To amend the Federal Water Pollution Control Act.

[AI summary unavailable — showing source text] Directs the Administrator of the Environmental Protection Agency to make grants: (1) under the Federal Water Pollution Control Act (the Act) to appropriate instrumentalities for the construction of treatment works (including combined sewer overflow facilities) to serve coastal localities; and (2) to States for assistance for the construction of treatment works and alternative wastewater treatment systems to serve small communities. Authorizes appropriations. Modifies the Act's: (1) definition of "treatment works" to include acquisition of the land that will be an integral part of the treatment process or will be used for ultimate disposal of residues resulting from such treatment and acquisition of other lands, and interests in lands, which are necessary for construction; and (2) policy on cost effectiveness to provide that a project for waste treatment and management undertaken with Federal assistance by any State, municipality, or intermunicipal or interstate agency shall be that system which constitutes the most economical and cost-effective treatment works, subject to specified requirements. Requires that each permit issued for a discharge from a combined storm and sanitary sew…