SECTION 1. Chapter 44 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by adding the following section:-

Section 53J. (a) Notwithstanding the provisions of sections 53, a city, town or district may establish in its treasury a separate account into which shall be deposited any funds received for settlement of claims for actual or potential pollution or contamination of its water supply. The treasurer shall invest the funds in the manner authorized by section 54 for trust funds, or in accordance with the prudent investor rule as defined in sections 3, 4, 5, 8, 9 and 10 of chapter 203C of the General Laws. Such funds may be deposited in a separate account, or invested under chapter 203, upon a majority vote of the voters at the next annual town or district meeting, or meeting of the city council after which the funds are received or within two years after which the funds are received if such funds are received after the effective date of this act, or at an annual town or district meeting or meeting of the city council within two years of the effective date of this act if such funds were received prior to the effective date of this act.  Any interest shall be added to and become part of the fund.

(b) Nothing in this act shall prevent the deposit of multiple settlements for different pollution causes into a single or common fund and nothing herein shall prevent the monies in the fund from being appropriated to abate any pollution cause.

(c) If a city, town or district has voted to establish a separate fund for any receipts as provided in this section, at each annual town or district meeting thereafter, or in the case of a city, at a minimum of 1 city council meeting annually, the officials in charge of the water supply system shall report on the status of the pollution causing the trust fund to be established.

If in any year, the officials in charge of the water supply system report that all pollution for which the fund was established to abate has been eliminated or all monies in the fund have been appropriated for that purpose, then the fund shall be dissolved and any monies remaining in the fund shall be credited to the general fund.

(d) If a city, town or district votes to establish a separate fund for any receipts as provided in this section, it shall also adopt a written investment policy; provided, however, that if the funds are in excess of $100,000, the city, town or district shall engage an external investment manager to manage the funds.