Subd. 1. Definitions.

1. (a) The definitions in section 116.16, subdivision 2, apply to this section.
2. (b) "Corrective action" means action taken to upgrade or correct wastewater treatment facilities, funded under the Federal Water Pollution Control Act or the independent state grants program, that have failed to meet performance standards, and includes engineering, design, construction, legal assistance, and other action as the agency may allow.

Subd. 2. Set aside.

In any fiscal year, up to ten percent of the money available for independent state grants, up to a maximum of $1,000,000, may be set aside for the award of grants to municipalities for corrective action.

Subd. 3. Grant limitations.

The amount of a corrective action grant awarded to a municipality shall not exceed $500,000. In no event shall the grant amount exceed the cost of the corrective action. Construction costs that were not eligible under the original grant are not eligible under a corrective action grant.

Subd. 4. Repayment.

Any municipality that is awarded a corrective action grant shall seek recovery from any person who is responsible for the failure of the facility to perform. The municipality shall reimburse the state in the event the municipality recovers any funds from responsible persons. Any repayments must be deposited in the Minnesota state water pollution control fund.

Subd. 5. Award of grants.

Until June 30, 1988, the agency shall award corrective action grants. On July 1, 1988, the authority shall award corrective action grants to municipalities selected by the state pollution control commissioner upon certification by the state pollution control commissioner that the municipalities' projects and applications have been reviewed and approved in accordance with this section and agency rules adopted under subdivision 6.

Subd. 6. Agency rules.

The agency shall promulgate permanent rules for the administration of the corrective action grant program. The rules must contain at a minimum:

1. (1) the method for determining the amount of the corrective action grant;
2. (2) application requirements;
3. (3) criteria for determining which municipalities will be awarded grants when there are more applicants than money;
4. (4) conditions for use of the grant funds;
5. (5) identification of eligible costs;
6. (6) the amount that must be reimbursed to the authority in the event funds are recovered by the municipality from the responsible person; and
7. (7) other matters that the agency finds necessary for proper administration of the program.

Subd. 7. Authority rules.

The commissioner of employment and economic development may adopt rules containing procedures for administration of the authority's duties as set forth in subdivision 5.