Introduced Version






SENATE BILL No. 192

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 13-18.

Synopsis: Revolving loan funds. Designates the budget agency to manage and administer all aspects of the wastewater and drinking water financial assistance programs, and directs the budget agency to designate the department of environmental management (IDEM) to manage and administer environmental aspects of the programs. Amends certain aspects of the administration of the programs by the budget agency. Voids certain rules relating to the programs. Repeals certain joint administrative responsibilities of the budget agency and IDEM with respect to the programs.

Effective: July 1, 2002.





Gard




    January 7, 2002, read first time and referred to Committee on Environmental Affairs.







Introduced

Second Regular Session 112th General Assembly (2002)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2001 General Assembly.

SENATE BILL No. 192



    A BILL FOR AN ACT to amend the Indiana Code concerning environmental law.

Be it enacted by the General Assembly of the State of Indiana:

    SECTION 1. IC 13-18-13-5.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 5.5. (a) Except as provided in subsection (b), the budget agency shall manage and administer all aspects of the program.
    (b) The budget agency shall designate environmental aspects of the program to be managed and administered by the department. When the budget agency makes a designation under this subsection, the budget agency shall direct the department in writing to manage and administer the designated environmental aspects of the program.
    (c) The budget agency shall fix a budget for the environmental aspects of the program to be:
        (1) managed and administered by the department under subsection (b); and
        (2) funded from:
            (A) the fund; or


            (B) a capitalization grant made by the United States Environmental Protection Agency for the benefit of the program.
    SECTION 2. IC 13-18-13-8 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 8. (a) The department and the budget agency may:
        (1) provide services to a political subdivision in connection with a loan or other financial assistance, including advisory and other services; and
        (2) charge a fee for services provided.
    (b) The department and the budget agency may charge a fee for costs and services incurred in the review or consideration of an application for a proposed loan or other financial assistance to or for the benefit of a political subdivision under this chapter, regardless of whether the application is approved or rejected.
    (c) A political subdivision may pay fees charged under this section.
    SECTION 3. IC 13-18-13-9 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 9. (a) The department budget agency shall use a priority ranking system to recommend loans or other financial assistance from the fund. The department budget agency shall develop the priority ranking system to achieve optimum water quality consistent with the water quality goals of the state and the federal Clean Water Act.
    (b) Based on the recommendations made under subsection (a), and subject to any bypass procedures implemented by the budget agency to render program assistance efficiently, the budget agency may make loans and provide other financial assistance from the fund to or for the benefit of political subdivisions.
    SECTION 4. IC 13-18-13-10 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 10. (a) The budget agency may make loans or provide other financial assistance from the fund to or for the benefit of a political subdivision under the following conditions:
        (1) The loan or other financial assistance must be used:
            (A) for planning, designing, constructing, renovating, improving, or expanding wastewater collection and treatment systems and other activities necessary or convenient to complete these tasks;
            (B) to:
                (i) establish reserves or sinking funds; or
                (ii) provide interest subsidies;
            (C) to pay financing charges, including interest on the loan or

other financial assistance during construction and for a reasonable period after the completion of construction; or
            (D) to pay the following:
                (i) Consultant, advisory, and legal fees.
                (ii) Any other costs or expenses necessary or incident to the loan, other financial assistance, or the administration of the fund and the program.
        (2) Subject to section 15 of this chapter, upon recommendation of the budget agency the state board of finance shall establish the interest rate or parameters for establishing the interest rate on each loan, including parameters for establishing the amount of interest subsidies.
        (3) The budget agency shall establish the terms and conditions that the budget agency considers necessary or convenient to:
            (A) make loans; or
            (B) provide other financial assistance under this chapter.
     (b) The budget agency is not required to establish uniform terms and conditions applicable to all loans or other financial assistance under this chapter. Differences in the terms and conditions may be based on:
        (1) credit;
        (2) loan structure;
        (3) capital access; or
        (4) other factors the budget agency considers relevant.

    SECTION 5. IC 13-18-13-11 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 11. A loan or other financial assistance from the fund must be accompanied by the following:
        (1) All papers and opinions required by the budget agency.
        (2) Unless otherwise provided by rule, the following:
            (A) An approving opinion of nationally recognized bond counsel if required by the budget agency.
            (B) A certification and guarantee of signatures.
            (C) A certification that, as of the date of the loan or other financial assistance:
                (i) no litigation is pending challenging the validity of or entry into the loan or other financial assistance or any security for the loan or other financial assistance; or
                (ii) if litigation is pending, the litigation will not have a material adverse effect on the validity of the loan or other financial assistance or any security for the loan or other financial assistance.


            (D) If litigation is pending, as an alternative to the certification described in clause (C), an opinion of legal counsel that the litigation will not have a material adverse effect on the validity of the loan or other financial assistance.
    SECTION 6. IC 13-18-13-15 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 15. (a) In recommending to the state board of finance the interest rate or parameters for establishing the interest rate on each loan, as provided in section 10 of this chapter, the budget agency shall recommend and the state board of finance shall establish the following:
        (1) A base or subsidized interest rate that:
            (A) would be payable by political subdivisions other than political subdivisions described in subdivision (2) or (3); and
            (B) may provide for the payment of no interest during all or a part of the estimated construction period for the wastewater treatment system.
        (2) A base reduced or more heavily subsidized interest rate, that:
            (A) would be payable by political subdivisions whose median household incomes are:
                (i) not more than the state nonmetropolitan median household income, as determined and reported by the federal government periodically; and
                (ii) not less than eighty-one percent (81%) of the state nonmetropolitan median household income; and
            (B) may provide for the payment of no interest during all or a part of the estimated construction period for the wastewater collection and treatment system.
        (3) A base zero (0) or most heavily subsidized interest rate that:
            (A) would be payable on loans made to political subdivisions whose median household incomes are not more than eighty percent (80%) of the state nonmetropolitan household income; and
            (B) may provide for the payment of no interest during all or a part of the estimated construction period of the wastewater collection and treatment system.
    (b) The budget agency, in recommending to the state board of finance the interest rate or parameters for establishing the interest rate on each loan under section 10 of this chapter, shall take into account the following:
        (1) Credit risk.
        (2) Environmental enforcement and protection.
        (3) Affordability.
        (4) Other fiscal factors the budget agency considers relevant, including:
            (A) the program's cost of funds; and
            (B) whether the financial assistance provided to a particular political subdivision is taxable or tax exempt under federal law.
Based on the factors set forth in subdivisions (1) through (4), more than one (1) interest rate may be established and used for loans made to different political subdivisions in the same interest rate category.

    (c) In enacting this section, the general assembly understands that, in financing the program, the Indiana bond bank issued at the budget agency's request, and will continue to issue at the budget agency's request:
        (1) revenue bonds payable from and secured by political subdivisions; and
        (2) loan payments made by and loan payments made to political subdivisions.
It is not the intent of the general assembly to cause the budget agency or the state board of finance to establish interest rates on loans or parameters for establishing interest rates that would cause the bond bank's revenue bonds to be insecure or otherwise negatively affect the ability of the state to continue to finance the program.
    SECTION 7. IC 13-18-13-16 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 16. The budget agency shall require that a political subdivision receiving that owns or operates a wastewater collection and treatment system and that receives a loan or other financial assistance under this chapter to establish under applicable statute and maintain sufficient user charges or other charges, fees, taxes, special assessments, or revenues available to the political subdivision to:
        (1) operate and maintain the wastewater collection and treatment system; and
        (2) pay the obligations of the system.
    SECTION 8. IC 13-18-13-18 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 18. (a) The water pollution control board and the budget agency may jointly adopt rules under IC 4-22-2 , including emergency rules under IC 4-22-2-37.1 , to implement this chapter.
     (b) All rules adopted by the board to implement this chapter are void. The publisher of the Indiana Administrative Code shall remove these rules from the Indiana Administrative Code.
    (c) All rules adopted by the budget agency before July 1, 2002, to implement this chapter are void to the extent that the rules designate the department to manage or administer any aspect of the program.

    SECTION 9. IC 13-18-13-19 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 19. (a) Notwithstanding any other law, a political subdivision may borrow money from the budget agency by negotiating a loan or other financial assistance directly and without complying with requirements for the competitive sale of bonds, notes, or other obligations or evidences of indebtedness. A political subdivision shall observe any applicable existing contractual commitments to bondholders or other persons when entering into a financial assistance agreement.
    (b) Notwithstanding any other law, a political subdivision may issue and sell its notes, the principal and accrued interest on which shall be paid with proceeds from the issuance of its bonds or other available money at the time the notes are due. The notes must be issued pursuant to a resolution or ordinance and the proceeds must be used to carry out the purposes specified in this chapter.
    (c) A political subdivision that issues notes under subsection (b) or IC 4-23-21-13 (before its repeal) may renew or extend the notes periodically on terms agreed to with the budget agency, and the budget agency may purchase and sell the renewed or extended notes. Accrued interest on the date of renewal or extension may be paid or added to the principal amount of the note being renewed or extended.
    (d) The notes issued by a political subdivision under subsection (b), including any renewals or extensions, must mature:
        (1) in the amounts; and
        (2) at the times not exceeding four (4) years from the date of original issuance;
that are agreed to by the political subdivision and the budget agency.
    (e) Compliance with subsection (b) constitutes full authority for a political subdivision to issue its notes and sell the notes to the department and the budget agency, for the benefit of the program, and the political subdivision is not required to comply with any other law applicable to the authorization, approval, issuance, and sale of its notes. These notes are:
        (1) valid and binding obligations of the political subdivision;
        (2) enforceable in accordance with the terms of the notes; and
        (3) payable solely from the sources specified in the resolution or ordinance authorizing the issuance of the notes.
    (f) If the political subdivision issues bonds, all or part of the

proceeds of which will be used to pay the notes issued under subsection (b), neither:
        (1) the provisions of this section; nor
        (2) the actual issuance by a political subdivision of notes under subsection (b);
relieves the political subdivision of the obligation to comply with the statutory requirements for the issuance of bonds.
    SECTION 10. IC 13-18-21-3 , AS AMENDED BY P.L.132-1999, SECTION 12, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 3. (a) Money in the fund may be used to do the following:
        (1) Provide loans or other financial assistance to participants for the:
            (A) planning;
            (B) designing;
            (C) construction;
            (D) renovation;
            (E) improvement;
            (F) expansion; or
            (G) any combination of clauses (A) through (F);
        for public water systems that will facilitate compliance with national primary drinking water regulations applicable to public water systems under the federal Safe Drinking Water Act (42 U.S.C. 300f et seq.) or otherwise significantly further the health protection objectives of the federal Safe Drinking Water Act (42 U.S.C. 300f et seq.) and other activities necessary or convenient to complete these tasks.
        (2) Except as provided in the federal Safe Drinking Water Act (42 U.S.C. 300f et seq.), pay the cost of administering the fund and the program.
        (3) Conduct all other activities that are allowed by the federal Safe Drinking Water Act (42 U.S.C. 300f et seq.).
    (b) Notwithstanding section 2(g) of this chapter, if an adequate state match is available, the department and the budget agency shall may use not more than two percent (2%) of the funds allotted to the state under 42 U.S.C. 300j-12 to provide technical assistance to participants for public water systems serving not more than ten thousand (10,000) persons in Indiana. The department and the budget agency may jointly contract with a person or persons to provide the technical assistance. Funds used under this subsection may not be used for enforcement actions.
    (c) To the extent permitted by this chapter, required by the federal

Safe Drinking Water Act (42 U.S.C. 300f et seq.), and subject to any banking for technical assistance in prior state fiscal years permitted under that act, fifteen percent (15%) of the amount credited to the fund in a state fiscal year shall be available solely for providing loan assistance to participants for public water systems regularly serving less than ten thousand (10,000) persons in Indiana to the extent that the money can be obligated for eligible projects under the federal Safe Drinking Water Act (42 U.S.C. 300f et seq.). program.
    (d) To avoid the loss of money allotted to the state under 42 U.S.C. 300j-12 et seq., the budget agency and the department state shall develop and implement a strategy to assist participants in acquiring and maintaining technical, managerial, and financial capacity as contemplated by 42 U.S.C. 300g-9. This is all the legal authority required by the state for the budget agency and the department to ensure that all new community water systems and new nontransient, noncommunity water systems, as contemplated by the federal Safe Drinking Water Act (42 U.S.C. 300f et seq.), commencing operations after October 1, 1999, demonstrate technical, managerial, and financial capacity with respect to each federal primary drinking water regulation in effect on the date operations commence. The department has primary responsibility to carry out this subsection.
    (e) This chapter does not require the budget agency to provide a loan or other financial assistance to any participant that would cause any bonds or other obligations issued to finance the program to lose their exemption from federal income taxation.
    SECTION 11. IC 13-18-21-4 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 4. The department and the budget agency shall administer and manage the fund and program in accordance with this chapter.
    SECTION 12. IC 13-18-21-5.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 5.5. (a) Except as provided in subsection (b), the budget agency shall manage and administer all aspects of the program.
    (b) The budget agency shall designate environmental aspects of the program to be managed and administered by the department. When the budget agency makes a designation under this subsection, the budget agency shall direct the department in writing to manage and administer the designated environmental aspects of the program.
    (c) The budget agency shall fix a budget for the environmental

aspects of the program to be:
        (1) managed and administered by the department under subsection (b); and
        (2) funded from:
            (A) the fund; or
            (B) a capitalization grant made by the United States Environmental Protection Agency for the benefit of the program.

    SECTION 13. IC 13-18-21-8 , AS AMENDED BY P.L.132-1999, SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 8. (a) The department and the budget agency may:
        (1) provide services to a participant in connection with a loan or other financial assistance, including advisory and other services; and
        (2) charge a fee for services provided.
    (b) The department and the budget agency may charge a fee for costs and services incurred in the review or consideration of an application for a proposed loan or other financial assistance under this chapter to or for the benefit of a participant, regardless of whether the application is approved or rejected.
    (c) A political subdivision may pay fees charged under this section.
    SECTION 14. IC 13-18-21-9 , AS AMENDED BY P.L.132-1999, SECTION 15, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 9. (a) The department budget agency shall use a priority ranking system to recommend loans or other financial assistance from the fund. The department budget agency shall develop the priority ranking system consistent with federal primary drinking water regulations and health protection objectives of the federal Safe Drinking Water Act (42 U.S.C. 300f et seq.).
    (b) Based on the recommendations made under subsection (a), and subject to any bypass procedures implemented by the budget agency to render program assistance efficiently, the budget agency may make loans and provide other financial assistance from the fund to or for the benefit of participants.
    SECTION 15. IC 13-18-21-18 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 18. (a) The water pollution control board and the budget agency may jointly adopt rules under IC 4-22-2 , including emergency rules under IC 4-22-2-37.1 , to implement this chapter.
     (b) All rules adopted by the board to implement this chapter are void. The publisher of the Indiana Administrative Code shall remove these rules from the Indiana Administrative Code.


    (c) All rules adopted by the budget agency before July 1, 2002, to implement this chapter are void to the extent that the rules designate the department to manage or administer any aspect of the program.
    SECTION 16. IC 13-18-21-19 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 19. (a) Notwithstanding any other law, a political subdivision may borrow money under this chapter by negotiating a loan or other financial assistance directly and without complying with requirements for the competitive sale of bonds, notes, or other obligations or evidences of indebtedness. A political subdivision shall observe any existing contractual commitments to bondholders or other persons when entering into a financial assistance agreement.
    (b) Notwithstanding any other law, a political subdivision may issue and sell notes, the principal and accrued interest on which shall be paid with proceeds from the issuance of bonds or other available money at the time the notes are due. The notes must be issued under a resolution or ordinance and the proceeds must be used to carry out the purposes specified in this chapter.
    (c) A political subdivision that issues notes under subsection (b) may renew or extend the notes periodically on terms agreed to with the budget agency, and the budget agency may purchase and sell the renewed or extended notes. Accrued interest on the date of renewal or extension may be paid or added to the principal amount of the note being renewed or extended.
    (d) The notes issued by a political subdivision under subsection (b), including any renewals or extensions, must mature:
        (1) in the amounts; and
        (2) at the times not exceeding four (4) years from the date of original issuance;
that are agreed to by the political subdivision and the budget agency.
    (e) Compliance with subsection (b) constitutes full authority for a political subdivision to issue notes and sell the notes to the department and the budget agency, for the benefit of the program, and the political subdivision is not required to comply with any other law applicable to the authorization, approval, issuance, and sale of the notes. The notes are:
        (1) valid and binding obligations of the political subdivision;
        (2) enforceable in accordance with the terms of the notes; and
        (3) payable solely from the sources specified in the resolution or ordinance authorizing the issuance of the notes.
    (f) If the political subdivision issues bonds, all or part of the

proceeds of which will be used to pay notes issued under subsection (b), the:
        (1) provisions of this section; or
        (2) actual issuance by a political subdivision of notes under subsection (b);
do not relieve the political subdivision of the obligation to comply with the statutory requirements for the issuance of bonds.
    SECTION 17. IC 13-18-21-25 , AS AMENDED BY P.L.55-2001, SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 25. (a) The budget agency may make grants or loans or provide other financial assistance from the supplemental fund for the benefit of a participant under the following conditions:
        (1) A grant, loan, or other financial assistance may be used:
            (A) for planning, designing, acquiring, constructing, renovating, improving, or expanding public water systems, and other activities necessary or convenient to complete these tasks;
            (B) to:
                (i) establish reserves or sinking funds; or
                (ii) provide interest subsidies;
            (C) to pay financing charges, including interest on the loan during construction and for a reasonable period after the completion of construction; or
            (D) to pay the following:
                (i) Consultant, advisory, and legal fees.
                (ii) Other costs or expenses necessary or incident to the grant, loan, or other financial assistance or the administration of the supplemental fund or the supplemental program.
        (2) The budget agency must establish the terms and conditions that the budget agency considers necessary or convenient to make grants or loans or provide other financial assistance under this chapter.
    (b) In addition to its powers under subsection (a), the budget agency may also make grants or loans or provide other financial assistance from the supplemental fund to or for the benefit of a political subdivision under the following conditions:
        (1) A grant, loan, or other financial assistance may be used:
            (A) for planning, designing, acquiring, constructing, renovating, improving, or expanding wastewater or storm water collection and treatment systems, and other activities necessary or convenient to complete these tasks;


            (B) to:
                (i) establish reserves or sinking funds; or
                (ii) provide interest subsidies;
            (C) to pay financing charges, including interest on the loan during construction and for a reasonable period after the completion of construction; or
            (D) to pay the following:
                (i) Consultant, advisory, and legal fees.
                (ii) Other costs or expenses necessary or incident to the grant, loan, or other financial assistance or the administration of the supplemental fund or the supplemental program.
        (2) A grant may be used for tasks associated with the development and preparation of:
            (A) long term control plans;
            (B) use attainability analyses; and
            (C) storm water management programs.
        (3) The budget agency must establish the terms and conditions that the budget agency considers necessary or convenient to make grants or loans or provide other financial assistance under this chapter.
     (c) The budget agency is not required to establish uniform terms and conditions applicable to all loans or other financial assistance under this section. Differences in the terms and conditions may be based on:
        (1) credit;
        (2) loan structure;
        (3) capital access; or
        (4) other factors the budget agency considers relevant.

    SECTION 18. THE FOLLOWING ARE REPEALED [EFFECTIVE JULY 1, 2002]: IC 13-18-13-4 ; IC 13-18-13-5 ; IC 13-18-13-6 ; IC 13-18-21-5 ; IC 13-18-21-6.