1.1 	 A bill for an act
1.2 	 relating to the environment; creating the Clean Water Legacy Act; providing 
1.3 	authority, direction, and funding to achieve and maintain water quality standards 
1.4 	for Minnesota's surface waters in accordance with section 303(d) of the federal 
1.5 	Clean Water Act; appropriating money; amending Laws 2005, chapter 20, article 
1.6 	1, section 39; proposing coding for new law in Minnesota Statutes, chapter 
1.7 	446A; proposing coding for new law as Minnesota Statutes, chapter 114D.
1.8 	 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	 Section 1. [114D.05] CITATION.
1.10 	This chapter may be cited as the "Clean Water Legacy Act." 

1.11 	 Sec. 2. [114D.10] LEGISLATIVE PURPOSE AND FINDINGS.
1.12 		Subdivision 1.Purpose. The purpose of the Clean Water Legacy Act is to protect, 
1.13 	restore, and preserve the quality of Minnesota's surface waters by providing authority, 
1.14 	direction, and resources to achieve and maintain water quality standards for surface waters 
1.15 	as required by section 303(d) of the federal Clean Water Act, United States Code, title 33, 
1.16 	section 1313(d), and applicable federal regulations.
1.17 		Subd. 2.Findings. The legislature finds that:
1.18 	(1) there is a close link between protecting, restoring, and preserving the quality of 
1.19 	Minnesota's surface waters and the ability to develop the state's economy, enhance its 
1.20 	quality of life, and protect its human and natural resources;
1.21 	(2) achieving the state's water quality goals will require long-term commitment and 
1.22 	cooperation by all state and local agencies, and other public and private organizations 
1.23 	and individuals, with responsibility and authority for water management, planning, and 
1.24 	protection; and 
2.1 	(3) all persons and organizations whose activities affect the quality of waters, 
2.2 	including point and nonpoint sources of pollution, have a responsibility to participate in 
2.3 	and support efforts to achieve the state's water quality goals.

2.4 	 Sec. 3. [114D.15] DEFINITIONS.
2.5 		Subdivision 1.Application. The definitions provided in this section apply to the 
2.6 	terms used in this chapter.
2.7 		Subd. 2.Citizen monitoring. "Citizen monitoring" means monitoring of surface 
2.8 	water quality by individuals and nongovernmental organizations that is consistent 
2.9 	with Pollution Control Agency guidance on monitoring procedures, quality assurance 
2.10 	protocols, and data management.
2.11 		Subd. 3.Clean water council. "Clean Water Council" or "council" means the Clean 
2.12 	Water Council created pursuant to section 114D.30, subdivision 1.
2.13 		Subd. 4.Federal TMDL requirements. "Federal TMDL requirements" means the 
2.14 	requirements of section 303(d) of the Clean Water Act, United States Code, title 33, 
2.15 	section 1313(d), and associated regulations and guidance.
2.16 		Subd. 5.Impaired water. "Impaired water" means surface water that does not 
2.17 	meet applicable water quality standards.
2.18 		Subd. 6.Public agencies. "Public agencies" means all state agencies, political 
2.19 	subdivisions, joint powers organizations, and special purpose units of government with 
2.20 	authority, responsibility, or expertise in protecting, restoring, or preserving the quality of 
2.21 	surface waters, managing or planning for surface waters and related lands, or financing 
2.22 	waters-related projects.  "Public agencies" also includes the University of Minnesota and 
2.23 	other public education institutions.
2.24 		Subd. 7.Restoration. "Restoration" means actions, including effectiveness 
2.25 	monitoring, that are taken to achieve and maintain water quality standards for impaired 
2.26 	waters in accordance with a TMDL that has been approved by the United States 
2.27 	Environmental Protection Agency under federal TMDL requirements.
2.28 		Subd. 8.Surface waters. "Surface waters" means waters of the state as defined 
2.29 	in section 115.01, subdivision 22, excluding groundwater as defined in section 115.01, 
2.30 	subdivision 6.
2.31 		Subd. 9.Third-party TMDL. "Third-party TMDL" means a TMDL that is 
2.32 	developed by a qualified public agency other than the Pollution Control Agency consistent 
2.33 	with the goals, policies, and priorities in section 114D.20.
2.34 		Subd. 10.Total maximum daily load or TMDL. "Total maximum daily load" 
2.35 	or "TMDL" means a calculation of the maximum amount of a pollutant that may be 
3.1 	introduced into a surface water and still ensure that applicable water quality standards 
3.2 	for that water are achieved and maintained.  A TMDL is the sum of the pollutant load 
3.3 	allocations for all sources of the pollutant, including a load allocation for point sources, a 
3.4 	load allocation for nonpoint sources and natural background, a load allocation for future 
3.5 	growth of point and nonpoint sources, and a margin of safety to account for uncertainty 
3.6 	about the relationship between pollutant loads and the quality of the receiving surface 
3.7 	water.  "Natural background" means characteristics of the water body resulting from the 
3.8 	multiplicity of factors in nature, including climate and ecosystem dynamics, that affect 
3.9 	the physical, chemical, or biological conditions in a water body, but does not include 
3.10 	measurable and distinguishable pollution that is attributable to human activity or influence. 
3.11 	A TMDL must take into account seasonal variations.
3.12 		Subd. 11.Water quality standards. "Water quality standards" for Minnesota 
3.13 	surface waters are found in Minnesota Rules, chapters 7050 and 7052.

3.14 	 Sec. 4. [114D.20] IMPLEMENTATION; COORDINATION; GOALS; 
3.15 	POLICIES; AND PRIORITIES.
3.16 		Subdivision 1.Coordination and cooperation. In implementing this chapter, 
3.17 	public agencies shall take into consideration the relevant provisions of local and other 
3.18 	applicable water management, conservation, land use, land management, and development 
3.19 	plans and programs.  Public agencies with authority for local water management, 
3.20 	conservation, land use, land management, and development plans shall take into 
3.21 	consideration the manner in which their plans affect the implementation of this chapter. 
3.22 	Public agencies shall identify opportunities to participate and assist in the successful 
3.23 	implementation of this chapter, including the funding or technical assistance needs, if any, 
3.24 	that may be necessary.  In implementing this chapter, public agencies shall endeavor 
3.25 	to engage the cooperation of organizations and individuals whose activities affect the 
3.26 	quality of surface waters, including point and nonpoint sources of pollution, and who 
3.27 	have authority and responsibility for water management, planning, and protection. To 
3.28 	the extent practicable, public agencies shall endeavor to enter into formal and informal 
3.29 	agreements and arrangements with federal agencies and departments to jointly utilize 
3.30 	staff and resources to deliver programs or conduct activities to achieve the intent of this 
3.31 	chapter, including efforts under the federal Clean Water Act and other federal farm and 
3.32 	soil and water conservation programs.
3.33 		Subd. 2.Goals for implementation. The following goals must guide the 
3.34 	implementation of this chapter:
4.1 	(1) to identify impaired waters in accordance with federal TMDL requirements 
4.2 	within ten years after the effective date of this section and thereafter to ensure continuing 
4.3 	evaluation of surface waters for impairments;
4.4 	(2) to submit TMDL's to the United States Environmental Protection Agency for all 
4.5 	impaired waters in a timely manner in accordance with federal TMDL requirements;
4.6 	(3) to set a reasonable time for implementing restoration of each identified impaired 
4.7 	water;
4.8 	(4) to provide assistance and incentives to prevent waters from becoming impaired 
4.9 	and to improve the quality of waters that are listed as impaired but do not have an 
4.10 	approved TMDL addressing the impairment; and 
4.11 	(5) to promptly seek the delisting of waters from the impaired waters list when those 
4.12 	waters are shown to achieve the designated uses applicable to the waters.
4.13 		Subd. 3.Implementation policies. The following policies must guide the 
4.14 	implementation of this chapter:
4.15 	(1) develop regional and watershed TMDL's, and TMDL's for multiple pollutants, 
4.16 	where reasonable and feasible;
4.17 	(2) maximize use of available organizational, technical, and financial resources to 
4.18 	perform sampling, monitoring, and other activities to identify impaired waters, including 
4.19 	use of citizen monitoring;
4.20 	(3) maximize opportunities for restoration of impaired waters, by prioritizing and 
4.21 	targeting of available programmatic, financial, and technical resources and by providing 
4.22 	additional state resources to complement and leverage available resources;
4.23 	(4) use existing regulatory authorities to achieve restoration for point and nonpoint 
4.24 	sources of pollution where applicable, and promote the development and use of effective 
4.25 	nonregulatory measures to address pollution sources for which regulations are not 
4.26 	applicable;
4.27 	(5) use restoration methods that have a demonstrated effectiveness in reducing 
4.28 	impairments and provide the greatest long-term positive impact on water quality protection 
4.29 	and improvement and related conservation benefits while incorporating innovative 
4.30 	approaches on a case-by-case basis;
4.31 	(6) identify for the legislature any innovative approaches that may strengthen or 
4.32 	complement existing programs; and 
4.33 	(7) identify and encourage implementation of measures to prevent waters from 
4.34 	becoming impaired and to improve the quality of waters that are listed as impaired but 
4.35 	have no approved TMDL addressing the impairment using the best available data and 
5.1 	technology, and establish and report outcome-based performance measures that monitor 
5.2 	the progress and effectiveness of protection and restoration measures.
5.3 		Subd. 4.Priorities for identifying impaired waters. The Pollution Control 
5.4 	Agency, in accordance with federal TMDL requirements, shall set priorities for identifying 
5.5 	impaired waters, giving consideration to:
5.6 	(1) waters where impairments would pose the greatest potential risk to human or 
5.7 	aquatic health; and 
5.8 	(2) waters where data developed through public agency or citizen monitoring or 
5.9 	other means provides evidence that an impaired condition exists.
5.10 		Subd. 5Priorities for preparation of TMDL's. The Clean Water Council shall 
5.11 	recommend priorities for scheduling and preparing TMDL's taking into account the 
5.12 	severity of the impairment, the designated uses of those waters, and other applicable 
5.13 	federal TMDL requirements.  In recommending priorities, the council shall also give 
5.14 	consideration to waters and watersheds:
5.15 	(1) with impairments that pose the greatest potential risk to human health;
5.16 	(2) with impairments that pose the greatest potential risk to threatened or endangered 
5.17 	species;
5.18 	(3) with impairments that pose the greatest potential risk to aquatic health;
5.19 	(4) where other public agencies and participating organizations and individuals, 
5.20 	especially local, basinwide, or regional agencies or organizations, have demonstrated 
5.21 	readiness to assist in carrying out the responsibilities, including availability and 
5.22 	organization of human, technical, and financial resources necessary to undertake the 
5.23 	work; and 
5.24 	(5) where there is demonstrated coordination and cooperation among cities, 
5.25 	counties, watershed districts, and soil and water conservation districts in planning and 
5.26 	implementation of activities that will assist in carrying out the responsibilities.
5.27 		Subd. 6.Priorities for restoration of impaired waters. In implementing 
5.28 	restoration of impaired waters, in addition to the priority considerations in subdivision 5 
5.29 	the Clean Water Council shall give priority in its recommendations for restoration funding 
5.30 	from the clean water legacy account to restoration projects that:
5.31 	(1) coordinate with and utilize existing local authorities and infrastructure for 
5.32 	implementation;
5.33 	(2) can be implemented in whole or in part by providing support for existing or 
5.34 	ongoing restoration efforts;
5.35 	(3) most effectively leverage other sources of restoration funding, including federal, 
5.36 	state, local, and private sources of funds;
6.1 	(4) show a high potential for early restoration and delisting based upon data 
6.2 	developed through public agency or citizen monitoring or other means; and 
6.3 	(5) show a high potential for long-term water quality and related conservation 
6.4 	benefits.
6.5 		Subd. 7.Priorities for funding prevention actions. The Clean Water Council 
6.6 	shall apply the priorities applicable under subdivision 6, as far as practicable, when 
6.7 	recommending priorities for funding actions to prevent waters from becoming impaired 
6.8 	and to improve the quality of waters that are listed as impaired but do not have an 
6.9 	approved TMDL.

6.10 	 Sec. 5. [114D.25] ADMINISTRATION; POLLUTION CONTROL AGENCY.
6.11 		Subdivision 1.General duties and authorities. (a) The Pollution Control Agency, 
6.12 	in accordance with federal TMDL requirements, shall:  identify impaired waters and 
6.13 	propose a list of the waters for review and approval by the United States Environmental 
6.14 	Protection Agency; develop and approve TMDL's for listed impaired waters and submit 
6.15 	the approved TMDL's to the United States Environmental Protection Agency for final 
6.16 	approval; and propose to delist waters from the United States Environmental Protection 
6.17 	Agency impaired waters list.
6.18 	(b) A TMDL must include a statement of the facts and scientific data supporting the 
6.19 	TMDL and a list of potential implementation options, including:
6.20 	(1) a range of estimates of the cost of implementation of the TMDL; and 
6.21 	(2) for point sources, the individual wasteload data and the estimated cost of 
6.22 	compliance addressed by the TMDL.
6.23 	The implementation information does not need to be sent to the United States 
6.24 	Environmental Protection Agency for review.
6.25 		Subd. 2.Administrative procedures for TMDL approval. Before approving a 
6.26 	TMDL, the agency shall give written notice to the public of the proposed TMDL and 
6.27 	provide a 30-day opportunity for submission of written comments.  The agency shall 
6.28 	distribute the notice in the same manner as a notice of a proposed permit is distributed 
6.29 	under agency rules. The approval of a TMDL by the Pollution Control Agency is a final 
6.30 	decision of the agency under section 115.05, subdivision 11, clause (1), and is subject 
6.31 	to the contested case procedures of sections 14.57 to 14.62 in accordance with agency 
6.32 	procedural rules.  The agency shall not submit an approved TMDL to the United States 
6.33 	Environmental Protection Agency until the time for commencing judicial review has 
6.34 	run or the judicial review process has been completed.  A TMDL is not subject to the 
6.35 	rulemaking requirements of chapter 14, including section 14.386.
7.1 		Subd. 3.Third-party TMDL development. The Pollution Control Agency may 
7.2 	enter agreements with any qualified public agency setting forth the terms and conditions 
7.3 	under which that entity is authorized to develop a third-party TMDL.  In determining 
7.4 	whether the public agency is qualified to develop a third-party TMDL, the Pollution 
7.5 	Control Agency shall consider the technical and administrative qualifications of the public 
7.6 	agency and shall avoid any potential organizational conflict of interest, as defined in 
7.7 	section 16C.02, subdivision 10a, of the public agency with respect to the development of 
7.8 	the third-party TMDL.  A third-party TMDL is subject to modification and approval by the 
7.9 	Pollution Control Agency, and must be approved by the Pollution Control Agency before it 
7.10 	is submitted to the United States Environmental Protection Agency.  The Pollution Control 
7.11 	Agency shall consider authorizing the development of third-party TMDL's consistent with 
7.12 	the goals, policies, and priorities determined under section 116.384.

7.13 	 Sec. 6. [114D.30] CLEAN WATER COUNCIL.
7.14 		Subdivision 1.Creation; duties. A Clean Water Council is created to advise on the 
7.15 	administration and implementation of this chapter, and foster coordination and cooperation 
7.16 	as described in section 114D.20, subdivision 1.  The council may also advise on the 
7.17 	development of appropriate processes for expert scientific review as described in section 
7.18 	114D.35, subdivision 2.  The Pollution Control Agency shall provide administrative 
7.19 	support for the council with the support of other member agencies.  The members of the 
7.20 	council shall elect a chair from the nonagency members of the council.
7.21 		Subd. 2.Membership; appointment. The commissioners of natural resources, 
7.22 	agriculture, and the Pollution Control Agency, and the executive director of the Board of 
7.23 	Water and Soil Resources shall appoint one person from their respective agency to serve 
7.24 	as a member of the council.  Seventeen additional nonagency members of the council shall 
7.25 	be appointed as follows:
7.26 	(1) two members representing statewide farm organizations, appointed by the 
7.27 	governor;
7.28 	(2) one member representing business organizations, appointed by the governor;
7.29 	(3) one member representing environmental organizations, appointed by the 
7.30 	governor;
7.31 	(4) one member representing soil and water conservation districts, appointed by 
7.32 	the governor;
7.33 	(5) one member representing watershed districts, appointed by the governor;
7.34 	(6) one member representing organizations focused on improvement of Minnesota 
7.35 	lakes or streams, appointed by the governor;
8.1 	(7) two members representing an organization of county governments, one member 
8.2 	representing the interests of rural counties, and one member representing the interests of 
8.3 	counties in the seven-county metropolitan area, appointed by the governor;
8.4 	(8) two members representing organizations of city governments, appointed by 
8.5 	the governor;
8.6 	(9) one member representing the Metropolitan Council established under section 
8.7 	473.123, appointed by the governor;
8.8 	(10) one township officer, appointed by the governor;
8.9 	(11) one member of the house of representatives, appointed by the speaker;
8.10 	(12) one member of the senate, appointed by the majority leader;
8.11 	(13) one member representing the University of Minnesota or a Minnesota state 
8.12 	university, appointed by the governor; and 
8.13 	(14) one member representing the interests of tribal governments, appointed by 
8.14 	the governor.
8.15 	The members of the council appointed by the governor are subject to the advice 
8.16 	and consent of the senate.  At least six of the members appointed by the governor must 
8.17 	reside in the seven-county metropolitan area.  In making appointments, the governor must 
8.18 	attempt to provide for geographic balance.
8.19 		Subd. 3.Terms; compensation; removal. The initial terms of members 
8.20 	representing state agencies and the Metropolitan Council expire on the first Monday in 
8.21 	January, 2007. Thereafter, the terms of members representing the state agencies and 
8.22 	the Metropolitan Council are four years and are coterminous with the governor.  The 
8.23 	terms of other members of the council shall be as provided in section 15.059, subdivision 
8.24 	2.  Members may serve until their successors are appointed and qualify. Compensation 
8.25 	and removal of council members is as provided in section 15.059, subdivisions 3 and 4. 
8.26 	A vacancy on the council may be filled by the appointing authorities, as provided in 
8.27 	subdivision 1, for the remainder of the unexpired term.
8.28 		Subd. 4.Implementation plan. The Clean Water Council shall recommend a 
8.29 	plan for implementation of this chapter.  The recommended plan shall address general 
8.30 	procedures and time frames for implementing this chapter, and shall include a more 
8.31 	specific implementation work plan for the next fiscal biennium and a framework for setting 
8.32 	priorities to address impaired waters consistent with section 114D.20, subdivisions 2 to 7. 
8.33 	The council shall issue the first recommended plan under this subdivision by December 1, 
8.34 	2005, and shall issue a revised plan by December 1 of each even-numbered year thereafter.
8.35 		Subd. 5.Recommendations on appropriation of funds. The Clean Water Council 
8.36 	shall recommend to the governor the manner in which money from the clean water legacy 
9.1 	account should be appropriated for the purposes identified in section 114D.45, subdivision 
9.2 	3.  The council's recommendations must be consistent with the purposes, policies, goals, 
9.3 	and priorities in sections 114D.05 to 114D.35, and shall allocate adequate support 
9.4 	and resources to identify impaired waters, develop TMDL's, implement restoration of 
9.5 	impaired waters, and provide assistance and incentives to prevent waters from becoming 
9.6 	impaired and improve the quality of waters which are listed as impaired but have no 
9.7 	approved TMDL.
9.8 		Subd. 6.Biennial report to legislature. By December 1 of each even-numbered 
9.9 	year, the council shall submit a report to the legislature on the activities for which money 
9.10 	from the clean water legacy account has been or will be spent for the current biennium, 
9.11 	the activities for which money from the account is recommended to be spent in the next 
9.12 	biennium, and the impact on economic development of the implementation of the impaired 
9.13 	waters program.  The report due on December 1, 2014, must include an evaluation of the 
9.14 	progress made through June 30, 2014, in implementing this chapter, the need for funding of 
9.15 	future implementation of those sections, and recommendations for the sources of funding.

9.16 	 Sec. 7. [114D.35] PUBLIC AND STAKEHOLDER PARTICIPATION; 
9.17 	SCIENTIFIC REVIEW; EDUCATION.
9.18 		Subdivision 1.Public and stakeholder participation.  Public agencies involved 
9.19 	in the implementation of this chapter shall encourage participation by the public and 
9.20 	stakeholders, including local citizens, landowners and managers, and public and private 
9.21 	organizations, in the identification of impaired waters, in developing TMDL's, and in 
9.22 	planning and implementing restoration of impaired waters.  In particular, the Pollution 
9.23 	Control Agency shall make reasonable efforts to provide timely information to the public 
9.24 	and to stakeholders about impaired waters that have been identified by the agency.  The 
9.25 	agency shall seek broad and early public and stakeholder participation in scoping the 
9.26 	activities necessary to develop a TMDL, including the scientific models, methods, and 
9.27 	approaches to be used in TMDL development, and to implement restoration pursuant to 
9.28 	section 114D.15, subdivision 7.
9.29 		Subd. 2.Expert scientific advice. The Clean Water Council and public 
9.30 	agencies shall make use of available expertise from educational, research, and technical 
9.31 	organizations, including the University of Minnesota and other higher education 
9.32 	institutions, to provide appropriate independent expert advice on models, methods, and 
9.33 	approaches used in identifying impaired waters, developing TMDL's, and implementing 
9.34 	prevention and restoration.
10.1 		Subd. 3.Education. The Clean Water Council shall develop strategies for 
10.2 	informing, educating, and encouraging the participation of citizens, stakeholders, and 
10.3 	others regarding the identification of impaired waters, development of TMDL's, and 
10.4 	development and implementation of restoration for impaired waters.  Public agencies shall 
10.5 	be responsible for implementing the strategies.

10.6 	 Sec. 8. [114D.45] CLEAN WATER LEGACY ACCOUNT.
10.7 		Subdivision 1.Creation. The clean water legacy account is created as an account 
10.8 	in the environmental fund.  Money in the account must be made available for the 
10.9 	implementation of this chapter and sections 446A.073, 446A.074, and 446A.075, without 
10.10 	supplanting or taking the place of any other funds which are currently available or may 
10.11 	become available from any other source, whether federal, state, local, or private, for 
10.12 	implementation of those sections.
10.13 		Subd. 2.Sources of revenue. The following revenues must be deposited in the 
10.14 	clean water legacy account:
10.15 	(1) money transferred to the account; and 
10.16 	(2) interest accrued on the account.
10.17 		Subd. 3.Purposes. Subject to appropriation by the legislature, the clean water 
10.18 	legacy account may be spent for the following purposes:
10.19 	(1) to provide grants, loans, and technical assistance to public agencies and others 
10.20 	who are participating in the process of identifying impaired waters, developing TMDL's, 
10.21 	implementing restoration plans for impaired waters, and monitoring the effectiveness 
10.22 	of restoration;
10.23 	(2) to support measures to prevent waters from becoming impaired and to improve 
10.24 	the quality of waters that are listed as impaired but have no approved TMDL addressing 
10.25 	the impairment;
10.26 	(3) to provide grants and loans for wastewater and storm water treatment projects 
10.27 	through the Public Facilities Authority;
10.28 	(4) to support the efforts of public agencies associated with individual sewage 
10.29 	treatment systems and financial assistance for upgrading and replacing the systems; and 
10.30 	(5) to provide funds to state agencies to carry out their responsibilities under this 
10.31 	chapter.

10.32 	 Sec. 9. [446A.073] CLEAN WATER LEGACY PHOSPHORUS REDUCTION 
10.33 	GRANTS.
11.1 		Subdivision 1.Creation of fund; appropriation. The authority shall establish a 
11.2 	clean water legacy capital improvement fund and shall make grants from the fund as 
11.3 	provided in this section.  Money in the clean water legacy capital improvement fund, 
11.4 	including interest earned, is appropriated to the authority for the purposes of this section.
11.5 		Subd. 2.Grants. The authority shall award grants from the clean water legacy 
11.6 	capital improvement fund to governmental units for the capital costs of wastewater 
11.7 	treatment facility projects or a portion thereof that will reduce the discharge of total 
11.8 	phosphorus from the facility to one milligram per liter or less.  A project is eligible for a 
11.9 	grant if it meets the following requirements:
11.10 	(1) the applicable phosphorus discharge limit is incorporated in a permit issued by 
11.11 	the agency for the wastewater treatment facility on or after March 28, 2000, the grantee 
11.12 	agrees to comply with the applicable limit as a condition of receiving the grant, or the 
11.13 	grantee made improvements to a wastewater treatment facility on or after March 28, 2000, 
11.14 	that include infrastructure to reduce the discharge of total phosphorus to one milligram 
11.15 	per liter or less;
11.16 	(2) the governmental unit has submitted a facilities plan for the project to the agency 
11.17 	and a grant application to the authority on a form prescribed by the authority; and 
11.18 	(3) the agency has approved the application and facilities plan, and certified the 
11.19 	eligible costs for the project to the authority.
11.20 		Subd. 3.Eligible capital costs. Eligible capital costs for phosphorus reduction 
11.21 	grants under subdivision 4, paragraph (a), include the as-bid construction costs and 
11.22 	engineering planning and design costs.  Eligible capital costs for phosphorus reduction 
11.23 	grants under subdivision 4, paragraph (b), include the final, incurred construction, 
11.24 	engineering, planning, and design costs.
11.25 		Subd. 4.Grant amounts and priorities. (a) Priority must be given to projects that 
11.26 	start construction on or after July 1, 2005.  If a facility's plan for a project is approved 
11.27 	by the agency before July 1, 2009, the amount of the grant is 75 percent of the eligible 
11.28 	capital cost of the project.  If a facility's plan for a project is approved by the agency on 
11.29 	or after July 1, 2009, the amount of the grant is 50 percent of the eligible capital cost of 
11.30 	the project.  Priority in awarding grants under this paragraph must be based on the date of 
11.31 	approval of the facility's plan for the project.
11.32 	(b) Projects that meet the eligibility requirements in subdivision 2 and have started 
11.33 	construction before July 1, 2005, are eligible for grants to reimburse 75 percent of the 
11.34 	eligible capital cost of the project, less any amounts previously received in grants from 
11.35 	other sources.  Application for a grant under this paragraph must be submitted to the 
12.1 	agency no later than June 30, 2007.  Priority for award of grants under this paragraph must 
12.2 	be based on the date of agency approval of the application for the grant.
12.3 	(c) In each fiscal year that money is available for grants, the authority shall first 
12.4 	award grants under paragraph (a) to projects that met the eligibility requirements of 
12.5 	subdivision 2 by May 1 of that year.  The authority shall use any remaining money 
12.6 	available that year to award grants under paragraph (b). Grants that have been approved 
12.7 	but not awarded in a previous fiscal year carry over and must be awarded in subsequent 
12.8 	fiscal years in accordance with the priorities in this paragraph.
12.9 	(d) Disbursements of grants under this section by the authority to recipients must 
12.10 	be made for eligible project costs as incurred by the recipients, and must be made by the 
12.11 	authority in accordance with the project financing agreement and applicable state law.
12.12 		Subd. 5.Fees. The authority may charge the grant recipient a fee for its 
12.13 	administrative costs not to exceed one-half of one percent of the grant amount, to be 
12.14 	paid upon execution of the grant agreement.

12.15 	 Sec. 10. [446A.074] SMALL COMMUNITY WASTEWATER TREATMENT 
12.16 	LOAN PROGRAM.
12.17 		Subdivision 1.Creation of fund. The authority shall establish a small community 
12.18 	wastewater treatment fund and shall make loans from the fund as provided in this section. 
12.19 	Money in the fund is annually appropriated to the authority and does not lapse.  The fund 
12.20 	shall be credited with all loan repayments and investment income from the fund, and 
12.21 	servicing fees assessed under section 446A.04, subdivision 5.  The authority shall manage 
12.22 	and administer the small community wastewater treatment fund, and for these purposes, 
12.23 	may exercise all powers provided in this chapter.
12.24 		Subd. 2.Loans. The authority shall award loans to governmental units from 
12.25 	the small community wastewater treatment fund for projects to replace noncomplying 
12.26 	individual sewage treatment systems with a community wastewater treatment system or 
12.27 	systems meeting the requirements of section 115.55.  A governmental unit receiving a 
12.28 	loan from the fund shall own the community wastewater treatment systems built under 
12.29 	the program and shall be responsible, either directly or through a contract with a private 
12.30 	vendor, for all inspections, maintenance, and repairs necessary to assure proper operation 
12.31 	of the systems.
12.32 		Subd. 3.Project priority list. Governmental units seeking loans from the small 
12.33 	community wastewater treatment loan program shall first submit a project proposal to the 
12.34 	agency.  A project proposal shall include a compliance determination for all individual 
12.35 	sewage treatment systems in the project area. The agency shall rank project proposals on 
13.1 	its project priority list used for the water pollution control revolving fund under section 
13.2 	446A.07.
13.3 		Subd. 4.Loan applications. Governmental units with projects on the project 
13.4 	priority list shall submit applications to the authority on forms prescribed by the authority. 
13.5 	The application shall include:
13.6 	(1) a list of the individual sewage treatment systems proposed to be replaced over a 
13.7 	period of up to three years;
13.8 	(2) a project schedule and cost estimate for each year of the project;
13.9 	(3) a financing plan for repayment of the loan; and 
13.10 	(4) a management plan providing for the inspection, maintenance, and repairs 
13.11 	necessary to assure proper operation of the systems.
13.12 		Subd. 5.Loan awards. The authority shall award loans to governmental units with 
13.13 	approved loan applications based on their ranking on the agency's project priority list.  The 
13.14 	loan amount shall be based on the estimated project costs for the portion of the project 
13.15 	expected to be completed within one year, up to an annual maximum of $500,000.  For 
13.16 	projects expected to take more than one year to complete, the authority may make a 
13.17 	multiyear commitment for a period not to exceed three years, contingent on the future 
13.18 	availability of funds.  Each year of a multiyear commitment must be funded by a separate 
13.19 	loan agreement meeting the terms and conditions in subdivision 6.  A governmental unit 
13.20 	receiving a loan under a multiyear commitment shall have priority for additional loan 
13.21 	funds in subsequent years.
13.22 		Subd. 6.Loan terms and conditions. Loans from the small community wastewater 
13.23 	treatment fund shall comply with the following terms and conditions:
13.24 	(1) principal and interest payments must begin no later than two years after the 
13.25 	loan is awarded;
13.26 	(2) loans shall carry an interest rate of one percent;
13.27 	(3) loans shall be fully amortized within ten years of the first scheduled payment 
13.28 	or, if the loan amount exceeds $10,000 per household, shall be fully amortized within 20 
13.29 	years but not to exceed the expected design life of the system;
13.30 	(4) a governmental unit receiving a loan must establish a dedicated source or sources 
13.31 	of revenues for repayment of the loan and must issue a general obligation note to the 
13.32 	authority for the full amount of the loan; and 
13.33 	(5) each property owner to be served by a community wastewater treatment system 
13.34 	under this program must provide an easement to the governmental unit to allow access to 
13.35 	the system for management and repairs.
14.1 		Subd. 7.Special assessment deferral. (a) A governmental unit receiving a loan 
14.2 	under this section that levies special assessments to repay the loan may defer payment of 
14.3 	the assessments under the provisions of sections 435.193 to 435.195.
14.4 	(b) A governmental unit that defers payment of special assessments for one or more 
14.5 	properties under paragraph (a) may request deferral of that portion of the debt service on 
14.6 	its loan, and the authority shall accept appropriate amendments to the general obligation 
14.7 	note of the governmental unit.  If special assessment payments are later received from 
14.8 	properties that received a deferral, the funds received shall be paid to the authority with 
14.9 	the next scheduled loan payment.
14.10 		Subd. 8.Eligible costs. Eligible costs for small community wastewater treatment 
14.11 	loans shall include the costs of planning, design, construction, legal fees, administration, 
14.12 	and land acquisition.
14.13 		Subd. 9.Disbursements. Loan disbursements by the authority under this section 
14.14 	must be made for eligible project costs as incurred by the recipients, and must be made in 
14.15 	accordance with the project loan agreement and applicable state law.
14.16 		Subd. 10.Audits. A governmental unit receiving a loan under this section must 
14.17 	annually provide to the authority for the term of the loan a copy of its annual independent 
14.18 	audit or, if the governmental unit is not required to prepare an independent audit, a copy of 
14.19 	the annual financial reporting form it provides to the state auditor.

14.20 	 Sec. 11. Laws 2005, chapter 20, article 1, section 39, is amended to read:

14.21 	 Sec. 39. [446A.073] TOTAL MAXIMUM DAILY LOAD GRANTS.
14.22 		 Subdivision 1.Program established. From money appropriated for this 
14.23 	program,the authority must make grants to municipalities to cover up to one-half the cost 
14.24 	of wastewater treatment or stormwater projects made necessary by wasteload reductions 
14.25 	under total maximum daily load plans required by section 303(d) of the federal Clean 
14.26 	Water Act, United States Code, title 33, section 1313(d).
14.27 		 Subd. 2.Grant application. Application for a grant must be made to the authority 
14.28 	on forms prescribed by the authority for the total maximum daily load grant program, with 
14.29 	additional information as required by the authority.  In accordance with section 116.182, 
14.30 	the Pollution Control Agency shall:
14.31 	 (1) calculate the essential project component percentage, which must be multiplied 
14.32 	by the total project cost to determine the eligible project cost; and
14.33 	 (2) review and certify approved projects to the authority.
15.1 		 Subd. 3.Project priorities. When money is appropriated for grants under this 
15.2 	program, the authority shall reserve money for projects in the order that their total 
15.3 	maximum daily load plan was approved by the United States Environmental Protection 
15.4 	Agency and in an amount based on their most recent cost estimates submitted to the 
15.5 	authority or the as-bid costs, whichever is less.
15.6 		 Subd. 4.Grant approval. The authority must make a grant to a municipality, as 
15.7 	defined in section 116.182, subdivision 1, only after:
15.8 	 (1) the commissioner of the Minnesota Pollution Control Agency has certified to 
15.9 	the United States Environmental Protection Agency a total maximum daily load plan for 
15.10 	identified waters of this state that includes a point source wasteload allocation;
15.11 	 (2) the Environmental Protection Agency has approved the plan;
15.12 	 (3) a municipality affected by the plan has estimated the cost to it of wastewater 
15.13 	treatment projects necessary to comply with the point source wasteload allocation;
15.14 	 (4) the Pollution Control Agency has approved the cost estimate; and
15.15 	 (5) the authority has determined that the additional financing necessary to complete 
15.16 	the project has been committed from other sources.
15.17 		 Subd. 5.Grant disbursement. Disbursement of a grant must be made for eligible 
15.18 	project costs as incurred by the municipality and in accordance with a project financing 
15.19 	agreement and applicable state and federal laws and rules governing the payments.

15.20 	 Sec. 12. APPROPRIATIONS.
 15.21 		Subdivision 1.General provisions. The appropriations in this section are from the 
15.22 	environmental fund and are available for the fiscal years ending June 30, 2006, and June 
15.23 	30, 2007. Any money remaining after the first year of the biennium is available for the 
15.24 	second year.  Appropriations in this section that are encumbered under contract, including 
15.25 	grant contract, on or before June 30, 2007, are available until June 30, 2009.
15.26 		Subd. 2.Pollution Control Agency. The following amounts are appropriated to the 
15.27 	Pollution Control Agency for the purposes stated:
15.28 	(1) $4,125,000 in fiscal year 2006 and $1,669,000 in fiscal year 2007 are for 
15.29 	statewide assessment of surface water quality and trends; of these amounts, up to 
15.30 	$1,960,000 in fiscal year 2006 and $793,000 in fiscal year 2007 are available for grants or 
15.31 	contracts to support citizen monitoring of surface waters; and 
15.32 	(2) $3,290,000 in fiscal year 2006 and $1,331,000 in fiscal year 2007 are to develop 
15.33 	TMDL's for waters listed on the United States Environmental Protection Agency approved 
16.1 	2004 impaired waters list; of this appropriation, up to $1,119,000 in fiscal year 2006 and 
16.2 	$453,000 in fiscal year 2007 are available for grants or contracts to develop TMDL's.
16.3 		Subd. 3.Agriculture Department. The following amounts are appropriated to the 
16.4 	Department of Agriculture for the purposes stated:
16.5 	(1) $2,300,000 in fiscal year 2006 is for the agricultural best management practices 
16.6 	loan program under Minnesota Statutes, section 17.117; of this amount, $2,100,000 
16.7 	in fiscal year 2006 is available for pass-through to local governments and lenders for 
16.8 	low-interest loans;
16.9 	(2) $800,000 in fiscal year 2006 is to expand technical assistance to producers 
16.10 	and conservation professionals on nutrient and pasture management; target practices to 
16.11 	sources of water impairments; coordinate federal and state farm conservation programs to 
16.12 	fully utilize federal conservation funds; and expand conservation planning assistance for 
16.13 	producers; of this amount, $210,000 in fiscal year 2006 is available for grants or contracts 
16.14 	to develop nutrient and conservation planning assistance information materials; and 
16.15 	(3) $800,000 in fiscal year 2006 is for research, evaluation, and effectiveness 
16.16 	monitoring of agricultural practices in restoring impaired waters; of this amount, $600,000 
16.17 	in fiscal year 2006 is available for grants or contracts for research, evaluations, and 
16.18 	effectiveness monitoring of agricultural practices in restoring impaired waters, including 
16.19 	on-farm demonstrations.
16.20 		Subd. 4.Board of Water and Soil Resources. The following amounts are 
16.21 	appropriated to the Board of Water and Soil Resources for restoration and prevention 
16.22 	actions as described in Minnesota Statutes, section 114D.20, subdivisions 6 and 7:
16.23 	(1) $1,807,000 in fiscal year 2006 is for targeted nonpoint restoration cost-share and 
16.24 	incentive payments; of this amount, up to $1,713,000 in fiscal year 2006 is available 
16.25 	for grants to soil and water conservation districts through the state cost-share program 
16.26 	authorized under Minnesota Statutes, section 103C.501;
16.27 	(2) $1,085,000 in fiscal year 2006 is for targeted nonpoint technical and engineering 
16.28 	assistance for restoration activities; of this amount, up to $1,022,000 in fiscal year 2006 
16.29 	is available for grants to soil and water conservation districts, watershed management 
16.30 	organizations, or counties to support implementation of nonpoint restoration activities;
16.31 	(3) $63,000 in fiscal year 2006 is for reporting and evaluation of applied soil and 
16.32 	water conservation practices;
16.33 	(4) $755,000 in fiscal year 2006 is for grants to counties for implementation of 
16.34 	county individual sewage treatment systems programs through the local water resources 
16.35 	protection and management program under Minnesota Statutes, section 103B.3369;
17.1 	(5) $471,000 in fiscal year 2006 is for base and challenge grants to support nonpoint 
17.2 	source protection activities related to lake and river protection and management through 
17.3 	the local water resources protection and management program under Minnesota Statutes, 
17.4 	section 103B.3369; and 
17.5 	(6) $755,000 in fiscal year 2006 is for grants to soil and water conservation districts 
17.6 	for streambank, stream channel, lakeshore, and roadside protection and restoration projects 
17.7 	through the state-cost share program under Minnesota Statutes, section 103C.501.
17.8 		Subd. 5.Public Facilities Authority. $15,249,000 in fiscal year 2006 is 
17.9 	appropriated to the Public Facilities Authority; of this amount, $6,131,000 in fiscal year 
17.10 	2006 is for deposit in the clean water legacy capital improvements fund for grants under 
17.11 	Minnesota Statutes, section 446A.073; $1,441,000 in fiscal year 2006 is for deposit in the 
17.12 	small community wastewater treatment fund for loans under Minnesota Statutes, section 
17.13 	446A.074; and $7,677,000 in fiscal year 2006 is for deposit in the water pollution control 
17.14 	revolving fund under Minnesota Statutes, section 446A.07, for wastewater treatment and 
17.15 	storm water projects.  Money appropriated under this subdivision does not cancel and is 
17.16 	available until expended.

17.17 	 Sec. 13. REVISOR'S INSTRUCTION.
 17.18 	The revisor of statutes shall renumber the section coded as Minnesota Statutes, 
17.19 	section 446A.073, as Minnesota Statutes, section 446A.075.