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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2550 Introduced in Senate (IS)]

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.

    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 ``Water 
Infrastructure Financing Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                TITLE I--WATER POLLUTION INFRASTRUCTURE

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.

                TITLE I--WATER POLLUTION INFRASTRUCTURE

SEC. 101. TECHNICAL ASSISTANCE FOR RURAL AND SMALL TREATMENT WORKS.

Title II of the Federal Water Pollution Control Act is amended by 
adding after section 221 (33 U.S.C. 1301) the following:

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

    ``(a) Definition of Qualified Nonprofit Technical Assistance 
Provider.--In this section, the term `qualified nonprofit technical 
assistance provider' means a qualified nonprofit technical assistance 
provider of water and wastewater services to small rural communities 
that provide technical assistance to treatment works that--
            ``(1) serve not more than 10,000 users; and
            ``(2) are located in a rural area.
    ``(b) Grant Program.--
            ``(1) In general.--The Administrator may make grants to 
        qualified nonprofit technical assistance providers--
                    ``(A) to assist small treatment works in planning, 
                developing, and obtaining financing for eligible 
                projects described in section 603(c);
                    ``(B) to capitalize revolving loan funds to provide 
                loans, in consultation with the State in which the 
                assistance is provided, to rural and small 
                municipalities for predevelopment costs (including 
                costs for planning, design, associated preconstruction, 
                and necessary activities for siting the facility and 
                related elements) associated with wastewater 
                infrastructure projects or short-term costs incurred 
                for equipment replacement that is not part of regular 
                operation and maintenance activities for existing 
                wastewater systems, so long as--
                            ``(i) any loan from the fund is made at or 
                        below market interest rate, for a term not to 
                        exceed 10 years;
                            ``(ii) the amount of a single loan does not 
                        exceed $100,000;
                            ``(iii) all loan repayments are credited to 
                        the fund;
                    ``(C) to provide technical assistance and training 
                for rural and small publicly owned treatment works and 
                decentralized wastewater treatment systems to enable 
                those treatment works and systems to protect water 
                quality and achieve and maintain compliance with this 
                Act; and
                    ``(D) to disseminate information to rural and small 
                municipalities with respect to planning, design, 
                construction, and operation of publicly owned treatment 
                works and decentralized wastewater treatment systems.
            ``(2) Distribution of grant.--In carrying out this 
        subsection, the Administrator shall ensure, to the maximum 
        extent practicable, that technical assistance provided using 
        funds from a grant under paragraph (1) is made available in 
        each State.
            ``(3) Consultation.--As a condition of receiving a grant 
        under this subsection, a qualified nonprofit technical 
        assistance provider shall consult with each State in which 
        grant funds are to be expended or otherwise made available 
        before the grant funds are expended or made available in the 
        State.
            ``(4) Annual report.--For each fiscal year, a qualified 
        nonprofit technical assistance provider that receives a grant 
        under this paragraph 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 section for the fiscal year; 
                and
                    ``(B) specifies the number of communities served, 
                the size of those communities, and the type of 
                financing provided.
    ``(c) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this subsection $25,000,000 for each of 
fiscal years 2005 through 2009.''.

SEC. 102. PROJECTS ELIGIBLE FOR ASSISTANCE.

    Section 603 of the Federal Water Pollution Control Act (33 U.S.C. 
1383) is amended by striking subsection (c) and inserting the 
following:
    ``(c) Projects Eligible for Assistance.--Funds in each State water 
pollution control revolving fund shall be used only for--
            ``(1) providing financial assistance to a municipality, 
        intermunicipal, interstate, or State agency, or private utility 
        that principally treats municipal wastewater or domestic 
        sewage, for construction (including costs for planning, design, 
        associated preconstruction, and necessary activities for siting 
        the facility and related elements) of treatment works (as 
        defined in section 212);
            ``(2) implementation of a management program established 
        under section 319;
            ``(3) development and implementation of a conservation and 
        management plan under section 320;
            ``(4) water conservation projects or activities the primary 
        purpose of which is the protection, preservation, or 
        enhancement of water quality, including through--
                    ``(A) piping or lining of an irrigation canal;
                    ``(B) recovery or recycling of wastewater or runoff 
                from irrigation;
                    ``(C) irrigation scheduling;
                    ``(D) measurement or metering of water use; or
                    ``(E) improvement of on-field irrigation 
                efficiency;
            ``(5) reuse, reclamation, or recycling projects the primary 
        purpose of which is the protection, preservation, or 
        enhancement of water quality;
            ``(6) projects to increase the security of wastewater 
        treatment works (excluding any expenditure for operations or 
        maintenance); or
            ``(7) measures to control municipal stormwater, the primary 
        purpose of which is the preservation, protection, or 
        enhancement of water quality.''.

SEC. 103. AFFORDABILITY.

    Section 603 of the Federal Water Pollution Control Act (33 U.S.C. 
1383) is amended--
            (1) by redesignating subsections (e) through (h) as 
        subsections (f) through (i); and
            (2) by inserting after subsection (d) the following:
    ``(e) Types of Assistance for Disadvantaged Communities.--
            ``(1) Definition of disadvantaged community.--In this 
        subsection, the term `disadvantaged community' means the 
        service area, or portion of a service area, of a treatment 
        works that meets affordability criteria established after 
        public review and comment by the State in which the treatment 
        works is located.
            ``(2) Loan subsidy.--Notwithstanding any other provision of 
        this section, in a case in which the State makes a loan from 
        the water pollution control revolving loan fund in accordance 
        with subsection (c) to a disadvantaged community or a community 
        that the State expects to become a disadvantaged community as 
        the result of a proposed project, the State may provide 
        additional subsidization, including the forgiveness of the 
        principal of 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) Extended term.--A State may provide an extended term 
        for a loan if the extended term--
                    ``(A) terminates not later than the date that is 30 
                years after the date of completion of the project; and
                    ``(B) does not exceed the expected design life of 
                the project.
            ``(5) Information.--The Administrator may publish 
        information to assist States in establishing affordability 
        criteria described in paragraph (1).''.

SEC. 104. WATER POLLUTION CONTROL REVOLVING LOAN FUNDS.

    Section 603 of the Federal Water Pollution Control Act (33 U.S.C. 
1383) is amended by striking subsection (h) (as redesignated by section 
103) and inserting the following:
    ``(h) Priority System Requirement.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Restructuring.--The term `restructuring' 
                means--
                            ``(i) the consolidation of management 
                        functions or ownership with another facility; 
                        or
                            ``(ii) the formation of cooperative 
                        partnerships.
                    ``(B) Traditional wastewater approach.--The term 
                `traditional wastewater approach' means a managed 
                system used to collect and treat wastewater from an 
                entire service area consisting of--
                            ``(i) collection sewers;
                            ``(ii) a centralized treatment plant using 
                        biological or physical/chemical treatment 
                        processes; and
                            ``(iii) a direct point source discharge to 
                        surface water.
            ``(2) Priority system.--A State shall provide financial 
        assistance from the water pollution control revolving fund of 
        the State only for projects described in subsection (c) by 
        amending the priority system established by the State under 
        subsection (g) under which the State--
                    ``(A) gives more weight to an application for 
                assistance by a treatment works if the application 
                includes--
                            ``(i) an inventory of assets, including a 
                        description of the condition of those assets;
                            ``(ii) a schedule for replacement of 
                        assets;
                            ``(iii) a financing plan indicating sources 
                        of revenue from rate payers, grants, bonds, 
                        other loans, and other sources;
                            ``(iv) a review of options for 
                        restructuring the treatment works;
                            ``(v) a review of options for approaches 
                        other than a traditional wastewater approach 
                        that may include actions or projects that treat 
                        or minimize sewage or urban stormwater 
                        discharges using--
                                    ``(I) decentralized or distributed 
                                stormwater controls;
                                    ``(II) decentralized wastewater 
                                treatment;
                                    ``(III) low impact development 
                                technologies;
                                    ``(IV) stream buffers;
                                    ``(V) wetland restoration; or
                                    ``(VI) actions to minimize the 
                                amount of and direct connections to 
                                impervious surfaces; or
                            ``(vi) such other information as the State 
                        determines to be appropriate;
                    ``(B) takes into consideration appropriate 
                chemical, physical, and biological data that the State 
                considers reasonably available and of sufficient 
                quality;
                    ``(C) provides for public notice and opportunity to 
                comment on establishment of the system and the summary 
                under subparagraph (D);
                    ``(D) publishes not less than biennially in summary 
                form a description of projects in the State that are 
                eligible for assistance under this title that 
                indicates--
                            ``(i) the priority assigned to each project 
                        under the priority system of the State; and
                            ``(ii) the funding schedule for each 
                        project, to the extent that such information is 
                        available; and
                    ``(E) ensures that projects undertaken with 
                assistance under this title are designed to achieve, in 
                the estimation of the State, the optimum water quality 
                management, consistent with the public health and water 
                quality goals and requirements of this title.''.

SEC. 105. TRANSFERABILITY OF FUNDS.

    Section 603 of the Federal Water Pollution Control Act (33 U.S.C. 
1383) (as amended by section 103) is amended by adding at the end the 
following:
    ``(j) Transfer of Funds.--
            ``(1) In general.--The Governor of a State may--
                    ``(A)(i) reserve not more than 33 percent of a 
                capitalization grant made under this title; and
                    ``(ii) add the funds reserved to any funds provided 
                to the State under section 1452 of the Safe Drinking 
                Water Act (42 U.S.C. 300j-12); and
                    ``(B)(i) reserve in 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)).''.

SEC. 106. GRANTS PROGRAM.

    Section 603 of the Federal Water Pollution Control Act (33 U.S.C. 
1383) (as amended by section 105) is amended by adding at the end the 
following:
    ``(k) Setaside.--
            ``(1) $3,000,000,000 or less made available.--
                    ``(A) In general.--For a fiscal year in which 
                appropriations for State revolving loan funds do not 
                exceed $3,000,000,000, a State shall set aside 10 
                percent of its capitalization grant under section 
                601(a) to provide grants to eligible users described in 
                subsection (c) in the amount of not more than 55 
                percent of the total cost of a project for which a 
                grant is made.
                    ``(B) Waiver.--A State may waive the requirement of 
                subparagraph (A) if the average time for processing 
                loan applications during the preceding 12 months did 
                not exceed 90 days.
            ``(2) More than $3,000,000,000 made available.--For a 
        fiscal year in which appropriations for State revolving loan 
        funds exceed $3,000,000,000, a State shall set aside not more 
        than 10 nor less than 5 percent of its State revolving loan 
        fund.''.

SEC. 107. COSTS OF ADMINISTERING WATER POLLUTION CONTROL REVOLVING LOAN 
              FUNDS.

    Section 603(d)(7) of the Federal Water Pollution Control Act (33 
U.S.C. 1383(d)(7)) is amended by striking ``4 percent'' and inserting 
``6 percent''.

SEC. 108. ALLOCATION FORMULA.

    Section 604 of the Federal Water Pollution Control Act (33 U.S.C. 
1384) is amended--
            (1) by redesignating subsections (b) and (c) as subsections 
        (d) and (e), respectively; and
            (2) by striking subsection (a) and inserting the following:
    ``(a) Definitions.--In this subsection:
            ``(1) Base formula.--The term `base formula' means a 
        formula for the allotment of funds made available to carry out 
        this section for a fiscal year to States in accordance with 
        section 205(c)(3).
            ``(2) Needs survey.--The term `needs survey' means a needs 
        survey conducted under section 516(2).
            ``(3) Needs survey percentage.-- The term `needs survey 
        percentage', with respect to a State, means the percentage 
        applicable to the State under a formula for the allotment of 
        funds made available to carry out this section for a fiscal 
        year to States in amounts determined by the Administrator based 
        on the ratio that--
                    ``(A) the needs of a State described in categories 
                I through VII of the most recent needs survey; bears to
                    ``(B) the needs of all States described in 
                categories I through VII of the most recent needs 
                survey.
            ``(4) Next needs survey.--The term `next needs survey' 
        means the first needs survey that is completed after the 2000 
        needs survey.
            ``(5) State.--The term `State' means a State, the District 
        of Columbia, and the Commonwealth of Puerto Rico.
    ``(b) Allocation of Funds.--
            ``(1) In general.--Funds made available to carry out this 
        section for a fiscal year shall be allocated by the 
        Administrator in accordance with this subsection.
            ``(2) Indian tribes.--Of the total amount of funds 
        available, 1.5 percent shall be allocated to Indian tribes 
        (within the meaning of section 518(c)).
            ``(3) Certain territories and freely associated states.--Of 
        the total amount of funds made available, 0.25 percent shall be 
        allocated to Guam, the Virgin Islands, Samoa, the Commonwealth 
        of the Northern Mariana Islands, the Federated States of 
        Micronesia, the Republic of the Marshall Islands, and the 
        Republic of Palau to be allocated among those territories and 
        freely associated states, as determined by the Administrator.
            ``(4) States.--
                    ``(A) Target allocation.--Each State shall have a 
                target allocation, which--
                            ``(i) in the case of a State for which the 
                        needs survey percentage is less than 1.0 
                        percent, shall be 1.0 percent; and
                            ``(ii) in the case of any other State, 
                        shall be the needs survey percentage.
                    ``(B) Limitation on growth.--
                            ``(i) Applicability.--This subparagraph 
                        applies with respect to any fiscal year for 
                        which the amount of funds made available to 
                        carry out this section is $3,150,000,000 or 
                        less.
                            ``(ii) States for which the needs survey 
                        percentage is less than 1.0 percent.--In the 
                        case of a State for which the needs survey 
                        percentage is 1.0 percent or less, the growth 
                        in allocation in dollar terms relative to the 
                        base formula shall be limited to--
                                    ``(I) 12 percent for fiscal year 
                                2005;
                                    ``(II) 16 percent for fiscal year 
                                2006;
                                    ``(III) 20 percent for fiscal year 
                                2007;
                                    ``(IV) 24 percent for fiscal year 
                                2008; and
                                    ``(V) 28 percent for fiscal year 
                                2009 and each fiscal year thereafter.
                            ``(iii) States for which the needs survey 
                        percentage is 1.0 percent or more.--In the case 
                        of a State for which the needs survey 
                        percentage is greater than 1.0 percent, the 
                        growth in allocation in dollar terms relative 
                        to the base formula shall be limited to 0.0 
                        percent.
                    ``(C) Limitation on loss.--
                            ``(i) Growth of less than 1.0 percent.--A 
                        dollar amount that is not less than the dollar 
                        amount under the base formula shall be 
                        allocated to States described in subparagraph 
                        (A)(i) but not described in subparagraph (D).
                            ``(ii) Growth of 1.0 percent or more.--A 
                        dollar amount that is equal to the dollar 
                        amount under the base formula shall be 
                        allocated to States described in subparagraph 
                        (A)(ii) but not described in subparagraph (D) 
                        that--
                                    ``(I) in the most recent needs 
                                survey, reported higher needs in both 
                                categories V and VII than the State 
                                reported in the previous needs survey;
                                    ``(II) grew in population by more 
                                than 10 percent between the 1990 
                                decenniel census and the 2000 decenniel 
                                census; or
                                    ``(III) has a population equal to 4 
                                percent or more of the total population 
                                of the United States, as reported in 
                                the 2000 decenniel census.
                    ``(D) Unallocated balance.--The unallocated balance 
                of available funds shall be allocated in equal parts to 
                all States that, in the most recent needs survey, 
                report higher total needs both in absolute dollar terms 
                and as a percentage of total United States needs.''.

SEC. 109. AUTHORIZATION OF APPROPRIATIONS.

    The Federal Water Pollution Control Act is amended by striking 
section 607 (33 U.S.C. 1387) and inserting the following:

``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 2005 and 
        2006;
            ``(2) $3,600,000,000 for fiscal year 2007;
            ``(3) $4,000,000,000 for fiscal year 2008; and
            ``(4) $6,000,000,000 for fiscal year 2009.
    ``(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 per year to pay the 
costs of conducting needs surveys under section 516(2).''.

SEC. 110. REPORTS.

    Section 516 of the Federal Waste Pollution Control Act (33 U.S.C. 
1375) is amended in the second sentence by striking ``odd-numbered'' 
and inserting ``fourth''.

              TITLE II--SAFE DRINKING WATER INFRASTRUCTURE

SEC. 201. TECHNICAL ASSISTANCE FOR SMALL CENTERS.

Section 1420(g) of the Safe Drinking Water Act (42 U.S.C. 300g-9(g)) is 
amended by striking paragraph (4) and inserting the following:
            ``(4) Authorization of appropriations.--There is authorized 
        to be appropriated to carry out this subsection $2,000,000 for 
        each of fiscal years 2005 through 2009.''.

SEC. 202. PRECONSTRUCTION WORK.

    Section 1452(a)(2) of the Safe Drinking Water Act (42 U.S.C. 300j-
12(a)(2)) is amended in the second sentence--
            (1) by striking ``(not'' and inserting ``(including 
        expenditures for planning, design, and associated 
        preconstruction and for recovery for siting of the facility and 
        related elements but not''; and
            (2) by inserting before the period at the end the 
        following: ``or to replace or rehabilitate aging collection, 
        treatment, storage (including reservoirs), and distribution 
        facilities of public water systems or provide for capital 
        projects to upgrade the security of public water systems''.

SEC. 203. AFFORDABILITY.

    Section 1452(d)(3) of the Safe Drinking Water Act (42 U.S.C. 300j-
12(d)(3)) is amended in the first sentence by inserting ``, or portion 
of a service area,'' after ``service area''.

SEC. 204. SAFE DRINKING WATER REVOLVING LOAN FUNDS.

    (a) In General.--Section 1452(g) of the Safe Drinking Water Act (42 
U.S.C. 300j-12(g)) is amended--
            (1) in paragraph (2)--
                    (A) in the first sentence, by striking ``4'' and 
                inserting ``6''; and
                    (B) by striking ``1419'' and all that follows and 
                inserting ``1419.''; and
            (2) by adding at the end the following:
            ``(5) Transfer of funds.--
                    ``(A) In general.--The Governor of a State may--
                            ``(i)(I) reserve not more than 33 percent 
                        of a capitalization grant made under this 
                        section; and
                            ``(II) add the funds reserved to any funds 
                        provided to the State under section 601 of the 
                        Federal Water Pollution Control Act (33 U.S.C. 
                        1381); and
                            ``(ii)(I) reserve for any 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)).''.
    (b) Priority System Requirements.--Section 1452(b)(3) of the Safe 
Drinking Water Act (42 U.S.C. 300j-12(3)) is amended--
            (1) by redesignating subparagraph (B) as subparagraph (C);
            (2) by striking subparagraph (A) and inserting the 
        following:
                    ``(A) Definitions.--In this paragraph:
                            ``(i) Restructuring.--The term 
                        `restructuring' means--
                                    ``(I) the consolidation of 
                                management functions or ownership with 
                                another facility; or
                                    ``(II) the formation of cooperative 
                                partnerships.
                            ``(ii) Traditional approach.--The term 
                        `traditional approach' means a managed system 
                        used to treat and distribute drinking water to 
                        an entire service area consisting of a 
                        centralized water system using biological or 
                        physical/chemical treatment processes.
                    ``(B) Priority system.--An intended use plan shall 
                provide, to the maximum extent practicable, that the 
                State shall give more weight to an application for 
                assistance by a community water system if the 
                application includes--
                            ``(i) an inventory of assets, including a 
                        description of the condition of those assets;
                            ``(ii) a schedule for replacement of 
                        assets;
                            ``(iii) a financing plan indicating sources 
                        of revenue from rate payers, grants, bonds, 
                        other loans, and other sources;
                            ``(iv) a review of options for 
                        restructuring the public water system;
                            ``(v) a review of options for approaches 
                        other than a traditional approach; or
                            ``(vi) such other information as the State 
                        determines to be appropriate.''; and
            (3) in subparagraph (C) (as redesignated by paragraph (1)), 
        by striking ``periodically'' and inserting ``at least 
        biennially''.

SEC. 205. GRANTS PROGRAM.

    Section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12) is 
amended by adding at the end the following:
    ``(s) Setaside.--
            ``(1) $2,500,000,000 or less made available.--
                    ``(A) In general.--For a fiscal year in which 
                appropriations for State revolving loan funds do not 
                exceed $2,500,000,000, a State shall set aside 10 
                percent of its capitalization grant under subsection 
                (a) to provide grants to eligible users described in 
                subsection (c) of not more than 55 percent of the total 
                cost of a project for which a grant is made.
                    ``(B) Waiver.--A State may waive the requirement of 
                subparagraph (A) if the average time for processing 
loan applications during the preceding 12 months did not exceed 90 
days.
            ``(2) More than $2,500,000,000 made available.--For a 
        fiscal year in which appropriations for State revolving loan 
        funds exceed $2,500,000,000, a State shall set aside not more 
        than 5 nor less than 2.5 percent of its State revolving loan 
        fund.''.

SEC. 206. OTHER AUTHORIZED ACTIVITIES.

    Section 1452(k)(2)(D) of the Safe Drinking Water Act (42 U.S.C. 
300j-12(k)(2)(D)) is amended by inserting before the period at the end 
the following: ``(including implementation of source water protection 
plans)''.

SEC. 207. SMALL SYSTEM REVOLVING LOAN FUND.

    Section 1442(e) of the Safe Drinking Water Act (42 U.S.C. 300j-
1(e)) is amended--
            (1) by striking ``The Administrator may provide'' and 
        inserting the following:
            ``(1) In general.--The Administrator may provide''; and
            (2) by adding at the end the following:
            ``(2) Small system revolving loan fund.--
                    ``(A) In general.--In addition to amounts provided 
                under this section, each State may provide grants to 
                qualified private, nonprofit entities to capitalize 
                revolving funds to provide financing to eligible 
                entities described in subparagraph (B) for--
                            ``(i) predevelopment costs (including costs 
                        for planning, design, associated 
                        preconstruction, and necessary activities for 
                        siting the facility and related elements) 
                        associated with proposed water projects or with 
                        existing water systems; and
                            ``(ii) short-term costs incurred for 
                        replacement equipment, small-scale extension 
                        services, or other small capital projects that 
                        are not part of the regular operations and 
                        maintenance activities of existing water 
                        systems.
                    ``(B) Eligible entities.--Only small water systems 
                (as described in section 1412(b)(4)(E)(ii)) shall be 
                eligible for assistance under this paragraph.
                    ``(C) Maximum amount of loans.--The amount of 
                financing made to an eligible entity under this 
                paragraph shall not exceed--
                            ``(i) $100,000 for costs described in 
                        subparagraph (A)(i); and
                            ``(ii) $100,000 for costs described in 
                        subparagraph (A)(ii).
                    ``(D) Term.--The term of a loan made to an eligible 
                entity under this paragraph shall not exceed 10 years.
                    ``(E) Annual report.--For each fiscal year, a 
                nonprofit entity that receives a grant under this 
                paragraph shall submit to the Administrator a report 
                that--
                            ``(i) describes the activities of nonprofit 
                        entities receiving grants reauthorized under 
                        this paragraph for the fiscal year; and
                            ``(ii) specifies the number of communities 
                        served, the size of those communities, and the 
                        type of financing provided.
                    ``(F) Authorization of appropriations.--There is 
                authorized to be appropriated to carry out this 
                subsection $25,000,000 for each of fiscal years 2005 
                through 2009.''.

SEC. 208. AUTHORIZATION OF APPROPRIATIONS.

    Section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12) is 
amended by striking subsection (m) and inserting the following:
    ``(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 2005;
                    ``(B) $2,000,000,000 for each of fiscal years 2006 
                and 2007;
                    ``(C) $3,500,000,000 for fiscal year 2008; and
                    ``(D) $6,000,000,000 for fiscal year 2009.
            ``(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).''.

                        TITLE III--MISCELLANEOUS

SEC. 301. DEFINITION OF ADMINISTRATOR.

    In this title, the term ``Administrator'' means the Administrator 
of the Environmental Protection Agency.

SEC. 302. DEMONSTRATION GRANT PROGRAM FOR WATER QUALITY ENHANCEMENT AND 
              MANAGEMENT.

    (a) Establishment.--
            (1) In general.--As soon as practicable after the date of 
        enactment of this Act, the Administrator shall establish a 
        nationwide demonstration grant program to--
                    (A) promote innovations in technology and 
                alternative approaches to water quality management or 
                water supply; and
                    (B) reduce costs to municipalities incurred in 
                complying with--
                            (i) the Federal Water Pollution Control Act 
                        (33 U.S.C. 1251 et seq.); and
                            (ii) the Safe Drinking Water Act (42 U.S.C. 
                        300f et seq.).
            (2) Scope.--The demonstration grant program shall consist 
        of 10 projects each year, to be carried out in municipalities 
        selected by the Administrator under subsection (b).
    (b) Selection of Municipalities.--
            (1) Application.--A municipality that seeks to be selected 
        to participate in the demonstration grant program shall submit 
        to the Administrator a plan that--
                    (A) is developed in coordination with--
                            (i) the agency of the State having 
                        jurisdiction over water quality or water supply 
                        matters; and
                            (ii) interested stakeholders;
                    (B) describes water impacts specific to urban or 
                rural areas;
                    (C) includes a strategy under which the 
                municipality, through participation in the 
                demonstration grant program, could effectively--
                            (i) address those problems; and
                            (ii) achieve the same water quality goals 
                        as those goals that--
                                    (I) could be achieved using more 
                                traditional methods; or
                                    (II) are mandated under--
                                            (aa) the Federal Water 
                                        Pollution Control Act (33 
                                        U.S.C. 1251 et seq.); and
                                            (bb) the Safe Drinking 
                                        Water Act (42 U.S.C. 300f et 
                                        seq.); and
                    (D) includes a schedule for achieving the goals of 
                the municipality.
            (2) Types of projects.--In carrying out the demonstration 
        grant program, the Administrator shall provide grants for 
        projects relating to water supply or water quality matters such 
        as--
                    (A) excessive nutrient growth;
                    (B) urban or rural population pressure;
                    (C) lack of an alternative water supply;
                    (D) difficulties in water conservation and 
                efficiency;
                    (E) lack of support tools and technologies to 
                rehabilitate and replace water supplies;
                    (F) lack of monitoring and data analysis for water 
                distribution systems;
                    (G) nonpoint source water pollution (including 
                stormwater);
                    (H) sanitary overflows;
                    (I) combined sewer overflows;
                    (J) problems with naturally occurring constituents 
                of concern; and
                    (K) problems with erosion and excess sediment.
            (3) Responsibilities of administrator.--In providing grants 
        for projects under this subsection, the Administrator shall--
                    (A) ensure, to the maximum extent practicable, 
                that--
                            (i) the demonstration program includes a 
                        variety of projects with respect to--
                                    (I) geographic distribution;
                                    (II) innovative technologies used 
                                for the projects; and
                                    (III) nontraditional approaches 
                                (including low-impact development 
                                technologies) used for the projects; 
                                and
                            (ii) each category of project described in 
                        paragraph (2) is adequately represented;
                    (B) give higher priority to projects that--
                            (i) address multiple problems; and
                            (ii) are regionally applicable;
                    (C) ensure, to the maximum extent practicable, that 
                at least 1 community having a population of 10,000 or 
                fewer individuals receives a grant each fiscal year; 
                and
                    (D) ensure that, for each fiscal year, no 
                municipality receives more than 25 percent of the total 
                amount of funds made available for the fiscal year to 
                provide grants under this section.
            (4) Cost sharing.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the non-Federal share of the total cost of a 
                project funded by a grant under this section shall be 
                not less than 20 percent.
                    (B) Waiver.--The Administrator may reduce or 
                eliminate the non-Federal share of the cost of a 
                project for reasons of affordability.
    (c) Reports.--
            (1) Reports from grant recipients.--A recipient of a grant 
        under this section shall submit to the Administrator, on the 
        date of completion of a project of the recipient and on each of 
        the dates that is 1, 2, and 3 years after that date, a report 
        that describes the effectiveness of the project.
            (2) Reports to congress.--Not later than 2 years after the 
        date of enactment of this Act, and every 2 years thereafter, 
        the Administrator shall submit to the Committee on Environment 
        and Public Works of the Senate and the Committee on 
        Transportation and Infrastructure and the Committee on Energy 
        and Commerce of the House of Representatives a report that 
        describes the status and results of the demonstration program.
    (d) Incorporation of Results and Information.--To the maximum 
extent practicable, the Administrator shall incorporate the results of, 
and information obtained from, successful projects under this section 
into programs administered by the Administrator.
    (e) Research and Development.--
            (1) In general.--As soon as practicable after the date of 
        enactment of this Act, the Administrator shall, through a 
        competitive process, award grants and enter into contracts and 
        cooperative agreements for research and development on the use 
        of innovative and alternative technologies to improve water 
        quality or drinking water supply.
            (2) Types of projects.--In carrying out this subsection, 
        the Administrator may select projects relating to such matters 
        as innovative or alternative technologies, approaches, 
        practices, or methods--
                    (A) to increase the effectiveness and efficiency of 
                public water supply systems, including--
                            (i) source water protection;
                            (ii) water use reduction;
                            (iii) water reuse;
                            (iv) water treatment;
                            (v) water distribution and collection 
                        systems; and
                            (vi) water security;
                    (B) to encourage the use of innovative or 
                alternative technologies or approaches relating to 
                water supply or availability; or
                    (C) to increase the effectiveness and efficiency of 
                treatment works, including--
                            (i) methods of collecting, treating, 
                        dispersing, reusing, reclaiming, and recycling 
                        wastewater;
                            (ii) system design;
                            (iii) nonstructural alternatives;
                            (iv) decentralized approaches;
                            (v) assessment;
                            (vi) water efficiency; and
                            (vii) wastewater security.
            (3) Recipients.--Grant recipients and parties to contracts 
        or cooperative agreements under this subsection may be research 
        institutions or consortia or educational institutions or 
        consortia.
            (4) Authorization of appropriations.--There is authorized 
        to be appropriated to carry out this subsection $20,000,000 for 
        each of fiscal years 2005 through 2009.
    (f) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section (other than subsection (e)) 
$20,000,000 for each of fiscal years 2005 through 2009.

SEC. 303. COST OF SERVICE STUDY.

    (a) In General.--Not later than 2 years after the date of enactment 
of this Act, the Administrator shall enter into a contract with the 
National Academy of Sciences for, and the National Academy of Sciences 
shall complete and provide to the Administrator the results of, a study 
of the means by which public water systems and treatment works selected 
by the Academy in accordance with subsection (c) meet the costs 
associated with operations, maintenance, capital replacement, and 
regulatory requirements.
    (b) Required Elements.--
            (1) Affordability.--The study shall, at a minimum--
                    (A) identify existing standards for affordability;
                    (B) determine the manner in which those standards 
                are determined and defined;
                    (C) determine the manner in which affordability 
                varies with respect to communities of different sizes 
                and in different regions; and
                    (D) determine the extent to which affordability 
                affects the decision of a community to increase public 
                water system and treatment works rates (including the 
                decision relating to the percentage by which those 
                rates should be increased).
            (2) Disadvantaged communities.--The study shall, at a 
        minimum--
                    (A) survey a cross-section of States representing 
                different sizes, demographics, and geographical 
                regions;
                    (B) describe, for each State described in 
                subparagraph (A), the definition of ``disadvantaged 
                community'' used in the State in carrying out projects 
                and activities under the Safe Drinking Water Act (42 
                U.S.C. 300f et seq.);
                    (C) review other means of identifying the meaning 
                of the term ``disadvantaged'', as that term applies to 
                communities;
                    (D) determine which factors and characteristics are 
                required for a community to be considered 
                ``disadvantaged''; and
                    (E) evaluate the degree to which factors such as a 
                reduction in the tax base over a period of time, a 
                reduction in population, the loss of an industrial 
                base, and the existence of areas of concentrated 
                poverty are taken into account in determining whether a 
                community is a disadvantaged community.
    (c) Selection of Communities.--The National Academy of Sciences 
shall select communities, the public water system and treatment works 
rate structures of which are to be studied under this section, that 
include a cross section of communities representing various 
populations, income levels, demographics, and geographical regions.
    (d) Use of Results of Study.--On receipt of the results of the 
study, the Administrator shall--
            (1) submit to Congress a report that describes the results 
        of the study; and
            (2) make the results available to treatment works and 
        public water systems for use by the publicly owned treatment 
        works and public water systems, on a voluntary basis, in 
        determining whether 1 or more new approaches may be implemented 
        at facilities of the publicly owned treatment works and public 
        water systems.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $1,000,000 for each of fiscal 
years 2005 and 2006.

SEC. 304. STATE REVOLVING FUND REVIEW PROCESS.

    As soon as practicable after the date of enactment of this Act, the 
Administrator shall--
            (1) consult with States, utilities, 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--
                    (A) the State water pollution control revolving 
                funds established under title VI of the Federal Water 
                Pollution Control Act (33 U.S.C. 1381 et seq.); and
                    (B) the State drinking water treatment revolving 
                loan funds established under section 1452 of the Safe 
                Drinking Water Act (42 U.S.C. 300j-12); and
            (2) take such administrative action as is necessary to 
        expedite and improve the process as the Administrator has 
        authority to take under existing law; and
            (3) submit to Congress a report that, based on the 
        information identified under paragraph (1), contains 
        recommendations for legislation to facilitate further 
        streamlining and improvement of the process.
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