COLUMBUS - Ohio intends to use $278 million in federal stimulus money to upgrade its water and sewer systems, as well as help homeowners fix or replace failing septic systems that pollute ditches and streams, environmental officials said Thursday.

The stimulus money would help fund 324 projects in 74 of Ohio's 88 counties, the state Environmental Protection Agency said in announcing its priority list.

The U.S. Environmental Protection Agency must approve the plans before funds can be awarded.

The list includes $5 million for the village of Buckeye Lake in Licking County to help build a drinking water system. All residents and businesses rely on individual wells for drinking water, and the village, which has a population of about 3,000, is one of the largest in Ohio that doesn't have a public system.

The state EPA received 3,300 applications from cities, counties and villages seeking to get a slice of President Barack Obama's $787 billion stimulus package that he signed this year to help jump-start the economy.

Projects were selected using criteria that included how quickly construction could be completed and the project's ability to improve water quality and public health, Ohio EPA Director Chris Korleski said.

"We don't have enough money for everybody, and the need is great," he said.

The federal EPA released a report in 2007 estimating the nation's drinking water utilities need $334.8 billion in infrastructure investments over the next 20 years for pipe, treatment plants and storage tanks. Ohio's infrastructure needs totaled $12 billion, according to the report.

The stimulus list includes $1.8 million for the small village of Cumberland in Guernsey County to run a new waterline to nearby Byesville and abandon a failing treatment plant that can't meet safe drinking water standards.

In rural southeast Ohio, about $5 million in stimulus funds will help build a new $15.8 million groundwater system for the Burr Oak Water District, where high levels of trihalomethane contaminants have been reported. Although the levels don't pose an immediate health risk, long-term risks include liver damage and cancer, the EPA said.

The water district, which has installed a temporary filter, would not have been able to push the project forward without the stimulus money, said district board president Roger McCauley. Construction on the new water system to serve Athens, Perry, Hocking and Morgan counties should be completed within two years, he said.