In November 2014, voters passed Proposition 1 (“Prop. 1”) approving a $7.545 billion dollar bond for water projects and programs in California. The State Water Resources Control Board (“Water Board”) has been tasked with administering $800 million of those funds for grants and loans to projects that prevent or cleanup groundwater contamination that serves or has served as a source of drinking water, known as the Groundwater Grant Program. After administrative and bond costs, there is approximately $744 million available for the Groundwater Grant Program. The Water Board released Draft Proposition 1 Groundwater Grant Program Guidelines (“Guidelines”) that will govern how the Groundwater Grant Program funds are awarded and monitored.

The Water Board is accepting written comments in PDF format on the Guidelines until April 1, 2016 to commentletters@waterboards.ca.gov with the subject line “Comment Letter – Proposition 1 Groundwater Grant Program Funding Guidelines” and by regular mail. Additionally, the Water Board is holding a series of public comment meetings from March 14^th through March 25^th. The meetings are being held regionally and the schedule is available here.

Guidelines

Project Selection Priorities

Prop. 1 includes project priorities for funding, preferring projects that demonstrate a cooperative funding approach across federal, state, and local sources, projects that include new and innovative technology, and projects that will address groundwater resource sustainability. The Guidelines build upon those preferences and require that projects seeking Groundwater Grant Program funding are (1) consistent with the California Water Action Plan; (2) identified as high priority by applicable state or federal agencies; (3) have matching funding available; and (4) have a useful life of at least 20 years. The Water Board also includes preferences for projects that further the basic human right to water, those that will have a regional impact with multiple benefits, and applicants that have a demonstrated ability to complete improvement projects.

Grant Amounts and Fund Matching Requirements

There are two types of projects that may be funded with Groundwater Grant Program funding: planning projects and implementation projects. Planning projects generally produce a report or information needed to design and build an eligible implementation project. Grant funding available for planning projects under the Groundwater Grant Program is limited to a minimum of $100,000 and a maximum of $1,000,000. Implementation projects generally involve the design, construction, pilot studies, and initial startup of facilities. The Groundwater Grant Program funding sought for these types of projects must be for a project cost of at least $500,000 and has no maximum amount. Applicants for both planning and implementation projects must provide matching funds of at least fifty percent (50%) of the total project cost. Other state funds, no matter the issuing agency, may not be used to provide the matching funds required.

Application and Project Selection Process

The application and project selection process under the Guidelines is a seven (7) step process that is highly collaborative between the applicant and Water Board staff. It begins with the pre-application submittal and ends with the grant agreement.

1. Pre-application Submittal

Applicants for Prop. 1 funding must fill out an online application available through the Financial Assistance Application Submittal Tool (“FAAST”). The application is available on an ongoing basis and collects basic information regarding projects seeking grant funding.

2. Initial Staff Review

Water Board staff will review applications for the best fit with the grant funding program goals.  Generally, projects that address the cleanup or prevention of contamination of groundwater that serves or has served as a source of drinking water and will substantially reduce the contaminants in a drinking water aquifer will be administered by the Prop. 1 Groundwater Grant Program.

3. Applicant Contact

Projects selected for further administration under the Prop. 1 Groundwater Grant Program will be contacted to discuss the scope and budget of the proposed project. Water Board staff will also begin the dialogue with other regulatory agencies at the state and federal level that may be involved in the project.

4. Final Application Submittal

Following the discussions from step 3, applicants will be invited to submit a final application that includes: a detailed work plan, budget, and metrics for success. Applicants will use a common final application that the Water Board will develop and make available in the FAAST system.

5. Evaluation

Final applications will be reviewed by the Water Board, the applicable Regional Water Quality Control Board, and if required, Department of Toxic Substances Control staff based on criteria for the type of project being funded. For planning projects, the evaluation criteria include a determination on how well the project’s scope of work is detailed, the clarity of its schedule and budget, identification of the beneficial uses and issues the project will address, and how the planning project will lead to a future successful implementation project. For implementation projects the evaluation criteria include identified project goals and purposes, a timeline of the work to be achieved, and a clear budget and performance evaluation system.

6. Preliminary Award

Following evaluation, Water Board staff will recommend projects and funding amounts to the Deputy Director of the Division of Financial Assistance who will make the final decision regarding project funding. Projects that are selected will receive notice of the amount of funding they have been awarded and the requirements they must comply with in receiving those funds.

7. Grant Agreement

The agencies selected for project funding will work with Water Board staff to enter into a grant agreement with a specific scope of the project. The preliminary award amount may be adjusted based on this final evaluation and scope of work.

Program Requirements

Agencies that enter into grant agreements under the Guidelines will be required to comply with a number of requirements including state auditing requirements. The Guidelines list out eighteen (18) separate requirements for grant receiving agencies. These requirements include compliance with state and federal laws, including those related to conflicts of interest; labor code compliance; CEQA compliance; submission of quarterly progress reports; waiver of confidentiality related to the project being funded; and data management requirements. The grant agreements themselves will also carry with them specific terms and requirements.

Implications

The Guidelines provide a system for agencies seeking Prop. 1 Groundwater Grant Program funding to follow in making their submissions to the Water Board. The process proposed under the Guidelines is a collaborative one with the Water Board. Agencies seeking funding should be prepared to adjust their projects as necessary to meet the objectives of the Prop. 1 funding priorities and the feedback they receive in the grant application process.

If your agency is interested in seeking Prop. 1 funding and in need of assistance in doing so, please contact Barbara A. Brenner at (916) 468-0950 or barbara@whitebrennerllp.com or Kerry A. Fuller at kerry@whitebrennerllp.com or (916) 468-0620.