Authorizes the Governor, or a state official with authorization from the Governor, to transfer federal capitalization grant funds between the Water Pollution Control Revolving Fund and the Drinking Water Treatment Revolving Loan Fund, in accordance with Title 40 Code of Federal Regulations section 35.3530(c). Requires the Department of Health to submit an annual report to the Legislature on transfers between the Drinking Water Treatment Revolving Loan Fund and Water Pollution Control Revolving Fund. (CD1)