HF 24

3rd Engrossment - 93rd Legislature (2023 - 2024) Posted on 04/24/2023 08:23am

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; 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 Definitions. new text end

new text begin (a) For the purposes of this section the following terms have
the meanings given.
new text end

new text begin (b) "Lead service line" means a water supply connection that is made of or lined with a
material consisting of lead and that connects a water main to a building. A lead pigtail, lead
gooseneck, or other lead fitting is considered a lead service line, regardless of the composition
of the service line or other portions of piping to which the piece is attached. A galvanized
service line is considered a lead service line.
new text end

new text begin (c) "Service line" means any piping, tubing, or fitting connecting a water main to a
building. Service line includes the property owner side and the system side of a service line.
new text end

new text begin Subd. 2. 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 4.
new text end

new text begin Subd. 3. 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. 4. 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.
new text end

new text begin (c) Grant money used for removing and replacing lead drinking water service lines under
paragraph (a), clause (1), may pay for a maximum of 50 percent of the cost of replacing the
publicly owned portions of those lines.
new text end

new text begin (d) Grant money used for repaying debt under paragraph (a), clause (2), must pay the
full balance of the outstanding debt.
new text end

new text begin Subd. 5. new text end

new text begin Grant priorities. new text end

new text begin (a) An eligible recipient must submit a plan to the
commissioner of health for replacement of all lead service lines in the service area. The
plan must describe how the eligible recipient will prioritize the expenditure of grant money
received under this section, including:
new text end

new text begin (1) removing lead service lines that are an imminent threat to public health and safety;
new text end

new text begin (2) targeting areas with children with elevated blood lead levels;
new text end

new text begin (3) targeting areas with children under the age of five;
new text end

new text begin (4) targeting areas with lower-income residents and other disadvantaged communities;
new text end

new text begin (5) coordinating the replacement of publicly owned and privately owned portions of
lead lines; and
new text end

new text begin (6) coordinating the replacement of lead service lines with water main replacement
projects for the most efficient use of money.
new text end

new text begin (b) In prioritizing the expenditure of grant money received under this section, the
authority, in consultation with the commissioner of health, must give priority to eligible
recipients whose plans comprehensively address the priorities in paragraph (a).
new text end

new text begin (c) The authority must use available money received under this section first for grants
to repay debt incurred under subdivision 4, paragraph (a), clause (2).
new text end

new text begin Subd. 6. new text end

new text begin Workforce plan. new text end

new text begin Applicants who serve 15,000 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. 7. new text end

new text begin Reporting. new text end

new text begin (a) 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. The report must include:
new text end

new text begin (1) details on how the lead was stored, handled, and disposed of; and
new text end

new text begin (2) descriptions of the measures taken to protect the environment and workers removing
and handling the lead from contamination.
new text end

new text begin (b) On or before October 1, 2023, and on or before each January 1, April 1, July 1, and
October 1 thereafter, the authority, in consultation with the commissioner of health, must
report to the chairs and ranking minority members of the legislative committees and divisions
with jurisdiction over economic development finance and policy, health policy and finance,
environment and natural resources policy and finance, and capital investment on the
administration of grant priorities under subdivision 5. The report must include:
new text end

new text begin (1) a list of the eligible recipients that submitted a plan to the commissioner of health;
new text end

new text begin (2) information about how the authority prioritized grants to eligible recipients; and
new text end

new text begin (3) a list of the eligible recipients that received a grant under this section, in order of
priority as determined by the authority.
new text end

new text begin Subd. 8. 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. 9. new text end

new text begin Mapping and inventory costs. new text end

new text begin The authority may use up to $20,000,000 of
appropriations to the lead service line replacement grant program under this section for
costs related to mapping and inventory activities that will identify lead service lines for
replacement under this section. The authority may enter into interagency agreements with
the Department of Health, including agreements to transfer funds, for the Department of
Health to provide technical assistance to municipalities for producing an inventory of publicly
and privately owned lead service lines and associated replacement plans within their
jurisdiction. Any amounts not spent on mapping and inventory work must be used by the
authority for replacement of lead service lines under this section.
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. Priority must be given
to projects that address an imminent threat to public health or safety.
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 REPLACEMENT; APPROPRIATION.
new text end

new text begin $240,000,000 in fiscal year 2024 is appropriated from the general fund to the Public
Facilities Authority for the lead service line replacement grant program under Minnesota
Statutes, section 446A.077. This appropriation is available until June 30, 2043.
new text end