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ACT NO. 134

(H.594)

Drinking Water Planning Loan Fund;

Drinking Water Source Protection Fund

This act creates two new state revolving funds. The first is the Vermont drinking water planning loan fund, which shall be used for providing loans to municipalities with populations of less than 10,000, conducting feasibility studies, and conducting planning and preliminary designs for making improvements to public water systems. The secondfund is the Vermont drinking water source protection fund, which shall be used to provide loans to municipalities for purchasing land or conservation easements in order to protect public water sources. The act provides that monies in these funds may be transferred into the EPA revolving fund, upon authorization of the secretary of natural resources. The act deletes provisions of law that prohibit use of revolving funds until operating permits have been obtained, and requires instead that the secretary and an applicant certify that other permits shall be obtained before disbursements or expenditures for construction may be made.

The act allows the consolidation of certain loans and removes a restriction that previously provided that privately-owned community water system applicants for loans, to be eligible, had to serve structures, at least 80 percent of which are inhabited by year-round residents. It allows the secretary or the bond bank to require compliance with any regulations promulgated by the U.S. Environmental Protection Agency which may require the state to implement a state environmental review process as a condition to receipt of federal funding. It provides that loans awarded for the purpose of conducting feasibility studies and preparation of engineering plans and designs shall be for a term of no more than five years at an interest rate of zero percent; and provides that loans awarded for the purpose of purchasing land or conservation easements to protect public water sources shall be for a term of no more than 20 years at an annual interest rate of three percent.

The act raises from 10 to 15 the number of service connections required before a water system is classified as a public water system. It allows the secretary to adopt rules for obtaining a construction permit for a new water system, requirements which will require the water system to demonstrate that it possesses the long-term financial, managerial and technical capability to operate and maintain a water system in conformance with federal and state law.

The act makes it state policy: to conserve water resources through technology, methods, and procedures designed to promote the efficient use of water; to consider water conservation in all water use decisions; and to reduce or minimize the waste of water through water supply management practices. It provides that public water system permits may require the development, submission and implementation of a water conservation plan in accordance with state policy, and may require development and submission of a system-level business plan and comprehensive water supply plan to ensure system capacity in the long-term.

The act requires the secretary of natural resources to establish standards for implementing a public water system capacity program for community water systems and nontransient, noncommunity water systems, placing particular emphasis on problems and needs of small rural community water systems and public water systems operated by school districts. The program is to include assessing capacity of publicsystems, promoting the restructuring of systems, and providing preference in assistance to small systems whose water supply is contaminated, threatened by contamination, or which fail to comply with state drinking water standards. The act also gives municipalities the authority to require existing customers to remain connected to the municipal system.

Effective Date: July 1, 1998