— Address loan forgiveness. Federal law changes since the last Adm 35 revision allow the Environmental Improvement Fund to forgive loan principal. Forgiven loan principal is effectively a grant.
— Include all the types of financial assistance permitted under federal law, such as loan guarantees.
— Include the SDWLP and reflect the CWFP’s expansion into the Environmental Improvement Fund.
— Reflect Wisconsin’s creation of the Environmental Improvement Fund revenue bond program to replace the Clean Water revenue bond program.
— Remove requirements meant to protect funding capacity and instead focus on streamlined administration. The Environmental Improvement Fund’s increased funding capacity means that the program’s short-term solvency is not in doubt.
— Incorporate federal Environmental Protection Agency policy changes, including the federal equivalency policy that alleviates regulatory burdens on recipients.
— Remove provisions that duplicate Wisconsin Statutes or are the responsibility of the Department of Natural Resources.
6. Summary of, and preliminary comparison with, any existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule:
The EIF is governed by the federal Clean Water Act and Safe Drinking Water Act as well as EPA regulations. The EPA annually reviews Wisconsin’s EIF and regularly determines that the EIF complies with federal law and regulations.
Because the EIF receives grants from the EPA, it is also subject to an annual grant agreement with the EPA.
Adm 35 complies with US Treasury and Internal Revenue Service regulations related to issuing tax-exempt municipal bonds.
7. Comparison with similar rules in Illinois, Iowa, Michigan, and Minnesota:
Illinois, Iowa, Michigan, and Minnesota, along with all other states and Puerto Rico, operate state revolving funds that are broadly similar to Wisconsin’s Environmental Improvement Fund. Like Wisconsin, Illinois, Iowa, Michigan, and Minnesota issue revenue bonds to leverage federal grants and program funds. Illinois, Michigan, and Minnesota are in EPA region five with Wisconsin, facilitating interstate communication and information sharing among state revolving fund program staff.
8. Summary of the factual data and analytical methodologies that the agency used in support of the proposed rule and how any related findings support the regulatory approach chosen for the proposed rule:
The Department of Administration did not use any factual data or analytical methodologies in developing the proposed rule. Adm 35 does not implement any regulatory requirements.
9. Effect on small business
None. The Environmental Improvement Fund provides financial assistance only to municipalities as defined in Section 281.59 (1) (c), Wis Stats. The requirements of Adm 35 apply only to municipalities and only if they choose to use the program. Municipalities who apply for Environmental Improvement Fund loans may employ professional services: engineers, accountants, financial advisors, and lawyers to help the municipalities comply with program requirements. Some of these professional services firms may be small businesses. Otherwise Adm 35 does not impact small businesses.
10. Any analysis and supporting documents used in support of the agency’s determination of the rule’s effect on small business or in preparation of economic impact report:
None.
11. Email address and telephone number of agency contact person:
12. Place where comments are to be submitted and deadline for submission:
Deadline: 5 pm central time on January 5, 2023
RULE TEXT
Section 1. Adm 35 (title) is amended to read:
Adm 35 (title) CLEAN WATER ENVIRONMENTAL IMPROVEMENT FUND
Section 2. Adm 35.01 is amended to read:
Adm 35.01 Purpose. The purpose of this chapter is to establish rules under s. ss. 281.58, 281.59, and 281.61 Stats., for the administration of a program to provide financial assistance to municipalities for certain costs incurred in abatement of to abate pollution of the waters of the state or to provide drinking water. Section 3. Adm 35.02 (1) is renumbered 35.02 (2m) and amended to read:
Adm 35.02 (2m) “Clean water Environmental improvement fund" means the fund established under s. 25.43, Stats., for the purpose of providing financial assistance to municipalities for certain costs incurred in abatement of pollution of waters of the state. Section 4. Adm 35.02 (3) is repealed and recreated to read:
Adm 35.02 (3) “Financial assistance” includes assistance from the environmental improvement fund under ss. 281.58 (6) (b), 281.59 (12), or 281.61 (2r), including assistance that the department does not require the recipient to repay. Section 5. Adm 35.02 (3m) is created to read:
Adm 35.02 (3m) “Financial assistance agreement” means an agreement entered into by the department pursuant to s. 281.59 (11) (a), Stats., including an amendment to a financial assistance agreement. Section 6. Adm 35.02 (4) and (5) are amended to read:
Adm 35.02 (4) “Market interest rate” means interest at the effective rate, as determined by the department, for revenue obligations issued by the state to fund a project loan or a portion of a project loan. has the meaning given in s. 281.59 (1) (b), Stats. Adm 35.02 (5) “Municipality” has the meaning set forth given in s. 281.59 (1) (c), Stats. Section 7. Adm 35.02 (6) is repealed.
Section 8. Adm 35.02 (7) is repealed and recreated to read:
Adm 35.02 (7) “Obligation" means financial assistance that the recipient must repay. Obligations include a recipient’s debts guaranteed or insured by the environmental improvement fund that the recipient must repay to another lender.
Section 9. Adm 35.03 (title) is amended to read:
Adm 35.03 (title) Certification. Conditions of financial assistance.
Section 10. Adm 35.03 (1), (2) (intro.), and (2) (a) to (i) are repealed.
Section 11. Adm 35.03 (3) (a) and (b) are amended to read:
Adm 35.03 (3) (a) The department may not issue a certification enter into a financial assistance agreement unless the municipality recipient demonstrates to the satisfaction of the department that the municipality recipient has the financial capacity to assure sufficient dedicated sources of revenue to operate and maintain the project system for its useful life as long as an obligation is outstanding for the project and to pay the debt service, including funding and maintaining any debt service reserve, on its project loan obligation. The department may consider the effect of proposed financial hardship assistance or assistance provided by another entity in making a determination of financial capacity.
(b) The department may shall require an opinion of counsel or bond counsel, acceptable to the department, to the effect that the obligation of the municipality recipient to repay the project loan is valid and enforceable and that interest on the project loan is excluded from gross income for federal income tax purposes.
Section 12. Adm 35.03 (3) (c) is created to read:
Adm 35.03 (3) (c) The department may require the opinion of counsel or bond counsel under par. (b) to include a statement that interest on the obligation is excluded from gross income for federal income tax purposes.
