S 2813 IS

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

July 29, 2002

Mr. SMITH of New Hampshire (for himself, Mr. CRAPO, and Mr. INHOFE) 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 Quality 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; use of State loan funds for security purposes.

Sec. 202. State loan fund.

Sec. 203. Assistance for disadvantaged communities.

Sec. 204. Private utilities.

Sec. 205. Technical assistance for small systems.

Sec. 206. 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. State loan fund review process.

Sec. 305. 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 maximize use of Federal funds and encourage maximum efficiency for States and localities; and

(3) to recognize the national environmental and public health importance of maintaining the drinking water and waste water infrastructure of the United States.

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 allocations 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) 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 a water quality benefit;

`(E) reuse, reclamation, or recycling projects that provide a water quality benefit; or

`(F) improvements to the security of infrastructure systems and treatment works.

`(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--

`(A) provide a water quality benefit; and

`(B) use 1 or more nontraditional approaches (such as 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 30 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 (8);

(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)--

`(A) to 1 or more treatment works for use in developing technical, managerial, and financial capacity in accordance with subsection (i); or

`(B) to a disadvantaged community, or to a community or entity that the State expects to experience significant financial difficulties and unaffordable rate increases in order to meet the requirements of this Act (including regulations promulgated under this Act), that receives a loan from the State under this title; and'; and

(5) in paragraph (8) (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 subsection (d)(7) may not exceed 30 percent of the amount of all capitalization grants received by the State for the fiscal year.'.

(e) 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' means the agency of a State having jurisdiction over water quality management (including the establishment of water quality standards).

`(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, as needed 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 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) CONDITION FOR RECEIPT OF ASSISTANCE-

`(A) IN GENERAL- Except as provided in subparagraph (B) and subsection (l), 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, in the aggregate, more than $500,000 under this title in any fiscal year to certify to the State that the treatment works has adequate technical, managerial, and financial capacity, including the establishment and implementation by the treatment works of an asset management plan 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 subsections (k) and (l), 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 certifies to the State that the recipient has considered--

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

`(2) forming cooperative partnerships; and

`(3) using nonstructural alternatives or technologies that may be more environmentally sensitive.

`(k) RATE STRUCTURE- As a condition of the receipt of funds for a project under this title, a recipient shall certify to the State that the recipient has in effect--

`(1) 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

`(2) not later than the date of completion of the project, an asset management plan described in subsection (i)(3).

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

`(m) 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, preliminary engineering evaluations, and rural community assistance programs) to 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 $10,000,000 for each of fiscal years 2003 through 2007.

`(n) PRIORITY- In making a loan under this section, a State may give priority to a disadvantaged community.'.

(f) 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) DEFINITION OF STATE- In this subsection, the term `State' means--

`(A) a State; and

`(B) the District of Columbia.

`(2) ALLOCATION- Funds made available to carry out this title for each of fiscal years 2003 through 2006 shall be allocated by the Administrator 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 percent of available funds.

`(3) PRIVATE UTILITIES- If a State elects to include the needs of private utilities in a needs survey used to develop the allocation formula described

in paragraph (2), the State shall include projects of the private utilities on the list of projects of the State that are eligible to receive funds under this title for each year covered by the needs survey.'.

(g) 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), 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), 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.'.

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

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

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

`(4) $6,000,000,000 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 $500,000 per year to pay the costs of conducting needs surveys under section 516(2).'.

(i) CONFORMING AMENDMENT- Section 216 of the Federal Water Pollution Control Act (33 U.S.C. 1296) is amended by striking `Not less than 25 per centum' and all that follows.

(j) NO NEW CAUSE OF ACTION- Nothing in this section or in any amendment made by this section establishes any new cause of action, or affects any cause of action in existence as of the date of enactment of this Act, for the purposes of judicial review under the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.).

TITLE II--SAFE DRINKING WATER ACT MODIFICATIONS

SEC. 201. PLANNING, DESIGN, AND PRECONSTRUCTION COSTS; USE OF STATE LOAN FUNDS FOR SECURITY PURPOSES.

Section 1452(a)(2) of the Safe Drinking Water Act (42 U.S.C. 300j-12(a)(2)) is amended--

(1) in the second sentence, by striking `(not' and inserting `(including planning, design, and associated preconstruction expenditures but not'; and

(2) in the third sentence, by inserting before the period at the end the following: `, or used by any public water system for the purpose of carrying out a project or activity to increase the security of the public water system'.

SEC. 202. STATE 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) 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 (B)--

(i) by striking `20' and inserting `30'; and

(ii) by striking `project, except' and all that follows and inserting the following: `project, except that in the case of a disadvantaged community (as defined in subsection (d)(3)), a State may provide an extended term for a loan, if the extended term does not exceed the expected life of the project; and';

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

(C) by adding at the end the following:

`(E) during the planning and engineering phase of each project for which the loan funds are received, the recipient of the loan funds certifies to the State that the recipient of the loan funds has considered--

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

`(ii) forming cooperative partnerships; and

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

`(F) during the planning and engineering phase of each project for which a recipient receives loan funds in excess of $500,000, the recipient certifies to the State that the recipient has in effect--

`(i) 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

`(ii) an asset management plan (for which the Administrator may provide information to assist States in determining plan content) that--

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

`(II) includes--

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

`(bb) 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.'.

(c) 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 of source water protection programs (including wellhead protection programs under section 1428).'.

(d) NO NEW CAUSE OF ACTION- Nothing in this section or in any amendment made by this section establishes any new cause of action, or affects any cause of action in existence as of the date of enactment of this Act, for the purposes of judicial review under the Safe Drinking Water Act (42 U.S.C. 300f et seq.).

(e) PLANNING, DESIGN, AND SECURITY ASSISTANCE- Nothing in this section or in any amendment made by this section applies to assistance provided under section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12) that is to be used solely for any planning, design, or security measure (as defined by a State in coordination with guidance issued by the Administrator of the Environmental Protection Agency) carried out with respect to a public water system under section 1452 of that Act.

SEC. 203. ASSISTANCE FOR DISADVANTAGED COMMUNITIES.

Section 1452(d)(1) of the Safe Drinking Water Act (42 U.S.C. 300j-12(d)(1)) is amended by striking `to a community that the State expects to become a disadvantaged community as the result of a proposed project' and inserting the following: `a community or entity that the State expects to experience significant financial difficulties and unaffordable rate increases in order to meet the requirements of this title (including regulations promulgated under this title), that receives a loan from the State under this title'.

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. 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 $8,000,000 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 $8,000,000 for each of fiscal years 2003 through 2007.'.

SEC. 206. 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) $1,500,000,000 for fiscal year 2003;

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

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

`(D) $6,000,000,000 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 $500,000 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) (as amended by section 103(e)) is amended by adding at the end the following:

`(o) 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)) (as amended by section 202(c)) is amended--

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

(2) by adding at the end the following:

`(6) 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 grant program to--

(A) promote innovations in technology and alternative approaches to water quality management or water supply (including water quality trading); 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 provide grants to municipalities to be used to carry out 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 sewer 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 providing grants to 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 GRANT RECIPIENTS- A recipient of a grant under this section shall submit to the Administrator, on the date of completion of a project using funds from the grant, and on the date that is 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;

(E) describe 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; and

(F) assess how communities use incentive-based fees--

(i) to reduce the quantity of water used by ratepayers; or

(ii) to reduce the quantity of pollutants or contaminants in sewage or stormwater generated by ratepayers.

(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 $2,000,000 for each of fiscal years 2003 and 2004.

SEC. 304. STATE LOAN FUND REVIEW PROCESS.

As soon as practicable after the date of enactment of this Act, the Administrator of the Environmental Protection Agency shall--

(1) consult with States, treatment works, and public water systems to identify ways to streamline and improve the application and review process for the provision of assistance from--

(A) the State water pollution revolving fund under title VI of the Federal Water Pollution Control Act (33 U.S.C. 1381 et seq.); and

(B) the State drinking water revolving fund under section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12); and

(2) submit to Congress a report that, based on the information identified under paragraph (1), contains recommendations for streamlining and improving the application and review process described in that paragraph.

SEC. 305. 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 and periodically thereafter, the Secretary shall conduct an assessment of the state of water resources in the United States.

(2) COMPONENTS- An assessment under paragraph (1) shall, at a minimum, determine the status and trends of--

(A) fresh water in waterways and reservoirs;

(B)(i) groundwater; and

(ii) fresh water stored in aquifers; and

(C) withdrawals of fresh water from waterways and aquifers.

(3) REPORT- On completion of each assessment under paragraph (1), 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