City Brewing is scheduled to close this month on $7.8 million in state aid for a project that will help its Latrobe brewery expand production.

Meanwhile, the former Rolling Rock plant is adding Duquesne Beer and Narragansett Lager to the lineup of beers it produces under contract.

Latrobe Municipal Authority Manager Tom Gray said City Brewing would close this month on a $3.1 million state grant and a $4.7 million state loan. The money will be used to build a plant that will treat the brewery's wastewater before it is sent to the municipal treatment plant. Mr. Gray said sending the wastewater directly to the municipal plant would overburden that facility.

Construction is expected to begin in May, and the plant is scheduled to be in operation by June 2012, Mr. Gray said.

The state aid was offered by Gov. Ed Rendell in 2007, shortly after LaCrosse, Wis.-based City Brewing acquired the Latrobe brewery from Anheuser-Busch InBev. The state gave City Brewing $4.5 million in grants, low-interest loans and tax credits for the purchase.

City Brewing produces its own beer in LaCrosse but also brews for beer companies that do not have their own production facilities. It also makes Arizona brand teas and other nonalcoholic beverages.

Production levels at the Latrobe brewery have not met projections of City Brewing officials, who said in 2007 they expected that the plant would employ 250 within three years. The Latrobe brewery currently employs about 115, said City Brewing's D.J. O'Donnell, who is in charge of business development and scheduling.

The brewery had been a major employer when Rolling Rock beer was brewed there. But Anheuser-Busch bought the hometown brand from InBev in 2006 and transferred Rolling Rock production to Newark, N.J. Anheuser-Busch subsequently merged with InBev.

The Latrobe plant has been making Iron City brands under contract since last summer, when Iron City halted production at its Lawrenceville plant. Mr. O'Donnell said the plant also brews Stoney's and Mike's Hard Lemonade.

He said he knew nothing about the wastewater treatment project.

Narragansett Brewing Co. President Mark Hellendrung said that Providence, R.I., beer company would shift production from City Brewing's LaCrosse plant to Latrobe this month. Brewing nearly 1,000 a barrels of Narragansett Lager monthly in Western Pennsylvania will put the beer closer to the company's market, he said.

Duke Beer, once Pittsburgh's best-selling hometown beer, also will be brewed in Latrobe. Mark Dudash, the Upper St. Clair attorney who is trying to revive the historic brand, said the pilsener would be available late this month or in early August.

Pennsylvania Liquor Control Board records indicate several other out-of-state brewers are licensed to brew at Latrobe, and two more have applied for licenses to make beer there.

Officials at Christian Moerlein Brewing of Cincinnati and Sleeman Brewing of Guelph, Ontario, who have state licenses, did not return calls. Blue Point Brewing of Long Island, N.Y., which has applied for a license, did not return calls.

Mr. O'Donnell said City Brewing was talking with several potential customers, but he declined to elaborate.

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