A person, including a local government, may submit a request to the executive director for a municipal setting designation for property if:
(1) the property is within the corporate limits or extraterritorial jurisdiction of a municipality authorized by statute; and
(2) a public drinking water supply system exists that satisfies the requirements of Chapter 341 and that supplies or is capable of supplying drinking water to:
(A) the property for which designation is sought; and
(B) property within one-half mile of the property for which designation is sought.