(1) The state matching grants for innovative and alternative technology projects shall be limited to nine percent which is the same portion of the nonfederal share as other types of projects funded under the construction grants program.

(2) Expenditure of funds under the provisions of chapter 43.83A RCW is limited to public bodies which are defined in the statute to mean any agency, political subdivision, taxing district, or municipal corporation thereof, and those Indian tribes now or hereafter recognized as such by the federal government for participation in the federal land and water conservation program and which may constitutionally receive grants or loans from the state of Washington. This provision and definition prohibits the expenditure of state funds for matching grants for, among others:

(a) Individual systems; and

(b) That portion of the construction of a municipal treatment works attributable to industrial users. Such portion is to be determined through the environmental protection agency's industrial cost recovery program.