(a) The board shall, contingent upon receiving federal capitalization grant funds, develop and implement a program to protect sources of drinking water. In carrying out this program, the board shall coordinate with local, state, and federal agencies that have public health and environmental management programs to ensure an effective implementation of the program while avoiding duplication of effort and reducing program costs. The program shall include all of the following:

1. (1) A source water assessment program to delineate and assess the drinking water supplies of public drinking water systems pursuant to Section 1453 of the federal act.
2. (2) A wellhead protection program to protect drinking water wells from contamination pursuant to Section 1428 of the federal act.
3. (3) Pursuant to Section 1452(k) of the federal act, the board shall set aside federal capitalization grant funds sufficient to carry out paragraphs (1) and (2).

(b) The board shall set aside federal capitalization grant funds to provide assistance to water systems pursuant to Section 1452(k) of the federal act for the following source water protection activities, to the extent that those activities are proposed:

1. (1) To acquire land or a conservation easement if the purpose of the acquisition is to protect the source water of the system from contamination and to ensure compliance with primary drinking water regulations.
2. (2) To implement local, voluntary source water protection measures to protect source water in areas delineated pursuant to Section 1453 of the federal act, in order to facilitate compliance with primary drinking water regulations applicable to the water system under Section 1412 of the federal act or otherwise significantly further the health protection objectives of the federal and state acts.
3. (3) To carry out a voluntary, incentive-based source water quality protection partnership pursuant to Section 1454 of the federal act.