S 1961 IS

To improve the financial and environmental sustainability of the water programs of the United States.

February 15, 2002

Mr. GRAHAM (for himself, Mr. CRAPO, Mr. JEFFORDS, and Mr. SMITH of New Hampshire) introduced the following bill; which was read twice and referred to the Committee on Environment and Public Works

To improve the financial and environmental sustainability of the water programs of the United States.

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 `Water Investment Act of 2002'.

(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Purposes.

TITLE I--FEDERAL WATER POLLUTION CONTROL ACT MODIFICATIONS

Sec. 101. Definitions.

Sec. 102. Funding for Indian programs.

Sec. 103. Requirements for receipt of funds.

TITLE II--SAFE DRINKING WATER ACT MODIFICATIONS

Sec. 201. Planning, design, and preconstruction costs.

Sec. 202. State Revolving Loan Fund.

Sec. 203. Additional subsidization.

Sec. 204. Private utilities.

Sec. 205. Competition requirements.

Sec. 206. Technical assistance for small systems.

Sec. 207. Authorization of appropriations.

TITLE III--INNOVATIONS IN FUND AND WATER QUALITY MANAGEMENT

Sec. 301. Transfer of funds.

Sec. 302. Demonstration program for water quality enhancement and management.

Sec. 303. Rate study.

Sec. 304. Effects on policies and rights.

TITLE IV--WATER RESOURCE PLANNING

Sec. 401. Findings.

Sec. 402. Definition of Secretary.

Sec. 403. Actions.

Sec. 404. Report to Congress.

Sec. 405. Authorization of appropriations.

SEC. 2. PURPOSES.

The purposes of this Act are--

(1) to modernize State water pollution control revolving funds and the allocation for those funds to ensure that the funds distributed reflect water quality needs;

(2) to streamline State water pollution control assistance programs and State drinking water treatment assistance programs to maximize use of Federal funds and encourage maximum efficiency for States and localities;

(3) to provide additional structure to the water supply research conducted in the United States; and

(4) to ensure that the Federal Government is performing the appropriate role in analyzing regional and national water supply trends.

TITLE I--FEDERAL WATER POLLUTION CONTROL ACT MODIFICATIONS

SEC. 101. DEFINITIONS.

Section 502 of the Federal Water Pollution Control Act (33 U.S.C. 1362) is amended by adding at the end the following:

`(24) DISADVANTAGED COMMUNITY- The term `disadvantaged community' means a community or entity that meets affordability criteria established, after public review and comment, by the State in which the community or entity is located.

`(25) SMALL TREATMENT WORKS- The term `small treatment works' means a treatment works (as defined in section 212) serving a population of 10,000 or less.'.

SEC. 102. FUNDING FOR INDIAN PROGRAMS.

Section 518 of the Federal Water Pollution Control Act (33 U.S.C. 1377) is amended by striking subsection (c) and inserting the following:

`(c) RESERVATION OF FUNDS-

`(1) IN GENERAL- For fiscal year 1987 and each fiscal year thereafter, the Administrator shall reserve, before allotments to the States under section 604(a), not less than 0.5 percent nor more than 1.5 percent of the funds made available under section 207.

`(2) USE OF FUNDS- Funds reserved under this subsection shall be available only for grants for the development of waste treatment management plans and for the construction of sewage treatment works to serve--

`(A) Indian tribes;

`(B) former Indian reservations in Oklahoma (as determined by the Secretary of the Interior); and

`(C) Native villages (as defined in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602)).'.

SEC. 103. REQUIREMENTS FOR RECEIPT OF FUNDS.

(a) GRANTS TO STATES FOR ESTABLISHMENT OF REVOLVING FUNDS- Section 601(a) of the Federal Water Pollution Control Act (33 U.S.C. 1381(a)) is amended by striking `for providing assistance (1)' and all that follows and inserting the following: `for providing assistance for eligible projects in accordance with section 603(c).'.

(b) PROJECTS ELIGIBLE FOR ASSISTANCE- Section 603 of the Federal Water Pollution Control Act (33 U.S.C. 1383) is amended by striking subsection (c) and inserting the following:

`(c) PROJECTS ELIGIBLE FOR ASSISTANCE-

`(1) IN GENERAL- Funds available to each State water pollution control revolving fund shall be used only for--

`(A) providing financial assistance to a municipality, intermunicipal, interstate, or State agency, or private utility, for construction (including costs for planning, design, associated preconstruction, and necessary activities for siting the facility and related elements) of treatment works (as defined in section 212);

`(B) implementation of a management program established under section 319;

`(C) development and implementation of a conservation and management plan under section 320;

`(D) water conservation projects or activities that provide 1 or more water quality benefits; or

`(E) reuse, reclamation, or recycling projects that provide 1 or more water quality benefits.

`(2) MAINTENANCE OF FUND-

`(A) IN GENERAL- The fund shall be established, maintained, and credited with repayments.

`(B) AVAILABILITY- Any balances in the fund shall be available in perpetuity for providing financial assistance described in paragraph (1).

`(3) APPROACHES- Projects eligible to receive assistance from a State water pollution control revolving fund under this title may include projects that use 1 or more nontraditional approaches (such as land conservation, low-impact development technologies, redevelopment of waterfront brownfields, watershed management actions, decentralized wastewater treatment innovations, and other nonpoint best management practices).'.

(c) EXTENSION OF LOANS; TYPES OF ASSISTANCE- Section 603(d) of the Federal Water Pollution Control Act (33 U.S.C. 1383(d)) is amended--

(1) in paragraph (1)--

(A) in subparagraph (A), by striking `, at terms not to exceed 20 years';

(B) by striking subparagraph (B) and inserting the following:

`(B)(i) annual principal and interest payments shall commence not later than 1 year after the date of completion of any project for which the loan was made; and

`(ii) except as provided in subparagraph (C), each loan shall be fully amortized not later than 20 years after the date of completion of the project for which the loan is made;';

(C) by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively;

(D) by inserting after subparagraph (B) the following:

`(C) in the case of a disadvantaged community, a State may provide an extended term for a loan if the extended term--

`(i) terminates not later than the date that is 30 years after the date of completion of the project; and

`(ii) does not exceed the expected design life of the project.';

(E) in subparagraph (D) (as redesignated by subparagraph (C)), by inserting `, or, in the case of a privately owned system, demonstrate that adequate security exists,' after `revenue'; and

(F) in subparagraph (E) (as redesignated by subparagraph (C)), by inserting `State loan' before `fund';

(2) in paragraph (6), by striking `and' at the end;

(3) by redesignating paragraph (7) as paragraph (10);

(4) by inserting after paragraph (6) the following:

`(7) subject to subsection (e)(2), by a State to provide additional subsidization (including forgiveness of principal) to 1 or more treatment works for use in developing technical, managerial, and financial capacity in accordance with subsection (i);

`(8) by a State to provide additional subsidization (including forgiveness of principal) to 1 or more treatment works for a purpose other than a purpose specified in paragraph (7) or (9), except that--

`(A) for the first fiscal year that begins after the date of enactment of this paragraph and each fiscal year thereafter, the total amount of subsidization provided by a State under this paragraph shall not exceed 15 percent of the amount of all capitalization grants received by the State for the fiscal year;

`(B) notwithstanding section 204(b)(1), the State, as part of an assistance agreement between the State and each applicable treatment works, shall ensure, to the maximum extent practicable, that additional subsidization provided under this paragraph is directed through the user charge rate system to disadvantaged users within the residential user class of the community (as defined by the State based on affordability criteria and after an opportunity for public review and comment) in which the treatment works is located; and

`(C) a community that receives assistance as a disadvantaged community under paragraph (9) shall not be eligible for assistance under this paragraph;

`(9) subject to subsection (e)(2), by the State to provide additional subsidization (including forgiveness of principal) to a disadvantaged community, or to a community or entity that the State expects to become a disadvantaged community as the result of a proposed project, that receives a loan from the State under this title; and'; and

(5) in paragraph (10) (as redesignated by paragraph (3)), by striking `that such amounts shall not exceed 4' and inserting `that, beginning in fiscal year 2003, those amounts shall not exceed 5'.

(d) LIMITATIONS- Section 603(e) of the Federal Water Pollution Control Act (33 U.S.C. 1383(e)) is amended--

(1) by striking `(e)' and all that follows through `If a State' and inserting the following:

`(e) LIMITATIONS-

`(1) PREVENTION OF DOUBLE BENEFITS- If a State'; and

(2) by adding at the end the following:

`(2) TOTAL AMOUNT OF SUBSIDIES- For each fiscal year, the total amount of loan subsidies made by a State under paragraphs (7) and (9) of subsection (d) may not exceed 30 percent of the amount of all capitalization grants received by the State for the fiscal year.'.

(e) CONSISTENCY WITH PLANNING REQUIREMENTS- Section 603(f) of the Federal Water Pollution Control Act (33 U.S.C. 1383(f)) is amended--

(1) by striking `A State may' and inserting the following:

`(1) IN GENERAL- A State may';

(2) by striking `320 of this Act.' and inserting `320.'; and

(3) by adding at the end the following:

`(2) COMMUNITY DEVELOPMENT- A State that provides financial assistance from the water pollution control revolving fund of the State shall ensure that applicants for the assistance consult and coordinate with, as appropriate, agencies responsible for developing any--

`(A) local land use plans;

`(B) regional transportation improvement and long-range transportation plans; and

`(C) State, regional, and municipal watershed plans.'.

(f) PRIORITY SYSTEM REQUIREMENT- Section 603 of the Federal Water Pollution Control Act (33 U.S.C. 1383) is amended by striking subsection (g) and inserting the following:

`(g) PRIORITY SYSTEM REQUIREMENT-

`(1) DEFINITION OF STATE AGENCY- In this subsection, the term `State agency' means the agency of a State having jurisdiction over water quality management (including the establishment of water quality standards).

`(2) DEVELOPMENT-

`(A) IN GENERAL- Notwithstanding section 216, each State agency shall develop and periodically update a project priority system for use in prioritizing projects that are eligible to receive funding from the water pollution control revolving fund of the State in accordance with subsection (c).

`(B) REQUIREMENTS- In developing the project priority system, a State agency shall--

`(i) take into consideration all available water quality data for the State; and

`(ii) provide for public notice and opportunity for comment, including significant public outreach.

`(3) SUMMARY OF PROJECTS-

`(A) IN GENERAL- Each State agency, after public notice and opportunity for comment, shall biennially publish a summary of projects in the State that are eligible for assistance under this title.

`(B) INCLUSIONS- The summary under subparagraph (A) shall include--

`(i) the priority assigned to each project under the priority system of the State developed under paragraph (2); and

`(ii) the funding schedule for each project, to the extent that such information is available.

`(4) STATEMENT OF POLICY- It is the policy of Congress that projects in a State that are carried out using assistance provided under this title shall be funded, to the maximum extent practicable, through a project priority system of the State that, in the estimation of the State, is designed to achieve optimum water quality management, consistent with the public health and water quality goals and requirements of this Act.'.

(g) ADDITIONAL REQUIREMENTS FOR WATER POLLUTION CONTROL REVOLVING FUNDS- Section 603 of the Federal Water Pollution Control Act (33 U.S.C. 1383) is amended by adding at the end the following:

`(i) TECHNICAL, MANAGERIAL, AND FINANCIAL CAPACITY FOR OPTIMAL PERFORMANCE-

`(1) DEFINITION OF STATE AGENCY- In this subsection, the term `State agency' has the meaning given the term in subsection (g)(1).

`(2) STRATEGY-

`(A) IN GENERAL- Not later than 3 years after the date of enactment of this subsection, each State agency shall implement a strategy to assist treatment works in the State receiving assistance under this title in--

`(i) attaining and maintaining technical, managerial, operations, maintenance, and capital investments; and

`(ii) meeting and sustaining compliance with applicable Federal and State laws.

`(B) REQUIREMENTS- In preparing the strategy described in subparagraph (A), the State shall consider, solicit public comment on, and include in the strategy--

`(i) a description of the institutional, regulatory, financial, tax, or legal factors at the Federal, State, and local levels that encourage or impair the development of technical, managerial, and financial capacity; and

`(ii) a description of the manner in which the State intends to use the authorities and resources of the State to assist treatment works in attaining and maintaining technical, managerial, and financial capacity.

`(3) DETERMINATION BY ADMINISTRATOR- Except as provided in subsection (k), if the Administrator determines that a State agency has not developed or implemented a strategy in accordance with paragraph (2), the Administrator shall--

`(A) withhold 20 percent of each capitalization grant made to the State under this title after the date of the determination; and

`(B) permit the State a 1-year period, beginning on the date on which funds are withheld under subparagraph (A), during which the State may implement a strategy in accordance with paragraph (2).

`(4) REALLOTMENT OF FUNDS-

`(A) IN GENERAL- If, after the 1-year period described in paragraph (3)(B), the Administrator is not satisfied that a State has carried out adequate corrective action relating to the development and implementation of a strategy required under paragraph (2), the Administrator shall reallot all funds of the State withheld by the Administrator as of that date in accordance with subparagraph (B).

`(B) REQUIREMENTS FOR REALLOTMENT- The Administrator shall reallot funds under subparagraph (A)--

`(i) only to States that the Administrator determines to be in compliance with this subsection; and

`(ii) in the same ratio provided under the most recent formula for the allotment of funds under this title.

`(5) CONDITION FOR RECEIPT OF ASSISTANCE-

`(A) IN GENERAL- Except as provided in subparagraph (B) and subsection (k), beginning on the date that is 3 years after the date of enactment of this subsection, the State shall require each treatment works that receives significant assistance under this title to demonstrate adequate technical, managerial, and financial capacity, including the establishment and implementation by the treatment works of an asset management plan (for which the Administrator may publish information to assist States in determining required content) that--

`(i) conforms to generally accepted industry practices; and

`(ii) includes--

`(I) an inventory of existing assets (including an estimate of the useful life of those assets); and

`(II) an optimal schedule of operations, maintenance, and capital investment required to meet and sustain performance objectives for the treatment works established in accordance with applicable Federal and State laws over the useful life of the treatment works.

`(B) EXCEPTION- Notwithstanding subparagraph (A), a treatment works may receive assistance under this title if the State determines that the assistance would enable the treatment works to attain adequate technical, managerial, and financial capacity.

`(j) RESTRUCTURING- Notwithstanding section 204(b)(1), except as provided in subsection (k), a State may provide assistance from the water pollution control revolving fund of the State for a project only if the recipient of the assistance--

`(1) has considered--

`(A) consolidating management functions or ownership with another facility;

`(B) forming public-private partnerships or other cooperative partnerships; and

`(C) using nonstructural alternatives or technologies that may be more environmentally sensitive; and

`(2) has in effect a plan to achieve, within a reasonable period of time, a rate structure that, to the maximum extent practicable--

`(A) reflects the actual cost of service provided by the recipient; and

`(B) addresses capital replacement funds; and

`(3) has in effect, or will have in effect on completion of the project, an asset management plan described in subsection (i)(5).

`(k) EXEMPTION FOR ASSISTANCE SOLELY FOR PLANNING, DESIGN, AND PRECONSTRUCTION ACTIVITIES- Subsection (j) and paragraphs (3) and (5) of subsection (i) shall not apply to assistance provided under this title that is to be used by a treatment works solely for planning, design, or preconstruction activities.

`(l) TECHNICAL ASSISTANCE-

`(1) DEFINITION OF QUALIFIED NONPROFIT TECHNICAL ASSISTANCE PROVIDER- In this subsection, the term `qualified nonprofit technical assistance provider' means a nonprofit entity that provides technical assistance (such as circuit-rider programs, training, and preliminary engineering evaluations) to small treatment works that--

`(A) serve not more than 3,300 users; and

`(B) are located in a rural area.

`(2) GRANT PROGRAM-

`(A) IN GENERAL- The Administrator may make grants to a qualified nonprofit technical assistance provider for use in assisting small treatment works in planning, developing, and obtaining financing for eligible projects described in subsection (c).

`(B) DISTRIBUTION OF GRANTS- In carrying out this subsection, the Administrator shall ensure, to the maximum extent practicable, that technical assistance provided using funds from a grant under subparagraph (A) is made available in each State.

`(C) CONSULTATION- As a condition of receiving a grant under this subsection, a qualified nonprofit technical assistance provider shall consult with each State in which grant funds are to be expended or otherwise made available before the grant funds are expended or made available in the State.

`(3) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this subsection $7,000,000 for each of fiscal years 2003 through 2007.

`(m) COMPETITION REQUIREMENTS-

`(1) IN GENERAL- The requirements described in section 204(a)(6) shall apply to each specification for bids for projects receiving assistance under this title.

`(2) SINGLE BIDS- Nothing in this subsection prohibits a recipient of assistance under this title that receives only 1 bid for a project described in paragraph (1) from accepting the bid and carrying out the project.

`(n) NO JUDICIAL REVIEW- A determination by a State to provide financial assistance under this title shall not be subject to judicial review.'.

(h) ALLOTMENT OF FUNDS- Section 604(a) of the Federal Water Pollution Control Act (33 U.S.C. 1384(a)) is amended by striking subsection (a) and inserting the following:

`(a) FORMULA-

`(1) ALLOCATION-

`(A) IN GENERAL- Except as provided in paragraph (2) and subject to subsection (b), funds made available to carry out this title for each of fiscal years 2003 through 2006 shall be allocated by the Administrator as follows:

`(i) AMOUNTS OF $1,350,000,000 OR LESS- $1,350,000,000 (or, if the total amount made available for the fiscal year is less than that amount, the total amount made available) shall be allocated in accordance with a formula that allocates to each State the proportional share of the State needs identified in the most recent survey conducted under section 516(2), except that the minimum proportionate share provided to each State shall be 1.1 percent of available funds.

`(ii) AMOUNTS BETWEEN $1,350,000,000 AND $1,550,000,000- Amounts greater than $1,350,000,000 but less than $1,550,000,000 made available for the fiscal year shall be allocated by the Administrator in accordance with a formula that allocates to each State a proportionate share equal to the difference between--

`(I) the amount received under clause (i); and

`(II) the amount that the State would have received under section 205(c);

in cases in which an amount received by the State under clause (i) is less than the amount that would have been received by the State under section 205(c).

`(iii) AMOUNTS GREATER THAN $1,550,000,000- Any amounts equal to or greater than $1,550,000,000 that are made available for the fiscal year shall be allocated in accordance with a formula that allocates to each State the proportional share of the State needs identified in the most recent survey conducted under section 516(2), except that the minimum proportionate share provided to each State shall be 1.1 percent of available funds.

`(B) SUBSEQUENT FISCAL YEARS- For fiscal year 2007 and each fiscal year thereafter, funds shall be allocated in accordance with a formula that allocates to each State the proportional share of the State needs identified in the most recent survey conducted pursuant to section 516(2), except that the minimum proportionate share provided to each State shall be 1 percent of available funds.

`(2) PRIVATE UTILITIES- If a State elects to include the needs of private utilities in the needs survey used to develop the allocation formula described in paragraph (1), the State shall ensure that the private utilities are eligible to receive funds under this title.'.

(i) AUDITS, REPORTS, AND FISCAL CONTROLS; INTENDED USE PLAN- Section 606 of the Federal Water Pollution Control Act (33 U.S.C. 1386) is amended--

(1) in subsection (c)--

(A) by inserting `(including significant public outreach)' after `review'; and

(B) by striking paragraph (1) and inserting the following:

`(1) a summary of the priority projects developed under section 603(g) for which the State intends to provide assistance from the water pollution control revolving fund of the State for the year covered by the plan;'; and

(2) in subsection (d)--

(A) in the subsection heading, by striking `REPORT' and inserting `REPORTS';

(B) by striking `Beginning the' and inserting the following:

`(1) IN GENERAL- Beginning in the'; and

(C) by adding at the end the following:

`(2) REPORT ON TECHNICAL, MANAGERIAL, AND FINANCIAL CAPACITY- Not later than 2 years after the date on which a State first adopts a strategy in accordance with section 603(j)(2), and annually thereafter, the State shall submit to the Administrator a report on the progress made in improving the technical, managerial, and financial capacity of treatment works in the State (including the progress of the State in complying with the amendments to section 603 made by the Water Investment Act of 2002).

`(3) AVAILABILITY- A State that submits a report under this subsection shall make the report available to the public.'.

(j) AUTHORIZATION OF APPROPRIATIONS- The Federal Water Pollution Control Act is amended by striking section 607 (33 U.S.C. 1387) and inserting the following:

`SEC. 607. AUTHORIZATION OF APPROPRIATIONS.

`(a) IN GENERAL- There are authorized to be appropriated to carry out this title--

`(1) $3,200,000 for each of fiscal years 2003 and 2004;

`(2) $3,600,000 for fiscal year 2005;

`(3) $4,000,000 for fiscal year 2006; and

`(4) $6,000,000 for fiscal year 2007.

`(b) AVAILABILITY- Amounts made available under this section shall remain available until expended.

`(c) RESERVATION FOR NEEDS SURVEYS- Of the amount made available under subsection (a) to carry out this title for a fiscal year, the Administrator may reserve not more than $1,000,000 per year to pay the costs of conducting needs surveys under section 516(2).'.

(k) CONFORMING AMENDMENT- Section 216 of the Federal Water Pollution Control Act (33 U.S.C. 1296) is amended--

(1) in the first sentence, by inserting `in accordance with section 603(g)' before `the determination'; and

(2) by striking the `Not less than 25 per centum' and all that follows.

TITLE II--SAFE DRINKING WATER ACT MODIFICATIONS

SEC. 201. PLANNING, DESIGN, AND PRECONSTRUCTION COSTS.

Section 1452(a)(2) of the Safe Drinking Water Act (42 U.S.C. 300j-12(a)(2)) is amended in the second sentence by striking `(not' and inserting `(including planning, design, and associated preconstruction expenditures but not'.

SEC. 202. STATE REVOLVING LOAN FUND.

(a) IN GENERAL- Section 1452(a)(3)(B)(ii) of the Safe Drinking Water Act (42 U.S.C. 300j-12(a)(3)(B)(ii)) is amended by inserting `and the formation of regional partnerships' after `procedures'.

(b) PUBLIC OUTREACH- Section 1452(b) of the Safe Drinking Water Act (42 U.S.C. 300j-12(b)) is amended in paragraphs (1) and (3)(B) by inserting `(including significant public outreach)' after `comment' each place it appears.

(c) TYPES OF ASSISTANCE- Section 1452(f) of the Safe Drinking Water Act (42 U.S.C. 300j-12(f)) is amended--

(1) in paragraph (1)--

(A) in subparagraph (C), by striking `and' at the end; and

(B) by adding at the end the following:

`(E) the recipient of the loan funds considers, during the planning and engineering phase of each project for which the loan funds are received--

`(i) consolidating management functions or ownership with another facility;

`(ii) forming public-private partnerships or other cooperative partnerships; and

`(iii) using nonstructural alternatives or technologies that may be more environmentally sensitive;

`(F) the recipient of the loan funds has in effect a plan to achieve, within a reasonable period of time, a rate structure that, to the maximum extent practicable--

`(i) reflects the actual cost of service provided by the recipient; and

`(ii) addresses capital replacement funds; and

`(G) the recipient of each loan that reflects a significant capital investment has in effect, or will have in effect on completion of the project, an asset management plan (for which the Administrator may publish information to assist States in determining required content) that--

`(i) conforms to generally accepted industry practices; and

`(ii) includes--

`(I) an inventory of existing assets (including an estimate of the useful life of the assets); and

`(II) an optimal schedule of operations, maintenance, and capital investment required to meet and sustain performance objectives;';

(2) in paragraph (4), by striking `and' at the end;

(3) in paragraph (5), by striking the period at the end and inserting `; and'; and

(4) by adding at the end the following:

`(6) to reduce costs incurred by a municipality in issuing bonds.'.

(d) CONSULTATION AND COORDINATION WITH STATE AGENCIES; JUDICIAL REVIEW- Section 1452(g) of the Safe Drinking Water Act (42 U.S.C. 300j-12(g)) is amended by adding at the end the following:

`(5) CONSULTATION AND COORDINATION WITH STATE AGENCIES- A State that provides financial assistance from the drinking water revolving fund of the State shall ensure that applicants for the assistance consult and coordinate with, as appropriate, agencies responsible for developing any--

`(A) local land use plans;

`(B) regional transportation improvement and long-range transportation plans; and

`(C) State, regional, and municipal watershed plans.

`(6) NO JUDICIAL REVIEW- A determination by a State to provide financial assistance under this section shall not be subject to judicial review.'.

(e) OTHER AUTHORIZED ACTIVITIES- Section 1452(k)(1) of the Safe Drinking Water Act (42 U.S.C. 300j-12(k)(1)) is amended by striking subparagraph (D) and inserting the following:

`(D) Make expenditures for the development and implementation of source water protection programs.

`(E) Provide assistance for consolidation among community water systems for the purpose of--

`(i) meeting national primary drinking water standards; or

`(ii) making more efficient use of funds made available under subsection (a)(2).'.

SEC. 203. ADDITIONAL SUBSIDIZATION.

Section 1452(d)(1) of the Safe Drinking Water Act (42 U.S.C. 300j-12(d)(1)) is amended--

(1) by striking `Notwithstanding any other provision' and inserting the following:

`(A) IN GENERAL- Notwithstanding any other provision'; and

(2) by adding at the end the following:

`(B) SUBSIDIZATION FOR DISADVANTAGED USERS-

`(i) IN GENERAL- Subject to clause (ii), a State may provide additional subsidization under subparagraph (A) for a fiscal year for a community that does not meet the definition of a disadvantaged community if the State, as part of the assistance agreement between the State and the recipient of the assistance, ensures that the additional subsidization provided under this paragraph is directed through the

user charge rate system to disadvantaged users within the residential user class of the community (as defined by the State based on affordability criteria).

`(ii) MAXIMUM AMOUNT- Assistance provided by a State under clause (i) shall not exceed 15 percent of the amount of the capitalization grant received by the State for the fiscal year.

`(iii) GUIDANCE- The Administrator may publish guidance to assist States in identifying disadvantaged users described in clause (i).'.

SEC. 204. PRIVATE UTILITIES.

Section 1452(h) of the Safe Drinking Water Act (42 U.S.C. 300j-12(h)) is amended--

(1) by striking `The Administrator' and inserting the following:

`(1) IN GENERAL- The Administrator'; and

(2) by adding at the end the following:

`(2) PRIVATE UTILITIES- If a State elects to include the needs of private utilities in the needs survey under paragraph (1), the State shall ensure that the private utilities are eligible to receive funds under this title.'.

SEC. 205. COMPETITION REQUIREMENTS.

Section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12) is amended by adding at the end the following:

`(s) COMPETITION REQUIREMENTS-

`(1) IN GENERAL- Except as provided in paragraph (2), as a condition of receipt of funds under this section, no specification for bids prepared for projects to be carried out using the funds shall be written in such a manner as to contain any proprietary, exclusionary, or discriminatory requirement, other than requirements based on performance, unless such requirements are necessary to test or demonstrate a specific thing or to provide for necessary interchangeability of parts and equipment. If, in the judgment of a recipient of funds, it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a `brand name or equal' description may be used as a means to define the performance or other salient requirements of a procurement, and in doing so the recipient need not establish the existence of any source other than the brand or source so named.

`(2) SINGLE BIDS- Nothing in this subsection prohibits a recipient of assistance under this title that receives only 1 bid for a project described in paragraph (1) from accepting the bid and carrying out the project.'.

SEC. 206. TECHNICAL ASSISTANCE FOR SMALL SYSTEMS.

(a) SMALL PUBLIC WATER SYSTEMS TECHNOLOGY ASSISTANCE CENTERS- Section 1420(f) of the Safe Drinking Water Act (42 U.S.C. 300g-9(f)) is amended--

(1) in paragraph (2), by inserting `technology verification, pilot and field testing of innovative technologies, and' after `shall include'; and

(2) by striking paragraph (6) and inserting the following:

`(6) REVIEW AND EVALUATION-

`(A) IN GENERAL- Not less often than every 2 years, the Administrator shall review and evaluate the program carried out under this subsection.

`(B) DISQUALIFICATION- If, in carrying out this subsection, the Administrator determines that a small public water system technology assistance center is not carrying out the duties of the center, the Administrator--

`(i) shall notify the center of the determination of the Administrator; and

`(ii) not later than 180 days after the date of the notification, may terminate the provision of funds to the center.

`(7) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this subsection $5,000,000 for each of fiscal years 2003 through 2007, to be distributed to the centers in accordance with this subsection.'.

(b) ENVIRONMENTAL FINANCE CENTERS- Section 1420(g) of the Safe Drinking Water Act (42 U.S.C. 300g-9(g)) is amended by striking paragraph (4) and inserting the following:

`(4) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this subsection $1,500,000 for each of fiscal years 2003 through 2007.'.

SEC. 207. AUTHORIZATION OF APPROPRIATIONS.

Section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12) is amended by striking subsection (m) and inserting the following:

`(m) AUTHORIZATION OF APPROPRIATIONS-

`(1) IN GENERAL- There are authorized to be appropriated to carry out this section--

`(A) $1,500,000 for fiscal year 2003;

`(B) $2,000,000 for each of fiscal years 2004 and 2005;

`(C) $3,500,000 for fiscal year 2006; and

`(D) $6,000,000 for fiscal year 2007.

`(2) AVAILABILITY- Amounts made available under this subsection shall remain available until expended.

`(3) RESERVATION FOR NEEDS SURVEYS- Of the amount made available under paragraph (1) to carry out this section for a fiscal year, the Administrator may reserve not more than $1,000,000 per year to pay the costs of conducting needs surveys under subsection (h).'.

TITLE III--INNOVATIONS IN FUND AND WATER QUALITY MANAGEMENT

SEC. 301. TRANSFER OF FUNDS.

(a) WATER POLLUTION CONTROL FUND- Section 603 of the Federal Water Pollution Control Act (33 U.S.C. 1383) is amended by adding at the end the following:

`(i) TRANSFER OF FUNDS-

`(1) IN GENERAL- A Governor of the State may--

`(A) reserve up to 33 percent of a capitalization grant made under this title and add the funds reserved to any funds provided to the State under section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12); and

`(B) reserve in any year an amount up to the amount that may be reserved under subparagraph (A) for that year from capitalization grants made under section 1452 of that Act (42 U.S.C. 300j-12) and add the reserved funds to any funds provided to the State under this title.

`(2) STATE MATCH- Funds reserved under this subsection shall not be considered to be a State contribution for a capitalization grant required under this title or section 1452(b) of the Safe Drinking Water Act (42 U.S.C. 300j-12(b)).'.

(b) SAFE DRINKING WATER FUND- Section 1452(g) of the Safe Drinking Water Act (42 U.S.C. 300j-12(g)) is amended--

(1) in paragraph (2), by striking `4' and inserting `5'; and

(2) by adding at the end the following:

`(5) TRANSFER OF FUNDS-

`(A) IN GENERAL- A Governor of the State may--

`(i) reserve up to 33 percent of a capitalization grant made under this section and add the funds reserved to any funds provided to the State under section 601 of the Federal Water Pollution Control Act (33 U.S.C. 1381); and

`(ii) reserve in any year an amount up to the amount that may be reserved under clause (i) for that year from capitalization grants made under section 601 of that Act (33 U.S.C. 1381) and add the reserved funds to any funds provided to the State under this section.

`(B) STATE MATCH- Funds reserved under this paragraph shall not be considered to be a State match of a capitalization grant required under this section or section 602(b) of the Federal Water Pollution Control Act (33 U.S.C. 1382(b)).'.

SEC. 302. DEMONSTRATION PROGRAM FOR WATER QUALITY ENHANCEMENT AND MANAGEMENT.

(a) ESTABLISHMENT-

(1) IN GENERAL- As soon as practicable after the date of enactment of this Act, the Administrator of the Environmental Protection Agency (referred to in this section as the `Administrator') shall establish a nationwide demonstration program to--

(A) promote innovations in technology and alternative approaches to water quality management or water supply; and

(B) reduce costs to municipalities incurred in complying with--

(i) the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.); and

(ii) the Safe Drinking Water Act (42 U.S.C. 300f et seq.).

(2) SCOPE- The demonstration program shall consist of 10 projects per year, to be carried out in municipalities selected by the Administrator under subsection (b).

(b) SELECTION OF MUNICIPALITIES-

(1) APPLICATION- A municipality that seeks to be selected to participate in the demonstration program shall submit to the Administrator a plan that--

(A) is developed in coordination with--

(i) the agency of the State having jurisdiction over water quality or water supply matters; and

(ii) interested stakeholders;

(B) describes water impacts specific to urban and rural areas;

(C) includes a strategy under which the municipality, through participation in the demonstration program, could effectively--

(i) address those problems; and

(ii) achieve the same water quality goals as those goals that--

(I) could be achieved using more traditional methods; or

(II) are mandated under--

(aa) the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.); and

(bb) the Safe Drinking Water Act (42 U.S.C. 300f et seq.); and

(D) includes a schedule for achieving the goals of the municipality.

(2) TYPES OF PROJECTS- In carrying out the demonstration program, the Administrator may select projects relating to such matters as--

(A) excessive nutrient growth;

(B) urban or rural pressure;

(C) a lack of an alternative water supply;

(D) difficulties in water conservation and efficiency;

(E) a lack of support tools and technologies to rehabilitate and replace water supplies;

(F) a lack of monitoring and data analysis for distribution systems;

(G) nonpoint source water pollution;

(H) sanitary overflows;

(I) combined sewer overflows;

(J) problems with naturally-occurring constituents of concern; or

(K) problems with erosion and excess sediment.

(3) RESPONSIBILITIES OF ADMINISTRATOR- In selecting municipalities under this subsection, the Administrator shall--

(A) ensure, to the maximum extent practicable--

(i) the inclusion in the demonstration program of a variety of projects with respect to--

(I) geographic distribution;

(II) innovative technologies used for the projects; and

(III) nontraditional approaches (including low-impact development technologies) used for the projects; and

(ii) that each category of project described in paragraph (2) is adequately represented;

(B) give higher priority to projects that--

(i) address multiple problems; and

(ii) are regionally applicable;

(C) ensure, to the maximum extent practicable, that at least 1 small community having a population of 10,000 or less receives a grant each year; and

(D) ensure that, for each fiscal year, no municipality receives more than 25 percent of the total amount of funds made available for the fiscal year to provide grants under this section.

(4) COST SHARING-

(A) IN GENERAL- Except as provided in subparagraph (B), the non-Federal share of the cost of a project carried out under this section shall be at least 20 percent.

(B) WAIVER- The Administrator may reduce or eliminate the non-Federal share of the cost of a project for reasons of affordability.

(c) REPORTS-

(1) REPORTS FROM MUNICIPALITIES- A municipality that is selected for participation in the demonstration program shall submit to the Administrator, on the date of completion of a project of the municipality and on each of the dates that is 1, 2, and 3 years after that date, a report that describes the effectiveness of the project.

(2) REPORTS TO CONGRESS- Not later than 2 years after the date of enactment of this Act, and every 2 years thereafter, the Administrator shall compile, and submit to the Committee on Environment and Public Works of the Senate, and the Committee on Transportation and Infrastructure and the Committee on Energy and Commerce of the House of Representatives, a report that describes the status and results of the demonstration program.

(d) INCORPORATION OF RESULTS AND INFORMATION- To the maximum extent practicable, the Administrator shall incorporate the results of, and information obtained from, successful projects under this section into programs administered by the Administrator.

(e) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this section $20,000,000 for each of fiscal years 2003 through 2007.

SEC. 303. RATE STUDY.

(a) IN GENERAL- Not later than 2 years after the date of enactment of this Act, the National Academy of Sciences shall complete a study of the public water system and treatment works rate structures for communities in the United States selected by the Academy in accordance with subsection (c).

(b) REQUIRED ELEMENTS-

(1) RATES- The study shall, at a minimum--

(A) determine whether public water system and treatment works rates for communities included in the study adequately address the cost of service, including funds necessary to replace infrastructure;

(B) identify the manner in which the public water system and treatment works rates were determined;

(C) determine the manner in which cost of service is measured;

(D)(i) survey existing practices for establishing public water system and treatment works rates; and

(ii) identify any commonalities in factors and processes used to evaluate rate systems and make related decisions; and

(E) recommend a set of best industry practices for public water systems and treatment works for use in establishing a rate structure that--

(i) adequately addresses the true cost of service; and

(ii) takes into consideration the needs of disadvantaged individuals and communities.

(2) AFFORDABILITY- The study shall, at a minimum--

(A) identify existing standards for affordability;

(B) determine the manner in which those standards are determined and defined;

(C) determine the manner in which affordability varies with respect to communities of different sizes and in different regions; and

(D) determine the extent to which affordability affects the decision of a community to increase public water system and treatment works rates (including the decision relating to the percentage by which those rates should be increased).

(3) DISADVANTAGED COMMUNITIES- The study shall, at a minimum--

(A) survey a cross-section of States representing different sizes, demographics, and geographical regions;

(B) describe, for each State described in subparagraph (A), the definition of `disadvantaged community' used in the State in carrying out projects and activities under the Safe Drinking Water Act (42 U.S.C. 300f et seq.);

(C) review other means of identifying the meaning of the term `disadvantaged', as that term applies to communities;

(D) determine which factors and characteristics are required for a community to be considered `disadvantaged'; and

(E) evaluate the degree to which factors such as a reduction in the tax base over a period of time, a reduction in population, the loss of an industrial base, and the existence of areas of concentrated poverty are taken into account in determining whether a community is a disadvantaged community.

(c) SELECTION OF COMMUNITIES- The National Academy of Sciences shall select communities, the public water system and treatment works rate structures of which are to be studied under this section, that include a cross section of communities representing various populations, income levels, demographics, and geographical regions.

(d) REPORT TO CONGRESS- On completion of the study under this section, the National Academy of Sciences shall submit to Congress a report that describes the results of the study.

(e) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this section $1,000,000 for each of fiscal years 2003 and 2004.

SEC. 304. EFFECTS ON POLICIES AND RIGHTS.

(a) IN GENERAL- Nothing in this Act--

(1) impairs or otherwise affects in any way, any right or jurisdiction of any State with respect to the water (including boundary water) of the State;

(2) supersedes, abrogates, or otherwise impairs the authority of any State to allocate quantities of water within areas under the jurisdiction of the State; or

(3) supersedes or abrogates any right to any quantity or use of water that has been established by any State.

(b) STATE WATER RIGHTS- Notwithstanding any other provision of law, with respect to the implementation of this Act and amendments made by this Act--

(1) the management of and control over water in a State shall be subject to and in accordance with the laws of the State in which the water is located;

(2) Congress delegates to each State the authority to regulate water of the State, including the authority to regulate water in interstate commerce (including regulation of usufructuary rights, trade, and transportation); and

(3) the United States, and any agency or officer on behalf of the United States, may exercise management and control over water in a State only in compliance with the laws of the State in which the water is located.

TITLE IV--WATER RESOURCE PLANNING

SEC. 401. FINDINGS.

Congress finds that--

(1) there is ever-growing demand and competition for water from many segments of society, including municipal users, agriculture, and critical ecosystems;

(2) population growth in the United States will continue to place increasing pressure on the water supply of the United States;

(3) because sources of water do not follow political boundaries--

(A) the availability of water is increasingly becoming a regional issue; and

(B) it is more difficult to take action--

(i) to monitor the state of water resources;

(ii) to prepare for water shortages or surpluses;

(iii) to prevent the occurrence of water shortages or surpluses; or

(iv) to respond to emergency situations;

(4)(A) water shortages or surpluses can--

(i) impact public health;

(ii) limit economic and agricultural development; and

(iii) damage ecosystems; and

(B) the United States often suffers serious economic and environmental losses from water shortages or surpluses;

(5) there is no national policy to ensure an integrated and coordinated Federal strategy to monitor the state of the water resources of the United States;

(6) periodic assessments of the water resources of the United States are necessary; and

(7)(A) Congress has recognized and deferred to the States the authority to allocate and administer water within the borders of the States;

(B) the courts have confirmed that this is an appropriate role for the States; and

(C) Congress should continue to defer to States on laws and regulations governing the appropriation, distribution, and control or use of water.

SEC. 402. DEFINITION OF SECRETARY.

In this title, the term `Secretary' means the Secretary of the Interior, acting through the Director of the United States Geological Survey.

SEC. 403. ACTIONS.

(a) ASSESSMENT-

(1) IN GENERAL- Not later than 2 years after the date of enactment of this Act, the Secretary shall conduct an assessment of the state of water resources in the United States.

(2) COMPONENTS- The assessment shall, at a minimum--

(A) identify areas in the United States that are at significant risk for water shortages or water surpluses, as those shortages or surpluses pertain to support of human or ecosystem needs, in--

(i) the short term (1 through 10 years);

(ii) the middle term (11 through 20 years); and

(iii) the long term (21 through 50 years); and

(B) identify areas in each category described in subparagraph (A) in which water resource issues cross political boundaries.

(3) REPORT- On completion of the assessment, the Secretary shall submit to Congress a report that describes the results of the assessment.

(b) WATER RESOURCE RESEARCH PRIORITIES-

(1) IN GENERAL- The Secretary shall coordinate a process among Federal agencies (including the Environmental Protection Agency) to develop and publish, not later than 1 year after the date of enactment of this Act, a list of water resource research priorities that focuses on--

(A) monitoring; and

(B) improving the quality of the information available to State, tribal, and local water resource managers.

(2) USE OF LIST- The list published under paragraph (1) shall be used by Federal agencies as a guide in making decisions on the allocation of water research funding.

(c) INFORMATION DELIVERY SYSTEM-

(1) IN GENERAL- The Secretary shall coordinate a process to develop an effective information delivery system to communicate information described in paragraph (2) to--

(A) decisionmakers at the Federal, regional, State, tribal, and local levels;

(B) the private sector; and

(C) the general public.

(2) TYPES OF INFORMATION- The information referred to in paragraph (1) may include--

(A) the results of the national water resource assessment;

(B) a summary of the Federal water research priorities developed under subsection (b);

(C) near real-time data and other information on water shortages and surpluses;

(D) planning models for water shortages or surpluses (at various levels, such as State, river basin, and watershed levels);

(E) streamlined procedures for States and localities to interact with and obtain assistance from Federal agencies that perform water resource functions; and

(F) other materials, as determined by the Secretary.

SEC. 404. REPORT TO CONGRESS.

Not later than 2 years after the date of enactment of this Act, and every 2 years thereafter through fiscal year 2007, the Secretary shall submit to Congress a report on the implementation of this title.

SEC. 405. AUTHORIZATION OF APPROPRIATIONS.

There is authorized to be appropriated to the Secretary to carry out this title $3,000,000 for each of fiscal years 2003 through 2007, to remain available until expended.

END