Rural Water Supply Act of 2006
PL 109-451 (S.895), enacted 12/22/2006

120 STAT. 3345
PUBLIC LAW 109–451—DEC. 22, 2006
Public Law 109–451
109th Congress
An Act
To authorize the Secretary of the Interior to carry out a rural water supply program
in the Reclamation States to provide a clean, safe, affordable, and reliable water
supply to rural residents.
Be it enacted by the Senate and House of Representatives 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 ‘‘Rural Water
Supply Act of 2006’’.
(b) TABLE OF CONTENTS.—The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I—RECLAMATION RURAL WATER SUPPLY ACT OF 2006
Sec. 101. Short title.
Sec. 102. Definitions.
Sec. 103. Rural water supply program.
Sec. 104. Rural water programs assessment.
Sec. 105. Appraisal investigations.
Sec. 106. Feasibility studies.
Sec. 107. Miscellaneous.
Sec. 108. Reports.
Sec. 109. Authorization of appropriations.
Sec. 110. Termination of authority.
TITLE II—TWENTY-FIRST CENTURY WATER WORKS ACT
Sec. 201. Short title.
Sec. 202. Definitions.
Sec. 203. Project eligibility.
Sec. 204. Loan guarantees.
Sec. 205. Defaults.
Sec. 206. Operations, maintenance, and replacement costs.
Sec. 207. Title to newly constructed facilities.
Sec. 208. Water rights.
Sec. 209. Interagency coordination and cooperation.
Sec. 210. Records; audits.
Sec. 211. Full faith and credit.
Sec. 212. Report.
Sec. 213. Effect on the reclamation laws.
Sec. 214. Authorization of appropriations.
Sec. 215. Termination of authority.
TITLE III—REPORT ON TRANSFER OF RECLAMATION FACILITIES
Sec. 301. Report.
43 USC 2401
note.
Rural Water
Supply Act
of 2006.
Dec. 22, 2006
[S. 895]
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120 STAT. 3346
PUBLIC LAW 109–451—DEC. 22, 2006
TITLE I—RECLAMATION RURAL WATER
SUPPLY ACT OF 2006
SEC. 101. SHORT TITLE.
This title may be cited as the ‘‘Reclamation Rural Water Supply
Act of 2006’’.
SEC. 102. DEFINITIONS.
In this title:
(1) CONSTRUCTION.—The term ‘‘construction’’ means the
installation of infrastructure and the upgrading of existing
facilities in locations in which the infrastructure or facilities
are associated with the new infrastructure of a rural water
project recommended by the Secretary pursuant to this title.
(2) FEDERAL RECLAMATION LAW.—The term ‘‘Federal rec-
lamation law’’ means the Act of June 17, 1902 (32 Stat. 388,
chapter 1093), and Acts supplemental to and amendatory of
that Act (43 U.S.C. 371 et seq.).
(3) INDIAN.—The term ‘‘Indian’’ means an individual who
is a member of an Indian tribe.
(4) INDIAN TRIBE.—The term ‘‘Indian tribe’’ has the meaning
given the term in section 4 of the Indian Self-Determination
and Education Assistance Act (25 U.S.C. 450b).
(5) NON-FEDERAL PROJECT ENTITY.—The term ‘‘non-Federal
project entity’’ means a State, regional, or local authority,
Indian tribe or tribal organization, or other qualifying entity,
such as a water conservation district, water conservancy dis-
trict, or rural water district or association.
(6) OPERATIONS, MAINTENANCE, AND REPLACEMENT COSTS.—
(A) IN GENERAL.—The term ‘‘operations, maintenance,
and replacement costs’’ means all costs for the operation
of a rural water supply project that are necessary for
the safe, efficient, and continued functioning of the project
to produce the benefits described in a feasibility study.
(B) INCLUSIONS.—The term ‘‘operations, maintenance,
and replacement costs’’ includes—
(i) repairs of a routine nature that maintain a
rural water supply project in a well kept condition;
(ii) replacement of worn-out project elements; and
(iii) rehabilitation activities necessary to bring a
deteriorated project back to the original condition of
the project.
(C) EXCLUSION.—The term ‘‘operations, maintenance,
and replacement costs’’ does not include construction costs.
(7) PROGRAM.—The term ‘‘Program’’ means the rural water
supply program carried out under section 103.
(8) RECLAMATION STATES.—The term ‘‘Reclamation States’’
means the States and areas referred to in the first section
of the Act of June 17, 1902 (43 U.S.C. 391).
(9) RURAL WATER SUPPLY PROJECT.—
(A) IN
GENERAL.—The term ‘‘rural water supply
project’’ means a project that is designed to serve a commu-
nity or group of communities, each of which has a popu-
lation of not more than 50,000 inhabitants, which may
include Indian tribes and tribal organizations, dispersed
43 USC 2401.
43 USC 2401
note.
Reclamation
Rural Water
Supply Act
of 2006.
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120 STAT. 3347
PUBLIC LAW 109–451—DEC. 22, 2006
homesites, or rural areas with domestic, industrial, munic-
ipal, and residential water.
(B) INCLUSION.—The term ‘‘rural water supply project’’
includes—
(i) incidental noncommercial livestock watering
and noncommercial irrigation of vegetation and small
gardens of less than 1 acre; and
(ii) a project to improve rural water infrastructure,
including—
(I) pumps, pipes, wells, and other diversions;
(II) storage tanks and small impoundments;
(III) water treatment facilities for potable
water supplies, including desalination facilities;
(IV) equipment and management tools for
water conservation, groundwater recovery, and
water recycling; and
(V) appurtenances.
(C) EXCLUSION.—The term ‘‘rural water supply project’’
does not include—
(i) commercial irrigation; or
(ii) major impoundment structures.
(10) SECRETARY.—The term ‘‘Secretary’’ means the Sec-
retary of the Interior.
(11) TRIBAL ORGANIZATION.—The term ‘‘tribal organization’’
means—
(A) the recognized governing body of an Indian tribe;
and
(B) any legally established organization of Indians that
is controlled, sanctioned, or chartered by the governing
body or democratically elected by the adult members of
the Indian community to be served by the organization.
SEC. 103. RURAL WATER SUPPLY PROGRAM.
(a) IN GENERAL.—The Secretary, in cooperation with non-Fed-
eral project entities and consistent with this title, may carry out
a rural water supply program in Reclamation States to—
(1) investigate and identify opportunities to ensure safe
and adequate rural water supply projects for domestic, munic-
ipal, and industrial use in small communities and rural areas
of the Reclamation States;
(2) plan the design and construction, through the conduct
of appraisal investigations and feasibility studies, of rural water
supply projects in Reclamation States; and
(3) oversee, as appropriate, the construction of rural water
supply projects in Reclamation States that are recommended
by the Secretary in a feasibility report developed pursuant
to section 106 and subsequently authorized by Congress.
(b) NON-FEDERAL PROJECT ENTITY.—Any activity carried out
under this title shall be carried out in cooperation with a qualifying
non-Federal project entity, consistent with this title.
(c) ELIGIBILITY CRITERIA.—Not later than 1 year after the date
of enactment of this Act, the Secretary shall, consistent with this
title, develop and publish in the Federal Register criteria for—
(1) determining the eligibility of a rural community for
assistance under the Program; and
(2) prioritizing requests for assistance under the Program.
Deadline.
Federal Register,
publication.
43 USC 2402.
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(d) FACTORS.—The criteria developed under subsection (c) shall
take into account such factors as whether—
(1) a rural water supply project—
(A) serves—
(i) rural areas and small communities; or
(ii) Indian tribes; or
(B) promotes and applies a regional or watershed
perspective to water resources management;
(2) there is an urgent and compelling need for a rural
water supply project that would—
(A) improve the health or aesthetic quality of water;
(B) result in continuous, measurable, and significant
water quality benefits; or
(C) address current or future water supply needs;
(3) a rural water supply project helps meet applicable
requirements established by law; and
(4) a rural water supply project is cost effective.
(e) INCLUSIONS.—The Secretary may include—
(1) to the extent that connection provides a reliable water
supply, a connection to pre-existing infrastructure (including
impoundments and conveyance channels) as part of a rural
water supply project; and
(2) notwithstanding the limitation on population under sec-
tion 102(9)(A), a town or community with a population in excess
of 50,000 inhabitants in an area served by a rural water supply
project if, at the discretion of the Secretary, the town or commu-
nity is considered to be a critical partner in the rural supply
project.
SEC. 104. RURAL WATER PROGRAMS ASSESSMENT.
(a) IN GENERAL.—In consultation with the Secretary of Agri-
culture, the Administrator of the Environmental Protection Agency,
the Director of the Indian Health Service, the Secretary of Housing
and Urban Development, and the Secretary of the Army, the Sec-
retary shall develop an assessment of—
(1) the status of all rural water supply projects under
the jurisdiction of the Secretary authorized but not completed
prior to the date of enactment of this Act, including appropria-
tion amounts, the phase of development, total anticipated costs,
and obstacles to completion;
(2) the current plan (including projected financial and
workforce requirements) for the completion of the projects
identified in paragraph (1) within the time frames established
under the provisions of law authorizing the projects or the
final engineering reports for the projects;
(3) the demand for new rural water supply projects;
(4) rural water programs within other agencies and a
description of the extent to which those programs provide sup-
port for rural water supply projects and water treatment pro-
grams in Reclamation States, including an assessment of the
requirements, funding levels, and conditions of eligibility for
the programs assessed;
(5) the extent of the demand that the Secretary can meet
with the Program;
(6) how the Program will complement authorities already
within the jurisdiction of the Secretary and the heads of the
agencies with whom the Secretary consults; and
43 USC 2403.
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(7) improvements that can be made to coordinate and
integrate the authorities of the agencies with programs evalu-
ated under paragraph (4), including any recommendations to
consolidate some or all of the activities of the agencies with
respect to rural water supply.
(b) CONSULTATION WITH STATES.—Before finalizing the assess-
ment developed under subsection (a), the Secretary shall solicit
comments from States with identified rural water needs.
(c) REPORT.—Not later than 2 years after the date of enactment
of this Act, the Secretary shall submit to the Committee on Energy
and Natural Resources of the Senate and the Committee on
Resources of the House of Representatives a detailed report on
the assessment conducted under subsection (a).
SEC. 105. APPRAISAL INVESTIGATIONS.
(a) IN GENERAL.—On request of a non-Federal project entity
with respect to a proposed rural water supply project that meets
the eligibility criteria published under section 103(c) and subject
to the availability of appropriations, the Secretary may—
(1) receive and review an appraisal investigation that is—
(A) developed by the non-Federal project entity, with
or without support from the Secretary; and
(B) submitted to the Secretary by the non-Federal
project entity;
(2) conduct an appraisal investigation; or
(3) provide a grant to, or enter into a cooperative agreement
with, the non-Federal project entity to conduct an appraisal
investigation, if the Secretary determines that—
(A) the non-Federal project entity is qualified to com-
plete the appraisal investigation in accordance with the
criteria published under section 103(c); and
(B) using the non-Federal project entity to conduct
the appraisal investigation is a cost-effective alternative
for completing the appraisal investigation.
(b) DEADLINE.—An appraisal investigation conducted under
subsection (a) shall be scheduled for completion not later than
2 years after the date on which the appraisal investigation is
initiated.
(c) APPRAISAL REPORT.—In accordance with subsection (f), after
an appraisal investigation is submitted to the Secretary under
subsection (a)(1) or completed under paragraph (2) or (3) of sub-
section (a), the Secretary shall prepare an appraisal report that—
(1) considers—
(A) whether the project meets—
(i) the appraisal criteria developed under sub-
section (d); and
(ii) the eligibility criteria developed under section
103(c);
(B) whether viable water supplies and water rights
exist to supply the project, including all practicable water
sources such as lower quality waters, nonpotable waters,
and water reuse-based water supplies;
(C) whether the project has a positive effect on public
health and safety;
(D) whether the project will meet water demand,
including projected future needs;
43 USC 2404.
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PUBLIC LAW 109–451—DEC. 22, 2006
(E) the extent to which the project provides environ-
mental benefits, including source water protection;
(F) whether the project applies a regional or watershed
perspective and promotes benefits in the region in which
the project is carried out;
(G) whether the project—
(i)(I) implements an integrated resources manage-
ment approach; or
(II) 
enhances 
water 
management 
flexibility,
including providing for—
(aa) local control to manage water supplies
under varying water supply conditions; and
(bb) participation in water banking and mar-
kets for domestic and environmental purposes; and
(ii) promotes long-term protection of water sup-
plies;
(H) preliminary cost estimates for the project; and
(I) whether the non-Federal project entity has the capa-
bility to pay 100 percent of the costs associated with the
operations, maintenance, and replacement of the facilities
constructed or developed as part of the rural water supply
project; and
(2) provides recommendations on whether a feasibility
study should be initiated under section 106(a).
(d) APPRAISAL CRITERIA.—
(1) IN
GENERAL.—Not later than 1 year after the date
of enactment of this Act, the Secretary shall promulgate criteria
(including appraisal factors listed under subsection (c)) against
which the appraisal investigations shall be assessed for
completeness and appropriateness for a feasibility study.
(2) INCLUSIONS.—To minimize the cost of a rural water
supply project to a non-Federal project entity, the Secretary
shall include in the criteria methods to scale the level of effort
needed to complete the appraisal investigation relative to the
total size and cost of the proposed rural water supply project.
(e) REVIEW OF APPRAISAL INVESTIGATION.—
(1) IN GENERAL.—Not later than 90 days after the date
of submission of an appraisal investigation under paragraph
(1) or (3) of subsection (a), the Secretary shall provide to the
non-Federal entity that conducted the investigation a deter-
mination of whether the investigation has included the informa-
tion necessary to determine whether the proposed rural water
supply project satisfies the criteria promulgated under sub-
section (d).
(2) NO SATISFACTION OF CRITERIA.—If the Secretary deter-
mines that the appraisal investigation submitted by a non-
Federal entity does not satisfy the criteria promulgated under
subsection (d), the Secretary shall inform the non-Federal entity
of the reasons why the appraisal investigation is deficient.
(3) RESPONSIBILITY OF SECRETARY.—If an appraisal inves-
tigation as first submitted by a non-Federal entity does not
provide all necessary information, as defined by the Secretary,
the Secretary shall have no obligation to conduct further anal-
ysis until the non-Federal project entity submitting the
appraisal study conducts additional investigation and resubmits
the appraisal investigation under this subsection.
Deadline.
Deadline.
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PUBLIC LAW 109–451—DEC. 22, 2006
(f) APPRAISAL REPORT.—Once the Secretary has determined
that an investigation provides the information necessary under
subsection (e), the Secretary shall—
(1) complete the appraisal report required under subsection
(c);
(2) make available to the public, on request, the appraisal
report prepared under this title; and
(3) promptly publish in the Federal Register a notice of
the availability of the results.
(g) COSTS.—
(1) FEDERAL SHARE.—The Federal share of an appraisal
investigation conducted under subsection (a) shall be 100 per-
cent of the total cost of the appraisal investigation, up to
$200,000.
(2) NON-FEDERAL SHARE.—
(A) IN GENERAL.—Except as provided in subparagraph
(B), if the cost of conducting an appraisal investigation
is more than $200,000, the non-Federal share of the costs
in excess of $200,000 shall be 50 percent.
(B) EXCEPTION.—The Secretary may reduce the non-
Federal share required under subparagraph (A) if the Sec-
retary determines that there is an overwhelming Federal
interest in the appraisal investigation.
(C) FORM.—The non-Federal share under subpara-
graph (A) may be in the form of any in-kind services
that the Secretary determines would contribute substan-
tially toward the conduct and completion of the appraisal
investigation.
(h) CONSULTATION; IDENTIFICATION
OF FUNDING SOURCES.—
In conducting an appraisal investigation under subsection (a)(2),
the Secretary shall—
(1) consult and cooperate with the non-Federal project
entity and appropriate State, tribal, regional, and local authori-
ties;
(2) consult with the heads of appropriate Federal agencies
to—
(A) ensure that the proposed rural water supply project
does not duplicate a project carried out under the authority
of the agency head; and
(B) if a duplicate project is being carried out, identify
the authority under which the duplicate project is being
carried out; and
(3) identify what funding sources are available for the
proposed rural water supply project.
SEC. 106. FEASIBILITY STUDIES.
(a) IN GENERAL.—On completion of an appraisal report under
section 105(c) that recommends undertaking a feasibility study
and subject to the availability of appropriations, the Secretary
shall—
(1) in cooperation with a non-Federal project entity, carry
out a study to determine the feasibility of the proposed rural
water supply project;
(2) receive and review a feasibility study that is—
(A) developed by the non-Federal project entity, with
or without support from the Secretary; and
43 USC 2405.
Federal Register,
publication.
Notice.
Public
information.
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(B) submitted to the Secretary by the non-Federal
project entity; or
(3)(A) provide a grant to, or enter into a cooperative agree-
ment with, a non-Federal project entity to conduct a feasibility
study, for submission to the Secretary, if the Secretary deter-
mines that—
(i) the non-Federal entity is qualified to complete the
feasibility study in accordance with the criteria promul-
gated under subsection (d); and
(ii) using the non-Federal project entity to conduct
the feasibility study is a cost-effective alternative for com-
pleting the appraisal investigation; or
(B) if the Secretary determines not to provide a grant
to, or enter into a cooperative agreement with, a non-Federal
project entity under subparagraph (A), provide to the non-
Federal project entity notice of the determination, including
an explanation of the reason for the determination.
(b) REVIEW OF NON-FEDERAL FEASIBILITY STUDIES.—
(1) IN GENERAL.—In conducting a review of a feasibility
study submitted under paragraph (2) or (3) of subsection (a),
the Secretary shall—
(A) in accordance with the feasibility factors described
in subsection (c) and the criteria promulgated under sub-
section (d), assess the completeness of the feasibility study;
and
(B) if the Secretary determines that a feasibility study
is not complete, notify the non-Federal entity of the deter-
mination.
(2) REVISIONS.—If the Secretary determines under para-
graph (1)(B) that a feasibility study is not complete, the non-
Federal entity shall pay any costs associated with revising
the feasibility study.
(c) FEASIBILITY FACTORS.—Feasibility studies authorized or
reviewed under this title shall include an assessment of—
(1) near- and long-term water demand in the area to be
served by the rural water supply project;
(2) advancement of public health and safety of any existing
rural water supply project and other benefits of the proposed
rural water supply project;
(3) alternative new water supplies in the study area,
including any opportunities to treat and use low-quality water,
nonpotable water, water reuse-based supplies, and brackish
and saline waters through innovative and economically viable
treatment technologies;
(4) environmental quality and source water protection
issues related to the rural water supply project;
(5) innovative opportunities for water conservation in the
study area to reduce water use and water system costs,
including—
(A) nonstructural approaches to reduce the need for
the project; and
(B) demonstration technologies;
(6) the extent to which the project and alternatives take
advantage of economic incentives and the use of market-based
mechanisms;
(7)(A) the construction costs and projected operations,
maintenance, and replacement costs of all alternatives; and
Notification.
Grants.
Contracts.
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(B) the economic feasibility and lowest cost method of
obtaining the desired results of each alternative, taking into
account the Federal cost-share;
(8) the availability of guaranteed loans for a proposed rural
water supply project;
(9) the financial capability of the non-Federal project entity
to pay the non-Federal project entity’s proportionate share of
the design and construction costs and 100 percent of operations,
maintenance, and replacement costs, including the allocation
of costs to each non-Federal project entity in the case of multiple
entities;
(10) whether the non-Federal project entity has developed
an operations, management, and replacement plan to assist
the non-Federal project entity in establishing rates and fees
for beneficiaries of the rural water supply project that includes
a schedule identifying the annual operations, maintenance, and
replacement costs that should be allocated to each non-Federal
entity participating in the project;
(11)(A) the non-Federal project entity administrative
organization that would implement construction, operations,
maintenance, and replacement activities; and
(B) the fiscal, administrative, and operational controls to
be implemented to manage the project;
(12) the extent to which assistance for rural water supply
is available under other Federal authorities;
(13) the engineering, environmental, and economic activi-
ties to be undertaken to carry out the proposed rural water
supply project;
(14) the extent to which the project involves partnerships
with other State, local, or tribal governments or Federal enti-
ties; and
(15) in the case of a project intended for Indian tribes
and tribal organizations, the extent to which the project
addresses the goal of economic self-sufficiency.
(d) FEASIBILITY STUDY CRITERIA.—
(1) IN GENERAL.—Not later than 18 months after the date
of enactment of this Act, the Secretary shall promulgate criteria
(including the feasibility factors listed under subsection (c))
under which the feasibility studies shall be assessed for
completeness and appropriateness.
(2) INCLUSIONS.—The Secretary shall include in the criteria
promulgated under paragraph (1) methods to scale the level
of effort needed to complete the feasibility assessment relative
to the total size and cost of the proposed rural water supply
project and reduce total costs to non-Federal entities.
(e) FEASIBILITY REPORT.—
(1) IN GENERAL.—After completion of appropriate feasibility
studies for rural water supply projects that address the factors
described in subsection (c) and the criteria promulgated under
subsection (d), the Secretary shall—
(A) develop a feasibility report that includes—
(i) a recommendation of the Secretary on—
(I) whether the rural water supply project
should be authorized for construction; and
(II) the appropriate non-Federal share of
construction costs, which shall be—
Deadline.
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(aa) at least 25 percent of the total
construction costs; and
(bb) determined based on an analysis of
the capability-to-pay information considered
under subsections (c)(9) and (f); and
(ii) if the Secretary recommends that the project
should be authorized for construction—
(I) what amount of grants, loan guarantees,
or combination of grants and loan guarantees
should be used to provide the Federal cost share;
(II) a schedule that identifies the annual oper-
ations, maintenance, and replacement costs that
should be allocated to each non-Federal entity
participating in the rural water supply project;
and
(III) an assessment of the financial capability
of each non-Federal entity participating in the
rural water supply project to pay the allocated
annual operation, maintenance, and replacement
costs for the rural water supply project;
(B) submit the report to the Committee on Energy
and Natural Resources of the Senate and the Committee
on Resources of the House of Representatives;
(C) make the report publicly available, along with asso-
ciated study documents; and
(D) publish in the Federal Register a notice of the
availability of the results.
(f) CAPABILITY-TO-PAY.—
(1) IN
GENERAL.—In evaluating a proposed rural water
supply project under this section, the Secretary shall—
(A) consider the financial capability of any non-Federal
project entities participating in the rural water supply
project to pay 25 percent or more of the capital construction
costs of the rural water supply project; and
(B) recommend an appropriate Federal share and non-
Federal share of the capital construction costs, as deter-
mined by the Secretary.
(2) FACTORS.—In determining the financial capability of
non-Federal project entities to pay for a rural water supply
project under paragraph (1), the Secretary shall evaluate factors
for the project area, relative to the State average, including—
(A) per capita income;
(B) median household income;
(C) the poverty rate;
(D) the ability of the non-Federal project entity to
raise tax revenues or assess fees;
(E) the strength of the balance sheet of the non-Federal
project entity; and
(F) the existing cost of water in the region.
(3) INDIAN TRIBES.—In determining the capability-to-pay
of Indian tribe project beneficiaries, the Secretary may consider
deferring the collection of all or part of the non-Federal
construction costs apportioned to Indian tribe project bene-
ficiaries unless or until the Secretary determines that the
Indian tribe project beneficiaries should pay—
(A) the costs allocated to the beneficiaries; or
(B) an appropriate portion of the costs.
Federal Register,
publication.
Notice.
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(g) COST-SHARING REQUIREMENT.—
(1) IN GENERAL.—Except as otherwise provided in this sub-
section, the Federal share of the cost of a feasibility study
carried out under this section shall not exceed 50 percent
of the study costs.
(2) FORM.—The non-Federal share under paragraph (1)
may be in the form of any in-kind services that the Secretary
determines would contribute substantially toward the conduct
and completion of the study.
(3) FINANCIAL HARDSHIP.—The Secretary may increase the
Federal share of the costs of a feasibility study if the Secretary
determines, based on a demonstration of financial hardship,
that the non-Federal participant is unable to contribute at
least 50 percent of the costs of the study.
(4) LARGER
COMMUNITIES.—In conducting a feasibility
study of a rural water supply system that includes a community
with a population in excess of 50,000 inhabitants, the Secretary
may require the non-Federal project entity to pay more than
50 percent of the costs of the study.
(h) CONSULTATION AND COOPERATION.—In addition to the non-
Federal project entity, the Secretary shall consult and cooperate
with appropriate Federal, State, tribal, regional, and local authori-
ties during the conduct of each feasibility assessment and develop-
ment of the feasibility report conducted under this title.
SEC. 107. MISCELLANEOUS.
(a) AUTHORITY OF SECRETARY.—The Secretary may enter into
contracts, financial assistance agreements, and such other agree-
ments, and promulgate such regulations, as are necessary to carry
out this title.
(b) TRANSFER OF PROJECTS.—Nothing in this title authorizes
the transfer of pre-existing facilities or pre-existing components
of any water system from Federal to private ownership or from
private to Federal ownership.
(c) FEDERAL RECLAMATION LAW.—Nothing in this title super-
sedes or amends any Federal law associated with a project, or
portion of a project, constructed under Federal reclamation law.
(d) INTERAGENCY COORDINATION.—The Secretary shall coordi-
nate the Program carried out under this title with existing Federal
and State rural water and wastewater programs to facilitate the
most efficient and effective solution to meeting the water needs
of the non-Federal project sponsors.
(e) MULTIPLE INDIAN TRIBES.—In any case in which a contract
is entered into with, or a grant is made, to an organization to
perform services benefitting more than 1 Indian tribe under this
title, the approval of each such Indian tribe shall be a prerequisite
to entering into the contract or making the grant.
(f) OWNERSHIP OF FACILITIES.—Title to any facility planned,
designed, and recommended for construction under this title shall
be held by the non-Federal project entity.
(g) EXPEDITED PROCEDURES.—If the Secretary determines that
a community to be served by a proposed rural water supply project
has urgent and compelling water needs, the Secretary shall, to
the maximum extent practicable, expedite appraisal investigations
and reports conducted under section 105 and feasibility studies
and reports conducted under section 106.
(h) EFFECT ON STATE WATER LAW.—
43 USC 2406.
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(1) IN GENERAL.—Nothing in this title preempts or affects
State water law or an interstate compact governing water.
(2) COMPLIANCE
REQUIRED.—The Secretary shall comply
with State water laws in carrying out this title.
(i) NO
ADDITIONAL
REQUIREMENTS.—Nothing in this title
requires a feasibility study for, or imposes any other additional
requirements with respect to, rural water supply projects or pro-
grams that are authorized before the date of enactment of this
Act.
SEC. 108. REPORTS.
Beginning in fiscal year 2007, and each fiscal year thereafter
through fiscal year 2012, the Secretary shall submit to the Com-
mittee on Energy and Natural Resources of the Senate and the
Committee on Resources of the House of Representatives an annual
report that describes the number and type of full-time equivalent
positions in the Department of the Interior and the amount of
overhead costs of the Department of the Interior that are allocated
to carrying out this title for the applicable fiscal year.
SEC. 109. AUTHORIZATION OF APPROPRIATIONS.
(a) IN GENERAL.—There is authorized to be appropriated to
carry out this title $15,000,000 for each of fiscal years 2007 through
2016, to remain available until expended.
(b) RURAL WATER PROGRAMS ASSESSMENT.—Of the amounts
made available under subsection (a), not more than $1,000,000
may be made available to carry out section 104 for each of fiscal
years 2007 and 2008.
(c) CONSTRUCTION COSTS.—No amounts made available under
this section shall be used to pay construction costs associated with
any rural water supply project.
SEC. 110. TERMINATION OF AUTHORITY.
The authority of the Secretary to carry out this title terminates
on September 30, 2016.
TITLE II—TWENTY-FIRST CENTURY
WATER WORKS ACT
SEC. 201. SHORT TITLE.
This title may be cited as the ‘‘Twenty-First Century Water
Works Act’’.
SEC. 202. DEFINITIONS.
In this title:
(1) INDIAN TRIBE.—The term ‘‘Indian tribe’’ has the meaning
given the term in section 4 of the Indian Self-Determination
and Education Assistance Act (25 U.S.C. 450b).
(2) LENDER.—The term ‘‘lender’’ means—
(A) a non-Federal qualified institutional buyer (as
defined in section 230.144A(a) of title 17, Code of Federal
Regulation (or any successor regulation), known as Rule
144A(a) of the Securities and Exchange Commission and
issued under the Securities Act of 1933 (15 U.S.C. 77a
et seq.)); or
43 USC 2421.
43 USC 2401
note.
Twenty-First
Century Water
Works Act.
43 USC 2408.
43 USC 2407.
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(B) a clean renewable energy bond lender (as defined
in section 54(j)(2) of the Internal Revenue Code of 1986
(as in effect on the date of enactment of this Act)).
(3) LOAN GUARANTEE.—The term ‘‘loan guarantee’’ has the
meaning given the term ‘‘loan guarantee’’ in section 502 of
the Federal Credit Reform Act of 1990 (2 U.S.C. 661a).
(4) NON-FEDERAL BORROWER.—The term ‘‘non-Federal bor-
rower’’ means—
(A) a State (including a department, agency, or political
subdivision of a State); or
(B) a conservancy district, irrigation district, canal com-
pany, water users’ association, Indian tribe, an agency
created by interstate compact, or any other entity that
has the capacity to contract with the United States under
Federal reclamation law.
(5) OBLIGATION.—The term ‘‘obligation’’ means a loan or
other debt obligation that is guaranteed under this section.
(6) PROJECT.—The term ‘‘project’’ means—
(A) a rural water supply project (as defined in section
102(9));
(B) an extraordinary operation and maintenance
activity for, or the rehabilitation or replacement of, a
facility—
(i) that is authorized by Federal reclamation law
and constructed by the United States under such law;
or
(ii) in connection with which there is a repayment
or water service contract executed by the United States
under Federal reclamation law; or
(C) an improvement to water infrastructure directly
associated with a reclamation project that, based on a
determination of the Secretary—
(i) improves water management; and
(ii) fulfills other Federal goals.
(7) SECRETARY.—The term ‘‘Secretary’’ means the Secretary
of the Interior.
SEC. 203. PROJECT ELIGIBILITY.
(a) ELIGIBILITY CRITERIA.—
(1) IN GENERAL.—The Secretary shall develop and publish
in the Federal Register criteria for determining the eligibility
of a project for financial assistance under section 204.
(2) INCLUSIONS.—Eligibility criteria shall include—
(A) submission of an application by the lender to the
Secretary;
(B) demonstration of the creditworthiness of the
project, including a determination by the Secretary that
any financing for the project has appropriate security fea-
tures to ensure repayment;
(C) demonstration by the non-Federal borrower, to the
satisfaction of the Secretary, of the ability of the non-
Federal borrower to repay the project financing from user
fees or other dedicated revenue sources;
(D) demonstration by the non-Federal borrower, to the
satisfaction of the Secretary, of the ability of the non-
Federal borrower to pay all operations, maintenance, and
replacement costs of the project facilities; and
Federal Register,
publication.
43 USC 2422.
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120 STAT. 3358
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(E) such other criteria as the Secretary determines
to be appropriate.
(b) WAIVER.—The Secretary may waive any of the criteria in
subsection (a)(2) that the Secretary determines to be duplicative
or rendered unnecessary because of an action already taken by
the United States.
(c) PROJECTS PREVIOUSLY AUTHORIZED.—A project that was
authorized for construction under Federal reclamation laws prior
to the date of enactment of this Act shall be eligible for assistance
under this title, subject to the criteria established by the Secretary
under subsection (a).
(d) CRITERIA FOR RURAL WATER SUPPLY PROJECTS.—A rural
water supply project that is determined to be feasible under section
106 is eligible for a loan guarantee under section 204.
SEC. 204. LOAN GUARANTEES.
(a) AUTHORITY.—Subject to the availability of appropriations,
the Secretary may make available to lenders for a project meeting
the eligibility criteria established in section 203 loan guarantees
to supplement private-sector or lender financing for the project.
(b) TERMS AND LIMITATIONS.—
(1) IN GENERAL.—Loan guarantees under this section for
a project shall be on such terms and conditions and contain
such covenants, representations, warranties, and requirements
as the Secretary determines to be appropriate to protect the
financial interests of the United States.
(2) AMOUNT.—Loan guarantees by the Secretary shall not
exceed an amount equal to 90 percent of the cost of the project
that is the subject of the loan guarantee, as estimated at
the time at which the loan guarantee is issued.
(3) INTEREST RATE.—An obligation shall bear interest at
a rate that does not exceed a level that the Secretary determines
to be appropriate, taking into account the prevailing rate of
interest in the private sector for similar loans and risks.
(4) AMORTIZATION.—A loan guarantee under this section
shall provide for complete amortization of the loan guarantee
within not more than 40 years.
(5) NONSUBORDINATION.—An obligation shall be subject to
the condition that the obligation is not subordinate to other
financing.
(c) PREPAYMENT AND REFINANCING.—Any prepayment or refi-
nancing terms on a loan guarantee shall be negotiated between
the non-Federal borrower and the lender with the consent of the
Secretary.
SEC. 205. DEFAULTS.
(a) PAYMENTS BY SECRETARY.—
(1) IN GENERAL.—If a borrower defaults on the obligation,
the holder of the loan guarantee shall have the right to demand
payment of the unpaid amount from the Secretary.
(2) PAYMENT REQUIRED.—By such date as may be specified
in the loan guarantee or related agreements, the Secretary
shall pay to the holder of the loan guarantee the unpaid interest
on, and unpaid principal of, the obligation with respect to
which the borrower has defaulted, unless the Secretary finds
that there was not default by the borrower in the payment
of interest or principal or that the default has been remedied.
43 USC 2424.
43 USC 2423.
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120 STAT. 3359
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(3) FORBEARANCE.—Nothing in this subsection precludes
any forbearance by the holder of the obligation for the benefit
of the non-Federal borrower that may be agreed on by the
parties to the obligation and approved by the Secretary.
(b) SUBROGATION.—
(1) IN GENERAL.—If the Secretary makes a payment under
subsection (a), the Secretary shall be subrogated to the rights
of the recipient of the payment as specified in the loan guar-
antee or related agreements, including, as appropriate, the
authority (notwithstanding any other provision of law) to—
(A) complete, maintain, operate, lease, or otherwise
dispose of any property acquired pursuant to the loan guar-
antee or related agreements; or
(B) permit the non-Federal borrower, pursuant to an
agreement with the Secretary, to continue to pursue the
purposes of the project if the Secretary determines the
purposes to be in the public interest.
(2) SUPERIORITY OF RIGHTS.—The rights of the Secretary,
with respect to any property acquired pursuant to a loan guar-
antee or related agreement, shall be superior to the rights
of any other person with respect to the property.
(c) PAYMENT
OF PRINCIPAL
AND INTEREST
BY SECRETARY.—
With respect to any obligation guaranteed under this section, the
Secretary may enter into a contract to pay, and pay, holders of
the obligation, for and on behalf of the non-Federal borrower, from
funds appropriated for that purpose, the principal and interest
payments that become due and payable on the unpaid balance
of the obligation if the Secretary finds that—
(1)(A) the non-Federal borrower is unable to meet the pay-
ments and is not in default;
(B) it is in the public interest to permit the non-Federal
borrower to continue to pursue the purposes of the project;
and
(C) the probable net benefit to the Federal Government
in paying the principal and interest will be greater than that
which would result in the event of a default;
(2) the amount of the payment that the Secretary is author-
ized to pay shall be no greater than the amount of principal
and interest that the non-Federal borrower is obligated to pay
under the agreement being guaranteed; and
(3) the borrower agrees to reimburse the Secretary for
the payment (including interest) on terms and conditions that
are satisfactory to the Secretary.
(d) ACTION BY ATTORNEY GENERAL.—
(1) NOTIFICATION.—If the non-Federal borrower defaults
on an obligation, the Secretary shall notify the Attorney General
of the default.
(2) RECOVERY.—On notification, the Attorney General shall
take such action as is appropriate to recover the unpaid prin-
cipal and interest due from—
(A) such assets of the defaulting non-Federal borrower
as are associated with the obligation; or
(B) any other security pledged to secure the obligation.
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120 STAT. 3360
PUBLIC LAW 109–451—DEC. 22, 2006
SEC. 206. OPERATIONS, MAINTENANCE, AND REPLACEMENT COSTS.
(a) IN GENERAL.—The non-Federal share of operations, mainte-
nance, and replacement costs for a project receiving Federal assist-
ance under this title shall be 100 percent.
(b) PLAN.—On request of the non-Federal borrower, the Sec-
retary may assist in the development of an operation, maintenance,
and replacement plan to provide the necessary framework to assist
the non-Federal borrower in establishing rates and fees for project
beneficiaries.
SEC. 207. TITLE TO NEWLY CONSTRUCTED FACILITIES.
(a) NEW PROJECTS AND FACILITIES.—All new projects or facili-
ties constructed in accordance with this title shall remain under
the jurisdiction and control of the non-Federal borrower subject
to the terms of the repayment agreement.
(b) EXISTING PROJECTS AND FACILITIES.—Nothing in this title
affects the title of—
(1) reclamation projects authorized prior to the date of
enactment of this Act;
(2) works supplemental to existing reclamation projects;
or
(3) works constructed to rehabilitate existing reclamation
projects.
SEC. 208. WATER RIGHTS.
(a) IN GENERAL.—Nothing in this title preempts or affects State
water law or an interstate compact governing water.
(b) COMPLIANCE REQUIRED.—The Secretary shall comply with
State water laws in carrying out this title. Nothing in this title
affects or preempts State water law or an interstate compact gov-
erning water.
SEC. 209. INTERAGENCY COORDINATION AND COOPERATION.
(a) CONSULTATION.—The Secretary shall consult with the Sec-
retary of Agriculture before promulgating criteria with respect to
financial appraisal functions and loan guarantee administration
for activities carried out under this title.
(b) MEMORANDUM OF AGREEMENT.—The Secretary and the Sec-
retary of Agriculture shall enter into a memorandum of agreement
providing for Department of Agriculture financial appraisal func-
tions and loan guarantee administration for activities carried out
under this title.
SEC. 210. RECORDS; AUDITS.
(a) IN GENERAL.—A recipient of a loan guarantee shall keep
such records and other pertinent documents as the Secretary shall
prescribe by regulation, including such records as the Secretary
may require to facilitate an effective audit.
(b) ACCESS.—The Secretary and the Comptroller General of
the United States, or their duly authorized representatives, shall
have access, for the purpose of audit, to the records and other
pertinent documents.
SEC. 211. FULL FAITH AND CREDIT.
The full faith and credit of the United States is pledged to
the payment of all guarantees issued under this section with respect
to principal and interest.
43 USC 2430.
Regulations.
43 USC 2429.
43 USC 2428.
43 USC 2427.
43 USC 2426.
43 USC 2425.
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SEC. 212. REPORT.
Not later than 1 year after the date on which the eligibility
criteria are published in the Federal Register under section 203(a),
and every 2 years thereafter, the Secretary shall submit to the
Committee on Energy and Natural Resources of the Senate and
the Committee on Resources of the House of Representatives a
report that describes the implementation of the loan guarantee
program under section 204.
SEC. 213. EFFECT ON THE RECLAMATION LAWS.
(a) RECLAMATION PROJECTS.—Nothing in this title supersedes
or amends any Federal law associated with a project, or a portion
of a project, constructed under the reclamation laws.
(b) NO NEW OR SUPPLEMENTAL BENEFITS.—Any assistance pro-
vided under this title shall not—
(1) be considered to be a new or supplemental benefit
for purposes of the Reclamation Reform Act of 1982 (43 U.S.C.
390aa et seq.); or
(2) affect any contract in existence on the date of enactment
of this Act that is executed under the reclamation laws.
SEC. 214. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as are
necessary to carry out this title, to remain available until expended.
SEC. 215. TERMINATION OF AUTHORITY.
(a) IN GENERAL.—Subject to subsection (b), the authority of
the Secretary to carry out this title terminates on the date that
is 10 years after the date of enactment of this Act.
(b) EXCEPTION.—The termination of authority under subsection
(a) shall have no effect on—
(1) any loans guaranteed by the United States under this
title; or
(2) the administration of any loan guaranteed under this
title before the effective date of the termination of authority.
TITLE III—REPORT ON TRANSFER OF
RECLAMATION FACILITIES
SEC. 301. REPORT.
(a) IN GENERAL.—Not later than 180 days after the date of
enactment of this Act, the Secretary shall submit to the Committee
on Energy and Natural Resources of the Senate and the Committee
on Resources of the House of Representatives a report that describes
any impediments and activities that significantly delay the ability
of the Secretary to complete timely transfers of title to reclamation
facilities to qualified non-Federal entities under laws authorizing
the transfers.
43 USC 2434.
43 USC 2433.
43 USC 2432.
43 USC 2431.
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LEGISLATIVE HISTORY—S. 895:
SENATE REPORTS: No. 109–148 (Comm. on Energy and Natural Resources).
CONGRESSIONAL RECORD:
Vol. 151 (2005): Nov. 16, considered and passed Senate.
Vol. 152 (2006): Dec. 6, considered and passed House, amended.
Dec. 8, Senate concurred in House amendment.
(b) CONSULTATION.—In preparing the report under subsection
(a), the Secretary shall consult with any appropriate non-Federal
parties, including reclamation water and power customers.
Approved December 22, 2006.
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