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[Senate Report 111-47]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 109
111th Congress                                                   Report
                                 SENATE
 1st Session                                                     111-47

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

 
               WATER INFRASTRUCTURE FINANCING ACT OF 2009

                                _______
                                

                  July 15, 2009.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 1005]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Environment and Public Works, to which was 
referred a bill (S. 1005) to amend the Federal Water Pollution 
Control Act, also referred to as the Clean Water 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 an amendment and recommends that 
the bill, as amended, do pass.

                           General Statement

    S. 1005, the Water Infrastructure Financing Act of 2009, 
would reauthorize the Clean Water Act State Revolving Fund 
(SRF) and the Safe Drinking Water Act State Revolving Fund to 
improve wastewater and drinking water infrastructure in the 
United States. The bill also makes programmatic changes to the 
SRFs and establishes and improves other related grant and 
technical assistance programs. It provides new flexibility for 
States in providing assistance to disadvantaged communities and 
incentives for States to increase the use of cost saving water 
treatment and energy efficiency improvements. The bill 
establishes a new research program at the U.S. Environmental 
Protection Agency (EPA) focused on water conservation, 
efficiency and reuse, and establishes a demonstration grant 
program to promote innovative water treatment and conservation 
technologies. The bill authorizes EPA to establish a WaterSense 
program to identify and promote voluntary approaches that will 
increase water efficiency, including certification of water 
efficient consumer products and activities.

                               Background

Clean Water Act program

    Enacted in 1948 and comprehensively amended in 1972, 1977, 
1981 and 1987, the Clean Water Act (CWA) governs the discharge 
of pollution into waters under CWA jurisdiction. The 1972 
amendments strengthened the Federal construction grants program 
(Title II) through which the Federal Government provided grants 
to municipalities to construct publicly owned treatment works 
(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 adopted an 
innovative approach, called the SRF program, through which 
States would receive an annual grant to 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 program ended in 1994, 
after a sharp decline in its authorization level from $1.2 
billion in 1993 to $600 million in 1994. Although Congress 
originally intended for the Federal contribution to end in 1994 
giving States and localities greater flexibility, 
infrastructure needs have far outpaced the federal contribution 
to these programs.\1\ The ongoing need is underscored by the 
fact that Congress has continued to fund these programs even 
though the authorization has expired.
---------------------------------------------------------------------------
    \1\``Water Infrastructure Needs and Investment Review and Analysis 
of Key Issues.'' Congressional Research Service Report for Congress, 
RL3116, May 26, 2009; page 5.
---------------------------------------------------------------------------
    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. Except for a few minor adjustments in 
the 1990's to account for the end of financing to three of the 
U.S. territories, the formula has remained the same for the 
past 22 years.
    In order to receive its share of the Federal funding, each 
State signs a capitalization agreement with 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. Unlike 
the Drinking Water SRF, the State is not required to fund 
projects 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 to start.
    The loans are available at market rates or below and must 
be repaid within 20 years, the typical life of a POTW. Congress 
intended that States would provide loans expeditiously while 
leveraging some of the money to gain interest and grow their 
individual funds.

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 under 
which EPA had previously regulated contaminants in drinking 
water. The 1974 law provided EPA with authority to regulate 
drinking water contaminants while providing the States with 
authority over the implementation and enforcement of EPA 
established standards. The Public Health Service Act resulted 
in 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. EPA was also required to 
publish regulations for the disinfection and filtration of 
public water supplies.
    Based on input from EPA, States, public water systems and 
other stakeholders, Congress recognized the need to amend the 
SDWA to better ensure safe drinking water, which resulted in 
the 1996 amendments.\2\
---------------------------------------------------------------------------
    \2\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, EPA would 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 the contaminants. Concern over how 
communities, particularly small systems, would pay to meet 
these requirements and upgrade their systems led Congress to 
create the Drinking Water SRF.\3\
---------------------------------------------------------------------------
    \3\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. Congress also 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. For example, to address the needs of disadvantaged 
communities, the Drinking Water SRF provides States with 
authority to provide negative interest loans and principal 
forgiveness for disadvantaged communities 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. Unlike the Clean Water SRF, the State is 
required to fund in order of priority with a ``ready-to-
proceed'' exception so that State priorities are not delayed if 
the project at the top of its list is late 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 Drinking Water SRF also distributes money to the States 
based on a 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 based on 
the State's percentage of the nationwide need with each State 
receiving a minimum of 1% of the total funding.

Need for legislation

    The nationwide need for investment in water and wastewater 
infrastructure through the State Revolving Funds continues to 
far outpace the amount of funding that is available at all 
levels of government. A 2002 EPA Report--The Clean Water and 
Drinking Water Infrastructure Gap Analysis\4\--estimated that 
an additional $6 billion per year will be needed to meet the 
nation's wastewater infrastructure needs and $5 billion per 
year will be needed for drinking water needs through the year 
2019. This same study estimated that through 2019 the capital 
investment shortfall for wastewater and drinking water 
infrastructure combined will range from $66 billion to $224 
billion (in 2001 dollars). Grants to States through the SRF 
programs are used to help States make low-interest loans to 
local communities for wastewater and drinking water treatment 
facilities and implement other projects to treat, recycle and 
conserve water, consistent with the documented infrastructure 
needs of each State.
---------------------------------------------------------------------------
    \4\``The Clean Water and Drinking Water Infrastructure Gap 
Analysis.'' U.S. Environmental Protection Agency, Office of Water, EPA-
816-R-02-020. September 2002.
---------------------------------------------------------------------------
    The most recent Clean Watersheds Needs Survey, which was 
conducted in 2004, estimated that $202.5 billion is needed over 
the next twenty years for projects and activities eligible for 
assistance from the Clean Water SRF. This legislation would 
authorize $20 billion in appropriations from 2010 through 2014 
for the EPA to give capitalization grants for the Clean Water 
SRF.
    In parts of the country with aging infrastructure, combined 
sewer overflows (CSOs) often represent the most significant 
water quality problem. In the 2004 Clean Watersheds Needs 
Survey, EPA estimated $54.8 billion in infrastructure needs 
through 2024 to correct combined sewer overflows. The bill 
authorizes a $1.85 billion grant program to provide funding to 
States to make infrastructure upgrades to address combined 
sewer overflows.
    The allocation formula used to distribute Clean Water SRF 
funding was created by the 1987 Federal Water Pollution Control 
Act amendments. This formula gave each State a prescribed 
percentage. There is significant concern that the current 
formula no longer reflects the States' infrastructure needs. 
The bill revises the formula for distribution of funds for the 
Clean Water SRF. The Committee has taken steps to establish a 
formula that more accurately reflects current needs.
    EPA's 2007 Drinking Water Needs Survey identified a total 
national need of $334.8 billion to upgrade the nation's 
drinking water infrastructure over the next 20 years, with 
$116.3 billion of the total needs reported by water systems 
serving more than 100,000 people and $59.4 billion from small 
community water systems serving fewer than 3,300 people. The 
bill would authorize appropriations of $14.7 billion over the 
2010-2014 period for EPA to provide grants to States through 
the Drinking Water SRF program. Drinking Water SRF program 
grants are distributed to States in proportion to each State's 
share of the national infrastructure needs as reported in the 
Drinking Water Needs Survey, and the Committee encourages 
states to provide assistance in a manner consistent with the 
State's reported needs in the Drinking Water Needs Survey.
    This bill contains new incentives for States to increase 
the use of cost-effective water treatment and efficiency 
improvements. These projects are an alternative to traditional 
treatment and constructed conveyances and can limit 
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 
traditional wastewater treatment systems.
    The Committee, for the fifth 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 have maintained a 
commitment to fund the programs until the SRFs revolve at 
levels sufficient to meet the needs of local communities.

                      Section-by-Section Analysis

Section 1. Short title; table of contents

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

Section 2. Definition of Administrator

            Summary
    Defines ``Administrator'' to mean the Administrator of the 
Environmental Protection Agency.

                TITLE I--WATER POLLUTION INFRASTRUCTURE

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

            Summary
    This section adds a new Section 222 to the Clean Water Act 
and would authorize the EPA Administrator to make grants on a 
competitive basis to nonprofit organizations that are qualified 
to provide technical assistance on wastewater and stormwater 
approaches to owners and operators of small and medium 
treatment works. It adds definitions of the terms Advanced 
Decentralized Wastewater System, Decentralized Wastewater 
System, Medium Treatment Works, Qualified Nonprofit Technical 
Assistance Provider, and Small Treatment Works. It also 
requires EPA to assist the States in establishing simplified 
procedures for small systems to obtain assistance and to 
publish those procedures in a manual.
    This section would authorize annual appropriations for each 
of fiscal years 2010-2014 of $25,000,000 for grants for small 
treatment works and $15,000,000 for grants for medium treatment 
works.
            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 use septic systems or cesspools as their primary 
source of treatment.\5\ The 2004 EPA Clean Watersheds Needs 
Survey indicates that small systems, those serving fewer than 
10,000 households, represent about 9 percent of the nationwide 
funding need, or a total of $17 billion. While the needs of 
these communities are great, the ability of their ratepayers to 
pay the costs of those needs is limited.
---------------------------------------------------------------------------
    \5\The U.S. Environmental Protection Agency, `Wastewater Treatment 
Programs Serving Small Communities' (EPA 832-R-02-004.) December 2002. 
Page 1.
---------------------------------------------------------------------------
    The Committee recognizes the need to provide additional 
assistance for these small systems. Many small treatment works 
cannot afford the costs associated with planning a project, 
including the engineering costs. Without the ability to 
complete these initial steps, small system treatment works 
often have difficulty applying for an SRF loan to fund 
construction.
    This section provides nonprofit technical assistance 
providers with funds to assist treatment works in identifying 
and securing financing for projects, and provides technical 
assistance to operators of systems on how to best manage their 
treatment works and meet regulatory requirements. It also 
authorizes funds for the dissemination of information on 
financing, system management and water quality for small 
systems. These grants are intended to assist small systems in 
overcoming barriers to accessing the SRF. Nothing in this 
section is intended to increase capital costs or operation and 
maintenance costs or promote unnecessary treatment, nor is it 
intended to affect a State's or utility's ability to decide 
what kinds of system should be constructed, including whether a 
traditional wastewater system or an advanced decentralized 
treatment works is more appropriate.

Section 102. Preservation of employee labor standards

            Summary
    This section would require that contractors financed, in 
whole or in part, with financial assistance provided under the 
Federal Water Pollution Control Act, including State revolving 
loan funds, pay workers the prevailing wage.

Section 103. Projects eligible for assistance Summary

    This section amends Section 603(c) of the CWA and modifies 
the projects eligible for assistance from the Clean Water SRF.
    Assistance can only be provided for the following 
activities: to a municipality or an intermunicipal, interstate 
or State agency, or private utility or decentralized waste 
water system that principally treats municipal wastewater or 
domestic sewage for construction (as defined in section 212 of 
the CWA) or for capital costs associated with monitoring 
equipment for combined or sanitary sewer overflows; 
implementation of measures to control stormwater; 
implementation of a management program under Section 319; 
development and implementation of a conservation management 
plan under Section 320; increased security of treatment works; 
water conservation and efficiency; implementing water resource 
management planning; water reuse and recycling; activities to 
increase energy efficiency; and development of utility 
management and watershed management plans. This section limits 
the amount of a capitalization grant that can be used for 
development of utility management and watershed management 
plans to not more than 5 percent.
            Discussion
    This section expands the entities and activities eligible 
for assistance. By clarifying that all construction activities 
under Section 212 are qualified, it ensures that 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. It also clarifies 
that capital costs associated with monitoring equipment for 
combined or sanitary sewer overflows are eligible. The costs 
associated with operations, maintenance and personnel for 
monitoring equipment are not eligible for SRF funding.
    This section makes clear that expenses associated with 
reducing and mitigating contaminated stormwater are eligible 
for SRF funding and will ensure assistance is available to 
municipalities in meeting regulatory requirements, including 
stormwater Phase II regulations (64 FR 68721).
    This section 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 Clean Water SRF, but are eligible for 
Drinking Water SRF funding. This section ensures that only 
private utilities that ``principally treat municipal wastewater 
or domestic sewage'' can access SRF funding. The Committee does 
not intend for privately owned entities that do not meet this 
definition to access the fund.
    While EPA currently allows the use of SRF funding for 
security-related costs, this provision would explicitly 
authorize this activity, clarifying that capital costs are 
eligible. Security costs associated with operations, 
maintenance and personnel are not eligible for the SRF.
    Both the movement and pumping of water and wastewater 
treatment, can require large amounts of energy. To improve the 
energy efficiency of wastewater treatment operations, 
eligibility is extended to energy efficiency activities that 
have a direct water quality benefit.
    Finally, this section would extend eligibility to water 
conservation, efficiency, reclamation, recycling and reuse 
projects that have a water quality benefit. While historically 
seen as a problem for western States, water supply has become a 
nation-wide concern. This provision will enable States and 
localities to fund projects that will enhance the supply of 
clean, safe water.

Section 104. Affordability

            Summary
    This section would amend section 603 of the Clean Water Act 
(33 U.S.C. 1383) to make the program more affordable to States 
and municipalities, including by extending the terms of loans 
made under section 603 of the Clean Water Act to the lesser of 
30 years or the design life of the project; increasing the 
State's allowable administrative costs to 6 percent of an 
annual capitalization grant, 
\1/5\ of one percent of the value of the State fund, or 
$400,000, whichever is greater; and providing additional 
assistance, including loan forgiveness and negative interest 
rates, to disadvantaged communities.
    This section also provides additional assistance for cost-
effective water treatment or efficiency improvements by 
authorizing a State to forgive repayment of loans for the 
percentage of a project that treats or minimizes sewage or 
urban stormwater discharges using cost-effective water 
treatment or efficiency projects, including: decentralized 
stormwater or wastewater controls; low-impact development 
technologies; stream buffers; wetland restoration and 
enhancement; actions to minimize impervious surfaces; use of 
vegetation and other permeable materials; actions to increase 
efficient water use, conservation, and reuse, including 
rehabilitation or replacement of leaking pipes; and actions 
that increase energy efficiency or reduce energy consumption at 
treatment works.
    The amount of additional assistance for disadvantaged 
communities and cost-effective water treatment and efficiency 
improvements is limited to 30 percent of the capitalization 
grant received by a State in a fiscal year. This section waives 
the requirement to provide State matching funds for the portion 
of a State's capitalization grant used to provide additional 
assistance for cost-saving water treatment and efficiency 
projects.
            Discussion
    This section provides for flexibility mechanisms currently 
authorized in the Drinking Water SRF to the Clean Water SRF. 
These flexibility mechanisms provide the State with the ability 
to provide additional assistance to disadvantaged communities, 
such as forgiveness of 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 term does not exceed 
the life of the asset.
    New to both SRFs is the ability of a State to provide 
additional assistance 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. In order to assist cities 
struggling to pay for infrastructure upgrades without imposing 
too high a burden on low-income ratepayers, this provision 
makes treatment works in qualifying areas eligible for 
disadvantaged assistance.
    Additionally, this section provides incentives for States 
and communities to use innovative cost-effective and energy 
efficient technologies. Eligible projects include but are not 
limited to the use of stream buffers; wetland restoration; 
rehabilitation of pipes, such as the use of pipe systems that 
are designed and tested to be leak free and corrosion free for 
the life of the system; and other projects that increase energy 
efficiency or reduce consumption at treatment works. States may 
forgive repayment of the State match portion of projects that 
qualify as ``cost saving water treatment and efficiency 
improvements.'' This section does not create an obligation for 
a State to use these approaches but provides incentives to 
encourage a State to use these technologies in circumstances 
the State deems appropriate.
    The innovative infrastructure approaches outlined in this 
section can reduce stormwater runoff, improve water 
conservation and efficiency, and increase energy efficiency. 
Many of these innovative cost-effective water treatment and 
efficiency approaches are new. The Committee encourages EPA to 
analyze any limitations and barriers to implementation of these 
projects and to provide technical assistance to States to 
facilitate the use of innovative infrastructure activities 
authorized by this bill.

Section 105. Water pollution control revolving fund

            Summary
    This section amends Section 603(i) of the Clean Water Act.
    This section creates a requirement for States to establish 
a priority system for providing financial assistance through 
the State Clean Water SRF. It adds two definitions: 
``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.
    States must establish a priority system that: takes into 
consideration appropriate chemical, physical, and biological 
data relating to water quality that the State considers 
reasonably available and of sufficient quality; ensures that 
projects are designed to achieve the optimum water quality 
management, as determined by the State and are consistent with 
the requirements of the Act; provides for public notice and 
opportunity to comment on the priority system; and provides for 
the publication, not less than biennially, of a description of 
projects in the State that are eligible, including the priority 
and funding schedule for each project.
    This section also requires that, after determining project 
priorities, States shall give greater weight to an application 
that includes such information as the State deems necessary and 
demonstrates utility management best practices; proposes 
approaches other than the traditional wastewater approach 
(using decentralized stormwater or wastewater controls, low-
impact development technologies, stream buffers, wetland 
restoration and enhancement, actions to minimize impervious 
surfaces, use of vegetation and other permeable materials, and 
actions to increase efficient water use, conservation, and 
reuse); demonstrates consistency with watershed plans; is a 
proposal demonstrating flexibility to carry out 
responsibilities through alternative means and other innovative 
management approaches; or is a project that addresses adverse 
environmental conditions.
            Discussion
    Current law requires States to establish a list of projects 
that are eligible for, and have submitted applications to 
receive, funding. The State then provides SRF funds to as many 
projects on the list as it can with available funds. As a State 
puts together its priority list, it may assign priority based 
on the system the State has developed to meet its needs.
    This section requires States to ensure certain factors are 
included in their systems for determining priority. However, 
the Committee recognizes that some States have already 
developed sophisticated priority systems that give additional 
weight to many of the best practices and approaches outlined in 
this section. In carrying out the requirements of this section, 
the Committee encourages EPA to provide flexibility to States 
as they implement the priority system and additional weighting 
requirements under this section within the framework of 
existing State programs.
    The decision regarding how much weight to give each of the 
additional factors in this section is left to the State. 
Further, additional factors not required by this section may be 
given additional weight by a State.
    This section gives additional weight for utilities that 
review restructuring options. In some cases, it may be more 
efficient and cost effective for a utility to consolidate with 
a neighboring one, to develop a partnership with a 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. This is intended to encourage public 
water systems to analyze the efficiency of their systems, but 
is not intended to require public water systems to consider 
privatizing their operations, or to require large public water 
systems to consider consolidation or partnering with smaller 
systems, for the purpose of accessing an SRF loan. Further, 
restructuring does not imply a preference for privatization.
    Other factors to which a State must give additional weight 
are an inventory of assets, including a description of the 
condition of those assets; a schedule for replacing those 
assets; and a financing plan indicating how capital will be 
raised, including rate increases, grant assistance, bonds, 
loans or other sources. Aging systems are significant 
contributors to the infrastructure-financing gap. According to 
a 2002 Government Accountability 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.\6\ 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.\7\
---------------------------------------------------------------------------
    \6\U.S. General Accounting Office. Water Utility Financing and 
Planning (GAO-02-764). August 2002, Page 7.
    \7\Ibid, page 42.
---------------------------------------------------------------------------
    The Committee believes that 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.
    The States must ensure that applications to the State SRF 
receive additional weight if they incorporate nontraditional 
approaches, including decentralized or distributed storm water 
controls, decentralized wastewater treatment, low impact 
development technologies and stream buffers. Communities and 
developers are beginning to use 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 
traditional wastewater systems. Particularly in small, rural 
communities, properly maintained decentralized wastewater 
treatment systems that replace cesspools and individual sewer 
systems may be an affordable alternative to a treatment works.
    A number of efforts are currently underway across the 
country that undertake a holistic focus on watershed planning 
for the improvement of water quality, restoration of water 
resources and to address water supply. Under this section, the 
State must ensure that applications to the State SRF receive 
additional weight if they demonstrate consistency with State, 
regional and municipal watershed plans.
    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.

Section 106. Transferability of funds

            Summary
    This section would authorize the Governor of a State to 
reserve up to the greater of: 33 percent of a capitalization 
grant under Title II of the Clean Water Act and add those 
resources to funds provided to the State under section 1452 of 
the Safe Drinking Water Act (42 U.S.C. 300j-12), or to reserve 
up to that amount from capitalization grants made under section 
1452 of the Safe Drinking Water Act and add those resources to 
any funds the State received under title II of the Clean Water 
Act. The reserved funds would not be considered for purposes of 
the State's matching funds for a capitalization grant under 
title II of the Clean Water Act.
            Discussion
    Each year in the Interior and Related Agencies 
Appropriations bill, which funds EPA, the Committee on 
Appropriations includes a provision allowing States to transfer 
portions of a State's capitalization grant from the Clean Water 
SRF to the Drinking Water SRF and vice versa. Section 106 
permanently authorizes States to transfer no more than 33 
percent of a State's Clean Water capitalization grant into the 
Drinking Water SRF. It clarifies that the funds transferred 
cannot be considered by a State to meet its requirement to 
provide a 20 percent match to the Federal capitalization grant 
for the Drinking Water SRF.

Section 107. Noncompliance

            Summary
    This section would generally prohibit assistance (other 
than for purposes of planning, design, or security) to an owner 
or operator of a treatment works that has been in significant 
noncompliance with the Clean Water Act, unless the relevant 
permitting authority determines that the enforcement agency has 
determined that the assistance will enable the owner to take 
corrective actions toward resolving the violation or would 
assist the owner in making progress toward compliance.
            Discussion
    One purpose of the Clean Water SRF is to assist systems in 
complying with the Clean Water Act. 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 that will use the money to come into 
compliance, including those using the funds to comply with an 
administrative order.

Section 108. Negotiation of contracts

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

Section 109. Allotment of funds

            Summary
    This section would allow each State to reserve the greater 
of 2 percent or $100,000 from its fiscal year allotment to 
carry out planning under sections 205(j) and 303(e) of the 
Clean Water Act, requires 1.5 percent of the amount provided 
for this section to be allocated to Indian Tribes, and allows 
the Administrator to reserve up to $5 million per year to 
provide training for operators of waste treatment plants as 
described in section 104(g).
            Discussion
    This section updates the formula by which the Administrator 
distributes the Federal Clean Water SRF funding to the States.

Section 110. Authorization of appropriations

            Summary
    This section would authorize appropriations of $20 billion 
over 5 years for the capitalization of State revolving funds as 
follows: $3.2 billion in each of fiscal years 2010 and 2011, 
$3.6 billion in fiscal year 2012, $4 billion in fiscal year 
2013, and $6 billion in fiscal year 2014. Section 109 would 
authorize the Administrator to reserve not more than $1,000,000 
of the amounts made available in each fiscal year to conduct 
needs surveys.

Section 111. Sewer overflow control grants

            Summary
    This section would amend Section 221 of the Clean Water 
Act. It would authorize the Administrator to make grants for 
fiscal years 2010 through 2014 to prevent sewer overflows. 
Projects that receive grants under this section would be 
subject to the same requirements as a project that receives 
assistance from a State Clean Water revolving fund.
    This section would authorize appropriations of $1.8 billion 
over 5 years for sewer overflow control grants as follows: $250 
million for fiscal year 2010, $300 million for fiscal year 
2011, $350 million for fiscal year 2012, $400 million for 
fiscal year 2013, and $500 million for fiscal year 2014. For 
each of fiscal years 2010 and 2011, the Administrator is 
required to use the priority criteria in Section 221(b) (33 
U.S.C. 1301(b)), with additional priority given to projects 
that use nonstructural, low-impact development, water 
conservation, efficiency or reuse, or other decentralized 
stormwater or wastewater approaches. Starting in fiscal year 
2013, the Administrator would be required to provide sewer 
overflow control grants in accordance with the needs survey 
required under Section 210 (33 U.S.C. 1290).
            Discussion
    Major sewer overflow problems can generally be classified 
into two categories: Sanitary Sewer Overflows (SSO) and 
Combined Sewer Overflows (CSO). EPA estimates that between 
23,000 and 75,000 SSO events occur per year in the United 
States, discharging a total volume of three to 10 billion 
gallons per year. The estimated volume of CSO discharged 
nationwide is 850 billion gallons per year. In addition to 
adverse water quality impacts, microbial pathogens and toxics 
can be present in CSOs and SSOs at levels that pose risks to 
human health.
    Properly designed, operated, and maintained sanitary sewer 
systems are meant to collect and transport all of the sewage 
that flows into them to a POTW. However, occasional 
unintentional discharges of raw sewage from municipal sanitary 
sewers occur in almost every system. These SSOs have a variety 
of causes, including but not limited to severe weather, 
improper system operation and maintenance, and vandalism. EPA 
estimates that there are at least 40,000 SSOs each year.
    Combined sewer systems are sewers that are designed to 
collect rainwater runoff, domestic sewage, and industrial 
wastewater in the same pipe. Most of the time, combined sewer 
systems transport all received wastewater to a sewage treatment 
plant, where it is treated and then discharged to a water body. 
During periods of heavy rainfall or snowmelt, however, the 
wastewater volume in a combined sewer system can exceed the 
capacity of the sewer system or treatment plant. For this 
reason, combined sewer systems are designed to overflow 
occasionally and discharge excess wastewater directly to nearby 
streams, rivers, or other water bodies.
    These CSOs contain not only stormwater but also untreated 
human and industrial waste, toxic materials and debris. They 
are a major water pollution concern for the approximately 772 
cities in the U.S. that have combined sewer systems.
    In its 2004 report to Congress, the EPA reported that at 
that time 828 NPDES permits were in place, authorizing 
discharges from 9,348 CSO outfalls in 32 States (including the 
District of Columbia). The report goes on to note that ``most 
CSOs are located in the Northeast and Great Lakes regions.''\8\
---------------------------------------------------------------------------
    \8\U.S. EPA. Report to Congress on the Impacts and Control of CSOs 
and SSOs (EPA 833-R-04-001). August 2004, accessed at http://
www.epa.gov/npdes/pubs/csossoRTC2004_ executive_summary.pdf.
---------------------------------------------------------------------------
    The costs to control these sewer overflows can sometimes be 
extremely high because they require significant reengineering 
of the treatment works. For example, capital CSO control 
expenditures by 63 Michigan communities exceeded $1 billion 
between 1989 and 1999. Long-term control plans (LTCP) to 
correct CSOs can run to several hundred million dollars for a 
single system. Thirty-four facilities from 10 States documented 
CSO needs using LTCPs. These needs, totaling $3.9 billion, 
account for 7.7 percent of the CSO needs reported in the Clean 
Water Needs Survey. Since the 2004 report was issued, the 
number of municipal systems required to implement LTCPs has 
continued to grow. The Metropolitan Sewer District of Greater 
Cincinnati recently approved a LTCP that will cost more than $1 
billion. A similar plan by the City of Indianapolis has a price 
tag of $1.7 billion.
    This grant program is designed to assist with this major 
infrastructure need.

Section 112. Critical water infrastructure projects

            Summary
    This section would require the Administrator to establish a 
watershed restoration grant program to protect or improve water 
quality. Section 112 would authorize the Administrator to enter 
into agreements with one or more non-Federal entities to carry 
out watershed restoration projects, which may include projects 
that are on a State's intended use plan developed under Section 
606(c) of the Clean Water Act (33 U.S.C. 1386(c)). The non-
Federal entities would be required to pay 45 percent of the 
total project costs, which may include in-kind contributions. 
The Administrator may waive the cost-sharing requirement based 
on financial hardship.
    This section would authorize appropriations of $50 million 
for each fiscal year 2010 through 2014.
            Discussion
    The Committee acknowledges there is a growing need for 
funding for the common goals of restoring watershed functions; 
upgrading treatment works; assisting treatment works 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. This section 
provides grant funding for watershed restoration and critical 
water infrastructure projects across the country. In 
prioritizing projects under this new section, the Administrator 
must consult with State and local governments, as well as 
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 so that one category 
does not dominate the prioritization of projects and available 
funds provided to the program.

              TITLE II--SAFE DRINKING WATER INFRASTRUCTURE

Section 201. Drinking water technical assistance for communities

            Summary
    This section would reauthorize and amend the form of 
assistance, priorities, and other requirements for technical 
assistance under Section 1442(e) of the Safe Drinking Water 
Act. This section would allow for well system nonprofit 
technical assistance to be included under Section 1442(e) of 
the Safe Drinking Water Act.
    It authorizes $35 million for each fiscal year 2010 through 
2014, $7 million of which is for the well assistance programs 
in fiscal year 2010, and $7.5 million for fiscal years 2011 
through 2014.
            Discussion
    This section reauthorizes the technical assistance program 
in the Safe Drinking Water Act. It also allows for well and 
well system technical assistance. It recognizes the needs of 
some rural communities for continued education and support for 
private wells and the work that EPA has already done in 
providing education and information on private well systems. 
This section does not give EPA any new right to regulate 
private wells.

Section 202. Preservation of employee labor standards

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

Section 203. Preconstruction work

            Summary
    This section would amend Section 1452(b(a)(2) of the Safe 
Drinking Water Act (42 U.S.C. 300j-12(a)(2)) to allow the use 
of State loan funds for replacing or rehabilitating aging 
treatment, storage, or distribution facilities or to upgrade 
security of public water systems. Section 204 also allows the 
use of loan funds for payment of certain costs of general 
obligation bonds issued by the State to provide matching funds.
            Discussion
    By clarifying that preconstruction activities are eligible 
for funding, Section 203(1) 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 section clarifies that replacement and rehabilitation 
of aging infrastructure is an eligible use of Drinking Water 
SRF funds. In testimony before the Fisheries, Wildlife and 
Water Subcommittee on February 28, 2002, a representative of 
the nation's largest water utilities stated that the greatest 
expense for many large systems is replacing old infrastructure 
and pipes. The Committee, by clarifying this 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 aging infrastructure.
    Current EPA regulations allow States to leverage SRF 
funding by issuing public bonds. Bond issuance allows States to 
leverage funding up front and meet drinking water goals more 
quickly. This provision clarifies in the statute that use of 
SRF funds for bond issuance costs is allowed.

Section 204. Priority system requirements

            Summary
    This section amends Section 1452(b)(3) of the Safe Drinking 
Water Act. It adds two definitions; ``Restructuring'' and 
``Priority System''. It reaffirms that the SRF is to be used 
for funding projects that address the most serious risks to 
human health, are necessary to ensure compliance with the Act 
and assist the public water systems in the most need. It also 
adds a priority for improving the sustainability of the public 
water system.
    This section also directs States to give additional weight 
to applications that demonstrate effective utility management, 
demonstrate consistency with watershed or water conservation 
plans, and contain projects to improve the sustainability of a 
water system through water conservation or efficiency, use of 
recycled water, energy efficiency, or implementation of source 
water protection plans.
            Discussion
    The Safe Drinking Water Act requires States to establish a 
priority system to receive funding through the Drinking Water 
SRF. The priority system must include projects that address the 
most serious risks to human health, are necessary to ensure 
compliance, and assist systems most in need on a per household 
basis. This section maintains that priority system and adds an 
additional priority for improving the sustainability of a 
system. It also requires that additional weight be given to 
certain activities after prioritizing projects based on these 
categories.
    Activities that would qualify for additional weight in the 
ranking process include: demonstration of consistency with 
State, regional, and municipal watershed plans; use of a water 
conservation plan consistent with guidelines developed for 
those plans by the Administrator under section 1455(a); and 
approaches to improve the sustainability of the system, 
including water efficiency or conservation, use of reclaimed 
water, actions to increase energy efficiency, and 
implementation of source water protection plans.
    As a component of effective utility management, this 
section includes a review of restructuring options. This is 
intended to encourage public water systems to analyze the 
efficiency of their system, but is not intended to require 
public water systems to consider privatizing their operations, 
or to require large public water systems to consider 
consolidation or partnering with smaller systems, for the 
purpose of accessing an SRF loan. Further, restructuring does 
not imply a preference for privatization.
    In listing activities that would qualify for additional 
weight for improving systems sustainability, this section 
clarifies that water efficiency and conservation projects 
include the replacement or repair of leaking pipes. This 
includes replacement of existing pipes with new pipes that have 
a lower risk of leaking and corrosion.

Section 205. Affordability

            Summary
    This section would amend section 1452(d)(3) of the Safe 
Drinking Water Act (42 U.S.C. 300j-12(d)(3)) to expand the 
definition of a ``disadvantaged community'' to include a 
portion of a service area.
            Discussion
    Many large cities do not qualify as disadvantaged under 
their State's definition of the term because they have low-
income ratepayers that meet the affordability criteria as well 
as industrial and 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.

Section 206. Safe drinking water revolving loan funds

            Summary
    This section amends Section 1452(g) of the Safe Drinking 
Water Act. It would increase the State's allowable 
administrative costs to 6 percent of an annual capitalization 
grant, \1/5\ of one percent of the value of the State fund, or 
$400,000, whichever is greatest. It also authorizes a State to 
reserve up to the greater of: 33 percent of the capitalization 
grant made under Section 1452(g) of the Safe Drinking Water Act 
(42 U.S.C. 300j-12(g)) and transfer those funds to any funds 
provided to the State under Section 601 of the Clean Water Act 
(33 U.S.C. 1381), or to reserve up to that amount from 
capitalization grants made under Section 601 of the Clean Water 
Act and add those funds to any funds the State received under 
section 1452(g) of the Safe Drinking Water Act. The reserved 
funds would not be considered for purposes of the State's 
matching funds for a capitalization grant under Section 602(b) 
of the Clean Water Act. This section also makes technical 
corrections.
            Discussion
    Each year in the Interior and Related Agencies 
Appropriations bill, which funds EPA, the Committee on 
Appropriations includes a provision allowing States to transfer 
portions of a State's capitalization grant from the Drinking 
Water SRF to the Clean Water SRF and vice versa. Section 106 
permanently authorizes States to transfer no more than 33 
percent of a State's Drinking Water capitalization grant into 
the Clean Water SRF. It clarifies that the funds transferred 
cannot be considered by a State to meet its requirement to 
provide a 20% match to the Federal capitalization grant for the 
Clean Water SRF.

Section 207. Other authorized activities

            Summary
    This section authorizes the use of capitalization grant 
funds to implement 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 ensures States can use their SRF funds to implement 
source water protection plans.

Section 208. Authorization of appropriations

            Summary
    Section 208 would authorize appropriations of $14.7 billion 
over 5 years for the capitalization of State revolving funds as 
follows: $1.5 billion in fiscal year 2010, $2 billion in each 
of fiscal years 2011 and 2012, $3.2 billion in fiscal year 
2013, and $6 billion in fiscal year 2014. Section 207 would 
authorize the Administrator to reserve not more than $1,000,000 
of the amounts made available in each fiscal year to conduct 
needs surveys.

Section 209. Negotiation of contracts

            Summary
    Section 209 would require that certain contracts to be 
carried out with funds directly made available by a 
capitalization grant under Section 1452 of the Safe Drinking 
Water Act be negotiated in the same manner as a contract for 
architectural and engineering services under Chapter 11 of 
Title 40, United States Code, or an equivalent State 
qualifications-based requirement. This only applies to 
communities with populations greater than 10,000.

Section 210. Critical drinking water infrastructure projects

            Summary
    This section 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 develop alternative 
water sources, provide assistance to small systems, assist a 
community water system to comply with national primary drinking 
water regulations or mitigate groundwater contamination. This 
section defines an eligible entity as a community water system 
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.
    The section authorizes $230 million for fiscal year 2010 
and $300 million for each of fiscal years 2011 through 2014.
            Discussion
    Similar to the critical water infrastructure grant program 
(Section 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. 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.

Section 211. National lead in drinking water grant program

            Summary
    Section 211 establishes a nationwide lead grant program. 
The program is designed to give grants to a project where the 
primary purpose is reducing the level of lead in water for 
human consumption. The Administrator is required to establish 
the grant program within 180 days. EPA will also be responsible 
for evaluating eligible applicants, ensuring that the 
applicants have successfully taken steps to identify the source 
of lead in drinking water, and evaluating the means by which 
proposed projects would reduce levels of lead in drinking 
water.
    The non-Federal share of the project will not be less than 
20 percent. EPA may grant waivers that eliminate or reduce the 
non-Federal share on a case-by-case basis. Assistance for low 
income homeowners will not exceed more than $5 million, and no 
individual will receive more than $5,000 in grant money.
    Special considerations for lead service line replacement 
include: notifying customers of any replacements of publically 
owned portions of lead service lines; offering to replace the 
privately owned portions of lead service lines at the cost of 
replacement; recommending measures to avoid exposure to short-
term increases in lead levels following a partial lead service 
line replacement; and demonstrating multiple options for 
reducing lead in drinking water, including an evaluation of 
options for corrosion control.
    Appropriations for this program will be authorized at 
$60,000,000 for each fiscal year from 2010 through 2014.
            Discussion
    This grant program is designed to give assistance to 
eligible entities (a community water system, a system located 
in an area governed by an Indian Tribe, a non-transient non-
community water system, a qualified nonprofit organization, a 
municipality, or a State, interstate, or inter-municipal 
agency) to undertake projects that will reduce lead in drinking 
water. Lead can cause a variety of adverse health effects when 
persons are exposed to it at levels above the action level for 
relatively short periods of time. Babies and young children are 
especially vulnerable to lead in drinking water. The health 
effects of lead are well documented.
    Priority is given to assist lower-income homeowners to aid 
in replacing privately owned service lines, pipes, fittings, or 
fixtures that contain lead and aid in education of consumers 
regarding measures to reduce exposure to lead from drinking 
water or other sources. Priority is also given to a public 
water system; a non-transient non-community water system that 
has exceeded the lead action level established by EPA at any 
time during the 3-year period preceding the date of submission 
of the application by the eligible entity; or a project that 
addresses lead levels in water for human consumption at a 
school, daycare, or other facility that primarily serves 
children or another vulnerable human subpopulation.
    This grant program is designed to provide funding to water 
systems and low-income homeowners to replace fixtures that 
leach lead at levels that could cause health risks. It is not 
intended to replace fixtures and pipes that do not demonstrate 
a contribution to increased lead levels.
    EPA is responsible for ensuring that eligible projects have 
identified the source of lead levels in drinking water and that 
the funded project is an appropriate method to reduce these 
levels. In particular, this section outlines special 
considerations that must be taken prior to approving a service 
line replacement. Applicants should take steps to evaluate the 
contribution of disinfection chemicals to corrosion and lead 
leaching and ensure that replacement of lead service lines is 
necessary to reduce the increased lead levels. The 
Administrator should ensure such an analysis has taken place 
before funding these projects.

                        TITLE III--MISCELLANEOUS

Section 301. Definitions

            Summary
    This section defines that in this title ``Academy'' refers 
to the National Academy of Sciences.

Section 302. Program for water quality enhancement and management

            Summary
    This section requires the Administrator to establish a 
research program for water quality enhancement and management, 
water efficiency and conservation, and water reuse within the 
EPA. This includes research on (1) technologies and processes 
that enable the collection, storage, treatment, and reuse of 
water; (2) water storage and distribution systems; and (3) 
behavioral, social, and economic barriers to achieving greater 
water use efficiency. This section also requires the 
Administrator to coordinate the development of a strategic 
research plan for the research and development program 
established by this section with all other EPA research and 
development strategic plans.
    Under this section, the Administrator must establish a 
nationwide demonstration grant program to fund innovative and 
non-traditional water technologies and requires the 
Administrator to facilitate the adoption of technologies and 
processes to promote water use efficiency and conservation. 
This section also requires the Administrator to collect and 
disseminate information on technologies and processes to 
promote water use efficiency and conservation.
    This section authorizes $40 million for fiscal years 2010 
through 2014.
            Discussion
    At a March 31, 2009, hearing conducted by the Committee's 
Water and Wildlife Subcommittee, EPA testified that water use 
in the United States is increasing every year, placing pressure 
on our water supply. Since 1950, the United States population 
increased nearly 90 percent. In that same period, public demand 
for water increased 209 percent. Americans now use an average 
of 100 gallons of water per person each day.
    In the last five years, nearly every region of the country 
has experienced water shortages. At least 36 States are 
anticipating local, regional, or statewide water shortages by 
2013, even under non-drought conditions. Regions of the High 
Plains Aquifer in New Mexico and Texas experienced water level 
declines of more than 60 feet between 1980 and 1999. Along the 
oceans and bays, saltwater is infiltrating aquifers that are 
drawn down, making them brackish. This is a growing problem 
along the Gulf Coast and southern Atlantic and Pacific coasts.
    Drought is intensifying these shortages. In California, 
Governor Arnold Schwarzenegger declared a state of emergency in 
February 2009 due to drought, with the State facing nearly $3 
billion in economic losses from below normal rainfall in 2009. 
The National Oceanic and Atmospheric Administration (NOAA) 
reports that the Great Lakes, which supply drinking water to 
more than 40 million U.S. and Canadian residents, are 
experiencing record low levels. The southeast is again 
suffering from drought. This is Texas' driest winter since 
record-keeping began in 1895. According to a 2006 NOAA report, 
drought in the U.S. is estimated to result in average annual 
losses of between $6 to $8 billion across all sectors of the 
economy.
    EPA's Office of Research and Development has a program of 
research and development on water treatment technologies, 
health effects of water pollutants, security from deliberate 
contamination, and watershed protection. EPA's research is 
focusing on infrastructure, water processing technologies, 
water reclamation and reuse, and green infrastructure. While 
research in these areas touches on water supply, efficiency and 
conservation, EPA does not have a research and development 
program that specifically addresses these concerns. According 
to a 2004 National Research Council report, Confronting the 
Nation's Water Problems: The Role of Federal Research, research 
and development aimed at addressing water-use efficiency and 
conservation has decreased over the last 30 years.
    Other federal agencies, national laboratories, academic 
institutions, and other entities have considerable expertise 
and capacity in their research programs. A more coordinated, 
comprehensive approach would help to address the nation's water 
quality research needs.
    The subcommittee also heard testimony that many nations 
around the world (including China, India, Singapore, 
Switzerland, and many within the EU) are pouring money and 
resources into developing new science and technologies for 
increasing water supplies and for new purification methods. 
Similarly, extensive work is being done in developing and 
demonstrating low impact approaches that use micro-scale 
controls to mimic natural hydrology in developed areas, thus 
conserving water, reducing costs, and facilitating groundwater 
recharge. While the U.S. still leads in basic science, we are 
falling behind in technology diffusion into the marketplace and 
our communities.
    This section would establish a coordinated research 
program, provide for demonstration programs funded through new 
grant opportunities, and require the Administrator to develop a 
program to facilitate the widespread adoption of technologies 
and processes that address these critical issues.

Section 303. Agricultural pollution control technology grant program

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

Section 304. State revolving fund review process

            Summary
    This section requires the Administrator to consult with 
States, utilities, nonprofit organizations, and other Federal 
agencies providing financial assistance to identify ways to 
expedite and improve the application and review process for the 
provision of assistance from the Clean Water Act and Safe 
Drinking Water Act State Revolving Funds and the process for 
developing the Clean Watersheds Needs Survey. It also requires 
the Administrator to consider multiple sizes of water systems 
and communities, ranging from very small to large. Based upon 
the evaluation of these processes, this section requires the 
Administrator to take administrative action necessary to 
expedite and improve the process, collect information relating 
to innovative approaches taken by any State to simplify the 
application process, and provide recommendations to Congress to 
streamline these processes.
            Discussion
    This provision requires the Administrator to work with 
States and other agencies to develop recommendations for 
streamlining the application process and reducing the amount of 
time it takes to receive funds. At times, SRF funding may not 
be allocated to communities needing assistance the most because 
the resources, time and administrative burden necessary to 
apply for funding may discourage applications from small 
treatment works. This study should identify changes to make the 
SRFs more user-friendly.
    Changes to the application and review process 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. The 
Committee believes that streamlining the process would ensure 
the SRFs are used as efficiently and effectively as possible, 
while adhering to all requirements.

Section 305. Cost of service study

            Summary
    This section requires the Administrator to enter into an 
agreement with the National Academy of Sciences to conduct a 
study regarding public water systems and treatment works and 
the costs associated with operations, maintenance, capital 
replacement, and regulatory requirements.
            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 their most 
vulnerable populations when setting 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. It also requires 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 
2010 and 2011.

Section 306. Effective utility management

            Summary
    This section authorizes the Administrator, in cooperation 
with partner organizations, to carry out training programs, 
provide technical assistance, and disseminate information 
regarding effective utility management strategies.
            Discussion
    Water and wastewater utilities are facing many challenges, 
including rising costs, aging infrastructure, regulatory 
requirements, population changes, and a rapidly changing 
workforce. Based on these challenges, EPA and six national 
water and wastewater associations signed an agreement in 2007 
to jointly promote effective utility management based on the 
Ten Attributes of Effectively Managed Water Sector Utilities 
and Five Keys to Management Success. These effective utility 
management strategies can help utilities respond to both 
current and future challenges. This successful partnership 
effort has been ongoing for more than two years.
    This section would authorize EPA to continue existing 
efforts and undertake additional activities to promote 
effective utility management strategies.

Section 307. WaterSense program

            Summary
    This section authorizes the Administrator to establish a 
WaterSense program to identify and promote voluntary approaches 
to increase water efficiency. There is authorized to be 
appropriated $35 million from fiscal years 2010 through 2014.
            Discussion
    WaterSense, a partnership program sponsored by EPA, began 
in 2004. It is designed to assist consumers in making choices 
that will save water and protect the environment. Managing 
water is a growing concern in the United States. Communities 
across the country are facing challenges regarding water supply 
and water infrastructure. EPA's WaterSense program helps 
protect the future of our nation's water supply by promoting 
water efficiency and enhancing the market for water-efficient 
products, programs, and practices.
    This section gives the WaterSense program legislative 
authorization and authorizes appropriations so that it can 
continue to educate consumers and work to promote water-
efficient products.
    Products and services must achieve at least 20 percent 
water-use reduction over similar products or services to earn a 
WaterSense stamp of approval. WaterSense is partnering with 
irrigation professionals and irrigation certification programs 
to promote water-efficient landscape irrigation practices. 
WaterSense is also partnering with manufacturers, retailers, 
distributors and utilities to bring WaterSense products to the 
marketplace and make it easy to purchase high-performing, 
water-efficient products. EPA estimates that if all U.S. 
households installed water-efficient appliances, the country 
would save more than 3 trillion gallons of water and more than 
$17 billion dollars per year.

Section 308. Pharmaceuticals and personal care products

            Summary
    This section requires the National Academy of Sciences, in 
consultation with multiple federal agencies, to undertake a 
study of the sources of pharmaceuticals and personal care 
products in the waters of the United States. As part of the 
study, the National Academy of Sciences will identify sources 
of pharmaceuticals and personal care products and evaluate the 
feasibility of methods to control or treat them.
            Discussion
    Studies have shown that pharmaceuticals are present in the 
nation's waterbodies. EPA and other Federal agencies have 
undertaken research efforts to investigate this topic and are 
developing strategies to help protect the health of both the 
environment and the public. The study required by this section 
will provide additional information on the impacts of these 
products, their source, and methods to control or treat 
products in the nation's water bodies.

Section 309. Combined Sewer Overflow affordability guidance

            Summary
    This section requires the Administrator to undertake an 
update of the guidance titled, ``Combined Sewer Overflows--
Guidance for Financial Capability Assessment and Schedule 
Development,'' dated February 1997, by conducting a public 
outreach process involving States, municipalities, other 
interested stakeholders, and the general public.
            Discussion
    Currently, EPA's guidance document is used for determining 
a community's financial capability to undertake CSO Long Term 
Control Plans. The Committee recognizes the need for EPA to 
update this guidance document. This provision requires EPA to 
gather information and data for the purposes of revising the 
above-mentioned guidance document, and to take into 
consideration all relevant factors and views from multiple 
stakeholders, including municipally-owned wastewater treatment 
utilities.

                          Legislative History

    On May 7, 2009, Senator Cardin, for himself, Senator Boxer, 
Senator Inhofe and Senator Crapo, introduced the Water 
Infrastructure Financing Act. The bill was read twice and 
referred to the Committee on Environment and Public Works. On 
May 14, 2009 the Committee on Environment and Public Works held 
a Business Meeting, at which Senator Boxer offered a substitute 
amendment making certain technical changes to the bill, and the 
amendment was agreed to by voice vote. Senator Cardin offered 
an amendment applying Davis-Bacon prevailing wage requirements 
to contract negotiations under these programs. That amendment 
was adopted by a voice vote, with Sens. Inhofe, Barrasso, 
Crapo, Alexander, and Vitter recorded as voting No. Senator 
Bond offered an amendment to require EPA to update its 
affordability guidance for CSOs and to incorporate specific 
criteria in the updated guidance. The Bond amendment failed by 
voice vote. Senator Voinovich offered an amendment to require 
EPA to undertake an update of its affordability guidance for 
CSOs. Senator Boxer offered a second degree amendment to 
Senator Voinovich's amendment to make technical changes. The 
Voinovich amendment, as amended, was agreed to by voice vote. 
S. 1005 was ordered favorably reported, as amended, by a 
rollcall vote of 17 ayes and 2 nays.

                             Rollcall Votes

    There was one rollcall vote during the consideration of the 
Water Infrastructure Financing Act of 2009. The bill as amended 
was ordered reported favorably by voice vote with 0 recorded as 
voting NO.

                      Regulatory Impact Statement

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

                          Mandates Assessment

    In compliance with the Unfunded Mandates Reform Act (UMRA) 
of 1995 (Pub. L. 104-4), the Committee finds that this 
legislation does not impose intergovernmental mandates or 
private sector mandates as those terms are defined in UMRA. The 
Congressional Budget Office concurs, finding ``S. 1005 contains 
no intergovernmental or private-sector mandates as defined in 
the UMRA and would impose no costs on State, local, or tribal 
governments.''

                  Congressional Budget Office Estimate

                                                      May 22, 2009.
Hon. Barbara Boxer,
Chairman, Committee on Environment and Public Works,
U.S. Senate, Washington, DC.
    Dear Madam Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1005, the Water 
Infrastructure Financing Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Susanne S. 
Mehlman (for federal spending), and Mark Booth (for revenues).
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

S. 1005--Water Infrastructure Financing Act

    Summary: S. 1005 would authorize the appropriation of about 
$39 billion for the Environmental Protection Agency (EPA) to 
provide grants to states and nonprofit organizations to support 
a wide range of water quality projects and programs. CBO 
estimates that implementing this legislation would cost about 
$17 billion over the next five years and an additional $22 
billion after 2014, assuming appropriation of the authorized 
amounts.
    The Joint Committee on Taxation (JCT) estimates that 
enacting the bill would reduce revenues by $1.7 billion over 
the next 10 years. Enacting the bill would not affect direct 
spending.
    S. 1005 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of this legislation is summarized in Table 1. 
The costs of this legislation fall within budget function 300 
(natural resources and environment).
    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted near the end of fiscal year 2009, that the 
full amounts authorized will be appropriated for each year, and 
that outlays will follow the historical patterns of spending 
for existing and similar programs. Components of the estimated 
costs are described below.

                                                    TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF S. 1005
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               By fiscal year, in millions of dollars--
                                             -----------------------------------------------------------------------------------------------------------
                                               2010    2011    2012    2013     2014     2015     2016     2017     2018     2019   2010-2014  2010-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level1........................   5,470   6,040   6,493   8,143   13,045        0        0        0        0        0    39,191      39,191
Estimated Outlays...........................     498   1,824   3,503   4,861    6,182    7,213    6,227     3771    1,786      857    16,868      36,722

                                                                   CHANGES IN REVENUES

Estimated Revenues2,3.......................       *      -4     -18     -48      -96     -162     -244     -325     -380     -406      -166     -1,683
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: * = revenue loss of less than $500,000.
\1\The bill also would require the National Academy of Sciences to conduct a study on the presence of pharmaceuticals and personal-care products in
  water; CBO estimates that such a study would cost $1 million over the 2010-2014 period.
\2\Estimate provided by the Joint Committee on Taxation.
\3\Negative numbers indicate a reduction in revenues and an increase in the deficit.

Spending subject to appropriation

    This legislation would authorize appropriations totaling 
more than $39 billion over the next five years for EPA's water 
infrastructure and grant programs. Amounts authorized to be 
appropriated for individual programs are shown in Table 2.
    The bill would authorize the appropriation of nearly $35 
billion over the 2010-2014 period for EPA to provide 
capitalization grants for the State Revolving Fund (SRF) 
programs (about $20 billion for the clean water SRF program and 
about $15 billion for the safe drinking water SRF program). In 
2009, the combined appropriation for these SRF programs was 
about $1.5 billion. (In addition the American Recovery and 
Reinvestment Act of 2009 provided $6 billion for those 
programs.) States use such grants along with their own funds to 
make low-interest loans to communities to build or improve 
wastewater treatment and drinking water facilities. Indian 
tribes use such grants to construct wastewater treatment 
facilities and to fund projects that would improve the quality 
of drinking water. This bill would make several revisions to 
those grant programs, including expanding the types of projects 
eligible for assistance, changing the formulas used to allocate 
grant money among the states and tribes, and extending the 
repayment terms for loans made by states.

                 TABLE 2.--AMOUNTS AUTHORIZED TO BE APPROPRIATED FOR EPA PROGRAMS UNDER S. 1005
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   2010       2011       2012       2013       2014    2010-2014
----------------------------------------------------------------------------------------------------------------
Clean Water SRF Grants........................      3,200      3,200      3,600      4,000      6,000     20,000
Safe Drinking Water SRF Grants................      1,500      2,000      2,000      3,200      6,000     14,700
Sewer Overflow Grants.........................        250        300        350        400        500      1,800
Critical Drinking Water Infrastructure Grant          230        300        300        300        300      1,430
 Program......................................
Critical Water Infrastructure Grant Program...         50         50         50         50         50        250
Grants for Reducing Lead in Drinking Water....         60         60         60         60         60        300
Technical Assistance for Communities..........          2         43         43         43         43        214
EPA Management Strategies and Water and Sewage          6          6          9          9         11         41
 Program......................................
Technical Assistance for Small and Medium              40         40         40         40         40        200
 Treatment Works..............................
Agricultural Watershed Sustainability                  50          0          0          0          0         50
 Technology Grant Program.....................
Grants For Water Quality Enhancement and               40         40         40         40         40        200
 Management...................................
National Academy of Sciences Studies..........          2          1          1          1          1          6
                                               -----------------------------------------------------------------
    Total Authorization Level.................      5,470      6,040      6,493      8,143     13,045    39,191
----------------------------------------------------------------------------------------------------------------
Note: SRF = state revolving fund; EPA = Environmental Protection Agency.

    This legislation also would authorize the appropriation of 
about $1.8 billion over the 2010-2014 period for EPA to make 
grants to states to remedy sewage overflows (that is, the 
discharge of untreated wastewater into waterways). This bill 
also would authorize the appropriation of about $1.4 billion 
for the Critical Drinking Water Infrastructure Grant Program 
and about $250 million for the Critical Water Infrastructure 
Grant Program over the same period. Those programs would allow 
EPA to make grants to small public water systems to address the 
cost of complying with drinking water regulations and to make 
grants to entities to carry out projects related to watershed 
restoration.
    The remaining authorizations in the bill would total about 
$550 million over the next five years. That funding would be 
used for various purposes, including a grant program to assist 
small and medium treatment works with a broad range of 
approaches to managing wastewater and stormwater, grant 
programs aimed at promoting innovations in technology and 
alternative approaches to water quality management, and a grant 
program to reduce lead in drinking water.

Revenues

    The JCT expects that some of the funds authorized in S. 
1005 would be used by states to leverage additional funds by 
issuing tax-exempt bonds. The JCT estimates that issuing 
additional tax-exempt bonds would reduce federal revenues 
totaling about $1.7 billion over the next 10 years.
    Intergovernmental and private-sector impact: S. 1005 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The bill would benefit state, local, and 
tribal governments by authorizing grants for water and sewer 
projects.
    Estimate prepared by: Federal spending: Susanne S. Mehlman; 
Federal revenues: Mark Booth; Impact on State, Local, and 
Tribal Governments: Ryan Miller; Impact on the Private Sector: 
Amy Petz.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

              ADDITIONAL VIEWS OF SENATOR BOND ON S. 1005

    The financing capability guidance provisions in section 309 
of the Committee reported version of S. 1005 fail to protect 
disadvantaged communities across America suffering under the 
crushing burden of mandates imposed by the Environmental 
Protection Agency (EPA) under the Clean Water Act.
    As an example in the State of Missouri, the St. Louis 
Metropolitan Sewer District is the 4th largest in the nation in 
terms of miles of sewer pipe. While approximately the same size 
as the system in Los Angeles, California, St. Louis has only a 
quarter of the residents to support upgrades and costs of the 
same sized system.
    St. Louis' water obligations are massive. In the last 15 
years, St. Louis has invested over $1.8 billion in its 
wastewater system. St. Louis needs to spend another $4 to $6 
billion to meet its obligations. If St. Louis itself used up 
the entire annual Missouri allocation of federal wastewater 
funding, it would take 315 years to pay this $6 billion bill. 
Even with the increased authorizations in this bill, it would 
still take 127 years to fund these improvements.
    An example of a modest-sized city facing huge water burdens 
is St. Joseph. Its 75,000 residents face $450 million in 
stormwater mandates. That represents $6,000 for every man, 
woman, child and senior citizen in St. Joseph. Kansas City also 
faces massive new investments in water infrastructure.
    Missouri knows it must meet its wastewater obligations and 
is acting to do its part. St. Louis has scheduled a 106% 
increase in wastewater rates. Unfortunately, under EPA guidance 
on how much communities can afford to raise rates, St. Louis 
needs to raise them over 600%.
    That is because EPA's current guidance used for determining 
what level of financial burden communities are capable of 
meeting is clumsy and inflexible. EPA considers only median 
household income across the entire system. Unfortunately for 
St. Louis, some affluent areas are skewing the economic 
results. EPA refuses to acknowledge the vast minority community 
in St. Louis, the miles of urban decay, the blue-collar 
neighborhoods of hard working but modest incomes, or the 
elderly on fixed incomes.
    This system is broken and must be fixed. Under the 
leadership of Senator Voinovich, a bipartisan bill was 
introduced in the Senate, S. 854, the Clean Water Affordability 
Act, to mandate EPA to revise its financial capability 
guidance. S. 854 would not dictate the new guidance, but it 
would require EPA to update the guidance and meet criteria such 
as placing a greater emphasis on local economic conditions and 
significant demographic groups within each region. However, the 
Majority refused to incorporate these provisions into its 
legislation after repeated requests.
    In Committee markup, Senator Bond proposed an amendment 
similar to S. 854 to require EPA to update its financial 
capability guidance and place a greater emphasis on criteria 
such as local economic conditions, significant demographic 
groups within each locality, project timing that reflects local 
community financial conditions and mitigation of adverse 
economic impacts on distressed populations, low-income levels, 
and local shelter, utility and tax costs.
    There was concern among the Majority that S. 854 was overly 
detailed and prescriptive. To meet the concerns of the 
Majority, my amendment was much briefer and less detailed. 
Additionally, my amendment did nothing to change a locality's 
legal obligation to meet Clean Water Act requirements.
    The Chairman instead favored an amendment by Senator 
Voinovich. In contrast to the Bond amendment, which stated that 
``the [EPA] Administrator shall update'' the financial 
capability guidance, the Voinovich language did not actually 
require EPA to update its financial capability guidance. The 
Voinovich amendment required EPA to ``collect and take into 
consideration information'' . . . ``conduct a public outreach 
process'' and ``consult with affected States'' ``for the 
purpose of updating'' the guidance, but did not include a 
specific mandate on EPA to update the guidance. The amendment 
read in its entirety:

    ``At the end of title III, add the following:

``SEC. 3___. FINANCING CAPABILITY GUIDANCE.

    ``Not later than 180 days after the date of enactment of 
this Act, for the purpose of updating the document entitled 
``Combined Sewer Overflows--Guidance for Financial Capability 
Assessment and Schedule Development'' and dated February 1997, 
the Administrator shall--
          ``(1) collect and take into consideration information 
        that can be used to assess the financial condition of 
        permittees under the Federal Water Pollution Control 
        Act (33 U.S.C. 1251 et seq.) and the Safe Drinking 
        Water Act (42 U.S.C. 300f et seq.);
          ``(2) conduct a public outreach process regarding 
        that information; and
          ``(3) consult with the affected States, 
        municipalities, and other interested parties, as 
        determined by the Administrator, regarding that 
        information.''.

    The Committee adopted the above Voinovich amendment after 
an assertion by the Chairman, based on advice of Majority 
staff, that the Voinovich amendment and the Bond ``are the same 
in terms of the action that is required.'' Senator Bond 
disputed this assertion and the specific language above shows 
that the Chairman's assertion, upon which the Committee relied 
before its vote, was in fact mistaken. While the amendment 
would impose a duty upon EPA to collect information and consult 
with States and the public for the purposes of updating the 
guidance, there was no affirmative duty to complete an actual 
update of the guidance in the Voinovich amendment and there is 
no such requirement in the current section 309.
    Furthermore, there is no specific direction in section 309 
to EPA on financial conditions it should consider. There is no 
reference to local economic conditions, significant demographic 
groups within each locality, project timing that reflects local 
community financial conditions and mitigation of adverse 
economic impacts on distressed populations, low-income levels, 
or local shelter, utility and tax costs. For these reasons, S. 
1005 as reported by the Committee fails to protect 
disadvantaged communities from impossibly crushing mandates 
imposed by the federal government.

                                                          Kit Bond.

                        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:

           *       *       *       *       *       *       *

                              ----------                              

FEDERAL WATER POLLUTION CONTROL ACT

           *       *       *       *       *       *       *

    Sec. 104. (a) The Administrator shall establish national 
programs for the prevention, reduction, and elimination of 
pollution and as part of such programs shall--
          (1) * * *

           *       *       *       *       *       *       *

  (w) Presence of Pharmaceuticals and Personal Care Products in 
Waters of the United States.--
          (1) Definitions.--In this subsection:
                  (A) Academy.--The term ``Academy'' means the 
                National Academy of Sciences.
                  (B) Pharmaceutical.--The term 
                ``pharmaceutical'' has the meaning given the 
                term ``drug'' in section 201 of the Federal 
                Food, Drug, and Cosmetic Act (21 U.S.C. 321).
                  (C) Personal care product.--The term 
                ``personal care product'' has the meaning given 
                the term ``cosmetic'' in section 201 of the 
                Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                321).
          (2) Study.--The Administrator shall offer to enter 
        into an arrangement with the National Academy of 
        Sciences under which the Academy, in consultation with 
        the Administrator, the Secretary of Health and Human 
        Services (acting through the Commissioner of Food and 
        Drugs), the Director of the United States Geological 
        Survey, the heads of other appropriate Federal agencies 
        (including the National Institute of Environmental 
        Health Sciences), and other interested stakeholders 
        (including manufacturers of pharmaceuticals and 
        personal care products), shall conduct a study on the 
        presence of pharmaceuticals and personal care products 
        in the waters of the United States.
          (3) Contents.--In conducting the study under 
        paragraph (2), the Academy shall--
                  (A) identify pharmaceuticals and personal 
                care products that have been detected in the 
                waters of the United States and the levels at 
                which such pharmaceuticals and personal care 
                products have been detected;
                  (B) identify the sources of pharmaceuticals 
                and personal care products in the waters of the 
                United States, including point sources and 
                nonpoint sources of pharmaceutical and personal 
                care products; and
                  (C) evaluate--
                          (i) risks associated with the 
                        presence of pharmaceuticals and 
                        personal care products in the waters of 
                        the United States; and
                          (ii) based upon that assessment, the 
                        technical, economic, and legal 
                        feasibility of methods to control, 
                        limit, treat, or prevent that presence.
          (4) Report.--Not later than 2 years after the date of 
        enactment of this subsection, the Academy shall submit 
        to the Administrator and Congress a report on the 
        results of the study conducted under this subsection, 
        including the potential effects of pharmaceuticals and 
        personal care products in the waters of the United 
        States on human health and aquatic wildlife.

          TITLE II--GRANTS FOR CONSTRUCTION OF TREATMENT WORKS

    Sec. 201. (a) It is the purpose of this title to require 
and to assist the development and implementation of waste 
treatment management plans and practices which will achieve the 
goals of this Act.

           *       *       *       *       *       *       *

    Sec. 212. As used in this title--
          (1) The term ``construction'' means any one or more 
        of the following: preliminary planning to determine the 
        feasibility of treatment works, engineering, 
        architectural, legal, fiscal, or economic 
        investigations or studies, surveys, designs, plans, 
        working drawings, specifications, procedures, field 
        testing of innovative or alternative waste water 
        treatment processes and techniques meeting guidelines 
        promulgated under section 304(d)(3) of this Act, or 
        other necessary actions, erection, building, 
        acquisition, alteration, remodeling, improvement, or 
        extension of treatment works, or the inspection or 
        supervision of any of the foregoing items.
          (2)(A) The term ``treatment works'' means any devices 
        and systems used in the storage, treatment, recycling, 
        and reclamation of municipal sewage or industrial 
        wastes of a liquid nature to implement section 201 of 
        this act, or necessary to recycle or reuse water at the 
        most economical cost over the estimated life of the 
        works, including intercepting sewers, outfall sewers, 
        sewage collection systems, pumping, power, and other 
        equipment, and their appurtenances; extensions, 
        improvements, remodeling, additions, and alterations 
        thereof; elements essential to provide a reliable 
        recycled supply such as standby treatment units and 
        clear well facilities; [and any works, including site] 
        acquisition of the land that will be an integral part 
        of the treatment process (including land use for the 
        storage of treated wastewater in land treatment systems 
        prior to land application) or [is used for 
        ultimate]will be used for ultimate disposal of residues 
        resulting from such treatment; and acquisition of other 
        land and interests in land necessary for construction.

           *       *       *       *       *       *       *

SEC. 221. SEWER OVERFLOW CONTROL GRANTS.

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

           *       *       *       *       *       *       *

  (d) Cost-Sharing.--The Federal share of the cost of 
activities carried out using amounts from a grant made under 
subsection (a) shall be not less than 55 percent of the cost. 
The non-Federal share of the cost may include, in any amount, 
public and private funds and in-kind services, and may include, 
notwithstanding section [603(h)]603(j), financial assistance, 
including loans, from a State water pollution control revolving 
fund.
  [(e) Administrative Reporting Requirements.--If a project 
receives grant assistance under subsection (a) and loan 
assistance from a State water pollution control revolving fund 
and the loan assistance is for 15 percent or more of the cost 
of the project, the project may be administered in accordance 
with State water pollution control revolving fund 
administrative reporting requirements for the purposes of 
streamlining such requirements.
  [(f) Authorization of Appropriations.--There is authorized to 
be appropriated to carry out this section $750,000,000 for each 
of fiscal years 2002 and 2003. Such sums shall remain available 
until expended.
  [(g) Allocation of Funds.--
          [(1) Fiscal year 2002.--Subject to subsection (h), 
        the Administrator shall use the amounts appropriated to 
        carry out this section for fiscal year 2002 for making 
        grants to municipalities and municipal entities under 
        subsection (a)(2), in accordance with the criteria set 
        forth in subsection (b).
          [(2) Fiscal year 2003.--Subject to subsection (h), 
        the Administrator shall use the amounts appropriated to 
        carry out this section for fiscal year 2003 as follows:
                  [(A) Not to exceed 250,000,000 for making 
                grants to municipalities and municipal entities 
                under subsection (a)(2), in accordance with the 
                criteria set forth in subsection (b).
                  [(B) All remaining amounts for making grants 
                to States under subsection (a)(1), in 
                accordance with a formula to be established by 
                the Administrator, after providing notice and 
                an opportunity for public comment, that 
                allocates to each State a proportional share of 
                such amounts based on the total needs of the 
                State for municipal combined sewer overflow 
                controls and sanitary sewer overflow controls 
                identified in the most recent survey conducted 
                pursuant to section 516(b)(1).]
  (e) Administrative Requirements.--
          (1) In general.--Subject to paragraph (2), a project 
        that receives grant assistance under subsection (a) 
        shall be carried out subject to the same requirements 
        as a project that receives assistance from a State 
        water pollution control revolving fund established 
        pursuant to title VI.
          (2) Determination of governor.--The requirement 
        described in paragraph (1) shall not apply to a project 
        that receives grant assistance under subsection (a) to 
        the extent that the Governor of the State in which the 
        project is located determines that a requirement 
        described in title VI is inconsistent with the purposes 
        of this section.
  (f) Authorization of Appropriations.--There are authorized to 
be appropriated to carry out this section, to remain available 
until expended--
          (1) $250,000,000 for fiscal year 2010;
          (2) $300,000,000 for fiscal year 2011;
          (3) $350,000,000 for fiscal year 2012;
          (4) $400,000,000 for fiscal year 2013; and
          (5) $500,000,000 for fiscal year 2014.
  (g) Allocation of Funds.--
          (1) Fiscal year 2010 and 2011.--For each of fiscal 
        years 2010 and 2011, subject to subsection (h), the 
        Administrator shall use the amounts made available to 
        carry out this section to provide grants to 
        municipalities and municipal entities under subsection 
        (a)(2)--
                  (A) in accordance with the priority criteria 
                described in subsection (b); and
                  (B) with additional priority given to 
                proposed projects that involve the use of--
                          (i) nonstructural, low-impact 
                        development;
                          (ii) water conservation, efficiency, 
                        or reuse; or
                          (iii) other decentralized stormwater 
                        or wastewater approaches to minimize 
                        flows into the sewer systems.
          (2) Fiscal year 2012 and thereafter.--For fiscal year 
        2012 and each fiscal year thereafter, subject to 
        subsection (h), the Administrator shall use the amounts 
        made available to carry out this section to provide 
        grants to States under subsection (a)(1) in accordance 
        with a formula that--
                  (A) shall be established by the 
                Administrator, after providing notice and an 
                opportunity for public comment; and
                  (B) allocates to each State a proportional 
                share of the amounts based on the total needs 
                of the State for municipal combined sewer 
                overflow controls and sanitary sewer overflow 
                controls, as identified in the most recent 
                survey--
                          (i) conducted under section 210; and
                          (ii) included in a report required 
                        under section 516(b)(1)(B).

           *       *       *       *       *       *       *

  (i) Reports.--Not later than December 31, [2003]2011, and 
periodically thereafter, the Administrator shall transmit to 
Congress a report containing recommended funding levels for 
grants under this section. The recommended funding levels shall 
be sufficient to ensure the continued expeditious 
implementation of municipal combined sewer overflow and 
sanitary sewer overflow controls nationwide.

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

  (a) Definitions.--In this section:
          (1) Advanced decentralized wastewater system.--The 
        term ``advanced decentralized wastewater system'' means 
        a decentralized wastewater system that provides more 
        effective treatment than a conventional septic system.
          (2) Decentralized wastewater system.--
                  (A) In general.--The term ``decentralized 
                wastewater system'' means a wastewater 
                treatment system that is at or near a site at 
                which wastewater is generated.
                  (B) Inclusions.--The term ``decentralized 
                wastewater system'' includes a system that 
                provides for--
                          (i) nonpotable reuse of treated 
                        effluent; or
                          (ii) energy and nutrient recovery 
                        from wastewater constituents.
          (3) Medium treatment works.--The term ``medium 
        treatment works'' means a publicly owned treatment 
        works serving more than 10,000 but fewer than 100,000 
        individuals.
          (4) Qualified nonprofit technical assistance 
        provider.--The term ``qualified nonprofit technical 
        assistance provider'' means a qualified nonprofit 
        technical assistance provider of water and wastewater 
        services to small or medium-sized communities that 
        provides technical assistance (including circuit rider, 
        multi-State regional assistance programs, and training 
        and preliminary engineering evaluations) to owners and 
        operators of small treatment works or medium treatment 
        works that may include State agencies.
          (5) Small treatment works.--The term ``small 
        treatment works'' means a publicly owned treatment 
        works serving not more than 10,000 individuals.
  (b) Grant Program.--
          (1) In general.--The Administrator may make grants on 
        a competitive basis to qualified nonprofit technical 
        assistance providers that are qualified to provide 
        assistance on a broad range of wastewater and 
        stormwater approaches--
                  (A) to assist owners and operators of small 
                treatment works and medium treatment works to 
                plan, develop, and obtain financing for 
                eligible projects described in section 603(c) 
                or 518(c);
                  (B) to provide financial assistance, in 
                consultation with the State in which the 
                assistance is provided, to owners and operators 
                of small treatment works and medium treatment 
                works for predevelopment costs (including costs 
                for planning, design, and associated 
                preconstruction activities, such as activities 
                relating directly to the siting of the facility 
                and related elements) associated with 
                stormwater or wastewater infrastructure 
                projects or short-term costs incurred for 
                equipment replacement that is not part of 
                regular operation and maintenance activities 
                for existing stormwater or wastewater systems, 
                if the amount of assistance for any single 
                project does not exceed $50,000;
                  (C) to provide technical assistance and 
                training for owners and operators of small 
                treatment works and medium treatment works to 
                enable those treatment works and systems to 
                protect water quality and achieve and maintain 
                compliance with this Act; and
                  (D) to disseminate information to owners and 
                operators of small treatment works and medium 
                treatment works, with respect to planning, 
                design, construction, and operation of 
                treatment works, small municipal separate storm 
                sewer systems, decentralized wastewater 
                treatment systems, and advanced decentralized 
                wastewater treatment systems.
          (2) Distribution of grant.--In carrying out this 
        subsection, the Administrator shall ensure, to the 
        maximum extent practicable, that technical assistance 
        provided using funds from a grant under paragraph (1) 
        is made available in each State.
          (3) Consultation.--As a condition of receiving a 
        grant under this subsection, a qualified nonprofit 
        technical assistance provider shall agree to consult 
        with each State in which grant funds are to be expended 
        before the grant funds are expended in the State.
          (4) Annual report.--Not later than 60 days after the 
        end of each fiscal year, a qualified nonprofit 
        technical assistance provider that receives a grant 
        under this subsection shall submit to the Administrator 
        a report that--
                  (A) describes the activities of the qualified 
                nonprofit technical assistance provider using 
                grant funds received under this subsection for 
                the fiscal year; and
                  (B) specifies--
                          (i) the number of communities served;
                          (ii) the sizes of those communities; 
                        and
                          (iii) the type of assistance provided 
                        by the qualified nonprofit technical 
                        assistance provider.
  (c) Authorization of Appropriations.--There are authorized to 
be appropriated to carry out this section--
          (1) for grants for small treatment works, $25,000,000 
        for each of fiscal years 2010 through 2014; and
          (2) for grants for medium treatment works, 
        $15,000,000 for each of fiscal years 2010 through 2014.

           *       *       *       *       *       *       *

    [Sec. 513. The Administrator shall take such action as may 
be necessary to insure that all laborers and mechanics employed 
by contractors or subcontractors on treatment works for which 
grants are made under this Act shall be paid wages at rates not 
less than those prevailing for the same type of work on similar 
construction in the immediate locality, as determined by the 
Secretary of Labor, in accordance with the Act of March 3, 
1931, as amended, known as the Davis-Bacon Act (46 Stat. 1494; 
40 U.S.C., sec. 276a through 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) and 
section 2 of the Act of June 13, 1934, as amended (48 Stat. 
948; 40 U.S.C. 276c).]

SEC. 513. PRESERVATION OF EMPLOYEE LABOR STANDARDS.

  (a) In General.--Notwithstanding section 602(b)(6), the 
Administrator shall take such action as the Administrator 
determines to be necessary to ensure that each laborer and 
mechanic employed by a contractor or subcontractor of a 
construction project financed, in whole or in part, by a grant, 
loan, loan guarantee, refinancing, or any other form of 
financial assistance provided under this Act (including 
assistance provided by a State loan fund established under 
title VI) is paid wages at a rate of not less than the wages 
prevailing for the same type of work on similar construction in 
the immediate locality, as determined by the Secretary of Labor 
in accordance with subchapter IV of chapter 31 of title 40, 
United States Code.
  (b) Authority of Secretary of Labor.--With respect to the 
labor standards specified in this section, the Secretary of 
Labor shall have the authority and functions established in 
Reorganization Plan Numbered 14 of 1950 (5 U.S.C. App.) and 
section 3145 of title 40, United States Code.

           *       *       *       *       *       *       *

        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) General Rule.--To receive a capitalization grant with 
funds made available under this title and section 205(m) of 
this Act, a State shall enter into an agreement with the 
Administrator which shall include but not be limited to the 
specifications set forth in subsection (b) of this section.
    (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) * * *

           *       *       *       *       *       *       *

  (c) Guidance for Small Systems.--
          (1) Definition of small system.--In this subsection, 
        the term ``small system'' means a system--
                  (A) for which a municipality or 
                intermunicipal, interstate, or State agency 
                seeks assistance under this title; and
                  (B) that serves a population of not more than 
                10,000 individuals.
          (2) Simplified procedures.--Not later than 1 year 
        after the date of enactment of this subsection, the 
        Administrator shall assist the States in establishing 
        simplified procedures for small systems to obtain 
        assistance under this title.
          (3) Publication of manual.--Not later than 1 year 
        after the date of enactment of this subsection, after 
        providing notice and opportunity for public comment, 
        the Administrator shall publish--
                  (A) a manual to assist small systems in 
                obtaining assistance under this title; and
                  (B) in the Federal Register, notice of the 
                availability of the manual.

           *       *       *       *       *       *       *

SEC. 603. WATER POLLUTION CONTROL REVOLVING LOAN FUNDS.

    (a) Requirements for Obligation of Grant Funds.--Before a 
State may receive a capitalization grant with funds made 
available under this title and section 205(m) of this Act, the 
State shall first establish a water pollution control revolving 
fund which complies with the requirements of this section.
    (b) Administrator.--Each State water pollution control 
revolving fund shall be administered by an instrumentality of 
the State with such powers and limitations as may be required 
to operate such fund in accordance with the requirements and 
objectives of this Act.
    [(c) Projects Eligible for Assistance.--The amounts of 
funds available to each State water pollution control revolving 
fund shall be used only for providing financial assistance (1) 
to any municipality, intermunicipal, interstate, or State 
agency for construction of publicly owned treatment works (as 
defined in section 212 of this Act), (2) for the implementation 
of a management program established under section 319 of this 
Act, and (3) for development and implementation of a 
conservation and management plan under section 320 of this Act. 
The fund shall be established, maintained, and credited with 
repayments, and the fund balance shall be available in 
perpetuity for providing such financial assistance.]
  (c) Projects Eligible for Assistance.--
          (1) In general.--Funds in each State water pollution 
        control revolving fund shall be used only for providing 
        financial assistance--
                  (A) to a municipality or an intermunicipal, 
                interstate, or State agency or a private 
                treatment works or decentralized wastewater 
                system that principally treats municipal 
                wastewater or domestic sewage--
                          (i) for construction of treatment 
                        works (as defined in section 212); or
                          (ii) for capital costs associated 
                        with monitoring equipment for combined 
                        sanitary or sewer overflows;
                  (B) to implement measures to control, manage, 
                reduce, treat, infiltrate, or reuse stormwater, 
                the primary purpose of which is the 
                preservation, protection, or enhancement of 
                water quality to support public purposes 
                (including the procurement and use of equipment 
                to support minimum measures, such as street 
                sweeping and storm drain system cleaning, or 
                acquisition of other land and interests in land 
                that are necessary for those activities and 
                measures);
                  (C) to implement a management program 
                established under section 319;
                  (D) to develop and implement a conservation 
                and management plan under section 320;
                  (E) for projects to increase the security of 
                wastewater treatment works (as defined in 
                section 212), excluding any expenditure for 
                operations or maintenance;
                  (F) to carry out water conservation or 
                efficiency projects that result in direct water 
                quality benefits;
                  (G) to implement measures to integrate water 
                resource management planning and 
                implementation;
                  (H) to carry out water reuse (including 
                wastewater reuse), reclamation, and recycling 
                projects that result in direct water quality 
                benefits;
                  (I) for projects to increase the energy 
                efficiency of treatment works (as defined in 
                section 212) that result in direct water 
                quality benefits;
                  (J) for the development and implementation of 
                utility management improvement plans consistent 
                with an effective utility management strategy 
                (as defined in section 306(a) of the Water 
                Infrastructure Financing Act); and
                  (K) for the development and implementation of 
                integrative watershed improvement plans that 
                include cost-effective solutions that consider 
                point and nonpoint sources of pollution and 
                traditional and cost-saving water treatment and 
                efficiency projects.
          (2) Limitation.--Not more than 5 percent of the 
        amount of a capitalization grant of a State may be used 
        during a fiscal year to provide assistance for 
        activities described in subparagraph (J) or (K) of 
        paragraph (1).
          (3) State water pollution control revolving funds.--
                  (A) In general.--A State water pollution 
                control revolving fund shall be established, 
                maintained, and credited with repayments.
                  (B) Balance of fund.--The balance of each 
                fund described in subparagraph (A) shall be 
                available in perpetuity for providing financial 
                assistance under this section.
    (d) Types of Assistance.--Except as otherwise limited by 
State law, a water pollution control revolving fund of a State 
under this section may be used only--
          (1) to make loans, on the condition that--
                  (A) such loans are made at or below market 
                interest rates, including interest free loans, 
                at terms not to exceed [20 years]the lesser of 
                30 years or the design life of the project to 
                be financed with the proceeds of the loan;
                  (B) annual principal and interest payments 
                will commence not later than 1 year after 
                completion of any project and all loans will be 
                fully amortized [not later than 20 years after 
                project completion]upon the expiration of the 
                term of the loan;
                  (C) the recipient of a loan will establish a 
                dedicated source of revenue for repayment of 
                loans; and
                  (D) the fund will be credited with all 
                payments of principal and interest on all 
                loans;
          (2) to buy or refinance the debt obligation of 
        municipalities and intermunicipal and interstate 
        agencies within the State at or below market rates, 
        where such debt obligations were incurred after March 
        7, 1985;
          (3) to guarantee, or purchase insurance for, local 
        obligations where such action would improve credit 
        market access or reduce interest rates;
          (4) as a source of revenue or security for the 
        payment of principal and interest on revenue or general 
        obligation bonds issued by the State if the proceeds of 
        the sale of such bonds will be deposited in the fund;
          (5) to provide loan guarantees for similar revolving 
        funds established by municipalities or intermunicipal 
        agencies;
          (6) to earn interest on fund accounts; [and]
          (7) for the reasonable costs of administering the 
        fund and conducting activities under this [title, 
        except that such amounts shall not exceed 4 percent of 
        all grant awards to such fund under this title.]
          title, except that--
                  (A) such amounts shall not exceed an amount 
                equal to the sum of, for each fiscal year--
                          (i) an amount equal to the greatest 
                        of--
                                  (I) $400,000;
                                  (II) \1/5\ percent of the 
                                current valuation of the fund; 
                                or
                                  (III) 6 percent of all grant 
                                awards to the fund under this 
                                title for a fiscal year; and
                          (ii) the amount of any fees collected 
                        by the State for that purpose, 
                        regardless of the source; and
                  (B) as a source of revenue (restricted solely 
                to interest earnings of the fund) or security 
                for payment of the principal and interest on 
                revenue or general obligation bonds issued by 
                the State to provide matching funds under 
                section 602(b)(2), if the proceeds of the sale 
                of the bonds will be deposited in the fund.
  (e) Additional Assistance for Disadvantaged Communities.--
          (1) Definition of disadvantaged community.--In this 
        subsection, the term ``disadvantaged community'' means 
        a community with a service area, or portion of a 
        service area, of a treatment works that meets 
        affordability criteria established after public review 
        and comment by the State in which the treatment works 
        is located.
          (2) Loan subsidy.--Notwithstanding any other 
        provision of this section, subject to paragraph (5), in 
        a case in which the State makes a loan from the water 
        pollution control revolving loan fund in accordance 
        with subsection (c) to a disadvantaged community or a 
        community that the State expects to become a 
        disadvantaged community as the result of a proposed 
        project, the State may provide additional 
        subsidization, including--
                  (A) the forgiveness of all or a portion of 
                the principal of the loan; and
                  (B) a negative interest rate on the loan.
          (3) Total amount of subsidies.--For each fiscal year, 
        the total amount of loan subsidies made by the State 
        pursuant to this subsection may not exceed 30 percent 
        of the amount of the capitalization grant received by 
        the State for the fiscal year.
          (4) Information.--The Administrator may publish 
        information to assist States in establishing 
        affordability criteria described in paragraph (1).
  (f) Cost-Saving Water Treatment and Efficiency 
Improvements.--
          (1) In general.--Subject to subsection (e)(3), in 
        providing a loan for a project under this section, a 
        State may forgive repayment of a portion of the loan 
        amount up to the percentage of the project that is 
        devoted to alternative approaches to wastewater and 
        stormwater controls (including nonstructural methods), 
        such as projects that treat or minimize sewage or urban 
        stormwater discharges using--
                  (A) decentralized or distributed stormwater 
                controls;
                  (B) advanced decentralized wastewater 
                treatment;
                  (C) low-impact development technologies and 
                nonstructural approaches;
                  (D) stream buffers;
                  (E) wetland restoration and enhancement;
                  (F) actions to minimize the quantity of and 
                direct connections to impervious surfaces;
                  (G) soil and vegetation, or other permeable 
                materials;
                  (H) actions that increase efficient water 
                use, water conservation, or water reuse, 
                including the rehabilitation or replacement of 
                existing leaking pipes; or
                  (I) actions that increase energy efficiency 
                or reduce energy consumption at a treatment 
                works.
          (2) Treatment of loan forgiveness.--The amount of 
        loan forgiveness provided by a State under this 
        subsection shall be--
                  (A) credited to each State; and
                  (B) deducted from the total amount of State 
                capitalization grants for which matching funds 
                are required from the State under section 
                602(b)(2).
    [(e)](g) Limitation To Prevent Double Benefits.--If a State 
makes, from its water pollution revolving fund, a loan which 
will finance the cost of facility planning and the preparation 
of plans, specifications, and estimates for construction of 
publicly owned treatment works, the State shall ensure that if 
the recipient of such loan receives a grant under section 
201(g) of this Act for construction of such treatment works and 
an allowance under section 201(l)(1) of this Act for non-
federal funds expended for such planning and preparation, such 
recipient will promptly repay such loan to the extent of such 
allowance.
    [(f)](h) Consistency With Planning Requirements.--A State 
may provide financial assistance from its water pollution 
control revolving fund only with respect to a project which is 
consistent with plans, if any, developed under sections 205(j), 
208, 303(e), 319, and 320 of this Act.
    [(g) Priority List Requirement.--The State may provide 
financial assistance from its water pollution control revolving 
fund only with respect to a project for construction of a 
treatment works described in subsection (c)(1) if such project 
is on the State's priority list under section 216 of this Act. 
Such assistance may be provided regardless of the rank of such 
project on such list.]
  (i) Priority System Requirement.--
          (1) Definitions.--In this subsection:
                  (A) Restructuring.--The term 
                ``restructuring'' means--
                          (i) the consolidation of management 
                        functions or ownership with another 
                        facility; or
                          (ii) the formation of cooperative 
                        partnerships.
                  (B) Traditional wastewater approach.--The 
                term ``traditional wastewater approach'' means 
                a managed system used to collect and treat 
                wastewater from an entire service area 
                consisting of--
                          (i) collection sewers;
                          (ii) a centralized treatment plant 
                        using biological, physical, or chemical 
                        treatment processes; and
                          (iii) a direct point source discharge 
                        to surface water.
          (2) Priority system.--In providing financial 
        assistance from the water pollution control revolving 
        fund of the State, the State shall establish a priority 
        system that--
                  (A) takes into consideration appropriate 
                chemical, physical, and biological data 
                relating to water quality that the State 
                considers reasonably available and of 
                sufficient quality;
                  (B) ensures that projects undertaken with 
                assistance under this title are designed to 
                achieve, as determined by the State, the 
                optimum water quality management, consistent 
                with the public health and water quality goals 
                and requirements of this Act;
                  (C) provides for public notice and 
                opportunity to comment on the establishment of 
                the priority system and the summary under 
                subparagraph (D); and
                  (D) provides for the publication, not less 
                than biennially in summary form, of a 
                description of projects in the State that are 
                eligible for assistance under this title that 
                indicates--
                          (i) the priority assigned to each 
                        project under the priority system of 
                        the State; and
                          (ii) the funding schedule for each 
                        project, to the extent the information 
                        is available.
          (3) Weight given to applications.--After determining 
        project priorities under subparagraph (2), the State 
        shall give greater weight to an application for 
        assistance if the application includes such information 
        as the State determines to be necessary and contains--
                  (A) a description of utility management best 
                practices undertaken by a treatment works 
                applying for assistance, including--
                          (i) an inventory of assets, including 
                        a description of the condition of those 
                        assets;
                          (ii) a schedule for replacement of 
                        the assets;
                          (iii) a financing plan that factors 
                        in all lifecycle costs indicating 
                        sources of revenue from ratepayers, 
                        grants, bonds, other loans, and other 
                        sources to meet the costs; and
                          (iv) a review of options for 
                        restructuring the treatment works;
                  (B) approaches other than a traditional 
                wastewater approach that treat or minimize 
                sewage or urban stormwater discharges using--
                          (i) decentralized or distributed 
                        stormwater controls;
                          (ii) advanced decentralized 
                        wastewater treatment;
                          (iii) low-impact development 
                        technologies and nonstructural 
                        approaches;
                          (iv) stream buffers;
                          (v) wetland restoration and 
                        enhancement;
                          (vi) actions to minimize the quantity 
                        of and direct connections to impervious 
                        surfaces;
                          (vii) soil and vegetation, or other 
                        permeable materials;
                          (viii) actions that increase 
                        efficient water use, water 
                        conservation, or water reuse; or
                          (ix) actions that increase energy 
                        efficiency or reduce energy consumption 
                        at a treatment works;
                  (C) a demonstration of consistency with 
                State, regional, and municipal watershed plans, 
                water conservation and efficiency plans, or 
                integrated water resource management plans;
                  (D) a proposal by the applicant demonstrating 
                flexibility through alternative means to carry 
                out responsibilities under Federal regulations, 
                that may include watershed permitting and other 
                innovative management approaches, while 
                achieving results that--
                          (i) the State, in the case of a 
                        permit program approved under section 
                        402, determines will meet permit 
                        requirements; or
                          (ii) the Administrator determines are 
                        measurably superior, as compared to 
                        regulatory standards; or
                  (E) projects that address adverse 
                environmental conditions.
    [(h)](j) Eligibility of Non-Federal Share of Construction 
Grant Projects.--A State water pollution control revolving fund 
may provide assistance (other than under subsection (d)(1) of 
this section) to a municipality or intermunicipal or interstate 
agency with respect to the non-Federal share of the costs of a 
treatment works project for which such municipality or agency 
is receiving assistance from the Administrator under any other 
authority only if such assistance is necessary to allow such 
project to proceed.
  (k) Transfer of Funds.--
          (1) In general.--The Governor of a State may--
                  (A)(i) reserve not more than the greater of--
                          (I) 33 percent of a capitalization 
                        grant made under this title; or
                          (II) 33 percent of a capitalization 
                        grant made under section 1452 of the 
                        Safe Drinking Water Act (42 U.S.C. 
                        300j-12); and
                  (ii) add the reserved funds to any funds 
                provided to the State under section 1452 of the 
                Safe Drinking Water Act (42 U.S.C. 300j-12); 
                and
                  (B)(i) reserve for any year an amount that 
                does not exceed the amount that may be reserved 
                under subparagraph (A) for that year from 
                capitalization grants made under section 1452 
                of that Act (42 U.S.C. 300j-12); and
                  (ii) add the reserved funds to any funds 
                provided to the State under this title.
          (2) State match.--Funds reserved under this 
        subsection shall not be considered to be a State 
        contribution for a capitalization grant required under 
        this title or section 1452(b) of the Safe Drinking 
        Water Act (42 U.S.C. 300j-12(b)).
  (l) Noncompliance.--
          (1) In general.--Except as provided in paragraph (2), 
        no assistance (other than assistance that is to be used 
        by a treatment works solely for planning, design, or 
        security purposes) shall be provided under this title 
        to the owner or operator of a treatment works that has 
        been in significant noncompliance with any requirement 
        of this Act for any of the 4 quarters during the 
        preceding 8 quarters, unless the treatment works is in 
        compliance with an enforceable administrative order to 
        effect compliance with the requirement.
          (2) Exception.--An owner or operator of a treatment 
        works that is determined under paragraph (1) to be in 
        significant noncompliance with a requirement described 
        in that paragraph may receive assistance under this 
        title if the Administrator and the State providing the 
        assistance determine that--
                  (A) the entity conducting the enforcement 
                action on which the determination of 
                significant noncompliance is based has 
                determined that the use of assistance would 
                enable the owner or operator of the treatment 
                works to take corrective action toward 
                resolving the violations; or
                  (B) the entity conducting the enforcement 
                action on which the determination of 
                significant noncompliance is based has 
                determined that the assistance would be used by 
                the owner or operator of the treatment works in 
                order to assist owners and operators in making 
                progress towards compliance.
  (m) Negotiation of Contracts.--For communities with 
populations of more than 10,000 individuals, a contract to be 
carried out using funds directly made available by a 
capitalization grant under this section for program management, 
construction management, feasibility studies, preliminary 
engineering, design, engineering, surveying, mapping, or 
architectural or related services shall be negotiated in the 
same manner as--
          (1) a contract for architectural and engineering 
        services is negotiated under chapter 11 of title 40, 
        United States Code; or
          (2) an equivalent State qualifications-based 
        requirement (as determined by the Governor of the 
        State).

           *       *       *       *       *       *       *

SEC. 604. ALLOTMENT OF FUNDS.

    [(a) Formula.--Sums authorized to be appropriated to carry 
out this section for each of fiscal years 1989 and 1990 shall 
be allotted by the Administrator in accordance with section 
205(c) of this Act.
    [(b) Reservation of Funds for Planning.--Each State shall 
reserve each fiscal year 1 percent of the sums allotted to such 
State under this section for such fiscal year, or $100,000, 
whichever amount is greater, to carry out planning under 
sections 205(j) and 303(e) of this Act.]
  (a) In General.--Subject to subsection (b)(2), amounts 
authorized to be appropriated to carry out this section for 
each of fiscal years 2010 through 2014 shall be allotted among 
States by the Administrator in accordance with the allotment 
values specified in the following table:

------------------------------------------------------------------------
                                                              Allotment
                          ``State                               value
------------------------------------------------------------------------
Alabama....................................................     0.012860
Alaska.....................................................     0.007500
Arizona....................................................     0.010247
Arkansas...................................................     0.007500
California.................................................     0.079629
Colorado...................................................     0.010164
Connecticut................................................     0.014150
Delaware...................................................     0.007500
District of Columbia.......................................     0.005000
Florida....................................................     0.044139
Georgia....................................................     0.012825
Hawaii.....................................................     0.008048
Idaho......................................................     0.007500
Illinois...................................................     0.048540
Indiana....................................................     0.024633
Iowa.......................................................     0.010266
Kansas.....................................................     0.009129
Kentucky...................................................     0.012025
Louisiana..................................................     0.013465
Maine......................................................     0.007829
Maryland...................................................     0.025129
Massachusetts..............................................     0.025754
Michigan...................................................     0.033487
Minnesota..................................................     0.020385
Mississippi................................................     0.009112
Missouri...................................................     0.028037
Montana....................................................     0.007500
Nebraska...................................................     0.008023
Nevada.....................................................     0.007500
New Hampshire..............................................     0.007500
New Jersey.................................................     0.046117
New Mexico.................................................     0.007500
New York...................................................     0.103531
North Carolina.............................................     0.019007
North Dakota...............................................     0.007500
Ohio.......................................................     0.054722
Oklahoma...................................................     0.008171
Oregon.....................................................     0.012456
Pennsylvania...............................................     0.041484
Rhode Island...............................................     0.007500
South Carolina.............................................     0.007500
South Dakota...............................................     0.007500
Tennessee..................................................     0.011019
Texas......................................................     0.037664
Utah.......................................................     0.007500
Vermont....................................................     0.007500
Virginia...................................................     0.020698
Washington.................................................     0.017588
West Virginia..............................................     0.011825
Wisconsin..................................................     0.022844
Wyoming....................................................     0.007500
Puerto Rico................................................     0.005000
Territories................................................     0.002500
------------------------------------------------------------------------

  (b) Reservation of Funds.--
          (1) Planning.--Each State may reserve for each fiscal 
        year to carry out planning under sections 205(j) and 
        303(e) an amount equal to the greater of--
                  (A) 2 percent of the sums allotted to the 
                State under this section for the fiscal year; 
                or
                  (B) $100,000.
          (2) Operator training; indian tribes.--Of the total 
        amount of funds made available to carry out this title, 
        before allotting funds in accordance with subsection 
        (a), for fiscal year 2009 and each fiscal year 
        thereafter, the Administrator--
                  (A) may reserve not more than $5,000,000 to 
                carry out the objectives described in section 
                104(g); and
                  (B) shall allocate 1.5 percent to Indian 
                tribes (as defined in section 518(h)).

           *       *       *       *       *       *       *

[SEC. 607. AUTHORIZATION OF APPROPRIATIONS.

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

SEC. 607. AUTHORIZATION OF APPROPRIATIONS.

  (a) In General.--There are authorized to be appropriated to 
carry out this title--
          (1) $3,200,000,000 for each of fiscal years 2010 and 
        2011;
          (2) $3,600,000,000 for fiscal year 2012;
          (3) $4,000,000,000 for fiscal year 2013; and
          (4) $6,000,000,000 for fiscal year 2014.
  (b) Availability.--Amounts made available under this section 
shall remain available until expended.
  (c) Reservation for Needs Surveys.--Of the amount made 
available under subsection (a) to carry out this title for a 
fiscal year, the Administrator may reserve not more than 
1,000,000 for the fiscal year, to remain available until 
expended, to pay the costs of conducting needs surveys under 
section 516(b)(1)(B).

           *       *       *       *       *       *       *

  TITLE XIV OF THE PUBLIC HEALTH SERVICE ACT (THE SAFE DRINKING WATER 
                                  ACT)

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

                          Part A--Definitions

definitions

           *       *       *       *       *       *       *

  Sec. 1442. (a)(1) The Administrator may conduct research, 
studies, and demonstrations relating to the causes, diagnosis, 
treatment, control, and prevention of physical and mental 
diseases and other impairments of man resulting directly or 
indirectly from contaminants in water, or to the provision of a 
dependably safe supply of drinking water, including--
          (A) * * *

           *       *       *       *       *       *       *

  (e) Technical Assistance.--[The Administrator may provide]
          (1) Public water systems.--The Administrator may 
        provide technical assistance to small public water 
        systems to enable such systems to achieve and maintain 
        compliance with applicable national primary drinking 
        water regulations. [Such assistance]
          (2) Types of assistance.--Such assistance may include 
        circuit-rider and multi-State regional technical 
        assistance programs, training, and preliminary 
        engineering evaluations. [The Administrator shall 
        ensure]
          (3) Availability.--The Administrator shall ensure 
        that technical assistance pursuant to this subsection 
        is available in each State. [Each nonprofit]
          (4) Requirement applicable to nonprofit 
        organizations.--Each nonprofit organization receiving 
        assistance under this subsection shall consult with the 
        State in which the assistance is to be expended or 
        otherwise made available before using assistance to 
        undertake activities to carry out this subsection. 
        [There are authorized to be appropriated to the 
        Administrator to be used for such technical assistance 
        $15,000,000 for each of the fiscal years 1997 through 
        2003. No portion of any State loan fund established 
        under section 1452 (relating to State loan funds) and 
        no portion of any funds made available under this 
        subsection may be used for lobbying expenses. Of the 
        total amount appropriated under this subsection, 3 
        percent shall be used for technical assistance to 
        public water systems owned or operated by Indian 
        Tribes.]
          (5) Priority.--In providing grants under this 
        section, the Administrator shall give priority to small 
        systems organizations that, as determined by the 
        Administrator, in consultation with the State, are 
        qualified and will be the most effective at assisting 
        small systems.
          (6) Wells and well systems.--
                  (A) In general.--The Administrator shall 
                provide grants to nonprofit organizations to 
                provide technical assistance to communities and 
                individuals regarding the design, operation, 
                construction, and maintenance of household 
                wells and small shared well-systems that 
                provide drinking water.
                  (B) Form of assistance.--Technical assistance 
                referred to in subparagraph (A) may include--
                          (i) training and education;
                          (ii) operation of a hotline; and
                          (iii) the conduct of other activities 
                        relating to the design and construction 
                        of household, shared, and small water 
                        well systems in rural areas.
                  (C) Priority.--Subject to paragraph (5), in 
                providing grants under this section, the 
                Administrator shall give priority to applicants 
                that, as determined by the Administrator--
                          (i) are qualified; and
                          (ii) have demonstrated experience in 
                        providing similar technical assistance 
                        and in developing similar projects.
                  (D) Authorization of appropriations.--There 
                is authorized to be appropriated to carry out 
                this paragraph--
                          (i) $7,000,000 for fiscal year 2010; 
                        and
                          (ii) $7,500,000 for each of fiscal 
                        years 2011 through 2014.
          (7) Funding.--
                  (A) Authorization of appropriations.--There 
                is authorized to be appropriated to the 
                Administrator to carry out this subsection 
                (other than paragraph (6)) $35,000,000 for each 
                of fiscal years 2010 through 2014.
                  (B) Lobbying expenses.--No portion of any 
                State loan fund established under section 1452 
                and no portion of any funds made available 
                under this subsection may be used for lobbying 
                expenses.
                  (C) Indian tribes.--Of the total amount made 
                available under this section for each fiscal 
                year, 3 percent shall be used for technical 
                assistance to public water systems owned or 
                operated by Indian Tribes.

           *       *       *       *       *       *       *

  [Sec. 1450. (a)(1) The Administrator is authorized to 
prescribe such regulations as are necessary or appropriate to 
carry out his functions under this title.
  [(2) The Administrator may delegate any of his functions 
under this title (other than prescribing regulations) to any 
officer or employee of the Agency.
  [(b) The Administrator, with the consent of the head of any 
other agency of the United States, may utilize such officers 
and employees of such agency as he deems necessary to assist 
him in carrying out the purposes of this title.
  [(c) Upon the request of a State or interstate agency, the 
Administrator may assign personnel of the Agency to such State 
or interstate agency for the purposes of carrying out the 
provisions of this title.
  [(d)(1) The Administrator may make payments of grants under 
this title (after necessary adjustment on account of previously 
made underpayments or overpayments) in advance or by way of 
reimbursement, and in such installments and on such conditions 
as he may determine.
  [(2) Financial assistance may be made available in the form 
of grants only to individuals and nonprofit agencies or 
institutions. For purposes of this paragraph, the term 
``nonprofit agency or institution'' means an agency or 
institution no part of the net earnings of which inure, or may 
lawfully inure, to the benefit of any private shareholder or 
individual.
  [(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.]
  (e) Labor Standards.--
          (1) In general.--The Administrator shall take such 
        action as the Administrator determines to be necessary 
        to ensure that each laborer and mechanic employed by a 
        contractor or subcontractor of a construction project 
        financed, in whole or in part, by a grant, loan, loan 
        guarantee, refinancing, or any other form of financial 
        assistance provided under this Act (including 
        assistance provided by a State loan fund established 
        under section 1452) is paid wages at a rate of not less 
        than the wages prevailing for the same type of work on 
        similar construction in the immediate locality, as 
        determined by the Secretary of Labor in accordance with 
        subchapter IV of chapter 31 of title 40, United States 
        Code.
          (2) Authority of secretary of labor.--With respect to 
        the labor standards specified in this subsection, the 
        Secretary of Labor shall have the authority and 
        functions established in Reorganization Plan Numbered 
        14 of 1950 (5 U.S.C. App.) and section 3145 of title 
        40, United States Code.

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

  (g) Administration of State Loan Funds.--
          (1) Combined financial administration.--
        Notwithstanding subsection (c), a State may (as a 
        convenience and to avoid unnecessary administrative 
        costs) combine, in accordance with State law, the 
        financial administration of a State loan fund 
        established under this section with the financial 
        administration of any other revolving fund established 
        by the State if otherwise not prohibited by the law 
        under which the State loan fund was established and if 
        the Administrator determines that--
                  (A) the grants under this section, together 
                with loan repayments and interest, will be 
                separately accounted for and used solely for 
                the purposes specified in subsection (a); and
                  (B) the authority to establish assistance 
                priorities and carry out oversight and related 
                activities (other than financial 
                administration) with respect to assistance 
                remains with the State agency having primary 
                responsibility for administration of the State 
                program under section 1413, after consultation 
                with other appropriate State agencies (as 
                determined by the State): Provided, That in 
                nonprimacy States eligible to receive 
                assistance under this section, the Governor 
                shall determine which State agency will have 
                authority to establish priorities for financial 
                assistance from the State loan fund.
          (2) Cost of administering fund.--Each State may 
        annually use [up to 4 percent of the funds allotted to 
        the State under this section], for each fiscal year, an 
        amount that does not exceed the sum of the amount of 
        any fees collected by the State for use in covering 
        reasonable costs of administration of programs under 
        this section, regardless of the source, and an amount 
        equal to the greatest of $400,000, 1/5 percent of the 
        current valuation of the fund, or 6 percent of all 
        grant awards to the fund under this section for the 
        fiscal year,to cover the reasonable costs of 
        administration of the programs under this section, 
        including the recovery of reasonable costs expended to 
        establish a State loan fund which are incurred after 
        the date of enactment of this section, and to provide 
        technical assistance to public water systems within the 
        State. For fiscal year 1995 and each fiscal year 
        thereafter, each State may use up to an additional 10 
        percent of the funds allotted to the State under this 
        section--
                  (A) for public water system supervision 
                programs under section 1443(a);
                  (B) to administer or provide technical 
                assistance through source water protection 
                programs;
                  (C) to develop and implement a capacity 
                development strategy under section 1420(c); and
                  (D) for an operator certification program for 
                purposes of meeting the requirements of section 
                [1419,
        if the State matches the expenditures with at least an 
        equal amount of State funds. At least half of the match 
        must be additional to the amount expended by the State 
        for public water supervision in fiscal year 1993.]1419. 
        An additional 2 percent of the funds annually allotted 
        to each State under this section may be used by the 
        State to provide technical assistance to public water 
        systems serving 10,000 or fewer persons in the State. 
        Funds utilized under subparagraph (B) shall not be used 
        for enforcement actions.
          (3) Guidance and regulations.--The Administrator 
        shall publish guidance and promulgate regulations as 
        may be necessary to carry out the provisions of this 
        section, including--
                  (A) provisions to ensure that each State 
                commits and expends funds allotted to the State 
                under this section as efficiently as possible 
                in accordance with this title and applicable 
                State laws;
                  (B) guidance to prevent waste, fraud, and 
                abuse; and
                  (C) guidance to avoid the use of funds made 
                available under this section to finance the 
                expansion of any public water system in 
                anticipation of future population growth.
        The guidance and regulations shall also ensure that the 
        States, and public water systems receiving assistance 
        under this section, use accounting, audit, and fiscal 
        procedures that conform to generally accepted 
        accounting standards.
          (4) State report.--Each State administering a loan 
        fund and assistance program under this subsection shall 
        publish and submit to the Administrator a report every 
        2 years on its activities under this section, including 
        the findings of the most recent audit of the fund and 
        the entire State allotment. The Administrator shall 
        periodically audit all State loan funds established by, 
        and all other amounts allotted to, the States pursuant 
        to this section in accordance with procedures 
        established by the Comptroller General.
          (5) Transfer of funds.--
                  (A) In general.--The Governor of a State 
                may--
                          (i)(I) reserve not more than the 
                        greater of--
                                  (aa) 33 percent of a 
                                capitalization grant made under 
                                this section; or
                                  (bb) 33 percent of a 
                                capitalization grant made under 
                                section 601 of the Federal 
                                Water Pollution Control Act (33 
                                U.S.C. 1381);
                          (II) add the funds reserved to any 
                        funds provided to the State under 
                        section 601 of the Federal Water 
                        Pollution Control Act (33 U.S.C. 1381); 
                        and
                          (ii)(I) reserve for any fiscal year 
                        an amount that does not exceed the 
                        amount that may be reserved under 
                        clause (i)(I) for that year from 
                        capitalization grants made under 
                        section 601 of that Act (33 U.S.C. 
                        1381); and
                          (II) add the reserved funds to any 
                        funds provided to the State under this 
                        section.
                  (B) State match.--Funds reserved under this 
                paragraph shall not be considered to be a State 
                match of a capitalization grant required under 
                this section or section 602(b) of the Federal 
                Water Pollution Control Act (33 U.S.C. 
                1382(b)).

           *       *       *       *       *       *       *

  (k) Other Authorized Activities.--
          (1) In general.--Notwithstanding subsection (a)(2), a 
        State may take each of the following actions:
                  (A) Provide assistance, only in the form of a 
                loan, to one or more of the following:
                          (i) Any public water system described 
                        in subsection (a)(2) to acquire land or 
                        a conservation easement from a willing 
                        seller or grantor, if the purpose of 
                        the acquisition is to protect the 
                        source water of the system from 
                        contamination and to ensure compliance 
                        with national primary drinking water 
                        regulations.
                          (ii) Any community water system to 
                        implement local, voluntary source water 
                        protection measures to protect source 
                        water in areas delineated pursuant to 
                        section 1453, in order to 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. Funds authorized under this 
                        clause may be used to fund only 
                        voluntary, incentive-based mechanisms.
                          (iii) Any community water system to 
                        provide funding in accordance with 
                        section 1454(a)(1)(B)(i).
                  (B) Provide assistance, including technical 
                and financial assistance, to any public water 
                system as part of a capacity development 
                strategy developed and implemented in 
                accordance with section 1420(c).
                  (C) Make expenditures from the capitalization 
                grant of the State for fiscal years 1996 and 
                1997 to delineate and assess source water 
                protection areas in accordance with section 
                1453, except that funds set aside for such 
                expenditure shall be obligated within 4 fiscal 
                years.
                  (D) Make expenditures from the fund for the 
                establishment and implementation of wellhead 
                protection programs under section 1428.
          (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 2010;
                  (B) $2,000,000,000 for each of fiscal years 
                2011 and 2012;
                  (C) $3,200,000,000 for fiscal year 2013; and
                  (D) $6,000,000,000 for fiscal year 2014.
          (2) Availability.--Amounts made available under this 
        subsection shall remain available until expended.
          (3) Reservation for needs surveys.--Of the amount 
        made available under paragraph (1) to carry out this 
        section for a fiscal year, the Administrator may 
        reserve not more than $1,000,000 per year to pay the 
        costs of conducting needs surveys under subsection (h).

           *       *       *       *       *       *       *

  (s) Negotiation of Contracts.--For communities with 
populations of more than 10,000 individuals, a contract to be 
carried out using funds directly made available by a 
capitalization grant under this section for program management, 
construction management, feasibility studies, preliminary 
engineering, design, engineering, surveying, mapping, or 
architectural or related services shall be negotiated in the 
same manner as--
          (1) a contract for architectural and engineering 
        services is negotiated under chapter 11 of title 40, 
        United States Code; or
          (2) an equivalent State qualifications-based 
        requirement (as determined by the Governor of the 
        State).

           *       *       *       *       *       *       *

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