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[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 434 Introduced in House (IH)]

<DOC>

115th CONGRESS
  1st Session
                                H. R. 434

To authorize a pilot project for an innovative water project financing 
                    program, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            January 11, 2017

 Mr. Denham (for himself, Mr. LaMalfa, Mr. Newhouse, Mr. Calvert, Mr. 
  Costa, and Mr. Garamendi) introduced the following bill; which was 
             referred to the Committee on Natural Resources

_______________________________________________________________________

                                 A BILL

 
To authorize a pilot project for an innovative water project financing 
                    program, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``New Water 
Available To Every Reclamation State Act'' or the ``New WATER Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
Sec. 3. Authority to provide assistance.
Sec. 4. Applications.
Sec. 5. Eligibility for assistance.
Sec. 6. Selection criteria.
Sec. 7. Federal requirements.
Sec. 8. Secured loans.
Sec. 9. Program administration.
Sec. 10. State, tribal, and local permits.
Sec. 11. Regulations.
Sec. 12. Funding.
Sec. 13. Report to Congress on pilot project implementation.
Sec. 14. Definitions.

SEC. 2. PURPOSES.

    The purposes of this Act are--
            (1) to promote increased development of critical water 
        resources infrastructure by establishing additional 
        opportunities for financing water resources projects;
            (2) to attract new investment capital to infrastructure 
        projects that are capable of generating revenue streams through 
        user fees or other dedicated funding sources; and
            (3) to leverage private investment in water resources 
        infrastructure.

SEC. 3. AUTHORITY TO PROVIDE ASSISTANCE.

    (a) In General.--For 15 years after the date of the enactment of 
this Act, the Secretary may provide financial assistance under this Act 
to carry eligible projects within--
            (1) any Reclamation State;
            (2) any other State in which the Bureau of Reclamation is 
        authorized to provide project assistance; and
            (3) the States of Alaska and Hawaii.
    (b) Selection.--In selecting projects to receive financial 
assistance under subsection (a), the Secretary shall ensure diversity 
with respect to--
            (1) project types; and
            (2) geographical locations.

SEC. 4. APPLICATIONS.

    To be eligible to receive assistance under this Act, an eligible 
entity shall submit to the Secretary an application at such time, in 
such manner, and containing such information as the Secretary may 
require.

SEC. 5. ELIGIBILITY FOR ASSISTANCE.

    (a) Eligible Projects.--The following projects may be carried out 
using assistance made available under this Act:
            (1) Any non-Federal water infrastructure project that--
                    (A) the Secretary determines, through the 
                completion of an appraisal investigation and 
                feasibility study, would contribute to a safe, adequate 
                water supply for domestic, agricultural, environmental, 
                or municipal and industrial use; and
                    (B) is otherwise eligible for assistance under this 
                Act.
            (2) A project for enhanced energy efficiency in the 
        operation of a water system.
            (3) A project for accelerated repair and replacement of an 
        aging water distribution facility.
            (4) A brackish or sea water desalination project.
            (5) Acquisition of real property or an interest in real 
        property for water storage, reclaimed or recycled water, or 
        wastewater, if the acquisition is integral to a project 
        described in paragraphs (1) through (5).
            (6) A combination of projects, each of which is eligible 
        under paragraphs (1) through (6), for which an eligible entity 
        or group of eligible entities submits a single application.
    (b) Eligible Costs.--Assistance made available under this Act (as 
paid by or for the account of an obligor) may be used to cover the 
following costs with respect to an eligible project:
            (1) Development-phase activities, including planning, 
        feasibility analysis, revenue forecasting, environmental 
        review, permitting, preliminary engineering and design work, 
        and other preconstruction activities.
            (2) Construction, reconstruction, rehabilitation, and 
        replacement activities.
            (3) Acquisition of real property (including water rights, 
        land relating to the project, and improvements to land), 
        environmental mitigation, construction contingencies, and 
        acquisition of equipment.
            (4) Capitalized interest necessary to meet market 
        requirements, reasonably required reserve funds, capital 
        issuance expenses, and other carrying costs during 
        construction.
            (5) Refinancing interim construction funding, existing 
        long-term project obligations, or a secured loan or loan 
        guarantee made under this Act.
    (c) Additional Eligibility Requirements.--To be eligible to receive 
financial assistance under this Act, a project shall meet the following 
criteria, as determined by the Secretary:
            (1) Creditworthiness.--
                    (A) In general.--Subject to subparagraph (B), the 
                project shall be creditworthy, as determined by the 
                Secretary, who shall ensure that any financing for the 
                project has appropriate security features, such as a 
                rate covenant, if applicable, and adequate coverage 
                requirements, to ensure repayment.
                    (B) Opinion letter.--
                            (i) Preliminary rating opinion letter.--The 
                        Secretary shall require each applicant to 
                        provide a preliminary rating opinion letter 
                        from at least one rating agency indicating that 
                        the senior obligations of the project (which 
                        may be the Federal credit instrument) have the 
                        potential to achieve an investment-grade 
                        rating.
                            (ii) Final rating opinion letters.--The 
                        Secretary or the Administrator, as applicable, 
                        shall require each project applicant to 
                        provide, prior to final acceptance and 
                        financing of the project, final rating opinion 
                        letters from at least one rating agency 
                        indicating that the senior obligations of the 
                        project have an investment-grade rating.
            (2) Eligible project costs.--The eligible project costs of 
        a project shall be reasonably anticipated to be not less than 
        $20,000,000.
            (3) Dedicated revenue sources.--The Federal credit 
        instrument for the project shall be repayable, in whole or in 
        part, from dedicated revenue sources that also secure or fund 
        the project obligations.
            (4) Public sponsorship of private entities.--In the case of 
        a project carried out by an entity that is not a State or local 
        government or an agency or instrumentality of a State or local 
        government, the project shall be publicly sponsored as 
        demonstrated by certification of the same by an agency of the 
        relevant State, inclusion in the relevant State's official 
        improvement plan or by other means acceptable to the Secretary.
    (d) Receipt of Other Federal Funding.--Receipt of a Federal grant 
or contract or other Federal funding to support an eligible project 
shall not preclude the project from being eligible for assistance under 
this Act.

SEC. 6. SELECTION CRITERIA.

    (a) Establishment.--The Secretary shall establish criteria for the 
selection of one or more projects that meet the eligibility 
requirements section 5 in accordance with paragraph (2). The Secretary 
may enter into a master credit agreement for a projects secured by a 
common security pledge on terms acceptable to the Secretary.
    (b) Criteria.--The selection criteria shall include the following:
            (1) The extent to which the project is nationally or 
        regionally significant.
            (2) The extent to which assistance under this section would 
        foster innovative public-private partnerships and attract 
        private debt or equity investment.
            (3) The likelihood that assistance under this section would 
        enable the project to proceed at an earlier date than the 
        project would otherwise be able to proceed.
            (4) The extent to which the project uses new or innovative 
        approaches.
            (5) The amount of budget authority required to fund the 
        Federal credit instrument made available under this Act.
            (6) The extent to which the project helps maintain or 
        protect the environment.

SEC. 7. FEDERAL REQUIREMENTS.

    (a) Effect of Section.--Nothing in this section supersedes the 
applicability of other requirements of Federal law (including 
regulations).
    (b) NEPA.--A Federal action carried out regarding a loan or loan 
guarantee provided under this Act shall not be considered to be a 
Federal action for purposes of the National Environmental Policy Act of 
1969 (42 U.S.C. 4321 et seq.).

SEC. 8. SECURED LOANS.

    (a) Agreements.--
            (1) In general.--Subject to paragraphs (2) through (4), the 
        Secretary may enter into agreements with one or more obligors 
        to make secured loans, the proceeds of which shall be used--
                    (A) to finance eligible project costs of any 
                project selected under section 6;
                    (B) to refinance interim construction financing of 
                eligible project costs of any project selected under 
                section 6; or
                    (C) to refinance long-term project obligations or 
                Federal credit instruments, if that refinancing 
                provides additional funding capacity for the 
                completion, enhancement, or expansion of any project 
                that is selected under section 6.
            (2) Limitation on refinancing of interim construction 
        financing.--A secured loan under paragraph (1) shall not be 
        used to refinance interim construction financing under 
        paragraph (1)(B)--
                    (A) if the maturity of such interim construction 
                financing is later than 1 year after the substantial 
                completion of the project; and
                    (B) later than 1 year after the date of substantial 
                completion of the applicable project.
            (3) Risk assessment.--Before entering into an agreement 
        under this subsection for a secured loan, the Secretary, in 
        consultation with the Director of the Office of Management and 
        Budget shall determine an appropriate capital reserve subsidy 
        amount for the secured loan, taking into account each such 
        preliminary rating opinion letter.
            (4) Investment-grade rating requirement.--The execution of 
        a secured loan under this section shall be contingent on 
        receipt by the senior obligations of the project secured by the 
        same revenue pledge of an investment-grade rating from at least 
        one rating agency.
    (b) Terms and Limitations.--
            (1) In general.--A secured loan provided for a project 
        under this section shall be subject to such terms and 
        conditions, and contain such covenants, representations, 
        warranties, and requirements (including requirements for 
        audits), as the Secretary determines to be appropriate.
            (2) Maximum amount.--The amount of a secured loan under 
        this section shall not exceed the lesser of--
                    (A) an amount equal to 49 percent of the reasonably 
                anticipated eligible project costs; and
                    (B) if the secured loan does not receive an 
                investment-grade rating, the amount of the senior 
                project obligations of the project.
            (3) Payment.--A secured loan under this section--
                    (A) shall be payable, in whole or in part, from 
                State or local taxes, user fees, or other dedicated 
                revenue sources that also secure the senior project 
                obligations of the relevant project;
                    (B) shall include a rate covenant, coverage 
                requirement, or similar security feature supporting the 
                project obligations; and
                    (C) may have a lien on revenues described in 
                subparagraph (A), subject to any lien securing project 
                obligations.
            (4) Interest rate.--The interest rate on a secured loan 
        under this section shall not be less than a rate equal to the 
        yield on United States Treasury securities of a similar 
        maturity to the maturity of the secured loan on the date of 
        execution of the loan agreement.
            (5) Maturity date.--The final maturity date of a secured 
        loan under this section shall be not later than the earlier 
        of--
                    (A) 35 years after the date of substantial 
                completion of the relevant project; and
                    (B) the final day of the useful life of the capital 
                asset being financed.
            (6) Nonsubordination.--A secured loan under this section 
        shall not be subordinated to the claims of any holder of 
        project obligations in the event of bankruptcy, insolvency, or 
        liquidation of the obligor.
            (7) Fees.--The Secretary may establish fees, as provided 
        for in section 10(b), at a level sufficient to cover all or a 
        portion of the costs to the Federal Government of making a 
        secured loan under this section.
            (8) Non-federal share.--The proceeds of a secured loan 
        under this section may be used to pay any non-Federal share of 
        project costs required if the loan is repayable from non-
        Federal funds.
            (9) Maximum federal involvement.--For each project for 
        which assistance is provided under this Act, the total amount 
        of Federal assistance from all sources, including the 
        assistance provided under this Act, shall not exceed 80 percent 
        of the total project cost.
    (c) Repayment.--
            (1) Schedule.--The Secretary shall establish a repayment 
        schedule for each secured loan provided under this section, 
        based on the projected cash flow from project revenues, other 
        repayment sources, and the useful life of the project.
            (2) Commencement.--Scheduled loan repayment of principal or 
        interest on a secured loan under this section shall commence 
        not later than 5 years after the date of substantial completion 
        of the project.
            (3) Deferred payments.--
                    (A) Authorization.--If, at any time after the date 
                of substantial completion of a project for which a 
                secured loan is provided under this section, the 
                project is unable to generate sufficient revenues to 
                pay the scheduled loan repayments of principal and 
                interest on the secured loan, the Secretary may allow 
                the obligor, subject to subparagraph (C), to add unpaid 
                principal and interest to the outstanding balance of 
                the secured loan.
                    (B) Interest.--Any payment deferred under 
                subparagraph (A) shall--
                            (i) continue to accrue interest in 
                        accordance with subsection (b)(4) until fully 
                        repaid; and
                            (ii) be scheduled to be amortized over the 
                        remaining term of the secured loan.
                    (C) Criteria.--
                            (i) In general.--Any payment deferral under 
                        subparagraph (A) shall be contingent on the 
                        project meeting such criteria as the Secretary 
                        may establish.
                            (ii) Repayment standards.--The criteria 
                        established under clause (i) shall include 
                        standards for reasonable assurance of 
                        repayment.
            (4) Prepayment.--
                    (A) Use of excess revenues.--Any excess revenues 
                that remain after satisfying scheduled debt service 
                requirements on the project obligations and secured 
                loan and all deposit requirements under the terms of 
                any trust agreement, bond resolution, or similar 
                agreement securing project obligations may be applied 
                annually to prepay a secured loan under this section 
                without penalty.
                    (B) Use of proceeds of refinancing.--A secured loan 
                under this section may be prepaid at any time without 
                penalty from the proceeds of refinancing from non-
                Federal funding sources.
    (d) Sale of Secured Loans.--
            (1) In general.--Subject to paragraph (2), as soon as 
        practicable after the date of substantial completion of a 
        project and after providing a notice to the obligor, the 
        Secretary may sell to another entity or reoffer into the 
        capital markets a secured loan for a project under this 
        section, if the Secretary determines that the sale or 
        reoffering can be made on favorable terms.
            (2) Consent of obligor.--In making a sale or reoffering 
        under paragraph (1), the Secretary may not change the original 
        terms and conditions of the secured loan without the written 
        consent of the obligor.
    (e) Loan Guarantees.--
            (1) In general.--The Secretary may provide a loan guarantee 
        to a lender in lieu of making a secured loan under this 
        section, if the Secretary determines that the budgetary cost of 
        the loan guarantee is substantially the same as that of a 
        secured loan.
            (2) Terms.--The terms of a loan guarantee provided under 
        this subsection shall be consistent with the terms required 
        under this section for a secured loan, except that the rate on 
        the guaranteed loan and any prepayment features shall be 
        negotiated between the obligor and the lender, with the consent 
        of the Secretary.

SEC. 9. PROGRAM ADMINISTRATION.

    (a) Requirement.--The Secretary shall establish a uniform system to 
service the Federal credit instruments made available under this Act.
    (b) Servicer.--
            (1) In general.--The Secretary may appoint a financial 
        entity to assist the Secretary in servicing the Federal credit 
        instruments provided under this Act.
            (2) Duties; fee.--A servicer appointed under paragraph (1) 
        shall--
                    (A) act as the agent for the Secretary; and
                    (B) receive a servicing fee, subject to approval by 
                the Secretary.
    (c) Assistance From Experts.--The Secretary may retain the 
services, including counsel, of any organization or entity with 
expertise in the field of municipal and project finance to assist in 
the underwriting and servicing of Federal credit instruments provided 
under this Act.

SEC. 10. STATE, TRIBAL, AND LOCAL PERMITS.

    The provision of financial assistance for a project under this Act 
shall not--
            (1) relieve any recipient of the assistance of any 
        obligation to obtain any required State, local, or tribal 
        permit or approval with respect to the project;
            (2) limit the right of any unit of State, local, or tribal 
        government to approve or regulate any rate of return on private 
        equity invested in the project; or
            (3) otherwise supersede any State, local, or tribal law 
        (including any regulation) applicable to the construction or 
        operation of the project.

SEC. 11. REGULATIONS.

    The Secretary may promulgate such regulations as the Secretary 
determines to be appropriate to carry out this Act.

SEC. 12. FUNDING.

    (a) In General.--There is authorized to be appropriated to each of 
the Secretary and the Administrator to carry out this Act, to remain 
available until expended--
            (1) $20,000,000 for fiscal year 2018;
            (2) $25,000,000 for fiscal year 2019;
            (3) $35,000,000 for fiscal year 2020;
            (4) $45,000,000 for fiscal year 2021; and
            (5) $50,000,000 for fiscal year 2022.
    (b) Administrative Costs.--Of the funds made available to carry out 
this Act, the Secretary may use for the administration of this Act not 
more than $2,200,000 for each of fiscal years 2018 through 2022.

SEC. 13. REPORT TO CONGRESS ON PILOT PROJECT IMPLEMENTATION.

    Not later than 2 years after the date of enactment of this Act, and 
every 2 years thereafter, the Secretary shall submit to the Committee 
on Energy and Natural Resources of the Senate and the Committee on 
Natural Resources of the House of Representatives a report summarizing 
the financial performance of the projects that are receiving, or have 
received, assistance under this Act, including an assessment of whether 
the objectives of this Act are being met.

SEC. 14. DEFINITIONS.

    In this Act:
            (1) Eligible entity.--The term ``eligible entity'' means--
                    (A) a corporation;
                    (B) a partnership;
                    (C) a joint venture;
                    (D) a trust;
                    (E) a State, local or non-Federal governmental 
                entity, agency, or instrumentality; and
                    (F) a conservancy district, irrigation district, 
                canal company, mutual water company, water users' 
                association, Indian tribe, agency created by interstate 
                compact, or any other entity that has the capacity to 
                contract with the United States under Federal 
                reclamation law.
            (2) Eligible project costs.--The term ``eligible project 
        costs'' means the total cost of activities deemed eligible for 
        assistance in section 6(b) of this Act.
            (3) Federal credit instrument.--The term ``Federal credit 
        instrument'' means a secured loan or loan guarantee authorized 
        to be made available under this Act with respect to a project.
            (4) Investment-grade rating.--The term ``investment-grade 
        rating'' means a rating of BBB minus, Baa3, bbb minus, BBB 
        (low), or higher as assigned by a rating agency to project 
        obligations.
            (5) Lender.--
                    (A) In general.--The term ``lender'' means any non-
                Federal qualified institutional buyer (as defined in 
                section 230.144A(a) of title 17, Code of Federal 
                Regulations (or a successor regulation) (commonly known 
                as ``Rule 144A(a) of the Securities and Exchange 
                Commission'' and issued under the Securities Act of 
                1933 (15 U.S.C. 77a et seq.))).
                    (B) Inclusions.--The term ``lender'' includes--
                            (i) a qualified retirement plan (as defined 
                        in section 4974 of the Internal Revenue Code of 
                        1986) that is a qualified institutional buyer; 
                        and
                            (ii) a governmental plan (as defined in 
                        section 414 of the Internal Revenue Code of 
                        1986) that is a qualified institutional buyer.
            (6) Loan guarantee.--The term ``loan guarantee'' means any 
        guarantee or other pledge by the Secretary to pay all or part 
        of the principal of, and interest on, a loan or other debt 
        obligation issued by an obligor and funded by a lender.
            (7) Master credit agreement.--The term ``master credit 
        agreement'' means an Agreement to extend credit assistance for 
        one or more projects secured by a common security pledge (which 
        shall receive an investment-grade rating from a rating agency), 
        or for a single project that would--
                    (A) make contingent commitments of one or more 
                secured loans or other Federal credit instruments at 
                future dates, subject to the availability of future 
                funds being made available to carry out this Act;
                    (B) establish the maximum amounts and general terms 
                and conditions of the secured loans or other Federal 
                credit instruments;
                    (C) identify the one or more dedicated non-Federal 
                revenue sources that will secure the repayment of the 
                secured loans or secured Federal credit instruments;
                    (D) provide for the obligation of funds for the 
                secured loans or secured Federal credit instruments 
                after all requirements have been met for the projects 
                subject to the master credit agreement, including--
                            (i) completion of an environmental impact 
                        statement or similar analysis required under 
                        the National Environmental Policy Act of 1969 
                        (42 U.S.C. 4321 et seq.);
                            (ii) compliance with such other 
                        requirements as are specified in this Act; and
                            (iii) the availability of funds to carry 
                        out this Act; and
                    (E) require that contingent commitments result in a 
                financial close and obligation of credit assistance not 
                later than 3 years after the date of entry into the 
                master credit agreement, or release of the commitment, 
                unless otherwise extended by the Secretary.
            (8) Obligor.--The term ``obligor'' means an eligible entity 
        that is primarily liable for payment of the principal of, or 
        interest on, a Federal credit instrument.
            (9) Project obligation.--
                    (A) In general.--The term ``project obligation'' 
                means any note, bond, debenture, or other debt 
                obligation issued by an obligor in connection with the 
                financing of a project.
                    (B) Exclusion.--The term ``project obligation'' 
                does not include a Federal credit instrument.
            (10) Rating agency.--The term ``rating agency'' means a 
        credit rating agency registered with the Securities and 
        Exchange Commission as a nationally recognized statistical 
        rating organization (as defined in section 3(a) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78c(a))).
            (11) Reclamation state.--The term ``Reclamation State'' 
        means any of the following States:
                    (A) Arizona;
                    (B) California;
                    (C) Colorado;
                    (D) Idaho;
                    (E) Kansas;
                    (F) Montana;
                    (G) Nebraska;
                    (H) Nevada;
                    (I) New Mexico;
                    (J) North Dakota;
                    (K) Oklahoma;
                    (L) Oregon;
                    (M) South Dakota;
                    (N) Texas;
                    (O) Utah;
                    (P) Washington; and
                    (Q) Wyoming.
            (12) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior.
            (13) Secured loan.--The term ``secured loan'' means a 
        direct loan or other debt obligation issued by an obligor and 
        funded by the Secretary in connection with the financing of a 
        project under this Act.
            (14) Subsidy amount.--The term ``subsidy amount'' means the 
        amount of budget authority sufficient to cover the estimated 
        long-term cost to the Federal Government of a Federal credit 
        instrument, as calculated on a net present value basis, 
        excluding administrative costs and any incidental effects on 
        governmental receipts or outlays in accordance with the Federal 
        Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).
            (15) Substantial completion.--The term ``substantial 
        completion'', with respect to a project, means--
                    (A) the initial operation of a project (after 
                completion of any startup tests), resulting in 
                producing, storage, delivery, receiving, or conserving 
                water; or
                    (B) a comparable event, as determined by the 
                Secretary and specified in the master credit agreement.
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