Private Dam with Sponsor Questions

Not all grant sources allow Conservation Districts to apply for grants on behalf of private. For those grants that do allow this option, the Conservation District would be responsible for the following:
  • Fiscal responsibility and oversight - the district must ensure that all grant funds are spent per the grant agreement and may need to audit the funds if the grant requires.
  • Meet all conditions that are defined in the grant contract. A Conservation District should review with its attorney the grant contract and determine if the district can provide the assurances required in the contract before signing and obligating the funds. If a district does not feel comfortable with the terms, it can decide to refuse the grant.
  • Ensure the project is completed with the scope of work and timeline defined in the grant agreement.
  • Provide grant administration that includes submitting reimbursement requests, grant reporting, and grant closeout documents.
  • The district should consider having a memorandum of understanding (MOU) with the dam owner that obligates the owner to comply with the conditions of the grant.
The three main things to consider when sponsoring a project are the level of project planning, project readiness, and community benefits.
  • Has the private dam owner completed a preliminary engineering report?
  • Does the dam owner have an engineering firm contracted for the project?
  • Is the project’s cost estimation completed by an engineering firm?
  • What other sources of funds does the private dam owner have (cash, loan, etc.) for the project?
  • If the grant is awarded, is the private dam owner ready to start the project?
  • Does the dam owner have the capacity to meet the conditions of the grant?
  • Does the project have adequate public benefits and is the community supportive?
  • What are the long-term operation and maintenance (O&M)requirements of the grant sponsor? If an O&M assurance is required, a conservation district should have a legal review before committing.
There are two main costs associated with the administration of any grant, 1) grant administration and 2) financial review or audit of the project.

Both items can typically be added to the project's budget and can be paid by the grant. Each grant source varies, so further research will be required to ensure that the grant will cover both administration costs.

Renewable Resource Grant and Loan (RRGL) Program

The biggest difference between the RRGL for public dam operators vs. private dam operators is the amount of funds and the application. DNRC has separate funding sources that are available for projects depending on the type of entity applying. Private dam owners cannot apply for funding using the same application process used by public dam owners, and the same is true in reverse. For example, a RRGL loan to a public dam owner goes to the legislature for approval, and as such is tied to the legislative session schedule. A private dam owner can apply for a private loan from the RRGL program at any time. Note private loans are limited to either $400,000 or 80 percent of the fair market value of the security given for the loan.


The following will be required to apply for a private RRGL loan:
  • A technical report on the project or a Preliminary Engineering Report on the project.
  • Narrative reports on the natural resource features of the project.
  • Maps of the project site.
  • Property records and permits.
  • Water right permits.
  • Representative pictures of the project and problem.
Financial documentation is also required and includes:
  • Construction budget (with accompanying cost estimates from an engineering firm).
  • Statement of financial condition.
  • Profit or loss statement.
  • Documentation of income sources.
  • Three-year projected operating budget for the project.
  • Description of the loan collateral (security is typically a lien on real estate).
  • Abstract of title or other evidence of ownership.
  • Other funding commitments or status documentation.
The dam owner should apply for the RRGL loan once the project technical memo or Preliminary Engineering Report is completed. Expenses incurred before the loan is approved will not be reimbursable.
No, the RRGL private loan must be applied for at the beginning of a project once the project technical memo or Preliminary Engineering Report is completed. A private loan is not available mid-way through the project.
By state statute, all loans must be secured by a lien on Real Estate. Using water rights as collateral may be allowed. The lien is generally in the form of a Mortgage. Title insurance and recording fees are the responsibility of the applicant. DNRC seeks security of the loan of at least 150% of the loan amount.
User rates typically fund public projects. Therefore, the public entity would need to ensure that user rates can either cover the debt associated with the project or increase user rates to cover the debt.
RRGL loans are financed from the sale of state bonds. The interest rate varies from year to year, and successful applicants will be notified of the proposed bond sale and the anticipated interest rate before each sale. In general, the rates are better, but that depends on a number of factors. Note that some dam owners may receive better rates from loan institutions that specialize in agriculture, especially if the dam owner has a relationship with that institution.
The sale of state bonds.
If the RRGL loan (public or private) is being paid for with user rates, a bond attorney is needed. However, if user rates are not a part of the project, the loan will be structured as a general obligation bond, and a bond attorney is unnecessary.

Renewable Resource Grans (RRGL)

RRGL construction grants require that each construction project have a Preliminary Engineering Report. Therefore, an applicant should have a relationship with an engineering firm already, and the engineering firm would be able to give the applicant a quote.
An applicant does not need to use an engineering firm to write the grant application. However, it is strongly suggested that the applicant work closely with its engineer while writing the application. Historically, grants written by an experienced engineering firm fare better in the ranking and are more apt to receive funding.
Only one RRGL grant can be open at a time. To avoid cost overruns, it is strongly recommended that the applicant work closely with an engineering firm. An engineering firm can work with the applicant to divide the project up into phases that are achievable with the available budget.
This program is funded through earnings from certain natural resource-based taxes. Montana Code Annotated specifies the specific earnings MCA 85-1-603.
Since the program is funded through certain natural resource-based taxes, the amount of funding and the number of projects funded varies each biennium. In years with low resource based tax revenue, roughly 30 projects are funded. In high resource based tax revenue years, around 80-90 projects are funded.
No, projects are ranked by DNRC staff using feedback from external engineering consultants hired by DNRC to review applications. Ranking is based on predetermined, set criteria.
The grant application asks each applicant to define specific project implementation tasks and timelines. The grant contract is awarded with this timeline in mind. Extension requests can be made when the project will require more time to complete the approved tasks described in the grant agreement. If the extension is approved, the applicant will need to submit a revised scope, schedule, and budget.

Matching Funds

Yes, RRGL grants and loans are considered state funding and can be used as a cost-share for federal grants.
DNRC grants do not require a match. Many other grants will require a cost-share and allow in-kind as a match option. Each grant source will explain in its guidelines, what is allowed as an in-kind match, and how to track the match. In-kind services can include use of the applicants own equipment or time spent by a dam operator on the project. In all cases, careful documentation must be maintained.
No, DNRC grants do not require a cost-share/match. The project is not ranked higher if a match is provided. However, the largest RRGL grant is $125,000, and most projects are much larger in cost.

Planning Grants

Yes, a planning grant from DNRC can be used for a preliminary engineering report (PER). DNRC does not expect an applicant that receives a planning grant to utilize the RRGL grant or loan for construction. Note that planning grants are available to help with developing a preliminary engineering report. Keep in mind that for dam projects, additional engineering analysis is often necessary and would be completed during the construction of the project. A PER does not include this analysis, but the construction project will need to include the analysis to obtain the required construction permit from the State Dam Safety Program. It is important to discuss the analysis needed, design approach, and schedule with the State Dam Safety engineers in advance to avoid delays.
DNRC planning grants can only be used for preliminary engineering reports, feasibility studies, investigation, or planning tools. Planning grants cannot be used to fund grant writing services. However, an applicant can apply for two planning grants if each planning grant is for a different project.
No, there is not match/cost-share requirement for DNRC planning grants.

Environmental Requirements

MEPA is a Montana environmental requirement, and NEPA is a national environmental requirement. Each funding source has its own criteria that must be met when using the grant source. Often more than one environmental report will be needed to meet the requirements.


In most cases, private operators/owners will not need to follow specific state procurement laws because they are a private entity. However, suppose a private entity is utilizing state or federal funding. In that case, those funding sources will need to be contacted before procurement because the funding agency may require a private entity to follow state procurement laws.

Public entities must follow state-specific procurement laws. Montana Code Annotated defines the procurement process and can be found at the following links:

Hiring engineers, architects, etc. can be found here:

Hiring contractors can be found here:
In most cases, private operators/owners will not need to follow specific state procurement laws because they are a private entity. However, suppose a private entity is utilizing state or federal funding. In that case, those funding sources will need to be contacted before procurement because the funding agency may require a private entity to follow state procurement laws.

Public entities must follow state-specific procurement laws and a competitive hiring process would required for both engineers and contractors. Engineers can be hired based on qualifications. Contractors are hired by the lowest technically responsive bid.
An engineering firm must still be hired under the competitive hiring process but can be hired for the entire project, from preliminary design/grant to final design and construction. For federal grants, the procurement of the engineer must be for all services, which includes grant writing, or the engineering firm will not be eligible to complete design and oversee construction.

Preliminary Design vs. Final Design/Construction

If the final design is different than the preliminary design used in a grant application, the grant and loan programs will need to be informed right away. A change in the location of a project can change environmental requirements. A change in scope and schedule must be approved before the final design begins.