(a) There is established and created a fund to be known as the “Clean Water Fund”. There is established and created within the Clean Water Fund a water pollution control federal revolving loan account, a water pollution control state account, a Long Island Sound clean-up account, a drinking water federal revolving loan account, a drinking water state account and a river restoration account, which accounts shall be held separate and apart from each other.

(b) There shall be deposited in the water pollution control federal revolving loan account of the Clean Water Fund: (1) The proceeds of notes, bonds or other obligations issued by the state for the purpose of deposit therein and use in accordance with the permissible uses thereof; (2) federal capitalization grants and awards or other federal assistance received by the state pursuant to Title VI of the federal Water Pollution Control Act; (3) funds appropriated by the General Assembly for the purpose of deposit therein and use in accordance with the permissible uses thereof; (4) payments received from any municipality in repayment of a project loan made with moneys on deposit in the water pollution control federal revolving loan account; (5) interest or other income earned on the investment of moneys in the water pollution control federal revolving loan account; (6) any additional moneys made available from any sources, public or private, for the purposes for which the water pollution control federal revolving loan account has been established and for the purpose of deposit therein; and (7) on and after July 1, 1990, and annually thereafter, any moneys forfeited to the state by any person for a violation of a permit which results in a discharge into a municipal sewage treatment system, as determined by the commissioner, which are in excess of the total moneys forfeited to the state for such violations for the fiscal year ending June 30, 1990.

(c) Within the water pollution control federal revolving loan account there are established the following subaccounts: (1) A federal receipts subaccount, into which shall be deposited federal capitalization grants and awards or other federal assistance received by the state pursuant to Title VI of the federal Water Pollution Control Act, (2) a state bond receipts subaccount into which shall be deposited the proceeds of notes, bonds or other obligations issued by the state for the purpose of deposit therein, (3) a state General Fund receipts subaccount into which shall be deposited funds appropriated by the General Assembly for the purpose of deposit therein, (4) a federal loan repayment subaccount into which shall be deposited payments received from any municipality in repayment of a project loan made from any moneys deposited in the water pollution control federal revolving loan account. Moneys in each subaccount created under this subsection may be expended by the commissioner for any of the purposes of the water pollution control federal revolving loan account and investment earnings of any subaccount shall be deposited in such account.

(d) There shall be deposited in the water pollution control state account of the Clean Water Fund: (1) The proceeds of notes, bonds or other obligations issued by the state for the purpose of deposit therein and use in accordance with the permissible uses thereof; (2) funds appropriated by the General Assembly for the purpose of deposit therein and use in accordance with the permissible uses thereof; (3) interest or other income earned on the investment of moneys in the water pollution control state account; (4) payments received from any municipality as repayment for a grant account loan made with moneys on deposit in the water pollution control state account; and (5) any additional moneys made available from any sources, public or private, for the purposes for which the water pollution control state account has been established other than moneys on deposit in the federal receipts subaccount of the water pollution control federal revolving loan account.

(e) Within the water pollution control state account there are established the following subaccounts: (1) A state bond receipts subaccount, into which shall be deposited the proceeds of notes, bonds or other obligations issued by the state for the purpose of deposit therein; (2) a General Fund receipts subaccount into which shall be deposited funds appropriated by the General Assembly for the purpose of deposit therein; (3) a state loan repayment subaccount into which shall be deposited payments received from any municipality in repayment of a project loan made from any moneys deposited in the water pollution control state account; (4) a state administrative and management subaccount into which shall be deposited amounts for administration and management of the Clean Water Fund which amounts shall be determined by the commissioner in consultation with the Secretary of the Office of Policy and Management; and (5) a state grant subaccount, into which shall be deposited (A) the proceeds of notes, bonds or other obligations issued by the state for the purposes of deposit therein; (B) funds appropriated by the General Assembly for the purpose of deposit therein; and (C) payments received from a municipality in repayment of a grant account loan.

(f) Moneys deposited in the Clean Water Fund shall be held separate and apart from all other moneys, funds and accounts. Investment earnings credited to the assets of such fund and to any account and subaccount thereof shall become part of the assets of such fund, account and subaccount. Any balance remaining in the Clean Water Fund at the end of any fiscal year shall be carried forward in such fund, account and subaccount for the fiscal year next succeeding.

(g) Amounts in the water pollution control federal revolving loan account of the Clean Water Fund shall be available to the commissioner to provide financial assistance (1) to any municipality for construction of eligible water quality projects, and (2) for any other purpose authorized by Title VI of the federal Water Pollution Control Act. In providing such financial assistance to municipalities, amounts in such account may be used only: (A) By the commissioner to make loans to municipalities at an interest rate of two per cent per annum, provided such loans shall not exceed a term of twenty years and shall have principal and interest payments commencing not later than one year after scheduled completion of the project, and provided the loan recipient will establish a dedicated source of revenue for repayment of the loan; (B) by the commissioner to guarantee, or purchase insurance for, local obligations, where such action would improve credit market access or reduce interest rates; (C) as a source of revenue or security for the payment of principal and interest on revenue or general obligation bonds issued by the state if the proceeds of the sale of such bonds have been deposited in such account; (D) to be invested by the Treasurer of the state and earn interest on moneys in such account; (E) by the commissioner to pay for the reasonable costs of administering such account and conducting activities under Title VI of the federal Water Pollution Control Act; and (F) by the Treasurer to be transferred to the water pollution control state account for the purpose of meeting federal requirements for subsidization.

(h) Amounts in the water pollution control state account of the Clean Water Fund shall be available: (1) To be invested by the Treasurer of the state to earn interest on moneys in such account; (2) for the commissioner to make grants to municipalities in the amounts and in the manner set forth in a project funding agreement; (3) for the commissioner to make loans to municipalities in amounts and in the manner set forth in a project funding agreement for planning and developing eligible projects prior to construction and permanent financing; (4) for the commissioner to make loans to municipalities, for terms not exceeding twenty years, for an eligible water quality project; (5) for the commissioner to pay the costs of environmental studies and surveys to determine water pollution control needs and priorities and to pay the expenses of the department in administering the program; (6) for the payment of costs for administration and management of the Clean Water Fund; (7) provided such amounts are not required for the purposes of such fund, for the Treasurer of the state to pay debt service on bonds of the state issued to fund the Clean Water Fund, or for the purchase or redemption of such bonds; (8) for the commissioner to make grants to municipalities for the development and installation of structural improvements to secondary clarifier operations including, but not limited to, flow distribution mechanisms, baffle-type devices, feed well design and sludge withdrawal mechanisms. Grants under this subdivision shall be for one hundred per cent of the construction cost and not more than three million dollars from the fund shall be used for such grants; (9) for the commissioner to pay the costs for the establishment, administration and management of the nitrogen credit exchange program described in § 22a-524, including, but not limited to, the purchase of equivalent nitrogen credits from publicly-owned treatment works in the event that the account of state funds established pursuant to § 22a-524 is exhausted; and (10) for any other purpose of the Clean Water Fund and the program relating thereto.

(i) The Treasurer may establish such accounts and subaccounts within the Clean Water Fund as he deems desirable to effectuate the purposes of sections 22a-475 to 22a-483, inclusive, including, but not limited to, accounts (1) to segregate a portion or portions of the corpus of the water pollution control federal revolving loan account or the drinking water federal revolving loan account or as security for revenue bonds issued by the state for deposit in either of such accounts, (2) to segregate investment earnings on all or a portion of the water pollution control federal revolving loan account, the water pollution control state account, the drinking water federal revolving loan account or the drinking water state account, or (3) to segregate moneys in the fund that have previously been expended for the benefit of an eligible project from moneys that are initial deposits in the account.

(j) There shall be deposited in the Long Island Sound clean-up account (1) the proceeds of notes, bonds or other obligations issued by the state for the purpose of deposit therein and use in accordance with the permissible uses thereof, (2) funds appropriated by the General Assembly for the purpose of deposit therein and use in accordance with the permissible uses thereof, and (3) any additional moneys made available from any sources, public or private, for the purposes for which the Long Island Sound clean-up account has been established other than moneys on deposit in the federal revolving loan account.

(k) Amounts in the Long Island Sound clean-up account shall be available: (1) To be invested by the Treasurer of the state to earn interest on moneys in such account; (2) for the commissioner to make grants to municipalities who undertake the construction of combined sewer projects which are found by the commissioner to impact Long Island Sound or which are part of a system under construction by a municipality prior to July 1, 1990, to mitigate effects of inflow on treatment processes and on Long Island Sound, provided such grants shall be fifty per cent of the eligible water quality project costs of such project and be made in accordance with the provisions of § 22a-478; (3) for the commissioner to make grants to municipalities for eligible water quality projects for which the commissioner has required nutrient removal to protect Long Island Sound provided the amount of the grant shall be twenty per cent of the eligible water quality costs and be made in accordance with the provisions of said § 22a-478; (4) for the commissioner to make grants to agencies, institutions or persons to conduct research related to Long Island Sound in accordance with procedures established by the commissioner; (5) for the commissioner to provide funds for (A) sediment, dredging and disposal activities for Long Island Sound, including necessary studies, (B) physical improvements to coves, embayments, coastal wetlands and salt marshes in physical proximity to Long Island Sound, and (C) harbor water quality programs to enhance the sediment and water quality of harbors, coves, embayments and wetlands of Long Island Sound; (6) for the commissioner to provide funds for the restoration and rehabilitation of tidal coves, embayments and salt marshes degraded by physical modification, development or the effect of pollution, following a feasibility assessment which shall form the basis for the commissioner’s determination of eligible restoration practices; (7) for the commissioner to provide funds for laboratory development to aid analysis of water quality samples collected as part of the Long Island Sound ambient monitoring program; (8) for the commissioner to make grants to municipalities for each municipally-owned wastewater treatment facility which discharges into coastal waters, for interim improvements to remove total nitrogen from such discharges in a manner which ensures that the total nitrogen load does not exceed the amount discharged during 1990, provided such grants shall be one hundred per cent of the eligible project costs of such projects; and (9) for the commissioner to provide grants on a competitive basis for demonstration projects to reduce nonpoint source pollution of Long Island Sound, following establishment by the commissioner of criteria for the awarding of such grants. The funds authorized for deposit in the Long Island Sound clean-up account pursuant to § 22a-483 shall, in addition to any use under subdivision (1) of this subsection, be expended in accordance with the following minimums: (i) For the purposes of subdivision (2) of this subsection, not less than twenty million five hundred thousand dollars; (ii) for the purposes of subdivision (4) of this subsection, not less than one million dollars; (iii) for the purposes of subdivision (6) of this subsection, not less than three million dollars; (iv) for the purposes of subdivision (7) of this subsection, not less than five hundred thousand dollars; and (v) for the purposes of subdivision (8) of this subsection, not less than fifteen million dollars.

(l) There shall be deposited in the river restoration account (1) the proceeds of notes, bonds or other obligations issued by the state for the purpose of deposit therein and use in accordance with the permissible uses thereof, (2) funds authorized by the General Assembly for the purpose of deposit therein and use in accordance with the permissible uses thereof, and (3) any additional moneys made available from any sources, public or private, for the purposes for which the river restoration account has been established, except that in no case shall the funds authorized to be deposited in this account from the Clean Water Fund exceed three million dollars per year.

(m) Amounts in the river restoration account shall be available: (1) To be invested by the Treasurer of the state to earn interest on moneys in such account; (2) for the payment of costs incurred by the Department of Energy and Environmental Protection for the administration and management of the rivers protection programs of the department; (3) for the commissioner to provide assistance to river committees established by municipalities for purposes of protection of rivers; (4) for the commissioner to make grants to municipalities or such river committees for the physical improvement and restoration of rivers degraded by modification, development or the effects of pollution, including but not limited to actions to (A) restore water quality, (B) provide minimum stream flows, or (C) restore or enhance the recreational, economic or environmental value of rivers and riverfront land; and (5) for the payment of costs incurred by the department of environmental protection for the physical improvement and restoration of rivers degraded by modification, development or the effects of pollution, including but not limited to actions to (A) restore water quality, (B) provide minimum stream flows, or (C) restore or enhance the recreational, economic or environmental value of rivers and riverfront lands by, for example, planting vegetation, removing physical impediments to river access, stabilizing stream banks, deepening stream channels, installing fish ladders and removing sediment; and (6) for the commissioner to make grants to provide matching funds for riparian zone restoration projects funded under the federal Agricultural Conservation Program pursuant to 16 USC Section 590g et seq. Amounts in the river restoration fund shall not be used for acquisition of land or interests in land, for construction or maintenance of parking lots, or for construction or maintenance of boat ramps or other structures, with the exception of restoration or repair of historic river-related structures.

(n) (1) The commissioner shall maintain a priority list of eligible river restoration projects and shall establish a system setting the priority for making project grants. In establishing such priority list and ranking system, the commissioner shall consider all factors he deems relevant, including but not limited to, the following: (A) The public health and safety; (B) protection of environmental resources; (C) attainment of state water quality goals and standards; (D) funds expended on water quality improvements; (E) consistency with basin planning; and (F) state and federal statutes and regulations. In dispersing funds from the Rivers Restoration Account, the commissioner shall give priority to providing matching funds for riparian zone restoration projects funded under the federal Agricultural Conservation Program pursuant to 16 USC Section 590g et seq., and regulations adopted thereunder. The priority list of eligible river restoration projects shall include a description of each project and its purpose, and an explanation of the manner in which priorities were established.

(2) In each fiscal year the commissioner may make grants to municipalities and river committees established for river protection in the order of priority under subdivision (1) of this subsection to the extent of moneys available therefor in the appropriate accounts of the Clean Water Fund.

(3) The funding of a project shall be pursuant to a project funding agreement between the state, acting by and through the commissioner, and the municipality, river commission or river committee undertaking the project. A project funding agreement shall be in a form prescribed by the commissioner.

(4) The commissioner may adopt regulations, in accordance with the provisions of chapter 54, to carry out the purposes of this section.

(o) There shall be deposited in the drinking water federal revolving loan account of the Clean Water Fund: (1) The proceeds of notes, bonds or other obligations issued by the state for the purpose of deposit therein and use in accordance with the permissible uses thereof; (2) federal capitalization grants and federal capitalization awards received by the state pursuant to the federal Safe Drinking Water Act or other related federal acts; (3) funds appropriated by the General Assembly for the purpose of deposit therein and use in accordance with the permissible uses thereof; (4) payments received from any recipient in repayment of a project loan made with moneys on deposit in the drinking water federal revolving loan account; (5) interest or other income earned on the investment of moneys in the drinking water federal revolving loan account; and (6) any additional moneys made available from any sources, public or private, for the purposes for which the drinking water federal revolving loan account has been established and for the purpose of deposit therein.

(p) Within the drinking water federal revolving loan account there are established the following subaccounts: (1) A federal receipts subaccount, into which shall be deposited federal capitalization grants and federal capitalization awards received by the state pursuant to the federal Safe Drinking Water Act or other related federal acts; (2) a state bond receipts subaccount into which shall be deposited the proceeds of notes, bonds or other obligations issued by the state for the purpose of deposit therein; (3) a state General Fund receipts subaccount into which shall be deposited funds appropriated by the General Assembly for the purpose of deposit therein; and (4) a federal loan repayment subaccount into which shall be deposited payments received from any recipient in repayment of a project loan made from any moneys deposited in the drinking water federal revolving loan account. Moneys in each subaccount created under this subsection may be expended by the Commissioner of Public Health for any of the purposes of the drinking water federal revolving loan account and investment earnings of any subaccount shall be deposited in such account.

(q) There shall be deposited in the drinking water state account of the Clean Water Fund: (1) The proceeds of notes, bonds or other obligations issued by the state for the purpose of deposit therein and use in accordance with the permissible uses thereof; (2) funds appropriated by the General Assembly for the purpose of deposit therein and use in accordance with the permissible uses thereof; (3) interest or other income earned on the investment of moneys in the drinking water state account; (4) payments received from any recipient as repayment for a project loan made with moneys on deposit in the drinking water state account; and (5) any additional moneys made available from any sources, public or private, for the purposes for which the drinking water state account has been established other than moneys on deposit in the federal receipts subaccount of the drinking water federal revolving loan account.

(r) Within the drinking water state account there are established the following subaccounts: (1) A state bond receipts subaccount, into which shall be deposited the proceeds of notes, bonds or other obligations issued by the state for the purpose of deposit therein; (2) a General Fund receipts subaccount into which shall be deposited funds appropriated by the General Assembly for the purpose of deposit therein; and (3) a state loan repayment subaccount into which shall be deposited payments received from any recipient in repayment of a project loan made from any moneys deposited in the drinking water state account.

(s) Amounts in the drinking water federal revolving loan account of the Clean Water Fund shall be available to the Commissioner of Public Health to provide financial assistance (1) to any recipient for construction of eligible drinking water projects approved by the Department of Public Health, and (2) for any other purpose authorized by the federal Safe Drinking Water Act or other related federal acts. In providing such financial assistance to recipients, amounts in such account may be used only: (A) By the Commissioner of Public Health in conjunction with the State Treasurer to make loans to recipients at an interest rate not exceeding one-half the rate of the average net interest cost as determined by the last previous similar bond issue by the state of Connecticut as determined by the State Bond Commission in accordance with subsection (t) of § 3-20, provided such loans shall not exceed a term of twenty years, or such longer period as may be permitted by applicable federal law, and shall have principal and interest payments commencing not later than one year after scheduled completion of the project, and provided the loan recipient shall establish a dedicated source of revenue for repayment of the loan, except to the extent that the priority list of eligible drinking water projects allows for the making of project loans upon different terms, including reduced interest rates or an extended term, if permitted by federal law; (B) by the Commissioner of Public Health to guarantee, or purchase insurance for, local obligations, where such action would improve credit market access or reduce interest rates; (C) as a source of revenue or security for the payment of principal and interest on revenue or general obligation bonds issued by the state if the proceeds of the sale of such bonds have been deposited in such account; (D) to be invested by the State Treasurer and earn interest on moneys in such account; (E) by the Department of Public Health to pay for the reasonable costs of administering such account and conducting activities under the federal Safe Drinking Water Act or other related federal acts; and (F) by the Commissioner of Public Health to provide additional forms of subsidization, including grants, principal forgiveness or negative interest loans or any combination thereof, if permitted by federal law and made pursuant to a project funding agreement in accordance with subsection (k) of § 22a-478.

(t) Amounts in the drinking water state account of the Clean Water Fund shall be available: (1) To be invested by the State Treasurer to earn interest on moneys in such account; (2) for the Commissioner of Public Health to provide additional forms of subsidization, including grants, principal forgiveness or negative forgiveness loans or any combination thereof to recipients in a manner provided under the federal Safe Drinking Water Act in the amounts and in the manner set forth in a project funding agreement; (3) for the Commissioner of Public Health to make loans to recipients in amounts and in the manner set forth in a project funding agreement for planning and developing eligible drinking water projects prior to construction and permanent financing; (4) for the Commissioner of Public Health to make loans to recipients, for terms not exceeding twenty years, for an eligible drinking water project; (5) for the Commissioner of Public Health to pay the costs of studies and surveys to determine drinking water needs and priorities and to pay the expenses of the Department of Public Health in undertaking such studies and surveys and in administering the program; (6) for the payment of costs as agreed to by the Department of Public Health after consultation with the Secretary of the Office of Policy and Management and the office of the State Treasurer for administration and management of the drinking water programs within the Clean Water Fund; (7) for the State Treasurer to pay debt service on bonds of the state issued to fund the drinking water programs within the Clean Water Fund, or for the purchase or redemption of such bonds; and (8) for any other purpose of the drinking water programs within the Clean Water Fund and the program relating thereto.