required the regulation of 22 contaminants. In 1986, Congress 
substantially amended SDWA to require the EPA to issue 
regulations for 83 other contaminants by June 1989 and 25 
others every 3 years thereafter. The EPA was also required to 
publish regulations for the disinfection and filtration of 
public water supplies.
    Because the EPA, the States and public water systems had 
difficulty with the requirements of the 1986 amendments, 
Congress again amended SDWA in 1996.\3\
---------------------------------------------------------------------------
    \3\ Senate Report 104-169 accompanying Safe Drinking Water 
Amendments Act of 1995. Page 2.
---------------------------------------------------------------------------
    Congress replaced the requirement that the EPA regulate 25 
contaminants every 3 years with a requirement that beginning in 
1998, and each 5 years thereafter, that the EPA publish a list 
of contaminants that may need to be regulated. Beginning in 
2000 and each 5 years thereafter, EPA must determine whether or 
not to regulate five of those contaminants. Concern over how 
communities, particularly small systems, would pay to meet 
these requirements and upgrade their systems led Congress to 
duplicate the Clean Water SRF with the Drinking Water SRF.\4\
---------------------------------------------------------------------------
    \4\ Ibid, pages 11-12.
---------------------------------------------------------------------------
    Similar in many ways to the Clean Water SRF, the Drinking 
Water SRF provides communities with access to a State managed 
loan program. However, Congress took this opportunity to 
improve upon the SRF structure with many changes not included 
in the Clean Water program that were designed to increase State 
flexibility. To begin, to address the needs of disadvantaged 
communities, the SDWA provides States with authority to provide 
negative interest loans and principal forgiveness for 
disadvantaged communities through the Drinking Water SRF and 
give these disadvantaged communities 30 years to repay the 
loan. The Drinking Water SRF's authorization of $1 billion 
expired in 2003.
    As with the Clean Water SRF, States must also create a 
priority list but are required to fund in order with a `ready-
to-proceed' exception so that State programs do not sit idle if 
the project at the top of its list is delayed in getting the 
local share of financing in order. States are required to give 
first priority to those projects that address the most serious 
risk to human health, are necessary to ensure compliance, and 
assist systems most in need on a per household basis. The 
States are required to match 20 percent of the annual Federal 
capitalization grant. Private utilities are eligible for the 
Drinking Water SRF.
    The SDWA also distributes money to the States based on a 
formula. However, unlike the Clean Water SRF formula, the 
Drinking Water SRF formula changes every 4 years with the 
publication of EPA's drinking water needs assessment, required 
by the Safe Drinking Water Act. States must document and submit 
to EPA the funding requirements for their communities to meet 
the costs of the Act. EPA then determines what percent of the 
nationwide need each State has. The formula for the 
distribution of Federal funds is the State's percent of the 
nationwide need adjusted to ensure that those States with less 
than 1 percent of the nationwide need, receive 1 percent of the 
funding. This amount would assist small States, which otherwise 
might not receive enough funds to provide adequate assistance 
to their communities, in maintaining viable programs.

Need for legislation
    The SRFs have been very successful in dispersing assistance 
to POTWs and Public Water Systems (PWSs) throughout the 
country. The State Clean Water SRFs have over $50 billion 
available for assistance and have provided more than 15,000 
loans to communities across the country.\5\ It is important to 
note that some of these projects are initiated and implemented 
by nongovernmental entities that may experience difficulty in 
some States in applying for and receiving SRF funds. The 
Drinking Water SRF has provided 3,700 loans totaling over $8.0 
billion.\6\
---------------------------------------------------------------------------
    \5\ ``Clean Water State Revolving Fund Programs/2004 Annual 
Report'' (EPA-832-R-05-001) Environmental Protection Agency, April 
2005; page 2.
    \6\ ``Drinking Water Infrastructure Needs Survey and Assessment'' 
Environmental Protection Agency, June 2005, page 2.
---------------------------------------------------------------------------
    However, the need for infrastructure dollars continues to 
grow and according to several studies, outpaces what the nation 
as a whole spends. The Environmental Protection Agency (EPA) 
conducts two surveys, every 4 years, of the States' drinking 
water and wastewater needs. According to the two most recent 
needs surveys for drinking water (2003) and wastewater (2000), 
EPA estimates the nationwide need to be $457 billion over 20 
years. There are also several independent analyses of the `gap' 
between what we as a nation currently spend on infrastructure 
and what we need to spend. In 1999, the Water Infrastructure 
Network, a consortium of water and wastewater providers, 
researchers, environmentalists, engineers and product 
manufacturers, released a study identifying the 20-year need 
for clean water and drinking water as $11 billion a year for 
drinking water capital construction costs and $12 billion a 
year for clean water capital construction costs.\7\ In 2002, 
the EPA determined the gap for clean water ranged from $21 
billion to $122 billion over 20 years and the gap for drinking 
water ranged from $45 billion to $102 billion.\8\ The 
Congressional Budget Office also conducted a gap analysis in 
which it concluded the gap ranges from $3 billion to $19.4 
billion per year.\9\
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    \7\ Clean and Safe Water for the 21st Century; Water Infrastructure 
Network. 200. Page ES-1.
    \8\ The U.S. Environmental Protection Agency. `The Clean Water and 
Drinking Water Gap Analysis.' 2002. Page 43.
    \9\ U.S. Congressional Budget Office. `Future Investment in 
Drinking Water and Wastewater Infrastructure.' 2002. Page 26.
---------------------------------------------------------------------------
    The committee, for the third consecutive Congress, has 
acknowledged that the nationwide drinking water and wastewater 
infrastructure need continues to far outpace the amount of 
funding that is available from all levels of government. 
Therefore, the committee and the Congress has maintained a 
commitment to fund the programs until the SRFs revolve at 
levels sufficient to meet the needs of local communities. For 
instance, in 1995, when appropriations were scheduled to cease, 
the Clean Water SRF received $1.2 billion, double the 
previously authorized level. The lowest amount of funding the 
program received was $625 million in 1997. Since the expiration 
of the Act's authorization in 1994, annual appropriations have 
fluctuated. For several years, annual appropriations were $1.35 
billion. However, in fiscal year 2005, appropriations were cut 
to $1.1 billion and again in fiscal year 2006 to $900 million. 
These respective amounts and the $850 million annually provided 
to the Drinking Water SRF are not sufficient. Each level of 
government--local, State and Federal--must assess what it is 
currently contributing, add to the available funds, and 
determine how to increase efficiencies in their systems to make 
the most of the funds in the clean water and drinking water 
programs.

                     Objectives of the Legislation

    S. 1400 seeks to update the two State Revolving Loan Funds 
(SRF), which are the primary Federal funding mechanisms for 
clean water and drinking water. Both SRFs are expired and in 
need of moderate updating. The Clean Water SRF lacks many of 
the flexibility mechanisms that are currently a part of the 
drinking water program. The bill also seeks to promote the 
research and development of new ways of meeting water quality 
goals through a research and demonstration pilot program. 
Finally, the bill would help communities meet the costs 
associated with many regulatory requirements, pursue watershed 
plans, and address some of the nation's most pressing water 
quality problems through limited and directed grant assistance.

                      Section-by-Section Analysis

                TITLE I--WATER POLLUTION INFRASTRUCTURE

Sec. 101. Technical assistance for rural and small treatment works.
    This section adds Section 222 to the Clean Water Act in 
which it defines `Qualified Nonprofit Technical Assistance 
Provider' as a qualified nonprofit technical assistance 
provider of water and wastewater services to rural communities 
of 10,000 users and fewer.
    Section 222(a) will create a grant program through which 
the Administrator may make grants to qualified nonprofit 
technical assistant providers to:

            (A) Assist small POTWs in planning, developing and 
        obtaining financing for eligible projects, defined in 
        section 603(c) of the Clean Water Act;
            (B) To capitalize revolving loan funds, in 
        consultation with the State, to rural and small 
        municipalities for predevelopment costs, including 
        costs for planning, design, associated preconstruction, 
        and necessary activities for citing the facility and 
        related elements, or short-term costs incurred for 
        equipment replacement that is not part of a regular 
        operation and maintenance activities. Loan terms cannot 
        exceed 10 years and loans cannot exceed $100,000. Loan 
        repayments will be credited to the fund maintained by 
        the qualified nonprofit;
            (C) Provide technical assistance and training for 
        rural and small POTWs and decentralized wastewater 
        treatment systems to enable them to protect water 
        quality and achieve and maintain compliance with the 
        Act; and
            (D) To disseminate information to rural and small 
        municipalities with respect to planning, design, 
        construction and operation of POTWs and decentralized 
        wastewater treatment systems. The Administrator shall 
        to the maximum extent practicable ensure that grants 
        are made available in each State. The nonprofit 
        provider will submit a report to the Administrator 
        detailing the number of communities served, the sizes 
        of those communities and the types of financing 
        provided by the nonprofit provider.

    Section 222 authorizes $25 million for each fiscal year 
2005 through 2009.
    Section 222(b) amends Section 602 of the Clean Water Act to 
include a definition of small system as one that serves 10,000 
or fewer individuals and is one for which a municipality or 
intermunicipal, interstate, or State agency seeks assistance 
under this section. Further, no later than 1 year after 
enactment, the Administrator must assist States in establishing 
simplified procedures for small systems to obtain assistance 
and after providing notice and opportunity for public comment, 
publish a manual to assist small systems in obtaining 
assistance; and publish in the Federal Register notice of 
availability of the manual.

                               Discussion

    According to EPA, more than 70 percent of the nation's 
housing units with inadequate plumbing are in small 
communities. More than 19 million households in small 
communities are on septic systems or cesspools as their primary 
source of treatment.\10\ The 2000 EPA Clean Watersheds Needs 
Survey indicates that small systems, those serving fewer than 
10,000 individuals, represent about 10 percent of the 
nationwide funding need, or $16 billion. Seventy-four percent 
of wastewater treatment systems serve small communities which 
account for only 12 percent of the nation's population. While 
the needs of these communities are great, the ability of their 
ratepayers to pay the costs of those needs is limited.
---------------------------------------------------------------------------
    \10\ The U.S. Environmental Protection Agency, `Wastewater 
Treatment Programs Serving Small Communities.' (EPA 832-R-02-004.) 
December 2002. Page 1.
---------------------------------------------------------------------------
    The Environmental Protection Agency has several existing 
programs aimed at helping small systems and unsewered 
communities to maintain and upgrade their systems. The National 
Environmental Training Center for Small Communities develops 
and delivers training courses for both POTWs and drinking water 
systems operators. The National Small Flows Clearinghouse 
provides information about treatment options and the Operator 
On-Site Technical Assistance Program (section 104(g) of the 
Clean Water Act) provides compliance assistance to small POTW 
operators as well as help with maintenance and financing.
    The committee however continues to hear of a need for 
additional assistance for these small systems. In a letter to 
the committee on February 5, 2004, the Rural Community 
Assistance Program cited the need for assistance with 
predevelopment costs. Many small POTWs cannot afford the costs 
associated with planning a project, including the engineering 
costs. Without these initial steps completed, the POTW often 
has difficulty applying for an SRF loan to begin construction. 
The U.S. Department of Agriculture Rural Community Advancement 
Program, for example, runs several small SRFs in States to 
assist small POTWs with these startup costs, enabling them to 
then apply for funds through the State-run SRF for construction 
costs. Section 101 enables the Administrator to provide money 
to nonprofit technical assistance providers to create and run 
these smaller SRFs. This section also provides nonprofit 
technical assistance providers with funds to assist treatment 
works in identifying and securing financing for projects; 
provide technical assistance to operators of systems on how to 
best manage their POTW and meet regulatory requirements. It 
also authorizes funds for the dissemination of information on 
financing, system management and water quality for small 
systems.
Sec. 102. Projects eligible for assistance.

                                Summary

    This section amends Section 603(c) of CWA by modifying the 
project eligibility list with several changes.
    Section 102(c) establishes that funds can be used only to 
provide assistance to a municipality, intermunicipal, 
interstate or State agency, or private utility that principally 
treats municipal wastewater or domestic sewage for 
construction, including costs of planning, design, associated 
preconstruction and necessary activities for citing the 
facility and related elements of a treatment works; 
implementation of management program under Section 319; 
development and implementation of a management plan under 
section 320; projects by a municipality, intermunicipal, 
interstate or State agency to increase security at a POTW, 
excluding operation and maintenance costs; to control municipal 
stormwater runoff; water conservation projects, the primary 
purpose of which is to protect, preserve or enhance water 
quality; and reuse, reclamation or recycling projects the 
primary purpose of which is the preservation, protection or 
enhancement of water quality.

                               Discussion

    This section expands the entities and activities eligible 
for assistance. By clarifying that preconstruction activities 
are eligible for funding, Section 102(c) ensures treatment 
works are able to receive financing for engineering costs and 
other planning costs that precede actual construction. This 
provision will ensure that small communities with few resources 
available to develop a project in its early stages can receive 
assistance for pre-construction activities.
    This provision maintains current law eligibility of both 
section 319 and section 320 projects.
    This section would extend eligibility to privately owned 
treatment works. These systems are currently not eligible for 
assistance through the SRF. This section of the bill ensures 
that the eligibility expansion to privately owned treatment 
works only allows private utilities that ``principally treat 
municipal wastewater or domestic sewage'' to access the SRF. 
The committee does not intend for privately owned entities that 
do not meet this definition to access the fund.
    After the terrorist attacks of September 11, much attention 
is being paid to security at the nation's treatment works. 
While EPA currently allows POTWs to use the SRFs for security-
related costs, this provision would state the eligibility in 
statute, clarifying that in fact capital costs are eligible. 
Security costs associated with operations, maintenance and 
personnel are not eligible for the SRF.
    With finalization of the stormwater Phase II regulations 
(64 FR 68721), municipalities across the country face 
additional expenses trying to reduce and mitigate contaminated 
stormwater. Because there has been some confusion over whether 
these projects are eligible for SRF funding, this provision 
clarifies that these costs are in fact eligible for SRF loans.
    Finally, it would extend eligibility to water conservation 
projects, the primary purpose of which is the protection, 
preservation or enhancement of water quality. While typically 
seen as a problem for western States, water supply has become a 
nationwide concern. One aspect of the problem is the lack of a 
clean water supply, not just the lack of water in general. This 
provision envisions enabling States and localities to fund 
water conservation, reuse, recycling and reclamation projects 
that will enhance the supply of clean, safe water.
Sec. 103. Water pollution control revolving loan funds.

                                Summary

    This section amends the types of assistance that can be 
offered through the Clean Water State Revolving Fund (CWSRF) to 
include a revolving loan fund operated by a municipal, 
intermunicipal or interstate entity, State, public or private 
utility, corporation, partnership, association, or nonprofit 
agency to fund projects that are part of a 319 or 320 
implementation. The loans must be fully paid within 30 years of 
their issuance.

                               Discussion

    Section 103 reiterates the authority of States to fund 
smaller SRFs operated by a municipal, intermunicipal or 
interstate entity, State, public or private utility, 
corporation, partnership, association or nonprofit agency to 
fund projects related to nonpoint source pollution and estuary 
management plans. Funds cannot be used for traditional POTWs.
Sec. 104. Affordability.
    This section amends Section 603 by adding a subsection (e) 
which includes a series of flexibility mechanisms designed to 
improve assistance provided to disadvantaged communities and 
increase the flexibility offered to States. These provisions 
are similar to provisions already in the SDWA.
    Section (e)(1) defines `disadvantaged community' as a 
service area, or portion of a service area that meets State 
affordability criteria.
    Section (e)(2) provides the State with authority to provide 
additional subsidization, including principal forgiveness and 
an interest rate on the loan of zero percent, to a 
disadvantaged community or one the State expects to become 
disadvantaged as a result of a project.
    Section (e)(3) limits the total loan subsidy to no more 
than 30 percent of the State's annual capitalization grant.
    Section (e)(4) allows the State to extend the life of a 
loan from the current statutory limit of 20 years to 30 years 
but not to exceed the expected design life of the facility.
    Section (e)(5) authorizes the Administrator to publish 
information to assist States in establishing affordability 
criteria.

                               Discussion

    This section applies flexibility mechanisms from the Safe 
Drinking Water Act and applies them to the Clean Water program. 
These flexibility mechanisms provide the State with the ability 
to provide additional assistance to disadvantaged communities, 
such as forgiveness of their loans or zero-interest loans. It 
also allows the State to provide a 30-year loan instead of the 
current 20-year loan, provided the loan does not exceed the 
life of the asset. New to both SRFs is the ability of the State 
to provide these additional benefits to communities that may 
not meet a State's criteria for a disadvantaged community as a 
whole, but may have a `portion of a service area' that does 
meet the criteria. Many large cities do not qualify as 
disadvantaged under their State's definition of the term 
because they have pockets of low-income ratepayers, industry, 
and pockets of affluent ratepayers. Under Section 204(b) of the 
CWA, each wastewater user or class of users must pay its 
proportional share of the cost of service. Therefore, POTWs are 
essentially prohibited from raising rates on one sector of 
ratepayers, i.e. industry, in order to offset a cut in rates to 
another sector, i.e. residential, if the facility has ever 
received Federal grant money. Most of today's treatment works 
were funded at least in part with Title II construction grant 
dollars. Further, it is often politically difficult to raise 
rates only on those people with a proven ability to pay. In 
order to assist cities struggling to pay for infrastructure 
upgrades without imposing too high a burden on their low-income 
ratepayers, this provision makes them eligible for 
disadvantaged assistance.
Sec. 105. Transferability of funds.

                                Summary

    This section allows the States to transfer up to 33 percent 
of their Clean Water SRF into the Drinking Water SRF. The funds 
transferred however cannot be used by a State to meet its 20 
percent match requirement.

                               Discussion

    Each year the Committee on Appropriations in the 
appropriations bill for the Environmental Protection Agency 
includes a provision allowing States to transfer portions of a 
State's capitalization grant from one SRF to the other. Section 
106 permanently extends the authority to transfer no more than 
33 percent of a State's Clean Water capitalization grant into 
the Drinking Water State Revolving Fund (DWSRF). It clarifies 
that the funds transferred cannot be considered by a State to 
meet its SDWA requirement to match the Federal capitalization 
grant for the DWSRF by 20 percent.
Sec. 106. Costs of administering water pollution control revolving loan 
        funds.

                                Summary

    This section increases the percentage of funds a State is 
authorized to set-aside for program administration from 4 
percent to 6 percent.

                               Discussion

    While the committee does not anticipate that the 
requirements in this bill will result in new administrative 
burdens to the States, with the intended increase in 
appropriations authorized in the bill, it is reasonable to 
allow States to reserve a larger, but still small, percentage 
of the SRF to meet their administrative costs associated with 
carrying-out their responsibilities.
Sec. 107. Water pollution control revolving loan funds.

                                Summary

    This section amends section 603(h) of the Clean Water Act.
    Section (h)(1) adds several definitions including: 
`Restructuring' as the consolidation of management functions or 
ownership with another facility or the formation of cooperative 
partnerships; and `Traditional Wastewater Approach' as a 
managed system used to collect and treat wastewater from an 
entire service area consisting of collection sewers, a 
centralized plant using physical or chemical treatment 
processes, and a direct point of discharge to surface water.
    Section h(2)(A) requires States to amend their existing 
priority system so that projects would be more likely to 
receive assistance by submitting such other information as 
determined by the State, and:

            (i) An inventory of assets, including a description 
        of those assets;
            (ii) A schedule for replacement of those assets;
            (iii) A financing plan indicating sources of 
        revenue;
            (iv) A review of options for restructuring the 
        treatment works;
            (v) A review of options for approaches other than 
        traditional wastewater approaches that may include 
        actions or projects that treat or minimize sewer or 
        urban storm water discharges including decentralized or 
        distributed storm water controls, decentralized 
        wastewater treatment, low impact development 
        technologies, stream buffers, wetland restoration and 
        actions to minimize the amount of and direct 
        connections to impervious surfaces;
            (vi) Demonstration of consistency with State, 
        regional and municipal watershed plans;
            (vii) A review of options for urban waterfront 
        development or Brownfields revitalization to be 
        completed in conjunction with the project; or
            (viii) Provides an applicant with alternative 
        approaches to meeting Federal regulations that the 
        State determines to meet permit requirements for 
        permits that have been issued in accordance with the 
        national pollutant discharge elimination system or the 
        Administrator determines are measurably superior when 
        compared to regulatory standards.

    Section h(2)(B) requires States to, in the development of 
the priority system, take into consideration appropriate 
chemical, physical and biological data that the State considers 
reasonably available and of sufficient quality;
    Section h(2)(C) requires the States to provide for public 
notice and opportunity to comment on the priority system and 
list;
    Section h(2)(D) requires the State to publish, not less 
than biennially, a description of the projects in the State 
that are eligible for assistance including each project's 
priority ranking and the funding schedule; and
    Section h(2)(E) requires the State to ensure that projects 
are designed to achieve the optimum water quality management, 
consistent with the public health and the water quality goals 
and requirements of the Act.

                               Discussion

    Current law requires States to establish a list of projects 
that are eligible for, and have submitted applications for 
funding. The State then provides SRF funds to as many projects 
on the list as it can with the available funds. As a State puts 
together its priority list, it can assign priority based on 
whatever system the State develops to meet its needs. Section 
107 of S. 1400 would require the States to add additional 
factors to their system for determining priority. The decision 
regarding how much weight to give each of these additional 
factors is left to the State. A State may choose, for example, 
to give the most priority points to systems that serve under 
10,000 people or to those systems that have a median income 
below the poverty level even though S. 1400 does not refer to 
these criteria. However, the factors listed in this section 
must be incorporated into the State's priority system and used 
to give a project greater weight as the State determines which 
projects to fund in a given year from the State's priority 
list.
    The factors to which a State must give additional weight 
include an inventory of assets, including a description of the 
condition of those assets and a schedule for replacing those 
assets. Aging systems are significant contributors to the 
infrastructure-financing gap. According to a 2002 General 
Accounting Office (GAO) report, 27 percent of drinking water 
utilities and 31 percent of wastewater utilities do not have 
plans for managing their existing capital assets.\11\ GAO also 
found that `roughly half of the utilities actually 
rehabilitated or replaced 1 percent or less of their pipelines 
annually' even though 89 percent of drinking water utilities 
and 76 percent of wastewater utilities believed a higher level 
was necessary to maintain their systems.\12\ In order to fully 
understand the scope of the problem the nation faces, there 
must be an accounting of the health of our utilities. Further, 
if utilities are to make maximum use of the funds available, it 
makes good business sense to have a full understanding of the 
condition of one's assets and how much capital will need to be 
raised to replace those assets and over what amount of time.
---------------------------------------------------------------------------
    \11\ U.S. General Accounting Office. Water Utility Financing and 
Planning. (GAO-02-764). August 2002. Page 7.
    \12\ Ibid, page 42.
---------------------------------------------------------------------------
    Another factor is a financing plan indicating how that 
capital will be raised including rate increases, grant 
assistance, bonds, loans or other sources. In its 2002 report, 
GAO found that 85 percent of surveyed drinking water utilities 
and 82 percent of wastewater utilities were able to cover 
operations and maintenance costs through local user fees. 
However, an estimated 29 percent of surveyed utilities had to 
defer maintenance because of insufficient funding.\13\ The 
committee believes providing additional weight to projects that 
have asset management and financing plans in place will 
encourage utilities to incorporate these elements into their 
systems management and business practices. Providing asset 
management and financing plans additional weight will also 
encourage utilities with these elements already in place to 
review their existing plans; take whatever steps may be 
necessary to update them; and seek additional funding, if 
needed, to properly maintain their systems.
---------------------------------------------------------------------------
    \13\ Ibid, page 6.
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    The States must ensure that applications to the SRF receive 
additional weight if they have reviewed options for 
restructuring their treatment works. It some cases, it may be 
more efficient and cost effective for a utility to consolidate 
with a neighboring one, to develop a partnership with the local 
energy provider, or to consider other cooperative partnerships 
like public-private partnerships or privatization. These are 
all encompassed in the term restructuring, the goal of which is 
to improve upon the management and financial structure of a 
utility to ensure it is operating as efficiently and cost-
effectively as possible. Restructuring does not imply a 
preference for privatization.
    The States must ensure that applications to the SRF receive 
additional weight if they look at nontraditional approaches, 
including decentralized or distributed storm water controls, 
decentralized wastewater treatment, low impact development 
technologies and stream buffers. Communities and developers are 
experimenting with approaches other than traditional treatment 
and constructed conveyances to reduce contaminated runoff, 
reducing the amount of water entering a treatment works or 
adjoining waterways. These approaches may be more affordable 
and more environmentally friendly than concrete and pipes. 
Particularly in small, rural communities properly maintained 
decentralized wastewater treatment systems to replace such 
items as cesspools and individual sewer systems may be an 
affordable alternative to a treatment works.
    A number of efforts are currently underway across the 
country to focus more holistically on watershed planning for 
the improvement of water quality and resources, and to address 
water supply. There has also been a renewed focus on 
redevelopment opportunities for Brownfields and urban 
waterfronts. Under this section, the State must ensure that 
applications to the SRF receive additional weight if they 
demonstrate consistency with State, regional and municipal 
watershed plans or a review of options for urban or waterfront 
development or Brownfields revitalization. Finally, the State 
must ensure that applications to the SRF receive additional 
weight if they promote new approaches to meeting permitting 
limits such as watershed permitting as well as environmental 
management systems that assist in the day-to-day operations of 
a facility.
Sec. 108. Noncompliance.

                                Summary

    This section prohibits assistance to those POTWs that have 
been in significant noncompliance for any four out of the 
previous eight of the last reporting quarters unless the POTW 
is in compliance with or has entered into an Administrative 
Order; the State or Administrator (whichever took the 
enforcement action) determines the money will bring them into 
compliance; or the State or Administrator (whichever took the 
enforcement action) determines that the funding will be used 
for a portion of the treatment works not associated with the 
cause of noncompliance.

                               Discussion

    One purpose of the Clean Water SRF is to assist systems in 
complying with the Clean Water Act. Significant noncompliance 
is a category used by the Environmental Protection Agency to 
prioritize enforcement actions. This provision seeks to provide 
an incentive for systems to avoid getting into significant 
noncompliance and to remain in compliance. Because this 
provision is designed to target the worst actors that continue 
to mismanage their facilities over a long-term period, it 
exempts those systems which will use the money to come into 
compliance; may be using the funds to comply with an 
administrative order that already seeks to correct the 
noncompliance; or assistance is for a portion of the treatment 
works not associated with the noncompliance such as an upgrade 
to a pumping station that is unrelated to an ongoing CSO 
compliance issue.
Sec. 109. Allotment of funds.

                                Summary

    Section 109 requires that the Administrator provide 1.5 
percent of available funds to Indian tribes and that funds then 
be distributed to the States in accordance with the chart 
listed in the statute.

                               Discussion

    This section updates the formula by which the Administrator 
distributes the Federal Clean Water SRF funding to the States. 
It replaces each State's existing statutory percentage of funds 
with a new percentage.
Sec. 110. Authorization of appropriations.

                                Summary

    This section authorizes funding of $3.2 billion in 2006 and 
2007, $3.6 billion in 2008, $4 billion in 2009, and $6 billion 
in 2010. The EPA is authorized to reserve not more than $1 
million per year to pay the costs of conducting the Clean Water 
Needs Survey required by CWA Section 516.
Sec. 111. Critical water infrastructure projects.

                                Summary

    Section 111(a) requires the Administrator to establish a 
program through which eligible entities can apply for grants to 
carry out projects and activities for the primary purpose of 
watershed restoration through protection and improvement of 
water quality.
    The Administrator must ensure equitable distribution of 
funds under this section taking into account the cost and 
number of requests for each category of eligible projects. 
Eligible projects include:

         Projects listed on a State's priority list;
         Projects to mitigate wet weather flows;
         Upgrades of POTWs with at least an average 
capacity of 500,000 gallons of wastewater per day with new 
technology to reduce total nitrogen to an average annual 
concentration of 3 milligrams per liter; or total phosphorous 
to no more than 1 milligram per liter; or both total nitrogen 
and total phosphorous;
         Implementation of locally based watershed 
protection plans created by local nonprofit organizations 
through a public process that account for both point and 
nonpoint contributors;
         Projects contained in a State Section 319 or 
320 management plan; or
         Projects that include a means to develop 
alternative water supplies.

    In prioritizing projects, the Administrator shall consult 
with and consider the priorities of affected State and local 
governments and public and private entities. Local communities 
are required to provide 45 percent of the cost of the project, 
provide any associated land and pay 100 percent of the 
operation, maintenance, repair, replacement and rehabilitation 
costs associated with the project. The Administrator may waive 
the requirement to pay the non-Federal share of the cost of 
carrying out an eligible activity if the Administrator 
determines that an eligible entity is unable to pay, or would 
experience significant financial hardship if required to pay 
the non-Federal share.
    This section authorizes $300 million per year for each of 
fiscal years 2006 through 2010.

                               Discussion

    In this section, the committee acknowledges there is a 
growing interest in providing grant funding for the common 
goals of restoring watershed functions; upgrading treatment 
works; assisting POTWs in complying with new and existing 
Federal pollution control requirements; identifying alternative 
water supplies; and addressing high priority projects, such as 
storm water, combined sewer overflows and nutrient loadings. In 
the previous versions of the water infrastructure bill, S. 1961 
in the 107th Congress and S. 2550 in the 108th Congress, the 
committee has considered language in the water infrastructure 
bill that authorizes several independent and narrowly focused 
grant programs focusing on specific water bodies or regions. S. 
1400 recognizes that grant funding for watershed restoration 
and critical water infrastructure projects is needed across the 
country. In prioritizing projects under this new section, the 
Administrator must consult with State and local governments and 
the public and private entities active in local watershed 
planning and restoration efforts to identify high priority 
projects. The Administrator must also ensure an equitable 
distribution of funding between all eligible categories to 
ensure that one high-cost category does not dominate the 
prioritization of projects and available funds provided to the 
program.
Sec. 112. Capitalization grant agreements.

                                Summary

    This section requires all projects financed in whole or in 
part through the Clean Water State Revolving Loan funds to meet 
the requirements of Section 513 of the Clean Water Act, which 
applies Davis-Bacon prevailing wage requirements to Federal 
construction projects.

              TITLE II--SAFE DRINKING WATER INFRASTRUCTURE

Sec. 201. Preconstruction work.

                                Summary

    This section modifies the project eligibility list with 
several changes.
    Section 203(1) clarifies that planning, design, and 
associated preconstruction costs are eligible for funds under 
the Drinking Water SRF as standalone items.
    Section 203(2) states that replacement and rehabilitation 
of aging systems, treatment, storage (including reservoirs) and 
distribution systems are eligible expenses for the fund. This 
section also ensures that projects to upgrade the security of a 
water system are eligible.

                               Discussion

    By clarifying that preconstruction activities are eligible 
for funding, Section 203(1) ensures water systems are able to 
receive financing for engineering costs and other planning 
costs that precede actual construction. This provision will 
ensure that small communities with few resources available to 
develop a project in its early stages can receive assistance 
for pre-construction activities.
    The Safe Drinking Water Act establishes a priority for 
systems to receive funding under the Drinking Water SRF (SDWA 
Section 1452(b)(3)) to include projects that address the most 
serious risk to human health, are necessary to ensure 
compliance, and assist systems most in need on a per household 
basis. This section does not modify that priority system. 
Instead, it clarifies that replacement and rehabilitation are 
also eligible expenses under the Drinking Water SRF. As Jerry 
Johnson testified before the Fisheries, Wildlife and Water 
Subcommittee on behalf of the nation's largest water utilities 
on February 28, 2002, many large systems' biggest expense is 
replacing old infrastructure and pipes. The committee, by 
reiterating their eligibility, seeks to ensure that once a 
State has addressed the compliance and public health threats 
and helped those systems that are disadvantaged, it gives 
consideration to helping systems meet the cost of replacing 
their aging infrastructure.
    After the terrorist attacks of September 11, much attention 
is being paid to security at the nation's water systems. The 
Public Health and Bioterrorism Response Act of 2001 (P.L.107-
188) required PWSs to assess their vulnerabilities. Systems are 
now in the process of determining what changes need to be made 
to their facilities and how to pay for those upgrades. While 
EPA currently allows PWSs to use the SRFs for security-related 
costs, this provision would state the eligibility in statute, 
clarifying that capital costs for security are eligible. 
Security costs associated with operations, maintenance and 
personnel are not eligible for the SRF.
Sec. 202. Affordability.

                                Summary

    This section allows public water systems to receive funding 
assistance for portions of a service area served by the 
utility.

                               Discussion

    Many large cities do not qualify as disadvantaged under 
their State's definition of the term because they have both 
pockets of low-income ratepayers that meet the affordability 
criteria and industry and pockets of affluent ratepayers. These 
cities have difficulty raising rates because they have many 
ratepayers who simply cannot pay more and it is politically 
difficult to increase rates on only those with a proven ability 
to pay. In order to assist cities struggling to pay for 
infrastructure upgrades without imposing too high a burden on 
their low-income ratepayers, this provision allows a 
municipality to receive negative interest loans or principal 
forgiveness if a portion of their service area meets a State 
definition of disadvantaged.
Sec. 203. Safe drinking water revolving loan funds.

                                Summary

    This section changes the amount of their SRF the States can 
set-aside to meet their administrative costs from 4 percent to 
6 percent. It further strikes the requirement that State match 
any funds, up to 10 percent of their SRF, it opts to set aside 
for public water system supervision programs, to administer or 
provide technical assistance through source water protection 
programs, to develop and implement a capacity development 
strategy as defined in Section 1420(c) and for an operator 
certification program to meet the requirements of Section 1419. 
Finally, it allows the State to transfer up to 33 percent of 
its Drinking Water SRF funds into the Clean Water SRF fund. 
However, the transferred funds cannot be used by a State to 
meet its 20 percent match requirement.

                               Discussion

    Section 203 allows States to reserve up to 6 percent of the 
SRF for administrative costs. According to the State drinking 
water administrators, the cost to administer the program 
exceeds the current 4 percent allowable set-aside.\14\ In 1996, 
Congress created the SRF and gave States the authority to 
operate the program. With this new responsibility came new 
costs. While the committee does not anticipate that the 
requirements in this bill will result in new administrative 
burdens to the States, with the intended increase in 
appropriations authorized in the bill, it is reasonable to 
allow States to reserve a larger, but still small, percentage 
of the SRF to meet their administrative costs.
---------------------------------------------------------------------------
    \14\ Association of State Drinking Water Administrators, letter to 
the Committee, November 6, 2003.
---------------------------------------------------------------------------
    Section 203 also provides States with more flexibility by 
changing one of the cost-share requirements in current law. 
States are currently permitted to use 10 percent of their SRFs 
for specific set-asides as long as they match that 10 percent. 
However, States are also required to first match 20 percent of 
the capitalization grant they receive each year from the 
Federal Government. The subsequent 10 percent match for set 
asides is essentially a double-match requirement for the 
States. From 1996 through 2003, States had reserved 4 percent 
of their grant with nine States reserving the full amount and 
seven reserving none. This section waives the matching 
requirement for the 10 percent set-aside.
    This section also would make permanent the ability of 
States to transfer up to 33 percent of the Drinking Water SRF 
into their Clean Water SRF. Each year the Committee on 
Appropriations in the annual spending bill for the 
Environmental Protection Agency includes a provision allowing 
States to transfer portions of a State's capitalization grant 
from one SRF to the other. During a funding cycle, a State may 
have a particularly large drinking water or clean water project 
for which it needs additional funds. This provision allows them 
to transfer some money from one account to the other while 
protecting the corpus of the funds. The transferred funds 
cannot count toward the State's required 20 percent match of 
the Federal grant.
Sec. 204. Other authorized activities.

                                Summary

    This section permits use of the Drinking Water SRF for 
implementation of source water protection plans.

                               Discussion

    The SDWA required States to develop source water protection 
plans by May 2003. States were allowed to use up to 15 percent 
of their SRF for the development of these plans, as well as 
conservation easements, wellhead protection programs, capacity 
development programs and implementation of voluntary, 
incentive-based source water protection projects. However, no 
more than 10 percent of these funds could be used for any one 
of the categories listed above. With many State plans 
completed, funds are now needed to implement the plans. This 
section will allow States to use their SRF funds to implement 
their source water protection plans.
Sec. 205. Priority system requirements.

                                Summary

    Section 205 amends Section 1452 of the Safe Drinking Water 
Act by adding the definition of restructuring as ``changes in 
operations (including ownership, cooperative partnerships, 
accounting, rates, maintenance, consolidation, and alternative 
supply)''.
    It reiterates the current requirement that a State give 
highest priority to those 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.

    Section 205 requires the Administrator to then give 
additional weight to applications for assistance by a community 
water system if the application includes such other information 
as the State determines to be necessary and--

            (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 indicating sources of 
        revenue from ratepayers, grants, bonds, other loans and 
        other sources;
            (iv) a review of options for restructuring the 
        public water system;
            (v) demonstration of consistency with State, 
        regional and municipal watershed plans; or
            (vi) a review of options for urban waterfront 
        development or Brownfields revitalization to be 
        completed in conjunction with the projects.

    Section 205 changes the requirements that the priority list 
be updated periodically to at least biennially.

                               Discussion

    Section 205 adds the definition of restructuring and 
traditional approach to the statute. As part of its 
capitalization agreement with the EPA, each State is required 
to develop a priority system that outlines the projects a State 
will fund each year with its available funds. States must give 
priority to those projects that address the most serious risk 
to human health, are necessary to ensure compliance, and assist 
systems most in need on a per household basis. This section 
leaves that requirement in place unchanged and requires that 
States must ensure that applications to the SRF receive 
additional weight if they have in place an asset management 
plan, a capital replacement plan, a financing plan or have 
reviewed their restructuring options and nontraditional 
approaches.
    While many PWSs have a long-term plan for replacement of 
their aging assets, many do not. Yet in order to fully 
understand the scope of the problem the nation faces, there 
must be an accounting of the health of our utilities. Further, 
it makes good business sense to have a full understanding of 
the condition of one's assets and how much capital will need to 
raised to replace those assets and over what amount of time.
    Additional factors States must include in their priority 
system include a financing plan indicating how that capital 
will be raised including rate increases, grant assistance, 
bonds or other loans. PWSs will also receive additional credit 
if they have reviewed options for restructuring their water 
systems. In some cases, it may be better for a utility to 
consolidate with a neighboring one, develop a partnership with 
the local energy provider, or consider other cooperative 
partnerships like public-private partnerships or privatization. 
These are all encompassed in the term restructuring, the goal 
of which is to improve upon the management and financial 
structure of a utility to ensure it is operating as efficiently 
and cost-effectively as possible. Restructuring does not imply 
a preference for privatization. The States must ensure that 
applications to the SRF receive additional weight if they 
explore nontraditional approaches to treatment and source water 
protection. These new technologies may prove to be less 
expensive and/or more effective than traditional approaches.
    A number of efforts are currently underway across the 
country to focus more holistically on watershed planning for 
the improvement of water quality and resources, and to address 
water supply. There has also been a renewed focus on 
redevelopment opportunities for Brownfields and urban 
waterfronts. Under this section, the State must ensure that 
applications to the SRF receive additional weight if they 
demonstrate consistency with State, regional and municipal 
watershed plans or a review of options for urban or waterfront 
development or Brownfields revitalization.
Sec. 206. Authorization of appropriations.

                                Summary

    This section authorizes funding of $1.5 billion for 2006, 
$2 billion for 2007 and 2008, $3.5 billion for 2009, and $6 
billion for 2010. The EPA is authorized to withhold not more 
than $1 million per year to conduct the drinking water needs 
survey required by SDWA Section 1452(h).
Sec. 207. Critical drinking water infrastructure projects.

                                Summary

    Section 111(a) requires the Administrator to establish a 
program through which eligible entities can apply for grants to 
carry out projects and activities for the primary purpose of 
watershed restoration through protection and improvement of 
water quality.
    The Administrator must ensure equitable distribution of 
funds under this section taking into account the cost and 
number of requests for each category of eligible projects. 
Eligible projects include projects that--

            (i) develop alternative water sources
            (ii) provide assistance to small systems; or
            (iii) assist a community water system
                    (a) to comply with a national primary 
                drinking water regulation; or
                    (b) to mitigate groundwater contamination

    This section defines an eligible entity as a community 
water system as defined in Section 1401 of SDWA or a system 
that is located in an area governed by an Indian Tribe, as 
defined in Section 1401 of SDWA.
    In prioritizing projects, the Administrator shall consult 
with and consider the priorities of affected State and local 
governments and public and private entities. Local communities 
are required to provide 45 percent of the cost of the project, 
provide any associated land and pay 100 percent of the 
operation, maintenance, repair, replacement and rehabilitation 
costs associated with the project. The Administrator may waive 
the requirement to pay the non-Federal share of the cost of 
carrying out an eligible activity if the Administrator 
determines that an eligible entity is unable to pay, or would 
experience significant financial hardship if required to pay, 
the non-Federal share.
    This section authorizes $300 million per year for each of 
fiscal years 2006 through 2010.

                               Discussion

    This section authorizes $300 million per year for 5 years 
for the Administrator to establish a grant program to assist 
community water systems. Eligible projects may include projects 
to develop alternative water sources, provide assistance to 
small systems, or assist a community water system with 
compliance with the SDWA or mitigation of groundwater 
contamination. Similar to the critical water infrastructure 
grant program (Sec. 111), this section is designed to address a 
multitude of critical drinking water projects across the 
country rather than focusing grant authorization on specific 
regional or local concerns that may limit funding. With an 
emphasis on small and disadvantaged communities, this program 
is expected to address high priority drinking water concerns 
for States, Tribes and local governments nationwide.
Sec. 208. Small system revolving loan funds.

                                Summary

    This section would establish a loan fund to be operated by 
a qualified private, nonprofit entity for the purposes of 
helping small water systems with predevelopment costs and 
short-term costs. This program, in addition to those technical 
assistance programs already statutorily provided in the Safe 
Drinking Water Act, are authorized at $25 million per year for 
fiscal years 2006 to 2010. States shall provide to the EPA an 
annual report on the activities supported by this program. Loan 
terms cannot exceed 10 years and loans cannot exceed $100,000. 
Loan repayments will be credited to the fund maintained by the 
qualified nonprofit.

                               Discussion

    The EPA has several existing programs to assist small PWSs, 
including an information clearinghouse for technical assistance 
providers called Simple Tools for Effective Planning. The 
Agency also runs the Small System Technical Assistance Center 
Network, a series of technical assistance centers at 
universities throughout the country. The Agency partners with 
the National Rural Water Association and the Rural Community 
Assistance Partnership to provide technical assistance to PWSs 
including how to locate financing for projects and how to run a 
water system. Further, the States may reserve up to 2 percent 
of their SRF to provide technical assistance to small systems. 
Between 1996 and 2003, States had reserved 1.5 percent of their 
grants. Twenty-three States reserved the full 2 percent while 
two States did not reserve any funds.
    The committee however continues to hear of a need for 
additional assistance for these small systems.\15\ Many small 
PWSs cannot afford the costs associated with planning a 
project, including the engineering costs. Without these initial 
steps completed, the PWS often has difficulty applying for an 
SRF loan to begin construction. The U.S. Department of 
Agriculture Rural Community Advancement Program, for example, 
runs several small SRFs in States to assist small PWSs with 
these startup costs, enabling them to then apply for funds 
through the State-run SRF for construction costs. This 
provision enables the Administrator, with the Agency's 
technical assistance funds, to provide money to nonprofit 
technical assistance providers to create and run these smaller 
SRFs.
---------------------------------------------------------------------------
    \15\ Rural Community Advancement Program, letter to the Committee.
---------------------------------------------------------------------------
Sec. 209. Study of plumbing components.

                                Summary

    This section authorizes $500,000 for the Administrator to 
contract with the National Academy of Sciences (NAS) to study 
existing market conditions for plumbing components, including 
pipes, faucets, water meters, valves, household valves, and any 
other plumbing components that come into contact with water 
commonly used for human consumption. The NAS will look at the 
availability of plumbing components at various levels of lead 
content; the market share and relative cost of plumbing 
components; issues surrounding transition from current market 
to plumbing components with not more than 0.2 percent lead; the 
feasibility of manufacturing plumbing components with lead 
levels below 8 percent; and the use of lead alternatives in 
plumbing components with lead levels below 8 percent. In 
conducting this study, NAS must consult with the National 
Sanitation Foundation (NSF) and individuals with expertise in 
plumbing components, products, and materials; engineering; 
economics; and other appropriate fields from academia, industry 
and other organizations.

                               Discussion

    The committee looks forward to the results of the NAS study 
to further inform its members about the use of lead in plumbing 
products that come into contact with water commonly used for 
human consumption.
Sec. 210. District of Columbia lead service line replacement.

                                Summary

    This section authorizes $30 million per year for fiscal 
years 2006 through 2010 to assist the District of Columbia with 
lead service line replacement. $2 million must be reserved each 
year for low-income residents and individual grants are limited 
to $5,000.

                               Discussion

    Lead, a known toxin, is used in plumbing fixtures and had 
been a primary ingredient in paint and automobile fuel until it 
was phased out beginning in the 1970's (The Elimination of Lead 
in Gasoline v. M. Thomas).\16\ Great progress has been made in 
reducing exposure to lead by phasing out leaded gasoline and 
slowly rehabilitating lead-painted homes, and the nationwide 
incidence of elevated blood lead levels in children has 
continued to decline. Today, while lead in drinking water 
remains an exposure route and lead service lines still exist in 
many cities, including the District of Columbia, lead dust and 
paint chips in homes, and the tendency by young children to 
ingest them, remains the most common route of lead exposure in 
children.
---------------------------------------------------------------------------
    \16\ Annual Review of Energy and the Environment. 20:201-324, 1995.
---------------------------------------------------------------------------
    In 1991, the EPA finalized the lead and copper rule (56 FR 
26460), which would minimize lead and copper in drinking water 
by reducing corrosivity. Under the rule, the goal for lead in 
drinking water is zero parts per billion (ppb). The rule also 
established an Action Level, which is a combined measurement of 
lead amounts and prevalence at which the PWS is required to act 
to reduce the lead. The Action Level is defined as 10 percent 
of homes tested exceeding 15 ppb. At this level, the system is 
required to increase monitoring and testing, optimize corrosion 
control treatment and inform the public about the exceedances. 
If the corrosion control treatment does not result in a 
decrease in households that exceed the action level, the system 
is required to begin replacing lead service lines at a rate of 
7 percent per year.
    Unlike other contaminants regulated under the Safe Drinking 
Water Act, lead is measured inside the residence or business, 
not at the treatment plant, because it leaches into the water 
from the distribution system, service lines and other plumbing 
components found within or adjacent to homes and businesses.
    In accordance with the rule, the Washington Aqueduct, owned 
and operated by the U.S. Corps of Engineers, installed the 
corrosion control treatment in 2000. During the monitoring 
period July 2000-June 2001, WASA reported sampling 50 homes. 
However in its compliance order, Docket No. SDWA-03-2004-0259 
DS, EPA found that of those 50 samples, 2 were taken from a 
previously sampled location. WASA was required to sample from 
50 unique locations during this time. Five of these samples 
were taken outside of the required sampling period. EPA also 
found that WASA failed to report six samples that were taken. 
EPA found that if WASA had included these unreported samples, 
WASA would have exceeded the action level of lead in the 90th 
percentile during the July 2000--June 2001 timeframe.
    In August 2002, WASA reported that during the compliance 
period July 1,2001--June 30, 2002, it exceeded the action level 
for lead. The lead level in first draw water samples from the 
90th percentile of 53 residences tested was 75 ppb, well above 
the action level of 15 ppb. WASA was required to implement a 
lead in drinking water public education program, and to 
initiate lead service line replacement at a rate of 7 percent 
per year.
    From January 2003 through December 2003, WASA continued to 
test homes and continued to exceed the action level. As such, 
WASA was required to continue a public education program and 
its lead service line replacement efforts.
    EPA included several categories of findings regarding 
WASA's compliance with the lead and copper rule in their 
consent order which included a failure to take samples within 
the monitoring period, a failure to conduct follow-up 
monitoring of partially replaced lead service lines, and a 
failure to comply with requirements for public service 
announcements and to use required language in written materials 
provided to the public as well as a failure to perform 
corrective action. It should be noted that EPA was informed by 
WASA of these events and the data and signed off on the public 
service announcements.
    The EPA consent order requires WASA to take several 
corrective actions including:
    Plans for updating its lead service line inventory and 
reporting to EPA.
    Requirement for WASA to strongly encourage full replacement 
of lead service lines with owners paying for their portion, 
including submission of a plan to EPA for encouraging 
homeowners to agree to full replacement.
    Requirement for WASA to develop and submit a public 
education plan including public health issues, steps to reduce 
health risks and steps to address EPA recommendations on 
effectiveness of prior public education.
    Requirement for WASA to document to EPA that they have 
provided water filers to all customers suspected or known to 
have lead contamination at no charge as well as those with 
unknown service line materials.
    Requirement for WASA to submit detailed sampling plans to 
EPA.
    On August 23, 2004, WASA began adding orthophosophate to 
the drinking water supply through the city to reduce the 
corrosivity of the water supply in an effort to reduce lead 
levels. The addition of orthophosphate has resulted in lower 
lead levels in the District's drinking water. From January 
through April 2005, 90 percent of homes sampled had lead levels 
below the EPA's action level of 15 ppb.\17\ However more 
testing will be done as the Lead and Copper Rule requires that 
lead levels remain below the action level for two consecutive 
6-month periods to return to compliance.
---------------------------------------------------------------------------
    \17\ ``Community Update: Getting the Lead Out of DC Tap Water,'' 
Environmental Protection Agency, D.C. Water and Sewer Authority, D.C. 
Department of Health and Washington Aqueduct. July 2005, page 1.
---------------------------------------------------------------------------
    While lead levels in the water do appear to be going down, 
the District is still obligated to replace its lead service 
lines. To speed the corrective efforts, Mayor Williams, the 
Council of the District of Columbia, and the D.C. Water and 
Sewer Authority, plan to replace all of the lead service lines 
in the city. To execute this plan, the committee believes 
additional assistance must be provided to the city. This 
section would authorize $30 million per year for fiscal years 
2006 through 2010 for the District of Columbia to replace its 
lead service lines, as dictated in its consent order with the 
EPA.
Sec. 211. Contaminant prevention, detection and response.

                                Summary

    Section 211 amends Section 1434 of the Safe Drinking Water 
Act which requires the Administrator to evaluate the potential 
means, methods and equipment terrorists could use to impact a 
public water supply. Section 211 would require the 
Administrator to provide to Congress a report with:

            (a) a description of the progress made in 
        implementing this section; and
            (b) a description of any impediments to 
        implementation identified by the Administrator 
        including difficulty in coordinating the implementation 
        with other Federal, State or local agencies and 
        organizations; insufficient funding; lack of 
        authorization to take certain actions and the 
        technological impediments to developing the methods, 
        means and equipment.

    Section 211 also creates a new subsection 1474(c) that 
requires the Administrator to develop and carry out an 
implementation plan that is consistent with the actions taken 
to date and incorporates the results of the report under 
subsection (b). This section authorizes $7.5 million per year 
for each fiscal year 2006 through 2010.

                               Discussion

    Under Presidential Decision Directive 63 signed by 
President Bill Clinton in 1998, the Environmental Protection 
Agency was designated the lead agency for identifying and 
addressing vulnerabilities at the nation's water and wastewater 
facilities. In response to the terrorist attacks of September 
11, 2001, Congress enacted the Public Health Security and 
Bioterrorism Preparedness and Response Act of 2002. The 
Bioterrorism Act required the Administrator of the 
Environmental Protection Agency to review current and future 
methods to prevent, detect and respond to the intentional 
introduction of chemical, biological or radiological 
contaminants into community water systems and source water for 
community water systems. The review was to include the methods, 
means and equipment, including real time monitoring systems, 
designed to monitor and detect various levels of chemical, 
biological, and radiological contaminants or indicators of 
contaminants and reduce the likelihood that such contaminants 
can be successfully introduced into public water systems and 
source water intended to be used for drinking water. The 
Administrator was further charged with identifying the methods 
and means to provide sufficient notice to public water systems 
and individuals served by those systems of a contamination 
event; the methods and means for developing educational and 
awareness programs for community water systems; procedures and 
equipment necessary to prevent the flow of contaminated 
drinking water to individuals served by public water systems; 
methods and means which could negate or mitigate deleterious 
effects on public health and the safety and supply caused by 
the introduction of contamination of a drinking water supply 
and the biomedical research into the short-term and long-term 
impact on public health of various contaminants that may be 
introduced into a public water system.
    Section 211 requires the Administrator to report on the 
progress made in implementing this section and identify any 
impediments to its implementation. The Administrator is to 
incorporate the findings of the report into an implementation 
plan for carrying out this section, consistent with steps 
already taken and carry out that plan. Section 211 authorizes 
$7.5 million for each of fiscal years 2006 through 2010 for 
developing and carrying out the implementation plan.
Sec. 212. Labor standards.

                                Summary

    This section requires that laborers and mechanics employed 
by contractors and subcontractors on all projects financed in 
whole or in part through the Drinking Water State Revolving 
Loan Funds be paid in accordance with the Davis Bacon 
prevailing wage requirements.

                        TITLE III--MISCELLANEOUS

Sec. 301. Definitions.

                                Summary

    This section clarifies that references to the 
`Administrator' are to the Administrator of the Environmental 
Protection Agency. It also defines references to the 
`Secretary' as the Secretary of Agriculture in section 303, and 
the Secretary of Interior, acting through the Director of the 
United States Geological Survey, in section 306.
Sec. 302. Demonstration grant program for water quality enhancement and 
        management.

                                Summary

    Section 302(a) authorizes the Administrator to award grants 
and enter into cooperative agreements with research 
institutions, educational institutions and other appropriate 
entities for research and development of innovative and 
alternative technologies to improve water quality or drinking 
water supply. Eligible projects include those to increase the 
effectiveness and efficiency of public water supply systems; to 
encourage the use of innovative or alternative technologies or 
approaches related to water supply or availability; and to 
increase the effectiveness and efficiency of treatment works.
    Section 302(b) establishes a nationwide demonstration grant 
program within EPA to promote innovations in technology and 
alternative approaches to water quality management as well as 
reduce costs to municipalities incurred in complying with the 
CWA and the SDWA.
    Section 302(b) requires municipal applicants to submit to 
the Administrator a plan that is developed in coordination with 
the State in which the municipality is located and interested 
stakeholders. It further requires the applicant to describe the 
water impacts it seeks to address, include a strategy to 
address the water quality program and achieve the same goals 
that could be achieved using more traditional methods or those 
required by the CWA and the SDWA and include a schedule for 
achieving the goals.
    Section 302(c) further defines the types of projects that 
are eligible to include those that address excessive nutrient 
growth; urban or rural population pressures; lack of an 
alternative water supply; difficulty in water conservation and 
efficiency; lack of support tools and technologies; lack of 
monitoring or data analysis; nonpoint source water pollution; 
sanitary and combined sewer overflows; problems with naturally 
occurring constituents of concern; problems with erosion or 
excess sediment; new approaches to water treatment, 
distribution and collection; and new methods for collecting and 
treating wastewater.
    The Administrator much ensure, to the maximum extent 
practicable, that the projects are diverse geographically, in 
terms of the technologies tested and the nontraditional 
approaches used and that each category of projects described 
above is adequately represented. Higher priority should be 
given to projects that address multiple problems and are 
regionally applicable.
    The Administrator must ensure, to the maximum extent 
practicable, that at least one community serving less than 
10,000 receives a grant each year and that no municipality 
receives more than 25 percent of the funds.
    This section also limits the Federal cost share to 80 
percent which the Administrator may waive for affordability 
reasons.
    Section 302(c) requires each grant recipient to report to 
the Administrator on the progress of the project after one, two 
and 3 years. The Administrator must report to Congress 2 years 
after enactment on the results of the demonstration program.
    Section 302(d) requires the Administrator, to the maximum 
extent practicable, to incorporate the results of the projects 
into programs administered by the Administrator.
    This section authorizes $20 million per year from fiscal 
year 2006 through fiscal year 2010 to carry out this Title.
    Section 302(f) authorizes $20 million for each year from 
fiscal year 2006 through fiscal year 2010 to carry out Section 
302 except (a).

                               Discussion

    One important aspect of reducing the infrastructure 
financing gap is finding more affordable alternatives for POTWs 
and PWSs. As the Deputy Assistant Administrator from EPA's 
Office of Water testified before the committee on February 26, 
2002:

        `This strategy to renew our water and wastewater 
        infrastructure . . . puts a high premium on optimizing 
        the efficient use of our current capital assets and the 
        new investments we must make. That will require the use 
        of innovative technologies for improved services at 
        lower life-cycle costs, which in turn means supporting 
        research and development on these innovative 
        technologies.'

    To further encourage research into innovative technologies, 
Section 302 establishes in the EPA both a research and 
development program and a demonstration grant program. The 
research program is aimed at increasing the effectiveness and 
efficiency of public water supply systems, encouraging the use 
of innovative or alternative approaches to water supply or 
availability, and increasing the effectiveness of the treatment 
works. It is authorized at $20 million per year from fiscal 
year 2006 through fiscal year 2010.
    The demonstration grant program targets water quality 
management and enhancement. It requires at least a 20 percent 
non-Federal cost share for projects. The program will promote 
innovations in technology and alternative approaches to water 
quality management and supply, with the goal of reducing 
municipal costs of complying with the Clean Water Act and the 
Safe Drinking Water Act. Municipalities selected for programs 
must describe a strategy by which the demonstration grants 
could achieve similar results as those mandated by the two 
statutes or those that could be achieved by traditional water 
quality methods. Grant recipients must submit annual reports to 
EPA who must submit a report to Congress. The Administrator 
must ensure to the maximum extent practicable that innovative 
technologies, geographic distribution, and non-traditional 
approaches are represented.
    The National League of Cities, the Conference of Mayors, 
and the American Metropolitan Sewerage Association (AMSA) 
testified in favor of a demonstration grant program at a 
February 2002 hearing. AMSA testified that such a program is 
`vitally important.'
Sec. 303. Agricultural pollution control technology grant program.

                                Summary

    This section provides a one-time grant of $50 million to be 
distributed evenly among the States to create an SRF for 
farmers who may have an innovative approach to reducing 
polluted runoff. States are required to match 20 percent of the 
Federal share and return any unused amounts to the Federal 
Government after 2 years. Loans are limited to $250,000 and 
must be repaid within 10 years.

                               Discussion

    Research is being conducted around the country into new 
technologies to address air and water pollution at agricultural 
sites. This research is often hindered because traditional 
agriculture loan and grant programs do not readily accommodate 
innovative approaches or experimental projects. In many cases, 
State agricultural and environmental quality officials and 
farmers want to try a new agricultural pollution control 
technology but they lack funding. This revolving loan program 
gives States a dedicated source of funding to work with 
producers who are interested in experimenting with, and 
improving upon, new technologies (including, for instance, 
methane digesters on dairy farms) by designing and constructing 
agricultural pilot projects.
Sec. 304. State revolving fund review process.

                                Summary

    This section requires the Administrator to consult with 
States, other Federal agencies, and utilities to identify ways 
to expedite and improve the application and review process for 
the SRFs and take such administrative action as authorized 
under existing law to achieve that goal. The Administrator 
shall provide to Congress a report that contains 
recommendations for legislation to further improve the 
processes.

                               Discussion

    While each State is required to comply with several Federal 
requirements, each also imposes many of its own. This provision 
requires the Administrator to work with States and other 
agencies to develop recommendations for streamlining the 
application process and lessening the amount of time it takes 
to receive funds. One of the goals of the Water Infrastructure 
Financing Act is to make the SRF more user-friendly. This study 
is one step in that effort. At times, SRF funding may not be 
allocated to communities needing assistance the most because 
these communities may be overwhelmed or intimidated by the 
process. In other cases, the SRF process may be discouraging to 
small treatment works because they cannot afford to spend 
resources on the paperwork necessary to participate and 
compete.
    Because this is an issue that should be addressed carefully 
and appropriately to ensure the SRFs maximize benefits and 
address high priority projects, including those in smaller 
communities with limited resources, those who know about the 
processes and their complexities are best served to review the 
question and advise Congress. It is hoped that, by streamlining 
the process, the SRFs would be used as efficiently and 
effectively as possible, while ensuring that the accountability 
of all parties remains.
Sec. 305. Cost of service study.
    This section requires the NAS to:

         Determine whether rates at public water 
systems and treatment works were established using a full-cost 
pricing model;
         Identify incentives that have been successful 
in significantly reducing water demand, wastewater flows, 
stormwater runoff and the quantity of pollution generated by 
stormwater;
         Identify a set of best industry practices for 
use in establishing a rate structure that addresses full cost 
of service and water conservation while taking into 
consideration disadvantaged individuals and communities;
         Identify existing standards for affordability;
         Determine the manner in which those standards 
are determined; determine how affordability differs depending 
on community size and location;
         Study the extent to which affordability 
affects the decision of a utility to increase rates; and
         Evaluate the factors and characteristics that 
are required for a community to be considered disadvantaged.

                               Discussion

    Rate structures are the primary means of generating revenue 
for public wastewater and drinking water facilities. Typically, 
local governments or State public utility commissions establish 
rates taking into consideration the capital replacement needs 
of the facility, the cost of operation and maintenance, debt 
service, and the conditions of various rate classes. 
Communities must also consider what is `affordable' for its 
most vulnerable populations when setting its rates.
    A water facility may have significant financial need, but 
setting a rate sufficient to address that need may be 
unattractive or untenable for local governments. Many times 
this condition perpetuates a vicious cycle of pushing 
infrastructure costs to the future where they become even more 
costly. In order to provide a tool for water systems, section 
305 requires EPA to complete a study with the National Academy 
of Sciences on the rate structures of public water systems and 
treatment works as well as an assessment of how communities and 
States define ``disadvantaged'' and to what extent this 
population factors into rate setting decisions. The study will 
also give special consideration to identifying incentive rate 
systems that reduce per capita water demand, the volume of 
wastewater flows, the volume of stormwater runoff, and the 
volume of pollution generated by stormwater. This section 
authorizes $1 million for the study for fiscal years 2006 and 
2007.
Sec. 306. Water resources study.

                                Summary

    Section 306 authorizes $3 million until expended for the 
Secretary of Interior through the U.S. Geological Survey (USGS) 
to conduct an assessment of water resources in the United 
States and update the assessment every 2 years thereafter. The 
assessment shall measure the status and trends of fresh water 
in rivers and reservoirs; groundwater levels and volume of 
freshwater stored in the aquifers and fresh water withdrawn 
from streams and aquifers; and provide measurements for 
watersheds defined by the 352 hydrologic accounting units and 
the major aquifers as identified by the Secretary. The 
Secretary must provide a report to Congress not later than 1 
year after completing the initial assessment and every 2 years 
thereafter describing the results of the assessment and 
containing recommendations that are consistent with existing 
laws, treaties, decrees and interstate compacts, and respect 
the primary role of States in adjudicating, administering and 
regulating water rights and uses.
    The Secretary shall coordinate a process among Federal 
agencies and appropriate State agencies to develop and publish 
within 1 year after the date of enactment a list of water 
resource research priorities that focus on--

         water supply monitoring;
         means of capturing excess water and flood 
water for conservation and use in the event of a drought;
         strategies to conserve existing water 
supplies, including recommendations for repairing aging 
infrastructure;
         identifying incentives to ensure an adequate 
and dependable supply of water;
         identifying available technologies and other 
methods to optimize water supply reliability, availability, and 
quality, while safeguarding the environment; and
         improving the quality of water resource 
information available to State, tribal, and local water 
resource managers.

    The list shall be used by Federal agencies as they make 
decisions on the allocation of water research funding 
priorities. The Secretary shall coordinate a process to develop 
a way to deliver the information to decisionmakers at the 
Federal, State, Tribal, regional, and local levels; the private 
sector; and the general public. The information may include:

         the results of the national water resource 
assessments
         a summary of the Federal water research 
priorities
         near real-time data and other information on 
water shortages and surpluses;
         planning models for water shortages or 
surpluses (at various levels including State, river basin, and 
watershed levels);
         streamlined procedures for States and 
localities to interact with and obtain assistance from Federal 
agencies that perform water resource functions; and
         other water resource materials, as the 
Secretary determine appropriate.

    The provision also includes a savings clause to protect the 
rights of States. The savings clause states that nothing in 
this section--

            (1) modifies, supercedes, abrogates, impairs, or 
        otherwise affects in any way--
                    (A) any right or jurisdiction of any State 
                with respect to the water (including boundary 
                water) of the State;
                    (B) the authority of any State to allocate 
                quantities of water within areas under the 
                jurisdiction of the State; or
                    (C) any right or claim to any quantity or 
                use of water that has been adjudicated, 
                allocated, or claimed--
                            (i) in accordance with State law;
                            (ii) in accordance with subsections 
                        (a) through (c) of section 208 of the 
                        Department of Justice Appropriation 
                        Act, 1953 (43 U.S.C. 666);
                            (iii) by or pursuant to an 
                        interstate compact; or
                            (iv) by a decision of the United 
                        States Supreme Court;
            (2) requires a change in the nature of use or the 
        transfer of any right to use water or creates a 
        limitation on the exercise of any right to use water; 
        or
            (3) requires modifying the delivery, diversion, 
        non-diversion, allocation, storage, or release from 
        storage of any water to be delivered by contract.

                               Discussion

    Water supply is growing concern not only in the western 
United States, which is commonly associated with water 
shortages and fights, but also in the eastern United States 
which recently suffered from a long drought and continues to 
have drought conditions this year. While water supply is and 
should continue to be a State governed issue, there are several 
Federal programs that address the issue of supply. Better 
coordination of these programs may be necessary. Further, the 
Federal Government may be able to provide useful resources, 
information and tools to the States while respecting their 
primacy over the issue.

                          Legislative History

    On July 14, 2005, Senator Chafee introduced S. 1400, which 
was cosponsored by Senator Clinton, Senator Inhofe and Senator 
Jeffords. The bill was received, read twice and referred to the 
Senate Committee on Environment and Public Works. The committee 
met on July 20, 2005 to consider the bill. S. 1400 was ordered 
favorably reported, with amendment, to the full Senate.

                                Hearings

    The committee has been working on legislation to 
reauthorize the two SRFs and provide additional resources to 
communities throughout the 107th and 108th Congresses. The 
Subcommittee on Fisheries, Wildlife, and Water held four 
hearings related to clean water and drinking water programs and 
one legislative hearing on S. 1961. The full committee held one 
legislative hearing on S. 1961.
    On March 27, 2001, The Subcommittee on Fisheries, Wildlife, 
and Water held a hearing on water and wastewater infrastructure 
needs. Testimony was received from Hon. Christine Todd Whitman, 
Administrator, Environmental Protection Agency; Mr. Jon 
Sandoval, Chief of Staff, Idaho Department of Environmental 
Quality, Boise, ID; Mr. David Struhs, Secretary, Florida 
Department of Environmental Protection, Tallahassee, FL; Mr. 
Harry Stewart, Director, Water Division, New Hampshire 
Department of Environmental Services, Concord, NH; and Mr. 
Allen Biaggi, Administrator, Nevada Department of Conservation 
and Natural Resources, Division of Environmental Protection, 
Carson City, NV.
    On April 30, 2001 in Columbus, Ohio, the Subcommittee 
Fisheries, Wildlife, and Water held a field hearing, focusing 
on the types of water infrastructure challenges facing local 
communities in that region. Testimony was received from Hon. 
Lydia Reid, Mayor of Mansfield, OH; Hon. Robert Vicenzo, Mayor 
of St. Clairsville, OH; Mr. Christopher Jones, Director, Ohio 
Environmental Protection Agency; Columbus, OH; Mr. Erwin Odeal, 
Executive Director, Northeast Ohio Regional Sewer District, 
Cleveland, OH; Mr. Robert Stevenson, Commissioner, Department 
of Public Utilities, Division of Water/Wastewater, Toledo, OH; 
Mr. Patrick T. Karney, P.E., Director, Metropolitan Sewer 
District of Greater Cincinnati, Cincinnati, OH; and Mr. Patrick 
Gsellman, Environmental Supervisor, Bureau of Engineering, 
Akron, OH.
    On October 31, 2001, the Subcommittee on Fisheries, 
Wildlife, and Water held an oversight hearing on innovative 
financing techniques for water infrastructure improvements. 
Testimony was received by Mr. G. Tracy Mehan III, Assistant 
Administrator, Office of Water, Environmental Protection 
Agency; Mr. Stephen E. Howard, Senior Vice President, Lehman 
Brothers; Mr. Rick Farrell, Executive Director, Council of 
Infrastructure Financing Authorities; Mr. Peter L. Cook, 
Executive Director, National Association of Water Companies; 
Mr. Harold J. Gorman, Executive Director, New Orleans Sewage 
and Water Board, on behalf of the Association of Metropolitan 
Water Agencies; and Mr. Paul Pinault, Executive Director, 
Narragansett Bay Commission, on behalf of the Association of 
Metropolitan Sewerage Agencies.
    On November 14, 2001, the Subcommittee on Fisheries, 
Wildlife, and Water held a hearing on water supply. Testimony 
was received from Hon. Mike Parker, Assistant Secretary of the 
Army for Civil Works; Mr. John Keys, Commissioner for the 
Bureau of Reclamation, Department of the Interior; Mr. Tom 
Weber, Deputy Chief of Programs, Resources Conservation 
Service, Department of Agriculture; Ms. Ane Diester, Associate 
Vice President, Metropolitan Water District of Southern 
California, testifying as the non-Federal Chair of the National 
Drought Council; Mr. Jay Rutherford, Director, Water Supply 
Division, Vermont Department of Environmental Conservation, on 
behalf of the Association of State Drinking Water 
Administrators; Mr. Ken Frederick, Senior Fellow, Resources for 
the Future; and Mr. Leland `Roy' Mink, Director, Idaho Water 
Resources Research Institute.
    On February 26, 2002, the Committee on Environment and 
Public Works held the first legislative hearing on S. 1961 and 
other water infrastructure related bills. Testimony was 
received from Senator Jon Kyl; Mr. Ben Grumbles, Deputy 
Assistant Administrator for Water, Environmental Protection 
Agency; Hon. Douglas H. Palmer, Mayor of Trenton, NJ and 
chairman of the Urban Water Council of the Conference of 
Mayors; Hon. Joseph A. Moore, Alderman of the city of Chicago, 
on behalf of the League of Cities; Ms. Nancy Stoner, Director, 
Clean Water Project, Natural Resources Defense Council; Mr. 
Paul Schwartz, National Policy Director, Clean Water Action; 
Mr. Bill Kukurin Associated Builders and Contractors; Mr. Jim 
Barron, President, Ronkin Construction, on behalf of the 
National Utility Contractors Association; Mr. Terry Yellig, 
Building Trades Attorney, Sherman, Dunn, Cohen, Leifer & 
Yellig, on behalf of the International Union of Operating 
Engineers.
    On February 28, 2002, the Subcommittee on Fisheries, 
Wildlife, and Water held the second legislative hearing on S. 
1961 and other water infrastructure related bills. Testimony 
was received from Senator Paul S. Sarbanes; Mr. Robert Hirsch, 
Associate Director of Water, U.S. Geological Survey; Mr. Andrew 
M. Chapman, President, Elizabethtown Water Company, on behalf 
of the National Association of Water Companies; Mr. Ed 
Archuleta, General Manager, El Paso Water Utilities, on behalf 
of the Association of the Metropolitan Water Agencies; Mr. Paul 
Pinault, Executive Director, Narragansett Bay Commission on 
behalf of the Association of Metropolitan Sewerage Agencies; 
Mr. Elmer Ronnebaum, General Manager, Kansas Rural Water 
Association, on behalf of the National Rural Water Association; 
Mr. Howard Neukrug, Director, Office of Watershed of the 
Philadelphia Water Department, on behalf of the American Water 
Works Association; Mr. Tom Morrissey, President, Association of 
State and Interstate Water Pollution Control Administrators; 
and Mr. Jay L. Rutherford, P.E., Director, Water Supply 
Division for the Vermont Department of Environmental 
Conservation, on behalf of the Association of State Drinking 
Water Administrators.
    On February 15, 2002, Senators Graham, Crapo, Jeffords and 
Smith introduced S. 1961, the Water Investment Act of 2002. The 
committee reported the bill on May 17, 2002 by a vote of 13 to 
6.
    On June 21, 2004, Senators Crapo, Inhofe and Murkowski 
introduced S. 2550, the Water Infrastructure Investment Act of 
2004.
    On July 14, 2005, Senators Chafee, Clinton, Inhofe and 
Jeffords introduced S. 1400, the Water Infrastructure Financing 
Act of 2005.

                             Rollcall Votes

    The Committee on Environment and Public Works met to 
consider S. 1400 on July 20, 2005. A manager's amendment 
offered by Senators Inhofe and Jeffords was modified by 
unanimous consent and agreed to by voice vote.
    An amendment offered by Senator Boxer to direct the United 
States Geological Survey to conduct a nationwide assessment of 
sites contaminated with perchlorate was defeated by a vote of 5 
ayes and 13 nays with Senators Baucus, Boxer, Carper, Lieberman 
and Obama voting aye and Senators Bond, Chafee, Clinton, 
DeMint, Inhofe, Isakson, Jeffords, Lautenberg, Murkowski, 
Thune, Vitter, Voinovich and Warner voting nay.
    An amendment offered by Senators Lieberman, Boxer and Obama 
to impose Davis Bacon prevailing wage requirements on projects 
funded by the Clean Water Act State revolving loan fund was 
modified by voice vote and approved by voice vote.
    An amendment offered by Senators Lieberman, Boxer and Obama 
to impose Davis Bacon prevailing wage requirements on projects 
funded by the Safe Drinking Water Act State revolving loan fund 
was approved by voice vote.
    The bill, as amended, was ordered favorably reported by 
unanimous consent.

                      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 bill does not 
create any additional regulatory burdens, nor will it cause any 
adverse impact on the personal privacy of individuals.

                          Mandates Assessment

    In compliance with the Unfunded Mandates Reform Act of 1995 
(Public Law 104-4), the committee finds that S. 1400 would not 
impose unfunded mandates on local, State or tribal governments.

                          Cost of Legislation

    Section 403 of the Congressional Budget and Impoundment 
Control Act requires that a statement of the cost of the 
reported bill, prepared by the Congressional Budget Office, be 
included in the report. That statement follows:
                              ----------                              

S. 1400, Water Infrastructure Financing Act, As ordered reported by the 
        Senate Committee on Environment and Public Works on July 
        20,2005
Summary
    CBO estimates that implementing this legislation would cost 
about $17 billion over the next five years, assuming the 
appropriation of the authorized amounts. The funds would be 
used by the Environmental Protection Agency (EPA) to provide 
grants to states and nonprofit organizations to support a wide 
range of water quality projects and programs. The Joint 
Committee on Taxation (JCT) estimates that enacting S. 1400 
would reduce revenues by $214 million over the 2006-2010 period 
and by $1.9 billion over the next 10 years. Enacting the bill 
would not affect direct spending.
    S. 1400 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
The bill would benefit state, local, and tribal governments; 
any costs they incur would result from complying with 
conditions for receiving federal assistance.
Estimated Cost to the Federal Government
    The estimated budgetary impact of S. 1400 is shown in Table 
1. The costs of this legislation fall within budget function 
300 (natural resources and environment).
Basis of Estimate
    For this estimate, CBO assumes that S. 1400 will be enacted 
near the end of 2005, that the full amounts authorized will be 
appropriated for each year, and that outlays will follow the 
historical pattern of spending for EPA's infrastructure 
programs. Components of the estimated costs are described 
below.

             TABLE 1. ESTIMATED BUDGETARY EFFECTS OF S. 1400, THE WATER INFRASTRUCTURE FINANCING ACT
                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                   2005       2006       2007       2008       2009       2010
----------------------------------------------------------------------------------------------------------------
       SPENDING SUBJECT TO APPROPRIATION
EPA's Spending for Water Infrastructure and
 Grants Under Current Law.....................
    Budget Authority\1\.......................      1,929          0          0          0          0          0
    Estimated Outlays.........................      2,113      2,027      1,659        956        289          0
Proposed Changes..............................
    Authorization Level.......................          0      5,483      5,928      6,328      8,228     12,728
    Estimated Outlays.........................          0        626      1,565      3,169      4,915      6,398
EPA's Spending for Water Infrastructure and
 Grants Under S. 1400.........................
    Authorization Level\1\....................      1,929      5,483      5,928      6,328      8,228     12,728
    Estimated Outlays.........................      2,113      2,653      3,224      4,125      5,204      6,398
              CHANGES IN REVENUES
Estimated Revenues\2\.........................          0         -2         -7        -24        -61       -120
----------------------------------------------------------------------------------------------------------------
\1\The 2005 level is the amount appropriated for that year to EPA for the clean water state revolving fund and
  the safe drinking water state revolving fund.
\2\Estimate provided by JCT.

                   Spending Subject to Appropriation

    S. 1400 would authorize appropriations totaling nearly $39 
billion over the next five years for EPA's water infrastructure 
and grant programs. Amounts for individual programs are shown 
in table 2.

                  TABLE 2. AMOUNTS AUTHORIZED TO BE APPROPRIATED TO EPA PROGRAMS UNDER S. 1400
                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                                  2006      2007      2008      2009      2010
----------------------------------------------------------------------------------------------------------------
Clean Water SRF Grants........................................     3,200     3,200     3,600     4,000     6,000
Safe Drinking Water SRF Grants................................     1,500     2,000     2,000     3,500     6,000
Watershed Restoration Grants..................................       300       300       300       300       300
Critical Drinking Water Infrastructure Grant Program..........       300       300       300       300       300
Small System Revolving Loan Funds.............................        25        25        25        25        25
Grants for Lead Service Line Replacement in the District of           30        30        30        30        30
 Columbia.....................................................
Technical Assistance for Nonprofits...........................        25        25        25        25        25
Research and Demonstration Grant Programs.....................        40        40        40        40        40
Agricultural Pollution Control Technology Grant Program.......        50         0         0         0         0
EPA Support for Containment Prevention, Detection, and                 8         8         8         8         8
 Response Activities..........................................
DOI Water Resources Study.....................................         3         0         0         0         0
National Academy of Sciences Studies..........................         2         0         0         0         0
        Total Authorization Level.............................     5,483     5,928     6,328     8,228    12,728
----------------------------------------------------------------------------------------------------------------
NOTE: SRF = state revolving fund; DOI = Department of the Interior.

    The bill would authorize the appropriation of $35 billion 
over the 2006-2010 period for EPA to provide capitalization 
grants for the State Revolving Fund (SRF) program ($20 billion 
for the clean water SRF program and $15 billion for the safe 
drinking water SRF program). States would use such grants along 
with their own funds to make low-interest loans to communities 
and grants to Indian tribes to construct wastewater treatment 
facilities and to fund 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 extending the repayment terms 
for loans made by states.
    This legislation also would authorize the appropriation of 
$1.5 billion over the 2006-2010 period for EPA to make 
``watershed restoration'' grants to states to remedy sewage 
overflows (that is, the discharge of untreated wastewater) and 
stormwater discharges (that is, water from rain or snow that 
doesn't infiltrate the ground). S. 1400 also would authorize 
the appropriation of $1.5 billion over the same period for EPA 
to make grants to small public water systems to address the 
cost of complying with drinking water regulations.
    In addition, the bill would authorize about $650 million 
over the next five years for various other purposes, including 
establishing a small system revolving loan fund, several grant 
programs aimed at promoting innovations in technology and 
alternative approaches to water quality management, a grant 
program to address the replacement of lead drinking water 
service lines in the District of Columbia, a Department of the 
Interior study of water resources, and EPA studies of the rate 
structures of public water systems and treatment works, and on 
plumbing components.

                                Revenues

    This bill would authorize funds for EPA's clean water SRF 
and the safe drinking water SRF, and the appropriation of the 
agricultural pollution control technology grant program. The 
JCT expects that some of these funds would be used by states to 
leverage additional funds by issuing tax-exempt bonds. The JCT 
estimates that the consequent reductions in revenue would total 
$214 million over the 2006-2010 period and about $1.9 billion 
over the next 10 years as shown in table 3.

                                                     TABLE 3. ESTIMATED REVENUES LOSS UNDER S. 1400
                                                         By Fiscal Year, in Millions of Dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2005    2006    2007    2008    2009    2010    2011    2012    2013    2014    2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Revenues..............................................       0      -2      -7     -24     -61    -120    -195    -280    -357    -408    -424
--------------------------------------------------------------------------------------------------------------------------------------------------------

Intergovernmental and Private-Sector Impact
    S. 1400 contains no intergovernmental or private-sector 
mandates as defined by UMRA. The bill would benefit small and 
rural municipalities as well as disadvantaged communities by 
authorizing funding for water and wastewater projects. States 
and local governments would be subject to a new priority system 
for awarding funds in addition to wage requirements under the 
Davis-Bacon Act. Any costs incurred by governmental entities, 
including matching funds and costs associated with wage 
requirements, would result from complying with conditions for 
receiving federal assistance.
    Estimate Prepared By: Federal Spending: Susanne S. Mehlman; 
Federal Revenues: Annabelle Bartsch; Impact on State, Local, 
and Tribal Governments: Lisa Ramirez-Branum; Impact on the 
Private Sector: Craig Cammarata.
    Estimate Approved By: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                        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:
                              ----------                              

                        [33 U.S.C. 1251 ET SEQ.]

FEDERAL WATER POLLUTION CONTROL ACT

           *       *       *       *       *       *       *

          TITLE II--GRANTS FOR CONSTRUCTION OF TREATMENT WORKS

    Sec. 201. (a) * * *

           *       *       *       *       *       *       *

SEC. 221. SEWER OVERFLOW CONTROL GRANTS.

    (a) * * *

           *       *       *       *       *       *       *

    (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(i), financial assistance, 
including loans, from a State water pollution control revolving 
fund.

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

    (a) Definition of Qualified Nonprofit Technical Assistance 
Provider.--In this section, the term `qualified nonprofit 
technical assistance provider' means a qualified nonprofit 
technical assistance provider of water and wastewater services 
to small rural communities that provide technical assistance to 
treatment works (including circuit rider programs and training 
and preliminary engineering evaluations) that--
            (1) serve not more than 10,000 individuals; and
            (2) may include a State agency.
    (b) Grant Program.--
            (1) In general.--The Administrator may make grants 
        to qualified nonprofit technical assistance providers 
        that are qualified to provide assistance on a broad 
        range of wastewater and stormwater approaches--
                    (A) to assist small treatment works to 
                plan, develop, and obtain financing for 
                eligible projects described in section 603(c) 
                or 518(c);
                    (B) to capitalize revolving loan funds to 
                provide loans, in consultation with the State 
                in which the assistance is provided, to rural 
                and small municipalities for predevelopment 
                costs (including costs for planning, design, 
                associated preconstruction, and necessary 
                activities for siting the facility and related 
                elements) associated with wastewater 
                infrastructure projects or short-term costs 
                incurred for equipment replacement that is not 
                part of regular operation and maintenance 
                activities for existing wastewater systems, 
                if--
                            (i) any loan from the fund is made 
                        at or below the market interest rate, 
                        for a term not to exceed 10 years;
                            (ii) the amount of any single loan 
                        does not exceed $100,000; and
                            (iii) all loan repayments are 
                        credited to the fund;
                    (C) to provide technical assistance and 
                training for rural and small publicly owned 
                treatment works and decentralized wastewater 
                treatment systems 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 rural and 
                small municipalities with respect to planning, 
                design, construction, and operation of publicly 
                owned treatment works 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 consult with each 
        State in which grant funds are to be expended or 
        otherwise made available before the grant funds are 
        expended or made available in the State.
            (4) Annual report.--For 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 financing 
                        provided by the qualified nonprofit 
                        technical assistance provider.
    (c) Authorization of Appropriations.--There is authorized 
to be appropriated to carry out this section $25,000,000 for 
each of fiscal years 2006 through 2010.

           *       *       *       *       *       *       *

        TITLE VI--STATE WATER POLLUTION CONTROL REVOLVING FUNDS

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

    (a) * * *

           *       *       *       *       *       *       *

SEC. 602. CAPITALIZATION GRANT AGREEMENTS.

    (a) * * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

            [(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)(1) that are constructed, in whole or in part, 
        using funds made available by a State water pollution 
        control revolving loan fund under this title will 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 10,000 or 
                fewer 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) * * *

           *       *       *       *       *       *       *

    [(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 for--
            (1) providing financial assistance to any 
        municipality or an intermunicipal, interstate, or State 
        agency or private utility that principally treats 
        municipal wastewater or domestic sewage for 
        construction (including planning, design, associated 
        preconstruction, and activities relating to the siting 
        of a facility) of a treatment works (as defined in 
        section 212);
            (2) implementation of a management program 
        established under section 319;
            (3) development and implementation of a 
        conservation and management plan under section 320;
            (4) providing financial assistance to a 
        municipality or an intermunicipal, interstate, or State 
        agency for projects to increase the security of 
        wastewater treatment works (excluding any expenditure 
        for operations or maintenance);
            (5) providing financial assistance to a 
        municipality or an intermunicipal, interstate, or State 
        agency for measures to control municipal stormwater, 
        the primary purpose of which is the preservation, 
        protection, or enhancement of water quality to support 
        public purposes;
            (6) water conservation projects, the primary 
        purpose of which is the protection, preservation, and 
        enhancement of water quality to support public 
        purposes; or
            (7) reuse, reclamation, and recycling projects, the 
        primary purpose of which is the protection, 
        preservation, and enhancement of water quality to 
        support public purposes.
    (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;
                    (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] 6 
        percent of all grant awards to such fund under this 
        title[.] ; and
            (8) to carry out a project under paragraph (2) or 
        (3) of section 601(a), which may be--
                    (A) operated by a municipal, 
                intermunicipal, or interstate entity, State, 
                public or private utility, corporation, 
                partnership, association, or nonprofit agency; 
                and
                    (B) used to make loans that will be fully 
                amortized not later than 30 years after the 
                date of the completion of the project.
    (e) Types of Assistance for Disadvantaged Communities.--
            (1) Definition of disadvantaged community.--In this 
        subsection, the term `disadvantaged community' means 
        the 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 the principal of the 
                loan; and
                    (B) an interest rate on the loan of zero 
                percent.
            (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) Extended term.--A State may provide an extended 
        term for a loan if the extended term--
                    (A) terminates not later than the date that 
                is 30 years after the date of completion of the 
                project; and
                    (B) does not exceed the expected design 
                life of the project.
            (5) Information.--The Administrator may publish 
        information to assist States in establishing 
        affordability criteria described in paragraph (1).
    [(e)] (f) 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)] (g) 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)] [(h) 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.]
    (h) 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--
                    (A) give greater weight to an application 
                for assistance by a treatment works if the 
                application includes such other information as 
                the State determines to be appropriate and--
                            (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 life-cycle costs indicating 
                        sources of revenue from ratepayers, 
                        grants, bonds, other loans, and other 
                        sources;
                            (iv) a review of options for 
                        restructuring the treatment works;
                            (v) a review of options for or use 
                        of approaches other than a traditional 
                        wastewater approach that may include 
                        actions or projects 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;
                                    (IV) stream buffers;
                                    (V) wetland restoration; or
                                    (VI) actions to minimize 
                                the quantity of and direct 
                                connections to impervious 
                                surfaces;
                            (vi) demonstration of consistency 
                        with State, regional, and municipal 
                        watershed plans;
                            (vii) a review of options for urban 
                        waterfront development or brownfields 
                        revitalization to be completed in 
                        conjunction with the project; or
                            (viii) provides the applicant the 
                        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 authorized 
                                under section 402(a)(5) to 
                                issue national pollution 
                                discharge elimination permits 
                                determines meet permit 
                                requirements for permits that 
                                have been issued in accordance 
                                with the national pollution 
                                discharge elimination system 
                                under section 402; or
                                    (II) the Administrator 
                                determines are measurably 
                                superior when compared to 
                                regulatory standards;
                    (B) take into consideration appropriate 
                chemical, physical, and biological data that 
                the State considers reasonably available and of 
                sufficient quality;
                    (C) provide for public notice and 
                opportunity to comment on the establishment of 
                the system and the summary under subparagraph 
                (D);
                    (D) publish not less than biennially in 
                summary form 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) ensure 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 title.
            (3) Savings clause.--Nothing in paragraph 
        (2)(A)(viii) affects the authority of the Administrator 
        under section 402(a)(5).
    [(h)] (i) 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.
    (j) 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)).
    (k) 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 a treatment works that has been in significant 
        noncompliance with any requirement of this Act for any 
        of the 4 quarters in the previous 8 quarters, unless 
        the treatment works is in compliance with, or has 
        entered into, an enforceable administrative order to 
        effect compliance with the requirement.
            (2) Exception.--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 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 on 
                a portion of the treatment works that is not 
                directly related to the cause of finding 
                significant noncompliance.

SEC. 604. ALLOTMENT OF FUNDS.

    [(a) Formula.--Sums authorized to be appropriated to carry 
out this section for each of fiscal years 1989 and 1990 shall 
be allotted by the Administrator in accordance with section 
205(c) of this Act.]
    (a) Allocation of Funds.--
            (1) In general.--Funds made available to carry out 
        this section for a fiscal year shall be allocated by 
        the Administrator in accordance with this subsection.
            (2) Indian tribes.--Of the total amount of funds 
        available, 1.5 percent shall be allocated to Indian 
        tribes (as that term is used in section 518(c)).
            (3) States and territories.--Of the total amount of 
        funds available after the allocation made under 
        paragraph (2), funds shall be allocated among the 
        States and territories in accordance with the following 
        chart:

State:                                                       Percentage:
    Alabama...................................................      0.68
    Alaska....................................................      1.00
    Arizona...................................................      0.91
    Arkansas..................................................      0.50
    California................................................      8.02
    Colorado..................................................      0.50
    Connecticut...............................................      1.34
    Delaware..................................................      1.00
    Florida...................................................      3.46
    Georgia...................................................      1.81
    Hawaii....................................................      0.50
    Idaho.....................................................      0.50
    Illinois..................................................      6.39
    Indiana...................................................      2.48
    Iowa......................................................      0.82
    Kansas....................................................      0.55
    Kentucky..................................................      1.29
    Louisiana.................................................      1.49
    Maine.....................................................      0.50
    Maryland..................................................      1.47
    Massachusetts.............................................      2.06
    Michigan..................................................      4.36
    Minnesota.................................................      1.12
    Mississippi...............................................      0.92
    Missouri..................................................      2.89
    Montana...................................................      1.00
    Nebraska..................................................      0.50
    Nevada....................................................      0.75
    New Hampshire.............................................      0.61
    New Jersey................................................      5.77
    New Mexico................................................      0.50
    New York..................................................     12.89
    North Carolina............................................      1.93
    North Dakota..............................................      0.75
    Ohio......................................................      5.80
    Oklahoma..................................................      1.07
    Oregon....................................................      0.69
    Pennsylvania..............................................      4.02
    Rhode Island..............................................      1.00
    South Carolina............................................      1.13
    South Dakota..............................................      1.00
    Tennessee.................................................      1.48
    Texas.....................................................      2.78
    Utah......................................................      0.50
    Vermont...................................................      1.00
    Virginia..................................................      2.17
    Washington................................................      1.06
    West Virginia.............................................      1.58
    Wisconsin.................................................      1.64
    Wyoming...................................................      0.50
    District of Columbia......................................      0.50
    Puerto Rico...............................................      0.50
0.32.ritories...............................................

           *       *       *       *       *       *       *

[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 2006 
        and 2007;
            (2) $3,600,000,000 for fiscal year 2008;
            (3) $4,000,000,000 for fiscal year 2009; and
            (4) $6,000,000,000 for fiscal year 2010.
    (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(2).

           *       *       *       *       *       *       *

                              ----------                              

               TITLE XIV OF THE PUBLIC HEALTH SERVICE ACT

SAFETY OF PUBLIC WATER SYSTEMS (SAFE DRINKING WATER ACT)

           *       *       *       *       *       *       *

    Sec. 1400. This title may be cited as the ``Safe Drinking 
Water Act''.

           *       *       *       *       *       *       *

SEC. 1434. CONTAMINANT PREVENTION, DETECTION AND RESPONSE.

    (a) * * *

           *       *       *       *       *       *       *

    [(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;
            (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 2006 
through 2010.

           *       *       *       *       *       *       *

   research, technical assistance, information, training of personnel

    Sec. 1442. (a)(1) * * *

           *       *       *       *       *       *       *

    (e) Technical Assistance.--[The Administrator may provide]
            (1) In general.--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 may include circuit-rider 
        and multi-State regional technical assistance programs, 
        training, and preliminary engineering evaluations. The 
        Administrator shall ensure that technical assistance 
        pursuant to this subsection is available in each State. 
        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.
            (2) Small system revolving loan fund.--
                    (A) In general.--In addition to amounts 
                provided under this section, the Administrator 
                may provide grants to qualified private, 
                nonprofit entities to capitalize revolving 
                funds to provide financing to eligible entities 
                described in subparagraph (B) for--
                            (i) predevelopment costs (including 
                        costs for planning, design, associated 
                        preconstruction, and necessary 
                        activities for siting the facility and 
                        related elements) associated with 
                        proposed water projects or with 
                        existing water systems; and
                            (ii) short-term costs incurred for 
                        replacement equipment, small-scale 
                        extension services, or other small 
                        capital projects that are not part of 
                        the regular operations and maintenance 
                        activities of existing water systems.
                    (B) Eligible entities.--To be eligible for 
                assistance under this paragraph, an entity 
                shall be a small water system (as described in 
                section 1412(b)(4)(E)(ii)).
                    (C) Maximum amount of loans.--The amount of 
                financing made to an eligible entity under this 
                paragraph shall not exceed--
                            (i) $100,000 for costs described in 
                        subparagraph (A)(i); and
                            (ii) $100,000 for costs described 
                        in subparagraph (A)(ii).
                    (D) Term.--The term of a loan made to an 
                eligible entity under this paragraph shall not 
                exceed 10 years.
                    (E) Annual report.--For each fiscal year, a 
                qualified private, nonprofit entity that 
                receives a grant under subparagraph (A) shall 
                submit to the Administrator a report that--
                            (i) describes the activities of the 
                        qualified private, nonprofit entity 
                        under this paragraph for the fiscal 
                        year; and
                            (ii) specifies--
                                    (I) the number of 
                                communities served;
                                    (II) the sizes of those 
                                communities; and
                                    (III) the type of financing 
                                provided by the qualified 
                                private, nonprofit entity.
                    (F) Authorization of appropriations.--There 
                is authorized to be appropriated to carry out 
                this subsection $25,000,000 for each of fiscal 
                years 2006 through 2010.

           *       *       *       *       *       *       *

                           general provisions

    Sec. 1450. (a)(1) * * *

           *       *       *       *       *       *       *

    [(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) Wage Requirements.--
            (1) In general.--The Administrator shall take such 
        action as is necessary to ensure that laborers and 
        mechanics employed by contractors and subcontractors on 
        construction projects financed, in whole or in part, by 
        a grant, loan, loan guarantee, refinancing, or any 
        other form of assistance provided under this title 
        (including assistance provided from the State drinking 
        water revolving fund under section 1452) are paid at 
        rates that are not less than the rates prevailing for 
        the same type of work for 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 (commonly known as the 
        `Davis-Bacon Act').
            (2) Authority.--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 Fed. Reg. 
        3176) and section 3145 of title 40, United States Code.

           *       *       *       *       *       *       *

    Sec. 1452. (a) General Authority.--
            (1) * * *

           *       *       *       *       *       *       *

            (2) Use of funds.--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. 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 and 
        for recovery for siting of the facility and related 
        elements 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 title. 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). 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. 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 or 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.

           *       *       *       *       *       *       *

    (b) Intended Use Plans.--
            (1) * * *

           *       *       *       *       *       *       *

            (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, accounting, rates, 
                maintenance, 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 other information as the State 
                determines to be necessary and--
                            (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 indicating 
                        sources of revenue from ratepayers, 
                        grants, bonds, other loans, and other 
                        sources;
                            (iv) a review of options for 
                        restructuring the public water system;
                            (v) demonstration of consistency 
                        with State, regional, and municipal 
                        watershed plans; or
                            (vi) a review of options for urban 
                        waterfront development or brownfields 
                        revitalization to be completed in 
                        conjunction with the project;
                    [(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) * * *

           *       *       *       *       *       *       *

            (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) * * *

           *       *       *       *       *       *       *

            (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.

           *       *       *       *       *       *       *

            (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) * * *

           *       *       *       *       *       *       *

            (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 2006;
                    (B) $2,000,000,000 for each of fiscal years 
                2007 and 2008;
                    (C) $3,500,000,000 for fiscal year 2009; 
                and
                    (D) $6,000,000,000 for fiscal year 2010.
            (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).

           *       *       *       *       *       *       *

                                 
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