,,ii #aacth ,,congress #ast ,session ,s4 #cce ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,february #ad1 #bjac ,mr4 ,merkley 7for himself and ,mr4 ,lautenberg7 introduced the following bill2 which was read twice and referred to the ,committee on ,environment and ,public ,works ,a ,,bill ,to provide financing assistance for qualified water infrastructure projects1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,water ,infrastructure ,finance and ,innovation ,act of #bjac4 #b4 ,findings ,congress finds that-- 7#a7 it is in the national interest to encourage the timely and cost-effective rehabilitation and replacement of aging water and sewer infrastructure and to support investments in innovative1 cost-effective1 and sustainable infrastructure approaches to protect public health and clean water2 7#b7 the ,environmental ,protection ,agency reports that1 in the #bj-year period following the date of enactment of this ,act-- 7,a7 #ccd1hjj1jjj1jjj is needed to invest in infrastructure improvements to ensure the provision of safe water2 and 7,b7 #bih1ajj1jjj1jjj is needed for publicly owned wastewater systems-related infrastructure2 7#c7 customer rates and local charges are and will remain the primary means of paying for water service and infrastructure in the ,united ,states2 7#d7 the municipal bond market and ,state revolving fund programs are the primary long-term means for financing water infrastructure projects1 but upfront investment needs are too high to be met with those traditional means alone2 7#e7 financing constraints make it particularly difficult for ,state revolving funds to support large water infrastructure projects of regional and national significance2 7#f7 the growing funding gap demonstrates the need to invest in innovative and cost-effective approaches such as green infrastructure1 water efficiency1 and source water protection to obtain the greatest environmental and public health benefits per dollar invested2 7#g7 this ,act will substantially benefit the drinking water and wastewater systems of the ,united ,states by-- 7,a7 addressing the gap in funding for large1 regionally and nationally significant projects by making available direct loans and loan guarantees to reduce borrowing costs and accelerate water infrastructure investment2 7,b7 enhancing the capacity of ,state revolving fund programs to assist other projects2 and 7,c7 promoting clean and safe water through compliance with the ,federal ,water ,pollution ,control ,act 7#cc ,u4,s4,c4 #abea et seq47 and the ,safe ,drinking ,water ,act 7#db ,u4,s4,c4 #cjj;f et seq472 7#h7 since the historical default rate on water and sewer bonds is #j4jd percent1 the risk of default on ,federal assistance provided under this ,act is minimal2 7#i7 keeping the risk of default on water and sewer bonds low requires the alignment of infrastructure investment with environmental sustainability2 and 7#aj7 because loans1 loan guarantees1 and other credit instruments only incur long-term costs if subsidized or in the event of default1 this ,act can help to meet the water infrastructure needs of the ,united ,states at minimal long-term cost to the ,federal ,government4 #c4 ,definitions ,in this ,act3 7#a7 ,administrator ,the term ,administrator means the ,administrator of the ,environmental ,protection ,agency4 7#b7 ,borrower ,the term borrower means an eligible entity that owes payments of interest or principal on a credit instrument4 7#c7 ,community water system ,the term community water system has the meaning given the term in section #adja of the ,safe ,drinking ,water ,act 7#db ,u4,s4,c4 #cjj;f74 7#d7 ,cost of a direct loan2 cost of a loan guarantee ,the terms cost of a direct loan and cost of a loan guarantee mean the cost of a direct loan and cost of a loan guarantee1 respectively1 as those terms are used in section #ejb of the ,federal ,credit ,reform ,act of #aiij 7#b ,u4,s4,c4 #ffa;a74 7#e7 ,credit instrument ,the term credit instrument means-- 7,a7 a direct loan made under this ,act2 or 7,b7 a loan or other debt obligation that is subject to a loan guarantee under this ,act4 7#f7 ,direct loan 7,a7 ,in general ,the term direct loan has the meaning given the term in section #ejb of the ,federal ,credit ,reform ,act of #aiij 7#b ,u4,s4,c4 #ffa;a74 7,b7 ,inclusions ,the term direct loan includes the purchase of a bond by the ,federal ,government4 7#g7 ,eligible entity 7,a7 ,in general ,the term eligible entity means-- 7i7 an entity 7other than a ,state or local agency with jurisdiction over highways or roads7 that owns or operates a treatment works that serves the general public1 including a municipal1 tribal1 or regional separate storm sewer system management agency2 7ii7 an entity1 including an ,indian tribe1 that owns or operates a community water system2 7iii7 #a or more entities described in clauses 7i7 and 7ii7 that are cooperating on an eligible project2 7iv7 for an eligible project described in paragraph 7#h77;,b71 a ,state infrastructure financing authority2 7v7 any entity eligible to receive a loan or loan guarantee under a ,state water pollution control revolving fund established under title ,,vi of the ,federal ,water ,pollution ,control ,act 7#cc ,u4,s4,c4 #acha et seq472 and 7vi7 any entity eligible to receive a loan or loan guarantee under a ,state drinking water revolving loan fund established under section #adeb of the ,safe ,drinking ,water ,act 7#db ,u4,s4,c4 #cjj;j-#ab74 7,b7 ,inclusions ,the term eligible entity includes a public-private partnership1 except that only the public entity-owned or investor-owned utility shall receive assistance under this ,act1 not the private financing or development partner4 7#h7 ,eligible project ,the term eligible project means-- 7,a7 a capital project-- 7i7 to construct1 replace1 or rehabilitate a treatment works or a community water system2 7ii7 to reduce the energy consumption needs of a treatment works or a community water system1 including the implementation of energy efficient or renewable generation technologies2 7iii7 to increase water efficiency1 reduce the demand for water1 or reduce the demand for treatment works or community water system capacity2 7iv7 to manage or control stormwater2 7v7 to reuse municipal wastewater or stormwater2 7vi7 for the consolidation of #b or more treatment works or community water systems2 7vii7 to increase drinking water source protection for surface and groundwater sources2 7viii7 for construction activities involving-- 7,i7 the repair1 replacement1 or upgrading of a treatment works or sewage collection system in a community that exists on the date of enactment of this ,act to address an adverse environmental condition existing on that date of enactment2 7,,ii7 the construction of an advanced decentralized wastewater treatment system1 including planning1 design1 associated preconstruction planning activities 7as defined in section #bab of the ,federal ,water ,pollution ,control ,act 7#cc ,u4,s4,c4 #abib772 and 7,,iii7 implementation measures to control1 manage1 reduce1 treat1 infiltrate1 or reuse municipal stormwater1 the primary purpose of which is the protection1 preservation1 or enhancement of water quality to support public purposes 7including decentralized or distributed stormwater controls1 low-impact development technologies and nonstructural approaches1 stream buffers1 and wetlands restoration and enhancement1 the procurement and use of equipment to support minimum measures1 such as street sweeping and storm drain system cleaning1 and acquisition of other land and interests in land to meet the needs of existing development that are necessary for those activities and measures72 7ix7 to implement a management program established under section #cai of the ,federal ,water ,pollution ,control ,act 7#cc ,u4,s4,c4 #acbi72 7x7 to develop and implement a conservation and management plan under section #cbj of the ,federal ,water ,pollution ,control ,act 7#cc ,u4,s4,c4 #accj72 7xi7 to increase the security of wastewater treatment works or a community water system 7excluding any expenditure for operations or maintenance72 7xii7 to carry out water conservation or efficiency projects1 the primary purpose of which is the protection1 preservation1 or enhancement of water quality to support public purposes2 7xiii7 to implement measures to integrate water resource management planning and implementation2 7xiv7 to carry out water1 rainwater1 and wastewater reuse1 reclamation1 recycling1 and rainwater harvesting projects1 the primary purpose of which is the protection1 preservation1 or enhancement of water quality to support public purposes2 and 7xv7 for capital costs associated with monitoring equipment for combined or sanitary sewer overflows2 7,b7 a non-capital project that is-- 7i7 associated with a capital project2 and 7ii7 the aim of which is to promote the use of environmentally sustainable projects1 including utility-backed stormwater and water efficiency retrofit programs2 and 7,c7 #b or more projects described in subparagraph 7,a7 that are combined to receive a single direct loan or loan guarantee4 7#i7 ,indian tribe ,the term ,indian tribe has the meaning given the term in section #d of the ,indian ,self-,determination and ,education ,assistance ,act 7#be ,u4,s4,c4 #dej;b74 7#aj7 ,loan guarantee ,the term loan guarantee has the meaning given the term in section #ejb of the ,federal ,credit ,reform ,act of #aiij 7#b ,u4,s4,c4 #ffa;a74 7#aa7 ,state infrastructure financing authority ,the term ,state infrastructure financing authority means the ,state entity established or designated by the ,governor of a ,state to receive a capitalization grant provided under1 or to otherwise carry out the requirements of1 title ,,vi of the ,federal ,water ,pollution ,control ,act 7#cc ,u4,s4,c4 #acha et seq47 or section #adeb of the ,safe ,drinking ,water ,act 7#db ,u4,s4,c4 #cjj;j-#ab74 7#ab7 ,treatment works ,the term treatment works has the meaning given the term in section #bab of ,federal ,water ,pollution ,control ,act 7#cc ,u4,s4,c4 #abib74 #d4 ,establishment ,the ,administrator may make a direct loan1 including a subordinated loan1 or a loan guarantee to an eligible entity to carry out activities for an eligible project in accordance with this ,act4 #e4 ,applications 7a7 ,in general ,as a condition of receiving assistance under this ,act1 an eligible entity shall submit to the ,administrator an application at such time1 in such manner1 and containing such information as the ,administrator may require4 7b7 ,combined projects ,in the case of an eligible project described in section #c7h77;,c71 the ,administrator shall require from the eligible entity a single application for the group of projects4 #f4 ,use of assistance ,an eligible entity shall only use amounts received under this ,act for eligible projects-- 7#a7 to carry out-- 7,a7 development phase activities1 including planning1 feasibility analysis1 revenue forecasting1 environmental review1 permitting1 and other preconstruction engineering and design work2 7,b7 construction1 reconstruction1 rehabilitation1 and replacement activities necessary for the project2 and 7,c7 environmental mitigation and construction contingencies2 7#b7 to acquire real property 7including interests in real property7 and equipment2 7#c7 to provide for any funding mechanisms necessary to meet market or affordability requirements1 reasonably required reserve funds1 capitalized interest issuance expenses1 and other carrying costs during construction of the project2 and 7#d7 to refinance interim construction financing1 long-term project obligations1 or direct loans or loan guarantees made under this ,act4 #g4 ,selection among eligible projects 7a7 ,in general ,the ,administrator shall select eligible projects to receive assistance under this ,act based on-- 7#a7 the significance of the infrastructure needs addressed by the project1 including the economic1 environmental1 and public health benefits of the project2 7#b7 the creditworthiness of the project under consideration1 including the terms1 conditions1 financial structure1 and security features making up the proposed financing1 and the financial assumptions upon which the project is based2 7#c7 the need for ,federal assistance1 including the likelihood that the provision of assistance by the ,administrator under this ,act will cause the project to proceed more promptly and with lower costs for financing than would be the case without the assistance2 7#d7 the degree to which the project financing plan includes public or private financing in addition to assistance under this ,act2 7#e7 the cost of the direct loan or loan guarantee to the ,federal ,government for the project2 7#f7 the extent to which the project is nationally or regionally significant2 7#g7 whether the project1 to the maximum extent practicable1 incorporates environmentally sustainable approaches1 including conservation1 efficiency1 reuse1 source water protection1 energy efficiency1 green infrastructure1 and other innovative techniques2 7#h7 whether the project is consistent with-- 7,a7 the ,state priority system established pursuant to section #fjc7;g7 of the ,federal ,water ,pollution ,control ,act 7#cc ,u4,s4,c4 #achc7;g772 and 7,b7 the types of projects described in section #adeb7;b77#c7 of the ,safe ,drinking ,water ,act 7#db ,u4,s4,c4 #cjj;j-#ab7;b77#c772 and 7#i7 the priority system established under subsection 7b74 7b7 ,priority system ,the ,administrator shall establish a priority system that gives greater weight to an application for an eligible project that includes-- 7#a7 an inventory of the assets of the treatment works or community water system1 including a description of the condition of those assets2 7#b7 a schedule for replacement of the assets of the treatment works or community water system2 7#c7 a financing plan that factors in all lifecycle costs and describes the sources of revenue from ratepayers1 grants1 bonds1 loans1 and other sources designated to meet those lifecycle costs2 7#d7 a description of any options for restructuring the treatment works or community water system2 7#e7 any new models or techniques1 other than a traditional wastewater model1 to treat or minimize sewage or urban stormwater discharges using-- 7,a7 decentralized or distributed stormwater controls2 7,b7 advanced decentralized wastewater treatment2 7,c7 low-impact development technologies and nonstructural approaches2 7,d7 stream buffers2 7,e7 wetland restoration and enhancement2 7,f7 actions to minimize the quantity of and direct connections to impervious surfaces2 7,g7 soil and vegetation or other permeable materials2 or 7,h7 actions that increase efficient water use1 water conservation1 or water or wastewater reuse1 including rainwater harvesting2 7#f7 to the maximum extent practicable1 the use of water efficiency and conservation techniques to generate cost-effective sources of new water supply2 and 7#g7 a demonstration of consistency with ,state1 regional1 and municipal watershed plans1 water conservation and efficiency plans1 or integrated water resource management plans4 7c7 ,special rule for combined projects ,for an eligible project described in section #c7h77;,c71 the ,administrator shall consider only the criteria described in paragraphs 7#a71 7#b71 7#c71 and 7#e7 of subsection 7a74 7d7 ,reasonable assurance of payment ,the ,administrator may select an eligible project for assistance only if the ,administrator finds that there is a reasonable assurance that all payments will be made on the credit instrument4 #h4 ,credit evaluation 7a7 ,in general ,the ,administrator shall develop and implement a credit evaluation process before providing any assistance under this ,act4 7b7 ,preliminary rating opinion letter ,for purposes of determining creditworthiness under section #g7;a77#b71 the ,administrator may-- 7#a7 require an eligible entity to provide a preliminary rating opinion letter from at least #a rating agency2 or 7#b7 use an alternative 7including an internal7 credit rating process4 7c7 ,rule for certain combined projects ,for an eligible project described in section #c7h77;,c7 for which a ,state infrastructure financing authority is the eligible entity1 in addition to the creditworthiness consideration under section #g7;a77#b71 the ,administrator shall evaluate the creditworthiness of each entity represented by the ,state infrastructure financing authority that will be carrying out any eligible project described in section #c7h77;,a7 that will be a part of the eligible project4 #i4 ,terms and conditions 7a7 ,in general ,each direct loan and loan guarantee made under this ,act shall be on such terms and conditions and contain such covenants1 representations1 warranties1 and requirements 7including requirements for audits7 as the ,administrator may prescribe4 7b7 ,interest rate 7#a7 ,in general ,the interest rate applicable to a direct loan shall be the rate that is set by reference to a benchmark interest rate on marketable ,treasury securities with a similar maturity to that direct loan1 as of the date of issuance of the direct loan4 7#b7 ,higher interest rates ,the ,administrator may charge a higher interest rate on a direct loan if the ,administrator determines that the risk profile of the eligible project indicates a higher interest rate is necessary to protect the interests of the ,united ,states4 7c7 ,term of loan ,the ,administrator may provide assistance under this ,act only with respect to a credit instrument the final maturity date of which is not later than #ce years after the date on which funds are disbursed4 7d7 ,security features ,the ,administrator shall require a borrower receiving assistance under this ,act to use a rate covenant1 coverage requirement1 or similar security feature supporting the project obligations to ensure repayment4 7e7 ,direct loan repayments 7#a7 ,schedule ,the ,administrator shall establish a repayment schedule for each direct loan under this ,act based on the projected cash flow from project repayment sources4 7#b7 ,commencement ,scheduled repayments of principal or interest on a direct loan made under this ,act shall commence not later than #e years after the date of substantial completion of the project1 as determined by the ,administrator in a manner set forth at the time the direct loan is made4 7#c7 ,deferral of payments 7,a7 ,in general ,if the ,administrator determines that a borrower lacks the resources to make scheduled payments on a direct loan made under this ,act based on circumstances not foreseeable at the time the direct loan is made1 the ,administrator may allow for the deferral of the payments4 7,b7 ,interests ,any payment deferred under subparagraph 7,a7 shall-- 7i7 continue to accrue interest until fully repaid2 and 7ii7 be scheduled to be amortized over the remaining term of the direct loan4 7,c7 ,criteria ,any payment deferral under subparagraph 7,a7 shall be contingent on the project meeting criteria established by the ,administrator1 which shall include standards for reasonable assurance of repayment4 7#d7 ,prepayment ,payments on the direct loan may be made in advance with no penalty4 7f7 ,special rules for loan guarantees 7#a7 ,terms ,the terms of a credit instrument that is the subject of a loan guarantee under this ,act shall be consistent with the terms set forth in this ,act for a direct loan1 except that the interest rate and any prepayment features on the credit instrument shall be negotiated between the borrower and the lender1 with the approval of the ,administrator4 7#b7 ,interest rate ,the ,administrator may make a loan guarantee under this ,act only if the ,administrator determines that the interest rate on the credit instrument that is subject to the loan guarantee is appropriate1 taking into account the prevailing rate of interest in the private sector for similar obligations4 7#c7 ,eligible lender ,the ,administrator may not make a loan guarantee under this ,act unless the lender of the loan or purchaser of the debt security that will be the subject of the loan guarantee is a non-,federal1 qualified institutional buyer 7as defined in section #bcj4add;,a7a7 of title #ag1 ,code of ,federal ,regulations 7or successor regulation771 including-- 7,a7 a qualified retirement plan 7as defined in section #digd7;c7 of the ,internal ,revenue ,code of #aihf7 that is a non-,federal qualified institutional buyer2 and 7,b7 a governmental plan 7as defined in section #dad7;d7 of the ,internal ,revenue ,code of #aihf7 that is a non-,federal qualified institutional buyer4 7#d7 ,adequate servicing provisions required ,no loan guarantee may be made under this ,act for a loan unless the ,administrator determines that the lender with respect to the loan is responsible and that adequate servicing provisions have been made for the loan that is the subject of the loan guarantee that are reasonable and protect the financial interest of the ,united ,states4 #aj4 ,program administration 7a7 ,in general ,the ,administrator shall establish a uniform system to service each direct loan and loan guarantee made under this ,act4 7b7 ,assistance from expert firms ,the ,administrator may retain the services of expert firms1 including counsel1 in the field of municipal and project finance to assist in the underwriting and servicing of a direct loan or loan guarantee made under this ,act4 7c7 ,fees for administrative expenses 7#a7 ,in general ,in providing assistance under this ,act1 the ,administrator may-- 7,a7 collect fees for administrative expenses1 including premiums for loan guarantees1 at a level that is sufficient to cover the costs of services of expert firms and all or a portion of the costs to the ,federal ,government of servicing the direct loans and loan guarantees made under this ,act2 and 7,b7 as provided in advance in appropriations acts1 use the amounts described in subparagraph 7,a7 to cover the expenses described in that subparagraph4 7#b7 ,level of fees ,the ,administrator shall set the fees described in paragraph 7#a7 at a level that will minimize the cost to the ,federal ,government and maximize the assistance that can be provided under this ,act1 while providing competitive credit terms to eligible projects1 in order to reduce borrowing costs and accelerate water infrastructure investment4 #aa4 ,technical assistance ,the ,administrator may use amounts made available to carry out this ,act to provide technical assistance to applicants and prospective applicants in creating financing packages that leverage a mix of public and private funding sources4 #ab4 ,restrictions 7a7 ,assistance threshold ,the ,administrator may provide assistance under this ,act only with respect to a credit instrument in an amount of not less than #bj1jjj1jjj4 7b7 ,refinancing ,the ,administrator shall make available to eligible entities for refinancing activities described in section #f7d7 not more than #ae percent of the total amounts made available to carry out this ,act4 #ac4 ,prevailing wages 7a7 ,in general ,notwithstanding any other provision of law and in a manner consistent with other provisions in this ,act1 all laborers and mechanics employed by contractors and subcontractors on projects funded directly by1 or assisted in whole or in part by and through1 the ,federal ,government pursuant to this ,act shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the ,secretary of ,labor in accordance with subchapter ,,iv of chapter #ca of title #dj1 ,united ,states ,code4 7b7 ,administration ,with respect to the labor standards specified in this section1 the ,secretary of ,labor shall have the authority and functions set forth in ,reorganization ,plan ,numbered #ad of #aiej 7#fd ,stat4 #abfg2 #e ,u4,s4,c4 ,app47 and section #cade of title #dj1 ,united ,states ,code4 #ad4 ,use of ,american iron1 steel1 and manufactured goods 7a7 ,in general ,except as provided in subsection 7b71 none of the amounts made available under this ,act may be used for a project for the construction1 alteration1 maintenance1 or repair of a public building or public work unless all of the iron1 steel1 and manufactured goods used in the project are produced in the ,united ,states4 7b7 ,exception ,subsection 7a7 shall not apply in any case or category of cases in which the head of the ,federal department or agency involved finds that-- 7#a7 applying subsection 7a7 would be inconsistent with the public interest2 7#b7 iron1 steel1 and the relevant manufactured goods are not produced in the ,united ,states in sufficient and reasonably available quantities and of a satisfactory quality2 or 7#c7 inclusion of iron1 steel1 and manufactured goods produced in the ,united ,states will increase the cost of the overall project by more than #be percent4 7c7 ,public notice ,if the head of a ,federal department or agency determines that it is necessary to waive the application of subsection 7a7 based on a finding under subsection 7b71 the head of the department or agency shall publish in the ,federal ,register a detailed written justification as to why the provision is being waived4 7d7 ,international agreements ,this section shall be applied in a manner consistent with ,united ,states obligations under international agreements4 #ae4 ,funding 7a7 ,authorization of appropriations 7#a7 ,direct loans and loan guarantees ,there is authorized to be appropriated for the cost of providing direct loans and loan guarantees under this ,act such sums as are necessary4 7#b7 ,administrative expenses 7,a7 ,in general ,there is authorized to be appropriated for administrative expenses under this ,act an amount equal to the amount of fees collected under section #aj7;c74 7,b7 ,additional authorization of appropriations ,in addition to amounts authorized to be appropriated under subparagraph 7,a71 there are authorized to be appropriated for administrative expenses under this ,act such sums as are necessary4 7b7 ,payment of subsidy cost ,a borrower may pay for the cost of a direct loan or loan guarantee under this ,act1 along with the appropriate amount of related administrative expenses1 with payment the ,administrator may use1 as provided in advance in appropriations ,acts1 instead of using amounts authorized under subsection 7a71 to make a direct loan or loan guarantee to the borrower4