I 
113TH CONGRESS 
2D SESSION 
H. R. 5363 
To establish a WaterSense program, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 31, 2014 
Mrs. NAPOLITANO (for herself, Ms. ROYBAL-ALLARD, Ms. CHU, Mr. DEFA-
ZIO, Mrs. NEGRETE MCLEOD, Mr. GARAMENDI, Mr. CA´RDENAS, Mr. 
LOWENTHAL, Ms. ESHOO, Ms. HAHN, Mrs. KIRKPATRICK, and Ms. LEE 
of California) introduced the following bill; which was referred to the 
Committee on Natural Resources, and in addition to the Committees on 
Transportation and Infrastructure, Energy and Commerce, and Science, 
Space, and Technology, for a period to be subsequently determined by the 
Speaker, in each case for consideration of such provisions as fall within 
the jurisdiction of the committee concerned 
A BILL 
To establish a WaterSense program, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Water in the 21st Century Act’’ or ‘‘W21’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Definition of Administrator. 
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TITLE I—CONSERVATION AND EFFICIENCY 
Sec. 101. Water efficiency, conservation, and adaptation. 
TITLE II—RECYCLING, STORAGE, AND INTEGRATED WATER 
MANAGEMENT 
Sec. 201. Definitions. 
Subtitle A—Innovative Financing 
Sec. 211. Purposes. 
Sec. 212. Authority to provide assistance. 
Sec. 213. Applications. 
Sec. 214. Eligibility for assistance. 
Sec. 215. Determination of eligibility and project selection. 
Sec. 216. Secured loans. 
Sec. 217. Program administration. 
Sec. 218. State and local permits. 
Sec. 219. Regulations. 
Sec. 220. Funding. 
Sec. 221. Report to Congress. 
Subtitle B—Integrated Regional Water Management, Reclamation, and 
Recycling Projects 
Sec. 231. Water storage projects. 
Sec. 232. Authorization of appropriations. 
Subtitle C—Title Transfers 
Sec. 241. Authorization to transfer title. 
TITLE III—INNOVATION THROUGH RESEARCH, DATA, AND 
TECHNOLOGY 
Sec. 301. Open water data system. 
Sec. 302. Water Resources Research Act amendments. 
Sec. 303. Reauthorization of Water Desalination Act of 1996. 
Sec. 304. Review of reservoir operations. 
TITLE IV—DROUGHT PREPAREDNESS AND RESILIENCE 
Sec. 401. National drought resilience guidelines. 
Sec. 402. Drought preparedness for fisheries. 
SEC. 2. DEFINITION OF ADMINISTRATOR. 
In this Act, the term ‘‘Administrator’’ means the Ad-
ministrator of the Environmental Protection Agency. 
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TITLE I—CONSERVATION AND 
EFFICIENCY 
SEC. 101. WATER EFFICIENCY, CONSERVATION, AND ADAP-
TATION. 
(a) WATERSENSE.— 
(1) IN GENERAL.—There is established within 
the Environmental Protection Agency a WaterSense 
program to identify and promote water efficient 
products, buildings, landscapes, facilities, processes, 
and services so as— 
(A) to reduce water use; 
(B) to reduce the strain on water, waste-
water, and stormwater infrastructure; 
(C) to conserve energy used to pump, heat, 
transport, and treat water; and 
(D) to preserve water resources for future 
generations, through voluntary labeling of, or 
other forms of communications about, products, 
buildings, landscapes, facilities, processes, and 
services that meet the highest water efficiency 
and performance criteria. 
(2) DUTIES.—The Administrator shall— 
(A) establish— 
(i) a WaterSense label to be used for 
certain items; and 
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(ii) the procedure by which an item 
may be certified to display the WaterSense 
label; 
(B) promote WaterSense-labeled products, 
buildings, landscapes, facilities, processes, and 
services in the marketplace as the preferred 
technologies and services for— 
(i) reducing water use; and 
(ii) ensuring product and service per-
formance; 
(C) work to enhance public awareness of 
the WaterSense label through public outreach, 
education, and other means; 
(D) 
preserve 
the 
integrity 
of 
the 
WaterSense label by— 
(i) establishing and maintaining per-
formance criteria so that products, build-
ings, landscapes, facilities, processes, and 
services labeled with the WaterSense label 
perform as well or better than less water- 
efficient counterparts; 
(ii) overseeing WaterSense certifi-
cations made by third parties; 
(iii) conducting reviews of the use of 
the WaterSense label in the marketplace 
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and taking corrective action in any case in 
which misuse of the label is identified; and 
(iv) carrying out such other measures 
as the Administrator determines to be ap-
propriate; 
(E) regularly review and, if appropriate, 
update WaterSense criteria for categories of 
products, buildings, landscapes, facilities, proc-
esses, and services, at least once every 6 years; 
(F) to the maximum extent practicable, 
regularly estimate and make available to the 
public the production and relative market 
shares of, and the savings of water, energy, and 
capital 
costs 
of 
water, 
wastewater, 
and 
stormwater infrastructure attributable to the 
use of WaterSense-labeled products, buildings, 
landscapes, facilities, processes, and services, at 
least annually; 
(G) solicit comments from interested par-
ties and the public prior to establishing or re-
vising a WaterSense category, specification, in-
stallation criterion, or other criterion; 
(H) provide reasonable notice to interested 
parties and the public of any changes (including 
effective dates), on the adoption of a new or re-
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vised category, specification, installation cri-
terion, or other criterion, along with— 
(i) an explanation of the changes; and 
(ii) as appropriate, responses to com-
ments submitted by interested parties and 
the public; 
(I) provide appropriate lead time (as deter-
mined by the Administrator) prior to the appli-
cable effective date for a new or significant revi-
sion to a category, specification, installation cri-
terion, or other criterion, taking into account 
the timing requirements of the manufacturing, 
marketing, training, and distribution process 
for the specific product, building and landscape, 
or service category addressed; 
(J) identify and, if appropriate, implement 
other voluntary approaches in commercial, insti-
tutional, residential, industrial, and municipal 
sectors to encourage recycling and reuse tech-
nologies to improve water efficiency or lower 
water use; and 
(K) 
if 
appropriate, 
authorize 
the 
WaterSense label for use on products that are 
labeled by the Energy Star program imple-
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mented by the Administrator and the Secretary 
of Energy. 
(3) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated to carry out 
this section— 
(A) $5,000,000 for fiscal year 2015; 
(B) $10,000,000 for fiscal year 2016; 
(C) $15,000,000 for fiscal year 2017; 
(D) $20,000,000 for fiscal year 2018; and 
(E) for each subsequent fiscal year, the ap-
plicable amount for the preceding fiscal year, as 
adjusted to reflect changes for the 12-month 
period ending the preceding November 30 in 
the Consumer Price Index for All Urban Con-
sumers published by the Bureau of Labor Sta-
tistics of the Department of Labor. 
(b) STATE RESIDENTIAL WATER EFFICIENCY AND 
CONSERVATION INCENTIVES PROGRAM.— 
(1) DEFINITIONS.—In this subsection: 
(A) ELIGIBLE ENTITY.—The term ‘‘eligible 
entity’’ means a State government, local or 
county government, tribal government, waste-
water or sewerage utility, municipal water au-
thority, energy utility, water utility, or non-
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profit organization that meets the requirements 
of paragraph (2). 
(B) INCENTIVE PROGRAM.—The term ‘‘in-
centive program’’ means a program for admin-
istering financial incentives for consumer pur-
chase and installation of water-efficient prod-
ucts, buildings (including new water-efficient 
homes), landscapes, processes, or services de-
scribed in paragraph (2)(A). 
(C) 
RESIDENTIAL
WATER-EFFICIENT 
PRODUCT, BUILDING, LANDSCAPE, PROCESS, OR 
SERVICE.— 
(i) IN GENERAL.—The term ‘‘residen-
tial water-efficient product, building, land-
scape, process, or service’’ means a prod-
uct, building, landscape, process, or service 
for a residence or its landscape that is 
rated for water efficiency and perform-
ance— 
(I) by the WaterSense program; 
or 
(II) if a WaterSense specification 
does not exist, by the Energy Star 
program or an incentive program ap-
proved by the Administrator. 
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(XII) composting solutions com-
plementary to water use and water 
quality; and 
(XIII) other water-efficient prod-
ucts, services, processes, or behavioral 
water efficiency solutions that address 
the objectives of the WaterSense pro-
gram. 
(D) WATERSENSE
PROGRAM.—The term 
‘‘WaterSense program’’ means the program es-
tablished by subsection (a). 
(2) ELIGIBLE ENTITIES.—An entity shall be eli-
gible to receive an allocation under paragraph (3) if 
the entity— 
(A) establishes (or has established) an in-
centive program to provide financial incentives 
to residential consumers for the purchase of 
residential water-efficient products, buildings, 
landscapes, processes, or services; 
(B) submits an application for the alloca-
tion at such time, in such form, and containing 
such information as the Administrator may re-
quire; and 
(C) provides assurances satisfactory to the 
Administrator that the entity will use the allo-
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cation to supplement, but not supplant, non- 
Federal funds made available to carry out the 
incentive program. 
(3) AMOUNT OF ALLOCATIONS.—For each fiscal 
year, the Administrator shall determine the amount 
to allocate to each eligible entity to carry out para-
graph (4), taking into consideration— 
(A) the population served by the eligible 
entity during the most recent calendar year for 
which data are available; 
(B) the targeted population of the incen-
tive program of the eligible entity, such as gen-
eral households, low-income households, or first- 
time homeowners, and the probable effective-
ness of the incentive program for that popu-
lation; 
(C) for existing programs, the effectiveness 
of the program in encouraging the adoption of 
water-efficient products, buildings, landscapes, 
facilities, processes, and services; 
(D) any allocation to the eligible entity for 
a preceding fiscal year that remains unused; 
and 
(E) the per capita water demand of the 
population served by the eligible entity during 
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the most recent calendar year for which data 
are available and the availability or reliability of 
water supplies to the eligible entity. 
(4) USE OF ALLOCATED FUNDS.—Funds allo-
cated to an eligible entity under paragraph (3) may 
be used to pay up to 50 percent of the cost of estab-
lishing and carrying out an incentive program. 
(5) ISSUANCE OF INCENTIVES.— 
(A) IN
GENERAL.—Financial incentives 
may be provided to residential consumers that 
meet the requirements of the applicable incen-
tive program. 
(B) MANNER
OF
ISSUANCE.—An eligible 
entity may— 
(i) issue all financial incentives di-
rectly to residential consumers; or 
(ii) with approval of the Adminis-
trator, delegate all or part of financial in-
centive administration to other organiza-
tions, including local governments, munic-
ipal water authorities, water utilities, and 
nonprofit organizations. 
(C) AMOUNT.—The amount of a financial 
incentive shall be determined by the eligible en-
tity, taking into consideration— 
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(i) the amount of any Federal or 
State tax incentive available for the pur-
chase of the residential water-efficient 
product or service; 
(ii) the amount necessary to change 
consumer behavior to purchase water-effi-
cient products and services; and 
(iii) the consumer expenditures for on-
site preparation, assembly, and original in-
stallation of the product. 
(6) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated to the Ad-
ministrator to carry out this subsection— 
(A) $100,000,000 for fiscal year 2015; 
(B) $150,000,000 for fiscal year 2016; 
(C) $200,000,000 for fiscal year 2017; 
(D) $150,000,000 for fiscal year 2018; 
(E) $100,000,000 for fiscal year 2019; and 
(F) for each subsequent fiscal year, the ap-
plicable amount for the preceding fiscal year, as 
adjusted to reflect changes for the 12-month 
period ending the preceding November 30 in 
the Consumer Price Index for All Urban Con-
sumers published by the Bureau of Labor Sta-
tistics of the Department of Labor. 
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(c) WATER SYSTEM MITIGATION AND ADAPTATION 
GRANTS.— 
(1) DEFINITIONS.—In this subsection: 
(A) OWNER OR OPERATOR.— 
(i) IN GENERAL.—The term ‘‘owner 
or operator’’ means a person (including a 
regional, State, local, municipal, or private 
entity) that owns or operates a water sys-
tem. 
(ii) INCLUSION.—The term ‘‘owner or 
operator’’ includes a non-Federal entity 
that has operational responsibilities for a 
federally owned water system. 
(B) WATER
SYSTEM.—The term ‘‘water 
system’’ means— 
(i) a community water system (as de-
fined in section 1401 of the Safe Drinking 
Water Act (42 U.S.C. 300f)); 
(ii) a publicly owned treatment works 
(as defined in section 212 of the Federal 
Water Pollution Control Act (33 U.S.C. 
1292)), including a municipal separate 
storm sewer system; 
(iii) a decentralized wastewater treat-
ment system for domestic sewage; 
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(iv) a groundwater storage and re-
plenishment system; or 
(v) a system for transport and deliv-
ery of water for irrigation or conservation. 
(2) GRANTS.—Beginning in fiscal year 2015, 
the Administrator shall make grants to owners or 
operators of water systems to address any ongoing 
or forecasted (based on the best available research 
and data) climate-related impact on the water qual-
ity or quantity of a region of the United States, for 
the purposes of mitigating or adapting to the im-
pacts of climate change. 
(3) ELIGIBLE USES.—In carrying out this sub-
section, the Administrator shall make grants to as-
sist in the planning, design, construction, implemen-
tation, or maintenance of any program or project to 
increase the resilience of a water system to climate 
change by— 
(A) conserving water or enhancing water 
use efficiency, including through the use of 
water metering to measure the effectiveness of 
a water efficiency program; 
(B) modifying or relocating existing water 
system infrastructure made or projected to be 
made inoperable by climate change impacts; 
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(H) modifying or replacing existing sys-
tems or constructing new systems for existing 
communities or land currently in agricultural 
production to improve water availability, stor-
age, or conveyance in a manner that— 
(i) promotes more efficient use of 
available water supplies; and 
(ii) 
does 
not 
further 
exacerbate 
stresses on ecosystems; 
(I) supporting practices and projects, such 
as improved irrigation systems, water banking 
and other forms of water transactions, ground-
water recharge, stormwater capture, and reuse 
or recycling of drainage water, to improve water 
quality or promote more efficient water use, in-
cluding on land currently in agricultural pro-
duction; 
(J) conducting and completing studies or 
assessments to project how climate change may 
impact the future operations and sustainability 
of water systems; 
(K) developing and implementing mitiga-
tion measures to rapidly address impacts on 
water systems most susceptible to abrupt cli-
mate change, including those in the Colorado 
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River Basin and coastal regions at risk from 
rising sea levels; or 
(L) funding of transactions costs and cred-
it enhancement for pay-for-performance-based 
public-private initiatives intended to advance 
the eligible uses of the program or project. 
(4) APPLICATION.—To be eligible to receive a 
grant from the Administrator under paragraph (2), 
the owner or operator of a water system shall submit 
to the Administrator an application that— 
(A) includes a proposal of the program, 
strategy, or infrastructure improvement to be 
planned, designed, constructed, implemented, or 
maintained by the water system; 
(B) cites the best available research or 
data that demonstrates— 
(i) the risk to the water resources or 
infrastructure of the water system as a re-
sult of ongoing or forecasted changes to 
the hydrological system brought about by 
factors arising from climate change, in-
cluding rising sea levels and changes in 
precipitation levels; and 
(ii) how the proposed program, strat-
egy, or infrastructure improvement would 
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perform under the anticipated climate con-
ditions; 
(C) explains how the proposed program, 
strategy, or infrastructure improvement is ex-
pected to enhance the resiliency of the water 
system, including source water protection for 
community water systems, to these risks or re-
duce the direct or indirect greenhouse gas emis-
sions of the water system; and 
(D) demonstrates that the program, strat-
egy, or infrastructure improvement is— 
(i) consistent with any approved State 
and tribal climate adaptation plan; and 
(ii) not inconsistent with any ap-
proved natural resources plan. 
(5) COMPETITIVE PROCESS.— 
(A) IN GENERAL.—Each calendar year, the 
Administrator shall conduct a competitive proc-
ess to select and fund applications under this 
subsection. 
(B) 
PRIORITY
REQUIREMENTS
AND 
WEIGHTING.—In carrying out the process, the 
Administrator shall— 
(i) prioritize funding of applications 
that are submitted by the owners or opera-
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tors of water systems that are, based on 
the best available research and data, at the 
greatest and most immediate risk of facing 
significant climate-related negative impacts 
on water quality or quantity; 
(ii) in selecting among the priority ap-
plications determined under clause (i), en-
sure that the final list of applications fund-
ed for each year includes a substantial 
number that, to the maximum extent prac-
ticable, includes each eligible use described 
in paragraph (3); 
(iii) solicit applications from water 
systems that are— 
(I) located in all regions of the 
United States; and 
(II) facing varying risks as a re-
sult of climate change; and 
(iv) provide for solicitation and con-
sideration of public input in the develop-
ment of criteria used in evaluating applica-
tions. 
(6) COST SHARING.— 
(A) FEDERAL SHARE.—The Federal share 
of the cost of any program, strategy, or infra-
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structure improvement that is the subject of a 
grant awarded by the Administrator to a water 
system under paragraph (2) shall not exceed 50 
percent of the cost of the program, strategy, 
and infrastructure improvement. 
(B) 
CALCULATION
OF
NON-FEDERAL 
SHARE.—In calculating the non-Federal share 
of the cost of a program, strategy, or infra-
structure improvement proposed by a water sys-
tem through an application submitted by the 
water system under paragraph (4), the Admin-
istrator shall— 
(i) include the value of any in-kind 
services that are integral to the completion 
of the program, strategy, or infrastructure 
improvement, as determined by the Admin-
istrator; and 
(ii) not include any other amount that 
the water system receives from a Federal 
agency. 
(7) LABOR STANDARDS.— 
(A) IN GENERAL.—All laborers and me-
chanics employed on infrastructure improve-
ments funded directly by or assisted in whole or 
in part by this subsection shall be paid wages 
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at rates not less than those prevailing for the 
same type of work on similar construction in 
the immediate locality, as determined by the 
Secretary of Labor in accordance with sub-
chapter IV of chapter 31 of part A of subtitle 
II of title 40, United States Code. 
(B) AUTHORITY
AND
FUNCTIONS.—With 
respect to the labor standards in this para-
graph, the Secretary of Labor shall have the 
authority and functions set forth in Reorganiza-
tion Plan Numbered 14 of 1950 (64 Stat. 
1267; 5 U.S.C. App.) and section 3145 of title 
40, United States Code. 
(8) LOCAL HIRING.— 
(A) IN GENERAL.—The recipient of assist-
ance may advertise and award a contract for 
construction containing requirements for the 
employment of individuals residing in or adja-
cent to any of the areas in which the work is 
to be performed under the contract, if— 
(i) all or part of the construction work 
performed under the contract occurs in an 
area that has— 
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(I) a per capita income of 80 per-
cent or less of the national average 
per capita income; or 
(II) an unemployment rate that 
is, for the most recent 24-month pe-
riod for which data are available, at 
least 1 percent greater than the na-
tional average unemployment rate; 
(ii) the estimated cost of the project 
of which the contract is a part is greater 
than $1,000,000; and 
(iii) the recipient does not hire indi-
viduals who do not have the necessary 
skills to perform work in the applicable 
craft or trade, except for individuals who 
are subject to an apprenticeship program 
or other training program meeting, as de-
termined by the Secretary. 
(B) ADVERTISEMENT.—In advertising and 
awarding a contract under this subsection, the 
Secretary or recipient of assistance shall ensure 
that the requirements contained in the adver-
tisement would not— 
(i) compromise the quality of the 
project; 
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(ii) unreasonably delay the completion 
of the project; or 
(iii) unreasonably increase the cost of 
the project. 
(9) EFFICIENT, INTEGRATED
PROCUREMENT 
FOR PROGRAMS JOINTLY FUNDED WITH THE DE-
PARTMENT
OF
HOUSING
AND
URBAN
DEVELOP-
MENT.— 
(A) DEFINITION OF ELIGIBLE PROJECT.— 
In this paragraph, the term ‘‘eligible project’’ 
means a project for which the amount of fund-
ing provided by the Department of Housing and 
Urban Development is 10 percent or more of 
the amount of funding provided under this sub-
section. 
(B) PREFERENCES.—Notwithstanding the 
competitive bidding requirements of this section 
(including regulations), in the case of an eligible 
project funded jointly with funding provided by 
the Department of Housing and Urban Devel-
opment that is covered by section 3 of the 
Housing and Urban Development Act of 1968 
(82 Stat. 846; 12 U.S.C. 1701u), a contracting 
agency may apply the preferences required for 
the funding by the Department of Housing and 
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Urban Development under section 3 of that Act 
(including regulations) with respect to the fund-
ing, to the elements of the project funded in 
any part under this subsection. 
(C) PERMISSIBLE RESTRICTIONS.—A State 
or local law governing contracting practices that 
prohibits the awarding of contracts to busi-
nesses that have solicited or made contributions 
to political candidates, political parties, and 
holders of public office shall not be considered 
a violation of this section. 
(10) REGULATIONS.— 
(A) IN GENERAL.—Not later than 1 year 
after the date of enactment of this Act, the Ad-
ministrator shall promulgate final regulations to 
carry out this subsection. 
(B) SPECIAL RULE FOR THE CONSTRUC-
TION OF TREATMENT WORKS.—In carrying out 
this paragraph, the Administrator shall incor-
porate all relevant and appropriate require-
ments of title VI of the Federal Water Pollution 
Control Act (33 U.S.C. 1381 et seq.) applicable 
to the construction of treatment works that are 
carried out under this subsection. 
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(11) REPORT TO CONGRESS.—Not later than 3 
years after the date of enactment of this Act, and 
every 3 years thereafter, the Administrator shall 
submit to Congress a report on progress in imple-
menting this subsection, including information on 
project applications received and funded annually. 
(12) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated to carry out 
this subsection such sums as are necessary. 
TITLE II—RECYCLING, STORAGE, 
AND 
INTEGRATED 
WATER 
MANAGEMENT 
SEC. 201. DEFINITIONS. 
In this title: 
(1) ELIGIBLE ENTITY.—The term ‘‘eligible enti-
ty’’ means— 
(A) a corporation; 
(B) a partnership; 
(C) a joint venture; 
(D) a trust; 
(E) a Federal, State, or local governmental 
entity, agency, or instrumentality; and 
(F) a conservancy district, irrigation dis-
trict, canal company, mutual water company, 
water users’ association, Indian tribe, agency 
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created by interstate compact, or any other en-
tity that has the capacity to contract with the 
United States under Federal reclamation law. 
(2) FEDERAL CREDIT INSTRUMENT.—The term 
‘‘Federal credit instrument’’ means a secured loan, 
loan guarantee, or other credit enhancement author-
ized to be made available under this title with re-
spect to a project. 
(3) INVESTMENT-GRADE
RATING.—The term 
‘‘investment-grade rating’’ means a rating of BBB 
minus, Baa3, bbb minus, BBB (low), or higher as 
assigned by a rating agency to project obligations. 
(4) LENDER.— 
(A) IN
GENERAL.—The term ‘‘lender’’ 
means any non-Federal qualified institutional 
buyer (as defined in section 230.144A(a) of 
title 17, Code of Federal Regulations (or a suc-
cessor regulation) (commonly known as ‘‘Rule 
144A(a) of the Securities and Exchange Com-
mission’’ and issued under the Securities Act of 
1933 (15 U.S.C. 77a et seq.))). 
(B) INCLUSIONS.—The term ‘‘lender’’ in-
cludes— 
(i) a qualified retirement plan (as de-
fined in section 4974 of the Internal Rev-
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enue Code of 1986) that is a qualified in-
stitutional buyer; and 
(ii) a governmental plan (as defined in 
section 414 of the Internal Revenue Code 
of 1986) that is a qualified institutional 
buyer. 
(5) LOAN GUARANTEE.—The term ‘‘loan guar-
antee’’ means any guarantee or other pledge by the 
Secretary to pay all or part of the principal of, and 
interest on, a loan or other debt obligation issued by 
an obligor and funded by a lender. 
(6) OBLIGOR.—The term ‘‘obligor’’ means an 
eligible entity that is primarily liable for payment of 
the principal of, or interest on, a Federal credit in-
strument. 
(7) PROJECT OBLIGATION.— 
(A) IN GENERAL.—The term ‘‘project obli-
gation’’ means any note, bond, debenture, or 
other debt obligation issued by an obligor in 
connection with the financing of a project. 
(B) EXCLUSION.—The term ‘‘project obli-
gation’’ does not include a Federal credit in-
strument. 
(8) RATING AGENCY.—The term ‘‘rating agen-
cy’’ means a credit rating agency registered with the 
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(11) SECURED
LOAN.—The term ‘‘secured 
loan’’ means a direct loan or other debt obligation 
issued by an obligor and funded by the Secretary in 
connection with the financing of a project under sub-
title A. 
(12) SUBSIDY
AMOUNT.—The term ‘‘subsidy 
amount’’ means the amount of budget authority suf-
ficient to cover the estimated long-term cost to the 
Federal Government of a Federal credit instrument, 
as calculated on a net present value basis, excluding 
administrative costs and any incidental effects on 
Governmental receipts or outlays in accordance with 
the Federal Credit Reform Act of 1990 (2 U.S.C. 
661 et seq.). 
(13) SUBSTANTIAL
COMPLETION.—The term 
‘‘substantial completion’’, with respect to a project, 
means the earliest date on which a project is consid-
ered to perform the functions for which the project 
is designed. 
Subtitle A—Innovative Financing 
SEC. 211. PURPOSES. 
The purposes of this subtitle are— 
(1) to promote increased development of critical 
water resources infrastructure by establishing addi-
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tional opportunities for financing water resources 
projects; 
(2) to attract new investment capital to infra-
structure projects that are capable of generating rev-
enue streams through user fees or other dedicated 
funding sources; 
(3) to complement existing Federal funding 
sources and address budgetary constraints on Bu-
reau of Reclamation programs; and 
(4) to leverage private investment in water re-
sources infrastructure. 
SEC. 212. AUTHORITY TO PROVIDE ASSISTANCE. 
(a) IN GENERAL.—The Secretary may provide finan-
cial assistance under this subtitle to carry out projects 
within— 
(1) any Reclamation State; 
(2) any other State in which the Bureau of 
Reclamation is authorized to provide project assist-
ance; and 
(3) the States of Alaska and Hawaii. 
(b) SELECTION.—In selecting projects to receive fi-
nancial assistance under subsection (a), the Secretary 
shall ensure diversity with respect to— 
(1) project types; and 
(2) geographical locations. 
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SEC. 213. APPLICATIONS. 
To be eligible to receive assistance under this subtitle, 
an eligible entity shall submit to the Secretary an applica-
tion at such time, in such manner, and containing such 
information as the Secretary may require. 
SEC. 214. ELIGIBILITY FOR ASSISTANCE. 
(a) ELIGIBLE PROJECTS.—The following projects 
may be carried out using assistance made available under 
this subtitle: 
(1) A project for the reclamation and reuse of 
municipal, industrial, domestic, and agricultural 
wastewater, and naturally impaired ground and sur-
face waters, which the Secretary, acting through the 
Commissioner of Reclamation, is authorized to un-
dertake. 
(2) Any water infrastructure project not specifi-
cally authorized by law that— 
(A) the Secretary determines, through the 
completion of an appraisal investigation and 
feasibility study, would contribute to a safe, 
adequate water supply for domestic, agricul-
tural, environmental, or municipal and indus-
trial use; and 
(B) is otherwise eligible for assistance 
under this title. 
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(3) A project for enhanced energy efficiency in 
the operation of a water system. 
(4) A project for accelerated repair and replace-
ment of an aging water distribution facility. 
(5) A brackish or sea water desalination 
project. 
(6) Acquisition of real property or an interest 
in real property for water storage, reclaimed or recy-
cled water, or wastewater, if the acquisition is inte-
gral to a project described in paragraphs (1) 
through (5). 
(7) A combination of projects, each of which is 
eligible under paragraphs (1) through (6), for which 
an eligible entity submits a single application. 
(b) ACTIVITIES ELIGIBLE
FOR ASSISTANCE.—For 
purposes of this subtitle, an eligible activity with respect 
to an eligible project under subsection (a) includes the cost 
of— 
(1) development-phase activities, including plan-
ning, feasibility analysis, revenue forecasting, envi-
ronmental review, permitting, transaction costs, pre-
liminary engineering and design work, and other 
preconstruction activities; 
(2) construction, reconstruction, rehabilitation, 
and replacement activities; 
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(3) the acquisition of real property (including 
water rights, land relating to the project, and im-
provements to land), environmental mitigation, con-
struction contingencies, and acquisition of equip-
ment; 
(4) capitalized interest necessary to meet mar-
ket requirements, reasonably required reserve funds, 
capital issuance expenses, and other carrying costs 
during construction; 
(5) refinancing interim construction funding, 
long-term project obligations, or a secured loan, loan 
guarantee, or other credit enhancement made under 
this subtitle; 
(6) reimbursement or success payments to any 
public or private entity that achieves predetermined 
outcomes on a pay-for-performance or pay-for-suc-
cess basis; and 
(7) grants, loans, or credit enhancement for 
community development financial institutions, green 
banks, and other financial intermediaries providing 
ongoing finance for projects that meet the purposes 
of this subtitle. 
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SEC. 215. DETERMINATION OF ELIGIBILITY AND PROJECT 
SELECTION. 
(a) ELIGIBILITY REQUIREMENTS.—To be eligible to 
receive financial assistance under this subtitle, a project 
shall meet the following criteria, as determined by the Sec-
retary: 
(1) CREDITWORTHINESS.— 
(A) IN
GENERAL.—Subject to subpara-
graph (B), the project shall be creditworthy, as 
determined by the Secretary, who shall ensure 
that any financing for the project has appro-
priate security features, such as a rate cov-
enant, to ensure repayment. 
(B) PRELIMINARY RATING OPINION LET-
TER.—The Secretary shall require each appli-
cant to provide a preliminary rating opinion let-
ter from at least 1 rating agency indicating that 
the senior obligations of the project (which may 
be the Federal credit instrument) have the po-
tential to achieve an investment-grade rating. 
(2) ELIGIBLE
PROJECT
COSTS.—The eligible 
project costs of a project and other projects in a wa-
tershed shall be reasonably anticipated to be not less 
than $10,000,000. 
(3) DEDICATED REVENUE SOURCES.—The Fed-
eral credit instrument for the project shall be repay-
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able, in whole or in part, from dedicated revenue 
sources that also secure the project obligations. 
(4) PUBLIC SPONSORSHIP OF PRIVATE ENTI-
TIES.—In the case of a project carried out by an en-
tity that is not a State or local government or an 
agency or instrumentality of a State or local govern-
ment, the project shall be publicly sponsored. 
(b) SELECTION CRITERIA.— 
(1) ESTABLISHMENT.—The Secretary shall es-
tablish criteria for the selection of projects that meet 
the eligibility requirements of subsection (a), in ac-
cordance with paragraph (2). 
(2) CRITERIA.—The selection criteria shall in-
clude the following: 
(A) The extent to which the project is na-
tionally or regionally significant. 
(B) The extent to which assistance under 
this section would foster innovative public-pri-
vate partnerships and attract private debt or 
equity investment. 
(C) The likelihood that assistance under 
this section would enable the project to proceed 
at an earlier date than the project would other-
wise be able to proceed. 
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(D) The extent to which the project uses 
new or innovative approaches. 
(E) The extent to which projects track evi-
dence about the effectiveness of the 1 or more 
projects financed and the availability of the evi-
dence and project information to the public to 
facilitate replication. 
(F) The amount of budget authority re-
quired to fund the Federal credit instrument 
made available under this subtitle. 
(G) The extent to which the project helps 
maintain or protect the environment. 
(H) The extent to which the project sup-
ports the local economy and provides local jobs. 
(c) RECEIPT OF OTHER FEDERAL FUNDING.—Re-
ceipt of a Federal grant or contract or other Federal fund-
ing to support an eligible project shall not preclude the 
project from being eligible for assistance under this sub-
title. 
(d) FEDERAL REQUIREMENTS.— 
(1) EFFECT OF SECTION.—Nothing in this sec-
tion supersedes the applicability of other require-
ments of Federal law (including regulations). 
(2) NEPA.—A Federal action carried out re-
garding a loan or loan guarantee provided under this 
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subtitle shall not be considered to be a Federal ac-
tion for purposes of the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321 et seq.). 
SEC. 216. SECURED LOANS. 
(a) AGREEMENTS.— 
(1) IN GENERAL.—Subject to paragraphs (2) 
through (4), the Secretary may enter into agree-
ments with 1 or more obligors to make secured 
loans, the proceeds of which shall be used— 
(A) to finance eligible project costs of any 
project selected under section 206; 
(B) to refinance interim construction fi-
nancing of eligible project costs of any project 
selected under section 206; or 
(C) to refinance long-term project obliga-
tions or Federal credit instruments, if that refi-
nancing provides additional funding capacity for 
the completion, enhancement, or expansion of 
any project that— 
(i) is selected under section 206; or 
(ii) otherwise meets the requirements 
of section 206. 
(2) LIMITATION ON REFINANCING OF INTERIM 
CONSTRUCTION FINANCING.—A secured loan under 
paragraph (1) shall not be used to refinance interim 
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construction financing under paragraph (1)(B) later 
than 1 year after the date of substantial completion 
of the applicable project. 
(3) RISK
ASSESSMENT.—Before entering into 
an agreement under this subsection for a secured 
loan, the Secretary, in consultation with the Director 
of the Office of Management and Budget and each 
rating agency providing a preliminary rating opinion 
letter under section 206(a)(1)(B), shall determine an 
appropriate capital reserve subsidy amount for the 
secured loan, taking into account each such prelimi-
nary rating opinion letter. 
(4) 
INVESTMENT-GRADE
RATING
REQUIRE-
MENT.—The execution of a secured loan under this 
section shall be contingent on receipt by the senior 
obligations of the project of an investment-grade rat-
ing. 
(b) TERMS AND LIMITATIONS.— 
(1) IN GENERAL.—A secured loan provided for 
a project under this section shall be subject to such 
terms and conditions, and contain such covenants, 
representations, warranties, and requirements (in-
cluding requirements for audits), as the Secretary 
determines to be appropriate. 
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(2) MAXIMUM AMOUNT.—The amount of a se-
cured loan under this section shall not exceed the 
lesser of— 
(A) an amount equal to 100 percent of the 
reasonably anticipated eligible project costs; and 
(B) if the secured loan does not receive an 
investment-grade rating, the amount of the sen-
ior project obligations of the project. 
(3) PAYMENT.—A secured loan under this sec-
tion— 
(A) shall be payable, in whole or in part, 
from State or local taxes, user fees, or other 
dedicated revenue sources that also secure the 
senior project obligations of the relevant 
project; 
(B) shall include a rate covenant, coverage 
requirement, or similar security feature sup-
porting the project obligations; and 
(C) may have a lien on revenues described 
in subparagraph (A), subject to any lien secur-
ing project obligations. 
(4) INTEREST RATE.—The interest rate on a 
secured loan under this section shall be not more 
than the yield on United States Treasury securities 
of a similar maturity to the maturity of the secured 
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