(1) The natural disaster grant fund is hereby created in the state treasury. Moneys in the fund, including interest earned on the investment of moneys in the fund, are continuously appropriated to the department of public health and environment for the purpose specified in subsection (2) of this section.

(2) (a) The division shall expend moneys in the fund to award grants to local governments, including local governments accepting grants on behalf of and in coordination with not-for-profit public water systems, for the planning, design, construction, improvement, renovation, or reconstruction of domestic wastewater treatment works or public drinking water systems that have been impacted, damaged, or destroyed in connection with a natural disaster, as defined in section 24-33.5-703 (3), C.R.S. The division may also award grants to local governments to assist with the repair and restoration of on-site wastewater treatment systems, as defined in section 25-10-103 (12), that have been impacted, damaged, or destroyed in connection with a natural disaster. The division may only award grants to be used in counties for which the governor has declared a disaster emergency by executive order or proclamation under section 24-33.5-704, C.R.S.

(b) Grant recipients may use the grant moneys to provide a portion of any matching funds required to secure federal or state funding for the planning, design, construction, improvement, renovation, or reconstruction of drinking water and wastewater infrastructure.

(c) For the 2014-15 fiscal year and, as needed, the 2015-16 fiscal year, the division shall award grants to local governments that are eligible under paragraph (a) of this subsection (2) and have domestic wastewater treatment works, public drinking water systems, or on-site wastewater treatment systems that have been impacted, damaged, or destroyed in connection with the flood of September 2013 to restore the facilities' compliance with this article or the Colorado primary drinking water regulations.

(d) The division may retain up to one hundred thousand dollars per fiscal year of the moneys in the fund to cover the cost of administering projects or grants under this section.

(e) Repealed.

(3) The commission shall promulgate rules in accordance with article 4 of title 24, C.R.S., as necessary to administer this section, including rules defining who is eligible to apply for grants and the criteria to be used in awarding grants. The criteria must give priority to applicants that have the lowest financial ability to pay for the necessary construction, improvements, renovation, or reconstruction.