(h) CONTINUED CONSULTATION AND NEGOTIATION
REGARDING COST SHARING.—The Federal agencies shall
continue coordinated consultations and negotiations with
the State of California pursuant to the cost sharing agree-
ment required by section 78684.10 of California Senate
Bill 900, Chapter 135, Statutes of 1996, signed by the
Governor of California on July 11, 1996, and may enter
into an agreement with the State for that purpose.
(i) SATISFACTION OF SOLUTION PRINCIPLES AND
PRIMARY OBJECTIVES.—The Secretary shall ensure that
the proposal submitted under this section and other ac-
tions taken to implement the record of decision satisfy the
solution principles and primary objectives of the CALFED
program.
(j) LIMITATION ON APPROPRIATIONS TO IMPLEMENT
CALFED PROGRAM.—No amounts may be appropriated
for any fiscal year after fiscal year 2004 to implement the
CALFED Program, including under any other provision
of this title, and no amounts may be appropriated from
the restoration fund after such fiscal year, if there has
not been enacted by the Congress a law authorizing imple-
mentation of the proposal submitted by the Secretary
under this section.
SEC. 103. CALIFORNIA WATER SUPPLY SECURITY.
(a) WATER SYSTEM IMPROVEMENTS.—
(1) IN GENERAL.—The Federal agencies, acting
through the CALFED program, shall develop a bal-
anced and timely program to achieve for agricultural
and urban uses throughout the Bay-Delta solution
area—
(A) increased water supply and water
yield, improved water quality, and environ-
mental benefits; and
(B) improved water system reliability,
water use efficiency, watershed management,
water transfers, and levee protection.
(2) DEVELOPMENT OF OPTIONS.—In developing
water yield and water supply options the Federal
agencies, in cooperation with the State agencies,
shall—
(A) consider all potential water yield and
supply storage alternatives (including those
identified in the study under section 101(c)(1));
and
(B) utilize a cost/benefit analysis in con-
junction with environmental criteria to ensure
that proposals are selected that address envi-
ronmental issues and are economically viable.
(3) SELECTION
OF
PROJECTS.—In selecting
projects and programs for increasing water yield and
water supply, improving water quality, and enhanc-
ing environmental benefits, projects and programs
with multiple benefits shall be emphasized.
(4) WATER DELIVERIES.—In accordance with
the record of decision, the Secretary shall operate
the Central Valley Project in a manner that will in
a normal year make available to south-of-Delta Cen-
tral Valley Project agricultural water service con-
tractors at least 70 percent of their existing con-
tract. In years that are other than normal, the Cen-
tral Valley Project shall be operated to accomplish
water supply improvements to south-of-Delta Cen-
tral Valley Project agricultural water service con-
tractors that are comparable to the targeted normal-
year supply improvements. The increased supply for
south-of-Delta Central Valley Project agricultural
water service contractors pursuant to this subsection
shall be provided from existing Central Valley
Project facilities in a manner consistent with Cali-
fornia water laws without reducing deliveries to or
otherwise adversely affecting other water suppliers
and their water users that rely on water diverted
from or tributary to the Delta without degrading the
quality of water for municipal and industrial uses,
and in a manner that is consistent with the Bureau
of Reclamation’s, municipal and industrial water
shortage policy. For purposes of application of this
section to the 2002 water year, the term ‘‘normal-
year’’ means a water year in which the Sacramento
Valley Index is within 5 percent of 7.8 million acre
feet as defined by the State Water Resource Control
Board Water Quality Control Plan 95–1WR. The
Secretary shall develop, in consultation with affected
interests, a definition of a ‘‘normal year’’ for use in
water years after the 2002 water year. The Sec-
retary shall also develop, by no later than July 1,
2002, and in consultation with affected interests, an
operations plan (with associated protocols) describ-
ing the manner in which the requirements of this
section will be achieved.
(5) BANKS
PUMPING
PLANT.—In accordance
with the record of decision, the Federal agencies
shall cooperate with the State of California to do the
following:
(A) Increase pumping limits at the Banks
Pumping Plant in accordance with the schedule
established in the record of decision, or earlier
if feasible.
(B) Manage the Environmental Water Ac-
count and the Ecosystem Restoration Program
to maximize the water supply benefits to be
provided by the increased pumping capability.
(C) Implement the other actions in section
2.2.6. of the record of decision.
(b) ENVIRONMENTAL WATER MANAGEMENT.—
(1) MANAGEMENT OF ENVIRONMENTAL WATER
ACCOUNT.—The Federal agencies, in cooperation
with the State agencies, shall manage the Environ-
mental Water Account and the Ecosystem Restora-
tion Program under the record of decision as part
of a comprehensive plan to provide assurances that
actions taken to protect species listed under section
4(c) of the Endangered Species Act of 1973 (16
U.S.C. 1533(c)), pursuant to biological opinions and
incidental take permits under that Act, will be car-
ried out in a manner that—
(A) avoids redirected impacts and water
supply and water quality impacts to the Central
Valley Project and the State Water Project; and
(B) avoids adverse effects on the water
right holders in the Bay-Delta solution area, by
not imposing any direct costs or indirect costs
on the water users in the Bay-Delta solution
area.
(2) ENVIRONMENTAL WATER ACCOUNT PRIOR-
ITIES
AND
OPERATION.—(A) The Secretary shall
give first priority, in the allocation and use of Envi-
ronmental Water Account and the Ecosystem Res-
toration Program assets actually obtained or devel-
oped, to meeting the water supply assurances set
forth in paragraph (1).
(B) If, by December 31 of any year, the Envi-
ronmental Water Account Tier 2 assets (as that
term is used in section 2.2.7 of the record of deci-
sion) water purchase targets, or their functional
equivalents, have not been met, the Federal agencies
shall continue their efforts to meet such water pur-
chase targets and shall make use of the available
Environmental Water Account assets to avoid jeop-
ardizing the continued existence of any species listed
under section 4(c) of the Endangered Species Act of
1973 (16 U.S.C. 1533(c)) in a manner consistent
with minimizing water supply and water quality im-
pacts.
(C) If the efforts to meet such water purchase
targets are unsuccessful, the maximum responsibility
of water service contractors of the State Water
Project and the Central Valley Project to provide
water for Environmental Water Account Tier 2 asset
purposes shall be the difference between the Envi-
ronmental Water Account purchase targets estab-
lished in section 2.2.7 of the record of decision and
the amount of water actually acquired.
SEC. 104. IMPLEMENTATION OF THE CALFED PROGRAM.
(a) IN GENERAL.—The Secretary and the Federal
agencies shall, subject to approvals and the availability of
appropriations under this Act, and consistent with the
goals included pursuant to paragraph (3) of section 107(a)
in annual reports under that section, carry out all actions
necessary to implement the CALFED program.
(b) BALANCED REGULATORY IMPLEMENTATION.—
The Secretary and the Federal agencies, in carrying out
their regulatory responsibilities under any Federal law,
shall not—
(1) treat one CALFED program element as an
alternative to another CALFED program element;
or
(2) consider, as an alternative to one element of
the CALFED program, implementation of any other
element of the CALFED program beyond the levels
described in the record of decision.
(c) REGULATORY COORDINATION.—The Secretary,
working with the Governor of the State of California,
shall, on or before January 1, 2003, develop a regulatory
coordination and streamlining process for the issuance of
permits and approvals required under State and Federal
law for projects under the CALFED program, to ensure
that all Federal agencies’ and State agencies’ respective
regulatory programs will be coordinated in a manner that
reduces or eliminates duplicative processes or decision-
making, thereby reducing costs and time that would other-
wise be required.
(d) PROGRAM AGENCIES DISCRETION.—This Act
shall not affect the discretion of any of the Program agen-
cies or the authority granted to any of the Program agen-
cies by any other Federal or State law.
(e) AUTHORIZATION OF APPROPRIATIONS.—
(1) IN
GENERAL.—In addition to the other
amounts authorized by this Act, there are authorized
to be appropriated for activities that implement the
CALFED program—
(A) for each of fiscal years 2002 through
2004, $200,000,000; and
(B) for each of fiscal years 2005 through
2032 such sums as may be necessary for bal-
anced completion of Stage 1 of the CALFED
program and balanced implementation of subse-
quent stages of the CALFED program.
(2) CONTINUING AVAILABILITY.—Funds appro-
priated pursuant to this subsection may remain
available until expended.
SEC. 105. COMPETITIVE GRANT PROGRAM.
(a) GENERAL AUTHORITY.—The implementing entity
shall undertake a competitive grant program to—
(1) investigate and identify opportunities for
the design and construction of demonstration and
permanent facilities, or the implementation of other
programs, to—
(A) increase water yield and water supply;
(B) maintain existing water supply;
(C) improve water quality; or
(D) improve water use efficiency and water
conservation, 
reclamation, 
desalination 
of
brackish and sea water, and recycling of waste-
water and impaired ground and surface waters;
(2) carry out design and construction of facili-
ties and implement other programs identified pursu-
ant to paragraph (1);
(3) conduct research, including desalination and
other new and innovative techniques and techniques
for water treatment, regarding sea water and the
reclamation of wastewater and impaired ground and
surface waters; and
(4) encourage watershed management actions
to increase water quality, water yield, water supply,
and groundwater recharge and storage.
(b) LIMITATIONS ON GRANTS.—
(1) LOCATION OF PROJECT.—Grants under the
program may be made only for projects carried out
in a State that contains Reclamation lands.
(2) PER STATE LIMIT.—(A) Except as provided
in subparagraph (B), of the amount available in a
fiscal year for grants under the program, not more
than 50 percent may be used for projects in a single
State.
(B) The Secretary may increase the percentage
that applies under subparagraph (A) if the Secretary
finds that, due to the lack of grant applications for
projects that the Secretary finds meet the evaluation
criteria under this section, such increase is necessary
to ensure the use of amounts available for such fis-
cal year for such grants.
(c) EVALUATION CRITERIA.—In determining what
projects described in subsection (a) are eligible for funding
under this section, the implementing entity, to the max-
imum extent possible, shall consider the following criteria:
(1) Whether a project—
(A) increases water yield and water supply;
(B) reduces or stabilizes demand on exist-
ing Federal and State water supply facilities; or
(C) increases the availability of locally and
regionally developed water supplies.
(2) Whether a project improves water quality in
a manner that results in continuous, measurable,
and significant water quality benefits, except that
any project the primary purpose of which is the
project sponsor’s compliance with the Federal Water
Pollution Control Act shall not be considered as im-
proving water quality for purposes of this para-
graph.
(3) Whether a project—
(A) serves a small, rural, or economically
disadvantaged community or Indian tribes;
(B) shows economic benefits; and
(C) is cost-effective.
(4) Whether a project restores or enhances
habitats, including those affected by or affecting
project operation, or provides water for, or otherwise
protects, Federal or State listed threatened or en-
dangered species, or facilitates consensus-based envi-
ronmental restoration programs.
(5) Whether a project helps meet existing legal
requirements, contractual water supply obligations,
Indian trust responsibilities, water rights settle-
ments, water quality control plans and department
of health requirements, Federal and State environ-
mental laws, the Federal Water Pollution Control
Act, or other obligations.
(6) Whether a project promotes and applies a
regional or watershed perspective to water resource
management or cross-boundary issues, implements
an integrated resources management approach, in-
creases water management flexibility, or forms a
partnership with other entities.
(7) Whether a project improves health and safe-
ty of the general public.
(8) Whether a project provides benefits outside
the region in which the project occurs.
(9) Whether a project provides benefits to the
agricultural community, including any adverse im-
pacts on agricultural production and agricultural
lands.
(d) CONSTRUCTION GRANTS.—No grant may be
made under this section for the construction of any project
until after—
(1) an appraisal investigation and a feasibility
study have been completed;
(2) the implementing entity has determined
that the non-Federal project sponsor is financially
capable of funding the non-Federal share of the
project’s costs; and
(3) the implementing entity has approved a
cost-sharing agreement with the non-Federal project
sponsor that commits the non-Federal project spon-
sor to funding its share of the project’s construction
costs on an annual basis, and ongoing operations
and maintenance.
(e) COST SHARING.—
(1) IN GENERAL.—Except as provided in para-
graph (2), and notwithstanding any other provision
of this Act, a grant under this section shall not ex-
ceed the lesser of $50,000,000 (June 2000 prices) or
35 percent of the total cost of the project.
(2) REDUCED NON-FEDERAL SHARE.—The im-
plementing entity may reduce the non-Federal share
of the cost of a project carried out with a grant
under this section, including (subject to the avail-
ability of amounts for such grants, and less than
$50 million) by increasing the amount of the Fed-
eral share of such costs to an amount that is greater
than the amount specified in paragraph (1), if the
implementing entity, through the Secretary, deter-
mines that—
(A) the project is for the benefit of a
small, rural, or socially disadvantaged commu-
nity or an Indian tribe; and
(B) application of paragraph (1) would re-
sult in economic hardship for such community
or Indian tribe.
(f) ANNUAL REPORT.—The implementing entity shall
provide the Congress an annual report detailing the bene-
fits gained by projects funded under this section, and ex-
penditures for each such project. The report shall include
information on each project the implementing entity has
approved for funding, including an assessment of how the
project met each of the evaluation criteria under this sec-
tion.
(g) IMPLEMENTING ENTITY DEFINED.—In this sec-
tion the term ‘‘implementing entity’’—
(1) except as provided in paragraph (2), means
the Secretary; and
(2) for purposes of grants under this section for
projects in California, means the Water Security
Board.
(h) AUTHORIZATION
OF
APPROPRIATIONS.—For
grants under this section, there are authorized to be
appropriated—
(1) $50,000,000 for fiscal year 2002; and
(2) $500,000,000 for each fiscal year there-
after.
SEC. 106. AUTHORIZATION AND APPROPRIATION PROCESS.
(a) ACTIVITIES OTHER THAN CONSTRUCTION AND
ACQUISITION.—There are authorized to be appropriated
to the Secretary such sums as are necessary to pay the
Federal share of CALFED program costs and expenses
for—
(1) prefeasibility and feasibility studies, envi-
ronmental reviews, permit acquisitions, and related
preconstruction and preland acquisition activities;
(2) administration of all CALFED program
areas, including governance, monitoring, and imple-
mentation of a comprehensive science program; and
(3) acquiring the Tier 2 and Tier 3 assets (as
those terms are defined in the record of decision) for
the Environmental Water Account.
(b) CONSTRUCTION AND ACQUISITION ACTIVITIES.—
The process for authorizing appropriations to pay the
Federal share of the costs of implementing elements of
the CALFED program, as set forth in the Record of Deci-
sion, through the construction of projects and the acquisi-
tion of lands, easements, and rights-of-way shall be as fol-
lows:
(1) Every odd-numbered year beginning in
2003 at the same time the Secretary submits the re-
port described in section 107(a), the Water Security
Board, acting through the Secretary, shall submit to
the congressional authorizing committees a report
setting forth the list of projects and other actions
that are proposed for construction or acquisition in
order to implement the CALFED program over the
next 2 fiscal years. The list shall specify which
projects and actions require authorization by the
Congress through the process set forth in this sub-
section. The Water Security Board and the Sec-
retary shall certify that implementation of the
CALFED program in the manner set forth in the
report will result in balanced implementation in all
CALFED program areas.
(2) No amounts may be appropriated for any
fiscal year after fiscal year 2003 for any project or
other action that has not been previously authorized
and that requires construction or acquisition of
lands, easements, and rights-of-way, unless—
(A) the project has been specifically au-
thorized by law; or
(B) amounts were appropriated for con-
struction or acquisition of lands, easements,
and rights-of-way for the project or action be-
fore fiscal year 2003.
(3) It is the intent of Congress that the author-
izations and appropriations for implementation of
the CALFED program shall promote and carry out
the fundamental principle that the CALFED pro-
gram components, consisting of ecosystem restora-
tion, watershed improvements, water supply im-
provements, storage, conveyance, water use effi-
ciency, water quality improvement, and levee sta-
bility, must progress together in a balanced manner.
(4) If the Congress, through the authorization
and appropriation process set forth in this section,
amends, or fails to authorize or fund, the projects
and other actions included in a report submitted
pursuant to paragraph (1), the Secretary shall, in
consultation with the Water Security Board, redeter-
mine whether implementation of the projects and
other actions, as authorized or funded, respectively,
by the Congress will maintain balanced implementa-
tion in all CALFED program areas. If the Secretary
finds that implementation of such projects, as so au-
thorized or funded by the Congress, will not main-
tain balanced implementation in all program areas,
the Secretary shall report to the Congress the find-
ing and recommend those steps needed to restore
balance to the implementation process.
(c) CONTENTS OF REPORTS.—
(1) IN
GENERAL.—For each project rec-
ommended under paragraph (1), the reports under
this subsection shall include—
(A) a project description;
(B) feasibility and operational studies;
(C) required environmental documentation;
(D) a finding of consistency with the
record of decision;
(E) a cost-benefit analysis;
(F) identification of project benefits and
beneficiaries;
(G) identification of adverse impacts, if
any, to agricultural, municipal, industrial, or
other water users;
(H) a cost and benefit allocation plan;
(I) financing and repayment plan; and
(J) in the case of a project proposed to be
funded with a grant under section 105, a cer-
tification that an agreement in accordance with
section 105(d)(3) has been signed and the
Water Security Board has determined that the
non-Federal project sponsor is financially capa-
ble of funding the project’s non-Federal share
of the project’s costs, and ongoing operations
and maintenance.
(2) RECOMMENDATIONS
REGARDING
SPECIFIC
PROJECTS.—The Water Security Board, through the
Secretary, shall include in reports under this sub-
section recommendations with respect to construc-
tion of the surface storage, groundwater storage,
and complementary actions, that would improve
water system reliability and water quality, consistent
with the dates specified in the record of decision or
such other date as may be specified by the Water
Security Board.
SEC. 107. ANNUAL REPORTS.
(a) ANNUAL WATER REPORT BY WATER SECURITY
BOARD.—Not later than February 1 of each year, the
Water Security Board, through the Secretary, shall submit
to the Congress an annual report that includes the fol-
lowing:
(1) FEDERAL FUNDING.—An accounting of all
Federal funds received (or to be received) by the
Water Security Board, including—
(A) a description of all projects and activi-
ties carried out with such funds;
(B) amounts received by the State that
have not yet been expended by the State; and
(C) cost allocation and any applicable re-
payment capacity findings for new projects.
(2) ASSESSMENT
OF
ACHIEVEMENTS.—A de-
scription and assessment of expenditures and
achievements of the CALFED program and the
competitive grant program under section 105 in the
current fiscal year, including accomplishments in
achieving—
(A) increased water yield and water sup-
ply;
(B) improved water quality, including—
(i) measures taken to improve salinity;
(ii) an assessment of progress made in
implementing drinking water sources pro-
tection projects and programs described in
the record of decision; and
(iii) identification of regionally and lo-
cally sponsored projects and programs to
improve water treatment infrastructure
and technology;
(C) enhanced environmental benefits, in-
cluding ecosystem restoration;
(D) improved water system reliability,
water use efficiency, watershed management,
water transfers, and levee protection; and
(E) benefits in all geographic regions cov-
ered within the Bay-Delta solution area.
(3) PERFORMANCE MEASURES.—A clear state-
ment of goals to achieve, under the CALFED
program—
(A) increased water supply;
(B) improved water quality;
(C) enhanced environmental benefits; and
(D) improved water system reliability,
water use efficiency, watershed management,
water transfers, and levee protection.
(b) ANNUAL
BUDGET
CROSSCUT
REPORT.—Not
later than February 1 of each year, the Director of the
Office of Management and Budget shall submit to the
Congress an interagency budget crosscut report that de-
scribes in detail—
(1) all proposed and planned Federal expendi-
tures in the next fiscal year on ecosystem restoration
and other purposes in the Bay-Delta solution area;
and
(2) all proposed and planned State of California
and Federal expenditures in the next fiscal year to
achieve the objectives identified within the CALFED
record of decision.
SEC. 108. TREATMENT OF FUNDS.
Funds authorized to be appropriated by this title to
those Federal agencies that are currently or subsequently
become participants in the CALFED program shall be in
addition to the baseline funding levels established for cur-
rently authorized projects and programs under the Central
Valley Project Improvement Act (title XXXIV of Public
Law 102–575) and other currently authorized Federal
programs for the purposes of Bay-Delta ecosystem protec-
tion and restoration and water system and water quality
improvement.
SEC. 109. LAND ACQUISITION; MANAGEMENT PLAN RE-
QUIRED FOR EXISTING LANDS.
The Federal agencies may not, for purposes of imple-
menting the record of decision, acquire any additional
lands for ecosystem restoration unless such agencies,
through the Secretary and by not later than January 1,
2003, develop a management plan for all lands acquired
by such agencies under such structure before the date of
the enactment of this Act.
SEC. 110. ENVIRONMENTAL JUSTICE.
It is the intent of the Congress that—
(1) implementation of the CALFED program
by the Federal agencies and State agencies should
fulfill the commitment to addressing environmental
justice challenges referred to in the CALFED Bay-
Delta Program Environmental Justice Workplan,
dated December 13, 2000;
(2) the Federal agencies and State agencies
should continue to collaborate to develop a com-
prehensive environmental justice workplan for the
CALFED program, including through continuation
of the functions of the CALFED-Bay Delta Envi-
ronmental Justice Workgroup; and
(3) the Water Security Board should collabo-
rate with such workgroup to ensure fulfillment of
the commitment referred to in paragraph (1).
SEC. 111. LIMITATION ON FUNDING FOR NEW PROJECTS IN
CALIFORNIA 
UNDER 
THE 
RECLAMATION
WASTEWATER AND GROUNDWATER STUDY
AND FACILITIES ACT.
(a) LIMITATION.—The Reclamation Wastewater and
Groundwater Study and Facilities Act (43 U.S.C. 390h
et seq.) is amended by adding at the end the following:
‘‘SEC. 1635. LIMITATION ON APPROPRIATIONS FOR CER-
TAIN PROJECTS IN CALIFORNIA.
‘‘Notwithstanding any other provision of law, of the
amount appropriated for a fiscal year under this title for
projects that were first authorized after the date of the
enactment of the Western Water Security Enhancement
Act, not more than 25 percent may be appropriated for
projects in California.’’.
(b) CLERICAL AMENDMENT.—The table of contents
in section 2 of the Reclamation Projects Authorization and
Adjustment Act of 1992 (43 U.S.C. prec. 371; Public Law
102–575) is amended by adding at the end the following:
‘‘Sec. 1635. Limitation on appropriations for certain projects in California.’’.
TITLE II—SMALL RECLAMATION
PROJECTS
SEC. 201. SHORT TITLE; REFERENCES.
(a) SHORT TITLE.—This title may be cited as the
‘‘Small Reclamation Water Resources Project Act of
2001’’.
(b) REFERENCES.—Except as otherwise expressly
provided, whenever in this title an amendment or repeal
is expressed in terms of an amendment to, or repeal of,
a section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the
Small Reclamation Projects Act of 1956 (43422 et seq.).
SEC. 202. AMENDMENTS TO THE SMALL RECLAMATION
PROJECTS ACT OF 1956.
(a) PURPOSE.—The first section (43 U.S.C. 422a) is
amended—
(1) by striking ‘‘under the’’ and inserting
‘‘under this Act and other’’; and
(2) by adding the following at the end: ‘‘Such
projects may include, but shall not be limited to, ir-
rigation projects. Irrigation shall not be a required
purpose for projects receiving assistance under this
Act. In providing assistance, the Secretary shall give
priority to recommended proposals that are related
to a project that is otherwise authorized under the
Federal reclamation laws and that will benefit from
assistance under this Act.’’.
(b) DEFINITIONS.—Section 2 (43 U.S.C. 422b) is
amended—
(1) in paragraph (c), by striking ‘‘a State’’ and
inserting ‘‘an Indian Tribe, a State’’;
(2) by striking paragraph (d) and inserting the
following:
‘‘(d) The term ‘project’ means any of the following:
‘‘(1) A multipurpose water resource develop-
ment carried out by a non-Federal organization in-
volving significant conservation of water, energy, and
the environment.
‘‘(2) The rehabilitation, betterment, or retrofit
of any existing Federal or non-Federal water infra-
structure for purposes of complying with law and
regulations.
‘‘(3) An activity described in paragraph (1) or
(2) that—
‘‘(A) is carried out by a non-Federal orga-
nization under the Federal reclamation laws in
one or more of the 17 western reclamation
States, Hawaii, Alaska, the Commonwealth of
Puerto Rico, Guam, American Samoa, the Com-
monwealth of the Northern Mariana Islands,
the Virgin Islands, and the Trust Territory of
the Pacific Islands; and
‘‘(B) in the case of an activity proposed for
any project that is authorized under the rec-
lamation laws immediately before the enactment
of the Small Reclamation Water Resources
Project Act of 2001, is determined by the Sec-
retary to be consistent with the purposes of
that project before that date of enactment.’’;
and
(3) by striking paragraph (f) and inserting the
following:
‘‘(f) The term ‘water quality improvements’ means
operational measures and physical features associated
with—
‘‘(1) the reclamation and reuse of irrigation
drainage or municipal and industrial return flows,
including wastewater flows; or
‘‘(2) the reclamation, or control, of brackish,
toxic, or impaired waters for beneficial reuse or pro-
tection of other related water, land, or environmental
resources.’’.
(c) MODIFICATION
OF LOAN
AND GRANT PRO-
GRAMS.—The Small Reclamation Projects Act of 1956 is
amended—
(1) by striking sections 3 through 8 (43 U.S.C.
422c–422h); and
(2) by inserting after section 2 (43 U.S.C.
422b) the following:
‘‘TITLE 
I—STATE 
AND 
LOCAL
PARTICIPATION IN RECLAMA-
TION PROJECTS
‘‘SEC. 101. LOAN, GRANT, AND LOAN GUARANTEE PRO-
GRAM.
‘‘There is hereby established a program within the
Bureau of Reclamation, under which the Secretary may
make loans, grants, and loan guarantees to any organiza-
tion to carry out a project.
‘‘SEC. 102. PROPOSAL CONTENTS AND REQUIREMENTS.
‘‘(a) IN GENERAL.—Any organization seeking assist-
ance under this title shall submit a proposal to the Sec-
retary in such form and manner as the Secretary may pre-
scribe. Any proposal for a project submitted under this
title shall set forth a plan and estimated cost in detail
comparable to those included in preauthorization reports
required for a project under the Federal reclamation laws.
‘‘(b) LANDS
AND WATERS.—Each proposal sub-
mitted under this title shall include a statement of finan-
cial capability and legal authority, and a resolution from
the governing board of the organization showing that the
organization seeking assistance—
‘‘(1) holds or can acquire all lands and interests
in land (except public and other lands and interest
in land owned by the United States that are within
the administrative jurisdiction of the Secretary and
subject to disposition by the Secretary) to complete
the project;
‘‘(2) holds or can acquire all rights, pursuant to
applicable State law, to the use of water necessary
for the successful construction, operation, and main-
tenance of the project;
‘‘(3) is willing to finance, and capable of financ-
ing, the non-Federal portion of the costs of the
project, including all costs of acquiring lands, inter-
ests in land, and rights to the use of water, except
as provided in section 105(b)(2); and
‘‘(4) has the legal authority and responsibility
under State law to carry out the project.
‘‘SEC. 103. FEDERAL SHARE AND PROJECT SPONSOR SHARE
OF COSTS.
‘‘(a) IN GENERAL.—The Secretary shall require each
organization receiving assistance under this title to con-
tribute toward the cost of the project (other than by loan
or grant of Federal funds) not less than 25 percent of
the costs of the project. The Secretary shall credit toward
the non-Federal cost share that amount—
‘‘(1) the costs paid by the organization for in-
vestigations, surveys, engineering, administration,
and other services necessary for the preparation of
proposals and plans for the proposed project that
are required by the Secretary;
‘‘(2) the value of lands, rights-of-way, and
water rights acquisition required for the proposed
project that are provided by the organization;
‘‘(3) amounts spent by the organization for con-
struction or acquisition of facilities for the proposed
project prior to project approval; and
‘‘(4) the fee required by section 403.
‘‘(b) PREVENTION OF LOSS AND DAMAGE TO FISH
AND WILDLIFE.—The costs of measures to prevent loss
of, and damage to, existing fish and wildlife resources as
the result of a project for which assistance is provided
under this title shall be considered project costs and, for
purposes of reimbursement, shall be allocated as may be
appropriate among project functions.
‘‘(c) MAXIMUM ALLOWABLE FEDERAL SHARE.—The
maximum allowable Federal share per project shall be
$50,000,000 (January 2001 dollars).
‘‘(d) INCREASE IN AMOUNT.—To compensate for in-
creases in construction costs due to price escalation, and
subject to subsection (c), the Secretary may increase the
amount of a loan or grant, or both, under this title for
a project at any time prior to the completion of construc-
tion of the project, using the Bureau of Reclamation’s
composite construction cost trends index.
‘‘SEC. 104. APPROVAL OR DISAPPROVAL OF PROJECTS.
‘‘(a) IN GENERAL.—The Secretary shall determine
whether a proposal under this title is financially feasible
and constitutes a reasonable risk, and either approve or
disapprove the proposal, by not later than the later of—
‘‘(1) one year after the date the proposal is sub-
mitted to the Secretary; or
‘‘(2) the date of the completion of the appro-
priate documentation under the National Environ-
mental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
‘‘(b) TRANSMITTAL TO CONGRESS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the Secretary shall promptly transmit any approved
proposals to the Congress with a brief statement of
the project purposes and funding requirements.
‘‘(2) COMPLETION OF DOCUMENTATION.—The
documentation required under the National Environ-
mental Policy Act of 1969 (42 U.S.C. 4321 et seq.)
for a proposed project must be completed before the
Secretary transmits the proposal to the Congress.
‘‘SEC. 105. CONTRACT TERMS AND CONDITIONS.
‘‘(a) IN GENERAL.—Upon approval of any project
proposal submitted under this title by an organization, the
Secretary shall negotiate with the organization a contract
establishing the terms under which assistance shall be pro-
vided under this title.
‘‘(b) CONTRACT TERMS.—The contract shall include
the following:
‘‘(1) The maximum amount of any grant, which
shall not exceed 50 percent of the maximum allow-
able Federal share of the costs of the project under
section 103.
‘‘(2) The time and method of making any grant
or loan available to the organization.
‘‘(3) Such terms and conditions as the Sec-
retary considers necessary or proper to provide as-
surance of, and security for, prompt repayment of
any loan and to ensure achievement of the purposes
for which the loan was made.
‘‘(4) A plan for repayment by the organization
of any loan within 25 years, except that the organi-
zation shall have the right to prepay the loan or any
component thereof without penalty.
‘‘(5) For any loan, payment of interest at a
rate established by the Secretary of the Treasury at
the beginning of the fiscal year in which the contract
is executed, that shall be based on the average mar-
ket yield on outstanding marketable obligations of
the United States with periods of maturity com-
parable to the applicable repayment period of the
loan.
‘‘(c) LOANS PROJECTS BY INDIAN TRIBES.—
‘‘(1) IN GENERAL.—For any project undertaken
by an Indian tribe with assistance under this title,
the Secretary shall—
‘‘(A) determine, based on the findings in
the proposal under section 102, the reimburs-
able and nonreimbursable costs for the project
constructed under this Act;
‘‘(B) apportion those costs in accordance
with the benefits received; and
‘‘(C) allocate the reimbursable costs to the
project beneficiaries.
‘‘(2) LEAVITT ACT.—The Act of July 1, 1932
(chapter 369; 25 U.S.C. 386a), popularly known as
the ‘Leavitt Act’, shall not apply to loans made
under this Act.
‘‘TITLE II—PARTNERSHIP
PROGRAM
‘‘SEC. 201. ESTABLISHMENT OF PARTNERSHIP PROGRAM.
‘‘(a) PROGRAM.—There is hereby established within
the Bureau of Reclamation a small grant and loan pro-
gram to be known as the Small Reclamation Water Re-
sources Management Partnership Program, to be carried
out under this title. The purpose of this program shall
be to implement projects that can be performed—
‘‘(1) by the recipient organization’s workforce
or contractors,
‘‘(2) with streamlined documentation, and
‘‘(3) in a period of 18 months or less.
‘‘(b) GRANTS.—Grants under this title shall not ex-
ceed $5,000,000 for any one project under such program.
The Secretary shall require the recipient organization to
provide matching funds in an amount equal to 50 percent
of the amount of the grant.
‘‘(c) LOANS.—Loans under this title shall not exceed
$5,000,000 per project, and shall be subject to cost shar-
ing in the same manner as provided in title I. The contract
for each loan under this title shall require payment of in-
terest at a rate established by the Secretary of the Treas-
ury in the same manner as provided in section 105(b)(5)
for loans under title II.
‘‘SEC. 202. REPAYMENT OF LOANS.
‘‘Each loan made under this title shall be repaid with-
in the 5-year period beginning on the date the Secretary
certifies that work to be carried out with the loan is com-
pleted.
‘‘SEC. 203. ELIGIBLE ACTIVITIES.
‘‘(a) IN GENERAL.—The following types of activities
shall be eligible for grants or loans under this title:
‘‘(1) Water conservation.
‘‘(2) Water quality improvement projects.
‘‘(3) Water management for urban landscapes.
‘‘(4) Drought assistance.
‘‘(5) Fish and wildlife improvements.
‘‘(6) Public safety improvements.
‘‘(7) Water supply, including water production,
conveyance, conservation, and management.
‘‘(b) ADDITIONAL ACTIVITIES.—The Secretary may
add to the list of eligible activities under subsection (a)
as the Secretary considers appropriate, except that any
such addition shall not take effect until 60 days after the
Secretary publishes a notice of the proposed addition in
the Federal Register, and has notified the Committee on
Resources of the House of Representatives and the Com-
mittee on Energy and Natural Resources of the Senate
in writing of the proposed addition and the reasons there-
fore.
‘‘SEC. 204. APPLICATION PROCESS.
‘‘(a) NOTICE OF INTENT.—Each organization seek-
ing a grant or loan under this title shall submit a notice
of intent to the Secretary by April 1 of each year outlining
the proposed project and the public benefits thereof. With-
in two months, the Secretary shall provide a written re-
sponse to the organization, expressing either the Bureau
of Reclamation’s interest or disinterest in participating in
the project.
‘‘(b) APPLICATION.—30 days after receipt of a re-
sponse under subsection (a) expressing the Bureau of Rec-
lamation’s interest in participating in a project, the orga-
nization may submit to the Secretary an appropriate loan
or grant application, giving details of the project and the
anticipated public benefits.
‘‘(c) CONTENTS.—The application for any project
proposal under this title shall include each of the fol-
lowing:
‘‘(1) A resolution by the board of directors of
the organization stating—
‘‘(A) the total estimated project cost;
‘‘(B) the amount of the grant or loan re-
quested;
‘‘(C) the amount of the non-Federal con-
tribution for any grant;
‘‘(D) the organization’s ability to finance
and construct the project; and
‘‘(E) the project objectives.
‘‘(2) A summary of the proposal.
‘‘(3) A brief description of the anticipated ef-
fects of the project on the environment.
‘‘(4) Evidence that the organization has all
lands and water rights needed for the project, or can
obtain them and has legal authority and responsi-
bility under, State law to carry out the proposed
project.
‘‘(5) A project plan, including a general map
showing the location of proposed physical features,
conceptual engineering drawings of major and typ-
ical structures, and general standards for design.
‘‘(6) A construction schedule, with dates and a
schedule of funding requirements under this title, in
sufficient detail to provide an analysis of the pro-
posed construction program.
‘‘(7) A description of the proposed Federal
funding for the project and of the non-Federal fund-
ing for the project.
‘‘(d) COSTS.—The cost of any investigations and
preparation of any environmental documentation for a
project carried out with assistance under this title shall
be borne by the project applicant, and shall be credited
against the non-Federal cost share.
‘‘(e) ANNUAL LISTING.—The Secretary shall include
in the annual budget justification for the Bureau of Rec-
lamation, a listing of the activities and total funding re-
quired for work committed to under this title.
‘‘SEC. 205. TERMS AND CONDITIONS OF PROJECT WORK.
‘‘The Secretary shall examine each project proposal
submitted under this title to determine if the project can
reasonably be expected to accomplish its purpose, and ap-
prove or disapprove such proposal by September 1 of the
year in which the application for assistance under this title
is submitted. If the Secretary approves the proposal, and
subject to the availability of appropriations, the Secretary
shall provide funding within 60 days after such approval
for work scheduled for the next fiscal year.
‘‘SEC. 206. LIMITATION ON PROJECT PROPOSALS.
‘‘Only one proposal may be submitted under this title
by an applicant in any 5-year period.
‘‘TITLE III—LOAN GUARANTEES
‘‘SEC. 301. ESTABLISHMENT OF LOAN GUARANTEE PRO-
GRAM.
‘‘There is hereby established within the Bureau of
Reclamation a demonstration program to guarantee loans
for projects receiving, or eligible to receive, loans or grants
under title I or II of this Act.
‘‘SEC. 302. PROGRAM REQUIREMENTS.
‘‘(a) IN GENERAL.—The Secretary may provide sup-
port under the demonstration program to organizations
through the provision of loan guarantees for the purposes
for which assistance is authorized under titles I and II,
under such terms and conditions as are specified in this
section. Any proposal for a project submitted under this
title shall set forth a plan and estimated costs, in detail,
comparable to those required to be included in
preauthorization reports required for a project under the
Federal reclamation laws.
‘‘(b) SELECTION
OF RECIPIENTS.—The Secretary
shall adopt and use competitive procedures in the selection
of organizations to receive loan guarantees under this sec-
tion. In selecting any organization to receive a loan guar-
antee under this section, the Secretary shall consider, at
a minimum, the following:
‘‘(1) The extent to which the loan guarantee
would support new water supplies or more efficient
use of existing supplies.
‘‘(2) The repayment period of the guaranteed
loan.
‘‘(3) The extent to which the loan guarantee
would provide for a project of wide public purpose.
‘‘(4) Whether the loan guarantee would help the
organization comply with a Federal or State environ-
mental statute or regulation.
‘‘(f) REPORTING.—Reporting and documentation re-
quirements under titles I and II shall similarly apply to
loan guarantees under this title.
‘‘(g) STATE LAW.—For purposes of this Act, when
any bonds are issued by an organization to help finance
a project for which the organization is also receiving a loan
guarantee under this section, such bonds shall not be
treated as affecting the tax-exempt status of such bonds
under applicable State law.
‘‘(h) FULL FAITH AND CREDIT.—Any loan guarantee
issued pursuant to this section shall constitute an obliga-
tion, in accordance with the terms of such guarantee, of
the United States Government, and the full faith and cred-
it of the United States is hereby pledged to the full per-
formance of the obligations.
‘‘(i) REPORT.—At the end of the third fiscal year
after the enactment of this subsection, the Secretary shall
submit a report to the Congress on the beneficial use and
suggested improvements for use of loan guarantees under
this title as a mechanism for project construction.
‘‘SEC. 303. SUNSET.
‘‘No loan guarantee may be issued under this title
in any fiscal year after the expiration of 10 full fiscal years
after initial funding of projects under the amendments
made by the Small Reclamation Water Resources Project
Act of 2001.
‘‘TITLE IV—GENERAL
PROVISIONS
‘‘SEC. 401. PROPOSAL FEE.
‘‘The Secretary shall assess and collect a fee to defray
the cost of examining each proposal for a loan, grant, or
loan guarantee under this Act. The amount of the fee shall
be equal to $5,000 or 1⁄10 of 1 percent of the Federal share
of the costs of the proposed project, whichever is greater.
The Secretary shall require that 50 percent of the fee shall
accompany the application and the remainder shall be due
only upon approval of the project by the Secretary.
‘‘SEC. 402. MISCELLANEOUS PROVISIONS.
‘‘(a) TITLE.—Title to all project works and facilities
constructed with assistance under this Act shall remain
in the name of the organization.
‘‘(b) COMBINED LOANS, GRANTS, AND LOAN GUAR-
ANTEES.—A project sponsor shall be eligible for a loan,
grant, loan guarantee, or combination thereof for a project
proposal under this Act. An applicant may submit one pro-
posal to be carried out with assistance under more than
one title under this Act. No organization shall be eligible
for an additional loan, grant, loan guarantee, or any com-
bination thereof for the same project that has previously
received approval for a loan, grant, or loan guarantee
under this Act within the prior five fiscal years.
‘‘(c) PLANNING, CONSTRUCTION, OPERATION, AND
MAINTENANCE.—The United States shall not be required
to provide planning, construction, operation, and mainte-
nance of any project receiving a loan, grant or loan guar-
antee under this Act.
‘‘(d) STATE WATER LAW.—Any project assisted
under this Act shall be carried out in accordance with ap-
plicable State water law.’’.
(d) CONFORMING AMENDMENTS.—
(1) Sections 9 through 13 of the Small Rec-
lamation Projects Act of 1956 (43 U.S.C. 422i–
422k–1) are redesignated as sections 403 through
407, respectively.
(2) Section 404 of such Act, as redesignated by
paragraph (1) of this subsection, is amended as fol-
lows:
(A) By striking ‘‘section 3’’ and inserting
‘‘title I’’.
(B) By striking ‘‘effective October 1,
1986.’’ and inserting ‘‘for any fiscal year’’.
(C) By striking ‘‘for loans and grants pur-
suant to this Act’’ and inserting ‘‘for loans and
grants pursuant to title I’’.
(D) By striking ‘‘five years after the date
of enactment of this Act’’ and inserting ‘‘ten
years after the date of enactment of the Small
Reclamation Water Resources Project Act of
2001’’.
(E) By striking ‘‘section 4(c)’’ and insert-
ing ‘‘title I’’.
SEC. 203. ADDITIONAL APPROPRIATIONS.
Section 404 of the Small Reclamation Projects Act
of 1956 (43 U.S.C. 422j), as redesignated by section
202(d)(1) of this Act, is further amended—
(1) by striking ‘‘such sums’’ and all that follows
through ‘‘That the Secretary’’ and inserting ‘‘to
carry out this Act $1,300,000,000 for fiscal years
after fiscal year 2001, of which $900,000,000 may
be appropriated to carry out title I and to complete
ongoing 
projects 
under 
Public 
Law 
84–984,
$300,000,000 may be appropriated to carry out title
II, and $100,000,000 may be appropriated to carry
out title III. Of funds authorized under this Act, not
more than 20 percent shall be used for projects to
be carried out by Indian tribes or in economically
disadvantaged communities. The Secretary’’; and
(2) by striking ‘‘any single State’’ and all that
follows through ‘‘the Secretary is authorized to
waive’’ and inserting ‘‘in any single State. Funds ob-
ligated or expended for projects by Indian tribes
shall not be considered for purposes of the preceding
sentence. The Secretary may waive’’.
SEC. 204. GUIDELINES.
Within 180 days after the date of enactment of this
Act, the Secretary of the Interior shall complete and pub-
lish such administrative guidelines as may be necessary
to carry out the amendments made by this title.
SEC. 205. EFFECTIVE DATE.
The amendments made by this title shall take effect
on the date of enactment of this Act. Nothing in this title
or in any amendment made by this title shall affect any
loan or grant that has been approved before the date of
enactment of this Act.
SEC. 206. LIMITATION.
Activities funded under this title shall not be consid-
ered a supplemental or additional benefit under the Act
of June 17, 1902 (82 Stat. 388), and all Acts amendatory
thereof or supplementary thereto.
TITLE III—MISCELLANEOUS
SEC. 301. SECRETARIAL ACTIONS TO REDUCE CALIFOR-
NIA’S USE OF COLORADO RIVER WATER.
(a) REVIEW.—The Secretary shall review programs
that are administered by the Department of the Interior
in furtherance of the goal of reducing California’s use of
Colorado River water to its basic annual apportionment,
in a manner consistent with amounts and deadlines estab-
lished in the Interim Surplus Guidelines.
(b) UTILIZATION OF EXISTING PROGRAMS AND AU-
THORITIES.—The Secretary shall utilize existing programs
and authorities in furtherance of the goal of reducing Cali-
fornia’s current use of Colorado River water.
(c) IDENTIFICATION OF STATUS OF ONGOING EF-
FORTS.—In preparing the operating plans described in
section 602(b) of the Colorado River Basin Project Act
of 1968, beginning with the operating plan for 2003, the
Secretary shall specifically identify and describe the status
of ongoing efforts to reduce California’s current use of
Colorado River water.
(d) FUNDING TO ADDRESS IMPACTS OF QSA ON
SALTON SEA.—There is authorized to be appropriated to
the Secretary $60,000,000 for activities to address envi-
ronmental impacts on the Salton Sea associated with im-
plementation of the Quantification Settlement Agreement.
SEC. 302. WILLARD BAY RESERVOIR ENLARGEMENT STUDY.
(a) AUTHORIZATION OF FEASIBILITY STUDY.—Pur-
suant to the reclamation laws, the Secretary, through the
Bureau of Reclamation, may conduct a feasibility study
on raising the height of Arthur V. Watkins Dam and