Subd. 1. Program established.

When money is appropriated for grants under this program, the authority shall award grants up to a maximum of $3,000,000 to governmental units to cover up to one-half the cost of water infrastructure projects made necessary by:

1. (1) a wasteload reduction prescribed under a total maximum daily load plan required by section 303(d) of the federal Clean Water Act, United States Code, title 33, section 1313(d);
2. (2) a phosphorus concentration or mass limit which requires discharging one milligram per liter or less at permitted design flow which is incorporated into a permit issued by the Pollution Control Agency;
3. (3) any other water quality-based effluent limit established under section 115.03, subdivision 1, paragraph (e), clause (8), and incorporated into a permit issued by the Pollution Control Agency that exceeds secondary treatment limits; or
4. (4) a total nitrogen limit of ten milligrams per liter or less for a land-based treatment system.

Subd. 2. Grant application.

Application for a grant must be made to the authority on forms prescribed by the authority for the total maximum daily load grant program, with additional information as required by the authority, including a project schedule and cost estimate for the work necessary to comply with the point source wasteload allocation. The Pollution Control Agency shall:

1. (1) in accordance with section 116.182, calculate the essential project component percentage, which must be multiplied by the total project cost to determine the eligible project cost; and
2. (2) review and certify to the authority those projects that have plans and specifications approved under section 115.03, subdivision 1, paragraph (f).

Subd. 3. Project priorities.

When money is appropriated for grants under this program, the authority shall accept applications during the month of July and reserve money for projects expected to proceed with construction by the end of the fiscal year in the order listed on the Pollution Control Agency's project priority list and in an amount based on the cost estimate submitted to the authority in the grant application or the as-bid costs, whichever is less. Notwithstanding Minnesota Rules, chapter 7077, the Pollution Control Agency may rank a drinking water infrastructure project on the agency's project priority list if the project is necessary to meet an applicable requirement in subdivision 1.

Subd. 4. Grant approval.

The authority must make a grant for an eligible project only after:

1. (1) the applicant has submitted the as-bid cost for the water infrastructure project;
2. (2) the Pollution Control Agency has approved the as-bid costs and certified the grant eligible portion of the project; and
3. (3) the authority has determined that the additional financing necessary to complete the project has been committed from other sources.

Subd. 5. Grant disbursement.

Disbursement of a grant must be made for eligible project costs as incurred by the governmental unit and in accordance with a project financing agreement and applicable state and federal laws and rules governing the payments.