Previously water rights purchases were only eligible in the SRF program for water system consolidation purposes. When the drinking water SRF program was established via amendments to the 1996 Safe Drinking Water Act, those amendments prohibited the use of SRF funds to purchase water rights. The reason for the prohibition was that EPA assumed the primary purpose for water rights purchases would be to supply future population growth. In statute, the SRF program does not allow funding projects where the primary purpose of the project is for future population growth.
However, in implementing the SRF program, the EPA began to receive requests for an exception to the water rights prohibition for projects where water rights purchases were required to protect public health. For example, a system may need to switch from an existing water source to a new source in order to ensure the system could reliably meet primary drinking water standards. In these situations, EPA agreed to issue a project specific deviation.
In the case of Oshkosh, Nebraska an EPA deviation was granted to fund water transfer permit fees to withdraw water from new wells in a different aquifer from existing ones that were contaminated with uranium and arsenic. This case is mentioned in the Policy and Technical Evaluation for a DWSRF Class Deviation for Purchase of Water Rights, EPA October 2019. The policy paper goes on to describe the conditions that must be met for an eligible project.
In summary, a SRF fundable water rights purchase must be for an existing population (not primarily for future growth), address a public health threat, be a cost-effective alternative, and need SRF funding to ensure the project proceeds. The 2022 SRF Eligibility Survey (Opened June 1st!) includes a question to indicate if your system may be planning for water rights purchases. Please include those projects in the survey. If you have any questions regarding funding water rights purchases through the SRF, or any other program questions please feel free to contact Mark Henderson at mark.henderson@state.co.us.
