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nancial assistance of any kind or nature that the
State deems appropriate to public water systems.
Such financial assistance may be used by a pub-
lic water system only for expenditures (not in-
cluding monitoring, operation, and maintenance
expenditures) of a type or category which the
Administrator has determined, through guidance,
will facilitate compliance with national primary
drinking water regulations applicable to such
system under section 1411 or otherwise signifi-
cantly further the health protection objectives of
this title. 15 percent of the amount credited to
any revolving fund established under this section
in any fiscal year shall be available solely for
providing loan assistance to public water sys-
tems which regularly serve less than 10,000 indi-
viduals.
‘‘(C) FUND MANAGEMENT.—Each State re-
volving fund under this subsection shall be estab-
lished, maintained, and credited with repay-
ments and interest. The fund corpus shall be
available in perpetuity for providing financial
assistance under this section. To the extent
amounts in each such fund are not required for
current obligation or expenditure such amounts
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shall be invested in interest bearing obligations
of the State or of the United States. The Admin-
istrator and the States shall take such steps as
may be necessary to insure that amounts made
available under this subsection are deposited in
State revolving funds and earning interest as
promptly as practicable after the commencement
of the fiscal year in which such funds are made
available.
‘‘(D) GRANTS FROM REVOLVING FUNDS.—A
State may not provide assistance in the form of
grants from a State revolving fund established
under this subsection in an aggregate amount
which exceeds the sum of the interest collected on
deposits in such State revolving fund plus
amounts deposited in such fund by the State
pursuant to paragraph (3). Such grants may
only be made to public water systems owned by
a governmental or inter-governmental agency, a
non-profit organization, an Indian tribe, or any
combination thereof which the State finds to be
experiencing financial hardship.
‘‘(E) INVESTOR-OWNED PUBLIC WATER SYS-
TEMS.—In the case of any public water system
not owned by a governmental or inter-govern-
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mental agency, a non-profit organization, an In-
dian tribe, or any combination thereof, the State
may provide assistance from a State revolving
fund under this subsection only to those systems
having the greatest public health needs and fi-
nancial need. The State may provide loan assist-
ance to any such system from such a State re-
volving fund only after making a determination
that the system has the ability to repay the loan
according to its terms and conditions. States are
authorized to require such systems to identify a
dedicated source for repayment of the loans and
to impose such other requirements as may be
necessary to assure loan repayment.
‘‘(2) SPECIFIC REQUIREMENTS.—The Adminis-
trator shall enter into an agreement with a State
under this subsection only after the State has estab-
lished to the satisfaction of the Administrator that—
‘‘(A) the State will deposit all grants re-
ceived from the Administrator under this sub-
section, together with all repayments and interest
on such grants, in a drinking water treatment
revolving fund established by the State in accord-
ance with this subsection; and
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‘‘(B) no loan or other financial assistance
will be provided to a public water system from
such revolving fund to be used for any expendi-
ture that could be avoided or significantly re-
duced by appropriate consolidation of that pub-
lic water system with any other public water
system, except that in such cases such assistance
may be provided from the revolving fund for
such consolidation.
The Administrator, in consultation with the States
and public water systems, shall establish criteria to be
applied in determining when the consolidation of
public water systems is appropriate.
‘‘(3) STATE
CONTRIBUTION.—In the case of
grants made after fiscal year 1994, each agreement
under this subsection shall require that the State de-
posit in the fund from State moneys an amount equal
to at least 20 percent of the total amount of the grant
to be made to the State on or before the date on which
the grant payment is made to the State.
‘‘(4) COMBINED FINANCIAL ADMINISTRATION.—
Notwithstanding subparagraph (A) of paragraph (2),
a State may combine the financial administration of
a revolving fund established under this subsection
with the financial administration of any other revolv-
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ing fund established by the State if the Administrator
determines that—
‘‘(A) the grants under this subsection, to-
gether with loan repayments and interest, will be
separately accounted for and used solely for the
purposes specified in paragraph (1); and
‘‘(B) the authority to establish assistance
priorities and carry out oversight and related ac-
tivities (other than financial administration)
with respect to such assistance remains with the
State agency having primary responsibility for
administration of the State program under this
part.
‘‘(5) FUND
ADMINISTRATION.—(A) Each State
may use up to 4 percent of the grants in a revolving
fund established under this subsection to cover the
reasonable costs of administration of the assistance
program under this subsection and of providing tech-
nical assistance to public water systems within the
State. For fiscal year 1994, each State may use up
to 2 percent of the grants in any such revolving fund
for public water system supervision if the State
matches such expenditures with at least an equal
amount of non-Federal funds (additional to the
amount expended by the State for public water super-
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vision in fiscal year 1993). An additional 1 percent
of the grants in such fund shall be used by each State
to provide technical assistance to public water sys-
tems in such State.
‘‘(B) The Administrator shall publish such guid-
ance and promulgate such regulations as may be nec-
essary to carry out the provisions of this section, in-
cluding—
‘‘(i) provisions to ensure that each State
commits and expends funds from revolving funds
established under this subsection in accordance
with this Act and applicable Federal and State
laws,
‘‘(ii) guidance to prevent waste, fraud, and
abuse, and
‘‘(iii) guidance to avoid the use of funds
made available under this subsection to finance
the expansion of any public water system in an-
ticipation of future population growth.
Such guidance and regulations shall also insure that
the States, and public water systems receiving assist-
ance under this subsection, use accounting, audit, and
fiscal procedures that conform to generally accepted
accounting standards.
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‘‘(C) Each State administering a revolving fund
and assistance program under this subsection shall
publish and submit to the Administrator a report
every 2 years on its activities under this subsection,
including the findings of the most recent audit of the
fund. The Administrator shall periodically audit all
revolving funds established under this subsection in
accordance with procedures established by the Comp-
troller General.
‘‘(6) NEEDS SURVEY.—The Administrator shall
conduct an assessment of financial needs of all public
water systems in the United States and submit a re-
port to the Congress containing the results of such as-
sessment within 2 years after the date of the enact-
ment of this subsection.
‘‘(7) INDIAN TRIBES.—One and 1⁄2 percent of the
amounts appropriated to carry out this subsection
may be used by the Administrator to make grants to
Indian Tribes and Alaskan Native Villages which are
not eligible to receive either capitalization grants
from the Administrator under this subsection or as-
sistance from State revolving funds established under
this subsection. Such grants shall be used for expendi-
tures by such tribes and villages for public water sys-
tem expenditures referred to in paragraph (1)(B).