ORDER OF THE STATE OF WISCONSIN NATURAL RESOURCES BOARD
REPEALING AND RECREATING RULES
The Wisconsin Natural Resources Board proposes an order to repeal and recreate ch. NR 166, relating to the Safe Drinking Water Loan Program. |
CF-13-19
Analysis Prepared by the Department of Natural Resources
1. Statute Interpreted: Sections 281.59 and 281.61, Wis. Stats. 2. Statutory Authority: Section 281.61 (12), Wis. Stats., authorizes the department to promulgate rules establishing eligibility criteria for applicants and projects necessary for the execution of its responsibilities under the Safe Drinking Water Loan Program. The Safe Drinking Water Loan Program provides financial assistance to municipalities for drinking water system construction projects. In addition, s. 227.11 (2) (a), Wis. Stats., authorizes state agencies to promulgate rules interpreting the statutes it administers and enforces if it is necessary to effectuate the purpose of the statute. The proposed rules are necessary to effectuate the purpose of s. 281.61, Wis. Stats. 3. Explanation of Agency Authority: This order implements s. 281.61 (12), Wis. Stats., which requires the department to promulgate rules that are necessary for the proper execution of its responsibilities under the Safe Drinking Water Loan Program statute (s. 281.61, Wis. Stats.) including establishing eligibility criteria for applicants and projects. Section 281.61 (12), Wis. Stats., also requires the department to cooperate with the Department of Administration in administering the Safe Drinking Water Loan Program. This order provides the rules for municipalities and the department in determining eligibility of an applicant and of a project for Safe Drinking Water Loan Program financial assistance, preparing and submitting a complete financial assistance application, processing a financial assistance application, documenting the costs of a project, preparing financial assistance agreements, following procurement laws, amending a financial assistance agreement, obtaining applicant documentation required by the Department of Administration, scoring and ranking projects, allocating available funds, developing and publishing project priority and funding lists, determining the amount of subsidy to be provided to a municipality for their project, and requesting and processing disbursement of financial assistance. 4. Related Statutes or Rules: Concurrent with this effort, the department is also repealing and recreating ch. NR 162, Wis. Adm. Code, relating to the Clean Water Fund Program. Both the Safe Drinking Water Loan Program and the Clean Water Fund Program are part of the Environmental Improvement Fund.
5. Plain Language Analysis: Revisions to ch. NR 166, Wis. Adm. Code, relating to the Safe Drinking Water Loan Program, bring the code in line with statutory changes that occurred after the current version became effective, clarify eligibility criteria, streamline processes, modify the scoring system, and update implementation issues since the rule was last revised. No significant changes to the program will result from the rule revisions. The main topics for revision include: — Definitions – adds, modifies, and removes various definitions to add clarity to several sections of the code.
— Types of financial assistance – adds language to state that the statutes allow funds from the federal capitalization grant to be used as allowed under federal law, including providing principal forgiveness.
— Eligible projects/activities – updates language to incorporate current practices.
— Dates for ITA/PERF submittals – revises language to be flexible for implementing potential changes to the application process after 2021 Wisconsin Act 112 removed some of the barriers to streamlining the process from the statutes (ss. 281.59 and 281.61, Wis. Stats.), including the intent to apply requirement and submittal deadline; the department put a policy paper out for public comment stating that the intent to apply is not being eliminated immediately but that the department will be looking at potential changes; the department may look at whether information requested from applicants in the intent to apply should become part of the financial assistance application and whether the intent to apply should be eliminated, modified, or requested less frequently; eliminating the intent to apply requirement and deadline from the statute was needed to be able to examine the entire application process from beginning to end to determine what streamlining should be done to better align the process with customer needs, administrative responsibilities, Wisconsin’s construction season, and multiple other factors that impact water infrastructure project timelines; the department will engage program customers to seek input regarding these streamlining efforts. — Application process – requires applicant use of the online application systems, revises language to be flexible for implementing potential changes to the application process after 2021 Wisconsin Act 112 removed some of the barriers to streamlining the process from the statutes (ss. 281.59 and 281.61, Wis. Stats.), and modifies requirements for application submittals, including removing submittals no longer needed, adding clarity for certain submittals, removing intermunicipal agreement requirements while still requiring submittal of some of the information typically contained in an intermunicipal agreement, and adding a design life calculation worksheet requirement for municipalities requesting loan terms greater than 20 years since language was added to the statutes allowing terms of up to 30 years; the department intends to begin another administrative rule revision after completing a life cycle analysis of loan processes and procedures to determine the best timeline for the loan program and to look in detail at current submittal requirements and document reviews to gain efficiencies. — Deadline for signing a financial assistance agreement – modifies the language regarding the timeframe within which a municipality must sign a financial assistance agreement to provide flexibility for potential modifications to the loan process timeline.
— Legal opinion on land ownership and easements – adds a requirement for submittal of a certification regarding land ownership and easements; codifies new policies the department developed regarding when a legal opinion regarding land ownership and easement rights is needed in addition to or in lieu of a certification, and what needs to be addressed in the legal opinion regarding who owns the land on which a project is being constructed.
— Procurement and disbursement processes – adds language to clarify what documentation is expected when from municipalities for these processes.
— Loan interest rates – revises language related to procedures for obtaining median household income data for applicants that are not a city, town, or village.
— Amendments – revises the financial assistance agreement amendment process as it was previously based on availability of present value subsidy, which was removed from the statutes, and clarifies the type of financial assistance that may be provided in an amendment.
— Priority scoring system – adds language to provide points for watermain replacement projects that include replacement of lead service lines, removes the financial need section to allow the median household income points to be directly tied to the principal forgiveness points identified in the annual intended use plan, assigns negative points to projects of municipalities that are lacking required capacity items (such as a written emergency action plan or a private well abandonment ordinance), and removes procedures for scoring notifications and reevaluations to allow flexibility in researching what kind of process will work best for program customers and staff as the current process is inadequate.
6. Summary of, and Comparison with, Existing or Proposed Federal Statutes and Regulations: All state drinking water revolving fund programs must comply with the federal requirements of the federal program, as outlined in 42 USC 300g-1. This rule complies with the requirements of the federal Safe Drinking Water Act, 42 USC 300f to 300j-26. 7. If Held, Summary of Comments Received During Preliminary Comment Period and at Public Hearing on the Statement of Scope: A preliminary public hearing was not required for this rule.
8. Comparison with Similar Rules in Adjacent States: Each state implements the federal Safe Drinking Water Act consistently with the associated state statutes and federal requirements. Every state revolving fund program has unique features, but all of the programs are designed to meet federal Safe Drinking Water Act requirements. Each state has a unique priority scoring system based on state priorities but consistent with federal priorities. The U.S. Environmental Protection Agency reviews program implementation to ensure consistency with the federal requirements.
9. Summary of Factual Data and Analytical Methodologies Used and How Any Related Findings Support the Regulatory Approach Chosen: The implementation of the Safe Drinking Water Loan Program does not include regulatory activities. Refinements to the program were established with both internal and external advisory groups with the intent of streamlining processes and clarifying criteria for program implementation.
10. Analysis and Supporting Documents Used to Determine the Effect on Small Business or in Preparation of an Economic Impact Report: These rule revisions are expected to have no impact on small businesses. The revisions streamline and clarify existing processes and criteria. The revisions do not contain new requirements for small businesses. The department did a section-by-section analysis of potential impacts to local governments and businesses.
11. Effect on Small Business (initial regulatory flexibility analysis): The department expects no economic impact directly related to these rule changes.
12. Agency Contact Person: Jeanne Cargill, Bureau of Community Financial Assistance, 101 S. Webster Street., PO Box 7921, Madison WI 53707-7921; jeanne.cargill@wisconsin.gov; 608-436-6080. 13. Place where comments are to be submitted and deadline for submission:
A public comment period on the draft rule occurred from October 10, 2022, to November 9, 2022, with a public hearing on November 9, 2022. No comments were received during the public hearing, but the department did receive written comments during the public comment period. The department responded to those comments and made revisions to the rule as a result of the comments. The Natural Resources Board adopted the rule that included those revisions on February 2, 2023.
RULE TEXT
Section 1 Chapter NR 166-Safe Drinking Water Loan Program is repealed and recreated to read:
SUBCHAPTER I - GENERAL
NR 166.01 Purpose. The purposes of this chapter are all of the following:
(1) Establish rules under ss. 281.59 and 281.61, Stats., for the implementation and administration of a financial assistance program for the engineering and construction of public water system projects. (2) Establish a priority system for the distribution of safe drinking water loan program financial assistance as provided in s. 281.61, Stats., and the mechanisms and methodology to be used to modify the priority system. Note: All forms necessary for financial assistance under this chapter are available on the department’s website. Paper forms may be acquired at no charge from the Department of Natural Resources, Bureau of Community Financial Assistance, 101 S. Webster St., P.O. Box 7921, Madison, Wisconsin 53707–7921. Most information is required to be submitted through the department’s online application systems.
NR 166.02 Applicability. This chapter applies to all applicants for and recipients of financial assistance for the engineering and construction of public water systems made under ss. 281.59 and 281.61, Stats. This rule first applies to financial assistance applications submitted to the department on the effective date of this rule [LRB inserts date]. Compliance with the applicable requirements of this chapter is a prerequisite to receiving financial assistance under ss. 281.59 and 281.61, Stats. NR 166.03 Definitions. In this chapter:
(1) “Action level” or “AL” has the meaning given in s. NR 809.04 (1). (2) “Amendment” means a formal, written change to an existing legal agreement or contract executed by all parties to the original agreement or contract.
(3) “American Community Survey” or “ACS” means the nationwide survey conducted by the U.S. bureau of the census to collect demographic, social, housing, and economic data and produce 1-year, 3-year, and 5-year estimates based on population thresholds.
(4) “Applicant” means any municipality that submits to the department any of the following for financial assistance under this chapter:
(a) Priority evaluation and ranking information as required by the department.
(b) A financial assistance application.
(5) “Approval” means the written approval of the department.
(6) “Block group” means a subdivision of a census tract made up of a cluster of blocks having the same first digit of their 4-digit identifying numbers within the tract.
(7) “Breach of contract” means the failure of the financial assistance recipient to comply with any of the following:
(a) The terms and conditions of the financial assistance agreement.
(b) The terms and conditions of the municipal obligation resolution authorizing the issuance and sale of bonds or notes to the safe drinking water loan program.
(8) “Capital improvement” means construction resulting in improvements to real property or depreciable property, or both, and adding to the value or useful life of these assets, including structural improvements or improvements that enhance usefulness or productivity. “Capital improvement” includes capital assets that are not structural but are necessary for provision of safe drinking water by a municipality, including trucks and other tangible assets with a single item cost of greater than $5,000.
Note: The following are examples of capital improvements: drilling a new well and constructing a well house; upgrading existing equipment or installing new, more efficient process equipment, such as pumps, or treatment equipment, such as chemical feed equipment; constructing new buildings or facilities; adding to or constructing major renovations of existing facilities; replacing aged or undersized water mains; constructing a water system crossing of a highway, railroad, or waterbody; constructing a watermain loop to eliminate one or more dead ends in the water system; constructing, upgrading, or improving an existing storage tank, including recoating the entire exterior or entire interior, or both, of a storage tank; or installing security, a supervisory control and data acquisition system, or monitoring equipment as part of a scored project. Replacing an old pump with a new pump that is the same size and efficiency as the old pump is not considered a capital improvement; rather, it is maintenance.
(9) “Census block” means the smallest unit for which the U.S. bureau of the census collects and tabulates population information in the decennial census and income information in the ACS.
(10) “Census designated place” means a statistical area delineated for each decennial census according to U.S. bureau of the census guidelines for the purpose of presenting census data and ACS data for a concentration of population, housing, and commercial structures that is locally identifiable by name, but is not within an incorporated place.
(11) “Census tract” means a small, relatively permanent statistical subdivision of a county used in the decennial census and the ACS, delineated for the purpose of presenting data, typically following visible features or governmental boundaries or both, including approximately 4,000 inhabitants, and designed to be a relatively homogeneous unit with respect to population characteristics, economic status, and living conditions.
(12) “Change order” means an action that specifies and justifies a change to a construction contract that alters the time of completion or the total price, or both.
(13) “Community water system” has the meaning given in s. NR 809.04 (5).
(14) “Construction” means a set of actions taken to make a capital improvement, including any of the following actions if the set of actions is the most cost effective solution to the problem being solved with the project:
(a) Building, erecting, extending, or assembling a water system or a new major asset for an existing water system.
(b) Preparing a construction site or sites of a scored project for work activities, including grading, staking, digging, and demolition or abandonment of existing structures.
(c) Purchasing an entire existing water system or buying capacity in an existing water system owned by another entity.
(d) Altering, modifying, improving, upgrading, rehabilitating, or adding to existing water system facilities.
(e) Performing major repairs or replacing major components of existing facilities.
(f) Installing new piping or mechanical, electrical, or electronic equipment or facilities.
(15) “Contaminant” has the meaning given in s. NR 809.04 (13).
