```

[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 895 Enrolled Bill (ENR)]

        S.895

                       One Hundred Ninth Congress

                                 of the

                        United States of America

                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
             the third day of January, two thousand and six

                                 An Act

 
 To authorize the Secretary of the Interior to carry out a rural water 
   supply program in the Reclamation States to provide a clean, safe, 
        affordable, and reliable water supply to rural residents.

    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 ``Rural Water Supply 
Act of 2006''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

           TITLE I--RECLAMATION RURAL WATER SUPPLY ACT OF 2006

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. Reports.
Sec. 109. Authorization of appropriations.
Sec. 110. Termination of authority.

             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. Defaults.
Sec. 206. Operations, maintenance, and replacement costs.
Sec. 207. Title to newly constructed facilities.
Sec. 208. Water rights.
Sec. 209. Interagency coordination and cooperation.
Sec. 210. Records; audits.
Sec. 211. Full faith and credit.
Sec. 212. Report.
Sec. 213. Effect on the reclamation laws.
Sec. 214. Authorization of appropriations.
Sec. 215. Termination of authority.

         TITLE III--REPORT ON TRANSFER OF RECLAMATION FACILITIES

Sec. 301. Report.

          TITLE I--RECLAMATION RURAL WATER SUPPLY ACT OF 2006

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Reclamation Rural Water Supply Act 
of 2006''.

SEC. 102. DEFINITIONS.

    In this title:
        (1) Construction.--The term ``construction'' means the 
    installation of infrastructure and the upgrading of existing 
    facilities in locations in which the infrastructure or facilities 
    are associated with the new infrastructure of a rural water project 
    recommended by the Secretary pursuant to this title.
        (2) Federal reclamation law.--The term ``Federal reclamation 
    law'' means the Act of June 17, 1902 (32 Stat. 388, chapter 1093), 
    and Acts supplemental to and amendatory of that Act (43 U.S.C. 371 
    et seq.).
        (3) Indian.--The term ``Indian'' means an individual who is a 
    member of an Indian tribe.
        (4) Indian tribe.--The term ``Indian tribe'' has the meaning 
    given the term in section 4 of the Indian Self-Determination and 
    Education Assistance Act (25 U.S.C. 450b).
        (5) Non-federal project entity.--The term ``non-Federal project 
    entity'' means a State, regional, or local authority, Indian tribe 
    or tribal organization, or other qualifying entity, such as a water 
    conservation district, water conservancy district, or rural water 
    district or association.
        (6) Operations, maintenance, and replacement costs.--
            (A) In general.--The term ``operations, maintenance, and 
        replacement costs'' means all costs for the operation of a 
        rural water supply project that are necessary for the safe, 
        efficient, and continued functioning of the project to produce 
        the benefits described in a feasibility study.
            (B) Inclusions.--The term ``operations, maintenance, and 
        replacement costs'' includes--
                (i) repairs of a routine nature that maintain a rural 
            water supply project in a well kept condition;
                (ii) replacement of worn-out project elements; and
                (iii) rehabilitation activities necessary to bring a 
            deteriorated project back to the original condition of the 
            project.
            (C) Exclusion.--The term ``operations, maintenance, and 
        replacement costs'' does not include construction costs.
        (7) Program.--The term ``Program'' means the rural water supply 
    program carried out under section 103.
        (8) Reclamation states.--The term ``Reclamation States'' means 
    the States and areas referred to in the first section of the Act of 
    June 17, 1902 (43 U.S.C. 391).
        (9) Rural water supply project.--
            (A) In general.--The term ``rural water supply project'' 
        means a project that is designed to serve a community or group 
        of communities, each of which has a population of not more than 
        50,000 inhabitants, which may include Indian tribes and tribal 
        organizations, dispersed homesites, or rural areas with 
        domestic, industrial, municipal, and residential water.
            (B) Inclusion.--The term ``rural water supply project'' 
        includes--
                (i) incidental noncommercial livestock watering and 
            noncommercial irrigation of vegetation and small gardens of 
            less than 1 acre; and
                (ii) a project to improve rural water infrastructure, 
            including--

                    (I) pumps, pipes, wells, and other diversions;
                    (II) storage tanks and small impoundments;
                    (III) water treatment facilities for potable water 
                supplies, including desalination facilities;
                    (IV) equipment and management tools for water 
                conservation, groundwater recovery, and water 
                recycling; and
                    (V) appurtenances.

            (C) Exclusion.--The term ``rural water supply project'' 
        does not include--
                (i) commercial irrigation; or
                (ii) major impoundment structures.
        (10) Secretary.--The term ``Secretary'' means the Secretary of 
    the Interior.
        (11) Tribal organization.--The term ``tribal organization'' 
    means--
            (A) the recognized governing body of an Indian tribe; and
            (B) any legally established organization of Indians that is 
        controlled, sanctioned, or chartered by the governing body or 
        democratically elected by the adult members of the Indian 
        community to be served by the organization.

SEC. 103. RURAL WATER SUPPLY PROGRAM.

    (a) In General.--The Secretary, in cooperation with non-Federal 
project entities and consistent with this title, may carry out a rural 
water supply program in Reclamation States to--
        (1) investigate and identify opportunities to ensure safe and 
    adequate rural water supply projects for domestic, municipal, and 
    industrial use in small communities and rural areas of the 
    Reclamation States;
        (2) plan the design and construction, through the conduct of 
    appraisal investigations and feasibility studies, of rural water 
    supply projects in Reclamation States; and
        (3) oversee, as appropriate, the construction of rural water 
    supply projects in Reclamation States that are recommended by the 
    Secretary in a feasibility report developed pursuant to section 106 
    and subsequently authorized by Congress.
    (b) Non-Federal Project Entity.--Any activity carried out under 
this title shall be carried out in cooperation with a qualifying non-
Federal project entity, consistent with this title.
    (c) Eligibility Criteria.--Not later than 1 year after the date of 
enactment of this Act, the Secretary shall, consistent with this title, 
develop and publish in the Federal Register criteria for--
        (1) determining the eligibility of a rural community for 
    assistance under the Program; and
        (2) prioritizing requests for assistance under the Program.
    (d) Factors.--The criteria developed under subsection (c) shall 
take into account such factors as whether--
        (1) a rural water supply project--
            (A) serves--
                (i) rural areas and small communities; or
                (ii) Indian tribes; or
            (B) promotes and applies a regional or watershed 
        perspective to water resources management;
        (2) there is an urgent and compelling need for a rural water 
    supply project that would--
            (A) improve the health or aesthetic quality of water;
            (B) result in continuous, measurable, and significant water 
        quality benefits; or
            (C) address current or future water supply needs;
        (3) a rural water supply project helps meet applicable 
    requirements established by law; and
        (4) a rural water supply project is cost effective.
    (e) Inclusions.--The Secretary may include--
        (1) to the extent that connection provides a reliable water 
    supply, a connection to pre-existing infrastructure (including 
    impoundments and conveyance channels) as part of a rural water 
    supply project; and
        (2) notwithstanding the limitation on population under section 
    102(9)(A), a town or community with a population in excess of 
    50,000 inhabitants in an area served by a rural water supply 
    project if, at the discretion of the Secretary, the town or 
    community is considered to be a critical partner in the rural 
    supply project.

SEC. 104. RURAL WATER PROGRAMS ASSESSMENT.

    (a) In General.--In consultation with the Secretary of Agriculture, 
the Administrator of the Environmental Protection Agency, the Director 
of the Indian Health Service, the Secretary of Housing and Urban 
Development, and the Secretary of the Army, the Secretary shall develop 
an assessment of--
        (1) the status of all rural water supply projects under the 
    jurisdiction of the Secretary authorized but not completed prior to 
    the date of enactment of this Act, including appropriation amounts, 
    the phase of development, total anticipated costs, and obstacles to 
    completion;
        (2) the current plan (including projected financial and 
    workforce requirements) for the completion of the projects 
    identified in paragraph (1) within the time frames established 
    under the provisions of law authorizing the projects or the final 
    engineering reports for the projects;
        (3) the demand for new rural water supply projects;
        (4) rural water programs within other agencies and a 
    description of the extent to which those programs provide support 
    for rural water supply projects and water treatment programs in 
    Reclamation States, including an assessment of the requirements, 
    funding levels, and conditions of eligibility for the programs 
    assessed;
        (5) the extent of the demand that the Secretary can meet with 
    the Program;
        (6) how the Program will complement authorities already within 
    the jurisdiction of the Secretary and the heads of the agencies 
    with whom the Secretary consults; and
        (7) improvements that can be made to coordinate and integrate 
    the authorities of the agencies with programs evaluated under 
    paragraph (4), including any recommendations to consolidate some or 
    all of the activities of the agencies with respect to rural water 
    supply.
    (b) Consultation With States.--Before finalizing the assessment 
developed under subsection (a), the Secretary shall solicit comments 
from States with identified rural water needs.
    (c) Report.--Not later than 2 years after the date of enactment of 
this Act, the Secretary shall submit to the Committee on Energy and 
Natural Resources of the Senate and the Committee on Resources of the 
House of Representatives a detailed report on the assessment conducted 
under subsection (a).

SEC. 105. APPRAISAL INVESTIGATIONS.

    (a) In General.--On request of a non-Federal project entity with 
respect to a proposed rural water supply project that meets the 
eligibility criteria published under section 103(c) and subject to the 
availability of appropriations, the Secretary may--
        (1) receive and review an appraisal investigation that is--
            (A) developed by the non-Federal project entity, with or 
        without support from the Secretary; and
            (B) submitted to the Secretary by the non-Federal project 
        entity;
        (2) conduct an appraisal investigation; or
        (3) provide a grant to, or enter into a cooperative agreement 
    with, the non-Federal project entity to conduct an appraisal 
    investigation, if the Secretary determines that--
            (A) the non-Federal project entity is qualified to complete 
        the appraisal investigation in accordance with the criteria 
        published under section 103(c); and
            (B) using the non-Federal project entity to conduct the 
        appraisal investigation is a cost-effective alternative for 
        completing the appraisal investigation.
    (b) Deadline.--An appraisal investigation conducted under 
subsection (a) shall be scheduled for completion not later than 2 years 
after the date on which the appraisal investigation is initiated.
    (c) Appraisal Report.--In accordance with subsection (f), after an 
appraisal investigation is submitted to the Secretary under subsection 
(a)(1) or completed under paragraph (2) or (3) of subsection (a), the 
Secretary shall prepare an appraisal report that--
        (1) considers--
            (A) whether the project meets--
                (i) the appraisal criteria developed under subsection 
            (d); and
                (ii) the eligibility criteria developed under section 
            103(c);
            (B) whether viable water supplies and water rights exist to 
        supply the project, including all practicable water sources 
        such as lower quality waters, nonpotable waters, and water 
        reuse-based water supplies;
            (C) whether the project has a positive effect on public 
        health and safety;
            (D) whether the project will meet water demand, including 
        projected future needs;
            (E) the extent to which the project provides environmental 
        benefits, including source water protection;
            (F) whether the project applies a regional or watershed 
        perspective and promotes benefits in the region in which the 
        project is carried out;
            (G) whether the project--
                (i)(I) implements an integrated resources management 
            approach; or
                (II) enhances water management flexibility, including 
            providing for--

                    (aa) local control to manage water supplies under 
                varying water supply conditions; and
                    (bb) participation in water banking and markets for 
                domestic and environmental purposes; and

                (ii) promotes long-term protection of water supplies;
            (H) preliminary cost estimates for the project; and
            (I) whether the non-Federal project entity has the 
        capability to pay 100 percent of the costs associated with the 
        operations, maintenance, and replacement of the facilities 
        constructed or developed as part of the rural water supply 
        project; and
        (2) provides recommendations on whether a feasibility study 
    should be initiated under section 106(a).
    (d) Appraisal Criteria.--
        (1) In general.--Not later than 1 year after the date of 
    enactment of this Act, the Secretary shall promulgate criteria 
    (including appraisal factors listed under subsection (c)) against 
    which the appraisal investigations shall be assessed for 
    completeness and appropriateness for a feasibility study.
        (2) Inclusions.--To minimize the cost of a rural water supply 
    project to a non-Federal project entity, the Secretary shall 
    include in the criteria methods to scale the level of effort needed 
    to complete the appraisal investigation relative to the total size 
    and cost of the proposed rural water supply project.
    (e) Review of Appraisal Investigation.--
        (1) In general.--Not later than 90 days after the date of 
    submission of an appraisal investigation under paragraph (1) or (3) 
    of subsection (a), the Secretary shall provide to the non-Federal 
    entity that conducted the investigation a determination of whether 
    the investigation has included the information necessary to 
    determine whether the proposed rural water supply project satisfies 
    the criteria promulgated under subsection (d).
        (2) No satisfaction of criteria.--If the Secretary determines 
    that the appraisal investigation submitted by a non-Federal entity 
    does not satisfy the criteria promulgated under subsection (d), the 
    Secretary shall inform the non-Federal entity of the reasons why 
    the appraisal investigation is deficient.
        (3) Responsibility of secretary.--If an appraisal investigation 
    as first submitted by a non-Federal entity does not provide all 
    necessary information, as defined by the Secretary, the Secretary 
    shall have no obligation to conduct further analysis until the non-
    Federal project entity submitting the appraisal study conducts 
    additional investigation and resubmits the appraisal investigation 
    under this subsection.
    (f) Appraisal Report.--Once the Secretary has determined that an 
investigation provides the information necessary under subsection (e), 
the Secretary shall--
        (1) complete the appraisal report required under subsection 
    (c);
        (2) make available to the public, on request, the appraisal 
    report prepared under this title; and
        (3) promptly publish in the Federal Register a notice of the 
    availability of the results.
    (g) Costs.--
        (1) Federal share.--The Federal share of an appraisal 
    investigation conducted under subsection (a) shall be 100 percent 
    of the total cost of the appraisal investigation, up to $200,000.
        (2) Non-federal share.--
            (A) In general.--Except as provided in subparagraph (B), if 
        the cost of conducting an appraisal investigation is more than 
        $200,000, the non-Federal share of the costs in excess of 
        $200,000 shall be 50 percent.
            (B) Exception.--The Secretary may reduce the non-Federal 
        share required under subparagraph (A) if the Secretary 
        determines that there is an overwhelming Federal interest in 
        the appraisal investigation.
            (C) Form.--The non-Federal share under subparagraph (A) may 
        be in the form of any in-kind services that the Secretary 
        determines would contribute substantially toward the conduct 
        and completion of the appraisal investigation.
    (h) Consultation; Identification of Funding Sources.--In conducting 
an appraisal investigation under subsection (a)(2), the Secretary 
shall--
        (1) consult and cooperate with the non-Federal project entity 
    and appropriate State, tribal, regional, and local authorities;
        (2) consult with the heads of appropriate Federal agencies to--
            (A) ensure that the proposed rural water supply project 
        does not duplicate a project carried out under the authority of 
        the agency head; and
            (B) if a duplicate project is being carried out, identify 
        the authority under which the duplicate project is being 
        carried out; and
        (3) identify what funding sources are available for the 
    proposed rural water supply project.

SEC. 106. FEASIBILITY STUDIES.

    (a) In General.--On completion of an appraisal report under section 
105(c) that recommends undertaking a feasibility study and subject to 
the availability of appropriations, the Secretary shall--
        (1) in cooperation with a non-Federal project entity, carry out 
    a study to determine the feasibility of the proposed rural water 
    supply project;
        (2) receive and review a feasibility study that is--
            (A) developed by the non-Federal project entity, with or 
        without support from the Secretary; and
            (B) submitted to the Secretary by the non-Federal project 
        entity; or
        (3)(A) provide a grant to, or enter into a cooperative 
    agreement with, a non-Federal project entity to conduct a 
    feasibility study, for submission to the Secretary, if the 
    Secretary determines that--
            (i) the non-Federal entity is qualified to complete the 
        feasibility study in accordance with the criteria promulgated 
        under subsection (d); and
            (ii) using the non-Federal project entity to conduct the 
        feasibility study is a cost-effective alternative for 
        completing the appraisal investigation; or
        (B) if the Secretary determines not to provide a grant to, or 
    enter into a cooperative agreement with, a non-Federal project 
    entity under subparagraph (A), provide to the non-Federal project 
    entity notice of the determination, including an explanation of the 
    reason for the determination.
    (b) Review of Non-Federal Feasibility Studies.--
        (1) In general.--In conducting a review of a feasibility study 
    submitted under paragraph (2) or (3) of subsection (a), the 
    Secretary shall--
            (A) in accordance with the feasibility factors described in 
        subsection (c) and the criteria promulgated under subsection 
        (d), assess the completeness of the feasibility study; and
            (B) if the Secretary determines that a feasibility study is 
        not complete, notify the non-Federal entity of the 
        determination.
        (2) Revisions.--If the Secretary determines under paragraph 
    (1)(B) that a feasibility study is not complete, the non-Federal 
    entity shall pay any costs associated with revising the feasibility 
    study.
    (c) Feasibility Factors.--Feasibility studies authorized or 
reviewed under this title shall include an assessment of--
        (1) near- and long-term water demand in the area to be served 
    by the rural water supply project;
        (2) advancement of public health and safety of any existing 
    rural water supply project and other benefits of the proposed rural 
    water supply project;
        (3) alternative new water supplies in the study area, including 
    any opportunities to treat and use low-quality water, nonpotable 
    water, water reuse-based supplies, and brackish and saline waters 
    through innovative and economically viable treatment technologies;
        (4) environmental quality and source water protection issues 
    related to the rural water supply project;
        (5) innovative opportunities for water conservation in the 
    study area to reduce water use and water system costs, including--
            (A) nonstructural approaches to reduce the need for the 
        project; and
            (B) demonstration technologies;
        (6) the extent to which the project and alternatives take 
    advantage of economic incentives and the use of market-based 
    mechanisms;
        (7)(A) the construction costs and projected operations, 
    maintenance, and replacement costs of all alternatives; and
        (B) the economic feasibility and lowest cost method of 
    obtaining the desired results of each alternative, taking into 
    account the Federal cost-share;
        (8) the availability of guaranteed loans for a proposed rural 
    water supply project;
        (9) the financial capability of the non-Federal project entity 
    to pay the non-Federal project entity's proportionate share of the 
    design and construction costs and 100 percent of operations, 
    maintenance, and replacement costs, including the allocation of 
    costs to each non-Federal project entity in the case of multiple 
    entities;
        (10) whether the non-Federal project entity has developed an 
    operations, management, and replacement plan to assist the non-
    Federal project entity in establishing rates and fees for 
    beneficiaries of the rural water supply project that includes a 
    schedule identifying the annual operations, maintenance, and 
    replacement costs that should be allocated to each non-Federal 
    entity participating in the project;
        (11)(A) the non-Federal project entity administrative 
    organization that would implement construction, operations, 
    maintenance, and replacement activities; and
        (B) the fiscal, administrative, and operational controls to be 
    implemented to manage the project;
        (12) the extent to which assistance for rural water supply is 
    available under other Federal authorities;
        (13) the engineering, environmental, and economic activities to 
    be undertaken to carry out the proposed rural water supply project;
        (14) the extent to which the project involves partnerships with 
    other State, local, or tribal governments or Federal entities; and
        (15) in the case of a project intended for Indian tribes and 
    tribal organizations, the extent to which the project addresses the 
    goal of economic self-sufficiency.
    (d) Feasibility Study Criteria.--
        (1) In general.--Not later than 18 months after the date of 
    enactment of this Act, the Secretary shall promulgate criteria 
    (including the feasibility factors listed under subsection (c)) 
    under which the feasibility studies shall be assessed for 
    completeness and appropriateness.
        (2) Inclusions.--The Secretary shall include in the criteria 
    promulgated under paragraph (1) methods to scale the level of 
    effort needed to complete the feasibility assessment relative to 
    the total size and cost of the proposed rural water supply project 
    and reduce total costs to non-Federal entities.
    (e) Feasibility Report.--
        (1) In general.--After completion of appropriate feasibility 
    studies for rural water supply projects that address the factors 
    described in subsection (c) and the criteria promulgated under 
    subsection (d), the Secretary shall--
            (A) develop a feasibility report that includes--
                (i) a recommendation of the Secretary on--

                    (I) whether the rural water supply project should 
                be authorized for construction; and
                    (II) the appropriate non-Federal share of 
                construction costs, which shall be--

                        (aa) at least 25 percent of the total 
                    construction costs; and
                        (bb) determined based on an analysis of the 
                    capability-to-pay information considered under 
                    subsections (c)(9) and (f); and
                (ii) if the Secretary recommends that the project 
            should be authorized for construction--

                    (I) what amount of grants, loan guarantees, or 
                combination of grants and loan guarantees should be 
                used to provide the Federal cost share;
                    (II) a schedule that identifies the annual 
                operations, maintenance, and replacement costs that 
                should be allocated to each non-Federal entity 
                participating in the rural water supply project; and
                    (III) an assessment of the financial capability of 
                each non-Federal entity participating in the rural 
                water supply project to pay the allocated annual 
                operation, maintenance, and replacement costs for the 
                rural water supply project;

            (B) submit the report to the Committee on Energy and 
        Natural Resources of the Senate and the Committee on Resources 
        of the House of Representatives;
            (C) make the report publicly available, along with 
        associated study documents; and
            (D) publish in the Federal Register a notice of the 
        availability of the results.
    (f) Capability-To-Pay.--
        (1) In general.--In evaluating a proposed rural water supply 
    project under this section, the Secretary shall--
            (A) consider the financial capability of any non-Federal 
        project entities participating in the rural water supply 
        project to pay 25 percent or more of the capital construction 
        costs of the rural water supply project; and
            (B) recommend an appropriate Federal share and non-Federal 
        share of the capital construction costs, as determined by the 
        Secretary.
        (2) Factors.--In determining the financial capability of non-
    Federal project entities to pay for a rural water supply project 
    under paragraph (1), the Secretary shall evaluate factors for the 
    project area, relative to the State average, including--
            (A) per capita income;
            (B) median household income;
            (C) the poverty rate;
            (D) the ability of the non-Federal project entity to raise 
        tax revenues or assess fees;
            (E) the strength of the balance sheet of the non-Federal 
        project entity; and
            (F) the existing cost of water in the region.
        (3) Indian tribes.--In determining the capability-to-pay of 
    Indian tribe project beneficiaries, the Secretary may consider 
    deferring the collection of all or part of the non-Federal 
    construction costs apportioned to Indian tribe project 
    beneficiaries unless or until the Secretary determines that the 
    Indian tribe project beneficiaries should pay--
            (A) the costs allocated to the beneficiaries; or
            (B) an appropriate portion of the costs.
    (g) Cost-Sharing Requirement.--
        (1) In general.--Except as otherwise provided in this 
    subsection, the Federal share of the cost of a feasibility study 
    carried out under this section shall not exceed 50 percent of the 
    study costs.
        (2) Form.--The non-Federal share under paragraph (1) may be in 
    the form of any in-kind services that the Secretary determines 
    would contribute substantially toward the conduct and completion of 
    the study.
        (3) Financial hardship.--The Secretary may increase the Federal 
    share of the costs of a feasibility study if the Secretary 
    determines, based on a demonstration of financial hardship, that 
    the non-Federal participant is unable to contribute at least 50 
    percent of the costs of the study.
        (4) Larger communities.--In conducting a feasibility study of a 
    rural water supply system that includes a community with a 
    population in excess of 50,000 inhabitants, the Secretary may 
    require the non-Federal project entity to pay more than 50 percent 
    of the costs of the study.
    (h) Consultation and Cooperation.--In addition to the non-Federal 
project entity, the Secretary shall consult and cooperate with 
appropriate Federal, State, tribal, regional, and local authorities 
during the conduct of each feasibility assessment and development of 
the feasibility report conducted under this title.

SEC. 107. MISCELLANEOUS.

    (a) Authority of Secretary.--The Secretary may enter into 
contracts, financial assistance agreements, and such other agreements, 
and promulgate such regulations, as are necessary to carry out this 
title.
    (b) Transfer of Projects.--Nothing in this title authorizes the 
transfer of pre-existing facilities or pre-existing components of any 
water system from Federal to private ownership or from private to 
Federal ownership.
    (c) Federal Reclamation Law.--Nothing in this title supersedes or 
amends any Federal law associated with a project, or portion of a 
project, constructed under Federal reclamation law.
    (d) Interagency Coordination.--The Secretary shall coordinate the 
Program carried out under this title with existing Federal and State 
rural water and wastewater programs to facilitate the most efficient 
and effective solution to meeting the water needs of the non-Federal 
project sponsors.
    (e) Multiple Indian Tribes.--In any case in which a contract is 
entered into with, or a grant is made, to an organization to perform 
services benefitting more than 1 Indian tribe under this title, the 
approval of each such Indian tribe shall be a prerequisite to entering 
into the contract or making the grant.
    (f) Ownership of Facilities.--Title to any facility planned, 
designed, and recommended for construction under this title shall be 
held by the non-Federal project entity.
    (g) Expedited Procedures.--If the Secretary determines that a 
community to be served by a proposed rural water supply project has 
urgent and compelling water needs, the Secretary shall, to the maximum 
extent practicable, expedite appraisal investigations and reports 
conducted under section 105 and feasibility studies and reports 
conducted under section 106.
    (h) Effect on State Water Law.--
        (1) In general.--Nothing in this title preempts or affects 
    State water law or an interstate compact governing water.
        (2) Compliance required.--The Secretary shall comply with State 
    water laws in carrying out this title.
    (i) No Additional Requirements.--Nothing in this title requires a 
feasibility study for, or imposes any other additional requirements 
with respect to, rural water supply projects or programs that are 
authorized before the date of enactment of this Act.

SEC. 108. REPORTS.

    Beginning in fiscal year 2007, and each fiscal year thereafter 
through fiscal year 2012, the Secretary shall submit to the Committee 
on Energy and Natural Resources of the Senate and the Committee on 
Resources of the House of Representatives an annual report that 
describes the number and type of full-time equivalent positions in the 
Department of the Interior and the amount of overhead costs of the 
Department of the Interior that are allocated to carrying out this 
title for the applicable fiscal year.

SEC. 109. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There is authorized to be appropriated to carry 
out this title $15,000,000 for each of fiscal years 2007 through 2016, 
to remain available until expended.
    (b) Rural Water Programs Assessment.--Of the amounts made available 
under subsection (a), not more than $1,000,000 may be made available to 
carry out section 104 for each of fiscal years 2007 and 2008.
    (c) Construction Costs.--No amounts made available under this 
section shall be used to pay construction costs associated with any 
rural water supply project.

SEC. 110. TERMINATION OF AUTHORITY.

    The authority of the Secretary to carry out this title terminates 
on September 30, 2016.

             TITLE II--TWENTY-FIRST CENTURY WATER WORKS ACT

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Twenty-First Century Water Works 
Act''.

SEC. 202. DEFINITIONS.

    In this title:
        (1) Indian tribe.--The term ``Indian tribe'' has the meaning 
    given the term in section 4 of the Indian Self-Determination and 
    Education Assistance Act (25 U.S.C. 450b).
        (2) Lender.--The term ``lender'' means--
            (A) a non-Federal qualified institutional buyer (as defined 
        in section 230.144A(a) of title 17, Code of Federal Regulation 
        (or any successor regulation), known as Rule 144A(a) of the 
        Securities and Exchange Commission and issued under the 
        Securities Act of 1933 (15 U.S.C. 77a et seq.)); or
            (B) a clean renewable energy bond lender (as defined in 
        section 54(j)(2) of the Internal Revenue Code of 1986 (as in 
        effect on the date of enactment of this Act)).
        (3) Loan guarantee.--The term ``loan guarantee'' has the 
    meaning given the term ``loan guarantee'' in section 502 of the 
    Federal Credit Reform Act of 1990 (2 U.S.C. 661a).
        (4) Non-federal borrower.--The term ``non-Federal borrower'' 
    means--
            (A) a State (including a department, agency, or political 
        subdivision of a State); or
            (B) a conservancy district, irrigation district, canal 
        company, water users' association, Indian tribe, an agency 
        created by interstate compact, or any other entity that has the 
        capacity to contract with the United States under Federal 
        reclamation law.
        (5) Obligation.--The term ``obligation'' means a loan or other 
    debt obligation that is guaranteed under this section.
        (6) Project.--The term ``project'' means--
            (A) a rural water supply project (as defined in section 
        102(9));
            (B) an extraordinary operation and maintenance activity 
        for, or the rehabilitation or replacement of, a facility--
                (i) that is authorized by Federal reclamation law and 
            constructed by the United States under such law; or
                (ii) in connection with which there is a repayment or 
            water service contract executed by the United States under 
            Federal reclamation law; or
            (C) an improvement to water infrastructure directly 
        associated with a reclamation project that, based on a 
        determination of the Secretary--
                (i) improves water management; and
                (ii) fulfills other Federal goals.
        (7) Secretary.--The term ``Secretary'' means the Secretary of 
    the Interior.

SEC. 203. PROJECT ELIGIBILITY.

    (a) Eligibility Criteria.--
        (1) In general.--The Secretary shall develop and publish in the 
    Federal Register criteria for determining the eligibility of a 
    project for financial assistance under section 204.
        (2) Inclusions.--Eligibility criteria shall include--
            (A) submission of an application by the lender to the 
        Secretary;
            (B) demonstration of the creditworthiness of the project, 
        including a determination by the Secretary that any financing 
        for the project has appropriate security features to ensure 
        repayment;
            (C) demonstration by the non-Federal borrower, to the 
        satisfaction of the Secretary, of the ability of the non-
        Federal borrower to repay the project financing from user fees 
        or other dedicated revenue sources;
            (D) demonstration by the non-Federal borrower, to the 
        satisfaction of the Secretary, of the ability of the non-
        Federal borrower to pay all operations, maintenance, and 
        replacement costs of the project facilities; and
            (E) such other criteria as the Secretary determines to be 
        appropriate.
    (b) Waiver.--The Secretary may waive any of the criteria in 
subsection (a)(2) that the Secretary determines to be duplicative or 
rendered unnecessary because of an action already taken by the United 
States.
    (c) Projects Previously Authorized.--A project that was authorized 
for construction under Federal reclamation laws prior to the date of 
enactment of this Act shall be eligible for assistance under this 
title, subject to the criteria established by the Secretary under 
subsection (a).
    (d) Criteria for Rural Water Supply Projects.--A rural water supply 
project that is determined to be feasible under section 106 is eligible 
for a loan guarantee under section 204.

SEC. 204. LOAN GUARANTEES.

    (a) Authority.--Subject to the availability of appropriations, the 
Secretary may make available to lenders for a project meeting the 
eligibility criteria established in section 203 loan guarantees to 
supplement private-sector or lender financing for the project.
    (b) Terms and Limitations.--
        (1) In general.--Loan guarantees under this section for a 
    project shall be on such terms and conditions and contain such 
    covenants, representations, warranties, and requirements as the 
    Secretary determines to be appropriate to protect the financial 
    interests of the United States.
        (2) Amount.--Loan guarantees by the Secretary shall not exceed 
    an amount equal to 90 percent of the cost of the project that is 
    the subject of the loan guarantee, as estimated at the time at 
    which the loan guarantee is issued.
        (3) Interest rate.--An obligation shall bear interest at a rate 
    that does not exceed a level that the Secretary determines to be 
    appropriate, taking into account the prevailing rate of interest in 
    the private sector for similar loans and risks.
        (4) Amortization.--A loan guarantee under this section shall 
    provide for complete amortization of the loan guarantee within not 
    more than 40 years.
        (5) Nonsubordination.--An obligation shall be subject to the 
    condition that the obligation is not subordinate to other 
    financing.
    (c) Prepayment and Refinancing.--Any prepayment or refinancing 
terms on a loan guarantee shall be negotiated between the non-Federal 
borrower and the lender with the consent of the Secretary.

SEC. 205. DEFAULTS.

    (a) Payments by Secretary.--
        (1) In general.--If a borrower defaults on the obligation, the 
    holder of the loan guarantee shall have the right to demand payment 
    of the unpaid amount from the Secretary.
        (2) Payment required.--By such date as may be specified in the 
    loan guarantee or related agreements, the Secretary shall pay to 
    the holder of the loan guarantee the unpaid interest on, and unpaid 
    principal of, the obligation with respect to which the borrower has 
    defaulted, unless the Secretary finds that there was not default by 
    the borrower in the payment of interest or principal or that the 
    default has been remedied.
        (3) Forbearance.--Nothing in this subsection precludes any 
    forbearance by the holder of the obligation for the benefit of the 
    non-Federal borrower that may be agreed on by the parties to the 
    obligation and approved by the Secretary.
    (b) Subrogation.--
        (1) In general.--If the Secretary makes a payment under 
    subsection (a), the Secretary shall be subrogated to the rights of 
    the recipient of the payment as specified in the loan guarantee or 
    related agreements, including, as appropriate, the authority 
    (notwithstanding any other provision of law) to--
            (A) complete, maintain, operate, lease, or otherwise 
        dispose of any property acquired pursuant to the loan guarantee 
        or related agreements; or
            (B) permit the non-Federal borrower, pursuant to an 
        agreement with the Secretary, to continue to pursue the 
        purposes of the project if the Secretary determines the 
        purposes to be in the public interest.
        (2) Superiority of rights.--The rights of the Secretary, with 
    respect to any property acquired pursuant to a loan guarantee or 
    related agreement, shall be superior to the rights of any other 
    person with respect to the property.
    (c) Payment of Principal and Interest by Secretary.--With respect 
to any obligation guaranteed under this section, the Secretary may 
enter into a contract to pay, and pay, holders of the obligation, for 
and on behalf of the non-Federal borrower, from funds appropriated for 
that purpose, the principal and interest payments that become due and 
payable on the unpaid balance of the obligation if the Secretary finds 
that--
        (1)(A) the non-Federal borrower is unable to meet the payments 
    and is not in default;
        (B) it is in the public interest to permit the non-Federal 
    borrower to continue to pursue the purposes of the project; and
        (C) the probable net benefit to the Federal Government in 
    paying the principal and interest will be greater than that which 
    would result in the event of a default;
        (2) the amount of the payment that the Secretary is authorized 
    to pay shall be no greater than the amount of principal and 
    interest that the non-Federal borrower is obligated to pay under 
    the agreement being guaranteed; and
        (3) the borrower agrees to reimburse the Secretary for the 
    payment (including interest) on terms and conditions that are 
    satisfactory to the Secretary.
    (d) Action by Attorney General.--
        (1) Notification.--If the non-Federal borrower defaults on an 
    obligation, the Secretary shall notify the Attorney General of the 
    default.
        (2) Recovery.--On notification, the Attorney General shall take 
    such action as is appropriate to recover the unpaid principal and 
    interest due from--
            (A) such assets of the defaulting non-Federal borrower as 
        are associated with the obligation; or
            (B) any other security pledged to secure the obligation.

SEC. 206. OPERATIONS, MAINTENANCE, AND REPLACEMENT COSTS.

    (a) In General.--The non-Federal share of operations, maintenance, 
and replacement costs for a project receiving Federal assistance under 
this title shall be 100 percent.
    (b) Plan.--On request of the non-Federal borrower, the Secretary 
may assist in the development of an operation, maintenance, and 
replacement plan to provide the necessary framework to assist the non-
Federal borrower in establishing rates and fees for project 
beneficiaries.

SEC. 207. TITLE TO NEWLY CONSTRUCTED FACILITIES.

    (a) New Projects and Facilities.--All new projects or facilities 
constructed in accordance with this title shall remain under the 
jurisdiction and control of the non-Federal borrower subject to the 
terms of the repayment agreement.
    (b) Existing Projects and Facilities.--Nothing in this title 
affects the title of--
        (1) reclamation projects authorized prior to the date of 
    enactment of this Act;
        (2) works supplemental to existing reclamation projects; or
        (3) works constructed to rehabilitate existing reclamation 
    projects.

SEC. 208. WATER RIGHTS.

    (a) In General.--Nothing in this title preempts or affects State 
water law or an interstate compact governing water.
    (b) Compliance Required.--The Secretary shall comply with State 
water laws in carrying out this title. Nothing in this title affects or 
preempts State water law or an interstate compact governing water.

SEC. 209. INTERAGENCY COORDINATION AND COOPERATION.

    (a) Consultation.--The Secretary shall consult with the Secretary 
of Agriculture before promulgating criteria with respect to financial 
appraisal functions and loan guarantee administration for activities 
carried out under this title.
    (b) Memorandum of Agreement.--The Secretary and the Secretary of 
Agriculture shall enter into a memorandum of agreement providing for 
Department of Agriculture financial appraisal functions and loan 
guarantee administration for activities carried out under this title.

SEC. 210. RECORDS; AUDITS.

    (a) In General.--A recipient of a loan guarantee shall keep such 
records and other pertinent documents as the Secretary shall prescribe 
by regulation, including such records as the Secretary may require to 
facilitate an effective audit.
    (b) Access.--The Secretary and the Comptroller General of the 
United States, or their duly authorized representatives, shall have 
access, for the purpose of audit, to the records and other pertinent 
documents.

SEC. 211. FULL FAITH AND CREDIT.

    The full faith and credit of the United States is pledged to the 
payment of all guarantees issued under this section with respect to 
principal and interest.

SEC. 212. REPORT.

    Not later than 1 year after the date on which the eligibility 
criteria are published in the Federal Register under section 203(a), 
and every 2 years thereafter, the Secretary shall submit to the 
Committee on Energy and Natural Resources of the Senate and the 
Committee on Resources of the House of Representatives a report that 
describes the implementation of the loan guarantee program under 
section 204.

SEC. 213. EFFECT ON THE RECLAMATION LAWS.

    (a) Reclamation Projects.--Nothing in this title supersedes or 
amends any Federal law associated with a project, or a portion of a 
project, constructed under the reclamation laws.
    (b) No New or Supplemental Benefits.--Any assistance provided under 
this title shall not--
        (1) be considered to be a new or supplemental benefit for 
    purposes of the Reclamation Reform Act of 1982 (43 U.S.C. 390aa et 
    seq.); or
        (2) affect any contract in existence on the date of enactment 
    of this Act that is executed under the reclamation laws.

SEC. 214. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated such sums as are necessary 
to carry out this title, to remain available until expended.

SEC. 215. TERMINATION OF AUTHORITY.

    (a) In General.--Subject to subsection (b), the authority of the 
Secretary to carry out this title terminates on the date that is 10 
years after the date of enactment of this Act.
    (b) Exception.--The termination of authority under subsection (a) 
shall have no effect on--
        (1) any loans guaranteed by the United States under this title; 
    or
        (2) the administration of any loan guaranteed under this title 
    before the effective date of the termination of authority.

        TITLE III--REPORT ON TRANSFER OF RECLAMATION FACILITIES

SEC. 301. REPORT.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, the Secretary shall submit to the Committee on 
Energy and Natural Resources of the Senate and the Committee on 
Resources of the House of Representatives a report that describes any 
impediments and activities that significantly delay the ability of the 
Secretary to complete timely transfers of title to reclamation 
facilities to qualified non-Federal entities under laws authorizing the 
transfers.
    (b) Consultation.--In preparing the report under subsection (a), 
the Secretary shall consult with any appropriate non-Federal parties, 
including reclamation water and power customers.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.
```