II 

109TH CONGRESS 

1ST SESSION S. 895 

To direct the Secretary of the Interior to establish a rural water supply 

program in the Reclamation States to provide a clean, safe, affordable, 

and reliable water supply to rural residents. 

IN THE SENATE OF THE UNITED STATES 

APRIL 25, 2005 

Mr. DOMENICI (for himself, Mr. BINGAMAN, Ms. MURKOWSKI, Mr. BENNETT, 

and Mr. JOHNSON) introduced the following bill; which was read twice 

and referred to the Committee on Energy and Natural Resources 

A BILL 

To direct the Secretary of the Interior to establish a rural 

water supply program in the Reclamation States to provide a clean, safe, affordable, and reliable water supply 

to rural residents. 

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 ‘‘Rural Water Supply Act of 2005’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 
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TITLE I—RECLAMATION RURAL WATER SUPPLY ACT OF 2005 

Sec. 101. Short title. 

Sec. 102. Definitions. 

Sec. 103. Rural water supply program. 

Sec. 104. Rural water programs assessment. 

Sec. 105. Appraisal investigations. 

Sec. 106. Feasibility studies. 

Sec. 107. Miscellaneous. 

Sec. 108. Authorization of appropriations. 

TITLE II—TWENTY-FIRST CENTURY WATER WORKS ACT 

Sec. 201. Short title. 

Sec. 202. Definitions. 

Sec. 203. Project eligibility. 

Sec. 204. Loan guarantees. 

Sec. 205. Operations, maintenance, and replacement costs. 

Sec. 206. Title to newly constructed facilities. 

Sec. 207. Water rights. 

Sec. 208. Interagency coordination and cooperation. 

Sec. 209. Authorization of appropriations. 

1 TITLE I—RECLAMATION RURAL 

2 WATER SUPPLY ACT OF 2005 

3 SEC. 101. SHORT TITLE. 

4 This title may be cited as the ‘‘Reclamation Rural 

5 Water Supply Act of 2005’’. 

6 SEC. 102. DEFINITIONS. 

7 In this title: 

8 (1) FEDERAL RECLAMATION LAW.—The term 

9 ‘‘Federal reclamation law’’ means the Act of June 

10 17, 1902 (32 Stat. 388, chapter 1093), and Acts 

11 supplemental to and amendatory of that Act (43 

12 U.S.C. 371 et seq.). 

13 (2) INDIAN.—The term ‘‘Indian’’ means an in14 dividual who is a member of an Indian tribe. 
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1 (3) INDIAN TRIBE.—The term ‘‘Indian tribe’’ 

2 has the meaning given the term in section 4 of the 

3 Indian Self-Determination and Education Assistance 

4 Act (25 U.S.C. 450b). 

5 (4) NON-FEDERAL PROJECT ENTITY.—The 

6 term ‘‘non-Federal project entity’’ means a State, 

7 regional, or local authority, Indian tribe or tribal or8 ganization, or other qualifying entity, such as a 

9 water conservation district, water conservancy dis10 trict, or rural water district or association. 

11 (5) OPERATIONS, MAINTENANCE, AND RE12 PLACEMENT COSTS.— 

13 (A) IN GENERAL.—The term ‘‘operations, 

14 maintenance, and replacement costs’’ means all 

15 costs for the operation of a rural water supply 

16 project that are necessary for the safe, efficient, 

17 and continued functioning of the project to 

18 produce the benefits described in a feasibility 

19 study. 

20 (B) INCLUSIONS.—The term ‘‘operations, 

21 maintenance, and replacement costs’’ in22 cludes— 

23 (i) repairs of a routine nature that 

24 maintain a rural water supply project in a 

25 well kept condition; 
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1 (ii) replacement of worn-out project 

2 elements; and 

3 (iii) rehabilitation activities necessary 

4 to bring a deteriorated project back to the 

5 original condition of the project. 

6 (C) EXCLUSION.—The term ‘‘operations, 

7 maintenance, and replacement costs’’ does not 

8 include construction costs. 

9 (6) PROGRAM.—The term ‘‘program’’ means 

10 the rural water supply program established under 

11 section 103. 

12 (7) RECLAMATION STATES.—The term ‘‘rec13 lamation States’’ means the States and areas re14 ferred to in the first section of the Act of June 17, 

15 1902 (43 U.S.C. 391). 

16 (8) RURAL WATER SUPPLY PROJECT.— 

17 (A) IN GENERAL.—The term ‘‘rural water 

18 supply project’’ means a project that is de19 signed to serve a group of communities, which 

20 may include Indian tribes and tribal organiza21 tions, dispersed homesites, or rural areas with 

22 domestic, industrial, municipal, and residential 

23 water, each of which has a population of not 

24 more than 50,000 inhabitants. 
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1 (B) INCLUSION.—The term ‘‘rural water 

2 supply project’’ includes— 

3 (i) incidental noncommercial livestock 

4 watering and noncommercial irrigation of 

5 vegetation and small gardens of less than 

6 1 acre; and 

7 (ii) a project to improve rural water 

8 infrastructure, including— 

9 (I) pumps, pipes, wells, and other 

10 diversions; 

11 (II) storage tanks and small im12 poundments; 

13 (III) water treatment facilities 

14 for potable water supplies; 

15 (IV) equipment and management 

16 tools for water conservation, ground17 water recovery, and water recycling; 

18 and 

19 (V) appurtenances. 

20 (C) EXCLUSION.—The term ‘‘rural water 

21 supply project’’ does not include— 

22 (i) commercial irrigation; or 

23 (ii) major impoundment structures. 

24 (9) SECRETARY.—The term ‘‘Secretary’’ means 

25 the Secretary of the Interior. 
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1 (10) TRIBAL ORGANIZATION.—The term ‘‘tribal 

2 organization’’ means— 

3 (A) the recognized governing body of an 

4 Indian tribe; and 

5 (B) any legally established organization of 

6 Indians that is controlled, sanctioned, or char7 tered by the governing body or democratically 

8 elected by the adult members of the Indian 

9 community to be served by the organization. 

10 SEC. 103. RURAL WATER SUPPLY PROGRAM. 

11 (a) IN GENERAL.—The Secretary, in cooperation 

12 with non-Federal project entities and consistent with this 

13 title, shall establish and carry out a rural water supply 

14 program in reclamation States to— 

15 (1) investigate and identify opportunities to en16 sure safe and adequate rural water supply projects 

17 for municipal and industrial use in small commu18 nities and rural areas of the reclamation States; and 

19 (2) plan the design and construction, through 

20 the conduct of appraisal investigations and feasi21 bility studies, of rural water supply projects in rec22 lamation States. 

23 (b) NON-FEDERAL PROJECT ENTITY.—Any activity 

24 carried out under this title shall be carried out in coopera-
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1 tion with a qualifying non-Federal project entity, con2 sistent with this title. 

3 (c) ELIGIBILITY CRITERIA.—Not later than 1 year 

4 after the date of enactment of this Act, the Secretary 

5 shall, consistent with this title, develop and publish in the 

6 Federal Register criteria for— 

7 (1) determining the eligibility of a rural com8 munity for assistance under the program; and 

9 (2) prioritizing requests for assistance under 

10 the program. 

11 (d) FACTORS.—The criteria developed under sub12 section (c) shall take into account such factors as wheth13 er— 

14 (1) a rural water supply project— 

15 (A) serves— 

16 (i) rural areas and small communities; 

17 or 

18 (ii) Indian tribes; or 

19 (B) promotes and applies a regional or wa20 tershed perspective to water resources manage21 ment; 

22 (2) there is an urgent and compelling need for 

23 a rural water supply project that would— 

24 (A) improve the health or aesthetic quality 

25 of water; 
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1 (B) result in continuous, measurable, and 

2 significant water quality benefits; or 

3 (C) address current or future water supply 

4 needs; 

5 (3) a rural water supply project helps meet ap6 plicable requirements established by law; and 

7 (4) a rural water supply project is cost effec8 tive. 

9 (e) INCLUSIONS.—The Secretary may include— 

10 (1) to the extent that connection provides a reli11 able water supply, a connection to preexisting infra12 structure (including dams and conveyance channels) 

13 as part of a rural water supply project; and 

14 (2) notwithstanding the limitation in section 

15 102(8), a town or community with a population in 

16 excess of 50,000 inhabitants in an area served by a 

17 rural water supply project if, at the discretion of the 

18 Secretary, the town or community is considered to 

19 be a critical partner in the rural supply project. 

20 SEC. 104. RURAL WATER PROGRAMS ASSESSMENT. 

21 (a) IN GENERAL.—In consultation with the Secretary 

22 of Agriculture, the Administrator of the Environmental 

23 Protection Agency, and the Director of the Indian Health 

24 Service, the Secretary shall develop an assessment of— 
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1 (1) the status of all rural water supply projects 

2 under the jurisdiction of the Secretary authorized 

3 but not completed prior to the date of enactment of 

4 this Act, including appropriation amounts, the phase 

5 of development, total anticipated costs, and obstacles 

6 to completion; 

7 (2) the current plan (including projected finan8 cial and workforce requirements) for the completion 

9 of the rural water supply projects within the time 

10 frames established under the provisions of law au11 thorizing the projects or the final engineering re12 ports for the projects; 

13 (3) the demand for rural water supply projects; 

14 (4) programs within other agencies that can, 

15 and a description of the extent to which the pro16 grams, provide support for rural water supply 

17 projects and water treatment programs in reclama18 tion States, including an assessment of the require19 ments, funding levels, and conditions for eligibility 

20 for the programs assessed; and 

21 (5) the extent of the unmet needs that the Sec22 retary can meet with the program that complements 

23 activities undertaken under the authorities already 

24 within the jurisdiction of the Secretary and the 
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1 heads of the agencies with whom the Secretary 

2 consults. 

3 (b) REPORT.—Not later than 2 years after the date 

4 of enactment of this Act, the Secretary shall submit to 

5 the Committee on Energy and Natural Resources of the 

6 Senate and the Committee on Resources of the House of 

7 Representatives a detailed report on the assessment con8 ducted under subsection (a). 

9 SEC. 105. APPRAISAL INVESTIGATIONS. 

10 (a) IN GENERAL.—On request of a non-Federal 

11 project entity with respect to a proposed rural water sup12 ply project that meets the eligibility criteria published 

13 under section 103(c) and subject to the availability of ap14 propriations, the Secretary may— 

15 (1) receive and review an appraisal investiga16 tion that is— 

17 (A) developed by the non-Federal project 

18 entity independent of support from the Sec19 retary; and 

20 (B) submitted to the Secretary by the non21 Federal project entity; 

22 (2) conduct an appraisal investigation; or 

23 (3) provide a grant to, or enter into a coopera24 tive agreement with, the non-Federal project entity 
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1 to conduct an appraisal investigation, if the Sec2 retary determines that— 

3 (A) the non-Federal project entity is quali4 fied to complete the appraisal investigation in 

5 accordance with the criteria published under 

6 section 103(c); and 

7 (B) using the non-Federal project entity to 

8 conduct the appraisal investigation is the lowest 

9 cost alternative for completing the appraisal in10 vestigation. 

11 (b) DEADLINE.—An appraisal investigation con12 ducted under subsection (a) shall be scheduled for comple13 tion not later than 2 years after the date on which the 

14 appraisal investigation is initiated. 

15 (c) APPRAISAL REPORT.—As soon as practicable 

16 after an appraisal investigation is submitted to the Sec17 retary under subsection (a)(1) or completed under para18 graph (2) or (3) of subsection (a), the Secretary shall pre19 pare an appraisal report that— 

20 (1) considers— 

21 (A) whether the project meets— 

22 (i) the appraisal criteria developed 

23 under subsection (d); and 

24 (ii) the eligibility criteria developed 

25 under section 103(c); 
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1 (B) whether viable water supplies and 

2 water rights exist to supply the project, includ3 ing all practicable water sources such as lower 

4 quality waters, nonpotable waters, and water 

5 reuse-based water supplies; 

6 (C) whether the project has a positive ef7 fect on public health and safety; 

8 (D) whether the project will meet water de9 mand, including projected future needs; 

10 (E) the extent to which the project pro11 vides environmental benefits, including source 

12 water protection; 

13 (F) the ability of the project to supply 

14 water consistent with Indian trust responsibil15 ities, as appropriate; 

16 (G) whether the project applies a regional 

17 or watershed perspective and promotes benefits 

18 in the region in which the project is carried out; 

19 (H) whether the project— 

20 (i)(I) implements an integrated re21 sources management approach; or 

22 (II) enhances water management 

23 flexibility, including providing for— 
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1 (aa) local control to manage 

2 water supplies under varying water 

3 supply conditions; and 

4 (bb) participation in water bank5 ing and markets for domestic and en6 vironmental purposes; and 

7 (ii) promotes long-term protection of 

8 water supplies; 

9 (I) preliminary cost estimates for the 

10 project; and 

11 (J) whether the non-Federal project entity 

12 has the capability to pay 100 percent of the 

13 costs associated with the operations, mainte14 nance, and replacement of the facilities con15 structed or developed as part of the rural water 

16 supply project; and 

17 (2) provides recommendations on whether a fea18 sibility study should be initiated under section 

19 106(a). 

20 (d) APPRAISAL CRITERIA.— 

21 (1) IN GENERAL.—Not later than 1 year after 

22 the date of enactment of this Act, the Secretary 

23 shall promulgate criteria (including appraisal factors 

24 listed under subsection (c)) against which the ap-
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1 praisal investigations shall be assessed for complete2 ness and appropriateness for a feasibility study. 

3 (2) INCLUSIONS.—To minimize the cost of a 

4 rural water supply project to a non-Federal project 

5 entity, the Secretary shall include in the criteria 

6 methods to scale the level of effort needed to com7 plete the appraisal investigation relative to the total 

8 size and cost of the proposed rural water supply 

9 project. 

10 (e) REVIEW OF APPRAISAL INVESTIGATION.—Not 

11 later than 180 days after the date of submission of an 

12 appraisal investigation under subsection (a)(1) or the com13 pletion of an appraisal investigation under paragraph (2) 

14 or (3) of subsection (a), the Secretary shall— 

15 (1) with respect to an appraisal investigation 

16 conducted by a non-Federal project entity under 

17 subsection (a)(1), provide to the non-Federal entity 

18 an evaluation of whether the appraisal investigation 

19 satisfies the criteria promulgated under subsection 

20 (d); 

21 (2) make available to the public, on request, the 

22 results of each appraisal investigation conducted 

23 under this title; and 

24 (3) promptly publish in the Federal Register a 

25 notice of the availability of the results. 
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1 (f) COSTS.— 

2 (1) FEDERAL SHARE.—The Federal share of an 

3 appraisal investigation conducted under subsection 

4 (a) shall be 100 percent of the total cost of the ap5 praisal investigation, up to $200,000. 

6 (2) NON-FEDERAL SHARE.— 

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

8 subparagraph (B), if the cost of conducting an 

9 appraisal investigation is more than $200,000, 

10 the non-Federal share of the costs in excess of 

11 $200,000 shall be 50 percent. 

12 (B) EXCEPTION.—The Secretary may re13 duce the non-Federal share required under sub14 paragraph (A) if the Secretary determines that 

15 there is an overwhelming Federal interest in the 

16 appraisal investigation. 

17 (g) CONSULTATION; IDENTIFICATION OF FUNDING

18 SOURCES.—In conducting an appraisal investigation 

19 under subsection (a)(2), the Secretary shall— 

20 (1) consult and cooperate with the non-Federal 

21 project entity and appropriate State, tribal, regional, 

22 and local authorities; 

23 (2) consult with the heads of appropriate Fed24 eral agencies to— 
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1 (A) ensure that the proposed rural water 

2 supply project does not duplicate a project car3 ried out under the authority of the agency head; 

4 and 

5 (B) if a duplicate project is being carried 

6 out, identify the authority under which the du7 plicate project is being carried out; and 

8 (3) identify what funding sources are available 

9 for the proposed rural water supply project. 

10 SEC. 106. FEASIBILITY STUDIES. 

11 (a) IN GENERAL.—On completion of an appraisal re12 port under section 105(c) that recommends undertaking 

13 a feasibility study and subject to the availability of appro14 priations, the Secretary shall— 

15 (1) in cooperation with a non-Federal project 

16 entity, carry out a study to determine the feasibility 

17 of the proposed rural water supply project; 

18 (2) receive and review a feasibility study that 

19 is— 

20 (A) developed by the non-Federal project 

21 entity independent of support from the Sec22 retary; and 

23 (B) submitted to the Secretary by the non24 Federal project entity; or 
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1 (3) provide a grant to, or enter into a coopera2 tive agreement with, a non-Federal project entity to 

3 conduct a feasibility study, for submission to the 

4 Secretary, if the Secretary determines that— 

5 (A) the non-Federal entity is qualified to 

6 complete the feasibility study in accordance 

7 with the criteria promulgated under subsection 

8 (d); and 

9 (B) using the non-Federal project entity to 

10 conduct the feasibility study is the lowest cost 

11 alternative for completing the appraisal inves12 tigation. 

13 (b) REVIEW OF NON-FEDERAL FEASIBILITY STUD14 IES.— 

15 (1) IN GENERAL.—In conducting a review of a 

16 feasibility study submitted under paragraph (2) or 

17 (3) of subsection (a), the Secretary shall— 

18 (A) in accordance with the feasibility fac19 tors described in subsection (c) and the criteria 

20 promulgated under subsection (d), assess the 

21 completeness of the feasibility study; and 

22 (B) if the Secretary determines that a fea23 sibility study is not complete, notify the non24 Federal entity of the determination. 
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1 (2) REVISIONS.—If the Secretary determines 

2 under paragraph (1)(B) that a feasibility study is 

3 not complete, the non-Federal entity shall pay any 

4 costs associated with revising the feasibility study. 

5 (c) FEASIBILITY FACTORS.—Feasibility studies au6 thorized or reviewed under this title shall include an as7 sessment of— 

8 (1) near- and long-term water demand in the 

9 region to be served by the rural water supply 

10 project; 

11 (2) advancement of public health and safety of 

12 any existing rural water supply project and other 

13 benefits of the proposed rural water supply project; 

14 (3) alternative new water supplies in the study 

15 area, including any opportunities to treat and use 

16 low-quality water, nonpotable water, water reuse17 based supplies, and brackish and saline waters 

18 through innovative and economically viable treat19 ment technologies; 

20 (4) environmental quality and source water pro21 tection issues related to the rural water supply 

22 project; 

23 (5) innovative opportunities for water conserva24 tion in the study area to reduce water use and water 

25 system costs, including— 
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1 (A) nonstructural approaches to reduce the 

2 need for the project; and 

3 (B) demonstration technologies; 

4 (6) the extent to which the project and alter5 natives take advantage of economic incentives and 

6 the use of market-based mechanisms; 

7 (7)(A) the construction costs and projected op8 erations, maintenance, and replacement costs of all 

9 alternatives; and 

10 (B) the economic feasibility and lowest cost 

11 method of obtaining the desired results of each alter12 native, taking into account the Federal cost-share; 

13 (8) the availability of guaranteed loans for a 

14 proposed rural water supply project; 

15 (9) the financial capability of the non-Federal 

16 project entity to pay the non-Federal project entity’s 

17 proportionate share of the design and construction 

18 costs and 100 percent of operations, maintenance, 

19 and replacement costs, including the allocation of 

20 costs to each non-Federal project entity in the case 

21 of multiple entities; 

22 (10) whether the non-Federal project entity has 

23 developed an operations, management, and replace24 ment plan to assist the non-Federal project entity in 
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1 establishing rates and fees for beneficiaries of the 

2 rural water supply project; 

3 (11)(A) the non-Federal project entity adminis4 trative organization that would implement construc5 tion, operations, maintenance, and replacement ac6 tivities; and 

7 (B) the fiscal, administrative, and operational 

8 controls to be implemented to manage the project; 

9 (12) the extent to which the project addresses 

10 Indian trust responsibilities, as appropriate; 

11 (13) the extent to which assistance for rural 

12 water supply is available under other Federal au13 thorities; 

14 (14) the engineering, environmental, and eco15 nomic activities to be undertaken to carry out the 

16 study; 

17 (15) the extent to which the project involves 

18 partnerships with other State, local, or tribal govern19 ments or Federal entities; and 

20 (16) in the case of a project intended for Indian 

21 tribes and tribal organizations, the extent to which 

22 the project addresses the goal of economic self-suffi23 ciency. 

24 (d) FEASIBILITY STUDY CRITERIA.— 
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1 (1) IN GENERAL.—Not later than 18 months 

2 after the date of enactment of this Act, the Sec3 retary shall promulgate criteria (including the feasi4 bility factors listed under subsection (c)) under 

5 which the feasibility studies shall be assessed for 

6 completeness and appropriateness. 

7 (2) INCLUSIONS.—The Secretary shall include 

8 in the criteria promulgated under paragraph (1) 

9 methods to scale the level of effort needed to com10 plete the feasibility assessment relative to the total 

11 size and cost of the proposed rural water supply 

12 project and reduce total costs to non-Federal enti13 ties. 

14 (e) FEASIBILITY REPORT.— 

15 (1) IN GENERAL.—After completion of appro16 priate feasibility studies for rural water supply 

17 projects that address the factors described in sub18 section (c) and the criteria promulgated under sub19 section (d), the Secretary shall— 

20 (A) develop a feasibility report that in21 cludes— 

22 (i) a recommendation of the Secretary 

23 on— 
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1 (I) whether the rural water sup2 ply project should be authorized for 

3 construction; and 

4 (II) the appropriate non-Federal 

5 share of construction costs, which 

6 shall be— 

7 (aa) at least 25 percent of 

8 the total construction costs; and 

9 (bb) determined based on an 

10 analysis of the capability-to-pay 

11 information considered under 

12 subsections (c)(9) and (f); and 

13 (ii) if the Secretary recommends that 

14 the project should be authorized for con15 struction— 

16 (I) what amount of grants, loan 

17 guarantees, or combination of grants 

18 and loan guarantees should be used to 

19 provide the Federal cost share; 

20 (II) a schedule that identifies the 

21 annual operations, maintenance, and 

22 replacement costs that should be allo23 cated to each non-Federal entity par24 ticipating in the rural water supply 

25 project; and 
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1 (III) an assessment of the finan2 cial capability of each non-Federal en3 tity participating in the rural water 

4 supply project to pay the allocated an5 nual operation, maintenance, and re6 placement costs for the rural water 

7 supply project; 

8 (B) submit the report to the Committee on 

9 Energy and Natural Resources of the Senate 

10 and the Committee on Resources of the House 

11 of Representatives; 

12 (C) make the report publicly available, 

13 along with associated study documents; and 

14 (D) publish in the Federal Register a no15 tice of the availability of the results. 

16 (f) CAPABILITY-TO-PAY.— 

17 (1) IN GENERAL.—In evaluating a proposed 

18 rural water supply project under this section, the 

19 Secretary shall— 

20 (A) consider the financial capability of any 

21 non-Federal project entities participating in the 

22 rural water supply project to pay the capital 

23 construction costs of the rural water supply 

24 project; and 
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1 (B) recommend an appropriate Federal 

2 share and non-Federal share of the capital con3 struction costs, as determined by the Secretary. 

4 (2) FACTORS.—In determining the financial ca5 pability of non-Federal project entities to pay for a 

6 rural water supply project under paragraph (1), the 

7 Secretary shall evaluate factors for the project area, 

8 relative to the State and county average, including— 

9 (A) per capita income; 

10 (B) median household income; 

11 (C) the poverty rate; 

12 (D) the ability of the non-Federal project 

13 entity to raise tax revenues or assess fees; 

14 (E) the strength of the balance sheet of 

15 the non-Federal project entity; and 

16 (F) the existing cost of water in the re17 gion. 

18 (3) INDIAN TRIBES.—In determining the capa19 bility-to-pay of Indian tribe project beneficiaries, the 

20 Secretary may consider deferring the collection of all 

21 or part of the non-Federal construction costs appor22 tioned to Indian tribe project beneficiaries unless or 

23 until the Secretary determines that the Indian tribe 

24 project beneficiaries should pay— 
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1 (A) the costs allocated to the beneficiaries; 

2 or 

3 (B) an appropriate portion of the costs. 

4 (g) COST-SHARING REQUIREMENT.— 

5 (1) IN GENERAL.—Except as otherwise pro6 vided in this subsection, the Federal share of the 

7 cost of a feasibility study carried out under this sec8 tion shall not exceed 50 percent of the study costs. 

9 (2) FORM.—The non-Federal share under para10 graph (1) may be in the form of any in-kind services 

11 that the Secretary determines would contribute sub12 stantially toward the conduct and completion of the 

13 study. 

14 (3) FINANCIAL HARDSHIP.—The Secretary may 

15 increase the Federal share of the costs of a feasi16 bility study if the Secretary determines, based on a 

17 demonstration of financial hardship, that the non18 Federal participant is unable to contribute at least 

19 50 percent of the costs of the study. 

20 (4) LARGER COMMUNITIES.—In conducting a 

21 feasibility study of a rural water supply system that 

22 includes a community with a population in excess of 

23 50,000 inhabitants, the Secretary may require the 

24 community to pay a greater percentage of the non- 
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1 Federal share than that required for communities 

2 with less than 50,000 inhabitants. 

3 (h) CONSULTATION AND COOPERATION.—In addition 

4 to the non-Federal project entity, the Secretary shall con5 sult and cooperate with appropriate Federal, State, tribal, 

6 regional, and local authorities during the conduct of each 

7 feasibility assessment and development of the feasibility 

8 report conducted under this title. 

9 SEC. 107. MISCELLANEOUS. 

10 (a) AUTHORITY OF SECRETARY.—The Secretary may 

11 enter into contracts, financial assistance agreements, and 

12 such other agreements, and promulgate such regulations, 

13 as are necessary to carry out this title. 

14 (b) TRANSFER OF PROJECTS.—Nothing in this title 

15 authorizes the transfer of pre-existing facilities or pre-ex16 isting components of any water system from Federal to 

17 private ownership or from private to Federal ownership. 

18 (c) FEDERAL RECLAMATION LAW.—Nothing in this 

19 title supersedes or amends any Federal law associated 

20 with a project, or portion of a project, constructed under 

21 Federal reclamation law. 

22 (d) INTERAGENCY COORDINATION.—The Secretary 

23 shall coordinate the program carried out under this title 

24 with existing Federal and State rural water and waste25 water programs to facilitate the most efficient and effec-
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1 tive solution to meeting the water needs of the non-Fed2 eral project sponsors. 

3 (e) MULTIPLE INDIAN TRIBES.—In any case in 

4 which a contract is entered into with, or a grant is made, 

5 to an organization to perform services benefitting more 

6 than 1 Indian tribe under this title, the approval of each 

7 such Indian tribe shall be a prerequisite to entering into 

8 the contract or making the grant. 

9 (f) OWNERSHIP OF FACILITIES.—Title to any facility 

10 planned, designed, and recommended for construction 

11 under this title is intended to be held by the non-Federal 

12 project entity. 

13 (g) EFFECT ON STATE WATER LAW.— 

14 (1) IN GENERAL.—Nothing in this title pre15 empts or affects State water law or an interstate 

16 compact governing water. 

17 (2) COMPLIANCE REQUIRED.—The Secretary 

18 shall comply with State water laws in carrying out 

19 this title. 

20 (h) NO ADDITIONAL REQUIREMENTS.—Nothing in 

21 this title requires a feasibility study for, or imposes any 

22 other additional requirements with respect to, rural water 

23 supply projects or programs that are authorized before the 

24 date of enactment of this Act. 
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1 SEC. 108. AUTHORIZATION OF APPROPRIATIONS. 

2 (a) IN GENERAL.—There is authorized to be appro3 priated to carry out this title $20,000,000 for the period 

4 of fiscal years 2006 through 2015, to remain available 

5 until expended. 

6 (b) RURAL WATER PROGRAMS ASSESSMENT.—Of the 

7 amounts made available under subsection (a), not more 

8 than $1,000,000 may be made available to carry out sec9 tion 104 for each of fiscal years 2006 and 2007. 

10 (c) LIMITATION.—No amounts made available under 

11 this section shall be used to pay construction costs associ12 ated with any rural water supply project. 

13 TITLE II—TWENTY-FIRST 

14 CENTURY WATER WORKS ACT 

15 SEC. 201. SHORT TITLE. 

16 This title may be cited as the ‘‘Twenty-First Century 

17 Water Works Act’’. 

18 SEC. 202. DEFINITIONS. 

19 In this title: 

20 (1) INDIAN TRIBE.—The term ‘‘Indian tribe’’ 

21 has the meaning given the term in section 4 of the 

22 Indian Self-Determination and Education Assistance 

23 Act (25 U.S.C. 450b). 

24 (2) LENDER.—The term ‘‘lender’’ means any 

25 non-Federal qualified institutional buyer (as defined 

26 in section 230.144A(a) of title 17, Code of Federal 
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1 Regulation (or any successor regulation), known as 

2 Rule 144A(a) of the Securities and Exchange Com3 mission and issued under the Securities Act of 1933 

4 (15 U.S.C. 77a et seq.)). 

5 (3) LOAN GUARANTEE.—The term ‘‘loan guar6 antee’’ means any guarantee, insurance, or other 

7 pledge by the Secretary to pay all or part of the 

8 principal of, and interest on, a loan or other debt ob9 ligation of a non-Federal borrower to a lender. 

10 (4) NON-FEDERAL BORROWER.—The term 

11 ‘‘non-Federal borrower’’ means— 

12 (A) a State (including a department, agen13 cy, or political subdivision of a State); or 

14 (B) a conservancy district, irrigation dis15 trict, canal company, water users’ association, 

16 Indian tribe, an agency created by interstate 

17 compact, or any other entity that has the ca18 pacity to contract with the United States under 

19 Federal reclamation law. 

20 (5) PROJECT.—The term ‘‘project’’ means— 

21 (A) a rural water supply project (as de22 fined in section 102(8)); or 

23 (B) an extraordinary operation and main24 tenance activity for, or the rehabilitation of, a 

25 facility— 
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1 (i) that is authorized by Federal rec2 lamation law and constructed by the 

3 United States under such law; or 

4 (ii) in connection with which there is 

5 a repayment or water service contract exe6 cuted by the United States under Federal 

7 reclamation law. 

8 (6) SECRETARY.—The term ‘‘Secretary’’ means 

9 the Secretary of the Interior. 

10 SEC. 203. PROJECT ELIGIBILITY. 

11 (a) ELIGIBILITY CRITERIA.— 

12 (1) IN GENERAL.—The Secretary shall develop 

13 and publish in the Federal Register criteria for de14 termining the eligibility of a project for financial as15 sistance under section 204. 

16 (2) INCLUSIONS.—Eligibility criteria shall in17 clude— 

18 (A) submission of an application by the 

19 lender to the Secretary; 

20 (B) demonstration of the creditworthiness 

21 of the project, including a determination by the 

22 Secretary that any financing for the project has 

23 appropriate security features to ensure repay24 ment; 
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1 (C) demonstration by the non-Federal bor2 rower, to the satisfaction of the Secretary, of 

3 the ability of the non-Federal borrower to repay 

4 the project financing from user fees or other 

5 dedicated revenue sources; 

6 (D) demonstration by the non-Federal bor7 rower, to the satisfaction of the Secretary, of 

8 the ability of the non-Federal borrower to pay 

9 all operations, maintenance, and replacement 

10 costs of the project facilities; and 

11 (E) such other criteria as the Secretary de12 termines to be appropriate. 

13 (b) WAIVER.—The Secretary may waive any of the 

14 criteria in subsection (a)(2) that the Secretary determines 

15 to be duplicative or rendered unnecessary because of an 

16 action already taken by the United States. 

17 (c) PROJECTS PREVIOUSLY AUTHORIZED.—A project 

18 that was authorized for construction under Federal rec19 lamation laws prior to the date of enactment of this Act 

20 shall be eligible for assistance under this title, subject to 

21 the criteria established by the Secretary under subsection 

22 (a). 

23 (d) CRITERIA FOR RURAL WATER SUPPLY

24 PROJECTS.—A rural water supply project that is deter-
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1 mined to be feasible under section 106 is eligible for a 

2 loan guarantee under section 204. 

3 SEC. 204. LOAN GUARANTEES. 

4 (a) AUTHORITY.—Subject to the availability of ap5 propriations, the Secretary may make available to lenders 

6 for a project meeting the eligibility criteria established in 

7 section 203 loan guarantees to supplement private-sector 

8 or lender financing for the project. 

9 (b) TERMS AND LIMITATIONS.— 

10 (1) IN GENERAL.—Loan guarantees under this 

11 section for a project shall be on such terms and con12 ditions and contain such covenants, representations, 

13 warranties, and requirements as the Secretary deter14 mines to be appropriate to protect the financial in15 terests of the United States. 

16 (2) MAXIMUM AMOUNT.—The amount of a loan 

17 guarantee shall not exceed 90 percent of the reason18 ably anticipated eligible project costs. 

19 (3) INTEREST RATE.—The interest rate on a 

20 loan guarantee shall be negotiated between the non21 Federal borrower and the lender with the consent of 

22 the Secretary. 

23 (4) AMORTIZATION.—A loan guarantee under 

24 this section shall provide for complete amortization 
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1 of the loan guarantee within not more than 40 

2 years. 

3 (5) NON-SUBORDINATION.—In case of bank4 ruptcy, insolvency, or liquidation of the non-Federal 

5 borrower, a loan guarantee shall not be subordinated 

6 to the claims of any holder of project obligations. 

7 (c) PREPAYMENT AND REFINANCING.—Any prepay8 ment or refinancing terms on a loan guarantee shall be 

9 negotiated between the non-Federal borrower and the 

10 lender with the consent of the Secretary. 

11 SEC. 205. OPERATIONS, MAINTENANCE, AND REPLACE12 MENT COSTS. 

13 (a) IN GENERAL.—The non-Federal share of oper14 ations, maintenance, and replacement costs for a project 

15 receiving Federal assistance under this title shall be 100 

16 percent. 

17 (b) PLAN.—On request of the non-Federal borrower, 

18 the Secretary may assist in the development of an oper19 ation, maintenance, and replacement plan to provide the 

20 necessary framework to assist the non-Federal borrower 

21 in establishing rates and fees for project beneficiaries. 

22 SEC. 206. TITLE TO NEWLY CONSTRUCTED FACILITIES. 

23 (a) NEW PROJECTS AND FACILITIES.—All new 

24 projects or facilities constructed in accordance with this 

25 title shall remain under the jurisdiction and control of the 
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1 non-Federal borrower subject to the terms of the repay2 ment agreement. 

3 (b) EXISTING PROJECTS AND FACILITIES.—Nothing 

4 in this title affects the title of— 

5 (1) reclamation projects authorized prior to the 

6 date of enactment of this Act; 

7 (2) works supplemental to existing reclamation 

8 projects; or 

9 (3) works constructed to rehabilitate existing 

10 reclamation projects. 

11 SEC. 207. WATER RIGHTS. 

12 (a) IN GENERAL.—Nothing in this title preempts or 

13 affects State water law or an interstate compact governing 

14 water. 

15 (b) COMPLIANCE REQUIRED.—The Secretary shall 

16 comply with State water laws in carrying out this title. 

17 Nothing in this title affects or preempts State water law 

18 or an interstate compact governing water. 

19 SEC. 208. INTERAGENCY COORDINATION AND COOPERA20 TION. 

21 The Secretary and the Secretary of Agriculture shall 

22 enter into a memorandum of agreement providing for De23 partment of Agriculture financial appraisal functions and 

24 loan guarantee administration for activities carried out 

25 under this title. 
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1 SEC. 209. AUTHORIZATION OF APPROPRIATIONS. 

2 There are authorized to be appropriated such sums 

3 as are necessary to carry out this title, to remain available 

4 until expended. 

Æ