(a)

(1) There is established on the books of the Arkansas Natural Resources Commission a special restricted fund to be known as the "Safe Drinking Water Fund", which shall be maintained in perpetuity and administered by the commission and the Department of Health under this subchapter for the purposes stated in this subchapter.

(2) The following shall be deposited into the Safe Drinking Water Fund:

(A) Grants from the federal government or its agencies allotted to the state for capitalization of the Safe Drinking Water Fund;

(B) State matching grants when required;

(C) Proceeds of bonds issued by the commission or the Arkansas Development Finance Authority for capitalization of the Safe Drinking Water Fund;

(D) Principal, interest, and premiums on loans provided; and

(E) Bonds, notes, and other evidences of indebtedness purchased with moneys in the Safe Drinking Water Fund.

(3) The commission may deposit loans made to and bonds, notes, and other evidences of indebtedness issued by owners to finance or refinance the planning, design, acquisition, construction, expansion, equipping, rehabilitation, or consolidation of water systems or parts of water systems into the Safe Drinking Water Fund.

(b) Moneys in the Safe Drinking Water Fund shall be expended in a manner consistent with the terms and conditions of applicable federal and state capitalization grants and may be used:

(1) To provide loans for the planning, design, acquisition, construction, expansion, equipping, rehabilitation, consolidation, or refinancing of water systems or parts of water systems;

(2) Subject to subsections (c)-(e) of this section and subject to the approval of the commission, to secure the payment of the principal of and premium, if any, and interest on and to pay costs incurred in connection with bonds issued by the commission or the authority if proceeds of the bonds are deposited into the Drinking Water State Revolving Loan Fund Account;

(3) To pay the principal of and premium, if any, and interest on and to pay costs incurred in connection with bonds issued by the commission or the authority if proceeds of the bonds are deposited into the Drinking Water State Revolving Loan Fund Account;

(4) To purchase bonds, notes, or other evidences of indebtedness issued by owners to finance or refinance the planning, design, acquisition, construction, expansion, equipping, rehabilitation, or consolidation of water systems or parts of water systems;

(5) To fund other water system programs that the federal or state government may allow in the future;

(6) To fund the administrative expenses of the commission relating to the responsibilities and requirements of this subchapter and the Safe Drinking Water Act;

(7) To fund technical assistance for water systems, assistance to state programs such as the public water system supervisory, source water protection, capacity development, health effects studies, unregulated contaminant monitoring, small system technical assistance, operation and training certification programs, and other purposes permitted by the Safe Drinking Water Act;

(8) To provide for any other expenditures consistent with applicable federal and state law;

(9) To make grants or loans to the Construction Assistance Revolving Loan Fund established by § 15-5-901, in amounts approved by the commission, consistent with applicable federal law;

(10) Subject to subsections (c)-(e) of this section and subject to the approval of the commission, to secure the payment of the principal of and premium, if any, and interest on bonds issued by the commission or the authority if proceeds of the bonds are deposited into the Construction Assistance Revolving Loan Fund established by § 15-5-901, consistent with applicable federal law;

(11) Subject to subsections (c)-(e) of this section and subject to the approval of the commission, to pay the principal of and premium, if any, and interest on and to pay costs incurred in connection with bonds issued by the commission or the authority if proceeds of the bonds are deposited into the Construction Assistance Revolving Loan Fund established by § 15-5-901, consistent with applicable federal law; or

(12)

(A) To make grants for the planning, design, acquisition, construction, expansion, equipping, rehabilitation, consolidation, or refinancing of water systems or parts of water systems.

(B) However, grants may be made only from moneys in the Safe Drinking Water Fund provided by the federal government under the Safe Drinking Water Act to provide additional subsidization to eligible recipients in the form of forgiveness of principal, negative interest loans, or grants or any combination of principal, negative interest loans, or grants.

(c)

(1) There is established a separate account within the Safe Drinking Water Fund designated the "Drinking Water State Administrative Account", into which moneys provided by the federal government pursuant to the Safe Drinking Water Act for the purpose of administering programs funded by the Safe Drinking Water Act and fees pursuant to §§ 15-22-1106 and 15-22-1107 shall be deposited.

(2) Moneys in the Drinking Water State Administrative Account may be expended by the commission for administrative costs of programs funded by the Safe Drinking Water Act.

(3) Moneys in the Drinking Water State Administrative Account shall never be pledged for the payment of or as security for any bonds issued by the authority or the commission.

(d)

(1) There is established a separate account within the Safe Drinking Water Fund designated the "Drinking Water State Set Aside Account", into which moneys provided by the federal government pursuant to the Safe Drinking Water Act for the purpose of funding costs of technical assistance to water systems, assistance to state programs such as the public water system supervisory, source water protection, capacity development, health effects studies, unregulated contaminant monitoring, small system technical assistance, and operation and training certification, and other purposes permitted by the Safe Drinking Water Act to be paid from set asides, shall be deposited.

(2) Moneys in the Drinking Water State Set Aside Account may be expended for the purpose of funding the cost of assistance to water systems, assistance to state programs such as public water system supervisory, source water protection, capacity development, health effects studies, unregulated contaminant monitoring, small system technical assistance, and operator training and certification programs, and other purposes permitted by the Safe Drinking Water Act to be paid from set asides.

(3) Moneys in the Drinking Water State Set Aside Account shall never be pledged for the payment of or as security for any bonds issued by the authority or the commission.

(e)

(1) There is established a separate account within the Safe Drinking Water Fund designated the "Drinking Water State Grants Account", into which moneys appropriated by the state for deposit into the Safe Drinking Water Fund shall be deposited.

(2)

(A) Moneys in the Drinking Water State Grants Account may be expended for the same purposes as other moneys in the Safe Drinking Water Fund.

(B) However, moneys in the Drinking Water State Grants Account shall never be pledged for the payment of or as security for any bonds issued by the commission or the authority.

(f) (1) There is established a separate account within the Safe Drinking Water Fund, designated the "Drinking Water State Revolving Loan Fund Account", into which shall be deposited moneys provided by:

(A) The federal government pursuant to the Safe Drinking Water Act;

(B) Proceeds of bonds issued by the commission or the authority; and

(C) Other amounts, excluding state appropriations, received pursuant to § 15-22-1105,

for the purpose of providing financial assistance to owners in connection with the planning, design, acquisition, construction, expansion, equipping, or rehabilitation of a water system, or parts of a water system.

(2) Moneys in the Drinking Water State Revolving Loan Fund Account may also be expended for the purposes set forth in subdivisions (b)(1)-(5) and (b)(8)-(12) of this section.

(g) The commission may establish and maintain additional accounts within the Safe Drinking Water Fund or subaccounts within the accounts established by this section.

(h) The commission shall maintain the Safe Drinking Water Fund at the authority or at one (1) or more financial institutions within or without the state.