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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 895 Referred in House (RFH)]

109th CONGRESS
  1st Session
                                 S. 895

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           November 17, 2005

                 Referred to the Committee on Resources

_______________________________________________________________________

                                 AN ACT

 
  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.

    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 2005''.
    (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 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. 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. Authorization of appropriations.

          TITLE I--RECLAMATION RURAL WATER SUPPLY ACT OF 2005

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Reclamation Rural Water Supply Act 
of 2005''.

SEC. 102. DEFINITIONS.

    In this title:
            (1) Construction.--The term ``construction'' means the 
        installation of new 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 established 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, shall establish and 
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 preexisting 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) 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--
                    (A) the non-Federal entity is qualified to complete 
                the feasibility study in accordance with the criteria 
                promulgated under subsection (d); and
                    (B) using the non-Federal project entity to conduct 
                the feasibility study is a cost-effective alternative 
                for completing the appraisal investigation.
    (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. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There is authorized to be appropriated to carry 
out this title $20,000,000 for the period of fiscal years 2006 through 
2015, 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 2006 and 2007.
    (c) Limitation.--No amounts made available under this section shall 
be used to pay construction costs associated with any rural water 
supply project.

             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 any 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.)).
            (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)); or
                    (B) an extraordinary operation and maintenance 
                activity for, or the rehabilitation 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.
            (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 (nothwithstanding 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 may 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. AUTHORIZATION OF APPROPRIATIONS.

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

            Passed the Senate November 16, 2005.

            Attest:

                                             EMILY J. REYNOLDS,

                                                             Secretary.
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