Section 18. (a) In addition to the powers and duties of the board otherwise provided in this chapter, the trust is hereby designated as the instrumentality of the commonwealth to establish and administer within the Drinking Water Revolving Fund, the state revolving fund pursuant to the Safe Drinking Water Act. The board shall apply monies in the Drinking Water Revolving Fund for the purpose of providing financial assistance, in the manner contemplated by section 1452 of the Safe Drinking Water Act, section 160 of chapter 111 and the department's drinking water regulations, to local governmental units and other eligible borrowers as provided herein, as beneficiaries of the fund, to finance or refinance costs of eligible drinking water projects approved by the department of environmental protection.

(b) The board shall receive in trust, hold, administer and disburse without further appropriation or allotment by the commonwealth in and from the Drinking Water Revolving Fund exclusively for the benefit of the beneficiaries thereof the following monies: (i) notwithstanding the provisions of sections 2B and 2C of chapter 29, all federal capitalization grants received under the Safe Drinking Water Act for purposes of the fund; (ii) amounts appropriated by the commonwealth to the trust for purposes of the fund; (iii) proceeds of bonds of the trust to the extent required by the board's resolution for issuance of such bonds or any applicable trust agreement; (iv) investment earnings on monies in the fund; and (v) any other amounts required to be credited to the fund by any law or by any resolution, loan agreement or trust agreement of the board or which the board shall otherwise determine to deposit therein.

(c) In the implementation of this section and the administration of the Drinking Water Revolving Fund, all provisions of this chapter and subsections (a), (c), (e) and (f) of section 27A of chapter 21 applicable to the Water Pollution Abatement Revolving Fund and the provision of financial assistance by the trust to local governmental units and other eligible borrowers for costs of water pollution abatement projects shall be equally applicable, to the extent consistent with this section, to the Drinking Water Revolving Fund and to the provision of financial assistance for costs of drinking water projects and the board and the department shall have the powers and shall be subject to the applicable limitations provided in this chapter and said subsections (a), (c), (e) and (f) to carry out the provisions of this section. Without limiting the generality of the foregoing, the board may apply and disburse monies and revenues of the Drinking Water Revolving Fund: (i) to make, and enter into binding commitments to make, loans and other forms of financial assistance authorized by the Safe Drinking Water Act to local governmental units and other eligible borrowers for the purpose of financing or refinancing costs of drinking water projects or portions thereof which have been approved by the department, including approval of the costs of such projects or portion thereof eligible to receive financial assistance as provided in this section, and completed, as determined by the department, after the promulgation date of the department's regulations implementing its powers under this section and to provide for all or any part of the debt service costs on loans and other forms of financial assistance made by the trust during the construction of such projects and for such period thereafter as the board shall determine; (ii) to provide reserves for or otherwise secure bonds of the trust and to provide insurance and letters or lines of credit or other credit enhancement which it deems reasonable and appropriate for bonds; (iii) to provide, and enter into binding commitments to provide, a subsidy for, or to otherwise assist local governmental units and other eligible borrowers in the payment of, debt service costs on loans and other forms of financial assistance made by the trust pursuant to this section and to provide any other subsidization authorized by the Safe Drinking Water Act in addition to the subsidy or other assistance authorized by this section; (iv) to provide reserves for, or to otherwise secure, amounts payable by local governmental units and other eligible borrowers on, loans and other forms of financial assistance made by the trust pursuant to this section; (v) to transfer to the Water Pollution Abatement and Drinking Water Projects Administration Fund established under section 2W of chapter 29 amounts derived from the proceeds of each federal capitalization grant award received by the trust to the extent determined by the board; and (vi) to provide payment from any available source for reasonable and necessary professional and financial services incident to the conduct of the programs of the trust, including costs of issuance of its bonds.

(d) The powers and duties otherwise conferred upon the department by law with respect to the regulation and supervision of public water supplies shall in no respect be diminished by this section including, but not limited to, the authority of the department to ensure that public water systems demonstrate technical, managerial and financial capacity with respect to the department's drinking water regulations. The department and the board shall establish standards, guidelines, criteria and other rules and regulations for the administration and implementation of their powers under this section including, without limitation, a priority system and priority list for the approval of projects, the determination of eligible borrowers and eligible costs of projects and the terms and conditions of loans by the trust.

(e) In addition to the authority provided in section 9, the board may provide by resolution for the issuance from time to time of bonds of the trust to carry out the purposes of this section. The holders of such bonds shall also be beneficiaries of the Drinking Water Revolving Fund to the extent provided in any trust agreement entered into by the trust with such holders. Except to the extent limited by the requirements of Title VI of the Clean Water Act or by the Safe Drinking Water Act or other applicable federal law, the board may secure bonds of the trust by pledging monies held in or otherwise allocable to either or both the Water Pollution Abatement Revolving Fund or the Drinking Water Revolving Fund, where the board determines that doing so will reasonably promote the purposes of either or both funds.

(f) Any local governmental unit and any other eligible borrowers may apply to the trust for a loan or other financial assistance authorized by the Safe Drinking Water Act to assist in financing or refinancing the cost of a drinking water project approved by the department. For entering into a loan or other financial assistance for financing or refinancing a drinking water project and establishing the authorized terms and conditions thereof and for issuing any local governmental obligations to secure the same, a local governmental unit shall be deemed to have all of the same powers expressly granted to local governmental units by this chapter with respect to loans or other financial assistance for financing or refinancing water pollution abatement projects and the powers granted to any such local governmental unit in any bond act applicable to it specifically or as a member of a class of governmental instrumentalities. Without limiting the generality of the foregoing, all local governmental units shall have the powers and shall be subject to the limitations with respect to such loans and local government obligations and the public water system of which the drinking water project financed by such loan is a part and the local system revenues therefrom set forth in sections 10 to 15, inclusive.