109TH CONGRESS

1ST SESSION S. 895

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.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Rural Water Supply Act of 2005’’.
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1 (b) TABLE OF CONTENTS.—The table of contents of

2 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.

3 TITLE I—RECLAMATION RURAL

4 WATER SUPPLY ACT OF 2005

5 SEC. 101. SHORT TITLE.

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

7 Water Supply Act of 2005’’.

8 SEC. 102. DEFINITIONS.

9 In this title:

10 (1) CONSTRUCTION.—The term ‘‘construction’’

11 means the installation of new infrastructure and the

12 upgrading of existing facilities in locations in which

13 the infrastructure or facilities are associated with
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1 the new infrastructure of a rural water project rec2 ommended by the Secretary pursuant to this title.

3 (2) FEDERAL RECLAMATION LAW.—The term

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

5 17, 1902 (32 Stat. 388, chapter 1093), and Acts

6 supplemental to and amendatory of that Act (43

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

8 (3) INDIAN.—The term ‘‘Indian’’ means an in9 dividual who is a member of an Indian tribe.

10 (4) INDIAN TRIBE.—The term ‘‘Indian tribe’’

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

12 Indian Self-Determination and Education Assistance

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

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

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

16 regional, or local authority, Indian tribe or tribal or17 ganization, or other qualifying entity, such as a

18 water conservation district, water conservancy dis19 trict, or rural water district or association.

20 (6) OPERATIONS, MAINTENANCE, AND RE21 PLACEMENT COSTS.—

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

23 maintenance, and replacement costs’’ means all

24 costs for the operation of a rural water supply

25 project that are necessary for the safe, efficient,
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1 and continued functioning of the project to

2 produce the benefits described in a feasibility

3 study.

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

5 maintenance, and replacement costs’’

6 includes—

7 (i) repairs of a routine nature that

8 maintain a rural water supply project in a

9 well kept condition;

10 (ii) replacement of worn-out project

11 elements; and

12 (iii) rehabilitation activities necessary

13 to bring a deteriorated project back to the

14 original condition of the project.

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

16 maintenance, and replacement costs’’ does not

17 include construction costs.

18 (7) PROGRAM.—The term ‘‘Program’’ means

19 the rural water supply program established under

20 section 103.

21 (8) RECLAMATION STATES.—The term ‘‘Rec22 lamation States’’ means the States and areas re23 ferred to in the first section of the Act of June 17,

24 1902 (43 U.S.C. 391).

25 (9) RURAL WATER SUPPLY PROJECT.—
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1 (A) IN GENERAL.—The term ‘‘rural water

2 supply project’’ means a project that is de3 signed to serve a community or group of com4 munities, each of which has a population of not

5 more than 50,000 inhabitants, which may in6 clude Indian tribes and tribal organizations,

7 dispersed homesites, or rural areas with domes8 tic, industrial, municipal, and residential water.

9 (B) INCLUSION.—The term ‘‘rural water

10 supply project’’ includes—

11 (i) incidental noncommercial livestock

12 watering and noncommercial irrigation of

13 vegetation and small gardens of less than

14 1 acre; and

15 (ii) a project to improve rural water

16 infrastructure, including—

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

18 diversions;

19 (II) storage tanks and small im20 poundments;

21 (III) water treatment facilities

22 for potable water supplies, including

23 desalination facilities;

24 (IV) equipment and management

25 tools for water conservation, ground-
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1 water recovery, and water recycling;

2 and

3 (V) appurtenances.

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

5 supply project’’ does not include—

6 (i) commercial irrigation; or

7 (ii) major impoundment structures.

8 (10) SECRETARY.—The term ‘‘Secretary’’

9 means the Secretary of the Interior.

10 (11) TRIBAL ORGANIZATION.—The term ‘‘tribal

11 organization’’ means—

12 (A) the recognized governing body of an

13 Indian tribe; and

14 (B) any legally established organization of

15 Indians that is controlled, sanctioned, or char16 tered by the governing body or democratically

17 elected by the adult members of the Indian

18 community to be served by the organization.

19 SEC. 103. RURAL WATER SUPPLY PROGRAM.

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

21 with non-Federal project entities and consistent with this

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

23 program in Reclamation States to—

24 (1) investigate and identify opportunities to en25 sure safe and adequate rural water supply projects
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1 for domestic, municipal, and industrial use in small

2 communities and rural areas of the Reclamation

3 States;

4 (2) plan the design and construction, through

5 the conduct of appraisal investigations and feasi6 bility studies, of rural water supply projects in Rec7 lamation States; and

8 (3) oversee, as appropriate, the construction of

9 rural water supply projects in Reclamation States

10 that are recommended by the Secretary in a feasi11 bility report developed pursuant to section 106 and

12 subsequently authorized by Congress.

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

14 carried out under this title shall be carried out in coopera15 tion with a qualifying non-Federal project entity, con16 sistent with this title.

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

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

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

20 Federal Register criteria for—

21 (1) determining the eligibility of a rural com22 munity for assistance under the Program; and

23 (2) prioritizing requests for assistance under

24 the Program.
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1 (d) FACTORS.—The criteria developed under sub2 section (c) shall take into account such factors as

3 whether—

4 (1) a rural water supply project—

5 (A) serves—

6 (i) rural areas and small communities;

7 or

8 (ii) Indian tribes; or

9 (B) promotes and applies a regional or wa10 tershed perspective to water resources manage11 ment;

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

13 a rural water supply project that would—

14 (A) improve the health or aesthetic quality

15 of water;

16 (B) result in continuous, measurable, and

17 significant water quality benefits; or

18 (C) address current or future water supply

19 needs;

20 (3) a rural water supply project helps meet ap21 plicable requirements established by law; and

22 (4) a rural water supply project is cost effec23 tive.

24 (e) INCLUSIONS.—The Secretary may include—
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1 (1) to the extent that connection provides a reli2 able water supply, a connection to preexisting infra3 structure (including impoundments and conveyance

4 channels) as part of a rural water supply project;

5 and

6 (2) notwithstanding the limitation on popu7 lation under section 102(9)(A), a town or commu8 nity with a population in excess of 50,000 inhab9 itants in an area served by a rural water supply

10 project if, at the discretion of the Secretary, the

11 town or community is considered to be a critical

12 partner in the rural supply project.

13 SEC. 104. RURAL WATER PROGRAMS ASSESSMENT.

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

15 of Agriculture, the Administrator of the Environmental

16 Protection Agency, the Director of the Indian Health

17 Service, the Secretary of Housing and Urban Develop18 ment, and the Secretary of the Army, the Secretary shall

19 develop an assessment of—

20 (1) the status of all rural water supply projects

21 under the jurisdiction of the Secretary authorized

22 but not completed prior to the date of enactment of

23 this Act, including appropriation amounts, the phase

24 of development, total anticipated costs, and obstacles

25 to completion;
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1 (2) the current plan (including projected finan2 cial and workforce requirements) for the completion

3 of the projects identified in paragraph (1) within the

4 time frames established under the provisions of law

5 authorizing the projects or the final engineering re6 ports for the projects;

7 (3) the demand for new rural water supply

8 projects;

9 (4) rural water programs within other agencies

10 and a description of the extent to which those pro11 grams provide support for rural water supply

12 projects and water treatment programs in Reclama13 tion States, including an assessment of the require14 ments, funding levels, and conditions of eligibility for

15 the programs assessed;

16 (5) the extent of the demand that the Secretary

17 can meet with the Program;

18 (6) how the Program will complement authori19 ties already within the jurisdiction of the Secretary

20 and the heads of the agencies with whom the Sec21 retary consults; and

22 (7) improvements that can be made to coordi23 nate and integrate the authorities of the agencies

24 with programs evaluated under paragraph (4), in25 cluding any recommendations to consolidate some or
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1 all of the activities of the agencies with respect to

2 rural water supply.

3 (b) CONSULTATION WITH STATES.—Before final4 izing the assessment developed under subsection (a), the

5 Secretary shall solicit comments from States with identi6 fied rural water needs.

7 (c) REPORT.—Not later than 2 years after the date

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

9 the Committee on Energy and Natural Resources of the

10 Senate and the Committee on Resources of the House of

11 Representatives a detailed report on the assessment con12 ducted under subsection (a).

13 SEC. 105. APPRAISAL INVESTIGATIONS.

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

15 project entity with respect to a proposed rural water sup16 ply project that meets the eligibility criteria published

17 under section 103(c) and subject to the availability of ap18 propriations, the Secretary may—

19 (1) receive and review an appraisal investiga20 tion that is—

21 (A) developed by the non-Federal project

22 entity, with or without support from the Sec23 retary; and

24 (B) submitted to the Secretary by the non25 Federal project entity;
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1 (2) conduct an appraisal investigation; or

2 (3) provide a grant to, or enter into a coopera3 tive agreement with, the non-Federal project entity

4 to conduct an appraisal investigation, if the Sec5 retary determines that—

6 (A) the non-Federal project entity is quali7 fied to complete the appraisal investigation in

8 accordance with the criteria published under

9 section 103(c); and

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

11 conduct the appraisal investigation is a cost-ef12 fective alternative for completing the appraisal

13 investigation.

14 (b) DEADLINE.—An appraisal investigation con15 ducted under subsection (a) shall be scheduled for comple16 tion not later than 2 years after the date on which the

17 appraisal investigation is initiated.

18 (c) APPRAISAL REPORT.—In accordance with sub19 section (f), after an appraisal investigation is submitted

20 to the Secretary under subsection (a)(1) or completed

21 under paragraph (2) or (3) of subsection (a), the Sec22 retary shall prepare an appraisal report that—

23 (1) considers—

24 (A) whether the project meets—
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1 (i) the appraisal criteria developed

2 under subsection (d); and

3 (ii) the eligibility criteria developed

4 under section 103(c);

5 (B) whether viable water supplies and

6 water rights exist to supply the project, includ7 ing all practicable water sources such as lower

8 quality waters, nonpotable waters, and water

9 reuse-based water supplies;

10 (C) whether the project has a positive ef11 fect on public health and safety;

12 (D) whether the project will meet water de13 mand, including projected future needs;

14 (E) the extent to which the project pro15 vides environmental benefits, including source

16 water protection;

17 (F) whether the project applies a regional

18 or watershed perspective and promotes benefits

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

20 (G) whether the project—

21 (i)(I) implements an integrated re22 sources management approach; or

23 (II) enhances water management

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

2 water supplies under varying water

3 supply conditions; and

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

7 (ii) promotes long-term protection of

8 water supplies;

9 (H) preliminary cost estimates for the

10 project; and

11 (I) whether the non-Federal project entity

12 has the capability to pay 100 percent of the

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

16 supply project; and

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

19 106(a).

20 (d) APPRAISAL CRITERIA.—

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

22 the date of enactment of this Act, the Secretary

23 shall promulgate criteria (including appraisal factors

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

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

4 rural water supply project to a non-Federal project

5 entity, the Secretary shall include in the criteria

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

8 size and cost of the proposed rural water supply

9 project.

10 (e) REVIEW OF APPRAISAL INVESTIGATION.—

11 (1) IN GENERAL.—Not later than 90 days after

12 the date of submission of an appraisal investigation

13 under paragraph (1) or (3) of subsection (a), the

14 Secretary shall provide to the non-Federal entity

15 that conducted the investigation a determination of

16 whether the investigation has included the informa17 tion necessary to determine whether the proposed

18 rural water supply project satisfies the criteria pro19 mulgated under subsection (d).

20 (2) NO SATISFACTION OF CRITERIA.—If the

21 Secretary determines that the appraisal investigation

22 submitted by a non-Federal entity does not satisfy

23 the criteria promulgated under subsection (d), the

24 Secretary shall inform the non-Federal entity of the

25 reasons why the appraisal investigation is deficient.
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1 (3) RESPONSIBILITY OF SECRETARY.—If an ap2 praisal investigation as first submitted by a non3 Federal entity does not provide all necessary infor4 mation, as defined by the Secretary, the Secretary

5 shall have no obligation to conduct further analysis

6 until the non-Federal project entity submitting the

7 appraisal study conducts additional investigation and

8 resubmits the appraisal investigation under this sub9 section.

10 (f) APPRAISAL REPORT.—Once the Secretary has de11 termined that an investigation provides the information

12 necessary under subsection (e), the Secretary shall—

13 (1) complete the appraisal report required

14 under subsection (c);

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

16 appraisal report prepared under this title; and

17 (3) promptly publish in the Federal Register a

18 notice of the availability of the results.

19 (g) COSTS.—

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

21 appraisal investigation conducted under subsection

22 (a) shall be 100 percent of the total cost of the ap23 praisal investigation, up to $200,000.

24 (2) NON-FEDERAL SHARE.—
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1 (A) IN GENERAL.—Except as provided in

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

3 appraisal investigation is more than $200,000,

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

5 $200,000 shall be 50 percent.

6 (B) EXCEPTION.—The Secretary may re7 duce the non-Federal share required under sub8 paragraph (A) if the Secretary determines that

9 there is an overwhelming Federal interest in the

10 appraisal investigation.

11 (C) FORM.—The non-Federal share under

12 subparagraph (A) may be in the form of any in13 kind services that the Secretary determines

14 would contribute substantially toward the con15 duct and completion of the appraisal investiga16 tion.

17 (h) CONSULTATION; IDENTIFICATION OF FUNDING

18 SOURCES.—In conducting an appraisal investigation

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

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

21 project entity and appropriate State, tribal, regional,

22 and local authorities;

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

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

4 and

5 (B) if a duplicate project is being carried

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

8 (3) identify what funding sources are available

9 for the proposed rural water supply project.

10 SEC. 106. FEASIBILITY STUDIES.

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

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

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

16 entity, carry out a study to determine the feasibility

17 of the proposed rural water supply project;

18 (2) receive and review a feasibility study that

19 is—

20 (A) developed by the non-Federal project

21 entity, with or without support from the Sec22 retary; and

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

3 conduct a feasibility study, for submission to the

4 Secretary, if the Secretary determines that—

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

6 complete the feasibility study in accordance

7 with the criteria promulgated under subsection

8 (d); and

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

10 conduct the feasibility study is a cost-effective

11 alternative for completing the appraisal inves12 tigation.

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

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

16 feasibility study submitted under paragraph (2) or

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

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

20 promulgated under subsection (d), assess the

21 completeness of the feasibility study; and

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

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

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

4 costs associated with revising the feasibility study.

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

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

9 area to be served by the rural water supply project;

10 (2) advancement of public health and safety of

11 any existing rural water supply project and other

12 benefits of the proposed rural water supply project;

13 (3) alternative new water supplies in the study

14 area, including any opportunities to treat and use

15 low-quality water, nonpotable water, water reuse16 based supplies, and brackish and saline waters

17 through innovative and economically viable treat18 ment technologies;

19 (4) environmental quality and source water pro20 tection issues related to the rural water supply

21 project;

22 (5) innovative opportunities for water conserva23 tion in the study area to reduce water use and water

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

2 need for the project; and

3 (B) demonstration technologies;

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

6 the use of market-based mechanisms;

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

9 alternatives; and

10 (B) the economic feasibility and lowest cost

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

13 (8) the availability of guaranteed loans for a

14 proposed rural water supply project;

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

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

17 proportionate share of the design and construction

18 costs and 100 percent of operations, maintenance,

19 and replacement costs, including the allocation of

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

21 of multiple entities;

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

23 developed an operations, management, and replace24 ment plan to assist the non-Federal project entity in

25 establishing rates and fees for beneficiaries of the
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1 rural water supply project that includes a schedule

2 identifying the annual operations, maintenance, and

3 replacement costs that should be allocated to each

4 non-Federal entity participating in the project;

5 (11)(A) the non-Federal project entity adminis6 trative organization that would implement construc7 tion, operations, maintenance, and replacement ac8 tivities; and

9 (B) the fiscal, administrative, and operational

10 controls to be implemented to manage the project;

11 (12) the extent to which assistance for rural

12 water supply is available under other Federal au13 thorities;

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

16 proposed rural water supply project;

17 (14) the extent to which the project involves

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

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

21 tribes and tribal organizations, the extent to which

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

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

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

5 which the feasibility studies shall be assessed for

6 completeness and appropriateness.

7 (2) INCLUSIONS.—The Secretary shall include

8 in the criteria promulgated under paragraph (1)

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

11 size and cost of the proposed rural water supply

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

14 (e) FEASIBILITY REPORT.—

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

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

20 (A) develop a feasibility report that

21 includes—

22 (i) a recommendation of the Secretary

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

3 construction; and

4 (II) the appropriate non-Federal

5 share of construction costs, which

6 shall be—

7 (aa) at least 25 percent of

8 the total construction costs; and

9 (bb) determined based on an

10 analysis of the capability-to-pay

11 information considered under

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

13 (ii) if the Secretary recommends that

14 the project should be authorized for

15 construction—

16 (I) what amount of grants, loan

17 guarantees, or combination of grants

18 and loan guarantees should be used to

19 provide the Federal cost share;

20 (II) a schedule that identifies the

21 annual operations, maintenance, and

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

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

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

7 supply project;

8 (B) submit the report to the Committee on

9 Energy and Natural Resources of the Senate

10 and the Committee on Resources of the House

11 of Representatives;

12 (C) make the report publicly available,

13 along with associated study documents; and

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

16 (f) CAPABILITY-TO-PAY.—

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

18 rural water supply project under this section, the

19 Secretary shall—

20 (A) consider the financial capability of any

21 non-Federal project entities participating in the

22 rural water supply project to pay 25 percent or

23 more of the capital construction costs of the

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

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

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

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

7 Secretary shall evaluate factors for the project area,

8 relative to the State average, including—

9 (A) per capita income;

10 (B) median household income;

11 (C) the poverty rate;

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

13 entity to raise tax revenues or assess fees;

14 (E) the strength of the balance sheet of

15 the non-Federal project entity; and

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

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

20 Secretary may consider deferring the collection of all

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

23 until the Secretary determines that the Indian tribe

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

2 or

3 (B) an appropriate portion of the costs.

4 (g) COST-SHARING REQUIREMENT.—

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

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

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

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

13 study.

14 (3) FINANCIAL HARDSHIP.—The Secretary may

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

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

19 50 percent of the costs of the study.

20 (4) LARGER COMMUNITIES.—In conducting a

21 feasibility study of a rural water supply system that

22 includes a community with a population in excess of

23 50,000 inhabitants, the Secretary may require the

24 non-Federal project entity to pay more than 50 per25 cent of the costs of the study.
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1 (h) CONSULTATION AND COOPERATION.—In addition

2 to the non-Federal project entity, the Secretary shall con3 sult and cooperate with appropriate Federal, State, tribal,

4 regional, and local authorities during the conduct of each

5 feasibility assessment and development of the feasibility

6 report conducted under this title.

7 SEC. 107. MISCELLANEOUS.

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

9 enter into contracts, financial assistance agreements, and

10 such other agreements, and promulgate such regulations,

11 as are necessary to carry out this title.

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

13 authorizes the transfer of pre-existing facilities or pre-ex14 isting components of any water system from Federal to

15 private ownership or from private to Federal ownership.

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

17 title supersedes or amends any Federal law associated

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

19 Federal reclamation law.

20 (d) INTERAGENCY COORDINATION.—The Secretary

21 shall coordinate the Program carried out under this title

22 with existing Federal and State rural water and waste23 water programs to facilitate the most efficient and effec24 tive solution to meeting the water needs of the non-Fed25 eral project sponsors.
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1 (e) MULTIPLE INDIAN TRIBES.—In any case in

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

3 to an organization to perform services benefitting more

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

5 such Indian tribe shall be a prerequisite to entering into

6 the contract or making the grant.

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

8 planned, designed, and recommended for construction

9 under this title shall be held by the non-Federal project

10 entity.

11 (g) EXPEDITED PROCEDURES.—If the Secretary de12 termines that a community to be served by a proposed

13 rural water supply project has urgent and compelling

14 water needs, the Secretary shall, to the maximum extent

15 practicable, expedite appraisal investigations and reports

16 conducted under section 105 and feasibility studies and

17 reports conducted under section 106.

18 (h) EFFECT ON STATE WATER LAW.—

19 (1) IN GENERAL.—Nothing in this title pre20 empts or affects State water law or an interstate

21 compact governing water.

22 (2) COMPLIANCE REQUIRED.—The Secretary

23 shall comply with State water laws in carrying out

24 this title.
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1 (i) NO ADDITIONAL REQUIREMENTS.—Nothing in

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

3 other additional requirements with respect to, rural water

4 supply projects or programs that are authorized before the

5 date of enactment of this Act.

6 SEC. 108. AUTHORIZATION OF APPROPRIATiONS.

7 (a) IN GENERAL.—There is authorized to be appro8 priated to carry out this title $20,000,000 for the period

9 of fiscal years 2006 through 2015, to remain available

10 until expended.

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

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

13 than $1,000,000 may be made available to carry out sec14 tion 104 for each of fiscal years 2006 and 2007.

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

16 this section shall be used to pay construction costs associ17 ated with any rural water supply project.

18 TITLE II—TWENTY-FIRST

19 CENTURY WATER WORKS ACT

20 SEC. 201. SHORT TITLE.

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

22 Water Works Act’’.

23 SEC. 202. DEFINITIONS.

24 In this title:
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1 (1) INDIAN TRIBE.—The term ‘‘Indian tribe’’

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

3 Indian Self-Determination and Education Assistance

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

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

6 non-Federal qualified institutional buyer (as defined

7 in section 230.144A(a) of title 17, Code of Federal

8 Regulation (or any successor regulation), known as

9 Rule 144A(a) of the Securities and Exchange Com10 mission and issued under the Securities Act of 1933

11 (15 U.S.C. 77a et seq.)).

12 (3) LOAN GUARANTEE.—The term ‘‘loan guar13 antee’’ has the meaning given the term ‘‘loan guar14 antee’’ in section 502 of the Federal Credit Reform

15 Act of 1990 (2 U.S.C. 661a).

16 (4) NON-FEDERAL BORROWER.—The term

17 ‘‘non-Federal borrower’’ means—

18 (A) a State (including a department, agen19 cy, or political subdivision of a State); or

20 (B) a conservancy district, irrigation dis21 trict, canal company, water users’ association,

22 Indian tribe, an agency created by interstate

23 compact, or any other entity that has the ca24 pacity to contract with the United States under

25 Federal reclamation law.
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1 (5) OBLIGATION.—The term ‘‘obligation’’

2 means a loan or other debt obligation that is guar3 anteed under this section.

4 (6) PROJECT.—The term ‘‘project’’ means—

5 (A) a rural water supply project (as de6 fined in section 102(9)); or

7 (B) an extraordinary operation and main8 tenance activity for, or the rehabilitation of, a

9 facility—

10 (i) that is authorized by Federal rec11 lamation law and constructed by the

12 United States under such law; or

13 (ii) in connection with which there is

14 a repayment or water service contract exe15 cuted by the United States under Federal

16 reclamation law.

17 (7) SECRETARY.—The term ‘‘Secretary’’ means

18 the Secretary of the Interior.

19 SEC. 203. PROJECT ELIGIBILITY.

20 (a) ELIGIBILITY CRITERIA.—

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

22 and publish in the Federal Register criteria for de23 termining the eligibility of a project for financial as24 sistance under section 204.
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1 (2) INCLUSIONS.—Eligibility criteria shall

2 include—

3 (A) submission of an application by the

4 lender to the Secretary;

5 (B) demonstration of the creditworthiness

6 of the project, including a determination by the

7 Secretary that any financing for the project has

8 appropriate security features to ensure repay9 ment;

10 (C) demonstration by the non-Federal bor11 rower, to the satisfaction of the Secretary, of

12 the ability of the non-Federal borrower to repay

13 the project financing from user fees or other

14 dedicated revenue sources;

15 (D) demonstration by the non-Federal bor16 rower, to the satisfaction of the Secretary, of

17 the ability of the non-Federal borrower to pay

18 all operations, maintenance, and replacement

19 costs of the project facilities; and

20 (E) such other criteria as the Secretary de21 termines to be appropriate.

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

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

24 to be duplicative or rendered unnecessary because of an

25 action already taken by the United States.
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1 (c) PROJECTS PREVIOUSLY AUTHORIZED.—A project

2 that was authorized for construction under Federal rec3 lamation laws prior to the date of enactment of this Act

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

5 the criteria established by the Secretary under subsection

6 (a).

7 (d) CRITERIA FOR RURAL WATER SUPPLY

8 PROJECTS.—A rural water supply project that is deter9 mined to be feasible under section 106 is eligible for a

10 loan guarantee under section 204.

11 SEC. 204. LOAN GUARANTEES.

12 (a) AUTHORITY.—Subject to the availability of ap13 propriations, the Secretary may make available to lenders

14 for a project meeting the eligibility criteria established in

15 section 203 loan guarantees to supplement private-sector

16 or lender financing for the project.

17 (b) TERMS AND LIMITATIONS.—

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

19 section for a project shall be on such terms and con20 ditions and contain such covenants, representations,

21 warranties, and requirements as the Secretary deter22 mines to be appropriate to protect the financial in23 terests of the United States.

24 (2) AMOUNT.—Loan guarantees by the Sec25 retary shall not exceed an amount equal to 90 per-
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1 cent of the cost of the project that is the subject of

2 the loan guarantee, as estimated at the time at

3 which the loan guarantee is issued.

4 (3) INTEREST RATE.—An obligation shall bear

5 interest at a rate that does not exceed a level that

6 the Secretary determines to be appropriate, taking

7 into account the prevailing rate of interest in the

8 private sector for similar loans and risks.

9 (4) AMORTIZATION.—A loan guarantee under

10 this section shall provide for complete amortization

11 of the loan guarantee within not more than 40

12 years.

13 (5) NONSUBORDINATION.—An obligation shall

14 be subject to the condition that the obligation is not

15 subordinate to other financing.

16 (c) PREPAYMENT AND REFINANCING.—Any prepay17 ment or refinancing terms on a loan guarantee shall be

18 negotiated between the non-Federal borrower and the

19 lender with the consent of the Secretary.

20 SEC. 205. DEFAULTS.

21 (a) PAYMENTS BY SECRETARY.—

22 (1) IN GENERAL.—If a borrower defaults on the

23 obligation, the holder of the loan guarantee shall

24 have the right to demand payment of the unpaid

25 amount from the Secretary.
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1 (2) PAYMENT REQUIRED.—By such date as

2 may be specified in the loan guarantee or related

3 agreements, the Secretary shall pay to the holder of

4 the loan guarantee the unpaid interest on, and un5 paid principal of, the obligation with respect to

6 which the borrower has defaulted, unless the Sec7 retary finds that there was not default by the bor8 rower in the payment of interest or principal or that

9 the default has been remedied.

10 (3) FORBEARANCE.—Nothing in this subsection

11 precludes any forbearance by the holder of the obli12 gation for the benefit of the non-Federal borrower

13 that may be agreed on by the parties to the obliga14 tion and approved by the Secretary.

15 (b) SUBROGATION.—

16 (1) IN GENERAL.—If the Secretary makes a

17 payment under subsection (a), the Secretary shall be

18 subrogated to the rights of the recipient of the pay19 ment as specified in the loan guarantee or related

20 agreements, including, as appropriate, the authority

21 (nothwithstanding any other provision of law) to—

22 (A) complete, maintain, operate, lease, or

23 otherwise dispose of any property acquired pur24 suant to the loan guarantee or related agree25 ments; or
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1 (B) permit the non-Federal borrower, pur2 suant to an agreement with the Secretary, to

3 continue to pursue the purposes of the project

4 if the Secretary determines the purposes to be

5 in the public interest.

6 (2) SUPERIORITY OF RIGHTS.—The rights of

7 the Secretary, with respect to any property acquired

8 pursuant to a loan guarantee or related agreement,

9 shall be superior to the rights of any other person

10 with respect to the property.

11 (c) PAYMENT OF PRINCIPAL AND INTEREST BY SEC12 RETARY.—With respect to any obligation guaranteed

13 under this section, the Secretary may enter into a contract

14 to pay, and pay, holders of the obligation, for and on be15 half of the non-Federal borrower, from funds appropriated

16 for that purpose, the principal and interest payments that

17 become due and payable on the unpaid balance of the obli18 gation if the Secretary finds that—

19 (1)(A) the non-Federal borrower is unable to

20 meet the payments and is not in default;

21 (B) it is in the public interest to permit the

22 non-Federal borrower to continue to pursue the pur23 poses of the project; and

24 (C) the probable net benefit to the Federal Gov25 ernment in paying the principal and interest will be
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1 greater than that which would result in the event of

2 a default;

3 (2) the amount of the payment that the Sec4 retary is authorized to pay shall be no greater than

5 the amount of principal and interest that the non6 Federal borrower is obligated to pay under the

7 agreement being guaranteed; and

8 (3) the borrower agrees to reimburse the Sec9 retary for the payment (including interest) on terms

10 and conditions that are satisfactory to the Secretary.

11 (d) ACTION BY ATTORNEY GENERAL.—

12 (1) NOTIFICATION.—If the non-Federal bor13 rower defaults on an obligation, the Secretary shall

14 notify the Attorney General of the default.

15 (2) RECOVERY.—On notification, the Attorney

16 General shall take such action as is appropriate to

17 recover the unpaid principal and interest due from—

18 (A) such assets of the defaulting non-Fed19 eral borrower as are associated with the obliga20 tion; or

21 (B) any other security pledged to secure

22 the obligation.
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1 SEC. 206. OPERATIONS, MAINTENANCE, AND REPLACE2 MENT COSTS.

3 (a) IN GENERAL.—The non-Federal share of oper4 ations, maintenance, and replacement costs for a project

5 receiving Federal assistance under this title shall be 100

6 percent.

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

8 the Secretary may assist in the development of an oper9 ation, maintenance, and replacement plan to provide the

10 necessary framework to assist the non-Federal borrower

11 in establishing rates and fees for project beneficiaries.

12 SEC. 207. TITLE TO NEWLY CONSTRUCTED FACILITIES.

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

14 projects or facilities constructed in accordance with this

15 title shall remain under the jurisdiction and control of the

16 non-Federal borrower subject to the terms of the repay17 ment agreement.

18 (b) EXISTING PROJECTS AND FACILITIES.—Nothing

19 in this title affects the title of—

20 (1) reclamation projects authorized prior to the

21 date of enactment of this Act;

22 (2) works supplemental to existing reclamation

23 projects; or

24 (3) works constructed to rehabilitate existing

25 reclamation projects.
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1 SEC. 208. WATER RIGHTS.

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

3 affects State water law or an interstate compact governing

4 water.

5 (b) COMPLIANCE REQUIRED.—The Secretary shall

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

7 Nothing in this title affects or preempts State water law

8 or an interstate compact governing water.

9 SEC. 209. INTERAGENCY COORDINATION AND COOPERA10 TION.

11 (a) CONSULTATION.—The Secretary shall consult

12 with the Secretary of Agriculture before promulgating cri13 teria with respect to financial appraisal functions and loan

14 guarantee administration for activities carried out under

15 this title.

16 (b) MEMORANDUM OF AGREEMENT.—The Secretary

17 and the Secretary of Agriculture may enter into a memo18 randum of agreement providing for Department of Agri19 culture financial appraisal functions and loan guarantee

20 administration for activities carried out under this title.

21 SEC. 210. RECORDS; AUDITS.

22 (a) IN GENERAL.—A recipient of a loan guarantee

23 shall keep such records and other pertinent documents as

24 the Secretary shall prescribe by regulation, including such

25 records as the Secretary may require to facilitate an effec26 tive audit.
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1 (b) ACCESS.—The Secretary and the Comptroller

2 General of the United States, or their duly authorized rep3 resentatives, shall have access, for the purpose of audit,

4 to the records and other pertinent documents.

5 SEC. 211. FULL FAITH AND CREDIT.

6 The full faith and credit of the United States is

7 pledged to the payment of all guarantees issued under this

8 section with respect to principal and interest.

9 SEC. 212. AUTHORIZATION OF APPROPRIATIONS.

10 There are authorized to be appropriated such sums

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

12 until expended.

Passed the Senate November 16, 2005.

Attest:

Secretary.
109TH CONGRESS

1ST SESSION S. 895

AN ACT

To direct the Secretary of the Interior to establish

reliable water supply to rural residents.States to provide a clean, safe, affordable, anda rural water supply program in the Reclamation