1.1                          A bill for an act 
  1.2             relating to the environment; providing funding for 
  1.3             individual sewage treatment systems; appropriating 
  1.4             money; amending Minnesota Statutes 2002, sections 
  1.5             17.117, subdivisions 5a, 10, 11, 13; 115.55, 
  1.6             subdivision 1, by adding a subdivision; 115.56, 
  1.7             subdivision 4; 115.72, by adding a subdivision; 
  1.8             116P.04, subdivision 3; 116P.12, subdivision 1; 
  1.9             proposing coding for new law in Minnesota Statutes, 
  1.10            chapter 115. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 2002, section 17.117, 
  1.13  subdivision 5a, is amended to read: 
  1.14     Subd. 5a.  [AGRICULTURAL AND ENVIRONMENTAL REVOLVING 
  1.15  ACCOUNTS.] (a) There shall be established in the agricultural 
  1.16  fund revolving accounts to receive appropriations, transfers of 
  1.17  the balances from previous appropriations for the activities 
  1.18  under this section, money from the environment and natural 
  1.19  resources trust fund, and money from other sources.  All 
  1.20  balances from previous appropriations for activities under this 
  1.21  section and repayments of loans granted under this section, 
  1.22  including principal and interest, must be deposited into the 
  1.23  appropriate revolving account created in this subdivision or the 
  1.24  account created in subdivision 13.  Interest earned in an 
  1.25  account accrues to that account. 
  1.26     (b) The money in the revolving accounts and the account 
  1.27  created in subdivision 13 is appropriated to the commissioner 
  1.28  for the purposes of this section. 
  2.1      Sec. 2.  Minnesota Statutes 2002, section 17.117, 
  2.2   subdivision 10, is amended to read: 
  2.3      Subd. 10.  [AUTHORITY AND RESPONSIBILITIES OF LOCAL 
  2.4   LENDERS.] (a) Local lenders may enter into lender agreements 
  2.5   with the commissioner. 
  2.6      (b) Local lenders may enter into loan agreements with 
  2.7   borrowers to finance eligible projects under this section. 
  2.8      (c) The local lender shall notify the local government unit 
  2.9   of the loan amount issued to the borrower after the closing of 
  2.10  each loan. 
  2.11     (d) Local lenders with local revolving loan accounts 
  2.12  created before July 1, 2001, may continue to retain and use 
  2.13  those accounts in accordance with their lending agreements for 
  2.14  the full term of those agreements. 
  2.15     (e) Local lenders, including local government units 
  2.16  designating themselves as the local lender, may enter into 
  2.17  participation agreements with other lenders. 
  2.18     (f) Local lenders may enter into contracts with other 
  2.19  lenders for the limited purposes of loan review, processing and 
  2.20  servicing, or to enter into loan agreements with borrowers to 
  2.21  finance projects under this section.  Other lenders entering 
  2.22  into contracts with local lenders under this section must meet 
  2.23  the definition of local lender in subdivision 4, must comply 
  2.24  with all provisions of the lender agreement and this section, 
  2.25  and must guarantee repayment of the loan funds to the local 
  2.26  lender.  
  2.27     (g) When required by the local government unit, a local 
  2.28  lender must withhold all or a portion of the loan disbursement 
  2.29  for a project until notified by the local government unit that 
  2.30  the project has been satisfactorily completed. 
  2.31     (h) The local lender is responsible for repaying all funds 
  2.32  provided by the commissioner to the local lender, including the 
  2.33  interest required under section 116P.12, subdivision 1, for 
  2.34  loans from the environment and natural resources trust fund.  
  2.35  Money that was appropriated from the environment and natural 
  2.36  resources trust fund and repaid to the commissioner, including 
  3.1   the interest required under section 116P.12, subdivision 1, must 
  3.2   be deposited in the environment and natural resources trust fund.
  3.3      (i) The local lender is responsible for collecting 
  3.4   repayments from borrowers.  If a borrower defaults on a loan 
  3.5   issued by the local lender, it is the responsibility of the 
  3.6   local lender to obtain repayment from the borrower.  Default on 
  3.7   the part of borrowers shall have no effect on the local lender's 
  3.8   responsibility to repay its obligations to the commissioner 
  3.9   whether or not the local lender fully recovers defaulted amounts 
  3.10  from borrowers. 
  3.11     (j) The local lender shall provide sufficient collateral or 
  3.12  protection to the commissioner for the funds provided to the 
  3.13  local lender.  The commissioner must approve the collateral or 
  3.14  protection provided. 
  3.15     Sec. 3.  Minnesota Statutes 2002, section 17.117, 
  3.16  subdivision 11, is amended to read: 
  3.17     Subd. 11.  [LOANS ISSUED TO BORROWER.] (a) Local lenders 
  3.18  may issue loans only for projects that are approved and 
  3.19  certified by the local government unit as meeting priority needs 
  3.20  identified in a comprehensive water management plan or other 
  3.21  local planning documents, are in compliance with accepted 
  3.22  practices, standards, specifications, or criteria, and are 
  3.23  eligible for financing under Environmental Protection Agency or 
  3.24  other applicable guidelines. 
  3.25     (b) The local lender may use any additional criteria 
  3.26  considered necessary to determine the eligibility of borrowers 
  3.27  for loans. 
  3.28     (c) Local lenders shall set the terms and conditions of 
  3.29  loans to borrowers, except that: 
  3.30     (1) no loan to a borrower may exceed $50,000; 
  3.31     (2) no loan for a project may exceed $50,000; and 
  3.32     (3) no borrower shall, at any time, have multiple loans 
  3.33  from this program with a total outstanding loan balance of more 
  3.34  than $50,000.  
  3.35     (d) The maximum term length for conservation tillage and 
  3.36  individual sewage treatment system projects is five years.  The 
  4.1   maximum term length for other projects in this paragraph is ten 
  4.2   years. 
  4.3      (e) Fees charged at the time of closing must: 
  4.4      (1) be in compliance with normal and customary practices of 
  4.5   the local lender; 
  4.6      (2) be in accordance with published fee schedules issued by 
  4.7   the local lender; 
  4.8      (3) not be based on participation program; and 
  4.9      (4) be consistent with fees charged other similar types of 
  4.10  loans offered by the local lender. 
  4.11     (f) The interest rate assessed to an outstanding loan 
  4.12  balance by the local lender must not exceed three percent per 
  4.13  year.  For loans made from the environment and natural resources 
  4.14  trust fund, the local lender shall also assess the interest on 
  4.15  the outstanding balance at the rate required under section 
  4.16  116P.12, subdivision 1. 
  4.17     Sec. 4.  Minnesota Statutes 2002, section 17.117, 
  4.18  subdivision 13, is amended to read: 
  4.19     Subd. 13.  [ESTABLISHMENT OF ACCOUNT.] The public 
  4.20  facilities authority shall establish ~~an account~~ accounts called 
  4.21  the agriculture best management practices revolving account and 
  4.22  the individual sewage treatment system account to provide loans 
  4.23  and other forms of financial assistance authorized under section 
  4.24  446A.07.  The ~~account~~ accounts must be credited with 
  4.25  repayments authorized by this section. 
  4.26     Sec. 5.  Minnesota Statutes 2002, section 115.55, 
  4.27  subdivision 1, is amended to read: 
  4.28     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
  4.29  subdivision apply to this section and section 115.56. 
  4.30     (b) "Advisory committee" means the advisory committee on 
  4.31  individual sewage treatment systems established under the 
  4.32  individual sewage treatment system rules.  The advisory 
  4.33  committee must be appointed to ensure geographic representation 
  4.34  of the state and include elected public officials. 
  4.35     (c) "Applicable requirements" means: 
  4.36     (1) local ordinances that comply with the individual sewage 
  5.1   treatment system rules, as required in subdivision 2; or 
  5.2      (2) in areas not subject to the ordinances described in 
  5.3   clause (1), the individual sewage treatment system rules. 
  5.4      (d) "City" means a statutory or home rule charter city. 
  5.5      (e) "Commissioner" means the commissioner of the pollution 
  5.6   control agency. 
  5.7      (f) "Dwelling" means a building or place used or intended 
  5.8   to be used by human occupants as a single-family or two-family 
  5.9   unit. 
  5.10     (g) "Individual sewage treatment system" or "system" means 
  5.11  a sewage treatment system, or part thereof, serving a dwelling, 
  5.12  other establishment, or group thereof, that uses subsurface soil 
  5.13  treatment and disposal. 
  5.14     (h) "Individual sewage treatment system professional" means 
  5.15  an inspector, installer, site evaluator or designer, or pumper. 
  5.16     (i) "Individual sewage treatment system rules" means rules 
  5.17  adopted by the agency that establish minimum standards and 
  5.18  criteria for the design, location, installation, use, and 
  5.19  maintenance of individual sewage treatment systems. 
  5.20     (j) "Inspector" means a person who inspects individual 
  5.21  sewage treatment systems for compliance with the applicable 
  5.22  requirements. 
  5.23     (k) "Installer" means a person who constructs or repairs 
  5.24  individual sewage treatment systems. 
  5.25     (l) "Local unit of government" means a township, city, or 
  5.26  county. 
  5.27     (m) "Pumper" means a person who maintains components of 
  5.28  individual sewage treatment systems including, but not limited 
  5.29  to, septic, aerobic, and holding tanks. 
  5.30     (n) "Seasonal dwelling" means a dwelling that is occupied 
  5.31  or used for less than 180 days per year and less than 120 
  5.32  consecutive days. 
  5.33     (o) "Site evaluator or designer" means a person who: 
  5.34     (1) investigates soils and site characteristics to 
  5.35  determine suitability, limitations, and sizing requirements; and 
  5.36     (2) designs individual sewage treatment systems. 
  6.1      (p) "Operator" means a person who operates, determines the 
  6.2   functional status, or adjusts or repairs components of a system 
  6.3   that is designed for an average flow of over 2,500 gallons per 
  6.4   day, or a system defined as requiring an operator criteria 
  6.5   established by local ordinance. 
  6.6      Sec. 6.  Minnesota Statutes 2002, section 115.55, is 
  6.7   amended by adding a subdivision to read: 
  6.8      Subd. 4a.  [PUMPER SEPTAGE ACTIVITY.] Licensed pumpers must 
  6.9   maintain accurate records of system pumping activity in each 
  6.10  county in which they are active and report the records by 
  6.11  February 1 each year to the county on a standardized form 
  6.12  provided by the commissioner. 
  6.13     Sec. 7.  [115.551] [TANK SURCHARGE.] 
  6.14     A surcharge of $25 is imposed on the sale of each septic 
  6.15  system tank.  The surcharge must be paid at the time the tax is 
  6.16  imposed on the retail sale of a tank, as retail sale is defined 
  6.17  in section 297A.61, subdivision 4.  The commissioner of revenue 
  6.18  has the same powers to collect the surcharge and to impose 
  6.19  penalties that are given to the commissioner with respect to the 
  6.20  collection of sales taxes in chapters 289A and 297A.  Proceeds 
  6.21  from the surcharge collection must be deposited in the 
  6.22  environmental fund and used to administer sections 115.55 to 
  6.23  115.58. 
  6.24     Sec. 8.  Minnesota Statutes 2002, section 115.56, 
  6.25  subdivision 4, is amended to read: 
  6.26     Subd. 4.  [LICENSE FEE.] The fee for a license required 
  6.27  under subdivision 2 is ~~$100~~ $200 per year.  The maximum total 
  6.28  for multiple licenses is $500.  Revenue from the fees must be 
  6.29  credited to the environmental fund.  This fee is exempt from 
  6.30  section 16A.1285.  
  6.31     Sec. 9.  Minnesota Statutes 2002, section 115.72, is 
  6.32  amended by adding a subdivision to read: 
  6.33     Subd. 3.  [LIMITED SUBSURFACE CERTIFICATION.] (a) The 
  6.34  commissioner may issue a limited subsurface certification within 
  6.35  any wastewater facility operator classification to system 
  6.36  operators, defined in section 115.55, subdivision 1, for use 
  7.1   with individual sewage treatment systems only. 
  7.2      (b) Experience with subsurface disposal systems may meet 
  7.3   applicable experience requirements for the sole purpose of 
  7.4   applying for a limited subsurface certification. 
  7.5      Sec. 10.  Minnesota Statutes 2002, section 116P.04, 
  7.6   subdivision 3, is amended to read: 
  7.7      Subd. 3.  [REVENUE.] Nothing in sections 116P.01 to 116P.12 
  7.8   limits the source of contributions to the trust fund.  All money 
  7.9   appropriated from the trust fund for loans made under section 
  7.10  17.117 must be paid back to the trust fund, including the 
  7.11  interest required under section 116P.12, subdivision 1. 
  7.12     Sec. 11.  Minnesota Statutes 2002, section 116P.12, 
  7.13  subdivision 1, is amended to read: 
  7.14     Subdivision 1.  [LOANS AUTHORIZED.] (a) If the principal of 
  7.15  the trust fund equals or exceeds $200,000,000, the commission 
  7.16  may vote to set aside up to five percent of the principal of the 
  7.17  trust fund for water system improvement loans, including upgrade 
  7.18  or replacement of individual private sewage treatment systems.  
  7.19  The purpose of water system improvement loans is to offer below 
  7.20  market rate interest loans to local units of government for the 
  7.21  purposes of water system improvements. 
  7.22     (b) The interest on a loan from the trust fund shall be 
  7.23  calculated on the declining balance at a rate the greater of: 
  7.24     (1) four percentage points below the secondary market yield 
  7.25  of one-year United States treasury bills calculated according to 
  7.26  section 549.09, subdivision 1, paragraph (c); or 
  7.27     (2) one percent. 
  7.28     (c) An eligible project must prove that existing federal or 
  7.29  state loans or grants have not been adequate.  
  7.30     (d) Payments on the principal and interest of loans under 
  7.31  this section must be credited to the trust fund.  
  7.32     (e) Except for individual sewage treatment system loans, 
  7.33  repayment of loans made under this section must be completed 
  7.34  within 20 years.  Repayment of individual sewage treatment 
  7.35  system loans made under this section must be completed within 
  7.36  seven years. 
  8.1      (f) The Minnesota public facilities authority must report 
  8.2   to the commission each year on the loan program under this 
  8.3   section.  
  8.4      Sec. 12.  [PILOT PROGRAM.] 
  8.5      By July 1, 2004, the commissioner of the pollution control 
  8.6   agency, in conjunction with the association of Minnesota 
  8.7   counties, must designate at least five cooperating counties with 
  8.8   bodies of water polluted by fecal coliform bacteria to: 
  8.9      (1) design an inventory of properties with individual 
  8.10  sewage treatment systems that are an imminent threat to public 
  8.11  health or safety due to surface water discharges of untreated 
  8.12  sewage; and 
  8.13     (2) develop and implement a plan to achieve compliance 
  8.14  within an eight to ten-year period. 
  8.15     Sec. 13.  [ADVISORY GROUP AND OVERSIGHT COMMITTEE.] 
  8.16     Subdivision 1.  [ADVISORY GROUP.] (a) The commissioner of 
  8.17  the pollution control agency must convene an advisory group by 
  8.18  June 1, 2003, comprised of: 
  8.19     (1) two county representatives; 
  8.20     (2) one county recorder; 
  8.21     (3) one township officer; 
  8.22     (4) one municipal representative; 
  8.23     (5) one licensed pumper; 
  8.24     (6) one licensed inspector; 
  8.25     (7) one representative of realtors; 
  8.26     (8) one representative of the University of Minnesota 
  8.27  individual sewage treatment systems staff; 
  8.28     (9) two representatives of environmental organizations; 
  8.29     (10) two citizens with an interest in septic systems; and 
  8.30     (11) one representative each from the state pollution 
  8.31  control agency, department of health, department of agriculture, 
  8.32  public facilities authority, and the metropolitan council. 
  8.33     (b) The commissioner, with input from the advisory group, 
  8.34  must develop a ten-year plan and report back to the legislature 
  8.35  by January 31, 2004, to: 
  8.36     (1) locate systems not identified in section 12 that are 
  9.1   imminent threats to public health and safety and those with less 
  9.2   than two feet of soil separation; 
  9.3      (2) upgrade of the systems identified in clause (1); 
  9.4      (3) institute a system to oversee compliance with 
  9.5   individual sewage treatment maintenance requirements of 
  9.6   Minnesota Rules, part 7080.0175, by July 1, 2005; and 
  9.7      (4) institute a system in real estate transactions to 
  9.8   disclose the location, adequacy, and upgrade of systems. 
  9.9      (c) The ten-year plan must include funding options for 
  9.10  paragraph (b), clauses (1) to (3), and shall recommend enhanced 
  9.11  funding mechanisms for low-interest loans to homeowners for 
  9.12  system upgrades. 
  9.13     Subd. 2.  [INDUSTRY OVERSIGHT COMMITTEE.] The commissioner 
  9.14  of the pollution control agency shall, in consultation with the 
  9.15  individual sewage treatment system industry, propose a structure 
  9.16  for an industry oversight board that will work with the 
  9.17  commissioner on industry oversight.  The commissioner shall 
  9.18  report to the committees of the legislature with jurisdiction 
  9.19  over environmental issues on the proposal and any other steps 
  9.20  the commissioner has taken with respect to industry oversight by 
  9.21  January 31, 2004.  
  9.22     Sec. 14.  [APPROPRIATIONS.] 
  9.23     (a) $....... is appropriated from the environmental fund to 
  9.24  the commissioner of the pollution control agency to address the 
  9.25  need for increased activity in the areas of new technology 
  9.26  review, technical assistance for local governments, training 
  9.27  individual sewage treatment system professionals, program 
  9.28  planning, and enforcement under Minnesota Statutes, sections 
  9.29  115.55 to 115.58, and to complete the requirements of sections 
  9.30  12 and 13.  Of this amount, $....... is available the first year 
  9.31  and $....... is available the second year for grants to counties 
  9.32  to assist in the implementation of individual sewage treatment 
  9.33  system requirements. 
  9.34     (b) $....... is appropriated from the environment and 
  9.35  natural resources trust fund to the commissioners of agriculture 
  9.36  and the pollution control agency to provide loans to counties 
 10.1   for loans to property owners under Minnesota Statutes, section 
 10.2   17.117 or 115.57.  Loans made from this appropriation, including 
 10.3   the interest required under Minnesota Statutes, section 116P.12, 
 10.4   subdivision 1, must be repaid within seven years.