SF 762

1st Unofficial Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

1.1                                        A bill for an act
1.2     relating to the environment; modifying provisions for cost-sharing contracts for 
1.3     erosion control and water management; creating the Clean Water Legacy Act; 
1.4     providing authority, direction, and funding to achieve and maintain water quality 
1.5     standards according to section 303(d) of the federal Clean Water Act; creating 
1.6     grant and loan programs; appropriating money; amending Minnesota Statutes 
1.7     2004, section 103C.501, subdivision 5; Minnesota Statutes 2005 Supplement, 
1.8     section 116.182, subdivision 2; proposing coding for new law in Minnesota 
1.9     Statutes, chapter 446A; proposing coding for new law as Minnesota Statutes, 
1.10    chapter 114D.
1.11     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.12        Section 1. Minnesota Statutes 2004, section 103C.501, subdivision 5, is amended to 
1.13    read:
1.14        Subd. 5. Contracts by districts. (a) A district board may contract on a cost-share 
1.15    basis to furnish financial aid to a land occupier or to a state agency for permanent systems 
1.16    for erosion or sedimentation control or water quality improvement that are consistent with 
1.17    the district's comprehensive and annual work plans.
1.18    (b) The duration of the contract may must, at a minimum, be the time required to 
1.19    complete the planned systems. A contract must specify that the land occupier is liable 
1.20    for monetary damages, not to exceed the and penalties in an amount of up to 150 percent 
1.21    of the financial assistance received from the district, for failure to complete the systems 
1.22    or practices in a timely manner or maintain the systems or practices as specified in the 
1.23    contract.
1.24    (c) A contract may provide for cooperation or funding with federal agencies. A land 
1.25    occupier or state agency may provide the cost-sharing portion of the contract through 
1.26    services in kind.
2.1     (d) The state board or the district board may not furnish any financial aid for 
2.2     practices designed only to increase land productivity.
2.3     (e) When a district board determines that long-term  maintenance of a system or 
2.4     practice is desirable, the board may  require that such maintenance be made a covenant 
2.5     upon the land for the effective life of the practice.  A covenant under this  subdivision shall 
2.6     be construed in the same manner as a  conservation restriction under section 84.65.

2.7         Sec. 2. [114D.05] CITATION.
2.8     This chapter may be cited as the "Clean Water Legacy Act."

2.9         Sec. 3. [114D.10] LEGISLATIVE PURPOSE AND FINDINGS.
2.10        Subdivision 1. Purpose. The purpose of the Clean Water  Legacy Act is to protect, 
2.11    restore, and preserve the quality of  Minnesota's surface waters by providing authority, 
2.12    direction,  and resources to achieve and maintain water quality standards for surface waters 
2.13    as required by section 303(d) of the federal Clean Water Act, United States Code, title 33, 
2.14    section 1313(d), and applicable federal regulations.
2.15        Subd. 2. Findings. The legislature finds that: 
2.16    (1) there is a close link between protecting, restoring, and preserving the quality of 
2.17    Minnesota's surface waters and the ability to develop the state's economy, enhance its 
2.18    quality of life, and protect its human and natural resources; 
2.19    (2) achieving the state's water quality goals will require long-term commitment and 
2.20    cooperation by all state and local agencies, and other public and private organizations 
2.21    and individuals, with responsibility and authority for water management, planning, and 
2.22    protection; and 
2.23    (3) all persons and organizations whose activities affect the quality of waters, 
2.24    including point and nonpoint sources of pollution, have a responsibility to participate in 
2.25    and support efforts to achieve the state's water quality goals. 

2.26        Sec. 4. [114D.15] DEFINITIONS.
2.27        Subdivision 1. Application. The definitions provided in this section apply to the 
2.28    terms used in this chapter.
2.29        Subd. 2. Citizen monitoring. "Citizen monitoring" means monitoring of surface 
2.30    water quality by individuals and nongovernmental organizations that is consistent with 
2.31    section 115.06, subdivision 4, and Pollution Control Agency guidance on monitoring 
2.32    procedures, quality assurance protocols, and data  management.
3.1         Subd. 3. Clean Water Council. "Clean Water Council" or "council" means the 
3.2     Clean Water Council created pursuant to section 114D.30, subdivision 1.
3.3         Subd. 4. Federal TMDL requirements. "Federal TMDL  requirements" means the 
3.4     requirements of section 303(d) of the Clean Water Act, United States Code, title 33, 
3.5     section 1313(d), and associated regulations and guidance.
3.6         Subd. 5. Impaired water. "Impaired water" means surface water that does not 
3.7     meet applicable water quality standards.
3.8         Subd. 6. Public agencies. "Public agencies" means all state agencies, political 
3.9     subdivisions, joint powers organizations, and special purpose units of government with 
3.10    authority, responsibility, or expertise in protecting, restoring, or preserving the quality of 
3.11    surface waters, managing or planning for surface waters and related lands, or financing 
3.12    waters-related projects. Public agencies includes the University of Minnesota and other 
3.13    public education institutions. 
3.14        Subd. 7. Restoration. "Restoration" means actions, including effectiveness 
3.15    monitoring, that are taken to achieve and maintain water quality standards for impaired 
3.16    waters in accordance with a TMDL that has been approved by the United States 
3.17    Environmental Protection Agency under federal TMDL requirements. 
3.18        Subd. 8. Surface waters. "Surface waters" means waters of the state as defined 
3.19    in section 115.01, subdivision 22, excluding groundwater as defined in section 115.01, 
3.20    subdivision  6.
3.21        Subd. 9. Third-party TMDL. "Third-party TMDL" means a TMDL by the 
3.22    Pollution Control Agency that is developed in whole or in part by a qualified public entity 
3.23    other than the Pollution Control Agency consistent with the goals, policies, and priorities 
3.24    in section 114D.20. 
3.25        Subd. 10. Total maximum daily load or TMDL. "Total maximum daily load" or 
3.26    "TMDL" means a scientific study that contains a calculation of the maximum amount of a 
3.27    pollutant that may be introduced into a surface water and still ensure that applicable 
3.28    water quality standards for that water are restored and maintained. A TMDL also is 
3.29    the sum of the pollutant load  allocations for all sources of the pollutant, including a 
3.30    wasteload allocation for point sources, a load allocation for  nonpoint sources and natural 
3.31    background, an allocation for future growth of point and nonpoint sources, and a margin 
3.32    of safety to account for uncertainty about the relationship between pollutant loads and 
3.33    the quality of the receiving surface water. "Natural background" means characteristics of 
3.34    the water body resulting from the multiplicity of factors in nature, including climate and 
3.35    ecosystem dynamics, that affect the physical, chemical, or biological conditions in a water 
4.1     body, but does not include measurable and distinguishable pollution that is  attributable to 
4.2     human activity or influence. A TMDL must take into account seasonal variations. 
4.3         Subd. 11. TMDL implementation plan. "TMDL implementation plan" means a 
4.4     document detailing restoration activities needed to meet the approved TMDL's pollutant 
4.5     load allocations for point and nonpoint sources.
4.6         Subd. 12. Water quality standards. "Water quality standards" for Minnesota 
4.7     surface waters are found in Minnesota Rules, chapters 7050 and 7052.

4.8         Sec. 5. [114D.20] IMPLEMENTATION; COORDINATION; GOALS; 
4.9     POLICIES; AND PRIORITIES.
4.10        Subdivision 1. Coordination and cooperation. In implementing this chapter, 
4.11    public agencies and private entities shall take into consideration the relevant provisions of 
4.12    local and other applicable water management, conservation, land use, land management, 
4.13    and development plans and programs. Public  agencies with authority for local water 
4.14    management, conservation, land use, land management, and development plans shall 
4.15    take into consideration the manner in which their plans  affect the implementation of 
4.16    this chapter. Public agencies shall identify opportunities to participate and assist in the 
4.17    successful implementation of this chapter, including the funding or technical assistance 
4.18    needs, if any, that may be necessary. In implementing this chapter, public agencies shall 
4.19    endeavor to engage the cooperation of organizations and individuals whose activities 
4.20    affect the quality of surface waters, including point and nonpoint sources of pollution, and 
4.21    who have authority and responsibility for water management, planning, and protection.   To 
4.22    the extent practicable, public agencies shall endeavor to enter into formal and informal 
4.23    agreements and arrangements with federal agencies and departments to jointly utilize 
4.24    staff and educational, technical, and financial resources to deliver programs or conduct 
4.25    activities to achieve the intent of this chapter, including efforts under the federal Clean 
4.26    Water Act and other federal farm and soil and water conservation programs. 
4.27        Subd. 2. Goals for implementation. The following goals must guide the 
4.28    implementation of this chapter: 
4.29    (1) to identify impaired waters in accordance with federal TMDL requirements 
4.30    within ten years after the effective date of this section and thereafter to ensure continuing 
4.31    evaluation of surface waters for impairments; 
4.32    (2) to submit TMDL's to the United States Environmental Protection Agency for all 
4.33    impaired waters in a timely manner in accordance with federal TMDL requirements; 
4.34    (3) to set a reasonable time for implementing restoration of each identified impaired 
4.35    water; 
5.1     (4) to provide assistance and incentives to prevent waters from becoming impaired 
5.2     and to improve the quality of waters which are listed as impaired but have no approved 
5.3     TMDL addressing the impairment; 
5.4     (5) to promptly seek the delisting of waters from the impaired waters list when those 
5.5     waters are shown to achieve the designated uses applicable to the waters; and 
5.6     (6) to achieve compliance with federal Clean Water Act requirements in Minnesota.
5.7         Subd. 3. Implementation policies. The following policies must guide the 
5.8     implementation of this chapter: 
5.9     (1) develop regional and watershed TMDL's and TMDL implementation plans, and 
5.10    TMDL's and TMDL implementation plans for multiple pollutants, where reasonable and 
5.11    feasible; 
5.12    (2) maximize use of available organizational, technical, and financial resources to 
5.13    perform sampling, monitoring, and other activities to identify impaired waters, including 
5.14    use of citizen monitoring; 
5.15    (3) maximize opportunities for restoration of impaired waters, by prioritizing and 
5.16    targeting of available programmatic, financial, and technical resources and by providing 
5.17    additional state resources to complement and leverage available resources; 
5.18    (4) use existing regulatory authorities to achieve restoration for point and nonpoint 
5.19    sources of pollution where applicable, and promote the development and use of effective 
5.20    nonregulatory measures to address pollution sources for which regulations are not 
5.21    applicable; 
5.22    (5) use restoration methods that have a demonstrated effectiveness in reducing 
5.23    impairments and provide the greatest long-term positive impact on water quality protection 
5.24    and improvement and related conservation benefits while incorporating innovative 
5.25    approaches on a case-by-case basis; 
5.26    (6) identify for the legislature any innovative approaches that may strengthen or 
5.27    complement existing programs; 
5.28    (7) identify and encourage implementation of measures to prevent waters from 
5.29    becoming impaired and to improve the quality of waters that are listed as impaired but 
5.30    have no approved TMDL addressing the impairment using the best available data and 
5.31    technology, and establish and report outcome-based performance measures that monitor 
5.32    the progress and effectiveness of protection and restoration measures; and
5.33    (8) monitor and enforce cost-sharing contracts and impose monetary damages in an 
5.34    amount up to 150 percent of the financial assistance received for failure to comply. 
6.1         Subd. 4. Priorities for identifying impaired waters. The Pollution Control 
6.2     Agency, in accordance with federal TMDL requirements, shall set priorities for identifying 
6.3     impaired waters, giving consideration to: 
6.4     (1) waters where impairments would pose the greatest potential risk to human or 
6.5     aquatic health; and 
6.6     (2) waters where data developed through public agency or citizen monitoring or 
6.7     other means, provides scientific evidence that an impaired condition exists. 
6.8         Subd. 5. Priorities for preparation of TMDL's. The Clean Water Council shall 
6.9     recommend priorities for scheduling and preparing TMDL's and TMDL implementation 
6.10    plans, taking into account the severity of the impairment, the designated uses of those 
6.11    waters, and other applicable federal TMDL requirements. In recommending priorities, the 
6.12    council shall also give consideration to waters and watersheds: 
6.13    (1) with impairments that pose the greatest potential risk to human health; 
6.14    (2) with impairments that pose the greatest potential risk to threatened or endangered 
6.15    species; 
6.16    (3) with impairments that pose the greatest potential risk to aquatic health; 
6.17    (4) where other public agencies and participating organizations and individuals, 
6.18    especially local, basinwide, watershed, or regional agencies or organizations, have 
6.19    demonstrated readiness to assist in carrying out the responsibilities, including availability 
6.20    and organization of human, technical, and financial resources necessary to undertake 
6.21    the work; and 
6.22    (5) where there is demonstrated coordination and cooperation among cities, 
6.23    counties, watershed districts, and soil and water conservation districts in planning and 
6.24    implementation of activities that will assist in carrying out the responsibilities. 
6.25        Subd. 6. Priorities for restoration of impaired waters. In implementing 
6.26    restoration of impaired waters, in addition to the priority considerations in subdivision 5, 
6.27    the Clean Water Council shall give priority in its recommendations for restoration funding 
6.28    from the clean water legacy account to restoration projects that: 
6.29    (1) coordinate with and utilize existing local authorities and infrastructure for 
6.30    implementation; 
6.31    (2) can be implemented in whole or in part by providing  support for existing or 
6.32    ongoing restoration efforts; 
6.33    (3) most effectively leverage other sources of restoration funding, including federal, 
6.34    state, local, and private sources of funds; 
6.35    (4) show a high potential for early restoration and delisting based upon scientific 
6.36    data developed through public agency or citizen monitoring or other means; and
7.1     (5) show a high potential for long-term water quality and related conservation 
7.2     benefits.
7.3         Subd. 7. Priorities for funding prevention actions. The Clean Water Council 
7.4     shall apply the priorities applicable under subdivision 6, as far as practicable, when 
7.5     recommending priorities for funding actions to prevent waters from becoming impaired 
7.6     and to improve the quality of waters that are listed as impaired but have no approved 
7.7     TMDL. 

7.8         Sec. 6. [114D.25] ADMINISTRATION; POLLUTION CONTROL AGENCY.
7.9         Subdivision 1. General duties and authorities. (a) The Pollution Control Agency, 
7.10    in accordance with federal TMDL requirements, shall: 
7.11    (1) identify impaired waters and propose a list of the waters for review and approval 
7.12    by the United States Environmental Protection Agency;
7.13    (2) develop and approve TMDL's for listed impaired waters and submit the approved 
7.14    TMDL's to the United State Environmental Protection Agency for final approval; and
7.15    (3) propose to delist waters from the Environmental Protection Agency impaired 
7.16    waters list.
7.17    (b) A TMDL must include a statement of the facts and scientific data supporting the 
7.18    TMDL and a list of potential implementation options, including a range of estimates of 
7.19    the cost of implementation and individual wasteload data for any point sources addressed 
7.20    by the TMDL.
7.21    (c) The implementation information need not be sent to the United States 
7.22    Environmental Protection Agency for review and approval.
7.23        Subd. 2. Administrative procedures for TMDL approval. The approval of a 
7.24    TMDL by the Pollution Control Agency is a final decision of the agency for purposes of 
7.25    section 115.05, and is subject to the contested case procedures of sections 14.57 to 14.62 in 
7.26    accordance with agency procedural rules.  The agency shall not submit an approved TMDL 
7.27    to the United States Environmental Protection Agency until the time for commencing 
7.28    judicial review has run or the judicial review process has been completed. A TMDL is not 
7.29    subject to the  rulemaking requirements of chapter 14, including section 14.386.
7.30        Subd. 3. TMDL submittal requirement. Before submitting a TMDL to the United 
7.31    States Environmental Protection Agency, the Pollution Control Agency shall comply with 
7.32    the notice and procedure requirements of this section.  If a contested case proceeding is not 
7.33    required for a proposed TMDL, the agency may submit the TMDL to the United States 
7.34    Environmental Protection Agency no earlier than 30 days after the notice required in 
7.35    subdivision 4. If a contested case proceeding is required for a TMDL, the TMDL may be 
8.1     submitted to the United States Environmental Protection Agency after the contested case 
8.2     proceeding and appeal process is completed.
8.3         Subd. 4. TMDL notice; contents. The Pollution Control Agency shall give notice 
8.4     of its intention to submit a TMDL to the United States Environmental Protection Agency. 
8.5     The notice must be given by publication in the State Register and by United States mail to 
8.6     persons who have registered their names with the agency.  The notice must include either a 
8.7     copy of the proposed TMDL or an easily readable and understandable description of its 
8.8     nature and effect and an announcement of how free access to the proposed TMDL can 
8.9     be obtained.  In addition, the agency shall make reasonable efforts to notify persons or 
8.10    classes of persons who may be significantly affected by the TMDL by giving notice of 
8.11    its intention in newsletters, newspapers, or other publications, or through other means of 
8.12    communication.  The notice must include a statement informing the public: 
8.13    (1) that the public has 30 days in which to submit comment in support of or in 
8.14    opposition to the proposed TMDL and that comment is encouraged; 
8.15    (2) that each comment should identify the portion of the proposed TMDL addressed, 
8.16    the reason for the comment, and any change proposed; 
8.17    (3) of the manner in which persons must request a contested case proceeding on 
8.18    the proposed TMDL; 
8.19    (4) that the proposed TMDL may be modified if the modifications are supported by 
8.20    the data and views submitted; and 
8.21    (5) the date on which the 30-day comment period ends. 
8.22        Subd. 5. Third-party TMDL development. The Pollution Control Agency may 
8.23    enter into agreements with any qualified public agency setting forth the terms and 
8.24    conditions under which that entity is authorized to develop a third-party TMDL.  In 
8.25    determining whether the public agency is qualified to develop a third-party TMDL, the 
8.26    Pollution Control Agency shall consider  the technical and administrative qualifications of 
8.27    the public agency, cost,  and shall avoid any potential organizational conflict of interest, 
8.28    as defined in section 16C.02, subdivision 10a, of the public agency with respect to the 
8.29    development of the third-party TMDL.  A third-party TMDL is subject to modification 
8.30    and approval by the Pollution Control Agency, and must be approved by the Pollution 
8.31    Control Agency before it is submitted to the  United States Environmental Protection 
8.32    Agency.  The Pollution Control Agency shall only consider authorizing the development 
8.33    of third-party TMDL's consistent with the goals, policies, and priorities determined under 
8.34    section 116.384.

8.35        Sec. 7. [114D.30] CLEAN WATER COUNCIL.
9.1         Subdivision 1. Creation; duties. A Clean Water Council is created to advise the 
9.2     Pollution Control Agency and other implementing public agencies on the administration 
9.3     and implementation of this chapter, and foster coordination and cooperation as described 
9.4     in section 114D.20, subdivision 1.  The council may also advise on the development 
9.5     of appropriate processes for expert scientific review as described in section 114D.35, 
9.6     subdivision 2.  The Pollution Control Agency shall provide administrative support for the 
9.7     council with the support of other member agencies.  The members of the council shall 
9.8     elect a chair from the nonagency members of the council.
9.9         Subd. 2. Membership; appointment. The governor must appoint the members of 
9.10    the council. The governor must appoint one person from each of the following agencies: 
9.11    the Department of Natural Resources, the Department of Agriculture, the Pollution 
9.12    Control Agency, and the Board of Water and Soil Resources. The governor must appoint 
9.13    18 additional nonagency members of the council as follows: 
9.14    (1) two members representing statewide farm organizations; 
9.15    (2) two members representing business organizations; 
9.16    (3) two members representing environmental organizations; 
9.17    (4) one member representing soil and water conservation districts; 
9.18    (5) one member representing watershed districts; 
9.19    (6) one member representing nonprofit organizations focused on improvement of 
9.20    Minnesota lakes or streams; 
9.21    (7) two members representing organizations of county governments; 
9.22    (8) two members representing organizations of city governments; 
9.23    (9) one member representing the Metropolitan Council established under section 
9.24    473.123;
9.25    (10) one member representing an organization of township governments;
9.26    (11) one member representing the interests of tribal governments; and
9.27    (12) two members representing statewide hunting organizations.
9.28    In making appointments, the governor must attempt to provide for geographic balance.
9.29        Subd. 3. Terms; compensation; removal. The initial terms of members 
9.30    representing state agencies and the Metropolitan Council expire on the first Monday in 
9.31    January, 2007. Thereafter, the terms of members representing the state agencies and the 
9.32    Metropolitan Council are four years and are coterminous with the governor. The terms 
9.33    of other members of the council shall be as provided in section 15.059, subdivision 2. 
9.34    Members may serve until their successors are appointed and qualify. Compensation and 
9.35    removal of council members is as provided in section 15.059, subdivisions 3 and 4. A 
10.1    vacancy on the council may be filled by the appointing authority provided in  subdivision 1 
10.2    for the remainder of the unexpired term.
10.3        Subd. 4. Implementation plan. The Clean Water Council shall prepare a plan for 
10.4    implementation of this chapter. The plan shall address general procedures and timeframes 
10.5    for implementing this chapter, and shall include a more specific implementation work plan 
10.6    for the next fiscal biennium and a framework for setting priorities to address impaired 
10.7    waters consistent with section 114D.45, subdivisions 2 to 7. The council shall issue the 
10.8    first implementation plan under this subdivision by December 1, 2006, and shall issue a 
10.9    revised work plan by December 1 of each even-numbered year thereafter.
10.10       Subd. 5. Recommendations on appropriation of funds. The  Clean Water Council 
10.11   shall recommend to the governor the manner in which money from the clean water legacy 
10.12   account should be appropriated for the purposes identified in section 114D.45, subdivision 
10.13   3.  The council's recommendations must be consistent with the purposes, policies, goals, 
10.14   and priorities in sections  114D.05 to 114D.35, and shall allocate adequate support and 
10.15   resources to identify impaired waters, develop TMDL's, develop TMDL implementation 
10.16   plans, implement restoration of impaired waters, and provide assistance and incentives 
10.17   to prevent waters from becoming impaired and improve the quality of waters which are 
10.18   listed as impaired but have no approved TMDL.  The council must recommend methods of 
10.19   ensuring that awards of grants, loans,  or other funds from the clean water legacy account 
10.20   specify the outcomes to be achieved as a result of the funding, and specify standards to 
10.21   hold the recipient accountable for achieving the desired outcomes.
10.22       Subd. 6. Biennial report to legislature. By December 1 of each even-numbered 
10.23   year, the council shall submit a report to the legislature on the activities for which money 
10.24   has been or will be spent for the current biennium, the activities for which money is 
10.25   recommended to be spent in the next biennium, and the impact on economic development 
10.26   of the implementation of the impaired waters program. The report due on December 
10.27   1, 2014, must include an evaluation of the progress made through June 30, 2014, in 
10.28   implementing this chapter, the need for funding of future implementation of those 
10.29   sections, and recommendations for the sources of funding. 

10.30       Sec. 8. [114D.35] PUBLIC AND STAKEHOLDER PARTICIPATION; 
10.31   SCIENTIFIC REVIEW; EDUCATION.
10.32       Subdivision 1. Public and stakeholder participation. Public agencies and private 
10.33   entities involved in the implementation of this chapter shall encourage participation by 
10.34   the public and stakeholders, including local citizens, landowners and managers, and 
10.35   public and private organizations, in the identification of impaired waters, in developing 
11.1    TMDL's, and in planning, priority setting, and implementing restoration of impaired 
11.2    waters. In particular, the Pollution Control Agency shall make reasonable efforts to 
11.3    provide timely information to the public and to stakeholders about impaired waters that 
11.4    have been identified by the agency. The agency shall seek broad and early public and 
11.5    stakeholder participation in scoping the activities necessary to develop a TMDL, including 
11.6    the scientific  models, methods, and approaches to be used in TMDL development, and to 
11.7    implement restoration pursuant to section 114D.15, subdivision 7.
11.8        Subd. 2. Expert scientific advice. The Clean Water Council and public agencies 
11.9    and private entities shall make use of available public and private expertise from 
11.10   educational, research, and technical organizations, including the University of Minnesota 
11.11   and other higher education institutions, to provide appropriate independent expert advice 
11.12   on models, methods, and  approaches used in identifying impaired waters, developing 
11.13   TMDL's, and implementing prevention and restoration. 
11.14       Subd. 3. Education. The Clean Water Council shall develop strategies for 
11.15   informing, educating, and encouraging the participation of citizens, stakeholders, 
11.16   and others regarding the identification of impaired waters, development of TMDL's, 
11.17   development of TMDL implementation plans, and implementation of restoration for 
11.18   impaired waters. Public agencies shall be  responsible for implementing the strategies. 

11.19       Sec. 9. Minnesota Statutes 2005 Supplement, section 116.182, subdivision 2, is 
11.20   amended to read:
11.21       Subd. 2. Applicability. This section governs the commissioner's certification of 
11.22   projects seeking financial assistance under section 103F.725, subdivision 1a; 446A.07; 
11.23   446A.072; or 446A.073; 446A.074; or 446A.075.

11.24       Sec. 10. [446A.074] CLEAN WATER LEGACY PHOSPHORUS REDUCTION 
11.25   GRANTS.
11.26       Subdivision 1. Creation of fund. The authority shall establish a clean water legacy 
11.27   capital improvement fund and shall make grants from the fund as provided in this section.
11.28       Subd. 2. Grants. The authority shall award grants from the clean water legacy 
11.29   capital improvement fund to governmental units for the capital costs of wastewater 
11.30   treatment facility projects or a portion thereof that will reduce the discharge of total 
11.31   phosphorus from the facility to one milligram per liter or less.  A project is eligible for a 
11.32   grant if it meets the following requirements:
11.33   (1) the applicable phosphorus discharge limit is incorporated in a permit issued by 
11.34   the agency for the wastewater treatment facility on or after March 28, 2000, the grantee 
12.1    agrees to comply with the applicable limit as a condition of receiving the grant, or the 
12.2    grantee made improvements to a wastewater treatment facility on or after March 28, 2000, 
12.3    that include infrastructure to reduce the discharge of total phosphorus to one milligram 
12.4    per liter or less;
12.5    (2) the governmental unit has submitted a facilities plan for the project to the agency 
12.6    and a grant application to the authority on a form prescribed by the authority; and 
12.7    (3) the agency has approved the facilities plan, and certified the eligible costs for the 
12.8    project to the authority.
12.9        Subd. 3. Eligible capital costs. Eligible capital costs for phosphorus reduction 
12.10   grants under subdivision 4, paragraph (a), include the as-bid construction costs and 
12.11   engineering planning and design costs for phosphorus treatment.  Eligible capital costs for 
12.12   phosphorus reduction grants under subdivision 4, paragraph (b), include the final, incurred 
12.13   construction, engineering, planning, and design costs for phosphorus treatment.
12.14       Subd. 4. Grant amounts and priorities. (a) Priority must be given to projects that 
12.15   start construction on or after July 1, 2006.  If a facility's plan for a project is approved 
12.16   by the agency before July 1, 2010, the amount of the grant is 75 percent of the eligible 
12.17   capital cost of the project.  If a facility's plan for a project is approved by the agency on 
12.18   or after July 1, 2010, the amount of the grant is 50 percent of the eligible capital cost of 
12.19   the project.  Priority in awarding grants under this paragraph must be based on the date of 
12.20   approval of the facility's plan for the project.
12.21   (b) Projects that meet the eligibility requirements in subdivision 2 and have started 
12.22   construction before July 1, 2006, are eligible for grants to reimburse up to 75 percent of 
12.23   the eligible capital cost of the project, less any amounts previously received in grants from 
12.24   other sources.  Application for a grant under this paragraph must be submitted to the 
12.25   authority no later than June 30, 2008.  Priority for award of grants under this paragraph 
12.26   must be based on the date of agency approval of the facility plan.
12.27   (c) In each fiscal year that money is available for grants, the authority shall first 
12.28   award grants under paragraph (a) to projects that met the eligibility requirements of 
12.29   subdivision 2 by May 1 of that year.  The authority shall use any remaining money 
12.30   available that year to award grants under paragraph (b). Grants that have been approved 
12.31   but not awarded in a previous fiscal year carry over and must be awarded in subsequent 
12.32   fiscal years in accordance with the priorities in this paragraph.
12.33   (d) Disbursements of grants under this section by the authority to recipients must 
12.34   be made for eligible project costs as incurred by the recipients, and must be made by the 
12.35   authority in accordance with the project financing agreement and applicable state law.
13.1        Subd. 5. Fees. The authority may charge the grant recipient a fee for its 
13.2    administrative costs not to exceed one-half of one percent of the grant amount, to be 
13.3    paid upon execution of the grant agreement.

13.4        Sec. 11. [446A.075] SMALL COMMUNITY WASTEWATER TREATMENT 
13.5    PROGRAM.
13.6        Subdivision 1. Creation of fund. The authority shall establish a small community 
13.7    wastewater treatment fund and shall make loans and grants from the fund as provided in 
13.8    this section. Money in the fund is annually appropriated to the authority and does not 
13.9    lapse.  The fund shall be credited with all loan repayments and investment income from 
13.10   the fund, and servicing fees assessed under section 446A.04, subdivision 5.  The authority 
13.11   shall manage and administer the small community wastewater treatment fund, and for 
13.12   these purposes, may exercise all powers provided in this chapter.
13.13       Subd. 2. Loans and grants. (a) The authority shall award loans as provided in 
13.14   paragraph (b) and grants as provided in paragraphs (c) and (d) to governmental units from 
13.15   the small community wastewater treatment fund for projects to replace noncomplying 
13.16   individual sewage treatment systems with a community wastewater treatment system or 
13.17   systems meeting the requirements of section 115.55.  A governmental unit receiving a loan 
13.18   or loan and grant from the fund shall own the community wastewater treatment systems 
13.19   built under the program and shall be responsible, either directly or through a contract 
13.20   with a private vendor, for all inspections, maintenance, and repairs necessary to ensure 
13.21   proper operation of the systems.
13.22   (b) Loans may be awarded for up to 100 percent of eligible project costs as described 
13.23   in this section.
13.24   (c) When the area to be served by a project has a median household income below 
13.25   the state average median household income, the governmental unit may receive 50 
13.26   percent of the funding provided under this section in the form of a grant.  An applicant 
13.27   may submit income survey data collected by an independent party if it believes the most 
13.28   recent United States census does not accurately reflect the median household income 
13.29   of the area to be served.
13.30   (d) If requested, a governmental unit receiving funding under this section may 
13.31   receive a grant equal to ten percent of its first year's award, up to a maximum of $30,000, 
13.32   to contract for technical assistance services from the University of Minnesota Extension 
13.33   Service to develop the technical, managerial, and financial capacity necessary to build, 
13.34   operate, and maintain the systems.
14.1        Subd. 3. Project priority list. Governmental units seeking loans or loans and grants 
14.2    from the small community wastewater treatment program shall first submit a project 
14.3    proposal to the agency on a form prescribed by the agency.  A project proposal shall 
14.4    include the compliance status for all individual sewage treatment systems in the project 
14.5    area. The agency shall rank project proposals on its project priority list used for the water 
14.6    pollution control revolving fund under section 446A.07.
14.7        Subd. 4. Applications. Governmental units with projects on the project priority 
14.8    list shall submit applications to the authority on forms prescribed by the authority.  The 
14.9    application shall include:
14.10   (1) a list of the individual sewage treatment systems proposed to be replaced over a 
14.11   period of up to three years;
14.12   (2) a project schedule and cost estimate for each year of the project;
14.13   (3) a financing plan for repayment of the loan; and 
14.14   (4) a management plan providing for the inspection, maintenance, and repairs 
14.15   necessary to ensure proper operation of the systems.
14.16       Subd. 5. Awards. The authority shall award loans or loans and grants as provided in 
14.17   subdivision 2 to governmental units with approved applications based on their ranking 
14.18   on the agency's project priority list.  The total amount awarded shall be based on the 
14.19   estimated project costs for the portion of the project expected to be completed within 
14.20   one year, up to an annual maximum of $500,000.  For projects expected to take more 
14.21   than one year to complete, the authority may make a multiyear commitment for a period 
14.22   not to exceed three years, contingent on the future availability of funds.  Each year of a 
14.23   multiyear commitment must be funded by a separate loan or loan and grant agreement 
14.24   meeting the terms and conditions in subdivision 6.  A governmental unit receiving a loan 
14.25   or loan and grant under a multiyear commitment shall have priority for additional loan and 
14.26   grant funds in subsequent years.
14.27       Subd. 6. Loan terms and conditions. Loans from the small community wastewater 
14.28   treatment fund shall comply with the following terms and conditions:
14.29   (1) principal and interest payments must begin no later than two years after the 
14.30   loan is awarded;
14.31   (2) loans shall carry an interest rate of one percent;
14.32   (3) loans shall be fully amortized within ten years of the first scheduled payment 
14.33   or, if the loan amount exceeds $10,000 per household, shall be fully amortized within 20 
14.34   years but not to exceed the expected design life of the system;
15.1    (4) a governmental unit receiving a loan must establish a dedicated source or sources 
15.2    of revenues for repayment of the loan and must issue a general obligation note to the 
15.3    authority for the full amount of the loan; and 
15.4    (5) each property owner to be served by a community wastewater treatment system 
15.5    under this program must provide an easement to the governmental unit to allow access to 
15.6    the system for management and repairs.
15.7        Subd. 7. Special assessment deferral. (a) A governmental unit receiving a loan 
15.8    under this section that levies special assessments to repay the loan may defer payment of 
15.9    the assessments under the provisions of sections 435.193 to 435.195.
15.10   (b) A governmental unit that defers payment of special assessments for one or more 
15.11   properties under paragraph (a) may request deferral of that portion of the debt service on 
15.12   its loan, and the authority shall accept appropriate amendments to the general obligation 
15.13   note of the governmental unit.  If special assessment payments are later received from 
15.14   properties that received a deferral, the funds received shall be paid to the authority with 
15.15   the next scheduled loan payment.
15.16       Subd. 8. Eligible costs. Eligible costs for small community wastewater treatment 
15.17   loans and grants shall include the costs of technical assistance as provided in subdivision 
15.18   2, paragraph (d), planning, design, construction, legal fees, administration, and land 
15.19   acquisition.
15.20       Subd. 9. Disbursements. Loan and grant disbursements by the authority under this 
15.21   section must be made for eligible project costs as incurred by the recipients, and must be 
15.22   made in accordance with the project loan or grant and loan agreement and applicable 
15.23   state law.
15.24       Subd. 10. Audits. A governmental unit receiving a loan under this section must 
15.25   annually provide to the authority for the term of the loan a copy of its annual independent 
15.26   audit or, if the governmental unit is not required to prepare an independent audit, a copy of 
15.27   the annual financial reporting form it provides to the state auditor.

15.28       Sec. 12. APPROPRIATIONS.
15.29       Subdivision 1. General provisions. The appropriations in this section are from the 
15.30   general fund and are available for the fiscal year ending June 30, 2007.  Unless otherwise 
15.31   specified in this section, these appropriations do not cancel and remain available until June 
15.32   30, 2007. Appropriations in this section that are encumbered under contract, including 
15.33   grant contract, on or before June 30, 2007, are available until June 30, 2009.
16.1        Subd. 2. Pollution Control Agency. The following amounts are appropriated to the 
16.2    Pollution Control Agency for the purposes stated: 
16.3    (1) $1,860,000 for statewide assessment of surface water quality  and trends; of 
16.4    these amounts, up to $1,010,000 is available for grants or contracts to support citizen 
16.5    monitoring of surface waters; and 
16.6    (2) $3,170,000 is available to develop TMDL's and TMDL implementation plans 
16.7    for waters listed on the United States Environmental Protection Agency approved 2004 
16.8    impaired waters list; of this appropriation, up to $1,740,000 is available for grants or 
16.9    contracts to develop TMDL's. 
16.10       Subd. 3. Agriculture Department. The following amounts are appropriated to the 
16.11   Department of Agriculture for the purposes stated: 
16.12   (1) $2,200,000 is for agricultural best management practices loan program; this 
16.13   appropriation remains available until spent; of this amount, $2,000,000 is for pass-through 
16.14   to local governments and lenders for low-interest loans to producers and rural landowners; 
16.15   (2) $800,000 is available to expand technical assistance to producers and 
16.16   conservation professionals on nutrient and pasture management; target practices to sources 
16.17   of water impairments; coordinate federal and state farm conservation programs to fully 
16.18   utilize federal conservation funds; and expand conservation planning assistance for 
16.19   producers; of this amount, $210,000 is available for grants or contracts to develop nutrient 
16.20   and conservation planning assistance information materials; and 
16.21   (3) $1,000,000 is available for research, evaluation, and effectiveness monitoring of 
16.22   agricultural practices in restoring impaired waters. 
16.23       Subd. 4. Board of Water and Soil Resources. The following amounts are 
16.24   appropriated to the Board of Water and Soil Resources for restoration and  prevention 
16.25   actions.  All of the money appropriated in this subdivision as grants to local governments 
16.26   will be administered through the Board of Water and Soil Resources' Local Water 
16.27   Resources Protection and Management Program under Minnesota Statutes, section 
16.28   103B.3369:
16.29   (1) $2,500,000 is for targeted nonpoint restoration cost-share and incentive 
16.30   payments; of these amounts, up to $2,400,000 in fiscal year 2007 is available for grants;
16.31   (2) $4,000,000 is for targeted nonpoint restoration technical, compliance, and 
16.32   engineering assistance activities; up to $3,800,000 in fiscal year 2007 is available for 
16.33   grants;
16.34   (3) $200,000 in fiscal year 2007 is for reporting and evaluation of applied soil and 
16.35   water conservation practices; 
17.1    (4) $730,000 is for grants for implementation of county individual sewage treatment 
17.2    system programs; and
17.3    (5) $1,500,000 is for grants to support local nonpoint source protection activities 
17.4    related to lake and river protection and management. 
17.5        Subd. 5. Department of Natural Resources. The following amounts are 
17.6    appropriated to the Department of Natural Resources for the purposes stated: 
17.7    (1) $280,000 in fiscal year 2007 is for statewide assessment of surface water quality 
17.8    and trends; and
17.9    (2) $1,900,000 is available for restoration of impaired waters and actions to prevent 
17.10   waters from becoming impaired; of these amounts, up to $1,400,000 in fiscal year 2007 is 
17.11   available for grants and contracts for forest stewardship planning and implementation, and 
17.12   for research, compliance, and monitoring. 

17.13       Sec. 13. EFFECTIVE DATE.
17.14   Sections 1 to 12 are effective the day following final enactment.