In the House of Representatives, U. S.,

December 6, 2006.

Resolved, That the bill from the Senate (S. 895) entitled 

‘‘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’’, do pass with the following

AMENDMENTS:

Strike out all after the enacting clause and insert:

1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

3 ‘‘Rural Water Supply Act of 2006’’. 

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

5 Act is as follows:

Sec. 1. Short title; table of contents. 

TITLE I—RECLAMATION RURAL WATER SUPPLY ACT OF 2006

Sec. 101. Short title. 

Sec. 102. Definitions. 

Sec. 103. Rural water supply program. 

Sec. 104. Rural water programs assessment. 

Sec. 105. Appraisal investigations. 

Sec. 106. Feasibility studies. 

Sec. 107. Miscellaneous. 

Sec. 108. Reports. 

Sec. 109. Authorization of appropriations. 

Sec. 110. Termination of authority. 

TITLE II—TWENTY-FIRST CENTURY WATER WORKS ACT 

Sec. 201. Short title. 

Sec. 202. Definitions. 
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Sec. 203. Project eligibility. 

Sec. 204. Loan guarantees. 

Sec. 205. Defaults. 

Sec. 206. Operations, maintenance, and replacement costs. 

Sec. 207. Title to newly constructed facilities. 

Sec. 208. Water rights. 

Sec. 209. Interagency coordination and cooperation. 

Sec. 210. Records; audits. 

Sec. 211. Full faith and credit. 

Sec. 212. Report. 

Sec. 213. Effect on the reclamation laws. 

Sec. 214. Authorization of appropriations. 

Sec. 215. Termination of authority. 

TITLE III—REPORT ON TRANSFER OF RECLAMATION FACILITIES 

Sec. 301. Report.

1 TITLE I—RECLAMATION RURAL 

2 WATER SUPPLY ACT OF 2006

3 SEC. 101. SHORT TITLE. 

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

5 Water Supply Act of 2006’’. 

6 SEC. 102. DEFINITIONS. 

7 In this title: 

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

9 means the installation of infrastructure and the up10 grading of existing facilities in locations in which the 

11 infrastructure or facilities are associated with the new 

12 infrastructure of a rural water project recommended 

13 by the Secretary pursuant to this title. 

14 (2) FEDERAL RECLAMATION LAW.—The term 

15 ‘‘Federal reclamation law’’ means the Act of June 17, 

16 1902 (32 Stat. 388, chapter 1093), and Acts supple-
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1 mental to and amendatory of that Act (43 U.S.C. 371 

2 et seq.). 

3 (3) INDIAN.—The term ‘‘Indian’’ means an indi4 vidual who is a member of an Indian tribe. 

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

6 the meaning given the term in section 4 of the Indian 

7 Self-Determination and Education Assistance Act (25 

8 U.S.C. 450b). 

9 (5) NON-FEDERAL PROJECT ENTITY.—The term 

10 ‘‘non-Federal project entity’’ means a State, regional, 

11 or local authority, Indian tribe or tribal organiza12 tion, or other qualifying entity, such as a water con13 servation district, water conservancy district, or rural 

14 water district or association. 

15 (6) OPERATIONS, MAINTENANCE, AND REPLACE16 MENT COSTS.—

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

18 maintenance, and replacement costs’’ means all 

19 costs for the operation of a rural water supply 

20 project that are necessary for the safe, efficient, 

21 and continued functioning of the project to 

22 produce the benefits described in a feasibility 

23 study. 

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

25 maintenance, and replacement costs’’ includes—
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1 (i) repairs of a routine nature that 

2 maintain a rural water supply project in a 

3 well kept condition; 

4 (ii) replacement of worn-out project 

5 elements; and 

6 (iii) rehabilitation activities necessary 

7 to bring a deteriorated project back to the 

8 original condition of the project. 

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

10 maintenance, and replacement costs’’ does not 

11 include construction costs. 

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

13 rural water supply program carried out under section 

14 103. 

15 (8) RECLAMATION STATES.—The term ‘‘Rec16 lamation States’’ means the States and areas referred 

17 to in the first section of the Act of June 17, 1902 (43 

18 U.S.C. 391). 

19 (9) RURAL WATER SUPPLY PROJECT.—

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

21 supply project’’ means a project that is designed 

22 to serve a community or group of communities, 

23 each of which has a population of not more than 

24 50,000 inhabitants, which may include Indian 

25 tribes and tribal organizations, dispersed home-
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1 sites, or rural areas with domestic, industrial, 

2 municipal, and residential water. 

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

4 supply project’’ includes—

5 (i) incidental noncommercial livestock 

6 watering and noncommercial irrigation of 

7 vegetation and small gardens of less than 1 

8 acre; and 

9 (ii) a project to improve rural water 

10 infrastructure, including—

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

12 diversions; 

13 (II) storage tanks and small im14 poundments; 

15 (III) water treatment facilities for 

16 potable water supplies, including de17 salination facilities; 

18 (IV) equipment and management 

19 tools for water conservation, ground20 water recovery, and water recycling; 

21 and 

22 (V) appurtenances. 

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

24 supply project’’ does not include—

25 (i) commercial irrigation; or 
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1 (ii) major impoundment structures. 

2 (10) SECRETARY.—The term ‘‘Secretary’’ means 

3 the Secretary of the Interior. 

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

5 organization’’ means—

6 (A) the recognized governing body of an In7 dian tribe; and 

8 (B) any legally established organization of 

9 Indians that is controlled, sanctioned, or char10 tered by the governing body or democratically 

11 elected by the adult members of the Indian com12 munity to be served by the organization. 

13 SEC. 103. RURAL WATER SUPPLY PROGRAM. 

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

15 non-Federal project entities and consistent with this title, 

16 may carry out a rural water supply program in Reclama17 tion States to—

18 (1) investigate and identify opportunities to en19 sure safe and adequate rural water supply projects for 

20 domestic, municipal, and industrial use in small 

21 communities and rural areas of the Reclamation 

22 States; 

23 (2) plan the design and construction, through the 

24 conduct of appraisal investigations and feasibility 
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1 studies, of rural water supply projects in Reclamation 

2 States; and 

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

4 rural water supply projects in Reclamation States 

5 that are recommended by the Secretary in a feasi6 bility report developed pursuant to section 106 and 

7 subsequently authorized by Congress. 

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

9 carried out under this title shall be carried out in coopera10 tion with a qualifying non-Federal project entity, consistent 

11 with this title. 

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

13 after the date of enactment of this Act, the Secretary shall, 

14 consistent with this title, develop and publish in the Federal 

15 Register criteria for—

16 (1) determining the eligibility of a rural commu17 nity for assistance under the Program; and 

18 (2) prioritizing requests for assistance under the 

19 Program. 

20 (d) FACTORS.—The criteria developed under sub21 section (c) shall take into account such factors as whether—

22 (1) a rural water supply project—

23 (A) serves—

24 (i) rural areas and small communities; 

25 or 
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1 (ii) Indian tribes; or 

2 (B) promotes and applies a regional or wa3 tershed perspective to water resources manage4 ment; 

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

6 a rural water supply project that would—

7 (A) improve the health or aesthetic quality 

8 of water; 

9 (B) result in continuous, measurable, and 

10 significant water quality benefits; or 

11 (C) address current or future water supply 

12 needs; 

13 (3) a rural water supply project helps meet ap14 plicable requirements established by law; and 

15 (4) a rural water supply project is cost effective. 

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

17 (1) to the extent that connection provides a reli18 able water supply, a connection to preexisting infra19 structure (including impoundments and conveyance 

20 channels) as part of a rural water supply project; and 

21 (2) notwithstanding the limitation on population 

22 under section 102(9)(A), a town or community with 

23 a population in excess of 50,000 inhabitants in an 

24 area served by a rural water supply project if, at the 

25 discretion of the Secretary, the town or community is 
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1 considered to be a critical partner in the rural supply 

2 project. 

3 SEC. 104. RURAL WATER PROGRAMS ASSESSMENT. 

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

5 of Agriculture, the Administrator of the Environmental 

6 Protection Agency, the Director of the Indian Health Serv7 ice, the Secretary of Housing and Urban Development, and 

8 the Secretary of the Army, the Secretary shall develop an 

9 assessment of—

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

11 under the jurisdiction of the Secretary authorized but 

12 not completed prior to the date of enactment of this 

13 Act, including appropriation amounts, the phase of 

14 development, total anticipated costs, and obstacles to 

15 completion; 

16 (2) the current plan (including projected finan17 cial and workforce requirements) for the completion of 

18 the projects identified in paragraph (1) within the 

19 time frames established under the provisions of law 

20 authorizing the projects or the final engineering re21 ports for the projects; 

22 (3) the demand for new rural water supply 

23 projects; 

24 (4) rural water programs within other agencies 

25 and a description of the extent to which those pro-
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1 grams provide support for rural water supply projects 

2 and water treatment programs in Reclamation 

3 States, including an assessment of the requirements, 

4 funding levels, and conditions of eligibility for the 

5 programs assessed; 

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

7 can meet with the Program; 

8 (6) how the Program will complement authori9 ties already within the jurisdiction of the Secretary 

10 and the heads of the agencies with whom the Sec11 retary consults; and 

12 (7) improvements that can be made to coordinate 

13 and integrate the authorities of the agencies with pro14 grams evaluated under paragraph (4), including any 

15 recommendations to consolidate some or all of the ac16 tivities of the agencies with respect to rural water 

17 supply. 

18 (b) CONSULTATION WITH STATES.—Before finalizing 

19 the assessment developed under subsection (a), the Secretary 

20 shall solicit comments from States with identified rural 

21 water needs. 

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

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

24 Committee on Energy and Natural Resources of the Senate 

25 and the Committee on Resources of the House of Representa-
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1 tives a detailed report on the assessment conducted under 

2 subsection (a). 

3 SEC. 105. APPRAISAL INVESTIGATIONS. 

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

5 entity with respect to a proposed rural water supply project 

6 that meets the eligibility criteria published under section 

7 103(c) and subject to the availability of appropriations, the 

8 Secretary may—

9 (1) receive and review an appraisal investiga10 tion that is—

11 (A) developed by the non-Federal project en12 tity, with or without support from the Secretary; 

13 and 

14 (B) submitted to the Secretary by the non15 Federal project entity; 

16 (2) conduct an appraisal investigation; or 

17 (3) provide a grant to, or enter into a coopera18 tive agreement with, the non-Federal project entity to 

19 conduct an appraisal investigation, if the Secretary 

20 determines that—

21 (A) the non-Federal project entity is quali22 fied to complete the appraisal investigation in 

23 accordance with the criteria published under sec24 tion 103(c); and 
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1 (B) using the non-Federal project entity to 

2 conduct the appraisal investigation is a cost-ef3 fective alternative for completing the appraisal 

4 investigation. 

5 (b) DEADLINE.—An appraisal investigation conducted 

6 under subsection (a) shall be scheduled for completion not 

7 later than 2 years after the date on which the appraisal 

8 investigation is initiated. 

9 (c) APPRAISAL REPORT.—In accordance with sub10 section (f), after an appraisal investigation is submitted to 

11 the Secretary under subsection (a)(1) or completed under 

12 paragraph (2) or (3) of subsection (a), the Secretary shall 

13 prepare an appraisal report that—

14 (1) considers—

15 (A) whether the project meets—

16 (i) the appraisal criteria developed 

17 under subsection (d); and 

18 (ii) the eligibility criteria developed 

19 under section 103(c); 

20 (B) whether viable water supplies and 

21 water rights exist to supply the project, includ22 ing all practicable water sources such as lower 

23 quality waters, nonpotable waters, and water 

24 reuse-based water supplies; 
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1 (C) whether the project has a positive effect 

2 on public health and safety; 

3 (D) whether the project will meet water de4 mand, including projected future needs; 

5 (E) the extent to which the project provides 

6 environmental benefits, including source water 

7 protection; 

8 (F) whether the project applies a regional or 

9 watershed perspective and promotes benefits in 

10 the region in which the project is carried out; 

11 (G) whether the project—

12 (i)(I) implements an integrated re13 sources management approach; or 

14 (II) enhances water management flexi15 bility, including providing for—

16 (aa) local control to manage 

17 water supplies under varying water 

18 supply conditions; and 

19 (bb) participation in water bank20 ing and markets for domestic and envi21 ronmental purposes; and 

22 (ii) promotes long-term protection of 

23 water supplies; 

24 (H) preliminary cost estimates for the 

25 project; and 
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1 (I) whether the non-Federal project entity 

2 has the capability to pay 100 percent of the costs 

3 associated with the operations, maintenance, and 

4 replacement of the facilities constructed or devel5 oped as part of the rural water supply project; 

6 and 

7 (2) provides recommendations on whether a fea8 sibility study should be initiated under section 

9 106(a). 

10 (d) APPRAISAL CRITERIA.—

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

12 the date of enactment of this Act, the Secretary shall 

13 promulgate criteria (including appraisal factors list14 ed under subsection (c)) against which the appraisal 

15 investigations shall be assessed for completeness and 

16 appropriateness for a feasibility study. 

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

18 rural water supply project to a non-Federal project 

19 entity, the Secretary shall include in the criteria 

20 methods to scale the level of effort needed to complete 

21 the appraisal investigation relative to the total size 

22 and cost of the proposed rural water supply project. 

23 (e) REVIEW OF APPRAISAL INVESTIGATION.—

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

25 the date of submission of an appraisal investigation 
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1 under paragraph (1) or (3) of subsection (a), the Sec2 retary shall provide to the non-Federal entity that 

3 conducted the investigation a determination of wheth4 er the investigation has included the information nec5 essary to determine whether the proposed rural water 

6 supply project satisfies the criteria promulgated 

7 under subsection (d). 

8 (2) NO SATISFACTION OF CRITERIA.—If the Sec9 retary determines that the appraisal investigation 

10 submitted by a non-Federal entity does not satisfy the 

11 criteria promulgated under subsection (d), the Sec12 retary shall inform the non-Federal entity of the rea13 sons why the appraisal investigation is deficient. 

14 (3) RESPONSIBILITY OF SECRETARY.—If an ap15 praisal investigation as first submitted by a non-Fed16 eral entity does not provide all necessary information, 

17 as defined by the Secretary, the Secretary shall have 

18 no obligation to conduct further analysis until the 

19 non-Federal project entity submitting the appraisal 

20 study conducts additional investigation and resubmits 

21 the appraisal investigation under this subsection. 

22 (f) APPRAISAL REPORT.—Once the Secretary has de23 termined that an investigation provides the information 

24 necessary under subsection (e), the Secretary shall—
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1 (1) complete the appraisal report required under 

2 subsection (c); 

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

4 appraisal report prepared under this title; and 

5 (3) promptly publish in the Federal Register a 

6 notice of the availability of the results. 

7 (g) COSTS.—

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

9 appraisal investigation conducted under subsection 

10 (a) shall be 100 percent of the total cost of the ap11 praisal investigation, up to $200,000. 

12 (2) NON-FEDERAL SHARE.—

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

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

15 appraisal investigation is more than $200,000, 

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

17 $200,000 shall be 50 percent. 

18 (B) EXCEPTION.—The Secretary may re19 duce the non-Federal share required under sub20 paragraph (A) if the Secretary determines that 

21 there is an overwhelming Federal interest in the 

22 appraisal investigation. 

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

24 subparagraph (A) may be in the form of any in25 kind services that the Secretary determines 
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1 would contribute substantially toward the con2 duct and completion of the appraisal investiga3 tion. 

4 (h) CONSULTATION; IDENTIFICATION OF FUNDING

5 SOURCES.—In conducting an appraisal investigation 

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

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

8 project entity and appropriate State, tribal, regional, 

9 and local authorities; 

10 (2) consult with the heads of appropriate Federal 

11 agencies to—

12 (A) ensure that the proposed rural water 

13 supply project does not duplicate a project car14 ried out under the authority of the agency head; 

15 and 

16 (B) if a duplicate project is being carried 

17 out, identify the authority under which the du18 plicate project is being carried out; and 

19 (3) identify what funding sources are available 

20 for the proposed rural water supply project. 

21 SEC. 106. FEASIBILITY STUDIES. 

22 (a) IN GENERAL.—On completion of an appraisal re23 port under section 105(c) that recommends undertaking a 

24 feasibility study and subject to the availability of appro25 priations, the Secretary shall—
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1 (1) in cooperation with a non-Federal project en2 tity, carry out a study to determine the feasibility of 

3 the proposed rural water supply project; 

4 (2) receive and review a feasibility study that 

5 is—

6 (A) developed by the non-Federal project en7 tity, with or without support from the Secretary; 

8 and 

9 (B) submitted to the Secretary by the non10 Federal project entity; or 

11 (3)(A) provide a grant to, or enter into a cooper12 ative agreement with, a non-Federal project entity to 

13 conduct a feasibility study, for submission to the Sec14 retary, if the Secretary determines that—

15 (i) the non-Federal entity is qualified to 

16 complete the feasibility study in accordance with 

17 the criteria promulgated under subsection (d); 

18 and 

19 (ii) using the non-Federal project entity to 

20 conduct the feasibility study is a cost-effective al21 ternative for completing the appraisal investiga22 tion; or 

23 (B) if the Secretary determines not to provide a 

24 grant to, or enter into a cooperative agreement with, 

25 a non-Federal project entity under subparagraph (A), 
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1 provide to the non-Federal project entity notice of the 

2 determination, including an explanation of the reason 

3 for the determination. 

4 (b) REVIEW OF NON-FEDERAL FEASIBILITY STUD5 IES.—

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

7 feasibility study submitted under paragraph (2) or 

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

9 (A) in accordance with the feasibility fac10 tors described in subsection (c) and the criteria 

11 promulgated under subsection (d), assess the 

12 completeness of the feasibility study; and 

13 (B) if the Secretary determines that a feasi14 bility study is not complete, notify the non-Fed15 eral entity of the determination. 

16 (2) REVISIONS.—If the Secretary determines 

17 under paragraph (1)(B) that a feasibility study is not 

18 complete, the non-Federal entity shall pay any costs 

19 associated with revising the feasibility study. 

20 (c) FEASIBILITY FACTORS.—Feasibility studies au21 thorized or reviewed under this title shall include an assess22 ment of—

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

24 area to be served by the rural water supply project; 
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1 (2) advancement of public health and safety of 

2 any existing rural water supply project and other 

3 benefits of the proposed rural water supply project; 

4 (3) alternative new water supplies in the study 

5 area, including any opportunities to treat and use 

6 low-quality water, nonpotable water, water reuse7 based supplies, and brackish and saline waters 

8 through innovative and economically viable treatment 

9 technologies; 

10 (4) environmental quality and source water pro11 tection issues related to the rural water supply 

12 project; 

13 (5) innovative opportunities for water conserva14 tion in the study area to reduce water use and water 

15 system costs, including—

16 (A) nonstructural approaches to reduce the 

17 need for the project; and 

18 (B) demonstration technologies; 

19 (6) the extent to which the project and alter20 natives take advantage of economic incentives and the 

21 use of market-based mechanisms; 

22 (7)(A) the construction costs and projected oper23 ations, maintenance, and replacement costs of all al24 ternatives; and 
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1 (B) the economic feasibility and lowest cost 

2 method of obtaining the desired results of each alter3 native, taking into account the Federal cost-share; 

4 (8) the availability of guaranteed loans for a 

5 proposed rural water supply project; 

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

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

8 proportionate share of the design and construction 

9 costs and 100 percent of operations, maintenance, and 

10 replacement costs, including the allocation of costs to 

11 each non-Federal project entity in the case of multiple 

12 entities; 

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

14 developed an operations, management, and replace15 ment plan to assist the non-Federal project entity in 

16 establishing rates and fees for beneficiaries of the 

17 rural water supply project that includes a schedule 

18 identifying the annual operations, maintenance, and 

19 replacement costs that should be allocated to each 

20 non-Federal entity participating in the project; 

21 (11)(A) the non-Federal project entity adminis22 trative organization that would implement construc23 tion, operations, maintenance, and replacement ac24 tivities; and 
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1 (B) the fiscal, administrative, and operational 

2 controls to be implemented to manage the project; 

3 (12) the extent to which assistance for rural 

4 water supply is available under other Federal au5 thorities; 

6 (13) the engineering, environmental, and eco7 nomic activities to be undertaken to carry out the 

8 proposed rural water supply project; 

9 (14) the extent to which the project involves part10 nerships with other State, local, or tribal governments 

11 or Federal entities; and 

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

13 tribes and tribal organizations, the extent to which 

14 the project addresses the goal of economic self-suffi15 ciency. 

16 (d) FEASIBILITY STUDY CRITERIA.—

17 (1) IN GENERAL.—Not later than 18 months 

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

19 shall promulgate criteria (including the feasibility 

20 factors listed under subsection (c)) under which the 

21 feasibility studies shall be assessed for completeness 

22 and appropriateness. 

23 (2) INCLUSIONS.—The Secretary shall include in 

24 the criteria promulgated under paragraph (1) meth25 ods to scale the level of effort needed to complete the 
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1 feasibility assessment relative to the total size and 

2 cost of the proposed rural water supply project and 

3 reduce total costs to non-Federal entities. 

4 (e) FEASIBILITY REPORT.—

5 (1) IN GENERAL.—After completion of appro6 priate feasibility studies for rural water supply 

7 projects that address the factors described in sub8 section (c) and the criteria promulgated under sub9 section (d), the Secretary shall—

10 (A) develop a feasibility report that in11 cludes—

12 (i) a recommendation of the Secretary 

13 on—

14 (I) whether the rural water sup15 ply project should be authorized for 

16 construction; and 

17 (II) the appropriate non-Federal 

18 share of construction costs, which shall 

19 be—

20 (aa) at least 25 percent of 

21 the total construction costs; and 

22 (bb) determined based on an 

23 analysis of the capability-to-pay 

24 information considered under sub25 sections (c)(9) and (f); and 
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1 (ii) if the Secretary recommends that 

2 the project should be authorized for con3 struction—

4 (I) what amount of grants, loan 

5 guarantees, or combination of grants 

6 and loan guarantees should be used to 

7 provide the Federal cost share; 

8 (II) a schedule that identifies the 

9 annual operations, maintenance, and 

10 replacement costs that should be allo11 cated to each non-Federal entity par12 ticipating in the rural water supply 

13 project; and 

14 (III) an assessment of the finan15 cial capability of each non-Federal en16 tity participating in the rural water 

17 supply project to pay the allocated an18 nual operation, maintenance, and re19 placement costs for the rural water 

20 supply project; 

21 (B) submit the report to the Committee on 

22 Energy and Natural Resources of the Senate and 

23 the Committee on Resources of the House of Rep24 resentatives; 
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1 (C) make the report publicly available, 

2 along with associated study documents; and 

3 (D) publish in the Federal Register a notice 

4 of the availability of the results. 

5 (f) CAPABILITY-TO-PAY.—

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

7 rural water supply project under this section, the Sec8 retary shall—

9 (A) consider the financial capability of any 

10 non-Federal project entities participating in the 

11 rural water supply project to pay 25 percent or 

12 more of the capital construction costs of the rural 

13 water supply project; and 

14 (B) recommend an appropriate Federal 

15 share and non-Federal share of the capital con16 struction costs, as determined by the Secretary. 

17 (2) FACTORS.—In determining the financial ca18 pability of non-Federal project entities to pay for a 

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

20 Secretary shall evaluate factors for the project area, 

21 relative to the State average, including—

22 (A) per capita income; 

23 (B) median household income; 

24 (C) the poverty rate; 
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1 (D) the ability of the non-Federal project 

2 entity to raise tax revenues or assess fees; 

3 (E) the strength of the balance sheet of the 

4 non-Federal project entity; and 

5 (F) the existing cost of water in the region. 

6 (3) INDIAN TRIBES.—In determining the capa7 bility-to-pay of Indian tribe project beneficiaries, the 

8 Secretary may consider deferring the collection of all 

9 or part of the non-Federal construction costs appor10 tioned to Indian tribe project beneficiaries unless or 

11 until the Secretary determines that the Indian tribe 

12 project beneficiaries should pay—

13 (A) the costs allocated to the beneficiaries; 

14 or 

15 (B) an appropriate portion of the costs. 

16 (g) COST-SHARING REQUIREMENT.—

17 (1) IN GENERAL.—Except as otherwise provided 

18 in this subsection, the Federal share of the cost of a 

19 feasibility study carried out under this section shall 

20 not exceed 50 percent of the study costs. 

21 (2) FORM.—The non-Federal share under para22 graph (1) may be in the form of any in-kind services 

23 that the Secretary determines would contribute sub24 stantially toward the conduct and completion of the 

25 study. 
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1 (3) FINANCIAL HARDSHIP.—The Secretary may 

2 increase the Federal share of the costs of a feasibility 

3 study if the Secretary determines, based on a dem4 onstration of financial hardship, that the non-Federal 

5 participant is unable to contribute at least 50 percent 

6 of the costs of the study. 

7 (4) LARGER COMMUNITIES.—In conducting a 

8 feasibility study of a rural water supply system that 

9 includes a community with a population in excess of 

10 50,000 inhabitants, the Secretary may require the 

11 non-Federal project entity to pay more than 50 per12 cent of the costs of the study. 

13 (h) CONSULTATION AND COOPERATION.—In addition 

14 to the non-Federal project entity, the Secretary shall consult 

15 and cooperate with appropriate Federal, State, tribal, re16 gional, and local authorities during the conduct of each fea17 sibility assessment and development of the feasibility report 

18 conducted under this title. 

19 SEC. 107. MISCELLANEOUS. 

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

21 enter into contracts, financial assistance agreements, and 

22 such other agreements, and promulgate such regulations, as 

23 are necessary to carry out this title. 

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

25 authorizes the transfer of pre-existing facilities or pre-exist-
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1 ing components of any water system from Federal to pri2 vate ownership or from private to Federal ownership. 

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

4 title supersedes or amends any Federal law associated with 

5 a project, or portion of a project, constructed under Federal 

6 reclamation law. 

7 (d) INTERAGENCY COORDINATION.—The Secretary 

8 shall coordinate the Program carried out under this title 

9 with existing Federal and State rural water and waste10 water programs to facilitate the most efficient and effective 

11 solution to meeting the water needs of the non-Federal 

12 project sponsors. 

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

14 a contract is entered into with, or a grant is made, to an 

15 organization to perform services benefitting more than 1 In16 dian tribe under this title, the approval of each such Indian 

17 tribe shall be a prerequisite to entering into the contract 

18 or making the grant. 

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

20 planned, designed, and recommended for construction under 

21 this title shall be held by the non-Federal project entity. 

22 (g) EXPEDITED PROCEDURES.—If the Secretary deter23 mines that a community to be served by a proposed rural 

24 water supply project has urgent and compelling water 

25 needs, the Secretary shall, to the maximum extent prac-
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1 ticable, expedite appraisal investigations and reports con2 ducted under section 105 and feasibility studies and reports 

3 conducted under section 106. 

4 (h) EFFECT ON STATE WATER LAW.—

5 (1) IN GENERAL.—Nothing in this title preempts 

6 or affects State water law or an interstate compact 

7 governing water. 

8 (2) COMPLIANCE REQUIRED.—The Secretary 

9 shall comply with State water laws in carrying out 

10 this title. 

11 (i) NO ADDITIONAL REQUIREMENTS.—Nothing in this 

12 title requires a feasibility study for, or imposes any other 

13 additional requirements with respect to, rural water supply 

14 projects or programs that are authorized before the date of 

15 enactment of this Act. 

16 SEC. 108. REPORTS. 

17 Beginning in fiscal year 2007, and each fiscal year 

18 thereafter through fiscal year 2012, the Secretary shall sub19 mit to the Committee on Energy and Natural Resources of 

20 the Senate and the Committee on Resources of the House 

21 of Representatives an annual report that describes the num22 ber and type of full-time equivalent positions in the Depart23 ment of the Interior and the amount of overhead costs of 

24 the Department of the Interior that are allocated to car25 rying out this title for the applicable fiscal year. 
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1 SEC. 109. AUTHORIZATION OF APPROPRIATIONS. 

2 (a) IN GENERAL.—There is authorized to be appro3 priated to carry out this title $15,000,000 for each of fiscal 

4 years 2007 through 2016, to remain available until ex5 pended. 

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

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

8 than $1,000,000 may be made available to carry out section 

9 104 for each of fiscal years 2007 and 2008. 

10 (c) CONSTRUCTION COSTS.—No amounts made avail11 able under this section shall be used to pay construction 

12 costs associated with any rural water supply project. 

13 SEC. 110. TERMINATION OF AUTHORITY. 

14 The authority of the Secretary to carry out this title 

15 terminates on September 30, 2016. 

16 TITLE II—TWENTY-FIRST 

17 CENTURY WATER WORKS ACT 

18 SEC. 201. SHORT TITLE. 

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

20 Water Works Act’’. 

21 SEC. 202. DEFINITIONS. 

22 In this title: 

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

24 the meaning given the term in section 4 of the Indian 

25 Self-Determination and Education Assistance Act (25 

26 U.S.C. 450b). 
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1 (2) LENDER.—The term ‘‘lender’’ means—

2 (A) a non-Federal qualified institutional 

3 buyer (as defined in section 230.144A(a) of title 

4 17, Code of Federal Regulation (or any successor 

5 regulation), known as Rule 144A(a) of the Secu6 rities and Exchange Commission and issued 

7 under the Securities Act of 1933 (15 U.S.C. 77a 

8 et seq.)); or 

9 (B) a clean renewable energy bond lender 

10 (as defined in section 54(j)(2) of the Internal 

11 Revenue Code of 1986 (as in effect on the date 

12 of enactment of this Act)). 

13 (3) LOAN GUARANTEE.—The term ‘‘loan guar14 antee’’ has the meaning given the term ‘‘loan guar15 antee’’ in section 502 of the Federal Credit Reform 

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

17 (4) NON-FEDERAL BORROWER.—The term ‘‘non18 Federal borrower’’ means—

19 (A) a State (including a department, agen20 cy, or political subdivision of a State); or 

21 (B) a conservancy district, irrigation dis22 trict, canal company, water users’ association, 

23 Indian tribe, an agency created by interstate 

24 compact, or any other entity that has the capac-
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1 ity to contract with the United States under 

2 Federal reclamation law. 

3 (5) OBLIGATION.—The term ‘‘obligation’’ means 

4 a loan or other debt obligation that is guaranteed 

5 under this section. 

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

7 (A) a rural water supply project (as defined 

8 in section 102(9)); 

9 (B) an extraordinary operation and main10 tenance activity for, or the rehabilitation or re11 placement of, a facility—

12 (i) that is authorized by Federal rec13 lamation law and constructed by the United 

14 States under such law; or 

15 (ii) in connection with which there is 

16 a repayment or water service contract exe17 cuted by the United States under Federal 

18 reclamation law; or 

19 (C) an improvement to water infrastructure 

20 directly associated with a reclamation project 

21 that, based on a determination of the Sec22 retary—

23 (i) improves water management; and 

24 (ii) fulfills other Federal goals. 
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1 (7) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of the Interior. 

3 SEC. 203. PROJECT ELIGIBILITY. 

4 (a) ELIGIBILITY CRITERIA.—

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

6 and publish in the Federal Register criteria for deter7 mining the eligibility of a project for financial assist8 ance under section 204. 

9 (2) INCLUSIONS.—Eligibility criteria shall in10 clude—

11 (A) submission of an application by the 

12 lender to the Secretary; 

13 (B) demonstration of the creditworthiness of 

14 the project, including a determination by the 

15 Secretary that any financing for the project has 

16 appropriate security features to ensure repay17 ment; 

18 (C) demonstration by the non-Federal bor19 rower, to the satisfaction of the Secretary, of the 

20 ability of the non-Federal borrower to repay the 

21 project financing from user fees or other dedi22 cated revenue sources; 

23 (D) demonstration by the non-Federal bor24 rower, to the satisfaction of the Secretary, of the 

25 ability of the non-Federal borrower to pay all 
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1 operations, maintenance, and replacement costs 

2 of the project facilities; and 

3 (E) such other criteria as the Secretary de4 termines to be appropriate. 

5 (b) WAIVER.—The Secretary may waive any of the cri6 teria in subsection (a)(2) that the Secretary determines to 

7 be duplicative or rendered unnecessary because of an action 

8 already taken by the United States. 

9 (c) PROJECTS PREVIOUSLY AUTHORIZED.—A project 

10 that was authorized for construction under Federal rec11 lamation laws prior to the date of enactment of this Act 

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

13 the criteria established by the Secretary under subsection 

14 (a). 

15 (d) CRITERIA FOR RURAL WATER SUPPLY

16 PROJECTS.—A rural water supply project that is deter17 mined to be feasible under section 106 is eligible for a loan 

18 guarantee under section 204. 

19 SEC. 204. LOAN GUARANTEES. 

20 (a) AUTHORITY.—Subject to the availability of appro21 priations, the Secretary may make available to lenders for 

22 a project meeting the eligibility criteria established in sec23 tion 203 loan guarantees to supplement private-sector or 

24 lender financing for the project. 

25 (b) TERMS AND LIMITATIONS.—
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1 (1) IN GENERAL.—Loan guarantees under this 

2 section for a project shall be on such terms and condi3 tions and contain such covenants, representations, 

4 warranties, and requirements as the Secretary deter5 mines to be appropriate to protect the financial inter6 ests of the United States. 

7 (2) AMOUNT.—Loan guarantees by the Secretary 

8 shall not exceed an amount equal to 90 percent of the 

9 cost of the project that is the subject of the loan guar10 antee, as estimated at the time at which the loan 

11 guarantee is issued. 

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

13 interest at a rate that does not exceed a level that the 

14 Secretary determines to be appropriate, taking into 

15 account the prevailing rate of interest in the private 

16 sector for similar loans and risks. 

17 (4) AMORTIZATION.—A loan guarantee under 

18 this section shall provide for complete amortization of 

19 the loan guarantee within not more than 40 years. 

20 (5) NONSUBORDINATION.—An obligation shall be 

21 subject to the condition that the obligation is not sub22 ordinate to other financing. 

23 (c) PREPAYMENT AND REFINANCING.—Any prepay24 ment or refinancing terms on a loan guarantee shall be ne-
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1 gotiated between the non-Federal borrower and the lender 

2 with the consent of the Secretary. 

3 SEC. 205. DEFAULTS. 

4 (a) PAYMENTS BY SECRETARY.—

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

6 obligation, the holder of the loan guarantee shall have 

7 the right to demand payment of the unpaid amount 

8 from the Secretary. 

9 (2) PAYMENT REQUIRED.—By such date as may 

10 be specified in the loan guarantee or related agree11 ments, the Secretary shall pay to the holder of the 

12 loan guarantee the unpaid interest on, and unpaid 

13 principal of, the obligation with respect to which the 

14 borrower has defaulted, unless the Secretary finds that 

15 there was not default by the borrower in the payment 

16 of interest or principal or that the default has been 

17 remedied. 

18 (3) FORBEARANCE.—Nothing in this subsection 

19 precludes any forbearance by the holder of the obliga20 tion for the benefit of the non-Federal borrower that 

21 may be agreed on by the parties to the obligation and 

22 approved by the Secretary. 

23 (b) SUBROGATION.—

24 (1) IN GENERAL.—If the Secretary makes a pay25 ment under subsection (a), the Secretary shall be sub-
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1 rogated to the rights of the recipient of the payment 

2 as specified in the loan guarantee or related agree3 ments, including, as appropriate, the authority (not4 withstanding any other provision of law) to—

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

6 otherwise dispose of any property acquired pur7 suant to the loan guarantee or related agree8 ments; or 

9 (B) permit the non-Federal borrower, pur10 suant to an agreement with the Secretary, to 

11 continue to pursue the purposes of the project if 

12 the Secretary determines the purposes to be in 

13 the public interest. 

14 (2) SUPERIORITY OF RIGHTS.—The rights of the 

15 Secretary, with respect to any property acquired pur16 suant to a loan guarantee or related agreement, shall 

17 be superior to the rights of any other person with re18 spect to the property. 

19 (c) PAYMENT OF PRINCIPAL AND INTEREST BY SEC20 RETARY.—With respect to any obligation guaranteed under 

21 this section, the Secretary may enter into a contract to pay, 

22 and pay, holders of the obligation, for and on behalf of the 

23 non-Federal borrower, from funds appropriated for that 

24 purpose, the principal and interest payments that become 
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1 due and payable on the unpaid balance of the obligation 

2 if the Secretary finds that—

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

4 meet the payments and is not in default; 

5 (B) it is in the public interest to permit the non6 Federal borrower to continue to pursue the purposes 

7 of the project; and 

8 (C) the probable net benefit to the Federal Gov9 ernment in paying the principal and interest will be 

10 greater than that which would result in the event of 

11 a default; 

12 (2) the amount of the payment that the Sec13 retary is authorized to pay shall be no greater than 

14 the amount of principal and interest that the non15 Federal borrower is obligated to pay under the agree16 ment being guaranteed; and 

17 (3) the borrower agrees to reimburse the Sec18 retary for the payment (including interest) on terms 

19 and conditions that are satisfactory to the Secretary. 

20 (d) ACTION BY ATTORNEY GENERAL.—

21 (1) NOTIFICATION.—If the non-Federal borrower 

22 defaults on an obligation, the Secretary shall notify 

23 the Attorney General of the default. 
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1 (2) RECOVERY.—On notification, the Attorney 

2 General shall take such action as is appropriate to re3 cover the unpaid principal and interest due from—

4 (A) such assets of the defaulting non-Fed5 eral borrower as are associated with the obliga6 tion; or 

7 (B) any other security pledged to secure the 

8 obligation. 

9 SEC. 206. OPERATIONS, MAINTENANCE, AND REPLACEMENT 

10 COSTS. 

11 (a) IN GENERAL.—The non-Federal share of oper12 ations, maintenance, and replacement costs for a project re13 ceiving Federal assistance under this title shall be 100 per14 cent. 

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

16 the Secretary may assist in the development of an oper17 ation, maintenance, and replacement plan to provide the 

18 necessary framework to assist the non-Federal borrower in 

19 establishing rates and fees for project beneficiaries. 

20 SEC. 207. TITLE TO NEWLY CONSTRUCTED FACILITIES. 

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

22 projects or facilities constructed in accordance with this 

23 title shall remain under the jurisdiction and control of the 

24 non-Federal borrower subject to the terms of the repayment 

25 agreement. 
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1 (b) EXISTING PROJECTS AND FACILITIES.—Nothing in 

2 this title affects the title of—

3 (1) reclamation projects authorized prior to the 

4 date of enactment of this Act; 

5 (2) works supplemental to existing reclamation 

6 projects; or 

7 (3) works constructed to rehabilitate existing rec8 lamation projects. 

9 SEC. 208. WATER RIGHTS. 

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

11 affects State water law or an interstate compact governing 

12 water. 

13 (b) COMPLIANCE REQUIRED.—The Secretary shall 

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

15 Nothing in this title affects or preempts State water law 

16 or an interstate compact governing water. 

17 SEC. 209. INTERAGENCY COORDINATION AND COOPERA18 TION. 

19 (a) CONSULTATION.—The Secretary shall consult with 

20 the Secretary of Agriculture before promulgating criteria 

21 with respect to financial appraisal functions and loan 

22 guarantee administration for activities carried out under 

23 this title. 

24 (b) MEMORANDUM OF AGREEMENT.—The Secretary 

25 and the Secretary of Agriculture shall enter into a memo-
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1 randum of agreement providing for Department of Agri2 culture financial appraisal functions and loan guarantee 

3 administration for activities carried out under this title. 

4 SEC. 210. RECORDS; AUDITS. 

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

6 shall keep such records and other pertinent documents as 

7 the Secretary shall prescribe by regulation, including such 

8 records as the Secretary may require to facilitate an effec9 tive audit. 

10 (b) ACCESS.—The Secretary and the Comptroller Gen11 eral of the United States, or their duly authorized represent12 atives, shall have access, for the purpose of audit, to the 

13 records and other pertinent documents. 

14 SEC. 211. FULL FAITH AND CREDIT. 

15 The full faith and credit of the United States is pledged 

16 to the payment of all guarantees issued under this section 

17 with respect to principal and interest. 

18 SEC. 212. REPORT. 

19 Not later than 1 year after the date on which the eligi20 bility criteria are published in the Federal Register under 

21 section 203(a), and every 2 years thereafter, the Secretary 

22 shall submit to the Committee on Energy and Natural Re23 sources of the Senate and the Committee on Resources of 

24 the House of Representatives a report that describes the im-
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1 plementation of the loan guarantee program under section 

2 204. 

3 SEC. 213. EFFECT ON THE RECLAMATION LAWS. 

4 (a) RECLAMATION PROJECTS.—Nothing in this title 

5 supersedes or amends any Federal law associated with a 

6 project, or a portion of a project, constructed under the rec7 lamation laws. 

8 (b) NO NEW OR SUPPLEMENTAL BENEFITS.—Any as9 sistance provided under this title shall not—

10 (1) be considered to be a new or supplemental 

11 benefit for purposes of the Reclamation Reform Act of 

12 1982 (43 U.S.C. 390aa et seq.); or 

13 (2) affect any contract in existence on the date 

14 of enactment of this Act that is executed under the 

15 reclamation laws. 

16 SEC. 214. AUTHORIZATION OF APPROPRIATIONS. 

17 There are authorized to be appropriated such sums as 

18 are necessary to carry out this title, to remain available 

19 until expended. 

20 SEC. 215. TERMINATION OF AUTHORITY. 

21 (a) IN GENERAL.—Subject to subsection (b), the au22 thority of the Secretary to carry out this title terminates 

23 on the date that is 10 years after the date of enactment 

24 of this Act. 
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1 (b) EXCEPTION.—The termination of authority under 

2 subsection (a) shall have no effect on—

3 (1) any loans guaranteed by the United States 

4 under this title; or 

5 (2) the administration of any loan guaranteed 

6 under this title before the effective date of the termi7 nation of authority. 

8 TITLE III—REPORT ON TRANS9 FER OF RECLAMATION FA10 CILITIES 

11 SEC. 301. REPORT. 

12 (a) IN GENERAL.—Not later than 180 days after the 

13 date of enactment of this Act, the Secretary shall submit 

14 to the Committee on Energy and Natural Resources of the 

15 Senate and the Committee on Resources of the House of 

16 Representatives a report that describes any impediments 

17 and activities that significantly delay the ability of the Sec18 retary to complete timely transfers of title to reclamation 

19 facilities to qualified non-Federal entities under laws au20 thorizing the transfers. 

21 (b) CONSULTATION.—In preparing the report under 

22 subsection (a), the Secretary shall consult with any appro23 priate non-Federal parties, including reclamation water 

24 and power customers.
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Amend the title so as to read ‘‘An Act to authorize 

the Secretary of the Interior to carry out a rural water 

supply program in the Reclamation States to provide a 

clean, safe, affordable, and reliable water supply to rural 

residents.’’.

Attest:

Clerk. 
109TH CONGRESS 

2D SESSION S. 895

AMENDMENTS