This bill modernizes how the federal government distributes clean water infrastructure funding to states, territories, and Indian tribes. The legislation replaces the existing allocation formula with a new three-part system that distributes 60 percent of available funds based on identified water quality needs, 20 percent based on population, and 20 percent based on poverty levels. The bill sets aside funding for Buy American oversight activities, allocates 2 percent of funds to Indian tribes and 1.5 percent to U.S. territories, and includes a transition period that limits how dramatically any state's funding can increase or decrease over four years to prevent budget disruptions. Additionally, states are permitted to use up to 0.5 percent of their water infrastructure grants to conduct watershed assessments needed to inform future funding decisions. The bill takes effect beginning in fiscal year 2027 and does not affect separate infrastructure funding provided under the 2021 Infrastructure Investment and Jobs Act.
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