1. (a) Except as provided in subsections (b) and (c), Projects shall only be eligible to receive Grant funding for actual Eligible Construction Costs, not including Construction Allowances, up to the Grant amount set forth in the Financing Agreement. Eligible Construction Costs include:

   1. (1) Construction of recycled water treatment facilities, storage facilities, pumping facilities, and groundwater recharge facilities;
   2. (2) Construction of recycled water distribution systems, including onsite improvements; and
   3. (3) Reasonable costs to provide an emergency backup water supply for the recycled water system.

2. (b) In addition to the Eligible Construction Costs listed in subsections (a)(1) -- (3), Large-Scale Projects shall also be eligible to receive Grant funding for:

   1. (1) Ancillary facilities, including pipelines, extraction wells, injection wells, recharge basins, nitrogen removal treatment systems, pertinent structures, and connection assemblies; and
   2. (2) Eligible Planning Costs, which include: feasibility studies, project reports, plans and specifications, financial analyses, engineering and design documents, preparation of environmental documents, legal costs and fees, value engineering, asset management plans, rate studies and costs related to Proposition 218 compliance, environmental management systems, and reasonable administrative costs.

3. (c) In addition to the Eligible Construction Costs listed in subsections (a)(1) -- (3), a Project of a Small DAC or a Small SDAC which has been awarded Grant funding for 100% of the Project's Total Eligible Project Cost pursuant to section 3432(c)(3), shall also be eligible to receive Grant funding for:

   1. (1) Eligible Planning Costs, as described in subsection (b)(2); and
   2. (2) Construction Allowances.

4. (d) No Project shall receive Grant funding for, or apply Grant funding to, ineligible costs, which include:

   1. (1) Operation and maintenance costs;
   2. (2) Land acquisition costs;
   3. (3) Decorative items, such as murals, decorative ponds, or decorative fountains;
   4. (4) Project components not included in the application and original scope of a Project;
   5. (5) Costs previously reimbursed by the State Water Board or other funding sources; and
   6. (6) Costs associated with constructing pipelines or treatment capacity in excess of the Eligible Project Capacity.

Note: Authority cited: Section 1058, Water Code; and Section 90135, Public Resources Code. Reference: Sections 90140, 91000, 91010 and 91014, Public Resources Code.

History

1. New section filed 2-17-2026 as an emergency; operative 2-17-2026 (Register 2026, No. 8). This filing is a deemed emergency and shall remain in effect until repealed or revised by the board pursuant to Public Resources Code section 90135(e).