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Directs the Secretary of the Interior (the Secretary) to construct and maintain a test and evaluation facility capable of processing at least 100,000 gallons of water per day at the Tularosa Basin in Otero County, New Mexico. Requires the facility to be used to research new desalination technologies to determine the most-technologically-efficient and cost-effective means for producing potable water from saline or other unsuitable water. Directs the Secretary to: (1) contract with Sandia National Laboratory to develop a desalination technology plan; and (2) construct the facility according to recommendations of such plan. Instructs the Secretary and the Secretary of Energy to: (1) enter into an agreement for the operation of the facility and the conduct of research under this Act; (2) establish a technical advisory panel; and (3) undertake research and development of desalination technologies in addition to the program carried out at the facility. Requires the Secretary to dispose of all water produced by the facility under contract with at least one community in Otero County, but only after Sandia notifies the Secretary that the water is of a consistent, reliable quality. Directs that any water provided by the Secretary to such a community be provided at a cost not to exceed its fair market value. Allows the Secretary to use sums collected to assist in paying the facility's operational costs. Authorizes appropriations, subject to specified limitations.

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