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104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-515
_______________________________________________________________________


 
           WATER SUPPLY INFRASTRUCTURE ASSISTANCE ACT OF 1996
                                _______


 March 29, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


 Mr. Shuster, from the Committee on Transportation and Infrastructure, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 2747]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Transportation and Infrastructure, to whom 
was referred the bill (H.R. 2747) to direct the Administrator 
of the Environmental Protection Agency to make grants to States 
for the purpose of financing the construction, rehabilitation, 
and improvement of water supply systems, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Water Supply Infrastructure Assistance 
Act of 1996''.

SEC. 2. PURPOSES.

  The purposes of this Act are as follows:
          (1) To provide grants for establishment of State revolving 
        funds for the purpose of providing financial and technical 
        assistance for the construction, rehabilitation, and 
        improvement of water supply systems, including treatment to 
        remove pollutants from navigable waters for the purpose of 
        making such waters usable by water supply systems and for 
        source water quality protection programs.
          (2) To provide for administrative efficiencies through 
        implementation of this Act relying on existing mechanisms of 
        State water pollution control revolving loan fund programs 
        established pursuant to title VI of the Federal Water Pollution 
        Control Act.

SEC. 3. LIMITATION ON STATUTORY CONSTRUCTION.

  Nothing in this Act shall be construed as affecting the requirements 
of title XIV of the Public Health Service Act (42 U.S.C. 300f-300j-9), 
commonly referred to as the Safe Drinking Water Act.

SEC. 4. DEFINITIONS.

  In this Act, the following definitions apply:
          (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
          (2) Disadvantaged community.--The term ``disadvantaged 
        community'' means the service area of a water supply system 
        with respect to which the average annual residential charges 
        for a user of the water supply system meet affordability 
        criteria established by the State in which the water supply 
        system is located (after providing for public review and 
        comment) in accordance with guidelines to be established by the 
        Administrator, in cooperation with the States.
          (3) Indian tribe.--The term ``Indian tribe'' has the meaning 
        such term has under section 518 of the Federal Water Pollution 
        Control Act and includes Alaska Native Villages and former 
        Indian reservations in Oklahoma.
          (4) Small water supply system.--The term ``small water supply 
        system'' means a water supply system that serves a population 
        of 10,000 or fewer.
          (5) State.--The term ``State'' means a State, the District of 
        Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, 
        Guam, American Samoa, the Commonwealth of the Northern Mariana 
        Islands, and the Trust Territory of the Pacific Islands.
          (6) Water supply system.--The term ``water supply system'' 
        means a system for the provision to the public of piped water 
        for human consumption if such system has at least 15 service 
        connections or regularly serves at least 25 individuals and a 
        draw and fill system for the provision to the public of water 
        for human consumption. Such term does not include a for-profit 
        system that has fewer than 15 service connections used by year-
        round residents of the area served by the system or a for-
        profit system that regularly serves fewer than 25 year-round 
        residents and does not include a system owned by a Federal 
        agency. Such term includes (A) any collection, treatment, 
        storage, and distribution facilities under control of the 
        operator of such system and used primarily in connection with 
        such system, and (B) any collection or pretreatment facilities 
        not under such control that are used primarily in connection 
        with such system.

SEC. 5. GRANTS TO STATES.

  Subject to the provisions of this Act, the Administrator shall make 
grants to each State for the purpose of establishing a water supply 
infrastructure account in the State water pollution control revolving 
loan fund programs established pursuant to title VI of the Federal 
Water Pollution Control Act, if any, to provide assistance (1) for the 
construction, rehabilitation, and improvement of water supply systems, 
and (2) consistent with nonpoint source management programs established 
under section 319 of the Federal Water Pollution Control Act, for 
source water quality protection programs to address pollutants in 
navigable waters for the purpose of making such waters usable by water 
supply systems.

SEC. 6. GRANT AGREEMENTS.

  (a) General Rule.--To receive a grant with funds made available under 
section 13, a State shall enter into an agreement with the 
Administrator which shall include, but not be limited to, the 
specifications set forth in subsection (b) of this section.
  (b) Specific Requirements.--The Administrator shall enter into an 
agreement under this section with a State only after the State has 
established to the satisfaction of the Administrator that--
          (1) the State will accept grant payments with funds to be 
        made available under this Act and will deposit all such 
        payments in the water supply infrastructure account established 
        by the State in accordance with this Act;
          (2) if the State has a water pollution control revolving fund 
        established in accordance with title VI of the Federal Water 
        Pollution Control Act, the State will establish the water 
        supply infrastructure account as a separate account in such 
        fund;
          (3) the State will deposit in the water supply infrastructure 
        account from State moneys an amount equal to at least 20 
        percent of the total amount of all grants which will be made to 
        the State with funds to be made available under section 13 on 
        or before (A) the date on which each grant payment will be made 
        to the State under this Act (other than sections 14 and 15), or 
        (B) September 30, 1998, in the case of grant payments made from 
        funds appropriated for fiscal years 1995, 1996, and 1997;
          (4) the State will enter into binding commitments to provide 
        assistance in accordance with this Act in an amount equal to 
        120 percent of the amount of each such grant payment within 1 
        year after the receipt of such grant payment;
          (5) the State will not make available any assistance from the 
        account unless the State has first determined that the 
        applicant--
                  (A) has adopted or will adopt a system of charges, 
                policies, and procedures to ensure that recipients of 
                financial assistance from the account are reasonably 
                likely to repay the assistance and will have adequate 
                resources to pay the cost of operation and maintenance 
                (including replacement) of the water supply system; and
                  (B) has or will have legal, institutional, technical, 
                managerial, and financial capability to ensure adequate 
                construction, operation, and maintenance of water 
                supply systems throughout the applicant's jurisdiction;
          (6) the State will take such action as may be necessary to 
        ensure that construction, rehabilitation, and improvement of a 
        water supply system undertaken with funds directly made 
        available by grants under section 5 are carried out in the most 
        cost-effective manner, as determined by the State;
          (7) the State will take such action as may be necessary to 
        ensure that, after construction, rehabilitation, and 
        improvement of a water supply system undertaken with funds 
        directly made available by grants under section 5, such system 
        will provide water supply services at the most economical cost, 
        including consideration of water conservation measures, as 
        determined by the applicant; and
          (8) the State will make annual reports to the Administrator 
        on the actual use of funds in accordance with section 606(d) of 
        the Federal Water Pollution Control Act.

SEC. 7. INCORPORATION OF FWPCA BY REFERENCE.

  (a) General Rule.--The provisions of title VI of the Federal Water 
Pollution Control Act shall apply as provided in this Act to accounts 
established by States under this Act. For purposes of this Act, any 
reference to the Federal Water Pollution Control Act and to any section 
thereof shall be treated as a reference to such Act or section as in 
effect on the date of the enactment of this Act.
  (b) Types of Assistance.--
          (1) In general.--Section 603(d) of the Federal Water 
        Pollution Control Act shall apply to accounts established by 
        States under this Act to the same extent and in the same manner 
        as such section applies to water pollution control revolving 
        funds under such Act.
          (2) Exceptions for disadvantaged communities.--
                  (A) Term of loan.--Notwithstanding paragraph (1), the 
                repayment period referred to in section 603(d)(1)(A) of 
                the Federal Water Pollution Control Act for a loan made 
                from a State water supply infrastructure account to a 
                disadvantaged community shall be the lesser of 40 years 
                or the expected life of the project to be financed with 
                the proceeds of the loan and the date for full loan 
                amortization referred to in section 603(d)(1)(B) of 
                such Act shall be the date of the expiration of the 
                term of the loan.
                  (B) Negative interest rates.--In any case in which 
                the State is making a loan from its water supply 
                infrastructure account to a disadvantaged community, 
                the State may charge a negative annual interest rate of 
                not to exceed 2 percent to reduce the unpaid principal 
                of the loan. The aggregate amount of all such negative 
                interest rate loans the State makes in a fiscal year 
                shall not exceed 20 percent of the funds in the water 
                supply infrastructure account of the State.
          (3) Exception for district of columbia and territories.--In 
        the case of a water supply infrastructure account established 
        by the District of Columbia, American Samoa, Guam, the 
        Commonwealth of the Northern Mariana Islands, the Commonwealth 
        of Puerto Rico, the Pacific Trust Territories, or the Virgin 
        Islands, the account may be used directly by the State for 
        construction, rehabilitation, and improvement of a water supply 
        system.
  (c) Corrective Action.--Section 605 of the Federal Water Pollution 
Control Act shall apply to a State's agreement with the Administrator 
under this Act and to requirements of this Act to the same extent and 
in the same manner as such section applies to a State's agreement under 
section 602 of such Act and the requirements of title VI of such Act.
  (d) Audits, Reports, and Fiscal Controls.--Subsections (a), (b), (d), 
and (e) of section 606 of the Federal Water Pollution Control Act shall 
apply to a State establishing an account under this Act and to such 
account to the same extent and in the same manner as such subsections 
apply to a State establishing a water pollution control revolving fund 
under title VI of such Act and to such fund.

SEC. 8. WATER SUPPLY INFRASTRUCTURE REVOLVING LOAN FUNDS.

  (a) Requirements for Obligation of Grant Funds.--Before a State may 
receive a grant with funds made available under section 13, the State 
shall first establish a water supply infrastructure account which 
complies with the requirements of this Act.
  (b) Administrator.--Each State water supply infrastructure account 
shall be administered by an instrumentality of the State with such 
powers and limitations as may be required to operate such account in 
accordance with the requirements and purposes of this Act.
  (c) Projects Eligible for Assistance.--The amounts of funds available 
to each State water supply infrastructure account shall be used only 
for providing financial assistance (1) for construction, 
rehabilitation, and improvement of water supply systems, and (2) 
consistent with nonpoint source management programs established under 
section 319 of the Federal Water Pollution Control Act and subject to 
subsection (d)(3), for source water quality protection programs to 
address pollutants in navigable waters for the purpose of making such 
waters usable by water supply systems. In addition, amounts in such 
account may be used to provide assistance to undertake feasible and 
appropriate changes in operations of the water supply system (including 
ownership, management, accounting, rates, maintenance, consolidation, 
alternative water supply, or other procedures) if the State determines 
that such measures are necessary to ensure adequate construction, 
operation, and maintenance of the water supply system. The account 
shall be established, maintained, and credited with repayments, and the 
account balance shall be available in perpetuity for providing such 
assistance.
  (d) Types of Assistance.--In addition to the types of assistance 
which may be made available under section 603(d) of the Federal Water 
Pollution Control Act from a water supply infrastructure account of a 
State under this Act--
          (1) up to 2 percent of the funds in such account may be used 
        to provide technical assistance with respect to construction, 
        rehabilitation, and improvement of water supply systems;
          (2) up to 10 percent of the funds in such account may be used 
        to provide technical and financial assistance described in 
        subsection (c)(2);
          (3) up to \1/4\ of the 10 percent set-aside under paragraph 
        (2) may be used to make grants to pay 50 percent of the cost of 
        the source water quality protection programs described in 
        subsection (c)(2); and
          (4) such account may be used to provide loan guarantees for 
        developing and implementing innovative technologies.
  (e) Acquisition of Lands.--Assistance provided with funds made 
available under section 13 may be used for the acquisition of lands and 
other interests in lands; however, nothing in this Act authorizes the 
acquisition of lands or other interests in lands from other than 
willing sellers.

SEC. 9. ALLOTMENT OF FUNDS.

  (a) Fiscal Year 1996.--Sums authorized to be appropriated pursuant to 
section 13 for fiscal year 1996 shall be allotted for such year by the 
Administrator not later than the 10th day which begins after the date 
of the enactment of this Act. Sums authorized for such fiscal year 
shall be allotted in accordance with the following table:

  States:
                                                           Percentages:
        Alabama............................................       0.98 
        Alaska.............................................       2.34 
        Arizona............................................       1.36 
        Arkansas...........................................       0.98 
        California.........................................       6.27 
        Colorado...........................................       1.35 
        Connecticut........................................       1.73 
        Delaware...........................................       0.63 
        District of Columbia...............................       0.52 
        Florida............................................       3.72 
        Georgia............................................       2.10 
        Hawaii.............................................       0.60 
        Idaho..............................................       1.13 
        Illinois...........................................       3.16 
        Indiana............................................       2.10 
        Iowa...............................................       1.36 
        Kansas.............................................       1.12 
        Kentucky...........................................       0.95 
        Louisiana..........................................       1.65 
        Maine..............................................       1.00 
        Maryland...........................................       1.42 
        Massachusetts......................................       1.15 
        Michigan...........................................       4.93 
        Minnesota..........................................       3.47 
        Mississippi........................................       1.32 
        Missouri...........................................       1.77 
        Montana............................................       1.19 
        Nebraska...........................................       1.02 
        Nevada.............................................       0.85 
        New Hampshire......................................       1.09 
        New Jersey.........................................       2.28 
        New Mexico.........................................       1.01 
        New York...........................................       4.90 
        North Carolina.....................................       3.80 
        North Dakota.......................................       0.76 
        Ohio...............................................       3.55 
        Oklahoma...........................................       1.41 
        Oregon.............................................       1.53 
        Pennsylvania.......................................       4.41 
        Rhode Island.......................................       0.61 
        South Carolina.....................................       1.18 
        South Dakota.......................................       0.82 
        Tennessee..........................................       1.01 
        Texas..............................................       5.81 
        Utah...............................................       0.87 
        Vermont............................................       0.81 
        Virginia...........................................       2.41 
        Washington.........................................       2.55 
        West Virginia......................................       0.98 
        Wisconsin..........................................       3.42 
        Wyoming............................................       0.81 
        American Samoa.....................................       0.18 
        Guam...............................................       0.17 
        Northern Marianas..................................       0.17 
        Puerto Rico........................................       0.81 
        Pacific Trust Territories..........................       0.17 
        Virgin Islands.....................................       0.31.

  (b) Fiscal Years 1997 Through 2000.--Sums authorized to be 
appropriated pursuant to section 13 for each of fiscal years 1997 
through 2000 shall be allotted by the Administrator in accordance with 
the relative needs of the States for construction, rehabilitation, and 
improvement of water supply systems and for source water quality 
protection programs described in section 5, as determined by the 
Administrator, in consultation with the States.
  (c) Reservation of Funds for Indian Tribes.--
          (1) In general.--Notwithstanding subsections (a) and (b), the 
        Administrator shall reserve for each fiscal year not to exceed 
        1.5 percent of the amount made available to carry out section 
        13 for such fiscal year for the purpose of making grants to 
        Indian tribes for construction, rehabilitation, and improvement 
        of water supply systems.
          (2) Alaska native villages.--In the case of a grant under 
        this subsection for a project in an Alaska Native village, the 
        Administrator is also authorized to make grants to the State of 
        Alaska for the benefit of Native villages. An amount not to 
        exceed 4 percent of the grant amount may be used by the State 
        of Alaska for project management.
  (d) Allotment Period.--
          (1) Period of availability for grant award.--Sums allotted to 
        a State under this section for a fiscal year shall be available 
        for obligation by the State during the fiscal year for which 
        sums are authorized and during the following fiscal year; 
        except that for sums allotted in fiscal year 1996, such period 
        of availability shall be fiscal years 1996 through 1998.
          (2) Reallotment of unobligated funds.--The amount of any 
        allotment not obligated by the State by the last day of the 
        period of availability established by paragraph (1) shall be 
        immediately reallotted by the Administrator on the basis of the 
        same ratio as is applicable to sums allotted under this section 
        for the second fiscal year of such period. None of the funds 
        reallotted by the Administrator shall be reallotted to any 
        State which has not obligated all sums allotted to such State 
        in the first fiscal year of such period.

SEC. 10. INTENDED USE PLANS.

  (a) In General.--After providing for public review and comment, each 
State establishing a water supply infrastructure account under this Act 
shall annually prepare a plan that identifies the intended uses of the 
amounts in the account.
  (b) Contents.--An intended use plan shall include--
          (1) a list of the projects to be assisted in the first fiscal 
        year that begins after the date of the plan, including a 
        description of the project, the expected terms of financial 
        assistance, and the size of the service area;
          (2) a determination of the priority to be given to such 
        projects, taking into account the relative financial and other 
        needs for construction, rehabilitation, and improvement of 
        water supply systems and for source water quality protection 
        within the boundaries of the State;
          (3) the criteria and methods established for the distribution 
        of funds; and
          (4) a description of the financial status of the water supply 
        infrastructure account.

SEC. 11. NEEDS SURVEY.

  (a) In General.--The Administrator, in cooperation with the States 
and Indian tribes, shall make--
          (1) a detailed estimate, biennially revised, of the cost of 
        needed construction, rehabilitation, and improvement of water 
        supply systems in the States and Indian tribes and of the cost 
        of needed construction in each of the States and Indian tribes; 
        and
          (2) a comprehensive study of the economic impact on affected 
        units of government of the costs of installation of water 
        supply systems and parts thereof.
  (b) Submission to Congress.--The Administrator shall submit the 
detailed estimate and the comprehensive study of costs under subsection 
(a) to Congress no later than January 1, 1998, and January 1 of each 
even-numbered year thereafter. The Administrator shall also submit 
recommendations for allotment of funds under section 9 to the States 
based on such estimates and on such additional factors as the 
Administrator deems appropriate, including financial need. Whenever the 
Administrator, pursuant to this section, requests and receives an 
estimate of costs from a State, the Administrator shall furnish copies 
of such estimate together with such detailed estimate to Congress.

SEC. 12. BUY AMERICAN.

  (a) Sense of Congress.--It is the sense of Congress that a recipient 
of assistance under this Act should purchase American-made equipment 
and products.
  (b) Notice.--The Administrator shall provide to each recipient of 
assistance under this Act a notice describing the sense of Congress set 
forth in subsection (a).

SEC. 13. AUTHORIZATION OF APPROPRIATIONS.

  There is authorized to be appropriated to carry out this Act (other 
than sections 14 and 15)--
          (1) $500,000,000 for fiscal year 1996;
          (2) $750,000,000 for fiscal year 1997;
          (3) $1,000,000,000 for fiscal year 1998;
          (4) $1,000,000,000 for fiscal year 1999; and
          (5) $1,000,000,000 for fiscal year 2000.
Such sums shall remain available until expended.

SEC. 14. TECHNICAL AND ENVIRONMENTAL FINANCING ASSISTANCE.

  (a) Technical Assistance for Small Water Supply Systems.--
          (1) Grants.--The Administrator may make grants to States, 
        local governments, and nonprofit organizations to provide 
        technical assistance and training to owners and operators of 
        small water supply systems (including systems that utilize an 
        alternative treatment technology) to enable the systems to 
        achieve the purposes of this Act.
          (2) Dissemination of information.--The Administrator may 
        disseminate information to communities with respect to the 
        planning, design, construction, and operation of water supply 
        systems.
          (3) Authorization of appropriations.--There is authorized to 
        be appropriated to carry out this subsection $13,000,000 for 
        each of fiscal years 1996 through 2000. Such sums shall remain 
        available until expended.
  (b) Environmental Finance Centers.--
          (1) In general.--The Administrator shall support the network 
        of university-based Environmental Finance Centers in providing 
        technical assistance to State and local officials to enable 
        water supply systems to meet the purposes of this Act.
          (2) Emphasis.--Assistance authorized under this subsection 
        shall be used by Environmental Finance Centers to increase the 
        capabilities of State and local officials to fund, operate, and 
        maintain water supply systems and source water quality 
        protection programs, as described in section 5 of this Act, 
        with greater involvement of private sector and public, non-
        Federal sector participants.
          (3) Authorization of appropriations.--There is authorized to 
        be appropriated to carry out this subsection $2,000,000 for 
        each of fiscal years 1996 through 2000. Such funds shall remain 
        available until expended.

SEC. 15. ADDITIONAL ASSISTANCE FOR WATER INFRASTRUCTURE AND WATERSHEDS.

  (a) General Program.--
          (1) In general.--The Administrator may provide technical and 
        financial assistance in the form of grants to States (A) for 
        the construction, rehabilitation, and improvement of water 
        supply systems, and (B) consistent with nonpoint source 
        management programs established under section 319 of the 
        Federal Water Pollution Control Act, for source water quality 
        protection programs to address pollutants in navigable waters 
        for the purpose of making such waters usable by water supply 
        systems.
          (2) Limitation.--Not more than 30 percent of the amounts 
        appropriated to carry out this subsection in a fiscal year may 
        be used for source water quality protection programs described 
        in paragraph (1)(B).
          (3) Condition.--As a condition to receiving assistance under 
        this subsection, a State shall ensure that such assistance is 
        carried out in the most cost-effective manner, as determined by 
        the State.
          (4) Authorization of appropriations.--There is authorized to 
        be appropriated to carry out this subsection $50,000,000 for 
        each of fiscal years 1996 through 2000. Such sums shall remain 
        available until expended.
  (b) New York City Watershed, New York.--
          (1) In general.--The Administrator may provide technical and 
        financial assistance in the form of grants for a source water 
        quality protection program described in subsection (a) for the 
        New York City Watershed in the State of New York.
          (2) Authorization of appropriations.--There is authorized to 
        be appropriated to carry out this subsection $15,000,000 for 
        each of fiscal years 1996 through 2000. Such sums shall remain 
        available until expended.
  (c) Rural and Native Villages, Alaska.--
          (1) In general.--The Administrator may provide technical and 
        financial assistance in the form of grants to the State of 
        Alaska for the benefit of rural and Alaska Native villages for 
        the development and construction of water systems to improve 
        conditions in such villages and to provide technical assistance 
        relating to construction and operation of such systems.
          (2) Consultation.--The Administrator shall consult the State 
        of Alaska on methods of prioritizing the allocation of grants 
        made to such State under this subsection.
          (3) Administrative expenses.--The State of Alaska may use not 
        to exceed 4 percent of the amount granted to such State under 
        this section for administrative expenses necessary to carry out 
        the activities for which the grant is made.
          (4) Authorization of appropriations.--There is authorized to 
        be appropriated to carry out this subsection $25,000,000. Such 
        sums shall remain available until expended.
  (d) Acquisition of Lands.--Assistance provided with funds made 
available under this section may be used for the acquisition of lands 
and other interests in lands; however, nothing in this Act authorizes 
the acquisition of lands or other interests in lands from other than 
willing sellers.
  (e) Federal Share.--The Federal share of the cost of activities for 
which grants are made under this section shall be 50 percent.
  (f) Condition on Authorizations of Appropriations.--An authorization 
of appropriations under this section shall be in effect for a fiscal 
year only if at least 75 percent of the total amount of funds 
authorized to be appropriated for such fiscal year by section 13 are 
appropriated.

                          purpose and summary

    The purpose of H.R. 2747, the ``Water Supply Infrastructure 
Assistance Act of 1996,'' is to provide financial and technical 
assistance to help meet the nation's water infrastructure and 
source water quality protection needs. The bill authorizes the 
creation of water supply infrastructure accounts, within 
existing Clean Water Act (CWA) State Revolving Funds (SRFs), 
for the States' use in making loans for constructing, 
rehabilitating, and improving water supply (drinking water) 
infrastructure. A portion of funds made available to the new 
accounts may be used for special assistance to disadvantaged 
communities and for source water quality protection programs, 
focusing on watershed protection, $4.25 billion is authorized 
over five years. An additional $350 million is authorized over 
five years for water infrastructure and watershed protection 
grants to State and local interests. The bill also authorizes 
$75 million over five years for technical and environmental 
assistance to small communities and other eligible recipients.

                          background and need

    Safe, clean drinking water supplies are invaluable, one 
simply cannot put a price on their importance to our nation's 
public health, environment, and economy. Unfortunately, one can 
put a price on providing, operating, and maintaining our 
nation's water infrastructure--and it is astonishingly high. 
Even conservative cost estimates of constructing, 
rehabilitating, and improving America's drinking water systems 
run into the tens of billions of dollars.
    For example, EPA estimates over $8.6 billion in capital 
needs to meet current Safe Drinking Water Act requirements. The 
Congressional Budget Office also estimates annual costs between 
$1.4 billion and $2.3 billion per year for compliance with 
current regulations. These costs, however, are dwarfed by the 
overall costs of meeting basic water supply infrastructure 
needs. The Associated General Contractors of America reports 
that current major capital needs for the nation's drinking 
water systems are more than $150 billion. These needs include 
the replacement and expansion of distribution systems and the 
replacement and expansion of treatment facilities, primarily in 
small systems. Aged, clogged pipes often need in-place cleaning 
and lining. Older facilities have deteriorating distribution 
systems. Some still have wooden pipes dating back to the 
1800's.
    H.R. 2747 is intended to respond to these overwhelming 
needs. While the bill will help to fund the requirements under 
the Safe Drinking Water Act, its greater contribution is to 
help fund measures for adequate water collection, storage, 
treatment, and distribution facilities and voluntary, 
nonregulatory measures to protect source water quality.

      discussion of committee bill and section-by-section analysis

Section 1--Short title

    ``Water Supply Infrastructure Assistance Act of 1996''.

Section 2--Purposes

    The purposes of the Act are: (1) to provide grants to 
States for financial and technical assistance for construction, 
rehabilitation and improvements of water supply systems, 
including source water quality protection programs; and (2) to 
achieve administrative efficiencies by relying on existing SRF 
mechanisms established under the CWA.
    While the bill makes specific reference only to navigable 
waters, the Committee is fully aware of the importance of 
nonnavigable waters and ground water, particularly in relation 
to source water quality protection. In fact, the Committee 
intends for ground water protection activities to be eligible 
for source water quality protection assistance to the extent 
such assistance is consistent with section 319 of the CWA. 
Section 319(i), in particular, authorizes financial and 
technical assistance for ground water protection against 
nonpoint source pollution. Activities that would be eligible 
for financial and technical assistance unde 319(i) are eligible 
for assistance under H.R. 2747.

Section 3--Limitation on statutory construction

    Nothing in this Act affects the requirements of the Safe 
Drinking Water Act.

Section 4--Definitions

    The bill defines ``Administrator,'' ``disadvantaged 
community,'' ``Indian tribe,'' ``small water supply system,'' 
``State,'' and ``water supply system.'' The term 
``disadvantaged community'' means a service area with respect 
to which the average annual service charges for users meet 
affordability criteria established by the State. The term 
``water supply system'' means a system for the provision to the 
public of piped water for human consumption if such a system 
has at least 15 service connections or regularly serves at 
least 25 individuals and a draw and fill system for the 
provision to the public for human consumption. The term, 
however, does not include a for-profit system that has fewer 
than 15 service connections used by year-round residents of the 
area served by the system or regularly serves fewer than 25 
year-round residents and does not include a system owned by a 
Federal agency. The term includes collection, treatment, 
storage, and distribution facilities and certain pretreatment 
facilities.
    The Committee has included, as part of the definition of 
water supply system, ``draw and fill system.'' This is a 
reference to the systems commonly used throughout rural Alaska, 
where piped systems are not feasible due due to the frequent 
freezing of the ground. Under such circumstances, residents 
often draw water from central locations, transport it to their 
homes, and then fill their closed systems with it.

Section 5--Grants to States

    The Administrator of the Environmental Protection Agency 
(EPA) is to make grants to States for establishing a water 
supply infrastructure account in existing CWA SRFs. Such grants 
are to be used to provide technical and financial assistance 
for constructing, rehabilitating, and improving water supply 
systems and for source water quality programs. Eligible 
projects and types of assistance are further described in other 
sections of the Act.

Section 6--Grant agreements

    To receive a grant under this Act, a State must enter into 
an agreement with EPA to, among other things, add to the 
account an amount equal to 20% of the EPA grant on or before 
the date of such grant (or by the end of FY 98 for grants from 
funds appropriated for FY 95, 96, and 97); agree to provide (in 
the form of assistance to applicants) an amount equal to 120% 
of each grant (i.e., the EPA grant amount plus the 20% State 
match) within one year of receipt; require that applicants 
impose charges sufficient to cover the cost of system 
operation, maintenance and replacement and has or will have 
legal, institutional, technical managerial, and financial 
capability to ensure adequate construction, operation, and 
maintenance of systems throughout the applicant's jurisdiction; 
take such action as necessary to ensure that construction, 
rehabilitation, and improvement of systems undertaken with 
funds directly made available by grants under this Act are 
carried out in the most cost-effective manner, as determined by 
the State; require that such systems provide services at the 
most economical cost, including consideration of water 
conservation, as determined by the applicant; and provide 
annual reports to EPA on the use of funds.
    The reference to cost effectiveness has significance with 
regard to the issue of contracting out work to the private 
sector. By including the phrase ``cost effective,'' the 
Committee expects that most, if not all, recipients will 
contract out with the private sector for construction, 
rehabilitation and improvement of public water supply systems. 
The Committee believes that like existing wastewater 
construction programs, the greatest possible use should be made 
of cost effective private engineering and construction 
capabilities. This creates the dual benefit of infrastructure 
improvement and job creation.
    Determinations of ``cost-effective'' and ``most economical 
cost'' are to be made for individual systems and not on a 
system-wide basis. Nothing in this legislation is intended to 
create or encourage a bias in favor of large or regional 
systems.
    One of the specific conditions that a state must satisfy 
under Section 6, in order to be eligible for a grant under 
section 5, is to take such action as may be necessary to ensure 
that the construction, rehabilitation or improvement of a water 
supply system undertaken with funds from the grant will provide 
water supply services at the most economical cost, including 
consideration of water conservation measures, as determined by 
the applicant.
    The purpose of this condition is to conserve available 
funding by encouraging states to determine whether an 
application to fund expansion of a water supply system is 
necessary to assure the safety of the existing system, rather 
than simply to accommodate future growth, and whether the water 
system has made a serious effort to satisfy its needs through 
water conservation methods, such as leak detection, and efforts 
to increase water use efficiency by its customers. An added 
benefit of drinking water conservation is to reduce 
``throughput'' (or flow) to wastewater treatment plants which 
should also conserve SRF funding for construction and 
improvement of such facilities.
    The Committee also notes that the applicant--usually the 
local government or water utility--is to determine the most 
economical cost, not the Federal Government. The intent of this 
is to avoid any unnecessary interference with historically 
State and local prerogatives.
    In addition, the Committee encourages public water systems 
receiving loans under this Act to establish enterprise funds as 
dedicated sources of revenue for repayment of loans. Such 
enterprise funds are a proven method of ensuring repayment and 
system viability.

Section 7--Incorporation of CWA by reference

    As a general rule, provisions of title VI of the CWA apply 
as provided herein to new accounts established in this Act. The 
types of assistance available under section 603(d) of the CWA 
shall also be available under this Act (e.g., making loans, 
refinancing debt obligations, etc.) for water supply systems.
    The Committee believes that, in limited circumstances, 
assistance under this Act could be used for refinancing in 
order to provide a measure of relief to rate payers facing 
exorbitant costs. This is based, in part, on the legislation's 
references to refinancing provisions in section 603(d) of the 
CWA, the focus on ``most economical'' rates, and the 
Committee's intent that the terms ``construction, 
rehabilitation and improvement'' be interpreted broadly.
    As a general matter, communities should not be penalized 
for taking the initiative to finance the construction, 
rehabilitation, or improvement of water supply systems prior to 
enactment of this legislation. Therefore, communities such as 
Attleboro, Massachusetts, should be eligible for so-called 
``rate payer relief'' under appropriate circumstances.
    Special provisions and exceptions are included for 
disadvantaged communities: notwithstanding other provisions of 
the CWA, the term of a loan to such a community shall be 
extended to the lesser of 40 years or the expected life of the 
project to be financed with the proceeds of the loans and the 
date for full loan amortization referred to in the CWA shall be 
the date of the expiration of the term of the loan; such a 
community may also receive a negative interest rate of up to 2% 
per year to reduce the unpaid principal of the loan, except 
that a State may not use more than 20% of its water 
infrastructure account in a fiscal year for making such 
negative interest loans. The Committee notes that States with 
restrictions on negative interest of low interest loans may 
provide principal subsidies as an alternative form of 
assistance. An exception to the general requirement for 
financial assistance to be in the form of loans is included for 
the District of Columbia and the Territories, allowing the 
account to be used directly by the District of Columbia and 
Territories for construction, rehabilitation, and improvement 
of a water supply system. However, the requirement for a 20% 
``State'' match will apply. EPA's authority under section 605 
of the CWA to enforce agreements, including the withholding of 
payments, also applies, as do the audit, reporting, and fiscal 
controls of section 606 of the CWA.
    The Committee recognizes that some small water supply 
systems, defined by this bill as systems serving populations of 
10,000 or fewer, may fall outside the scope of disadvantaged 
community affordability criteria for assistance under the CWA 
and this bill, and remain unable to meet their obligation to 
maintain and ensure a safe and efficient drinking water supply 
for their customers. Cameron Parish, Louisiana, Water Works 
District #1, for instance, serving just 800 homes, has failed 
to meet affordability guidelines established by Louisiana but 
still needs approximately $1.5 million in facility improvements 
to comply with requirements of the Safe Drinking Water Act. 
They have raised water rates over 100% in the last year in a 
failed attempt to comply. The Committee recommends that special 
consideration be given to small water systems including, but 
not limited to, Cameron Parish, Louisiana, for which unique 
circumstances qualify them for disadvantaged community status.

Section 8--Water supply infrastructure revolving loan funds

    To receive funds under this Act, States must establish new 
water supply infrastructure accounts in accordance with the 
requirements of this Act. Each State account is to be 
administered by an instrumentality of the State with such 
powers and limitations as may be required to operate the 
account in accordance with the requirements and purposes of the 
Act. The Committee supports providing each State maximum 
flexibility in meeting the water infrastructure needs of its 
citizens. Accordingly, the bill minimizes the number and degree 
of Federal requirements and conditions associated with proposed 
water supply infrastructure accounts. On the issue of 
``fungibility''--that is, the ability to transfer and mix funds 
between the SRF established under title VI of the CWA and the 
water supply infrastructure subaccount established under H.R. 
2747, the Committee has opted for an approach that protects the 
integrity of both the wastewater SRF and the water supply 
infrastructure account.
    The Committee also notes that each State is to decide how 
best to administer its accounts. For example, in some States 
the administering agency may be the agency with primary 
responsibility over the Safe Drinking Water Act rather than the 
CWA.
    The Committee has not included provisions that mandate 
priorities for the types of assistance under this bill. States 
should have maximum flexibility to determine and address the 
needs of their citizens and of public water supply systems 
within their jurisdiction. The Committee, however, does expect 
that each State will use its SRF to address priorities related 
to compliance with the Safe Drinking Water Act and to protect 
against threats to human health and the environment.
    Projects eligible for financial and technical assistance 
include the construction, rehabilitation, and improvement of 
water supply systems and, consistent with section 319 of the 
CWA, projects that are part of source water quality protection 
programs to address pollutants in navigable waters that may 
contaminate drinking water supplies.
    These funds may be used to provide technical and financial 
assistance to landowners to facilitate source water quality 
protection measures for nonpoint sources, consistent with such 
forms of assistance in nonpoint source management programs 
established under section 319 of the CWA. This enhanced 
flexibility allows individual local water supply systems, who 
(1) are ultimately responsible for providing drinking water 
that meets Safe Drinking Water Act standards; (2) are closest 
to the contaminant problems that may be at issue; and (3) are 
accountable for repaying loans, to lay a prominent role in 
determining the most effective investment of revolving loan 
funds on a site-specific basis. The Committee intends that 
States work with local government including providing funding 
through local governments in implementing source water quality 
protection programs.
    Local source water quality protection programs funded under 
section can help prevent pollution and reduce treatment costs 
downstream, but without the use of federal regulations. Under 
section 8, funds for source water quality protection are to be 
used only for voluntary, incentive-based mechanisms consistent 
with financial and technical assistance provided under section 
319 of the CWA. Examples of structures and practices that would 
be appropriate for technical and financial assistance include: 
buffer strips, soil testing and nutrient management plans, 
stream bank fencing, fencing for intensive rotational grazing, 
and improved manure storage and management facilities. Nothing 
in section 8 or the rest of this legislation creates or conveys 
any new regulatory authority over nonpoint source pollution to 
a State, political subdivision of a State, or a community water 
supply system.
    Accounts described in section 8 may also be used to provide 
assistance to undertake feasible and appropriate changes in 
operations of water supply systems if the State determines such 
measures are necessary to ensure system viability.
    Specifically, section 8(c) provides that amounts in water 
supply infrastructure revolving loan fund accounts may be used 
to provide assistance to undertake feasible and appropriate 
changes in operations of the water supply system (including 
ownership, management, accounting, rates, maintenance, 
consolidation, alternative water supply, or other procedures) 
if the State determines that such measures are necessary to 
ensure adequate construction, operation and maintenance of the 
water supply system. This section would allow, among other 
things, the funding of water conservation measures that satisfy 
these criteria, as well as restructuring or arrangements for 
alternative water supplies in lieu of or in addition to 
construction or repair of systems.
    Each account is to be established, maintained, and credited 
with repayments, and the account balance is to be available in 
perpetuity for providing such assistance.
    In addition to the types of financial assistance available 
under section 603(d) of the CWA, the following uses are 
authorized: up to 2% of the funds may be used to provide 
technical assistance; up to 10% of the funds may be used to 
provide technical and financial assistance for source water 
quality programs to address pollutants in navigable waters that 
may contaminate drinking water supplies, with up to \1/4\ of 
that percentage available for grants with a 50/50 cost-share; 
and funds may be used to provide loan guarantees for developing 
and implementing innovative technologies.
    The Committee has provided that one of the eligible 
purposes for which State revolving loan funds may be used 
includes loan guarantees for developing and implementing 
innovative technologies for purposes of meeting the goals and 
requirements of this Act. This will provide more flexibility to 
States in assisting private sector projects that may provide 
substantial water quality benefits.
    The Committee is aware that there may be cases in which the 
recipient of a guarantee will be willing to pay the cost of the 
guarantee. This type of financing would protect the interests 
of the State revolving loan fund while enabling the recipient 
to obtain financing at a reasonable rate. The Committee 
encourages States to explore this type of financing to promote 
private sector solutions to water quality problems.
    The Committee also encourages States to provide assistance 
for innovative technologies that will help provide emergency 
water supplies. For example, the Mission Basin project, if 
funded and implemented, could help the city of Oceanside, 
California meet its needs for emergency water supplies.
    The section also clarifies that assistance under this Act 
may be used for the acquisition of lands and other interests in 
land, but that nothing in this Act authorizes the acquisition 
of lands and other interests in land from other than willing 
sellers.
    It is not the intention of the Committee that the funds 
made available for land acquisition under this section be used 
to acquire lands whose primary purpose would be for public 
park, forest reserve, or recreational use. However, this does 
not preclude lands acquired under this section for the primary 
purpose of source water quality protection from being 
designated as a public park, forest reserve, or recreation 
area.

Section 9--Allotment of funds

    For appropriation available in FY96, funds are allotted to 
States in accordance with the existing EPA formula for public 
water system supervision grants. For each of FY97 through 
FY2000, the allotment formula is to be determined by the EPA, 
in consultation with the States, in accordance with the 
relative needs of the States. The Committee notes that the 
allotment formula is to be determined based on the Needs Survey 
referred to in section 11 and in close consultation with 
Congress in general and the Transportation and Infrastructure 
Committee in particular. In each of the five years, up to 1.5% 
of the total amount available is to be set aside for Indian 
tribes. For Alaska Native Villages, EPA is authorized to make 
grants to the State of Alaska for the benefit of Native 
Villages, with no more than 4% of the grant being used by the 
State for project management. Allotted funds are to be 
available for obligation for up to two years, except for funds 
allotted in FY96, which remain available through FY98. Funds 
not obligated within the required period revert back to EPA for 
reallotment under specified conditions.

Section 10--Intended use plans

    After providing for public review and comment, each State 
receiving assistance under this Act is to prepare an annual 
plan that identifies intended uses of the infrastructure 
account. Each plan must include lists and descriptions of 
projects, funding priorities, criteria and methods established 
for the distribution of funds, and a description of the 
financial status of the account. In developing the intended use 
plan, States should work closely with local water systems.

Section 11--Needs survey

    EPA, in cooperation with States and Indian tribes, is to 
make estimates every two years of water supply infrastructure 
needs and costs, and shall study the economic impact on units 
of government of the costs of installation of water supply 
systems. EPA must submit to Congress the estimates and study by 
January 1, 1998 and every two years thereafter. These reports 
are also to include recommendations regarding state allotment 
formulas. The Committee believes that a two-year cycle is 
appropriate for this new program. Following the initial 
authorization period of this bill, it may be appropriate to 
extend the time period between reports.

Section 12--Buy American

    It is the sense of Congress that recipients of assistance 
should purchase American-made equipment and products. EPA is to 
provide to each recipient of assistance under this Act a notice 
describing this intent of Congress.

Section 13--Authorization of appropriations

    Funding levels for water supply infrastructure accounts are 
authorized at $500 million for FY96; $750 million for FY97; $1 
billion for FY98; $1 billion for FY99; and $1 billion for 
FY2000.

Section 14--Technical and environmental financing assistance

    EPA may make grants to States, local governments, and 
nonprofit organizations to provide technical assistance and 
training to small water systems (including those utilizing 
alternative treatment technologies) to enable the systems to 
achieve the purposes of this Act. As part of this effort, EPA 
is also authorized to disseminate information to communities 
with respect to planning, design, construction, and operation 
of water supply systems. $13 million for each of FY96 through 
FY 2000 is authorized for such purposes. In addition, $2 
million for each of FY96 through FY 2000 is authorized for EPA 
to support the network of university-based Environmental 
Finance Centers in providing technical assistance to State and 
local officials to enable water supply systems to meet the 
purposes of this Act. With assistance authorized under this 
Act, the Centers are to emphasize alternative financing methods 
to help State and local officials meet water infrastructure and 
watershed protection needs with great involvement of the 
private and public, non-Federal sectors.

Section 15--Additional assistance for water infrastructure and 
        watersheds

    In addition to financial and technical assistance under the 
Act's water supply infrastructure account and technical and 
environmental financing provisions, EPA may provide technical 
and financial assistance, in the form of grants, for designated 
water supply systems and source water quality protection 
programs.
    Subsection (a) establishes a general program for technical 
and financial assistance grants for water supply systems and 
source water quality protection programs (authorizing $50 
million annually for FY 1996-2000). Up to 30% of amounts 
appropriated for this general program may be used by the 
Administrator to provide technical and financial assistance in 
the form of grants to States, consistent with such forms of 
assistance provided for under section 319 of the CWA, for 
source water quality protection programs as described in this 
Act.
    As part of the program established under section 15(a), the 
Administrator is directed to provide priority consideration to 
the following:
          (1) Drinking water infrastructure projects for areas 
        described in section 313 of the Water Resources 
        Development Act of 1992 (P.L. 102-580).
          (2) Construction of an alternative water supply 
        system for the area referred to in section 219(c)(5) of 
        the Water Resources Development Act of 1992 (P.L. 102-
        580).
          (3) Attleboro, MA, and Worcester, MA, for ratepayer 
        assistance relating to water infrastructure facilities, 
        in addition to other assistance in the form of low 
        interest loans and negative interest rates.
          (4) Buffalo, NY, for construction, rehabilitation, 
        and improvement of water treatment facilities.
          (5) Bad Axe, MI, for connection of its drinking water 
        system to the municipal system in Port Austin, MI.
          (6) Georgetown, IL, for construction and related 
        activities intended to increase the capacity of the 
        City's water supply reservoir and enhance source water 
        quality protection.
          (7) Morgan County, TN, for water line extensions and 
        related infrastructure assistance.
          (8) Northwest IA, for water infrastructure facilities 
        that are either part of or separate from the proposed 
        Lewis and Clark Rural Water System.
          (9) Olney, IL for construction of a new water tower 
        and Millstone Water District, Harrisburg, IL, for 
        completion of Phase I of a water line extension 
        project.
          (10) Philadelphia, PA, acting through the Fairmount 
        Park Commission, for improvement and restoration of 
        acquatic systems at Pennypack Park.
          (11) San Bernardino County, CA, for water 
        infrastructure assistance related to the Mojave River 
        Pipeline.
          (12) Springfield, IL, for financial and technical 
        assistance to complete the planning, design, and 
        construction of a water supply reservoir.
          (13) Tenino, WA, for water supply infrastructure, 
        including work related to wells, hydrants, and water 
        lines.
    Subsection (b) authorizes a program for source water 
quality protection in the New York City watershed ($15 million 
annually for FY 1996-2000). The Committee notes that this 
program can set a model for the nation in holistic, watershed-
based approaches to pollution prevention. If done right--with 
locally-driven, voluntary-based measures, such a program can 
prevent pollution and stem the need for costly downstream 
pollution cleanup or control. The New York City watershed 
program is just one example of an approach which could avoid 
the need for a multi-billion dollar water filtration plant by 
implementing agreed-upon measures upstream.
    Subsection (c) authorizes $25 million in assistance for the 
development and construction of water systems for the benefit 
of rural and Alaska Native Villages in Alaska. While relatively 
small in comparison to the documented needs, this funding is 
intended to help respond to the State's inadequate rural 
sanitation conditions. Recent studies, including the EPA's 
Federal Field Work Group Report to Congress on Alaska Rural 
Sanitation (August 1995), demonstrate a clear need for special 
assistance to finance and plan for adequate water and 
wastewater infrastructure in Alaska.
    Subsection (d) provides that assistance under this section 
may be used for acquisition of lands and other interests in 
land, but nothing in the section authorizes such acquisition 
from other than willing sellers. It is not the intention of the 
Committee that funds made available for land acquisition under 
this section be used to acquire lands whose primary purpose 
would be for public park, forest reserve, or recreational use. 
However, this does not preclude lands acquired under this 
section for the primary purpose of source water protection from 
being designated as a public park, forest reserve, or 
recreational area. The Committee also notes that Sterling 
Forest is not within the NYC watershed for purposes of 
subsection (b).
    Subsection (e) provides the Federal share of grants this 
section shall be for 50% of program costs.
    Subsection (f) provides that funding authorized in this 
section is subject to a requirement that at least 75% of the 
amount authorized annually for the water supply infrastructure 
account is appropriated.

               hearings and previous legislative activity

    The Public Works and Transportation Committee--now the 
Transportation and Infrastructure Committee--has played a 
continuing role in assuring that the nation's water supply 
needs are met. Over one-fourth of the Corps of Engineers' 442 
reservoirs provide water supply storage for local interests. 
Additionally, the Flood Control Act of 1941 authorizes the 
Corps to provide, in an emergency basis, clean water to 
localities with contaminated or potentially contaminated 
supplies, and, to drought-distressed areas, water supplies for 
human and livestock use.
    Recent legislation of the Committee has also addressed 
water supply infrastructure assistance. For example, the Water 
Resources Development Act of 1992, Public Law 102-580, provides 
various environmental infrastructure program, technical 
assistance, and demonstration project authorities for the 
Corps, many of which focus on water reclamation, reuse, 
treatment, storage and supply. Title 8 of H.R. 6, the ``Water 
Resources Conservation, Development, and Infrastructure 
Improvement and Rehabilitation Act of 1985,'' would have 
authorized the Corps to provide loans and design and 
construction assistance for repair, rehabilitation, expansion 
or improvement of water supply, treatment, and distribution 
systems.
    In other programs under the Committee's jurisdiction, the 
Federal Emergency Management Agency is authorized under its 
Disaster Relief Programs to provide financial and technical 
assistance for emergency water supplies and the repair/
reconstruction of public facilities (such as water supply, 
treatment, and distribution facilities). The Accelerated Local 
Public Works initiatives of 1976 and 1978 included water supply 
construction as one of the eligible activities. Under Economic 
Development Administration programs, eligible activities have 
included the installation of water lines to industrial areas 
and private residences.
    Finally, the Committee through the CWA, has worked toward 
the continuing improvement of the nation's raw water supplies. 
The objective of the CWA is ``to restore and maintain the 
chemical, physical, and biological integrity of the nation's 
waters.'' The mechanism to achieve this goal is compliance with 
water quality standards. These standards are established 
``taking into consideration their use and value for public 
water supplies * * *.''
    The Committee has authorized over $60 billion in federal 
financial assistance to municipal wastewater treatment systems 
to improve water quality since 1972; water which is often used 
as a drinking water source. In addition, H.R. 961, the Clean 
Water Amendments of 1995, which passed the House on May 16, 
1995, would authorize an additional $11.5 billion over five 
years for such purposes. The financial and technical assistance 
which would be provided by enactment of H.R. 2747 is 
inextricably linked in concept and practice to the existing 
municipal wastewater treatment SRF. Many of the states finance 
both their drinking water and wastewater treatment programs 
through the same CWA revolving funds.
    In the 103rd Congress, the Public Works & Transportation 
Committee reported H.R. 1865, the Water Supply Construction 
Assistance Act of 1993 (H. Report 103-115, May 27, 1993). This 
bipartisan legislation, which formed the starting point for 
H.R. 2747, established water supply accounts within existing 
CWA SRFs and authorized $2,599,000,000 over three years.
    In the 104th Congress, the bipartisan leadership of the 
Transportation and Infrastructure Committee introduced H.R. 
2747, the Water Supply Infrastructure Assistance Act of 1995 on 
December 7, 1995. The Water Resources and Environment 
Subcommittee held a hearing on the bill on January 31, 1996. 
Witnesses included representatives of EPA, State and local 
government, water utilities, agricultural and environmental 
interests and the construction industry.

                        committee consideration

    On March 6, 1996, the Subcommittee on Water Resources and 
Environment approved by voice vote, an amendment in the nature 
of a substitute, offered by Chairman Boehlert. The amendment 
made several significant changes, minor modifications, and 
clarifications to the introduced bill. On March 7, 1996, the 
Committee approved an amendment by Rep. Young by voice vote and 
ordered the bill reported by voice vote. The Committee, in 
compliance with rule XI, clause 2(l) of the Rules of the House 
of Representatives, reports favorably the bill, H.R. 2747, as 
amended.

                      committee oversight findings

    Clause 2(l)(3)(A) of rule XI requires each committee report 
to contain oversight findings and recommendations required 
pursuant to clause 2(b)(1) of rule X. The Committee has no 
specific oversight findings.

 oversight findings and recommendations of the committee on government 
                          reform and oversight

    Clause 2(l)(3)(D) of rule XI requires each committee report 
to contain a summary of the oversight findings and 
recommendations made by the Government reform and Oversight 
Committee pursuant to clause 4(c)(2) of rule X, whenever such 
findings have been timely submitted. The Committee on 
Transportation and Infrastructure has received no findings and 
recommendations from the Committee on Government Reform and 
Oversight.

                        committee cost estimate

    Clause 2(l)(3)(B) of rule XI requires each committee report 
that accompanies a measure providing new budget authority, new 
spending authority, or new credit authority or changing 
revenues or tax expenditures to contain a cost estimate, as 
required by section 308(a)(1) of the Congressional Budget Act 
of 1974 and, when practicable with respect to estimates of new 
budget.
    Clause 7(a) of rule XII requires committees to include 
their own cost estimates in certain committee reports, which 
include, where practicable, a comparison of the total estimated 
funding level for the relevant program (or programs) with the 
appropriate levels under current law.
    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office, pursuant to 
section 403 of the Congressional Budget Act of 1974.

                  congressional budget office estimate

    Clause 2(l)(3)(C) of rule XI requires each committee report 
to include a cost estimate prepared by the Director of 
Congressional Budget Office, pursuant to section 403 of the 
Congressional Budget Act of 1974, if the cost estimate is 
timely submitted. The following is the Congressional Budget 
Office cost estimate:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 14, 1996.
Hon. Bud Shuster,
Chairman, Committee on Transportation and Infrastructure,
House of Representatives Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2747, the Water 
Supply Infrastructure Assistance Act of 1996.
    Enactment of H.R. 2747 would not affect direct spending or 
receipts. Therefore, pay-as-you-go procedures would not apply 
to the bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                 June E. O'Neill, Director.

               congressional budget office cost estimate

    1. Bill number: H.R. 2747.
    2. Bill title: The Water Supply Infrastructure Assistance 
Act of 1996.
    3. Bill Status: As ordered reported by the House Committee 
on Transportation and Infrastructure on March 7, 1996.
    4. Bill purpose: The bill would authorize appropriations of 
$4.4 billion for grants to states over five years to establish 
state revolving funds (SRFs) that would offer financial and 
technical assistance for the construction, rehabilitation, and 
improvement of drinking water supply systems.
    5. Estimated cost to the Federal Government: Assuming 
appropriations of the authorized amounts, enactment of H.R. 
2747 would result in for new outlays for water supply 
infrastructure totaling $2.1 billion over the 1996-2000 period. 
The budgetary affects of the bill are summarized in the 
following table.

----------------------------------------------------------------------------------------------------------------
                                                                  1996      1997      1998      1999      2000  
----------------------------------------------------------------------------------------------------------------
Spending under current law:                                                                                     
    Budget authority\1\.......................................       275  ........  ........  ........  ........
    Estimate outlays..........................................         0        12        72        96        58
Proposed changes:                                                                                               
    Authorization level.......................................       330       830     1,080     1,080     1,080
    Estimated outlays.........................................         0        70       365       735       945
Spending under H.R. 2747:                                                                                       
    Authorization level.......................................       605       830     1,080     1,080     1,080
    Estimated outlays.........................................         0        82       437       831     1,003
----------------------------------------------------------------------------------------------------------------
\1\ Full-year appropriations for 1996 have not been enacted; the table shows the annualized level of            
  appropriations through March 15, 1996.                                                                        

    The costs of this bill fall within budget function 300.
    6. Basis of estimate: Section 13 of the bill would 
authorize appropriations of $500 million for 1996, $750 million 
for 1997, and $1 billion annually over the 1998-2000 period to 
carry out the SRF grants program. Section 14 would authorize 
$15 million annually over the 1996-2000 period for grants to 
organizations providing technical and financial assistance to 
small water supply systems. Section 15 would authorize 
appropriations of $50 million annually over the 1996-2000 
period for grants to States to conduct source water protection 
programs. An additional $15 million annually over the five-year 
period would be authorized for grants to New York City's source 
water protection program. Finally, the bill would authorize $25 
million for grants for Alaska to improve water systems in rural 
and Native villages.
    For purposes of this estimate, we assume that the bill will 
be enacted in the spring of 1996, that supplemental 
appropriations for 1996 will be provided during the summer at 
the authorized level, and that all amounts authorized for 
subsequent years will be appropriated by the beginning of each 
year. Estimated outlays are based on the historical spending 
pattern of the state revolving fund program established under 
title 6 of the Federal Water Pollution Control Act for waste 
water treatment. CBO estimates that 1996 outlays from any 
supplemental appropriations would be negligible because this 
new program is likely to require a startup period of several 
months.
    7. Pay-as-you-go considerations: None.
    8. Estimated impact on State, local, and tribal 
governments: H.R. 2747 contains no intergovernmental mandates 
as defined by Public Law 104-4 and would not result in direct 
costs to any state, local, or tribal government. The bill would 
instruct the EPA to make grants to States, tribes, and 
territories to establish SRFs. These SRFs would offer financing 
for water supply infrastructure improvement and would fund 
technical assistance and source water quality protection 
programs. Indian tribes, territories, and the District of 
Columbia would be allowed to spend the grant money directly on 
water supply activities rather than use it to make loans. The 
bill would require States, tribes, and territories to meet 
certain requirements in order to be eligible for the grants.
    The bill would authorize appropriations of $4.25 billion 
over fiscal years 1996 through 2000 for SRF grants. (Of that 
total, $275 million is shown in the federal cost table as 
spending under current law, based on appropriations action to 
date.) Recipients would be required to deposit an amount equal 
to 20 percent of any federal grant money received into their 
SRFs. Assuming appropriations of the authorized amounts, and 
assuming that States, tribes, and territories would decide to 
pursue the maximum federal aid, grant recipients would 
contribute about $850 million to their SFRs over the same time 
period.
    As discussed above, the bill also would authorize 
appropriations of $425 million for other grants to fund certain 
water supply infrastructure improvements, technical assistance, 
and source water quality protection programs.
    9. Estimated impact on the private sector: The bill would 
impose no new private sector mandates as defined in Public Law 
104-4.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: Federal cost estimate: Kim 
Cawley; State and local government impact: Pepper Santalucia; 
private sector impact: Jean Wooster.
    12. Estimate approved by: Robert A. Sunshine (for Paul N. 
Van de Water, Assistant Director for Budget Analysis).

                     inflationary impact statement

    Clause 2(1)(4) of rule XI requires each committee report on 
a bill or joint resolution of a public character to include an 
analytical statement describing what impact enactment of the 
measure would have on prices and costs in the operation of the 
national economy. The Committee has determined that H.R. 2747 
has no inflationary impact on the national economy.