‘‘(1) to any municipality or intermunicipal, 
interstate, or State agency for construction of pub-
licly owned treatment works; 
‘‘(2) for the implementation of a management 
program established under section 319; 
‘‘(3) for development and implementation of a 
conservation and management plan under section 
320; 
‘‘(4) for the implementation of lake protection 
programs and projects under section 314; 
‘‘(5) for repair or replacement of decentralized 
wastewater treatment systems that treat domestic 
sewage; 
‘‘(6) for measures to manage or reduce munic-
ipal stormwater runoff; 
‘‘(7) to any municipality or intermunicipal, 
interstate, or State agency for measures to reduce 
the demand for publicly owned treatment works ca-
pacity through water conservation; 
‘‘(8) for measures to increase the security of 
publicly owned treatment works; and 
‘‘(9) for the development and implementation of 
watershed projects meeting the criteria set forth in 
section 122.’’.
(b) 
EXTENDED
REPAYMENT
PERIOD.—Section 
603(d)(1) (33 U.S.C. 1383(d)(1)) is amended—
(1) in subparagraph (A) by striking ‘‘20 years’’ 
and inserting ‘‘the lesser of 30 years or the design 
life of the project to be financed with the proceeds 
of the loan’’; and 
(2) in subparagraph (B) by striking ‘‘not later 
than 20 years after project completion’’ and insert-
ing ‘‘upon the expiration of the term of the loan’’. 
(c) 
FISCAL
SUSTAINABILITY
PLAN.—Section 
603(d)(1) (33 U.S.C. 1383(d)(1)) is further amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (C); 
(2) by inserting ‘‘and’’ at the end of subpara-
graph (D); and 
(3) by adding at the end the following: 
‘‘(E) for any treatment works proposed for 
repair, replacement, or expansion, and eligible 
for assistance under section 603(c)(1), the re-
cipient of a loan will develop and implement a 
fiscal sustainability plan that includes—
‘‘(i) an inventory of critical assets 
that are a part of the treatment works;
‘‘(ii) an evaluation of the condition 
and performance of inventoried assets or 
asset groupings; and 
‘‘(iii) a plan for maintaining, repair-
ing, and, as necessary, replacing the treat-
ment works and a plan for funding such 
activities.’’. 
(d) ADMINISTRATIVE EXPENSES.—Section 603(d)(7) 
(33 U.S.C. 1383(d)(7)) is amended by inserting before the 
period at the end the following: ‘‘, $400,000 per year, or 
1⁄5 percent per year of the current valuation of the fund, 
whichever amount is greatest, plus the amount of any fees 
collected by the State for such purpose regardless of the 
source’’. 
(e) TECHNICAL
AND PLANNING ASSISTANCE
FOR 
SMALL SYSTEMS.—Section 603(d) (33 U.S.C. 1383(d)) is 
amended—
(1) by striking ‘‘and’’ at the end of paragraph 
(6); 
(2) by striking the period at the end of para-
graph (7) and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(8) to provide owners and operators of small 
treatment works (as defined in section 607) with 
technical and planning assistance and assistance in
financial management, user fee analysis, budgeting, 
capital improvement planning, facility operation and 
maintenance, repair schedules, and other activities 
to improve wastewater treatment plant management 
and operations; except that such amounts shall not 
exceed 2 percent of grant awards to such fund under 
this title.’’. 
(f) ADDITIONAL SUBSIDIZATION.—Section 603 (33 
U.S.C. 1383) is amended by adding at the end the fol-
lowing: 
‘‘(i) ADDITIONAL SUBSIDIZATION.—
‘‘(1) IN
GENERAL.—In any case in which a 
State provides assistance to a municipality or inter-
municipal, interstate, or State agency under sub-
section (d), the State may provide additional sub-
sidization, including forgiveness of principal and 
negative interest loans—
‘‘(A) to benefit a municipality that—
‘‘(i) meets the State’s affordability 
criteria established under paragraph (2); 
or 
‘‘(ii) does not meet the State’s afford-
ability criteria if the recipient—
‘‘(I) seeks additional subsidiza-
tion to benefit individual ratepayers in 
the residential user rate class; 
‘‘(II) demonstrates to the State 
that such ratepayers will experience a 
significant hardship from the increase 
in rates necessary to finance the 
project or activity for which assistance 
is sought; and 
‘‘(III) ensures, as part of an as-
sistance agreement between the State 
and the recipient, that the additional 
subsidization 
provided 
under 
this 
paragraph is directed through a user 
charge rate system (or other appro-
priate method) to such ratepayers; or 
‘‘(B) to implement alternative processes, 
materials, and techniques (including non-
structural protection of surface waters, new or 
improved methods of waste treatment, and pol-
lutant trading) that may result in cost savings 
or increased environmental benefit when com-
pared to standard processes, materials, and 
techniques. 
‘‘(2) AFFORDABILITY CRITERIA.—
‘‘(A) ESTABLISHMENT.—On or before Sep-
tember 30, 2004, and after providing notice 
and an opportunity for public comment, a State 
shall establish affordability criteria to assist in 
identifying municipalities that would experience 
a significant hardship raising the revenue nec-
essary to finance a project or activity eligible 
for assistance under section 603(c)(1) if addi-
tional subsidization is not provided. Such cri-
teria shall be based on income data, population 
trends, and other data determined relevant by 
the State. 
‘‘(B) EXISTING CRITERIA.—If a State has 
previously established, after providing notice 
and an opportunity for public comment, afford-
ability criteria that meet the requirements of 
subparagraph (A), the State may use the cri-
teria for the purposes of this subsection. For 
purposes of this Act, any such criteria shall be 
treated as affordability criteria established 
under this paragraph. 
‘‘(C) INFORMATION TO ASSIST STATES.—
The Administrator may publish information to 
assist States in establishing affordability cri-
teria under subparagraph (A).
‘‘(3) PRIORITY.—A State may give priority to a 
recipient for a project or activity eligible for funding 
under section 603(c)(1) if the recipient meets the 
State’s affordability criteria. 
‘‘(4) SET-ASIDE.—
‘‘(A) IN GENERAL.—In any fiscal year in 
which the Administrator has available for obli-
gation more than $1,400,000,000 for the pur-
poses of this title, a State shall provide addi-
tional subsidization under this subsection in the 
amount specified in subparagraph (B) to eligi-
ble entities described in paragraph (1) for 
projects and activities identified in the State’s 
intended use plan prepared under section 
606(c) to the extent that there are sufficient 
applications for such assistance. 
‘‘(B) AMOUNT.—In a fiscal year described 
in subparagraph (A), a State shall set aside for 
purposes of subparagraph (A) an amount not 
less than 25 percent of the difference be-
tween—
‘‘(i) the total amount that would have 
been allotted to the State under section 
604 for such fiscal year if the amount 
available to the Administrator for obliga-
tion under this title for such fiscal year 
had been equal to $1,400,000,000; and 
‘‘(ii) the total amount allotted to the 
State under section 604 for such fiscal 
year. 
‘‘(5) LIMITATION.—The total amount of addi-
tional subsidization provided under this subsection 
by a State may not exceed 30 percent of the total 
amount of capitalization grants received by the State 
under this title in fiscal years beginning after Sep-
tember 30, 2003.’’. 
SEC. 304. ALLOTMENT OF FUNDS. 
(a) IN
GENERAL.—Section 604(a) (33 U.S.C. 
1384(a)) is amended to read as follows: 
‘‘(a) ALLOTMENTS.—
‘‘(1) FISCAL YEARS 2003 AND 2004.—Sums ap-
propriated to carry out this title for each of fiscal 
years 2003 and 2004 shall be allotted by the Admin-
istrator in accordance with the formula used to allot 
sums appropriated to carry out this title for fiscal 
year 2002. 
‘‘(2) FISCAL YEAR 2005 AND THEREAFTER.—
Sums appropriated to carry out this title for fiscal 
year 2005 and each fiscal year thereafter shall be al-
lotted by the Administrator as follows:
‘‘(A) 
Amounts 
that 
do 
not 
exceed 
$1,350,000,000 shall be allotted in accordance 
with the formula described in paragraph (1). 
‘‘(B) Amounts that exceed $1,350,000,000 
shall be allotted in accordance with the formula 
developed by the Administrator under sub-
section (d).’’. 
(b) PLANNING ASSISTANCE.—Section 604(b) (33 
U.S.C. 1384(b)) is amended by striking ‘‘1 percent’’ and 
inserting ‘‘2 percent’’. 
(c) FORMULA.—Section 604 (33 U.S.C. 1384) is 
amended by adding at the end the following: 
‘‘(d) 
FORMULA
BASED
ON
WATER
QUALITY 
NEEDS.—Not later than September 30, 2004, and after 
providing notice and an opportunity for public comment, 
the Administrator shall publish an allotment formula 
based on water quality needs in accordance with the most 
recent survey of needs developed by the Administrator 
under section 516(b).’’. 
SEC. 305. INTENDED USE PLAN. 
(a) INTEGRATED PRIORITY LIST.—Section 603(g) 
(33 U.S.C. 1383(g)) is amended to read as follows: 
‘‘(g) PRIORITY LIST.—
‘‘(1) IN GENERAL.—For fiscal year 2005 and 
each fiscal year thereafter, a State shall establish or
update a list of projects and activities for which as-
sistance is sought from the State’s water pollution 
control revolving fund. Such projects and activities 
shall be listed in priority order based on the method-
ology established under paragraph (2). The State 
may provide financial assistance from the State’s 
water pollution control revolving fund only with re-
spect to a project or activity included on such list. 
In the case of projects and activities eligible for as-
sistance under section 603(c)(2), the State may in-
clude a category or subcategory of nonpoint sources 
of pollution on such list in lieu of a specific project 
or activity. 
‘‘(2) METHODOLOGY.—
‘‘(A) IN GENERAL.—Not later than 1 year 
after the date of enactment of this paragraph, 
and after providing notice and opportunity for 
public comment, each State (acting through the 
State’s water quality management agency and 
other appropriate agencies of the State) shall 
establish a methodology for developing a pri-
ority list under paragraph (1). 
‘‘(B) PRIORITY
FOR
PROJECTS
AND
AC-
TIVITIES
THAT
ACHIEVE
GREATEST
WATER 
QUALITY
IMPROVEMENT.—In developing the
methodology, the State shall seek to achieve the 
greatest degree of water quality improvement, 
taking into consideration the requirement of 
section 602(b)(5), section 603(i)(3), and wheth-
er such water quality improvements would be 
realized without assistance under this title. 
‘‘(C) 
CONSIDERATIONS
IN
SELECTING 
PROJECTS
AND
ACTIVITIES.—In determining 
which projects and activities will achieve the 
greatest degree of water quality improvement, 
the State shall consider—
‘‘(i) information developed by the 
State under sections 303(d) and 305(b); 
‘‘(ii) the State’s continuing planning 
process developed under section 303(e); 
‘‘(iii) the State’s management pro-
gram developed under section 319; and 
‘‘(iv) conservation and management 
plans developed under section 320. 
‘‘(D) NONPOINT SOURCES.—For categories 
or subcategories of nonpoint sources of pollu-
tion that a State may include on its priority list 
under paragraph (1), the State may consider 
the cumulative water quality improvements as-
sociated with projects or activities in such cat-
egories or subcategories. 
‘‘(E) EXISTING
METHODOLOGIES.—If a 
State has previously developed, after providing 
notice and an opportunity for public comment, 
a methodology that meets the requirements of 
this paragraph, the State may use the method-
ology for the purposes of this subsection.’’. 
(b) INTENDED USE PLAN.—Section 606(c) (33 
U.S.C. 1386(c)) is amended—
(1) in the matter preceding paragraph (1) by 
striking ‘‘each State shall annually prepare’’ and in-
serting ‘‘each State (acting through the State’s 
water quality management agency and other appro-
priate agencies of the State) shall annually prepare 
and publish’’; 
(2) by striking paragraph (1) and inserting the 
following: 
‘‘(1) the State’s priority list developed under 
section 603(g);’’; 
(3) by striking ‘‘and’’ at the end of paragraph 
(4); 
(4) by striking the period at the end of para-
graph (5) and inserting ‘‘; and’’; and 
(5) by adding at the end the following:
‘‘(6) if the State does not fund projects and ac-
tivities in the order of the priority established under 
section 603(g), an explanation of why such a change 
in order is appropriate.’’. 
(c) TRANSITIONAL PROVISION.—Before completion 
of a priority list based on a methodology established under 
section 603(g) of the Federal Water Pollution Control Act 
(as amended by this section), a State shall continue to 
comply with the requirements of sections 603(g) and 
606(c) of such Act, as in effect on the day before the date 
of enactment of this Act. 
SEC. 306. FEDERAL OVERSIGHT. 
(a) ANNUAL REPORT.—Section 606(d) (33 U.S.C. 
1386(d)) is amended by inserting ‘‘the eligible purpose 
under section 603(c) for which the assistance is provided,’’ 
after ‘‘loan amounts,’’. 
(b) ANNUAL FEDERAL OVERSIGHT REVIEW.—Sec-
tion 606(e) (33 U.S.C. 1386(e)) is amended by adding at 
the end the following: ‘‘In carrying out an oversight review 
under this subsection, the Administrator may allow a 
State to certify, with supporting documentation, its com-
pliance with the requirements of this title.’’. 
SEC. 307. TECHNICAL ASSISTANCE. 
Title VI (33 U.S.C. 1381 et seq.) is amended—
(1) by redesignating section 607 as section 608; 
and 
(2) by inserting after section 606 the following: 
‘‘SEC. 607. TECHNICAL ASSISTANCE. 
‘‘(a) 
ASSISTANCE
FOR
SMALL
TREATMENT 
WORKS.—
‘‘(1) SIMPLIFIED PROCEDURES.—Not later than 
1 year after the date of enactment of this section, 
the Administrator shall assist the States in estab-
lishing simplified procedures for small treatment 
works to obtain assistance under this title. 
‘‘(2) PUBLICATION
OF
MANUAL.—Not later 
than 2 years after the date of the enactment of this 
section, and after providing notice and opportunity 
for public comment, the Administrator shall publish 
a manual to assist small treatment works in obtain-
ing assistance under this title and publish in the 
Federal Register notice of the availability of the 
manual. 
‘‘(3) SMALL
TREATMENT
WORKS
DEFINED.—
For purposes of this title, the term ‘small treatment 
works’ means a treatment works for which a munici-
pality or intermunicipal, interstate, or State agency 
seeks assistance under this title and which serves a 
population of 20,000 or fewer.
‘‘(b) ASSISTANCE
FOR IMPROVING
THE MANAGE-
MENT OF WATER QUALITY INFRASTRUCTURE AND IN-
CREASING COST-EFFECTIVENESS
OF INFRASTRUCTURE 
IMPROVEMENTS.—At the request of any State, the Admin-
istrator shall assist in the development of criteria for a 
State to determine compliance with the conditions of fund-
ing assistance established under section 602(b)(13).’’. 
SEC. 308. AUTHORIZATION OF APPROPRIATIONS. 
Section 608 (as redesignated by section 307 of this 
Act) is amended by striking paragraphs (1) through (5) 
and inserting the following: 
‘‘(1) $2,000,000,000 for fiscal year 2004; 
‘‘(2) $3,000,000,000 for fiscal year 2005; 
‘‘(3) $4,000,000,000 for fiscal year 2006; 
‘‘(4) $5,000,000,000 for fiscal year 2007; and 
‘‘(5) $6,000,000,000 for fiscal year 2008.’’.
TITLE IV—GENERAL 
PROVISIONS 
SEC. 401. DEFINITION OF TREATMENT WORKS. 
Section 502 (33 U.S.C. 1362) is amended by adding 
at the end the following: 
‘‘(24) The term ‘treatment works’ has the 
meaning given that term in section 212.’’. 
SEC. 402. FUNDING FOR INDIAN PROGRAMS. 
Section 518(c) (33 U.S.C. 1377) is amended—
(1) by striking ‘‘The Administrator’’ and insert-
ing the following: 
‘‘(1) FISCAL YEARS 1987–2003.—The Adminis-
trator’’; 
(2) in paragraph (1) (as so designated)—
(A) by inserting ‘‘and ending before Octo-
ber 1, 2003,’’ after ‘‘1986,’’; and 
(B) by striking the second sentence; and 
(3) by adding at the end the following: 
‘‘(2) FISCAL YEAR 2004 AND THEREAFTER.—
For fiscal year 2004 and each fiscal year thereafter, 
the Administrator shall reserve, before allotments to 
the States under section 604(a), not less than 0.5 
percent and not more than 1.5 percent of the funds 
made available to carry out title VI. 
‘‘(3) USE OF FUNDS.—Funds reserved under 
this subsection shall be available only for grants for 
projects and activities eligible for assistance under 
section 603(c) to serve—
‘‘(A) Indian tribes; 
‘‘(B) former Indian reservations in Okla-
homa (as determined by the Secretary of the 
Interior); and
‘‘(C) Native villages (as defined in section 
3 of the Alaska Native Claims Settlement Act 
(43 U.S.C. 1602)).’’.
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