Washington - The Senate yesterday started debate on the Safe Drinking Water Act, which would create new state revolving loan funds similar to those authorized to help finance water sewage treatment plants.

Sen. Max Baucus, D-Mont., chairman of the Senate Environment and Public Works Committee, held the bill until reaching a compromise with state and local officials on provisions that would alter the way pollution standards are set.

The safe drinking law, which sets standards for the removal of contaminants commonly found in tap water, expired in 1991 but has been kept active through annual appropriations. The reauthorization bill would provide $600 million in fiscal 1994, and $1 billion annually from fiscal 1995 to fiscal 2000 for the revolving loan funds. Fiscal 1995 begins Oct. 1, 1994.

Under the bill, states may take the capital from the funds, put it in debt reserves, and issue bonds on the reserves.

States would also be able to transfer up to 50% of the water sewage treatment plant loan funds to the drinking water funds.

"This will give states added flexibility to address their most pressing problems, whether they are drinking water or waste water," Baucus said.

A final vote on the drinking water legislation could come Thursday or Friday, a Senate aide said. The House is expected to take up the bill this summer.

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