(a) The commissioner shall make a grant to any municipality which, after May 1, 1967, constructs, rebuilds, expands or acquires a pollution abatement facility and the commissioner may make a grant to any municipality which, after June 30, 1975, prepares an engineering report or plans and specifications or which constructs, rebuilds, expands, or acquires sewers. For the purposes of this section, “sewers” means (A) lateral or collector sewers required to abate pollution, and (B) after October 1, 1979, sanitary and storm sewers required to serve primarily industrial areas or outfall sewers required to convey to an acceptable point of discharge that wastewater and cooling water which, prior to October 1, 1979, had been discharged from manufacturing firms to sanitary sewers. In the case of a municipality which, on said date, is in the process of constructing, rebuilding, expanding or acquiring such a facility, such grant shall apply only to that part of the facility constructed, rebuilt, expanded or acquired after said date. The grants under this section shall be subject to the following conditions: (1) No grant shall be made for any report, plans and specifications for sewers or a pollution abatement facility except where such report, plans and specifications for sewers or a pollution abatement facility are in accordance with a time schedule of the commissioner, and subject to such requirements as the commissioner shall impose. If the commissioner requires that the report, plans, and specifications for sewers or a pollution abatement facility be approved by the federal Environmental Protection Agency any grant shall be conditioned upon the municipality complying with all of the requirements of said agency; (2) no grant shall be made until the municipality has agreed to pay that part of the total cost which is in excess of the applicable state and federal grants; (3) except as otherwise provided in this section the grant to each municipality shall equal thirty per cent of the cost, which cost shall be that cost which the federal Environmental Protection Agency uses or would use in making a federal grant, except that where the commissioner has imposed requirements exceeding the requirements of the federal act and for which federal grants are not available, the grant shall be thirty per cent of the actual cost provided the percentage of the cost which is the grant under this section shall be reduced when federal grants are available so that the total federal and state grants available to the municipality shall not exceed ninety per cent of the cost unless the reduction of the percentage will reduce the amount of the federal grant available in which case the total grant may exceed ninety per cent in order to maximize the federal grant; (4) on or after July 1, 1983, the grant to each municipality shall equal fifty-five per cent of the cost, which cost shall be that cost which the federal Environmental Protection Agency uses or would use in making a federal grant, except that where the commissioner has imposed requirements exceeding the requirements of the federal act and for which federal grants are not available, the grant shall be fifty-five per cent of the actual cost provided the percentage of the cost which is the grant under this section shall be reduced when federal grants are available so that the total federal and state grants available to the municipality shall not exceed ninety per cent of the cost unless the reduction of the percentage will reduce the amount of the federal grant available in which case the total grant may exceed ninety per cent in order to maximize the federal grant. To be eligible for the grant a municipality shall have been on the priority list for not less than three years and shall have the capability of initiating construction not more than ninety days after being awarded the grant; (5) the state grant under this section may be increased so that the total federal and state grant available to the municipality is equal to one hundred per cent of the cost of the engineering report provided the commissioner has required that the report cover regional problems outside of the corporate limits of the municipality; (6) the state grant under this section may be increased, in the sole discretion of the commissioner, so that the total federal and state grant available to the municipality shall equal one hundred per cent of the cost of facilities required to remove nutrients which are causing excessive growth of aquatic freshwater plants in the inland waters of the state; (7) on or after September 30, 1984, the total amount of federal and state grants available to the municipalities shall be not more than fifty-five per cent of the cost approved for the planning, design and construction of the facility, except as otherwise provided in this section and in the provisions of the federal Water Pollution Control Act concerning innovative and alternative technology, except that the amount of state and federal grants shall not be more than seventy-five per cent of the costs for the planning, design and construction of treatment facilities in excess of secondary treatment, as defined by the federal Water Pollution Control Act, required to meet water quality standards and new facilities required to meet secondary treatment where no previous secondary treatment existed; (8) the state grant under this section shall be paid to the municipality in partial payments similar to the time schedule that such payments are or would be provided to the municipality by the federal Environmental Protection Agency; (9) no grant shall be made for a pollution abatement facility unless the municipality assures the commissioner of the proper and efficient operation and maintenance of the facility after construction; (10) no grant shall be made unless the municipality has filed properly executed forms and applications prescribed by the commissioner; (11) any municipality receiving state or federal grants for pollution abatement facilities shall keep separate accounts by project for the receipt and disposal of such eligible project funds; and (12) no design grant or advance shall be made under this section or section 22a-443 for work initiated after October 1, 1981, unless local financing for design and construction is authorized. Any funds advanced to a municipality prior to October 1, 1971, under the provisions of this section shall be considered a part of the total amount of the state grant provided for in this section.

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(b) If federal funds for an engineering report for a pollution abatement facility are not available to a municipality at the time of its scheduled planning, the commissioner may advance funds to such municipality in an amount sufficient to pay the cost of the report. Such funds shall be considered a part of the total amount of the state grant provided for in this section. Notwithstanding any of the provisions of this section to the contrary, twenty-five per cent of the funds advanced shall be returned to the state if the report does not recommend the construction, rebuilding, expansion or acquisition of a pollution abatement facility.

(c) The Commissioner of Energy and Environmental Protection shall adopt regulations pursuant to chapter 54 to implement the provisions of this section. The regulations shall be consistent with Part 35 of the federal Construction Grant Regulations and the federal Water Pollution Control Act and shall include, but not be limited to, the establishment of a system setting the priority for making grants for municipal pollution abatement facilities. The commissioner shall prepare a list by priority of projects eligible for funding pursuant to this section. The system and list shall be similar to and used with the list required by Part 35 of the federal Construction Grant Regulations and the federal Water Pollution Control Act.