II 

108TH CONGRESS 

2D SESSION S. 2550 

To amend the Federal Water Pollution Control Act and the Safe Drinking 

Water Act to improve water and wastewater infrastructure in the United 

States. 

IN THE SENATE OF THE UNITED STATES 

JUNE 21, 2004 

Mr. CRAPO (for himself, Mr. INHOFE, and Ms. MURKOWSKI) introduced the 

following bill; which was read twice and referred to the Committee on Environment and Public Works 

A BILL 

To amend the Federal Water Pollution Control Act and 

the Safe Drinking Water Act to improve water and 

wastewater infrastructure in the United States. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Water Infrastructure Financing Act’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—WATER POLLUTION INFRASTRUCTURE 
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Sec. 101. Technical assistance for rural and small treatment works. 

Sec. 102. Projects eligible for assistance. 

Sec. 103. Affordability. 

Sec. 104. Water pollution control revolving loan funds. 

Sec. 105. Transferability of funds. 

Sec. 106. Grants program. 

Sec. 107. Costs of administering water pollution control revolving loan funds. 

Sec. 108. Allocation formula. 

Sec. 109. Authorization of appropriations. 

Sec. 110. Reports. 

TITLE II—SAFE DRINKING WATER INFRASTRUCTURE 

Sec. 201. Technical assistance for small centers. 

Sec. 202. Preconstruction work. 

Sec. 203. Affordability. 

Sec. 204. Safe drinking water revolving loan funds. 

Sec. 205. Grants program. 

Sec. 206. Other authorized activities. 

Sec. 207. Small system revolving loan fund. 

Sec. 208. Authorization of appropriations. 

TITLE III—MISCELLANEOUS 

Sec. 301. Definition of Administrator. 

Sec. 302. Demonstration grant program for water quality enhancement and 

management. 

Sec. 303. Cost of service study. 

Sec. 304. State revolving fund review process. 

1 TITLE I—WATER POLLUTION 

2 INFRASTRUCTURE 

3 SEC. 101. TECHNICAL ASSISTANCE FOR RURAL AND SMALL 

4 TREATMENT WORKS. 

5 Title II of the Federal Water Pollution Control Act is 

6 amended by adding after section 221 (33 U.S.C. 1301) 

7 the following: 

8 ‘‘SEC. 222. TECHNICAL ASSISTANCE FOR RURAL AND SMALL 

9 TREATMENT WORKS. 

10 ‘‘(a) DEFINITION OF QUALIFIED NONPROFIT TECH11 NICAL ASSISTANCE PROVIDER.—In this section, the term 

12 ‘qualified nonprofit technical assistance provider’ means a 
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1 qualified nonprofit technical assistance provider of water 

2 and wastewater services to small rural communities that 

3 provide technical assistance to treatment works that— 

4 ‘‘(1) serve not more than 10,000 users; and 

5 ‘‘(2) are located in a rural area. 

6 ‘‘(b) GRANT PROGRAM.— 

7 ‘‘(1) IN GENERAL.—The Administrator may 

8 make grants to qualified nonprofit technical assist9 ance providers— 

10 ‘‘(A) to assist small treatment works in 

11 planning, developing, and obtaining financing 

12 for eligible projects described in section 603(c); 

13 ‘‘(B) to capitalize revolving loan funds to 

14 provide loans, in consultation with the State in 

15 which the assistance is provided, to rural and 

16 small municipalities for predevelopment costs 

17 (including costs for planning, design, associated 

18 preconstruction, and necessary activities for 

19 siting the facility and related elements) associ20 ated with wastewater infrastructure projects or 

21 short-term costs incurred for equipment re22 placement that is not part of regular operation 

23 and maintenance activities for existing waste24 water systems, so long as— 
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1 ‘‘(i) any loan from the fund is made 

2 at or below market interest rate, for a 

3 term not to exceed 10 years; 

4 ‘‘(ii) the amount of a single loan does 

5 not exceed $100,000; 

6 ‘‘(iii) all loan repayments are credited 

7 to the fund; 

8 ‘‘(C) to provide technical assistance and 

9 training for rural and small publicly owned 

10 treatment works and decentralized wastewater 

11 treatment systems to enable those treatment 

12 works and systems to protect water quality and 

13 achieve and maintain compliance with this Act; 

14 and 

15 ‘‘(D) to disseminate information to rural 

16 and small municipalities with respect to plan17 ning, design, construction, and operation of 

18 publicly owned treatment works and decentral19 ized wastewater treatment systems. 

20 ‘‘(2) DISTRIBUTION OF GRANT.—In carrying 

21 out this subsection, the Administrator shall ensure, 

22 to the maximum extent practicable, that technical 

23 assistance provided using funds from a grant under 

24 paragraph (1) is made available in each State. 
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1 ‘‘(3) CONSULTATION.—As a condition of receiv2 ing a grant under this subsection, a qualified non3 profit technical assistance provider shall consult with 

4 each State in which grant funds are to be expended 

5 or otherwise made available before the grant funds 

6 are expended or made available in the State. 

7 ‘‘(4) ANNUAL REPORT.—For each fiscal year, a 

8 qualified nonprofit technical assistance provider that 

9 receives a grant under this paragraph shall submit 

10 to the Administrator a report that— 

11 ‘‘(A) describes the activities of the quali12 fied nonprofit technical assistance provider 

13 using grant funds received under this section 

14 for the fiscal year; and 

15 ‘‘(B) specifies the number of communities 

16 served, the size of those communities, and the 

17 type of financing provided. 

18 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There 

19 is authorized to be appropriated to carry out this sub20 section $25,000,000 for each of fiscal years 2005 through 

21 2009.’’. 

22 SEC. 102. PROJECTS ELIGIBLE FOR ASSISTANCE. 

23 Section 603 of the Federal Water Pollution Control 

24 Act (33 U.S.C. 1383) is amended by striking subsection 

25 (c) and inserting the following: 
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1 ‘‘(c) PROJECTS ELIGIBLE FOR ASSISTANCE.—Funds 

2 in each State water pollution control revolving fund shall 

3 be used only for— 

4 ‘‘(1) providing financial assistance to a munici5 pality, intermunicipal, interstate, or State agency, or 

6 private utility that principally treats municipal 

7 wastewater or domestic sewage, for construction (in8 cluding costs for planning, design, associated 

9 preconstruction, and necessary activities for siting 

10 the facility and related elements) of treatment works 

11 (as defined in section 212); 

12 ‘‘(2) implementation of a management program 

13 established under section 319; 

14 ‘‘(3) development and implementation of a con15 servation and management plan under section 320; 

16 ‘‘(4) water conservation projects or activities 

17 the primary purpose of which is the protection, pres18 ervation, or enhancement of water quality, including 

19 through— 

20 ‘‘(A) piping or lining of an irrigation canal; 

21 ‘‘(B) recovery or recycling of wastewater or 

22 runoff from irrigation; 

23 ‘‘(C) irrigation scheduling; 

24 ‘‘(D) measurement or metering of water 

25 use; or 
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1 ‘‘(E) improvement of on-field irrigation ef2 ficiency; 

3 ‘‘(5) reuse, reclamation, or recycling projects 

4 the primary purpose of which is the protection, pres5 ervation, or enhancement of water quality; 

6 ‘‘(6) projects to increase the security of waste7 water treatment works (excluding any expenditure 

8 for operations or maintenance); or 

9 ‘‘(7) measures to control municipal stormwater, 

10 the primary purpose of which is the preservation, 

11 protection, or enhancement of water quality.’’. 

12 SEC. 103. AFFORDABILITY. 

13 Section 603 of the Federal Water Pollution Control 

14 Act (33 U.S.C. 1383) is amended— 

15 (1) by redesignating subsections (e) through (h) 

16 as subsections (f) through (i); and 

17 (2) by inserting after subsection (d) the fol18 lowing: 

19 ‘‘(e) TYPES OF ASSISTANCE FOR DISADVANTAGED

20 COMMUNITIES.— 

21 ‘‘(1) DEFINITION OF DISADVANTAGED COMMU22 NITY.—In this subsection, the term ‘disadvantaged 

23 community’ means the service area, or portion of a 

24 service area, of a treatment works that meets afford25 ability criteria established after public review and 
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1 comment by the State in which the treatment works 

2 is located. 

3 ‘‘(2) LOAN SUBSIDY.—Notwithstanding any 

4 other provision of this section, in a case in which the 

5 State makes a loan from the water pollution control 

6 revolving loan fund in accordance with subsection (c) 

7 to a disadvantaged community or a community that 

8 the State expects to become a disadvantaged com9 munity as the result of a proposed project, the State 

10 may provide additional subsidization, including the 

11 forgiveness of the principal of the loan. 

12 ‘‘(3) TOTAL AMOUNT OF SUBSIDIES.—For each 

13 fiscal year, the total amount of loan subsidies made 

14 by the State pursuant to this subsection may not ex15 ceed 30 percent of the amount of the capitalization 

16 grant received by the State for the fiscal year. 

17 ‘‘(4) EXTENDED TERM.—A State may provide 

18 an extended term for a loan if the extended term— 

19 ‘‘(A) terminates not later than the date 

20 that is 30 years after the date of completion of 

21 the project; and 

22 ‘‘(B) does not exceed the expected design 

23 life of the project. 
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1 ‘‘(5) INFORMATION.—The Administrator may 

2 publish information to assist States in establishing 

3 affordability criteria described in paragraph (1).’’. 

4 SEC. 104. WATER POLLUTION CONTROL REVOLVING LOAN 

5 FUNDS. 

6 Section 603 of the Federal Water Pollution Control 

7 Act (33 U.S.C. 1383) is amended by striking subsection 

8 (h) (as redesignated by section 103) and inserting the fol9 lowing: 

10 ‘‘(h) PRIORITY SYSTEM REQUIREMENT.— 

11 ‘‘(1) DEFINITIONS.—In this subsection: 

12 ‘‘(A) RESTRUCTURING.—The term ‘re13 structuring’ means— 

14 ‘‘(i) the consolidation of management 

15 functions or ownership with another facil16 ity; or 

17 ‘‘(ii) the formation of cooperative 

18 partnerships. 

19 ‘‘(B) TRADITIONAL WASTEWATER AP20 PROACH.—The term ‘traditional wastewater ap21 proach’ means a managed system used to col22 lect and treat wastewater from an entire service 

23 area consisting of— 

24 ‘‘(i) collection sewers; 
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1 ‘‘(ii) a centralized treatment plant 

2 using biological or physical/chemical treat3 ment processes; and 

4 ‘‘(iii) a direct point source discharge 

5 to surface water. 

6 ‘‘(2) PRIORITY SYSTEM.—A State shall provide 

7 financial assistance from the water pollution control 

8 revolving fund of the State only for projects de9 scribed in subsection (c) by amending the priority 

10 system established by the State under subsection (g) 

11 under which the State— 

12 ‘‘(A) gives more weight to an application 

13 for assistance by a treatment works if the appli14 cation includes— 

15 ‘‘(i) an inventory of assets, including 

16 a description of the condition of those as17 sets; 

18 ‘‘(ii) a schedule for replacement of as19 sets; 

20 ‘‘(iii) a financing plan indicating 

21 sources of revenue from rate payers, 

22 grants, bonds, other loans, and other 

23 sources; 

24 ‘‘(iv) a review of options for restruc25 turing the treatment works; 
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1 ‘‘(v) a review of options for ap2 proaches other than a traditional waste3 water approach that may include actions 

4 or projects that treat or minimize sewage 

5 or urban stormwater discharges using— 

6 ‘‘(I) decentralized or distributed 

7 stormwater controls; 

8 ‘‘(II) decentralized wastewater 

9 treatment; 

10 ‘‘(III) low impact development 

11 technologies; 

12 ‘‘(IV) stream buffers; 

13 ‘‘(V) wetland restoration; or 

14 ‘‘(VI) actions to minimize the 

15 amount of and direct connections to 

16 impervious surfaces; or 

17 ‘‘(vi) such other information as the 

18 State determines to be appropriate; 

19 ‘‘(B) takes into consideration appropriate 

20 chemical, physical, and biological data that the 

21 State considers reasonably available and of suf22 ficient quality; 

23 ‘‘(C) provides for public notice and oppor24 tunity to comment on establishment of the sys25 tem and the summary under subparagraph (D); 
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1 ‘‘(D) publishes not less than biennially in 

2 summary form a description of projects in the 

3 State that are eligible for assistance under this 

4 title that indicates— 

5 ‘‘(i) the priority assigned to each 

6 project under the priority system of the 

7 State; and 

8 ‘‘(ii) the funding schedule for each 

9 project, to the extent that such information 

10 is available; and 

11 ‘‘(E) ensures that projects undertaken with 

12 assistance under this title are designed to 

13 achieve, in the estimation of the State, the opti14 mum water quality management, consistent 

15 with the public health and water quality goals 

16 and requirements of this title.’’. 

17 SEC. 105. TRANSFERABILITY OF FUNDS. 

18 Section 603 of the Federal Water Pollution Control 

19 Act (33 U.S.C. 1383) (as amended by section 103) is 

20 amended by adding at the end the following: 

21 ‘‘(j) TRANSFER OF FUNDS.— 

22 ‘‘(1) IN GENERAL.—The Governor of a State 

23 may— 
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1 ‘‘(A)(i) reserve not more than 33 percent 

2 of a capitalization grant made under this title; 

3 and 

4 ‘‘(ii) add the funds reserved to any funds 

5 provided to the State under section 1452 of the 

6 Safe Drinking Water Act (42 U.S.C. 300j–12); 

7 and 

8 ‘‘(B)(i) reserve in any year an amount that 

9 does not exceed the amount that may be re10 served under subparagraph (A) for that year 

11 from capitalization grants made under section 

12 1452 of that Act (42 U.S.C. 300j–12); and 

13 ‘‘(ii) add the reserved funds to any funds 

14 provided to the State under this title. 

15 ‘‘(2) STATE MATCH.—Funds reserved under 

16 this subsection shall not be considered to be a State 

17 contribution for a capitalization grant required 

18 under this title or section 1452(b) of the Safe 

19 Drinking Water Act (42 U.S.C. 300j–12(b)).’’. 

20 SEC. 106. GRANTS PROGRAM. 

21 Section 603 of the Federal Water Pollution Control 

22 Act (33 U.S.C. 1383) (as amended by section 105) is 

23 amended by adding at the end the following: 

24 ‘‘(k) SETASIDE.— 
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1 ‘‘(1) $3,000,000,000 OR LESS MADE AVAIL2 ABLE.— 

3 ‘‘(A) IN GENERAL.—For a fiscal year in 

4 which appropriations for State revolving loan 

5 funds do not exceed $3,000,000,000, a State 

6 shall set aside 10 percent of its capitalization 

7 grant under section 601(a) to provide grants to 

8 eligible users described in subsection (c) in the 

9 amount of not more than 55 percent of the 

10 total cost of a project for which a grant is 

11 made. 

12 ‘‘(B) WAIVER.—A State may waive the re13 quirement of subparagraph (A) if the average 

14 time for processing loan applications during the 

15 preceding 12 months did not exceed 90 days. 

16 ‘‘(2) MORE THAN $3,000,000,000 MADE AVAIL17 ABLE.—For a fiscal year in which appropriations for 

18 State revolving loan funds exceed $3,000,000,000, a 

19 State shall set aside not more than 10 nor less than 

20 5 percent of its State revolving loan fund.’’. 

21 SEC. 107. COSTS OF ADMINISTERING WATER POLLUTION 

22 CONTROL REVOLVING LOAN FUNDS. 

23 Section 603(d)(7) of the Federal Water Pollution 

24 Control Act (33 U.S.C. 1383(d)(7)) is amended by strik25 ing ‘‘4 percent’’ and inserting ‘‘6 percent’’. 
15 

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1 SEC. 108. ALLOCATION FORMULA. 

2 Section 604 of the Federal Water Pollution Control 

3 Act (33 U.S.C. 1384) is amended— 

4 (1) by redesignating subsections (b) and (c) as 

5 subsections (d) and (e), respectively; and 

6 (2) by striking subsection (a) and inserting the 

7 following: 

8 ‘‘(a) DEFINITIONS.—In this subsection: 

9 ‘‘(1) BASE FORMULA.—The term ‘base formula’ 

10 means a formula for the allotment of funds made 

11 available to carry out this section for a fiscal year 

12 to States in accordance with section 205(c)(3). 

13 ‘‘(2) NEEDS SURVEY.—The term ‘needs survey’ 

14 means a needs survey conducted under section 

15 516(2). 

16 ‘‘(3) NEEDS SURVEY PERCENTAGE.— The term 

17 ‘needs survey percentage’, with respect to a State, 

18 means the percentage applicable to the State under 

19 a formula for the allotment of funds made available 

20 to carry out this section for a fiscal year to States 

21 in amounts determined by the Administrator based 

22 on the ratio that— 

23 ‘‘(A) the needs of a State described in cat24 egories I through VII of the most recent needs 

25 survey; bears to 
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1 ‘‘(B) the needs of all States described in 

2 categories I through VII of the most recent 

3 needs survey. 

4 ‘‘(4) NEXT NEEDS SURVEY.—The term ‘next 

5 needs survey’ means the first needs survey that is 

6 completed after the 2000 needs survey. 

7 ‘‘(5) STATE.—The term ‘State’ means a State, 

8 the District of Columbia, and the Commonwealth of 

9 Puerto Rico. 

10 ‘‘(b) ALLOCATION OF FUNDS.— 

11 ‘‘(1) IN GENERAL.—Funds made available to 

12 carry out this section for a fiscal year shall be allo13 cated by the Administrator in accordance with this 

14 subsection. 

15 ‘‘(2) INDIAN TRIBES.—Of the total amount of 

16 funds available, 1.5 percent shall be allocated to In17 dian tribes (within the meaning of section 518(c)). 

18 ‘‘(3) CERTAIN TERRITORIES AND FREELY ASSO19 CIATED STATES.—Of the total amount of funds 

20 made available, 0.25 percent shall be allocated to 

21 Guam, the Virgin Islands, Samoa, the Common22 wealth of the Northern Mariana Islands, the Fed23 erated States of Micronesia, the Republic of the 

24 Marshall Islands, and the Republic of Palau to be 
17 

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1 allocated among those territories and freely associ2 ated states, as determined by the Administrator. 

3 ‘‘(4) STATES.— 

4 ‘‘(A) TARGET ALLOCATION.—Each State 

5 shall have a target allocation, which— 

6 ‘‘(i) in the case of a State for which 

7 the needs survey percentage is less than 

8 1.0 percent, shall be 1.0 percent; and 

9 ‘‘(ii) in the case of any other State, 

10 shall be the needs survey percentage. 

11 ‘‘(B) LIMITATION ON GROWTH.— 

12 ‘‘(i) APPLICABILITY.—This subpara13 graph applies with respect to any fiscal 

14 year for which the amount of funds made 

15 available to carry out this section is 

16 $3,150,000,000 or less. 

17 ‘‘(ii) STATES FOR WHICH THE NEEDS

18 SURVEY PERCENTAGE IS LESS THAN 1.0

19 PERCENT.—In the case of a State for 

20 which the needs survey percentage is 1.0 

21 percent or less, the growth in allocation in 

22 dollar terms relative to the base formula 

23 shall be limited to— 

24 ‘‘(I) 12 percent for fiscal year 

25 2005; 
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1 ‘‘(II) 16 percent for fiscal year 

2 2006; 

3 ‘‘(III) 20 percent for fiscal year 

4 2007; 

5 ‘‘(IV) 24 percent for fiscal year 

6 2008; and 

7 ‘‘(V) 28 percent for fiscal year 

8 2009 and each fiscal year thereafter. 

9 ‘‘(iii) STATES FOR WHICH THE NEEDS

10 SURVEY PERCENTAGE IS 1.0 PERCENT OR

11 MORE.—In the case of a State for which 

12 the needs survey percentage is greater 

13 than 1.0 percent, the growth in allocation 

14 in dollar terms relative to the base formula 

15 shall be limited to 0.0 percent. 

16 ‘‘(C) LIMITATION ON LOSS.— 

17 ‘‘(i) GROWTH OF LESS THAN 1.0 PER18 CENT.—A dollar amount that is not less 

19 than the dollar amount under the base for20 mula shall be allocated to States described 

21 in subparagraph (A)(i) but not described 

22 in subparagraph (D). 

23 ‘‘(ii) GROWTH OF 1.0 PERCENT OR

24 MORE.—A dollar amount that is equal to 

25 the dollar amount under the base formula 
19 

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1 shall be allocated to States described in 

2 subparagraph (A)(ii) but not described in 

3 subparagraph (D) that— 

4 ‘‘(I) in the most recent needs 

5 survey, reported higher needs in both 

6 categories V and VII than the State 

7 reported in the previous needs survey; 

8 ‘‘(II) grew in population by more 

9 than 10 percent between the 1990 

10 decenniel census and the 2000 

11 decenniel census; or 

12 ‘‘(III) has a population equal to 

13 4 percent or more of the total popu14 lation of the United States, as re15 ported in the 2000 decenniel census. 

16 ‘‘(D) UNALLOCATED BALANCE.—The 

17 unallocated balance of available funds shall be 

18 allocated in equal parts to all States that, in 

19 the most recent needs survey, report higher 

20 total needs both in absolute dollar terms and as 

21 a percentage of total United States needs.’’. 

22 SEC. 109. AUTHORIZATION OF APPROPRIATIONS. 

23 The Federal Water Pollution Control Act is amended 

24 by striking section 607 (33 U.S.C. 1387) and inserting 

25 the following: 
20 

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1 ‘‘SEC. 607. AUTHORIZATION OF APPROPRIATIONS. 

2 ‘‘(a) IN GENERAL.—There are authorized to be ap3 propriated to carry out this title— 

4 ‘‘(1) $3,200,000,000 for each of fiscal years 

5 2005 and 2006; 

6 ‘‘(2) $3,600,000,000 for fiscal year 2007; 

7 ‘‘(3) $4,000,000,000 for fiscal year 2008; and 

8 ‘‘(4) $6,000,000,000 for fiscal year 2009. 

9 ‘‘(b) AVAILABILITY.—Amounts made available under 

10 this section shall remain available until expended. 

11 ‘‘(c) RESERVATION FOR NEEDS SURVEYS.—Of the 

12 amount made available under subsection (a) to carry out 

13 this title for a fiscal year, the Administrator may reserve 

14 not more than $1,000,000 per year to pay the costs of 

15 conducting needs surveys under section 516(2).’’. 

16 SEC. 110. REPORTS. 

17 Section 516 of the Federal Waste Pollution Control 

18 Act (33 U.S.C. 1375) is amended in the second sentence 

19 by striking ‘‘odd-numbered’’ and inserting ‘‘fourth’’. 

20 TITLE II—SAFE DRINKING 

21 WATER INFRASTRUCTURE 

22 SEC. 201. TECHNICAL ASSISTANCE FOR SMALL CENTERS. 

23 Section 1420(g) of the Safe Drinking Water Act (42 

24 U.S.C. 300g–9(g)) is amended by striking paragraph (4) 

25 and inserting the following: 
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1 ‘‘(4) AUTHORIZATION OF APPROPRIATIONS.— 

2 There is authorized to be appropriated to carry out 

3 this subsection $2,000,000 for each of fiscal years 

4 2005 through 2009.’’. 

5 SEC. 202. PRECONSTRUCTION WORK. 

6 Section 1452(a)(2) of the Safe Drinking Water Act 

7 (42 U.S.C. 300j–12(a)(2)) is amended in the second sen8 tence— 

9 (1) by striking ‘‘(not’’ and inserting ‘‘(including 

10 expenditures for planning, design, and associated 

11 preconstruction and for recovery for siting of the fa12 cility and related elements but not’’; and 

13 (2) by inserting before the period at the end the 

14 following: ‘‘or to replace or rehabilitate aging collec15 tion, treatment, storage (including reservoirs), and 

16 distribution facilities of public water systems or pro17 vide for capital projects to upgrade the security of 

18 public water systems’’. 

19 SEC. 203. AFFORDABILITY. 

20 Section 1452(d)(3) of the Safe Drinking Water Act 

21 (42 U.S.C. 300j–12(d)(3)) is amended in the first sen22 tence by inserting ‘‘, or portion of a service area,’’ after 

23 ‘‘service area’’. 
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1 SEC. 204. SAFE DRINKING WATER REVOLVING LOAN 

2 FUNDS. 

3 (a) IN GENERAL.—Section 1452(g) of the Safe 

4 Drinking Water Act (42 U.S.C. 300j–12(g)) is amended— 

5 (1) in paragraph (2)— 

6 (A) in the first sentence, by striking ‘‘4’’ 

7 and inserting ‘‘6’’; and 

8 (B) by striking ‘‘1419’’ and all that follows 

9 and inserting ‘‘1419.’’; and 

10 (2) by adding at the end the following: 

11 ‘‘(5) TRANSFER OF FUNDS.— 

12 ‘‘(A) IN GENERAL.—The Governor of a 

13 State may— 

14 ‘‘(i)(I) reserve not more than 33 per15 cent of a capitalization grant made under 

16 this section; and 

17 ‘‘(II) add the funds reserved to any 

18 funds provided to the State under section 

19 601 of the Federal Water Pollution Con20 trol Act (33 U.S.C. 1381); and 

21 ‘‘(ii)(I) reserve for any year an 

22 amount that does not exceed the amount 

23 that may be reserved under clause (i)(I) 

24 for that year from capitalization grants 

25 made under section 601 of that Act (33 

26 U.S.C. 1381); and 
23 

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1 ‘‘(II) add the reserved funds to any 

2 funds provided to the State under this sec3 tion. 

4 ‘‘(B) STATE MATCH.—Funds reserved 

5 under this paragraph shall not be considered to 

6 be a State match of a capitalization grant re7 quired under this section or section 602(b) of 

8 the Federal Water Pollution Control Act (33 

9 U.S.C. 1382(b)).’’. 

10 (b) PRIORITY SYSTEM REQUIREMENTS.—Section 

11 1452(b)(3) of the Safe Drinking Water Act (42 U.S.C. 

12 300j–12(3)) is amended— 

13 (1) by redesignating subparagraph (B) as sub14 paragraph (C); 

15 (2) by striking subparagraph (A) and inserting 

16 the following: 

17 ‘‘(A) DEFINITIONS.—In this paragraph: 

18 ‘‘(i) RESTRUCTURING.—The term ‘re19 structuring’ means— 

20 ‘‘(I) the consolidation of manage21 ment functions or ownership with an22 other facility; or 

23 ‘‘(II) the formation of cooperative 

24 partnerships. 
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1 ‘‘(ii) TRADITIONAL APPROACH.—The 

2 term ‘traditional approach’ means a man3 aged system used to treat and distribute 

4 drinking water to an entire service area 

5 consisting of a centralized water system 

6 using biological or physical/chemical treat7 ment processes. 

8 ‘‘(B) PRIORITY SYSTEM.—An intended use 

9 plan shall provide, to the maximum extent prac10 ticable, that the State shall give more weight to 

11 an application for assistance by a community 

12 water system if the application includes— 

13 ‘‘(i) an inventory of assets, including 

14 a description of the condition of those as15 sets; 

16 ‘‘(ii) a schedule for replacement of as17 sets; 

18 ‘‘(iii) a financing plan indicating 

19 sources of revenue from rate payers, 

20 grants, bonds, other loans, and other 

21 sources; 

22 ‘‘(iv) a review of options for restruc23 turing the public water system; 
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1 ‘‘(v) a review of options for ap2 proaches other than a traditional approach; 

3 or 

4 ‘‘(vi) such other information as the 

5 State determines to be appropriate.’’; and 

6 (3) in subparagraph (C) (as redesignated by 

7 paragraph (1)), by striking ‘‘periodically’’ and in8 serting ‘‘at least biennially’’. 

9 SEC. 205. GRANTS PROGRAM. 

10 Section 1452 of the Safe Drinking Water Act (42 

11 U.S.C. 300j–12) is amended by adding at the end the fol12 lowing: 

13 ‘‘(s) SETASIDE.— 

14 ‘‘(1) $2,500,000,000 OR LESS MADE AVAIL15 ABLE.— 

16 ‘‘(A) IN GENERAL.—For a fiscal year in 

17 which appropriations for State revolving loan 

18 funds do not exceed $2,500,000,000, a State 

19 shall set aside 10 percent of its capitalization 

20 grant under subsection (a) to provide grants to 

21 eligible users described in subsection (c) of not 

22 more than 55 percent of the total cost of a 

23 project for which a grant is made. 

24 ‘‘(B) WAIVER.—A State may waive the re25 quirement of subparagraph (A) if the average 
26 

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1 time for processing loan applications during the 

2 preceding 12 months did not exceed 90 days. 

3 ‘‘(2) MORE THAN $2,500,000,000 MADE AVAIL4 ABLE.—For a fiscal year in which appropriations for 

5 State revolving loan funds exceed $2,500,000,000, a 

6 State shall set aside not more than 5 nor less than 

7 2.5 percent of its State revolving loan fund.’’. 

8 SEC. 206. OTHER AUTHORIZED ACTIVITIES. 

9 Section 1452(k)(2)(D) of the Safe Drinking Water 

10 Act (42 U.S.C. 300j–12(k)(2)(D)) is amended by inserting 

11 before the period at the end the following: ‘‘(including im12 plementation of source water protection plans)’’. 

13 SEC. 207. SMALL SYSTEM REVOLVING LOAN FUND. 

14 Section 1442(e) of the Safe Drinking Water Act (42 

15 U.S.C. 300j–1(e)) is amended— 

16 (1) by striking ‘‘The Administrator may pro17 vide’’ and inserting the following: 

18 ‘‘(1) IN GENERAL.—The Administrator may 

19 provide’’; and 

20 (2) by adding at the end the following: 

21 ‘‘(2) SMALL SYSTEM REVOLVING LOAN FUND.— 

22 ‘‘(A) IN GENERAL.—In addition to 

23 amounts provided under this section, each State 

24 may provide grants to qualified private, non25 profit entities to capitalize revolving funds to 
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1 provide financing to eligible entities described in 

2 subparagraph (B) for— 

3 ‘‘(i) predevelopment costs (including 

4 costs for planning, design, associated 

5 preconstruction, and necessary activities 

6 for siting the facility and related elements) 

7 associated with proposed water projects or 

8 with existing water systems; and 

9 ‘‘(ii) short-term costs incurred for re10 placement equipment, small-scale extension 

11 services, or other small capital projects 

12 that are not part of the regular operations 

13 and maintenance activities of existing 

14 water systems. 

15 ‘‘(B) ELIGIBLE ENTITIES.—Only small 

16 water systems (as described in section 

17 1412(b)(4)(E)(ii)) shall be eligible for assist18 ance under this paragraph. 

19 ‘‘(C) MAXIMUM AMOUNT OF LOANS.—The 

20 amount of financing made to an eligible entity 

21 under this paragraph shall not exceed— 

22 ‘‘(i) $100,000 for costs described in 

23 subparagraph (A)(i); and 

24 ‘‘(ii) $100,000 for costs described in 

25 subparagraph (A)(ii). 
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1 ‘‘(D) TERM.—The term of a loan made to 

2 an eligible entity under this paragraph shall not 

3 exceed 10 years. 

4 ‘‘(E) ANNUAL REPORT.—For each fiscal 

5 year, a nonprofit entity that receives a grant 

6 under this paragraph shall submit to the Ad7 ministrator a report that— 

8 ‘‘(i) describes the activities of non9 profit entities receiving grants reauthorized 

10 under this paragraph for the fiscal year; 

11 and 

12 ‘‘(ii) specifies the number of commu13 nities served, the size of those commu14 nities, and the type of financing provided. 

15 ‘‘(F) AUTHORIZATION OF APPROPRIA16 TIONS.—There is authorized to be appropriated 

17 to carry out this subsection $25,000,000 for 

18 each of fiscal years 2005 through 2009.’’. 

19 SEC. 208. AUTHORIZATION OF APPROPRIATIONS. 

20 Section 1452 of the Safe Drinking Water Act (42 

21 U.S.C. 300j–12) is amended by striking subsection (m) 

22 and inserting the following: 

23 ‘‘(m) AUTHORIZATION OF APPROPRIATIONS.— 

24 ‘‘(1) IN GENERAL.—There are authorized to be 

25 appropriated to carry out this section— 
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1 ‘‘(A) $1,500,000,000 for fiscal year 2005; 

2 ‘‘(B) $2,000,000,000 for each of fiscal 

3 years 2006 and 2007; 

4 ‘‘(C) $3,500,000,000 for fiscal year 2008; 

5 and 

6 ‘‘(D) $6,000,000,000 for fiscal year 2009. 

7 ‘‘(2) AVAILABILITY.—Amounts made available 

8 under this subsection shall remain available until ex9 pended. 

10 ‘‘(3) RESERVATION FOR NEEDS SURVEYS.—Of 

11 the amount made available under paragraph (1) to 

12 carry out this section for a fiscal year, the Adminis13 trator may reserve not more than $1,000,000 per 

14 year to pay the costs of conducting needs surveys 

15 under subsection (h).’’. 

16 TITLE III—MISCELLANEOUS 

17 SEC. 301. DEFINITION OF ADMINISTRATOR. 

18 In this title, the term ‘‘Administrator’’ means the Ad19 ministrator of the Environmental Protection Agency. 

20 SEC. 302. DEMONSTRATION GRANT PROGRAM FOR WATER 

21 QUALITY ENHANCEMENT AND MANAGEMENT. 

22 (a) ESTABLISHMENT.— 

23 (1) IN GENERAL.—As soon as practicable after 

24 the date of enactment of this Act, the Administrator 
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1 shall establish a nationwide demonstration grant 

2 program to— 

3 (A) promote innovations in technology and 

4 alternative approaches to water quality manage5 ment or water supply; and 

6 (B) reduce costs to municipalities incurred 

7 in complying with— 

8 (i) the Federal Water Pollution Con9 trol Act (33 U.S.C. 1251 et seq.); and 

10 (ii) the Safe Drinking Water Act (42 

11 U.S.C. 300f et seq.). 

12 (2) SCOPE.—The demonstration grant program 

13 shall consist of 10 projects each year, to be carried 

14 out in municipalities selected by the Administrator 

15 under subsection (b). 

16 (b) SELECTION OF MUNICIPALITIES.— 

17 (1) APPLICATION.—A municipality that seeks 

18 to be selected to participate in the demonstration 

19 grant program shall submit to the Administrator a 

20 plan that— 

21 (A) is developed in coordination with— 

22 (i) the agency of the State having ju23 risdiction over water quality or water sup24 ply matters; and 

25 (ii) interested stakeholders; 
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1 (B) describes water impacts specific to 

2 urban or rural areas; 

3 (C) includes a strategy under which the 

4 municipality, through participation in the dem5 onstration grant program, could effectively— 

6 (i) address those problems; and 

7 (ii) achieve the same water quality 

8 goals as those goals that— 

9 (I) could be achieved using more 

10 traditional methods; or 

11 (II) are mandated under— 

12 (aa) the Federal Water Pol13 lution Control Act (33 U.S.C. 

14 1251 et seq.); and 

15 (bb) the Safe Drinking 

16 Water Act (42 U.S.C. 300f et 

17 seq.); and 

18 (D) includes a schedule for achieving the 

19 goals of the municipality. 

20 (2) TYPES OF PROJECTS.—In carrying out the 

21 demonstration grant program, the Administrator 

22 shall provide grants for projects relating to water 

23 supply or water quality matters such as— 

24 (A) excessive nutrient growth; 

25 (B) urban or rural population pressure; 
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1 (C) lack of an alternative water supply; 

2 (D) difficulties in water conservation and 

3 efficiency; 

4 (E) lack of support tools and technologies 

5 to rehabilitate and replace water supplies; 

6 (F) lack of monitoring and data analysis 

7 for water distribution systems; 

8 (G) nonpoint source water pollution (in9 cluding stormwater); 

10 (H) sanitary overflows; 

11 (I) combined sewer overflows; 

12 (J) problems with naturally occurring con13 stituents of concern; and 

14 (K) problems with erosion and excess sedi15 ment. 

16 (3) RESPONSIBILITIES OF ADMINISTRATOR.—In 

17 providing grants for projects under this subsection, 

18 the Administrator shall— 

19 (A) ensure, to the maximum extent prac20 ticable, that— 

21 (i) the demonstration program in22 cludes a variety of projects with respect 

23 to— 

24 (I) geographic distribution; 
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1 (II) innovative technologies used 

2 for the projects; and 

3 (III) nontraditional approaches 

4 (including low-impact development 

5 technologies) used for the projects; 

6 and 

7 (ii) each category of project described 

8 in paragraph (2) is adequately represented; 

9 (B) give higher priority to projects that— 

10 (i) address multiple problems; and 

11 (ii) are regionally applicable; 

12 (C) ensure, to the maximum extent prac13 ticable, that at least 1 community having a pop14 ulation of 10,000 or fewer individuals receives 

15 a grant each fiscal year; and 

16 (D) ensure that, for each fiscal year, no 

17 municipality receives more than 25 percent of 

18 the total amount of funds made available for 

19 the fiscal year to provide grants under this sec20 tion. 

21 (4) COST SHARING.— 

22 (A) IN GENERAL.—Except as provided in 

23 subparagraph (B), the non-Federal share of the 

24 total cost of a project funded by a grant under 

25 this section shall be not less than 20 percent. 
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1 (B) WAIVER.—The Administrator may re2 duce or eliminate the non-Federal share of the 

3 cost of a project for reasons of affordability. 

4 (c) REPORTS.— 

5 (1) REPORTS FROM GRANT RECIPIENTS.—A re6 cipient of a grant under this section shall submit to 

7 the Administrator, on the date of completion of a 

8 project of the recipient and on each of the dates that 

9 is 1, 2, and 3 years after that date, a report that 

10 describes the effectiveness of the project. 

11 (2) REPORTS TO CONGRESS.—Not later than 2 

12 years after the date of enactment of this Act, and 

13 every 2 years thereafter, the Administrator shall 

14 submit to the Committee on Environment and Pub15 lic Works of the Senate and the Committee on 

16 Transportation and Infrastructure and the Com17 mittee on Energy and Commerce of the House of 

18 Representatives a report that describes the status 

19 and results of the demonstration program. 

20 (d) INCORPORATION OF RESULTS AND INFORMA21 TION.—To the maximum extent practicable, the Adminis22 trator shall incorporate the results of, and information ob23 tained from, successful projects under this section into 

24 programs administered by the Administrator. 

25 (e) RESEARCH AND DEVELOPMENT.— 
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1 (1) IN GENERAL.—As soon as practicable after 

2 the date of enactment of this Act, the Administrator 

3 shall, through a competitive process, award grants 

4 and enter into contracts and cooperative agreements 

5 for research and development on the use of innova6 tive and alternative technologies to improve water 

7 quality or drinking water supply. 

8 (2) TYPES OF PROJECTS.—In carrying out this 

9 subsection, the Administrator may select projects re10 lating to such matters as innovative or alternative 

11 technologies, approaches, practices, or methods— 

12 (A) to increase the effectiveness and effi13 ciency of public water supply systems, includ14 ing— 

15 (i) source water protection; 

16 (ii) water use reduction; 

17 (iii) water reuse; 

18 (iv) water treatment; 

19 (v) water distribution and collection 

20 systems; and 

21 (vi) water security; 

22 (B) to encourage the use of innovative or 

23 alternative technologies or approaches relating 

24 to water supply or availability; or 
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1 (C) to increase the effectiveness and effi2 ciency of treatment works, including— 

3 (i) methods of collecting, treating, dis4 persing, reusing, reclaiming, and recycling 

5 wastewater; 

6 (ii) system design; 

7 (iii) nonstructural alternatives; 

8 (iv) decentralized approaches; 

9 (v) assessment; 

10 (vi) water efficiency; and 

11 (vii) wastewater security. 

12 (3) RECIPIENTS.—Grant recipients and parties 

13 to contracts or cooperative agreements under this 

14 subsection may be research institutions or consortia 

15 or educational institutions or consortia. 

16 (4) AUTHORIZATION OF APPROPRIATIONS.— 

17 There is authorized to be appropriated to carry out 

18 this subsection $20,000,000 for each of fiscal years 

19 2005 through 2009. 

20 (f) AUTHORIZATION OF APPROPRIATIONS.—There is 

21 authorized to be appropriated to carry out this section 

22 (other than subsection (e)) $20,000,000 for each of fiscal 

23 years 2005 through 2009. 
37 

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1 SEC. 303. COST OF SERVICE STUDY. 

2 (a) IN GENERAL.—Not later than 2 years after the 

3 date of enactment of this Act, the Administrator shall 

4 enter into a contract with the National Academy of 

5 Sciences for, and the National Academy of Sciences shall 

6 complete and provide to the Administrator the results of, 

7 a study of the means by which public water systems and 

8 treatment works selected by the Academy in accordance 

9 with subsection (c) meet the costs associated with oper10 ations, maintenance, capital replacement, and regulatory 

11 requirements. 

12 (b) REQUIRED ELEMENTS.— 

13 (1) AFFORDABILITY.—The study shall, at a 

14 minimum— 

15 (A) identify existing standards for afford16 ability; 

17 (B) determine the manner in which those 

18 standards are determined and defined; 

19 (C) determine the manner in which afford20 ability varies with respect to communities of 

21 different sizes and in different regions; and 

22 (D) determine the extent to which afford23 ability affects the decision of a community to 

24 increase public water system and treatment 

25 works rates (including the decision relating to 
38 

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1 the percentage by which those rates should be 

2 increased). 

3 (2) DISADVANTAGED COMMUNITIES.—The 

4 study shall, at a minimum— 

5 (A) survey a cross-section of States rep6 resenting different sizes, demographics, and 

7 geographical regions; 

8 (B) describe, for each State described in 

9 subparagraph (A), the definition of ‘‘disadvan10 taged community’’ used in the State in carrying 

11 out projects and activities under the Safe 

12 Drinking Water Act (42 U.S.C. 300f et seq.); 

13 (C) review other means of identifying the 

14 meaning of the term ‘‘disadvantaged’’, as that 

15 term applies to communities; 

16 (D) determine which factors and character17 istics are required for a community to be con18 sidered ‘‘disadvantaged’’; and 

19 (E) evaluate the degree to which factors 

20 such as a reduction in the tax base over a pe21 riod of time, a reduction in population, the loss 

22 of an industrial base, and the existence of areas 

23 of concentrated poverty are taken into account 

24 in determining whether a community is a dis25 advantaged community. 
39 

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1 (c) SELECTION OF COMMUNITIES.—The National 

2 Academy of Sciences shall select communities, the public 

3 water system and treatment works rate structures of 

4 which are to be studied under this section, that include 

5 a cross section of communities representing various popu6 lations, income levels, demographics, and geographical re7 gions. 

8 (d) USE OF RESULTS OF STUDY.—On receipt of the 

9 results of the study, the Administrator shall— 

10 (1) submit to Congress a report that describes 

11 the results of the study; and 

12 (2) make the results available to treatment 

13 works and public water systems for use by the pub14 licly owned treatment works and public water sys15 tems, on a voluntary basis, in determining whether 

16 1 or more new approaches may be implemented at 

17 facilities of the publicly owned treatment works and 

18 public water systems. 

19 (e) AUTHORIZATION OF APPROPRIATIONS.—There is 

20 authorized to be appropriated to carry out this section 

21 $1,000,000 for each of fiscal years 2005 and 2006. 

22 SEC. 304. STATE REVOLVING FUND REVIEW PROCESS. 

23 As soon as practicable after the date of enactment 

24 of this Act, the Administrator shall— 
40 

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1 (1) consult with States, utilities, and other Fed2 eral agencies providing financial assistance to iden3 tify ways to expedite and improve the application 

4 and review process for the provision of assistance 

5 from— 

6 (A) the State water pollution control re7 volving funds established under title VI of the 

8 Federal Water Pollution Control Act (33 U.S.C. 

9 1381 et seq.); and 

10 (B) the State drinking water treatment re11 volving loan funds established under section 

12 1452 of the Safe Drinking Water Act (42 

13 U.S.C. 300j–12); and 

14 (2) take such administrative action as is nec15 essary to expedite and improve the process as the 

16 Administrator has authority to take under existing 

17 law; and 

18 (3) submit to Congress a report that, based on 

19 the information identified under paragraph (1), con20 tains recommendations for legislation to facilitate 

21 further streamlining and improvement of the proc22 ess. 

Æ