The Water and Power
Subcommittee (Chairman Radanovich, R-Calif.) of
House Resources Committee held a hearing on
pending legislation Thursday, July 27, 12006.
Below is the testimony of Dan Keppen, Family Farm
Alliance, John Keyes III, Commissioner Bureau of
Reclamation, and bill HR 4418.
Testimony of
Dan Keppen
Executive
Director
Family Farm
Alliance
Submitted to
the U.S. House Committee on Resources
Subcommittee
on Water and Power
Legislative
Hearing on
S. 895
The Rural
Water Supply Act of 2005
July 27,
2006
Chairman
Radanovich and Members of the Subcommittee:
Thank you
for this opportunity to submit testimony on behalf
of the Family Farm Alliance (Alliance). My name is
Dan Keppen, and I serve as the executive director
for the Alliance, which advocates for family
farmers, ranchers, irrigation districts, and
allied industries in seventeen Western states.
The Family
Farm Alliance is focused on one mission - To
ensure the availability of reliable, affordable
irrigation water supplies to Western farmers and
ranchers. The Alliance believes that ensuring the
continued viability of irrigated agriculture in
the West depends in large part on strengthening
and protecting the Bureau of Reclamation’s
(Reclamation) ability to carry out its core
responsibilities. Simply stated, these are the
operation and maintenance of existing water
infrastructure and the fulfillment of contractual
obligations to water and power users.
We
understand that S. 895 is intended to protect
Reclamation’s core activities by applying
consistent engineering and economic standards to
proposed rural (domestic) water supply projects
that are currently authorized by Congress on an ad
hoc basis, often without sufficient scrutiny of
their costs and benefits. In addition, the bill
would make federal loan guarantees available to
irrigation districts to help them pay for
extraordinary operations and maintenance projects
at existing Reclamation water supply and
conveyance facilities.
The Alliance
supports S. 895’s goals, but we have concerns
about how the legislation would achieve those
goals. The bill needs improvement, and the
Alliance cannot give its full support to the bill
unless several improvements are made. Below is a
discussion of those concerns and some
recommendations for addressing them.
Subjecting
proposed rural water supply projects to strict
scrutiny is certainly an improvement over current
practice, and it seems logical that such scrutiny
would result in fewer, better and cheaper
projects. Nevertheless, S. 895 formally expands
Reclamation’s mission and authorizes millions of
dollars to carry out a new rural water
program at a time when appropriations for the
agency’s existing obligations are shrinking. Good
intentions not withstanding, the Alliance is
concerned that this new program will compete with
Reclamation’s essential functions for scarce
resources.
Moreover,
the Alliance and others have long-standing
concerns about how Reclamation operates some of
its existing programs, especially the agency’s
Denver Technical Services Center (TSC). It’s
conceivable that the rural water supply program
envisioned by S. 895 could provide an expanded
role for the TSC.
Some of the
Alliance’s concerns about the TSC could be
addressed if the Bureau follows the recommendation
of the National Research Council of the National
Academies (NAS), which in December released a
draft report titled, “Managing Construction and
Infrastructure in the 21st Century Bureau of
Reclamation”. In comments on S. 895 earlier this
year, the Alliance recommended to House Resources
Committee that S 895 include provisions codifying
the NAS Committee recommendations to optimize
Reclamation’s planning, design and construction
management functions.
In the time
since we submitted our initial comments, the
Bureau has undertaken the “Managing for
Excellence” program, an action plan intended to
address the NAS report. It is essential that
Congress continue closely monitor the Bureau’s
effort to implement the NAS recommendations, and
legislation to codify or enforce them may
eventually be necessary. However, such
legislation may be premature at this time.
Still, the
Alliance remains concerned that the S. 895 may
create opportunities for bureaucratic growth and
administrative cost escalation. The Alliance
recommends that the S. 895 be amended to limit
the number of full-time equivalent employees or
the level of funding or both that can be devoted
to the new Bureau of Reclamation rural water
supply program.
Infrastructure Repair Loan Guarantees
The Rural
Water Supply Act of 2005 addresses an important
issue to western water users: the inability of
irrigation and water districts to pay for
expensive repairs to Bureau of Reclamation dams,
canals and other facilities. As the Subcommittee
is well aware, many Reclamation facilities are
near the end of their design life, and maintaining
the West’s aging water infrastructure is a major
financial challenge for Reclamation. It is also a
challenge for irrigation districts and communities
that depend upon these projects because in most
cases, project beneficiaries are obligated by
contract to pay 100 percent of operation,
maintenance and repair costs at Reclamation
facilities. Repair and replacement of aging
gates, canals and other facilities often involve
major construction projects costing millions of
dollars. Under Reclamation law, project
beneficiaries are required to pay these costs
immediately; they cannot be repaid over time.
Private
financing is difficult for many local entities to
obtain because they do not own the facilities that
are being repaired. In the past, programs such as
the Rehabilitation and Betterment Act provided
federal loans and other assistance for meeting the
costs of repairs and replacement of equipment.
However, such programs are no longer available.
The
alternative financing mechanism proposed in S. 895
– which would provide a government loan guarantee
to allow local entities to amortize expensive
operation, maintenance and replacement (OM&R)
projects – would be helpful to some local agencies
struggling to afford repairs to federally owned
facilities. By making it easier for certain
local agencies to meet their financial
responsibilities, S. 895 would make it easier to
protect the federal investment in the West water
supply infrastructure.
However,
while the loan guarantee program would be helpful
in many cases, it will not work in every case, or
at least not be itself. Other options that
Congress might consider for this or other
legislation could further enhance the ability of
rural irrigators to meet the costs of repairing
aging Bureau facilities. These options include
adapting repayment requirements that ease
borrowing requirements and extend repayment
periods, reinstating the Small Project Loan
Program, and allowing entities with annual
repayment obligations to shift those obligations
to reserve OM&R accounts.
The Alliance
believes the federal loan guarantee authority in
S. 895 can also be an effective tool for improving
water conservation, efficiency and management in
areas served by federal Reclamation projects. The
loan guarantee program should be expanded to make
it easier for local authorities to finance
improvements to the facilities that distribute and
deliver the water made available by Bureau of
Reclamation projects. Such improvements could
include lining leaking canals, modernization of
control structures, installation of water
conservation systems and other projects for which
local agencies may find difficult to secure
financing.
The Alliance
recommends that the Subcommittee consider amending
S. 895 to provide loan guarantees for improvement
of local water infrastructure connected to
Reclamation projects. Such an expansion could be
configured as a temporary pilot program to
demonstrate the effectiveness of this type of
assistance.
Conclusion
The
recommendations in this testimony are intended to
be constructive, and they are offered in a spirit
of cooperation. However, the bottom line is that
neither S. 895, nor any legislation currently
pending in the 109th Congress addresses
what’s really important to the family farmers in
the West. Their future is what’s really
important to them, and their future is at risk.
Urbanization and competition for water supplies
for environmental uses are driving Western farmers
off the land at a time when American food
production in general is following other
industries “off-shore” in search of lower costs.
Traditional farms and ranches are disappearing,
and this year it appears that our country will
actually become a net importer of food.
The U.S. needs a stable domestic food supply, just
as it needs a stable energy supply. The post 9/11
world of terrorist threats makes the stability of
domestic food supply even more pressing. For
farmers to survive; for food to be produced in
America there must be a stable water supply for
Western agriculture. Yet, supplies are anything
but stable. Urban and environmental demands are
claiming more and more water, and they are
draining it from agricultural.
This is
happening in every Western state, but especially
in Colorado, Arizona, Nevada and California. A
report released in April by Environment Colorado
found that, from 1987-2002, Colorado lost an
average of 460 acres per day of agricultural land.
The report predicts 3.1 million more acres will be
lost to development by 2022. Arizona’s Salt River
Project (SRP) is the “poster child” for transfers
of agricultural water to urban areas. In a few
years, the SRP will cease to provide water to
agriculture in order to meet new demands exerted
by development. In Las Vegas, over 70,000 new
residents are moving in every year, and Southern
Nevada Water Authority is looking to rural areas
to satisfy its growing thirst. California remains
the most populous state in the nation, with over
36 million people calling it home, and more
arriving every year.
Western
farmers, ranchers and water managers are getting
nervous. To them, it’s clear that either by
intention or by default current federal policy is
inconsistent with reliable long term domestic
agriculture and food production.
Congress and
the federal agencies need to take a careful look
at what’s happening in the West and decide if
irrigated agriculture is important to the nation
or not. If it is important, then we need to a
have a public policy conversation about how meet
urban and environmental needs while providing for
a healthy agricultural sector.
But we need
to answer that question soon, because some part of
the rural West is drying up and dying every day.
Thank you
for this opportunity to testify.
Statement of
John W. Keys, III, Commissioner
Bureau of Reclamation
U.S. Department of the Interior
Before the
Energy and Natural Resources Committee
U.S. Senate
on
S. 895
Rural Water Supply Act of 2005
May 12, 2005
Mr. Chairman, I am John W. Keys, III,
Commissioner of the Bureau of Reclamation. It is
my pleasure to present the Administration's views
on S. 895, the Rural Water Supply Act of 2005,
which would establish a rural water supply program
within the Department of the Interior and
authorize Reclamation to develop programmatic
criteria and guidelines giving Reclamation and
rural communities a consistent and fair process
for evaluating water supply needs and prospects in
rural communities.
During the last Congress, three distinct bills
were introduced for the purpose of creating a
coherent rural water program within the
Department: S. 1732, Senator Domenici's bill, S.
1085, Senator Bingaman's bill, and S. 2218, the
bill which Senator Domenici introduced by request
of the Administration.
The fact that there is but a single rural water
bill before the Committee in this Congress
reflects the positive spirit of consultation and
collaboration among this Committee's bipartisan
leadership and the Department as we have
brainstormed solutions and narrowed issues that
require more work. It is a pleasure to be a part
of this process which we hope very much will
culminate in enactment of a rural water program
that meets the fair expectations of rural
communities and U.S. taxpayers. Before addressing
the specific provisions of S. 895, I think it is
important to place our shared desire for a
rational rural water program in historical
context.
Historical Background
Since the early 1980s, Congress has authorized
thirteen separate single purpose Reclamation
projects for municipal and industrial water supply
in rural communities in Reclamation States. The
total federal budget authorization for those
projects is over $2.3 billion. These have all come
at a time when security and law enforcement costs,
operation and maintenance costs, dam safety costs,
and other program obligations continue to pressure
Reclamation's already tight budget. Congress
authorized and funded these projects without the
benefit of rigorous economic justification and
objective design review. Was the least cost
alternative chosen? Once constructed, could the
project deliver national economic benefits to
outweigh its costs? These questions were never
asked.
By no means can we assume that those thirteen
projects will be the last rural water projects
ever authorized and funded. A 1995 needs
assessment conducted by the U. S. Department of
Agriculture's Rural Development State Offices
estimated that over 1 million people in the United
States had no water piped into their homes, and
more than 2.4 million had critical unmet drinking
water needs. Recently released Environmental
Protection Agency data revealed $31 billion in
total funding needs for small systems serving
populations of 3,300 or less. As expensive as the
original thirteen Reclamation rural water projects
are, they represent only the tip of the iceberg if
no order and economic justification is introduced
to screen projects.
Compared to other Federal agencies with
water-management mandates, Reclamation has
maintained less control over rural water projects.
Programs managed in the Departments of
Agriculture, Commerce, Health and Human Services,
and the Environmental Protection Agency feature
specific eligibility criteria relating to the
missions and authorities of their agencies and
programs. In contrast, Reclamation currently has
no program, therefore no eligibility criteria and
no mechanism for qualitative or quantitative
analysis.
"Program" Performance
The thirteen rural water projects authorized
for Reclamation's involvement constitute a major
Federal budget issue that we are currently
attempting to manage without benefit of an
integrated rural water program.
Lacking generic authority to screen, plan,
design, and construct rural water projects,
Reclamation has limited ability to set priorities
and criteria for project development, and to
budget accordingly. This deficiency was brought
starkly to light when in 2002, as part of the
President's budget and performance integration
initiative, Reclamation's rural water activities
were assessed under two lenses: the Program
Assessment Rating Tool (PART) and the Common
Measures exercise. Under the PART exercise our
rural water program was rated "Results Not
Demonstrated," despite the fact that Reclamation's
rural water projects were meeting authorized
project purposes. Further, the assessment
concluded that stronger controls for project
development were needed and "lack of agency
involvement during project development may result
in a project that is not in the best Federal
interest."
As a result of the PART exercise, the
Administration concluded that legislation should
be developed to establish a Reclamation rural
water program with adequate controls and
guidelines. We are gratified that S. 895 reflects
its sponsors' agreement that this is necessary.
Let me turn now to several specific elements of
S. 895 that the Administration strongly supports.
Authority to Develop Eligibility Criteria
Because each of the existing rural water
projects has been authorized individually, and
because of a lack of general programmatic
authority, Reclamation and the Department have
been limited in our ability to plan for projects
effectively or to establish relative priorities
both within the budget for rural water activities
and within Reclamation's budget as a whole.
Establishing a rural water program as proposed
in S. 895 will allow for more realistic planning
so that rural water projects are not proposed in a
vacuum, but instead are guided through the
program's planning process to use a consistent set
of eligibility criteria. This approach will foster
some competition, allow for the development of
priorities, and create more realistic expectations
when a project is authorized for construction that
it will actually be developed.
Non-Federal Cost Share Based upon
"Capability to Pay"
The non-Federal cost shares for each of the
currently authorized rural water projects range
from zero for the Indian portion of the Mni Wiconi
Project in South Dakota to 25 percent for the
non-Indian Dry Prairie Rural Water System
connected to the Fort Peck Reservation Rural Water
System in Montana.
In contrast, capital investment costs
associated with traditional Reclamation projects
or portions of projects authorized for municipal
and industrial (M&I) use must be fully repaid with
interest. Further, traditional Reclamation
irrigation projects require that repayment of
costs be based upon a project sponsor's ability to
pay, as determined through the study of both the
project sponsor's financial information and the
project's economic (cost/benefit) feasibility.
S. 895 would require Reclamation to identify
the "capability to pay" of rural communities to
determine the appropriate level of their
contribution for development and construction
costs. The Administration strongly supports this
approach. It will establish a fair matrix to
identify the appropriate level of non-Federal
contribution.
Early Reclamation Involvement and
Development of Criteria for Appraisal and
Feasibility Studies
Because Reclamation does not have an integrated
rural water program, communities initiate studies
that have not been reviewed by Reclamation and do
not meet current Federal planning and engineering
standards. They do not necessarily explore all of
the available options to meet their water supply
needs beyond those designs that preceded them.
While these plans become the basis for
legislation, some of them are inadequate for sound
decision-making or may not reflect an exploration
of all the options. In these cases plans must be
redeveloped once the project is authorized and
funded. Project reformulation is complicated by
the fact that the original project concept
mandated in authorizing legislation cannot be
changed without further legislation, even if it
turns out to be a suboptimal option.
The rural water program proposed in S. 895 will
allow communities to approach Reclamation for
guidance early in the process and, more
importantly, will allow Reclamation to participate
in the early project scoping, appraisal and
feasibility study processes for rural water
projects in the Western United States. For
example, most projects developed to date have
consisted of pumping water and then transporting
it through long pipelines at great expense. One
option that has not been explored yet, but which
could be more economical to build and to maintain,
would be to develop small localized desalination
plants to treat brackish groundwater, thereby
avoiding the cost of building and maintaining long
pipelines. Under S. 895, Reclamation and the local
communities can explore this option.
A positive innovation in S. 895 that had not
appeared in any of the rural water bills
considered in the previous Congress allows local
communities to complete their own appraisal and
feasibility studies - either at their own expense
or through a grant from or cooperative agreement
with Reclamation - as long as those studies meet a
set of minimum criteria to be developed by
Reclamation. Not only could this reduce the cost
of these studies, but it should also increase the
sense of ownership of the study and of its
recommendations by the non-Federal project entity.
Operation and Maintenance Costs
In general, the Administration supports the
provisions in S. 895 that require the non-Federal
entities (particularly for the non-Indian project
beneficiaries) to demonstrate their capability to
pay 100 percent of the operations, maintenance and
replacement (OM&R) costs associated with the
projects proposed to be built for their benefit. A
specific concern with how this issue relates to
certain Tribal and Indian projects will be
addressed later in my statement.
Coordination with Other Federal Rural Water
Programs
Section 107(d) requires the Secretary to
coordinate the rural water program established by
the Act with existing Federal and state programs
to facilitate the most efficient and effective
solutions to meeting the water needs of the
project sponsors.
This will help the rural water supply programs
in the various Federal and state agencies to
derive maximum value for the dollar from the
limited Federal and state resources identified for
this purpose.
Concerns and Suggestions
The Administration views S. 895 as having the
potential to be one of the most positive
legislative developments for the Department of the
Interior in some time. Nevertheless, we have a few
concerns that we will work with the Committee to
address as this bill goes forward.
Create a Programmatic Framework: The
Administration recommends that S. 895 establish an
overall programmatic framework for all aspects of
the rural water program - not just limited to
completion of the appraisal and feasibility
studies, but as a framework for how projects, once
authorized, would be planned, designed,
constructed and then overseen and managed. This
approach will allow for the development of
priorities, and could create more realistic
expectations when a project is authorized for
construction that it will actually be developed.
It would also facilitate the legislative process
for future rural water activities and projects,
since the programmatic framework would already be
in place rather than having to be spelled out with
each subsequent project authorization.
Economic Factors for Eligibility Criteria
and Evaluation: As introduced, S. 895 spells
out a number of specific factors that must be
included in the eligibility criteria and in the
factors for consideration for the appraisal and
feasibility studies. While we support including
these factors, we also suggest that the bill
include criteria for analysis and reporting of
economic and financial benefits and impacts
necessary to justify the Federal investment.
For feasibility studies, Section 106(g) (3)
allows the Secretary to increase the Federal share
based upon a demonstration of financial hardship
by the non-Federal entities. These relatively
small local contributions are an important measure
of the communities' commitment in pursuing a first
indication of the level of priority that such a
project holds for these rural communities. If an
exemption is deemed to be necessary, we recommend
that such exemptions be limited to Indian tribes
or tribal organizations. Construction Cost
Share: As introduced, Section 106(e)(1)(A)(i)(II)(aa)
requires that the Feasibility Report include
non-Federal cost share of construction costs of no
less than 25%. The Administration recommends that
the non-Federal share of construction costs be
increased to no less than 35%, which is similar to
the 1/3 local cost-share that is central to the
landmark CALFED legislation passed by the 108th
Congress.
Operations and Maintenance Costs for Native
American Projects: S. 895, as introduced,
requires that all O&M costs be the sole
responsibility of the non-Federal project
entities. This may be beyond the capability of
some Tribes.
In stark contrast, however, the authorizing
legislation for the Mni Wiconi Project and the
Garrison Project each directed the Secretary to
operate and maintain project facilities
constructed to serve the Indian reservations. As
construction of these Indian rural water projects
is completed, the associated O&M costs consume an
increasing percentage of Reclamation's budget with
no prospect of declining. These ongoing
obligations will have increasingly significant
budget impacts without any consideration for the
improvements to the tribes' financial situation or
to their improved capability to pay for these O&M
costs due to the improved water supply systems.
The Administration recommends some middle
ground between these two approaches. We recommend
some accommodation for Tribes that cannot cover
100% of their initial O&M costs in the near term.
However, this should be structured to account for
the positive economic impacts that the rural water
delivery projects will have in these communities.
It should also encourage greater tribal
self-sufficiency, conservation, and the
development of the technical and financial
expertise needed to efficiently manage these water
systems themselves. In contrast to the current
practice of subsidizing all the OM&R costs
associated with Indian rural water facilities, we
recommend that the Secretary be authorized to seek
appropriations to assist Tribes to pay for the
difference between the actual OM&R costs and the
projected revenues from water sales to project
beneficiaries. As project benefits spur economic
development, Tribes will have a greater capability
to pay for their OM&R costs and the need for this
assistance will decline. Such a provision is found
in S. 2218, the Administration-sponsored rural
water bill from the 108th Congress.
Application of the Indian Self Determination
and Education Assistance Act (P.L. 93-638):
Another area that S. 895 does not address is the
application of the Indian Self Determination and
Education Assistance Act (P.L. 93-638), commonly
referred to as 638. As introduced, S. 895 would
not impact the application of provisions of P.L.
93-638 such that tribes would have priority in
construction activities impacting or benefiting
Tribal entities. The Administration strongly
concurs. However, we recommend that S. 895
specifically provide that the amounts appropriated
and made available to Indian project beneficiaries
under a self determination contract or a self
governance compact and all project revenues
(including interest earned and all collected fees)
should be: (1) reported to the Secretary by the
Tribes, (2) expended only for the purposes for
which they were originally appropriated; and (3)
used by the Secretary to determine the amount of
funds otherwise obligated to the contract or
agreement in subsequent years.
These provisions will improve the financial
management of these projects; will guarantee that
the appropriated funds and their associated
revenues will directly benefit the rural water
projects and will potentially reduce the need for
some appropriated funds since some project
construction costs could be addressed through
interest and associated revenues.
Indian Trust Responsibilities: As introduced,
section 105(c)(1)(F) and section 106(c)(12) speak
to "Indian trust responsibilities." We believe
these provisions may be read to create a trust
responsibility for rural water systems that has
not previously existed. We think these provisions
should be removed.
Loan guarantees
Title II of the legislation presents a
potentially valuable innovation, not only for the
rural water program, but for other Reclamation
customers. However, it would be an entirely new
tool for the Bureau, with far-reaching
programmatic, staffing, and budgetary impacts that
are not yet fully understood. The Administration
is interested in further exploring a loan
guarantee program for Reclamation, but will
reserve judgment on the merits of this proposal
until we can complete our ongoing process of
developing and vetting the idea, so that we can
clearly say whether this is the best policy
mechanism to address the particular challenges
faced by water users, and what it will cost the
taxpayer.
In addition to the above comments, we have
identified a few technical issues that may require
clarification. We are confident that Committee
staff will be able to determine quickly whether to
incorporate them or not. In conclusion, Mr.
Chairman, we are honored to work with you and
Senator Bingaman to advance legislation to
establish a rural water program within the
Department of the Interior that can benefit both
rural communities and taxpayers-at-large .
I am pleased to answer any questions.
*******************************************************************************************************
Rural Water Supply Act of 2005
http://www.theorator.com/bills109/hr4418.html
109th CONGRESS
1st Session
H. R. 4418
To direct the Secretary of the
Interior to establish a rural water supply
program in the Reclamation States to provide a
clean, safe, affordable, and reliable water
supply to rural residents.
IN THE HOUSE OF REPRESENTATIVES
November 18, 2005
Mr. PEARCE introduced the following bill;
which was referred to the Committee on Resources
A BILL
To direct the Secretary of the
Interior to establish a rural water supply
program in the Reclamation States to provide a
clean, safe, affordable, and reliable water
supply to rural residents.
Be it enacted by the Senate and House of
Representatives of the United States of
America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE
OF CONTENTS.
(a) Short Title- This Act may be cited as the
`Rural Water Supply Act of 2005'.
(b) Table of Contents- The table of contents
of this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I--RECLAMATION RURAL
WATER SUPPLY ACT OF 2005
Sec. 103. Rural water supply program.
Sec. 104. Rural water programs assessment.
Sec. 105. Appraisal investigations.
Sec. 106. Feasibility studies.
Sec. 108. Authorization of appropriations.
TITLE II--TWENTY-FIRST
CENTURY WATER WORKS ACT
Sec. 203. Project eligibility.
Sec. 204. Loan guarantees.
Sec. 205. Operations, maintenance, and
replacement costs.
Sec. 206. Title to newly constructed
facilities.
Sec. 208. Interagency coordination and
cooperation.
Sec. 209. Authorization of appropriations.
TITLE I--RECLAMATION RURAL WATER SUPPLY
ACT OF 2005
SEC. 101. SHORT TITLE.
This title may be cited as the `Reclamation
Rural Water Supply Act of 2005'.
SEC. 102. DEFINITIONS.
(1) CONSTRUCTION- The term `construction'
means the installation of new infrastructure
and the upgrading of existing facilities in
locations in which the infrastructure or
facilities are associated with the new
infrastructure of a rural water project
recommended by the Secretary pursuant to
this title.
(2) FEDERAL RECLAMATION LAW- The term
`Federal reclamation law' means the Act of
June 17, 1902 (32 Stat. 388, chapter 1093),
and Acts supplemental to and amendatory of
that Act (43 U.S.C. 371 et seq.).
(3) INDIAN- The term `Indian' means an
individual who is a member of an Indian
tribe.
(4) INDIAN TRIBE- The term `Indian tribe'
has the meaning given the term in section 4
of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. 450b).
(5) NON-FEDERAL PROJECT ENTITY- The term
`non-Federal project entity' means a State,
regional, or local authority, Indian tribe
or tribal organization, or other qualifying
entity, such as a water conservation
district, water conservancy district, or
rural water district or association.
(6) OPERATIONS, MAINTENANCE, AND REPLACEMENT
COSTS-
(A) IN GENERAL- The term `operations,
maintenance, and replacement costs' means
all costs for the operation of a rural
water supply project that are necessary
for the safe, efficient, and continued
functioning of the project to produce the
benefits described in a feasibility study.
(B) INCLUSIONS- The term `operations,
maintenance, and replacement costs'
includes--
(i) repairs of a routine nature that
maintain a rural water supply project in
a well kept condition;
(ii) replacement of worn-out project
elements; and
(iii) rehabilitation activities
necessary to bring a deteriorated
project back to the original condition
of the project.
(C) EXCLUSION- The term `operations,
maintenance, and replacement costs' does
not include construction costs.
(7) PROGRAM- The term `Program' means the
rural water supply program established under
section 103.
(8) RECLAMATION STATES- The term
`Reclamation States' means the States and
areas referred to in the first section of
the Act of June 17, 1902 (43 U.S.C. 391).
(9) RURAL WATER SUPPLY PROJECT-
(A) IN GENERAL- The term `rural water
supply project' means a project that is
designed to serve a community or group of
communities, each of which has a
population of not more than 50,000
inhabitants, which may include Indian
tribes and tribal organizations, dispersed
homesites, or rural areas with domestic,
industrial, municipal, and residential
water.
(B) INCLUSION- The term `rural water
supply project' includes--
(i) incidental noncommercial livestock
watering and noncommercial irrigation of
vegetation and small gardens of less
than 1 acre; and
(ii) a project to improve rural water
infrastructure, including--
(I) pumps, pipes, wells, and other
diversions;
(II) storage tanks and small
impoundments;
(III) water treatment facilities for
potable water supplies, including
desalination facilities;
(IV) equipment and management tools
for water conservation, groundwater
recovery, and water recycling; and
(C) EXCLUSION- The term `rural water
supply project' does not include--
(i) commercial irrigation; or
(ii) major impoundment structures.
(10) SECRETARY- The term `Secretary' means
the Secretary of the Interior.
(11) TRIBAL ORGANIZATION- The term `tribal
organization' means--
(A) the recognized governing body of an
Indian tribe; and
(B) any legally established organization
of Indians that is controlled, sanctioned,
or chartered by the governing body or
democratically elected by the adult
members of the Indian community to be
served by the organization.
SEC. 103. RURAL WATER SUPPLY
PROGRAM.
(a) In General- The Secretary, in cooperation
with non-Federal project entities and
consistent with this title, shall establish
and carry out a rural water supply program in
Reclamation States to--
(1) investigate and identify opportunities
to ensure safe and adequate rural water
supply projects for domestic, municipal, and
industrial use in small communities and
rural areas of the Reclamation States;
(2) plan the design and construction,
through the conduct of appraisal
investigations and feasibility studies, of
rural water supply projects in Reclamation
States; and
(3) oversee, as appropriate, the
construction of rural water supply projects
in Reclamation States that are recommended
by the Secretary in a feasibility report
developed pursuant to section 106 and
subsequently authorized by Congress.
(b) Non-Federal Project Entity- Any activity
carried out under this title shall be carried
out in cooperation with a qualifying
non-Federal project entity, consistent with
this title.
(c) Eligibility Criteria- Not later than 1
year after the date of enactment of this Act,
the Secretary shall, consistent with this
title, develop and publish in the Federal
Register criteria for--
(1) determining the eligibility of a rural
community for assistance under the Program;
and
(2) prioritizing requests for assistance
under the Program.
(d) Factors- The criteria developed under
subsection (c) shall take into account such
factors as whether--
(1) a rural water supply project--
(i) rural areas and small communities;
or
(B) promotes and applies a regional or
watershed perspective to water resources
management;
(2) there is an urgent and compelling need
for a rural water supply project that
would--
(A) improve the health or aesthetic
quality of water;
(B) result in continuous, measurable, and
significant water quality benefits; or
(C) address current or future water supply
needs;
(3) a rural water supply project helps meet
applicable requirements established by law;
and
(4) a rural water supply project is cost
effective.
(e) Inclusions- The Secretary may include--
(1) to the extent that connection provides a
reliable water supply, a connection to
preexisting infrastructure (including
impoundments and conveyance channels) as
part of a rural water supply project; and
(2) notwithstanding the limitation on
population under section 102(9)(A), a town
or community with a population in excess of
50,000 inhabitants in an area served by a
rural water supply project if, at the
discretion of the Secretary, the town or
community is considered to be a critical
partner in the rural supply project.
SEC. 104. RURAL WATER
PROGRAMS ASSESSMENT.
(a) In General- In consultation with the
Secretary of Agriculture, the Administrator of
the Environmental Protection Agency, the
Director of the Indian Health Service, the
Secretary of Housing and Urban Development,
and the Secretary of the Army, the Secretary
shall develop an assessment of--
(1) the status of all rural water supply
projects under the jurisdiction of the
Secretary authorized but not completed prior
to the date of enactment of this Act,
including appropriation amounts, the phase
of development, total anticipated costs, and
obstacles to completion;
(2) the current plan (including projected
financial and workforce requirements) for
the completion of the projects identified in
paragraph (1) within the time frames
established under the provisions of law
authorizing the projects or the final
engineering reports for the projects;
(3) the demand for new rural water supply
projects;
(4) rural water programs within other
agencies and a description of the extent to
which those programs provide support for
rural water supply projects and water
treatment programs in Reclamation States,
including an assessment of the requirements,
funding levels, and conditions of
eligibility for the programs assessed;
(5) the extent of the demand that the
Secretary can meet with the Program;
(6) how the Program will complement
authorities already within the jurisdiction
of the Secretary and the heads of the
agencies with whom the Secretary consults;
and
(7) improvements that can be made to
coordinate and integrate the authorities of
the agencies with programs evaluated under
paragraph (4), including any recommendations
to consolidate some or all of the activities
of the agencies with respect to rural water
supply.
(b) Consultation With States- Before
finalizing the assessment developed under
subsection (a), the Secretary shall solicit
comments from States with identified rural
water needs.
(c) Report- Not later than 2 years after the
date of enactment of this Act, the Secretary
shall submit to the Committee on Energy and
Natural Resources of the Senate and the
Committee on Resources of the House of
Representatives a detailed report on the
assessment conducted under subsection (a).
SEC. 105. APPRAISAL
INVESTIGATIONS.
(a) In General- On request of a non-Federal
project entity with respect to a proposed
rural water supply project that meets the
eligibility criteria published under section
103(c) and subject to the availability of
appropriations, the Secretary may--
(1) receive and review an appraisal
investigation that is--
(A) developed by the non-Federal project
entity, with or without support from the
Secretary; and
(B) submitted to the Secretary by the
non-Federal project entity;
(2) conduct an appraisal investigation; or
(3) provide a grant to, or enter into a
cooperative agreement with, the non-Federal
project entity to conduct an appraisal
investigation, if the Secretary determines
that--
(A) the non-Federal project entity is
qualified to complete the appraisal
investigation in accordance with the
criteria published under section 103(c);
and
(B) using the non-Federal project entity
to conduct the appraisal investigation is
a cost-effective alternative for
completing the appraisal investigation.
(b) Deadline- An appraisal investigation
conducted under subsection (a) shall be
scheduled for completion not later than 2
years after the date on which the appraisal
investigation is initiated.
(c) Appraisal Report- In accordance with
subsection (f), after an appraisal
investigation is submitted to the Secretary
under subsection (a)(1) or completed under
paragraph (2) or (3) of subsection (a), the
Secretary shall prepare an appraisal report
that--
(A) whether the project meets--
(i) the appraisal criteria developed
under subsection (d); and
(ii) the eligibility criteria developed
under section 103(c);
(B) whether viable water supplies and
water rights exist to supply the project,
including all practicable water sources
such as lower quality waters, nonpotable
waters, and water reuse-based water
supplies;
(C) whether the project has a positive
effect on public health and safety;
(D) whether the project will meet water
demand, including projected future needs;
(E) the extent to which the project
provides environmental benefits, including
source water protection;
(F) whether the project applies a regional
or watershed perspective and promotes
benefits in the region in which the
project is carried out;
(G) whether the project--
(i)(I) implements an integrated
resources management approach; or
(II) enhances water management
flexibility, including providing for--
(aa) local control to manage water
supplies under varying water supply
conditions; and
(bb) participation in water banking
and markets for domestic and
environmental purposes; and
(ii) promotes long-term protection of
water supplies;
(H) preliminary cost estimates for the
project; and
(I) whether the non-Federal project entity
has the capability to pay 100 percent of
the costs associated with the operations,
maintenance, and replacement of the
facilities constructed or developed as
part of the rural water supply project;
and
(2) provides recommendations on whether a
feasibility study should be initiated under
section 106(a).
(1) IN GENERAL- Not later than 1 year after
the date of enactment of this Act, the
Secretary shall promulgate criteria
(including appraisal factors listed under
subsection (c)) against which the appraisal
investigations shall be assessed for
completeness and appropriateness for a
feasibility study.
(2) INCLUSIONS- To minimize the cost of a
rural water supply project to a non-Federal
project entity, the Secretary shall include
in the criteria methods to scale the level
of effort needed to complete the appraisal
investigation relative to the total size and
cost of the proposed rural water supply
project.
(e) Review of Appraisal Investigation-
(1) IN GENERAL- Not later than 90 days after
the date of submission of an appraisal
investigation under paragraph (1) or (3) of
subsection (a), the Secretary shall provide
to the non-Federal entity that conducted the
investigation a determination of whether the
investigation has included the information
necessary to determine whether the proposed
rural water supply project satisfies the
criteria promulgated under subsection (d).
(2) NO SATISFACTION OF CRITERIA- If the
Secretary determines that the appraisal
investigation submitted by a non-Federal
entity does not satisfy the criteria
promulgated under subsection (d), the
Secretary shall inform the non-Federal
entity of the reasons why the appraisal
investigation is deficient.
(3) RESPONSIBILITY OF SECRETARY- If an
appraisal investigation as first submitted
by a non-Federal entity does not provide all
necessary information, as defined by the
Secretary, the Secretary shall have no
obligation to conduct further analysis until
the non-Federal project entity submitting
the appraisal study conducts additional
investigation and resubmits the appraisal
investigation under this subsection.
(f) Appraisal Report- Once the Secretary has
determined that an investigation provides the
information necessary under subsection (e),
the Secretary shall--
(1) complete the appraisal report required
under subsection (c);
(2) make available to the public, on
request, the appraisal report prepared under
this title; and
(3) promptly publish in the Federal Register
a notice of the availability of the results.
(1) FEDERAL SHARE- The Federal share of an
appraisal investigation conducted under
subsection (a) shall be 100 percent of the
total cost of the appraisal investigation,
up to $200,000.
(A) IN GENERAL- Except as provided in
subparagraph (B), if the cost of
conducting an appraisal investigation is
more than $200,000, the non-Federal share
of the costs in excess of $200,000 shall
be 50 percent.
(B) EXCEPTION- The Secretary may reduce
the non-Federal share required under
subparagraph (A) if the Secretary
determines that there is an overwhelming
Federal interest in the appraisal
investigation.
(C) FORM- The non-Federal share under
subparagraph (A) may be in the form of any
in-kind services that the Secretary
determines would contribute substantially
toward the conduct and completion of the
appraisal investigation.
(h) Consultation; Identification of Funding
Sources- In conducting an appraisal
investigation under subsection (a)(2), the
Secretary shall--
(1) consult and cooperate with the
non-Federal project entity and appropriate
State, tribal, regional, and local
authorities;
(2) consult with the heads of appropriate
Federal agencies to--
(A) ensure that the proposed rural water
supply project does not duplicate a
project carried out under the authority of
the agency head; and
(B) if a duplicate project is being
carried out, identify the authority under
which the duplicate project is being
carried out; and
(3) identify what funding sources are
available for the proposed rural water
supply project.
SEC. 106. FEASIBILITY
STUDIES.
(a) In General- On completion of an appraisal
report under section 105(c) that recommends
undertaking a feasibility study and subject to
the availability of appropriations, the
Secretary shall--
(1) in cooperation with a non-Federal
project entity, carry out a study to
determine the feasibility of the proposed
rural water supply project;
(2) receive and review a feasibility study
that is--
(A) developed by the non-Federal project
entity, with or without support from the
Secretary; and
(B) submitted to the Secretary by the
non-Federal project entity; or
(3) provide a grant to, or enter into a
cooperative agreement with, a non-Federal
project entity to conduct a feasibility
study, for submission to the Secretary, if
the Secretary determines that--
(A) the non-Federal entity is qualified to
complete the feasibility study in
accordance with the criteria promulgated
under subsection (d); and
(B) using the non-Federal project entity
to conduct the feasibility study is a
cost-effective alternative for completing
the appraisal investigation.
(b) Review of Non-Federal Feasibility Studies-
(1) IN GENERAL- In conducting a review of a
feasibility study submitted under paragraph
(2) or (3) of subsection (a), the Secretary
shall--
(A) in accordance with the feasibility
factors described in subsection (c) and
the criteria promulgated under subsection
(d), assess the completeness of the
feasibility study; and
(B) if the Secretary determines that a
feasibility study is not complete, notify
the non-Federal entity of the
determination.
(2) REVISIONS- If the Secretary determines
under paragraph (1)(B) that a feasibility
study is not complete, the non-Federal
entity shall pay any costs associated with
revising the feasibility study.
(c) Feasibility Factors- Feasibility studies
authorized or reviewed under this title shall
include an assessment of--
(1) near- and long-term water demand in the
area to be served by the rural water supply
project;
(2) advancement of public health and safety
of any existing rural water supply project
and other benefits of the proposed rural
water supply project;
(3) alternative new water supplies in the
study area, including any opportunities to
treat and use low-quality water, nonpotable
water, water reuse-based supplies, and
brackish and saline waters through
innovative and economically viable treatment
technologies;
(4) environmental quality and source water
protection issues related to the rural water
supply project;
(5) innovative opportunities for water
conservation in the study area to reduce
water use and water system costs,
including--
(A) nonstructural approaches to reduce the
need for the project; and
(B) demonstration technologies;
(6) the extent to which the project and
alternatives take advantage of economic
incentives and the use of market-based
mechanisms;
(7)(A) the construction costs and projected
operations, maintenance, and replacement
costs of all alternatives; and
(B) the economic feasibility and lowest cost
method of obtaining the desired results of
each alternative, taking into account the
Federal cost-share;
(8) the availability of guaranteed loans for
a proposed rural water supply project;
(9) the financial capability of the
non-Federal project entity to pay the
non-Federal project entity's proportionate
share of the design and construction costs
and 100 percent of operations, maintenance,
and replacement costs, including the
allocation of costs to each non-Federal
project entity in the case of multiple
entities;
(10) whether the non-Federal project entity
has developed an operations, management, and
replacement plan to assist the non-Federal
project entity in establishing rates and
fees for beneficiaries of the rural water
supply project that includes a schedule
identifying the annual operations,
maintenance, and replacement costs that
should be allocated to each non-Federal
entity participating in the project;
(11)(A) the non-Federal project entity
administrative organization that would
implement construction, operations,
maintenance, and replacement activities; and
(B) the fiscal, administrative, and
operational controls to be implemented to
manage the project;
(12) the extent to which assistance for
rural water supply is available under other
Federal authorities;
(13) the engineering, environmental, and
economic activities to be undertaken to
carry out the proposed rural water supply
project;
(14) the extent to which the project
involves partnerships with other State,
local, or tribal governments or Federal
entities; and
(15) in the case of a project intended for
Indian tribes and tribal organizations, the
extent to which the project addresses the
goal of economic self-sufficiency.
(d) Feasibility Study Criteria-
(1) IN GENERAL- Not later than 18 months
after the date of enactment of this Act, the
Secretary shall promulgate criteria
(including the feasibility factors listed
under subsection (c)) under which the
feasibility studies shall be assessed for
completeness and appropriateness.
(2) INCLUSIONS- The Secretary shall include
in the criteria promulgated under paragraph
(1) methods to scale the level of effort
needed to complete the feasibility
assessment relative to the total size and
cost of the proposed rural water supply
project and reduce total costs to
non-Federal entities.
(1) IN GENERAL- After completion of
appropriate feasibility studies for rural
water supply projects that address the
factors described in subsection (c) and the
criteria promulgated under subsection (d),
the Secretary shall--
(A) develop a feasibility report that
includes--
(i) a recommendation of the Secretary
on--
(I) whether the rural water supply
project should be authorized for
construction; and
(II) the appropriate non-Federal share
of construction costs, which shall
be--
(aa) at least 25 percent of the total
construction costs; and
(bb) determined based on an analysis
of the capability-to-pay information considered
under subsections (c)(9) and (f); and
(ii) if the Secretary recommends that
the project should be authorized for
construction--
(I) what amount of grants, loan
guarantees, or combination of grants
and loan guarantees should be used to
provide the Federal cost share;
(II) a schedule that identifies the
annual operations, maintenance, and
replacement costs that should be
allocated to each non-Federal entity
participating in the rural water
supply project; and
(III) an assessment of the financial
capability of each non-Federal entity
participating in the rural water
supply project to pay the allocated
annual operation, maintenance, and
replacement costs for the rural water
supply project;
(B) submit the report to the Committee on
Energy and Natural Resources of the Senate
and the Committee on Resources of the
House of Representatives;
(C) make the report publicly available,
along with associated study documents; and
(D) publish in the Federal Register a
notice of the availability of the results.
(1) IN GENERAL- In evaluating a proposed
rural water supply project under this
section, the Secretary shall--
(A) consider the financial capability of
any non-Federal project entities
participating in the rural water supply
project to pay 25 percent or more of the
capital construction costs of the rural
water supply project; and
(B) recommend an appropriate Federal share
and non-Federal share of the capital
construction costs, as determined by the
Secretary.
(2) FACTORS- In determining the financial
capability of non-Federal project entities
to pay for a rural water supply project
under paragraph (1), the Secretary shall
evaluate factors for the project area,
relative to the State average, including--
(B) median household income;
(D) the ability of the non-Federal project
entity to raise tax revenues or assess
fees;
(E) the strength of the balance sheet of
the non-Federal project entity; and
(F) the existing cost of water in the
region.
(3) INDIAN TRIBES- In determining the
capability-to-pay of Indian tribe project
beneficiaries, the Secretary may consider
deferring the collection of all or part of
the non-Federal construction costs
apportioned to Indian tribe project
beneficiaries unless or until the Secretary
determines that the Indian tribe project
beneficiaries should pay--
(A) the costs allocated to the
beneficiaries; or
(B) an appropriate portion of the costs.
(g) Cost-Sharing Requirement-
(1) IN GENERAL- Except as otherwise provided
in this subsection, the Federal share of the
cost of a feasibility study carried out
under this section shall not exceed 50
percent of the study costs.
(2) FORM- The non-Federal share under
paragraph (1) may be in the form of any
in-kind services that the Secretary
determines would contribute substantially
toward the conduct and completion of the
study.
(3) FINANCIAL HARDSHIP- The Secretary may
increase the Federal share of the costs of a
feasibility study if the Secretary
determines, based on a demonstration of
financial hardship, that the non-Federal
participant is unable to contribute at least
50 percent of the costs of the study.
(4) LARGER COMMUNITIES- In conducting a
feasibility study of a rural water supply
system that includes a community with a
population in excess of 50,000 inhabitants,
the Secretary may require the non-Federal
project entity to pay more than 50 percent
of the costs of the study.
(h) Consultation and Cooperation- In addition
to the non-Federal project entity, the
Secretary shall consult and cooperate with
appropriate Federal, State, tribal, regional,
and local authorities during the conduct of
each feasibility assessment and development of
the feasibility report conducted under this
title.
SEC. 107. MISCELLANEOUS.
(a) Authority of Secretary- The Secretary may
enter into contracts, financial assistance
agreements, and such other agreements, and
promulgate such regulations, as are necessary
to carry out this title.
(b) Transfer of Projects- Nothing in this
title authorizes the transfer of pre-existing
facilities or pre-existing components of any
water system from Federal to private ownership
or from private to Federal ownership.
(c) Federal Reclamation Law- Nothing in this
title supersedes or amends any Federal law
associated with a project, or portion of a
project, constructed under Federal reclamation
law.
(d) Interagency Coordination- The Secretary
shall coordinate the Program carried out under
this title with existing Federal and State
rural water and wastewater programs to
facilitate the most efficient and effective
solution to meeting the water needs of the
non-Federal project sponsors.
(e) Multiple Indian Tribes- In any case in
which a contract is entered into with, or a
grant is made, to an organization to perform
services benefitting more than 1 Indian tribe
under this title, the approval of each such
Indian tribe shall be a prerequisite to
entering into the contract or making the
grant.
(f) Ownership of Facilities- Title to any
facility planned, designed, and recommended
for construction under this title shall be
held by the non-Federal project entity.
(g) Expedited Procedures- If the Secretary
determines that a community to be served by a
proposed rural water supply project has urgent
and compelling water needs, the Secretary
shall, to the maximum extent practicable,
expedite appraisal investigations and reports
conducted under section 105 and feasibility
studies and reports conducted under section
106.
(h) Effect on State Water Law-
(1) IN GENERAL- Nothing in this title
preempts or affects State water law or an
interstate compact governing water.
(2) COMPLIANCE REQUIRED- The Secretary shall
comply with State water laws in carrying out
this title.
(i) No Additional Requirements- Nothing in
this title requires a feasibility study for,
or imposes any other additional requirements
with respect to, rural water supply projects
or programs that are authorized before the
date of enactment of this Act.
SEC. 108. AUTHORIZATION OF
APPROPRIATIONS.
(a) In General- There is authorized to be
appropriated to carry out this title
$20,000,000 for the period of fiscal years
2006 through 2015, to remain available until
expended.
(b) Rural Water Programs Assessment- Of the
amounts made available under subsection (a),
not more than $1,000,000 may be made available
to carry out section 104 for each of fiscal
years 2006 and 2007.
(c) Limitation- No amounts made available
under this section shall be used to pay
construction costs associated with any rural
water supply project.
TITLE II--TWENTY-FIRST CENTURY WATER
WORKS ACT
SEC. 201. SHORT TITLE.
This title may be cited as the `Twenty-First
Century Water Works Act'.
SEC. 202. DEFINITIONS.
(1) INDIAN TRIBE- The term `Indian tribe'
has the meaning given the term in section 4
of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. 450b).
(2) LENDER- The term `lender' means any
non-Federal qualified institutional buyer
(as defined in section 230.144A(a) of title
17, Code of Federal Regulation (or any
successor regulation), known as Rule 144A(a)
of the Securities and Exchange Commission
and issued under the Securities Act of 1933
(15 U.S.C. 77a et seq.)).
(3) LOAN GUARANTEE- The term `loan
guarantee' has the meaning given the term
`loan guarantee' in section 502 of the
Federal Credit Reform Act of 1990 (2 U.S.C.
661a).
(4) NON-FEDERAL BORROWER- The term
`non-Federal borrower' means--
(A) a State (including a department,
agency, or political subdivision of a
State); or
(B) a conservancy district, irrigation
district, canal company, water users'
association, Indian tribe, an agency
created by interstate compact, or any
other entity that has the capacity to
contract with the United States under
Federal reclamation law.
(5) OBLIGATION- The term `obligation' means
a loan or other debt obligation that is
guaranteed under this section.
(6) PROJECT- The term `project' means--
(A) a rural water supply project (as
defined in section 102(9)); or
(B) an extraordinary operation and
maintenance activity for, or the
rehabilitation of, a facility--
(i) that is authorized by Federal
reclamation law and constructed by the
United States under such law; or
(ii) in connection with which there is a
repayment or water service contract
executed by the United States under
Federal reclamation law.
(7) SECRETARY- The term `Secretary' means
the Secretary of the Interior.
SEC. 203. PROJECT
ELIGIBILITY.
(a) Eligibility Criteria-
(1) IN GENERAL- The Secretary shall develop
and publish in the Federal Register criteria
for determining the eligibility of a project
for financial assistance under section 204.
(2) INCLUSIONS- Eligibility criteria shall
include--
(A) submission of an application by the
lender to the Secretary;
(B) demonstration of the creditworthiness
of the project, including a determination
by the Secretary that any financing for
the project has appropriate security
features to ensure repayment;
(C) demonstration by the non-Federal
borrower, to the satisfaction of the
Secretary, of the ability of the
non-Federal borrower to repay the project
financing from user fees or other
dedicated revenue sources;
(D) demonstration by the non-Federal
borrower, to the satisfaction of the
Secretary, of the ability of the
non-Federal borrower to pay all
operations, maintenance, and replacement
costs of the project facilities; and
(E) such other criteria as the Secretary
determines to be appropriate.
(b) Waiver- The Secretary may waive any of the
criteria in subsection (a)(2) that the
Secretary determines to be duplicative or
rendered unnecessary because of an action
already taken by the United States.
(c) Projects Previously Authorized- A project
that was authorized for construction under
Federal reclamation laws prior to the date of
enactment of this Act shall be eligible for
assistance under this title, subject to the
criteria established by the Secretary under
subsection (a).
(d) Criteria for Rural Water Supply Projects-
A rural water supply project that is
determined to be feasible under section 106 is
eligible for a loan guarantee under section
204.
SEC. 204. LOAN GUARANTEES.
(a) Authority- Subject to the availability of
appropriations, the Secretary may make
available to lenders for a project meeting the
eligibility criteria established in section
203 loan guarantees to supplement
private-sector or lender financing for the
project.
(b) Terms and Limitations-
(1) IN GENERAL- Loan guarantees under this
section for a project shall be on such terms
and conditions and contain such covenants,
representations, warranties, and
requirements as the Secretary determines to
be appropriate to protect the financial
interests of the United States.
(2) AMOUNT- Loan guarantees by the Secretary
shall not exceed an amount equal to 90
percent of the cost of the project that is
the subject of the loan guarantee, as
estimated at the time at which the loan
guarantee is issued.
(3) INTEREST RATE- An obligation shall bear
interest at a rate that does not exceed a
level that the Secretary determines to be
appropriate, taking into account the
prevailing rate of interest in the private
sector for similar loans and risks.
(4) AMORTIZATION- A loan guarantee under
this section shall provide for complete
amortization of the loan guarantee within
not more than 40 years.
(5) NONSUBORDINATION- An obligation shall be
subject to the condition that the obligation
is not subordinate to other financing.
(c) Prepayment and Refinancing- Any prepayment
or refinancing terms on a loan guarantee shall
be negotiated between the non-Federal borrower
and the lender with the consent of the
Secretary.
SEC. 205. DEFAULTS.
(a) Payments by Secretary-
(1) IN GENERAL- If a borrower defaults on
the obligation, the holder of the loan
guarantee shall have the right to demand
payment of the unpaid amount from the
Secretary.
(2) PAYMENT REQUIRED- By such date as may be
specified in the loan guarantee or related
agreements, the Secretary shall pay to the
holder of the loan guarantee the unpaid
interest on, and unpaid principal of, the
obligation with respect to which the
borrower has defaulted, unless the Secretary
finds that there was not default by the
borrower in the payment of interest or
principal or that the default has been
remedied.
(3) FORBEARANCE- Nothing in this subsection
precludes any forbearance by the holder of
the obligation for the benefit of the
non-Federal borrower that may be agreed on
by the parties to the obligation and
approved by the Secretary.
(1) IN GENERAL- If the Secretary makes a
payment under subsection (a), the Secretary
shall be subrogated to the rights of the
recipient of the payment as specified in the
loan guarantee or related agreements,
including, as appropriate, the authority
(nothwithstanding any other provision of
law) to--
(A) complete, maintain, operate, lease, or
otherwise dispose of any property acquired
pursuant to the loan guarantee or related
agreements; or
(B) permit the non-Federal borrower,
pursuant to an agreement with the
Secretary, to continue to pursue the
purposes of the project if the Secretary
determines the purposes to be in the
public interest.
(2) SUPERIORITY OF RIGHTS- The rights of the
Secretary, with respect to any property
acquired pursuant to a loan guarantee or
related agreement, shall be superior to the
rights of any other person with respect to
the property.
(c) Payment of Principal and Interest by
Secretary- With respect to any obligation
guaranteed under this section, the Secretary
may enter into a contract to pay, and pay,
holders of the obligation, for and on behalf
of the non-Federal borrower, from funds
appropriated for that purpose, the principal
and interest payments that become due and
payable on the unpaid balance of the
obligation if the Secretary finds that--
(1)(A) the non-Federal borrower is unable to
meet the payments and is not in default;
(B) it is in the public interest to permit
the non-Federal borrower to continue to
pursue the purposes of the project; and
(C) the probable net benefit to the Federal
Government in paying the principal and
interest will be greater than that which
would result in the event of a default;
(2) the amount of the payment that the
Secretary is authorized to pay shall be no
greater than the amount of principal and
interest that the non-Federal borrower is
obligated to pay under the agreement being
guaranteed; and
(3) the borrrower agrees to reimburse the
Secretary for the payment (including
interest) on terms and conditions that are
satisfactory to the Secretary.
(d) Action by Attorney General-
(1) NOTIFICATION- If the non-Federal
borrower defaults on an obligation, the
Secretary shall notify the Attorney General
of the default.
(2) RECOVERY- On notification, the Attorney
General shall take such action as is
appropriate to recover the unpaid principal
and interest due from--
(A) such assets of the defaulting
non-Federal borrower as are associated
with the obligation; or
(B) any other security pledged to secure
the obligation.
SEC. 206. OPERATIONS,
MAINTENANCE, AND REPLACEMENT COSTS.
(a) In General- The non-Federal share of
operations, maintenance, and replacement costs
for a project receiving Federal assistance
under this title shall be 100 percent.
(b) Plan- On request of the non-Federal
borrower, the Secretary may assist in the
development of an operation, maintenance, and
replacement plan to provide the necessary
framework to assist the non-Federal borrower
in establishing rates and fees for project
beneficiaries.
SEC. 207. TITLE TO NEWLY
CONSTRUCTED FACILITIES.
(a) New Projects and Facilities- All new
projects or facilities constructed in
accordance with this title shall remain under
the jurisdiction and control of the
non-Federal borrower subject to the terms of
the repayment agreement.
(b) Existing Projects and Facilities- Nothing
in this title affects the title of--
(1) reclamation projects authorized prior to
the date of enactment of this Act;
(2) works supplemental to existing
reclamation projects; or
(3) works constructed to rehabilitate
existing reclamation projects.
SEC. 208. WATER RIGHTS.
(a) In General- Nothing in this title preempts
or affects State water law or an interstate
compact governing water.
(b) Compliance Required- The Secretary shall
comply with State water laws in carrying out
this title. Nothing in this title affects or
preempts State water law or an interstate
compact governing water.
SEC. 209. INTERAGENCY
COORDINATION AND COOPERATION.
(a) Consultation- The Secretary shall consult
with the Secretary of Agriculture before
promulgating criteria with respect to
financial appraisal functions and loan
guarantee administration for activities
carried out under this title.
(b) Memorandum of Agreement- The Secretary and
the Secretary of Agriculture may enter into a
memorandum of agreement providing for
Department of Agriculture financial appraisal
functions and loan guarantee administration
for activities carried out under this title.
SEC. 210. RECORDS; AUDITS.
(a) In General- A recipient of a loan
guarantee shall keep such records and other
pertinent documents as the Secretary shall
prescribe by regulation, including such
records as the Secretary may require to
facilitate an effective audit.
(b) Access- The Secretary and the Comptroller
General of the United States, or their duly
authorized representatives, shall have access,
for the purpose of audit, to the records and
other pertinent documents.
SEC. 211. FULL FAITH AND
CREDIT.
The full faith and credit of the United States
is pledged to the payment of all guarantees
issued under this section with respect to
principal and interest.
SEC. 212. AUTHORIZATION OF
APPROPRIATIONS.
There are authorized to be appropriated such
sums as are necessary to carry out this title,
to remain available until expended.
END
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