To provide for improved flood protection along the American River Watershed, and for other purposes.

Directs the Secretary of the Army to: (1) complete a feasibility study of enlarging the river outlets of the Folsom Dam, California, and constructing new river outlets below its emergency spillway; and (2) modify an Army Corps of Engineers (Corps) prior report, if necessary. Authorizes the Secretary to carry out the Folsom Dam and levee modification as described in the report.

Directs the Secretary to complete a study of feasible options for the safe passage of 180,000 cubic feet of flow water under the Howe Avenue bridge, California, or a replacement crossing for such bridge. Authorizes the Secretary to carry out a project to implement the best option.

Authorizes the Secretary to carry out the downstream levee improvement project of the Sacramento River Flood Control Project as described in the Corps report.

Sets at 75 percent the Federal share of the costs for loss of water and power resources as a result of the above projects. Directs the Secretary to submit to the Congress a long-term plan to finance such share.

Directs the Secretary, upon completion of such projects, to operate the Folsom Dam and Reservoir to the variable 400,000-600,000 acre-feet of flood control storage capacity.

Directs the Secretary to complete the American River Watershed Investigation and report results to the Congress, together with recommendations for reducing Watershed flood risks.