WASHINGTON -- A new revolving loan program that would help states finance drinking water treatment plants has been approved by the House.

The measure was included in legislation passed by voice vote Tuesday that would renew the Safe Drinking Water Act through fiscal 1997 and authorize nearly $3.6 billion for the new state revolving loan funds over the same period.

The revolving funds would permit states to leverage their federal dollars by issuing tax-exempt bonds, much as they do now under the existing wastewater treatment revolving loan fund program authorized by the Clean Water Act.

The drinking water bill now goes to a House-Senate conference where negotiators hope to iron out differences with the Senate's version of the measure before Congress adjourns for the year in the next week or two.

Both bills would authorize $1 billion a year for the revolving loan funds, but the Senate plan, which was approved in May, would extend the program through fiscal 2000.

If an agreement is reached and the legislation is signed into law, $599 million that was set aside for the new loan program in an appropriations bill for the current fiscal year ending Sept. 30 would be released to states.

There are substantial differences between the House and Senate versions that could make a final agreement difficult.

Environmental groups have complained that the Senate version goes too far in relaxing drinking water standards.

However, the House bill, a bipartisan compromise that was hammered out over several months, has the support of a broad coalition that includes interest groups representing state and local elected officials, local water authorities, and environmental groups, according to Rep. Henry Waxman, D-Calif., chairman of the health and environment subcommittee of the Energy and Commerce Committee.

Since Congress is running out of time this year, House sources said they hope the Senate will accept the House version of the bill and avoid a drawn-out conference.

Like the Senate bill, the House bill would modify a provision in the current law requiring states to identify 25 new containments every three years, a requirement that states said would be extremely cumbersome and expensive. The measure would focus on contaminants associated with the greatest health threats.

The bills would also give small systems more help through funds for technical assistance, guidelines for technologies suitable to small systems, and the leeway to use those alternative technologies best suited to the systems.

Even though the bill calls for spending $1 billion for the loan program next year, President Clinton's fiscal 1995 budget requested only $700 million.

The House and Senate followed the administration's lead and recently approved only $700 million in actual spending for the new state revolving loan funds in fiscal 1995.

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