Amends the Safe Drinking Water Act Amendments of 1996 to: (1) increase and extend through FY 2009 the authorization of appropriations for grants to Alaska to build public water and wastewater systems to improve health and sanitation in rural and Native villages; (2) condition grants on Alaska requiring applicants to identify a project's scope and goals; (3) require Alaska to report to the Administrator of the Environmental Protection Agency (EPA) annually on project goals and expenditures for the grant program; and (4) direct the Administrator to require Alaska to correct any deficiencies identified in the report; and (5) prohibit expenditures for projects for which any such deficiencies are not corrected by the agreed upon deadline or for which a deadline agreement has not been reached.