ITEM: 15 CONSIDERATION OF APPROVAL OF A RESOLUTION TO ESTABLISH A PROJECT PRIORITY LIST FOR THE AGRICULTURAL DRAINAGE MANAGEMENT LOAN PROGRAM (ADMLP) AND AUTHORIZE THE EXECUTIVE DIRECTOR OR HIS DESIGNEE TO NEGOTIATE, EXECUTE, OR AMEND ADMLP LOAN CONTRACTS FOR PROJECTS DESIGNATED BY THE STATE WATER RESOURCES CONTROL BOARD

DISCUSSION: The State Water Resources Control Board (SWRCB) issued a "Request for Proposals" (RFP) for projects to be funded with loans from the ADMLP established in California Water Code, Division 24, Chapter 5, Article 4. The deadline for submittal of a project proposal was April 17, 1998. No proposals were received prior to the deadline. A previous RFP resulted in only one application being submitted. There currently is no active RFP.

Recently, SWRCB staff was contacted by the Santa Ana River Watershed Group about the possibility of using ADMLP funds to address water quality problems associated with dairy waste in the Chino Basin of the Santa Ana River Watershed. The Santa Ana River Watershed Group is a group of self-selected public and private sector agencies and interests that have come together committed to a mission of working openly and collaboratively to address the identified concerns and opportunities in the Watershed.

The Santa Ana River is the largest river in Southern California, traversing almost 100 miles from its headwaters in the San Bernardino Mountains through three counties to the Pacific Ocean. It flows through a rapidly urbanizing watershed of over 4.3 million people, a population that is expected to increase to 6.8 million by 2020. With this change in land use, the competition among agriculture, the urban population, and the natural ecosystems has increased substantially. Some of the stress areas related to this competition are:

• Currently, within the 50 square mile Chino Basin dairy preserve area, there are more than 325,000 dairy cows and 1.5 million tons of manure on the ground. This concentration of dairy cows generates waste equivalent to an unsewered human population of 2.5 million. At the same time, the dairies constitute a $1 billion industry, 25 percent of California's milk production, the largest in the nation.

• Areawide storm drainage control is virtually nonexistent in the dairy preserve. Drainage waters from upland urban areas regularly flow onto and over the area mixing with dairy manure and wastewater and inundating on-site dairy waste facilities. This problem was particularly evident during last winter's El Ni{Special Char 164 in Font "MS"}o storms. The resultant flows diminish the quality of life for the 300 dairy families within the area and wash dairy wastes into the Santa Ana River, a major source of drinking water for the 2.4 million people of Orange County. A major impact in this regard is the salt loading of urban water supplies increasing health risks and diminishing the ability to reclaim water.

• The one to three million acre feet of underground water storage within the Chino Basin has been seriously impacted with salts and nitrates from agricultural and other practices. It is one of the largest ground water basins in the State and could be a critical piece in the State's overall water supply needs. In addition, the salt and nitrate laden water in the Chino Basin ground water migrates to the Orange County Water Basin.

• Water reclamation, desalting, and conservation are critical to the State water plan. Desalting projects are underway within the Chino Basin (and adjacent basins) sponsored by the Chino Basin Municipal Water District and the Santa Ana Watershed Project Authority and within the Orange County Water Basin downstream. These are extremely important to address health concerns. The Chino Basin desalting is focused on removing salt from past agricultural operations both to reclaim the basin for further water storage and to prevent the pollution of the Chino Basin from expanding to the Orange County Water Basin. In addition, the Orange County Water and Sanitation Districts are proceeding with a program to reclaim over one million acre feet of wastewater per year, one-sixth of the Orange County water supply.

• Wildlife habitat has been both impacted and a beneficiary of water programs in the past. However, habitat has been adversely impacted by dairy drainage and by drainage canals constructed to direct and control this drainage. There are now significant opportunities for wildlife enhancement in conjunction with past and current drainage efforts and other projects within the dairy preserve area.

The Santa Ana River Watershed Group has developed an Action Plan that envisions a shared effort of local, State, and federal agencies and other interests. The initial focus has been on the 50 square-mile Chino dairy preserve area, including:

• Drainage controls that will segregate water flowing across the dairy area from dairy wastes;

• Reduction of salts (primarily with the view that it is more cost efficient to prevent salts from entering water supplies), for example, by sewering dairy wash water, removing manure from the watershed, and removing salts from the ground water basin; and

• The enhancement and conservation of wildlife resources and habitat in connection with efforts to address drainage and processing (e.g., through the use of constructed wetlands and enhancement of riparian areas).

In addition to the previously SWRCB-approved Merced County project, members of the Santa Ana River Watershed Group have submitted ADMLP loan applications for the projects identified on the attached ADMLP Project Priority List (Attachment 1).

POLICY ISSUE: Should the SWRCB approve a resolution to establish a project priority list for the ADMLP and authorize the Executive Director or his designee to negotiate, execute, or amend ADMLP loan contracts for projects designated by the SWRCB that are above the established funding line provided they meet all procedural requirements and proceed to loan contract execution within two years of placement on the list?

FISCAL IMPACT: Water Code Section 78642(a) continuously appropriates the sum of $27,500,000 from the Drainage Management Subaccount to the SWRCB for the ADMLP. Section 78645.5 provides for the SWRCB to use up to 3 percent ($825,000) to administer to the ADMLP leaving $26,675,000 available for loans to local agencies. The status of the fund is as follows:

RWQCB IMPACT: Yes, Santa Ana Regional Water Quality Control Board.

STAFF RECOMMENDATION: That the SWRCB approve a resolution to establish a project priority list for the ADMLP and authorize the Executive Director or his designee to negotiate, execute, or amend ADMLP loan contracts for projects designated by the SWRCB that are above the established funding line provided they meet all procedural requirements and proceed to loan contract execution within two years of placement on the list.

NOTE: Attachment 1 (the proposed priority list) is not available electronically. For a copy contact: Bill Campbell at (916) 657-1043)

October 26, 1998 DRAFT

WHEREAS:

1. The State Water Resources Control Board (SWRCB) previously issued two "Requests for Proposals" for projects to be funded with loans from the ADMLP resulting in only one application being submitted.

2. SWRCB staff was contacted by the Santa Ana River Watershed Group about the possibility of using ADMLP funds to address water quality problems associated with dairy waste in the Chino Basin of the Santa Ana River Watershed.

3. Dairy waste poses a significant threat to water quality in the Santa Ana River Watershed.

4. SWRCB staff developed an ADMLP Project Priority List based on applications received by October 9, 1998.

THEREFORE BE IT RESOLVED THAT:

The SWRCB approves a resolution to establish a project priority list for the ADMLP and authorize the Executive Director or his designee to negotiate, execute, or amend ADMLP loan contracts for projects designated by the SWRCB that are above the established funding line provided they meet all procedural requirements and proceed to loan contract execution within two years of placement on the list.

The undersigned, Administrative Assistant to the SWRCB, does hereby certify that the foregoing is a full, true, and correct copy of a resolution duly and regularly adopted at a meeting of the State Water Resources Control Board held on November 19, 1998.

______________________________

Maureen Marché

Administrative Assistant to the Board