Oregon committee hears changes to water feasibility grants and project funding rules

House Bill 3364 would revise two Oregon water funding programs — the feasibility study grants (formerly the water conservation, reuse and storage investment fund) and the Water Project Grants and Loans Program (statutory Water Supply Development Account) — changing eligible activities, matching requirements, prioritization and data requirements, the Oregon Water Resources Department told the committee.

"House Bill 3,364 makes changes to the water conservation reuse and storage program and the water supply development account," Brynn Hudson, legislative coordinator for the Oregon Water Resources Department, told the committee during an informational presentation. Hudson said the department was providing information only and was not taking a formal position on the bill at that time.

The bill would rename the feasibility study grant fund to the Water Feasibility Investment Fund, expand eligible project types to add aquifer recharge and aquifer storage and recovery (ASR), streamflow protection or restoration, development of water management and conservation plans and other activities identified by the commission and rule. The bill would remove the $500,000 grant cap and reduce the applicant cost match from 50% to 25% for feasibility awards, aligning the feasibility program more closely with the Water Project Grants and Loans Program, which currently requires a 25% match for implementation-ready projects.

The Water Project Grants and Loans changes described by the department include allowing grant funds to pay for long-term monitoring and compliance with seasonally varying flows (SVFs), providing corrected statutory language to ensure SVF conditions can be applied to the underlying water right rather than only to ASR/AR permits, moving approval of water management and conservation plans (WMCP) to prior to funding decisions rather than application deadlines, and shortening the public comment window for each funding cycle from 60 days to 30 days.

The bill would direct the department to adopt rules establishing a scoring and ranking system to achieve the three public-benefit categories (environmental, social/cultural and economic) and remove detailed scoring criteria from statute. It would also change the role of the Technical Review Team (TRT): TRT would rank and score applications and provide recommendations to the department; the department would make funding recommendations to the Water Resources Commission after public comment; the Commission would make final funding decisions.

Stakeholders stressed that the public-benefit lens remains central. "I would just note, I think that's a really important part here. This is public money. We need to make sure it remains focused on public benefit," Representative Marsh said during committee discussion. Raquel Ranciere, deputy director of strategy and administration for the Water Resources Department, agreed that drafting changes may have led to wording swaps and said committee preferences could be reinserted during amendment: "I think in looking at the specific language... legislative council replaced scoring and rank with an evaluation system. And so I think it's just a matter of drafting."

Users and interest groups offered mixed views. April Snell, executive director of the Oregon Water Resources Congress, said irrigation districts actively use both programs and welcomed revisions but urged that WMCP requirements not become a permanent disincentive for agricultural managers. "We would prefer that requirement to be removed altogether because we find it to be a disincentive to districts who don't have those plans and otherwise aren't required to have them," Snell said. WaterWatch of Oregon said it opposed sections that remove statutory direction to fund projects with the highest public benefit and urged retaining minimum public-benefit scoring criteria that act as a funding floor.

Hudson and department staff provided program history and usage figures: feasibility study grants had been authorized in 2008 and the department has awarded 122 feasibility grants totaling over $9,400,000 since 2009. The Water Project Grants and Loans Program (established 2013 via HB 839) is a competitive program offered twice per year; since 2016 the department has awarded more than $100,000,000 to about 61 projects. The bill would also require the department to report to the Legislature at least once every eight years on four programs: place-based integrated planning, feasibility study grants, water project grants and loans, and the well abandonment/repair/replacement fund.

Committee members and stakeholders asked for clarification about several drafting choices, including the replacement of statutory scoring language with rulemaking directions, the shift in WMCP timing (application deadline to funding decision), and the corrected scope for applying SVFs. The department said it would analyze specific sections in more depth and work with the committee on drafting.

No formal vote occurred during the hearing; the item was presented as informational testimony and moved toward amendment and further work with stakeholders.

Ending: The committee closed the public hearing on HB 3364 and said it would consider amendments and return the bill for future action; department staff and stakeholders indicated they would work with the committee to clarify public-benefit language, scoring details and points of statutory correction.