Legislative Update – May 2023

State Capitol and water drop

Water policy flowing as legislative session nears conclusion

The Minnesota Legislature is entering the home stretch before it is scheduled to adjourn on May 22, with a wide range of environmental policy and funding decisions being considered.

The House and Senate each introduced an omnibus environment bill (HF2310/SF2438) with many complex pieces of legislation that could impact our waters. Those details are currently being hashed out through the conference committee process where members of each chamber gather to reconcile differences in bill language.

Overall, the state is on track to make headway on a number of key water policy areas this session. The $17.5 billion surplus and the infusion of federal dollars through the Infrastructure Investment and Jobs Act offers Minnesota a once-in-a-lifetime opportunity to address significant climate and water quality projects. Here is a summary of where things stand with Freshwater’s priority issues.

Water storage

The Board of Water and Soil Resources Water Storage and Climate Resilience program helps to prevent agricultural runoff by constructing ponds and basins, restoring wetlands, and implementing other projects that hold water on the land.

Current status Within the environment and natural resources omnibus bills, both the House and Senate supported $17 million in one-time funding for water storage, with no base budget going forward to the Board of Water and Soil Resources. Freshwater also worked on getting a water storage bonding bill introduced (HF1733/SF478) that would provide $15 million for the program.

Soil health funding

Improving soil health in agricultural regions of the state is a priority issue for Freshwater and other conservation groups. Base funding for soil health programs is needed to accomplish multiyear work that would increase the microbe diversity, create soil structure and sequester carbon in soils while reducing runoff pollution.

Current statusThe Senate adopted the Governor’s budget recommendation of $27 million in one-time funding for the biennium, but did not include ongoing base budget to the Board of Water and Soil Resources. The House omnibus bill has only $400,000 allocated for soil health.

Resilient communities grants and technical assistance

This provides critical resources to help communities plan and implement projects that will support climate change adaptation to a warmer and wetter Minnesota. The money is needed to assess infrastructure needs and plan for changes so that local infrastructure can withstand flooding and other climate stressors.

Current statusThe Senate provided nearly the total $173.88 million in one-time funds for the Minnesota Pollution Control Agency (MPCA) that was requested in the Governor’s budget – with late amendments that shifted some funds away. The ongoing base-budget of $1.12 million was not included. The House only provided $40 million in one-time funds.

Drinking water protection and PFAS response

The infrastructure we rely on for clean drinking water is facing challenges it was not designed to address. Freshwater supports increasing the technical capacity of agencies and communities to optimize water treatment to address emerging risks, including PFAS, chloride and increasing water volumes.

Current statusThe House and Senate both provided $25 million in one-time funds for planning, designing and bidding public water treatment systems to combat the widespread PFAS contamination in drinking water across the State of Minnesota.

The House also has $2.07 million per year from the Environmental Fund to help implement Minnesota’s PFAS Blueprint, a comprehensive action plan created by the MPCA. Meanwhile the Senate reduced the funding by $2.2 million. MPCA staff additions would begin with the first major initiative of the blueprint, the PFAS Monitoring Plan.

Soil and water conservation district (SWCD) funding

One of the most promising developments so far is the potential shift in funding for soil and water conservation districts (SWCDs), which provide frontline technical assistance for farmers and other landowners to install practices that support clean water and healthy soils. For the last six years, SWCD funding has come out of the Clean Water Fund, despite efforts to shift it to the General Fund, which would provide a stable and sufficient funding source.

Current statusThe House tax bill (HF1938) establishes a new Soil and Water Conservation District Aid program that would allocate $22 Million from the General Fund in 2023 and 2024, and $14 Million annually thereafter for SWCDs to carry out this important work. The Senate tax bill (SF1811) allocates $12.7 Million annually to the program.

Clean Water Legacy Fund

The Clean Water Fund, established by voters with passage of Minnesota’s Legacy Amendment in 2008, directs one third of Legacy-generated tax revenue to protect, enhance and restore water quality in lakes, rivers, streams and groundwater. These dollars are expressly meant to add to – not replace – existing funding for water. Freshwater has worked with the Clean Water Council to reform the processes for funding to maximize return on investment for Minnesota waters.

Current statusIn a major achievement, the Legislature did not make any changes to the Clean Water Council and Governor’s recommendations on project funding. This is the first time this has happened in the history of the Clean Water Council.

The House did, however, recommend several policy changes:

  • Shifted funding recommendations from a biennial process to an annual process (Freshwater objects to this change as the current process allows for long-term coordinated efforts between project partners).
  • Set a goal that all waters will achieve designated uses by 2040 (Freshwater objects to this as an unrealistic timeframe to achieve water quality goals statewide).
  • Removed the Governor from receiving Clean Water Council recommendations; instead have recommendations sent directly to the Legislature.
  • Changed project reporting requirements to include an “assessment of whether the funding celebrates cultural diversity or reaches diverse communities in Minnesota.”

Environment and Natural Resources Trust Fund

The Legislature must approve the package of projects proposed by the Legislative-Citizen Commission on Minnesota Resources (LCCMR), which includes proceeds from the Minnesota State Lottery. Within this year’s package, Freshwater has partnered on a $391,000 project to develop a tool for mapping aquifer recharge potential, to evaluate recharge potential of several aquifers in Minnesota, and to analyze aquifer recharge policy.

Current statusThe House bill of LCCMR projects has been rolled into the House omnibus environment bill, (HF2310); while the Senate bill (SF442) is currently moving on its own.

Lead pipe replacement

This creates a grant program in the Minnesota Department of Health to help municipalities fund the inventory and replacement of lead service lines. It sets a goal of removing these lines from public water systems statewide by 2033. Estimated total cost to remove all lead service lines in the state is estimated at $800 million.

Current statusThis legislation (HF24/SF340) is moving separately from the omnibus budget bills and is funded at $240 million for the biennium in one-time funds. HF24 has passed the House on a vote of 123-0.

Waste water infrastructure investments

There is a backlog of waste water infrastructure projects, particularly in low-income communities. The federal Infrastructure Investment and Jobs Act is expected to provide Minnesota with $7.4 billion over five years, although most of this must be matched by nonfederal sources.

Current statusThe House/Senate bonding bills (HF699/SF676) appropriates $295 million in state bonds to the Public Facilities Authority for federal matching funds as well as grants for water infrastructure and source implementation. These funds are likely tied to the success of a state bonding bill, which could pass the Legislature this year for the first time since 2020.