HF 24

1st Engrossment - 93rd Legislature (2023 - 2024) Posted on 02/06/2023 03:40pm

A bill for an act
relating to capital investment; modifying authority to ensure safe drinking water;
modifying provisions of drinking water revolving fund; establishing grant program
to replace lead drinking water service lines; establishing grant program for mapping
lead service lines; requiring report; appropriating money; amending Minnesota
Statutes 2022, sections 144.383; 446A.081, subdivisions 8, 9; proposing coding
for new law in Minnesota Statutes, chapter 446A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2022, section 144.383, is amended to read:

144.383 AUTHORITY OF COMMISSIONER.

In order to insure safe drinking water in all public water supplies, the commissioner has
the following powers:

(a) To approve the site, design, and construction and alteration of all public water supplies
and, for community and nontransient noncommunity water systems as defined in Code of
Federal Regulations, title 40, section 141.2, to approve documentation that demonstrates
the technical, managerial, and financial capacity of those systems to comply with rules
adopted under this section;

(b) To enter the premises of a public water supply, or part thereof, to inspect the facilities
and records kept pursuant to rules promulgated by the commissioner, to conduct sanitary
surveys and investigate the standard of operation and service delivered by public water
supplies;

(c) To contract with community health boards as defined in section 145A.02, subdivision
5, for routine surveys, inspections, and testing of public water supply quality;

(d) To develop an emergency plan to protect the public when a decline in water quality
or quantity creates a serious health risk, and to issue emergency orders if a health risk is
imminent;

(e) To promulgate rules, pursuant to chapter 14 but no less stringent than federal
regulation, which may include the granting of variances and exemptions deleted text begin . deleted text end new text begin ; and
new text end

new text begin (f) To maintain an asset management database of community public water supply systems,
provide technical assistance to community systems, and ensure the lead service line inventory
data is accessible to the public with relevant educational materials about health risks related
to lead and ways to reduce exposure.
new text end

Sec. 2.

new text begin [446A.077] LEAD SERVICE LINE REPLACEMENT; GRANT PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The authority must establish a program to replace lead
drinking water service lines in the state by 2033 and must provide grants to entities for this
purpose. The program must be structured to maximize use of federal funds available for the
purposes described in subdivision 3.
new text end

new text begin Subd. 2. new text end

new text begin Eligible recipients. new text end

new text begin (a) The following are eligible recipients of grants under
this section:
new text end

new text begin (1) community public water suppliers of a community water system as defined in Code
of Federal Regulations, title 40, section 141.2, as amended;
new text end

new text begin (2) municipalities;
new text end

new text begin (3) suppliers of other residential drinking water systems; and
new text end

new text begin (4) any applicant eligible for loans and grants under the federal Safe Drinking Water
Act.
new text end

new text begin (b) All eligible recipients as part of the grant application process must apply to be listed
on the Department of Health project priority list.
new text end

new text begin Subd. 3. new text end

new text begin Eligible uses. new text end

new text begin (a) An eligible recipient may use a grant provided under this
program for:
new text end

new text begin (1) removing and replacing lead drinking water service lines;
new text end

new text begin (2) repaying debt incurred for the purposes described in clauses (1), (3), and (4);
new text end

new text begin (3) providing information to residents on the benefits of removing lead service lines; or
new text end

new text begin (4) performing necessary construction activities required for and associated with removing
and replacing lead service lines.
new text end

new text begin (b) Grant money used for removing and replacing lead drinking water service lines under
paragraph (a), clause (1), must pay for 100 percent of the cost of replacing the privately
owned portions of those lines but may pay for not more than 50 percent of the cost of
replacing the publicly owned portions of those lines.
new text end

new text begin Subd. 4. new text end

new text begin Grant priorities. new text end

new text begin In prioritizing the expenditure of grant money received under
this section, the authority must give priority to applications that use the money as part of a
plan to remove all lead service lines within a municipality or residential drinking water
system. A plan should include:
new text end

new text begin (1) a description of how the recipient will maximize the number of property owners with
privately owned portions of lead lines that will participate in the removal and replacement,
including lower-income residents and those from other disadvantaged communities;
new text end

new text begin (2) a description of how the recipient will coordinate the removal of the publicly owned
and privately owned portions of the lead lines to maximize efficient use of money;
new text end

new text begin (3) a description of how the recipient will minimize the number of lead service lines
that are only partially removed; and
new text end

new text begin (4) a description of how equity for disadvantaged groups was prioritized in designing
the plan.
new text end

new text begin Subd. 5. new text end

new text begin Workforce plan. new text end

new text begin Applicants who serve 50,000 service connections or more
must submit a workforce plan as part of their application. The workforce plan must include
a description of how the applicant will maximize the use of registered apprentices, along
with populations under-represented in the construction industry in the lead removal and
replacement work.
new text end

new text begin Subd. 6. new text end

new text begin Reporting. new text end

new text begin By August 1 each year, the authority must report to the chairs and
ranking minority members of the legislative committees and divisions with jurisdiction over
environment and natural resources policy and finance on the operation of the program during
the previous fiscal year.
new text end

new text begin Subd. 7. new text end

new text begin Prevailing wage. new text end

new text begin Laborers and mechanics performing work on a project funded
by a grant under this section, including removing and replacing lead drinking water service
lines and installing replacement drinking water service lines, must be paid the prevailing
wage rate for the work as defined in section 177.42, subdivision 6. The project is subject
to the requirements and enforcement provisions of sections 177.27, 177.30, 177.32, 177.41
to 177.435, and 177.45.
new text end

new text begin Subd. 8. new text end

new text begin General fund appropriation. new text end

new text begin $80,000,000 in fiscal year 2024 through fiscal
year 2033 is appropriated from the general fund to the authority to provide grants according
to this section. This subdivision expires June 30, 2033.
new text end

Sec. 3.

new text begin [446A.078] LEAD LINE REMOVAL GOAL.
new text end

new text begin It is the goal of the state of Minnesota to remove all lead service lines in public drinking
water systems by 2033.
new text end

Sec. 4.

Minnesota Statutes 2022, section 446A.081, subdivision 8, is amended to read:

Subd. 8.

Loan conditions.

(a) When making loans from the drinking water revolving
fund, the authority shall comply with the conditions of the federal Safe Drinking Water Act,
including the criteria in this subdivision.

(b) Loans must be made at or below market interest rates, including zero interest loans,
for terms not to exceed those allowed under the federal Safe Drinking Water Act.

(c) The annual principal and interest payments must begin no later than one year after
completion of the project. Loans must be amortized no later than 20 years after project
completion, unless the recipient's average annual residential drinking water system cost
after completion of the project would exceed 1.2 percent of median household income in
the recipient governmental unit or entity, in which case the loan must be fully amortized
no later than 30 years after project completion.

(d) A loan recipient must identify and establish a dedicated source of revenue for
repayment of the loan, and provide for a source of revenue to properly operate, maintain,
and repair the water system.

(e) The fund must be credited with all payments of principal and interest on all loans,
except the costs as permitted under section 446A.04, subdivision 5, paragraph (a).

(f) A loan may not be used to pay operating expenses or current obligations, unless
specifically allowed by the federal Safe Drinking Water Act.

(g) A loan made by the authority must be secured by notes or bonds of the governmental
unit and collateral to be determined by the authority for private borrowers.

new text begin (h) Notwithstanding Minnesota Rules, part 7380.0272, the interest rate for loans made
to replace lead service lines is zero percent.
new text end

Sec. 5.

Minnesota Statutes 2022, section 446A.081, subdivision 9, is amended to read:

Subd. 9.

Other uses of fund.

(a) The drinking water revolving loan fund may be used
as provided in the act, including the following uses:

(1) to buy or refinance the debt obligations, at or below market rates, of public water
systems for drinking water systems, where the debt was incurred after the date of enactment
of the act, for the purposes of construction of the necessary improvements to comply with
the national primary drinking water regulations under the federal Safe Drinking Water Act;

(2) to purchase or guarantee insurance for local obligations to improve credit market
access or reduce interest rates;

(3) to provide a source of revenue or security for the payment of principal and interest
on revenue or general obligation bonds issued by the authority if the bond proceeds are
deposited in the fund;

(4) to provide loans or loan guarantees for similar revolving funds established by a
governmental unit or state agency;

(5) to earn interest on fund accounts;

(6) to pay the reasonable costs incurred by the authority, the Department of Employment
and Economic Development, and the Department of Health for conducting activities as
authorized and required under the act up to the limits authorized under the act;

(7) to develop and administer programs for water system supervision, source water
protection, and related programs required under the act;

(8) to provide principal forgiveness or grants to the extent permitted under the federal
Safe Drinking Water Act and other federal law, based on the criteria and requirements
established for drinking water projects under the water infrastructure funding program under
section 446A.072;

(9) to provide loans, principal forgiveness or grants to the extent permitted under the
federal Safe Drinking Water Act and other federal law to address green infrastructure, water
or energy efficiency improvements, or other environmentally innovative activities;

(10) to provide principal forgiveness, or grants for 80 percent of project costs up to a
maximum of $100,000 for projects needed to comply with national primary drinking water
standards for an existing nonmunicipal community public water system; deleted text begin and
deleted text end

(11) to provide principal forgiveness or grants to the extent permitted under the federal
Safe Drinking Water Act and other federal laws deleted text begin for 50 percent of the project costs up to a
maximum of $250,000 deleted text end for projects to replace the privately owned portion of drinking water
lead service lines deleted text begin . deleted text end new text begin ; and
new text end

new text begin (12) to provide principal forgiveness or grants to the extent permitted under the federal
Safe Drinking Water Act and other federal laws for 50 percent of project costs up to a
maximum of $3,000,000 for projects to address emerging contaminants in drinking water
as defined by the United States Environmental Protection Agency.
new text end

(b) Principal forgiveness or grants provided under paragraph (a), clause (9), may not
exceed 25 percent of the eligible project costs as determined by the Department of Health
for project components directly related to green infrastructure, water or energy efficiency
improvements, or other environmentally innovative activities, up to a maximum of
$1,000,000.

Sec. 6. new text begin LEAD SERVICE LINE MAPPING GRANTS.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The commissioner of health must establish a grant
program to provide financial assistance to municipalities for producing an inventory of
publicly and privately owned lead service lines within their jurisdiction.
new text end

new text begin Subd. 2. new text end

new text begin Eligible uses. new text end

new text begin A municipality may use grant money under this section for:
new text end

new text begin (1) surveying households to determine the material of their water service line;
new text end

new text begin (2) creating publicly available databases or visualizations of lead service lines; and
new text end

new text begin (3) complying with the lead service line inventory requirements of the federal
Environmental Protection Agency's lead and copper rule.
new text end

new text begin Subd. 3. new text end

new text begin Appropriation. new text end

new text begin $10,000,000 in fiscal year 2024 and $10,000,000 in fiscal year
2025 are appropriated from the general fund to the commissioner of health to provide grants
to municipalities for producing an inventory of publicly and privately owned lead service
lines within their jurisdiction. This is a onetime appropriation and is available until June
30, 2026.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2023.
new text end