State Water Board reviews proposed Drinking Water SRF intended‑use plan; staff urges applicants to submit projects as federal timeline tightens

State Water Resources Control Board staff presented a workshop on the draft Drinking Water State Revolving Fund (DWSRF) Intended Use Plan (IUP) on July 15, outlining loan capacity, grant and principal‑forgiveness proposals, and supplemental federal funds for emerging contaminants.

Key program numbers and timing - Loan capacity: staff said sustainable loan capacity for the drinking water SRF is about $300 million per year; proposed loan commitments for the coming fiscal year are about $370 million. - Grant/principal forgiveness: draft IUP assumes about $1.4 billion in grant and principal‑forgiveness ability in the coming fiscal year, including carryover and new appropriations; staff reported known demand of about $1.6 billion in the pipeline over three years. - Federal IIJA (Infrastructure Investment and Jobs Act): staff said IIJA funds include dedicated pots for emerging contaminants (EC) and for EC assistance targeted to small/disadvantaged communities; staff expects roughly $183 million for EC this year. Staff also proposed to transfer $15 million of Clean Water SRF EC funds to Drinking Water SRF to meet demand. - Lead service line replacement: staff reported about $197 million still available from prior allocations and said the board will not apply for the 2024 federal allotment and does not plan to apply for 2025 allocations unless demand increases.

Priorities, eligibility changes and caps - Project prioritization: the draft aligns SRF prioritization more closely with the SAFER program’s failing/at‑risk framework and prioritized failing systems, emerging contaminants, and consolidation projects. - Grant caps: for projects above 200 connections the draft proposes a cost‑per‑connection cap of $70,000 up to a $50 million maximum award; projects under 200 connections would have tiered caps (e.g., $7M for up to 50 connections, $10M for 51–100, $25M for 101–200). Staff said deputy director discretion exists for mandatory consolidations and similar special circumstances. - Emerging contaminant funding: staff proposed increasing maximum grant/principal‑forgiveness awards for EC projects (suggested $25 million cap per water system, up to 50% of eligible costs for larger systems) and removing cost‑per‑connection limits for small or disadvantaged systems for EC projects.

Application process and practical guidance Staff repeatedly urged utilities and local agencies to submit applications early and noted that staff can assign project managers to help shepherd applications. Presenters emphasized that projects do not require fully complete final plans to initiate a construction application; in many cases a 30% design and environmental clearance are sufficient to get a construction agreement that can be augmented later.

Public comments and board discussion Commenters included water agencies and advocacy groups. Topics raised included: the need for clarity about prioritization and scoring; requests for higher caps on awards for very large Chromium‑6 projects; concerns about whether small/disadvantaged community needs will be met; and questions about technical assistance and the use of federal funds for TA. Several municipal leaders with Chromium‑6 compliance timing concerns urged faster clarity and earlier allocation decisions.

Schedule and next steps Staff posted the draft IUP June 27 and invited written comments (deadline noted in the workshop as July 28). Staff expects to return to the board on Aug. 19 seeking final adoption of the IUP and asked prospective applicants to work with program staff to prepare applications and environmental materials as soon as possible.