The statement of scope for this rule, SS 103-20, was approved by the Governor on July 31, 2020, published in Register No. 776A2 on August 10, 2020, and approved by the Natural Resources Board on October 28, 2020. This rule was approved by the Governor on February 2, 2023. 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.
