(1) by striking ‘‘and’’ at the end of paragraph 
(9); 
(2) by striking the period at the end of para-
graph (10) and inserting a semicolon; and 
(3) by adding at the end the following: 
‘‘(11) the State will establish, maintain, invest, 
and credit the fund with repayments, such that the 
fund balance will be available in perpetuity for pro-
viding financial assistance in accordance with this 
title; 
‘‘(12) any fees charged by the State to recipients 
of assistance will be used for the purpose of financing 
the cost of administering the fund or financing 
projects or activities eligible for assistance from the 
fund; 
‘‘(13) beginning in fiscal year 2009, the State 
will include as a condition of providing assistance to 
a municipality or intermunicipal, interstate, or State 
agency that the recipient of such assistance certify, in 
a manner determined by the Governor of the State, 
that the recipient— 
‘‘(A) has studied and evaluated the cost and 
effectiveness of innovative and alternative proc-
esses, materials, techniques, and technologies for 
carrying out the proposed project or activity for 
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which assistance is sought under this title, and 
has selected, to the extent practicable, a project 
or activity that may result in greater environ-
mental benefits or equivalent environmental ben-
efits when compared to standard processes, mate-
rials, techniques, and technologies and more effi-
ciently uses energy and natural and financial 
resources; and 
‘‘(B) has considered the cost and effective-
ness of alternative management and financing 
approaches for carrying out a project or activity 
for which assistance is sought under this title, 
taking into account the cost of operating and 
maintaining the project or activity over its life, 
as well as the cost of constructing the project or 
activity; 
‘‘(14) the State will use at least 15 percent of the 
amount of each capitalization grant received by the 
State under this title after September 30, 2007, to 
provide assistance to municipalities of fewer than 
10,000 individuals that meet the affordability criteria 
established by the State under section 603(i)(2) for 
activities included on the State’s priority list estab-
lished under section 603(g), to the extent that there 
are sufficient applications for such assistance; 
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‘‘(15) treatment works eligible under section 
603(c)(1) which will be constructed in whole or in 
part with funds made available under section 205(m) 
or by a State water pollution control revolving fund 
under this title, or both, will meet the requirements 
of, or otherwise be treated (as determined by the Gov-
ernor of the State) under sections 204(b)(1), 211, 218, 
and 511(c)(1) in the same manner as treatment works 
constructed with assistance under title II of this Act; 
‘‘(16) a contract to be carried out using funds 
directly made available by a capitalization grant 
under this title for program management, construc-
tion management, feasibility studies, preliminary en-
gineering, design, engineering, surveying, mapping, 
or architectural related services shall be negotiated in 
the same manner as a contract for architectural and 
engineering services is negotiated under chapter 11 of 
title 40, United States Code, or an equivalent State 
qualifications-based requirement (as determined by 
the Governor of the State); and 
‘‘(17) the requirements of section 513 will apply 
to the construction of treatment works carried out in 
whole or in part with assistance made available by 
a State water pollution control revolving fund as au-
thorized under this title, or with assistance made 
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available under section 205(m), or both, in the same 
manner as treatment works for which grants are 
made under this Act.’’. 
SEC. 303. WATER POLLUTION CONTROL REVOLVING LOAN 
FUNDS. 
(a) PROJECTS AND ACTIVITIES ELIGIBLE FOR ASSIST-
ANCE.—Section 603(c) (33 U.S.C. 1383(c)) is amended to 
read as follows: 
‘‘(c) PROJECTS AND ACTIVITIES ELIGIBLE FOR AS-
SISTANCE.—The amounts of funds available to each State 
water pollution control revolving fund shall be used only 
for providing financial assistance— 
‘‘(1) to any municipality or intermunicipal, 
interstate, or State agency for construction of publicly 
owned treatment works; 
‘‘(2) for the implementation of a management 
program established under section 319; 
‘‘(3) for development and implementation of a 
conservation and management plan under section 
320; 
‘‘(4) for the implementation of lake protection 
programs and projects under section 314; 
‘‘(5) for repair or replacement of decentralized 
wastewater treatment systems that treat domestic sew-
age; 
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‘‘(6) for measures to manage or reduce munic-
ipal stormwater runoff; 
‘‘(7) to any municipality or intermunicipal, 
interstate, or State agency for measures to reduce the 
demand for publicly owned treatment works capacity 
through water conservation, efficiency, or reuse; 
‘‘(8) for measures to increase the security of pub-
licly owned treatment works; and 
‘‘(9) for the development and implementation of 
watershed projects meeting the criteria set forth in 
section 122.’’. 
(b) 
EXTENDED
REPAYMENT
PERIOD.—Section 
603(d)(1) (33 U.S.C. 1383(d)(1)) is amended— 
(1) in subparagraph (A) by striking ‘‘20 years’’ 
and inserting ‘‘the lesser of 30 years or the design life 
of the project to be financed with the proceeds of the 
loan’’; and 
(2) in subparagraph (B) by striking ‘‘not later 
than 20 years after project completion’’ and inserting 
‘‘upon the expiration of the term of the loan’’. 
(c) FISCAL SUSTAINABILITY PLAN.—Section 603(d)(1) 
(33 U.S.C. 1383(d)(1)) is further amended— 
(1) by striking ‘‘and’’ at the end of subpara-
graph (C); 
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(2) by inserting ‘‘and’’ at the end of subpara-
graph (D); and 
(3) by adding at the end the following: 
‘‘(E) for any portion of a treatment works 
proposed for repair, replacement, or expansion, 
and 
eligible 
for 
assistance 
under 
section 
603(c)(1), the recipient of a loan will develop 
and implement a fiscal sustainability plan that 
includes— 
‘‘(i) an inventory of critical assets that 
are a part of that portion of the treatment 
works; 
‘‘(ii) an evaluation of the condition 
and performance of inventoried assets or 
asset groupings; and 
‘‘(iii) a plan for maintaining, repair-
ing, and, as necessary, replacing that por-
tion of the treatment works and a plan for 
funding such activities;’’. 
(d) ADMINISTRATIVE EXPENSES.—Section 603(d)(7) 
(33 U.S.C. 1383(d)(7)) is amended by inserting before the 
period at the end the following: ‘‘, $400,000 per year, or 
1⁄5 percent per year of the current valuation of the fund, 
whichever amount is greatest, plus the amount of any fees 
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collected by the State for such purpose regardless of the 
source’’. 
(e) TECHNICAL
AND
PLANNING
ASSISTANCE
FOR 
SMALL SYSTEMS.—Section 603(d) (33 U.S.C. 1383(d)) is 
amended— 
(1) by striking ‘‘and’’ at the end of paragraph 
(6); 
(2) by striking the period at the end of para-
graph (7) and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(8) to provide owners and operators of treat-
ment works that serve a population of 10,000 or fewer 
with technical and planning assistance and assistance 
in financial management, user fee analysis, budg-
eting, capital improvement planning, facility oper-
ation and maintenance, equipment replacement, re-
pair schedules, and other activities to improve waste-
water treatment plant management and operations; 
except that such amounts shall not exceed 2 percent 
of grant awards to such fund under this title.’’. 
(f) ADDITIONAL SUBSIDIZATION.—Section 603 (33 
U.S.C. 1383) is amended by adding at the end the following: 
‘‘(i) ADDITIONAL SUBSIDIZATION.— 
‘‘(1) IN
GENERAL.—In any case in which a 
State provides assistance to a municipality or inter-
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municipal, interstate, or State agency under sub-
section (d), the State may provide additional sub-
sidization, including forgiveness of principal and neg-
ative interest loans— 
‘‘(A) to benefit a municipality that— 
‘‘(i) meets the State’s affordability cri-
teria established under paragraph (2); or 
‘‘(ii) does not meet the State’s afford-
ability criteria if the recipient— 
‘‘(I) seeks additional subsidization 
to benefit individual ratepayers in the 
residential user rate class; 
‘‘(II) demonstrates to the State 
that such ratepayers will experience a 
significant hardship from the increase 
in rates necessary to finance the 
project or activity for which assistance 
is sought; and 
‘‘(III) ensures, as part of an as-
sistance agreement between the State 
and the recipient, that the additional 
subsidization 
provided 
under 
this 
paragraph is directed through a user 
charge rate system (or other appro-
priate method) to such ratepayers; or 
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‘‘(B) to implement an innovative or alter-
native process, material, technique, or technology 
(including nonstructural protection of surface 
waters, a new or improved method of waste 
treatment, and pollutant trading) that may re-
sult in greater environmental benefits, or equiva-
lent environmental benefits at reduced cost, when 
compared to a standard process, material, tech-
nique, or technology. 
‘‘(2) AFFORDABILITY CRITERIA.— 
‘‘(A) ESTABLISHMENT.—On or before Sep-
tember 30, 2008, and after providing notice and 
an opportunity for public comment, a State shall 
establish affordability criteria to assist in identi-
fying municipalities that would experience a sig-
nificant hardship raising the revenue necessary 
to finance a project or activity eligible for assist-
ance under section 603(c)(1) if additional sub-
sidization is not provided. Such criteria shall be 
based on income data, population trends, and 
other data determined relevant by the State. 
‘‘(B) EXISTING CRITERIA.—If a State has 
previously established, after providing notice and 
an opportunity for public comment, affordability 
criteria that meet the requirements of subpara-
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graph (A), the State may use the criteria for the 
purposes of this subsection. For purposes of this 
Act, any such criteria shall be treated as afford-
ability criteria established under this paragraph. 
‘‘(C) INFORMATION
TO
ASSIST
STATES.— 
The Administrator may publish information to 
assist States in establishing affordability criteria 
under subparagraph (A). 
‘‘(3) PRIORITY.—A State may give priority to a 
recipient for a project or activity eligible for funding 
under section 603(c)(1) if the recipient meets the 
State’s affordability criteria. 
‘‘(4) SET-ASIDE.— 
‘‘(A) IN GENERAL.—In any fiscal year in 
which the Administrator has available for obliga-
tion more than $1,000,000,000 for the purposes 
of this title, a State shall provide additional sub-
sidization under this subsection in the amount 
specified in subparagraph (B) to eligible entities 
described in paragraph (1) for projects and ac-
tivities identified in the State’s intended use 
plan prepared under section 606(c) to the extent 
that there are sufficient applications for such as-
sistance. 
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‘‘(B) AMOUNT.—In a fiscal year described 
in subparagraph (A), a State shall set aside for 
purposes of subparagraph (A) an amount not 
less than 25 percent of the difference between— 
‘‘(i) the total amount that would have 
been allotted to the State under section 604 
for such fiscal year if the amount available 
to the Administrator for obligation under 
this title for such fiscal year had been equal 
to $1,000,000,000; and 
‘‘(ii) the total amount allotted to the 
State under section 604 for such fiscal year. 
‘‘(5) LIMITATION.—The total amount of addi-
tional subsidization provided under this subsection by 
a State may not exceed 30 percent of the total amount 
of capitalization grants received by the State under 
this title in fiscal years beginning after September 30, 
2007.’’. 
SEC. 304. ALLOTMENT OF FUNDS. 
(a) IN GENERAL.—Section 604(a) (33 U.S.C. 1384(a)) 
is amended to read as follows: 
‘‘(a) ALLOTMENTS.— 
‘‘(1) FISCAL YEARS 2008 AND 2009.—Sums appro-
priated to carry out this title for each of fiscal years 
2008 and 2009 shall be allotted by the Administrator 
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