This law proposed by Senate Bill 900 (Statutes of 1996, Chapter 135) is submitted to the people in accordance with the provisions of Article XVI of the Constitution.

This proposed law amends and adds sections to the Water Code; therefore, existing provisions proposed to be deleted are printed in strikeout type and new provisions proposed to be added are printed in italic type to indicate that they are new.

SECTION 1. Division 24 (commencing with Section 78500) is added to the Water Code, to read:

DIVISION 24. SAFE, CLEAN, RELIABLE WATER SUPPLY ACT

Chapter 1. Short Title and Findings and Declarations

   78500. This division shall be known and may be cited as the Safe, Clean, Reliable Water Supply Act.
   78500.2. In placing this measure before the voters, the Legislature hereby finds and declares all of the following:
   (a) The state faces a water crisis that threatens our economy and environment.
   (b) The state's growing population has increasing needs for safe water supplies which are essential to the public health, safety, and welfare.
   (c) It is of paramount importance that the limited water resources of the state be protected from pollution, and conserved and recycled whenever economically, environmentally, and technically feasible.
   (d) The state should plan to meet the water supply needs of all beneficial uses of water, including urban, agricultural, and environmental, utilizing a wide range of strategies including water conservation and recycling, conjunctive use of surface and groundwater supplies, water transfers, and improvements in the state's water storage and delivery systems to meet the growing water needs of the state.
   (e) This measure is a necessary first step toward providing for the state's long-term water supply requirements through a number of water management strategies.
   (f) The San Francisco Bay/Sacramento San Joaquin Delta Estuary (the Bay-Delta) is of statewide and national importance. The Bay-Delta provides habitat for more than 120 species of fish and wildlife and serves as a major link in our water delivery system for businesses and farms statewide and more than 22 million residents.
   (g) The state has signed an historic accord with federal officials and statewide water interests that calls for the development of a comprehensive and long-term solution for the water supply reliability, water quality, and environmental problems of the Bay-Delta.
   (h) Federal and state representatives have initiated a program known as CALFED, to develop a comprehensive and long-term solution to the problems associated with the Bay-Delta, including an equitable allocation of program costs among beneficiary groups. The success of the CALFED program is vital to the environmental and economic well-being of the state.
   78500.4. In enacting this measure, the people of California declare all of the following to be the objectives of this act:
   (a) To provide a safe, clean, affordable, and sufficient water supply to meet the needs of California residents, farms, and businesses.
   (b) To develop lasting water solutions that balance the needs of the state's economy and its environment.
   (c) To restore ecological health for native fish and wildlife, and their natural habitats, including wetlands.
   (d) To protect the integrity of the state's water supply system from catastrophic failure due to earthquakes and flooding.
   (e) To protect drinking water quality.
   (f) To protect the quality of life in our communities by ensuring recreational opportunities and maintaining parks, trees, and plants.

Chapter 2. Definitions

   78501. Unless the context otherwise requires, the following definitions govern the construction of this division:
   (a) ''Bay-delta" means the San Francisco Bay/Sacramento-San Joaquin Delta Estuary.
   (b) ''Board" means the State Water Resources Control Board.
   (c) ''CALFED" refers to a consortium of five state agencies, including the Resources Agency, the department, the Department of Fish and Game, the California Environmental Protection Agency, and the board, and five federal agencies, including the United States Department of Interior, the United States Bureau of Reclamation, the United States Fish and Wildlife Service, the Environmental Protection Agency, and the National Marine Fisheries Service, with management and regulatory responsibilities in the bay-delta.
   (d) ''Clean Water Act" means the federal Clean Water Act (33 U.S.C.A. Sec. 1251 et seq.) and includes any amendments thereto.
   (e) ''Committee" means the Safe, Clean, Reliable Water Supply Finance Committee created pursuant to Section 78693.
   (f) ''Delta" means the Sacramento-San Joaquin Delta.
   (g) ''Department" means the Department of Water Resources.
   (h) ''Fund" means the Safe, Clean, Reliable Water Supply Fund created pursuant to Section 78505.

Chapter 3. Safe, Clean, Reliable Water Supply Fund

   78505. The proceeds of bonds issued and sold pursuant to this division shall be deposited in the Safe, Clean, Reliable Water Supply Fund, which is hereby created.

Chapter 4. Delta Improvement Program

Article 1. The Delta Improvement Account

   78525. Unless the context otherwise requires, as used in this chapter, ''account" means the Delta Improvement Account created by Section 78526.
   78526. The Delta Improvement Account is hereby created in the fund. The sum of one hundred ninety-three million dollars ($193,000,000) is hereby transferred from the fund to the account.

Article 2. Central Valley Project Improvement Program

   78530. (a) There is hereby created in the account the Central Valley Project Improvement Subaccount.
   (b) For the purposes of this article, ''subaccount" means the Central Valley Project Improvement Subaccount created by subdivision (a).
   78530.5. The sum of ninety-three million dollars ($93,000,000) is hereby transferred from the account to the subaccount for the purpose of implementing this article.
   78531. (a) Notwithstanding Section 13340 of the Government Code, the money in the subaccount is hereby continuously appropriated, without regard to fiscal years, to the Controller, to be allocated to pay the state's share of the costs for fish and wildlife restoration measures required by Section 3406 of the Central Valley Project Improvement Act (P.L. 102-575), in accordance with subdivisions (b) and (c).
   (b) Funds appropriated pursuant to subdivision (a) shall be allocated to the Department of Fish and Game or the department for expenditure pursuant to the terms of the cost-sharing agreement between the United States and the State of California as required by subsection (h) of Section 3406 of the Central Valley Project Improvement Act, or any agreements supplemental thereto, for the payment of costs allocated to the state for the protection and restoration of fish and wildlife resources and habitat pursuant to Section 3406 of that federal act.
   (c) The money in the subaccount may be used for both of the following purposes:
   (1) To pay for the state's cost-sharing allocations or for actions directly undertaken by the department or the Department of Fish and Game relating to fish and wildlife restoration actions required by Section 3406 of the Central Valley Project Improvement Act (P.L. 102-575). For purposes of this paragraph, and consistent with Attachment C of the ''Principles for Agreement on Bay-Delta Standards Between the State of California and the Federal Government," dated December 15, 1994, preference for the screening of diversions shall be given to projects, and projects within programs, identified in the Central Valley Project Improvement Act (P.L. 102-575) for which deadlines have been established by state or federal agencies, or by a state or federal court. Any preference established under this paragraph shall be revised if the deadlines are extended or eliminated.
   (2) To pay for administrative costs incurred in connection with the implementation of this section by the department and the Department of Fish and Game related to fish and wildlife restoration measures undertaken pursuant to Section 3406 of the Central Valley Project Improvement Act (P.L. 102-575), as follows:
   (A) Not more than 3 percent of the total amount deposited in the subaccount for the use of the department may be used to pay the costs incurred in connection with the administration of this article by the department.
   (B) Not more than 3 percent of the total amount deposited in the subaccount for the use of the Department of Fish and Game may be used to pay the costs incurred in connection with the administration of this article by the Department of Fish and Game.

Article 3. Bay-Delta Agreement Program

   78535. (a) There is hereby created in the account the Bay-Delta Agreement Subaccount.
   (b) For the purposes of this article, ''subaccount" means the Bay-Delta Agreement Subaccount created by subdivision (a).
   78535.5. The sum of sixty million dollars ($60,000,000) is hereby transferred from the account to the subaccount for the purpose of implementing this article.
   78536. Notwithstanding Section 13340 of the Government Code, the money in the subaccount is hereby continuously appropriated, without regard to fiscal years, to the Resources Agency, to pay for the administration of this article and for non-flow-related projects called for in the Water Quality Control Plan for the Bay-Delta, adopted by the board in Resolution No. 95-24, and as it may be amended. Those projects are known as ''Category III" activities called for in the ''Principles for Agreement on Bay-Delta Standards Between the State of California and the Federal Government," dated December 15, 1994.
   78536.5. The Secretary of the Resources Agency shall carry out this article in accordance with procedures established by CALFED for the purposes of undertaking Category III activities and other ecosystem restoration programs until the Legislature, by statute, authorizes another entity that is recommended by CALFED, to carry out this article.
   78537. The state shall, to the greatest extent possible, secure federal and nonfederal matching funds to implement this article.
   78538. Not more than 3 percent of the total amount deposited in the subaccount may be used to pay the costs incurred in connection with the administration of this article.

Article 4. Delta Levee Rehabilitation Program

   78540. (a) There is hereby created in the account the Delta Levee Rehabilitation Subaccount.
   (b) For the purposes of this article, ''subaccount" means the Delta Levee Rehabilitation Subaccount created by subdivision (a).
   78540.5. The sum of twenty-five million dollars ($25,000,000) is hereby transferred from the account to the subaccount for the purpose of implementing this article.
   78541. Notwithstanding Section 13340 of the Government Code, the money in the subaccount is hereby continuously appropriated, without regard to fiscal years, to the department, as follows:
   (a) Twelve million five hundred thousand dollars ($12,500,000) for local assistance under the delta levee maintenance subventions program under Part 9 (commencing with Section 12980) of Division 6, and for the administration of that assistance.
   (b) Twelve million five hundred thousand dollars ($12,500,000) for special flood protection projects under Chapter 2 (commencing with Section 12310) of Part 4.8 of Division 6, subsidence studies and monitoring, and for the administration of this subdivision. Allocation of these funds shall be for flood protection projects on Bethel, Bradford, Holland, Hotchkiss, Jersey, Sherman, Twitchell, and Webb Islands, and at other locations in the delta.
   78542. The expenditure of funds under this article is subject to Chapter 1.5 (commencing with Section 12306) of Part 4.8 of Division 6.
   78543. (a) No expenditure of funds may be made under this article unless the Department of Fish and Game makes a written determination as part of its review and approval of a plan or project pursuant to Section 12314 or 12987 that the proposed expenditures are consistent with a net long-term habitat improvement program, and have a net benefit for aquatic species in the delta. The Department of Fish and Game shall make its determination in a reasonable and timely manner following the submission of the project or plan to that department. For the purposes of this article, an expenditure may include more than one levee project or plan.
   (b) The memorandum of understanding entered into pursuant to Section 12307 shall be amended to require, in accordance with this section, that projects or plans be consistent with a net long-term habitat improvement program in the delta. The memorandum of understanding shall define the term ''net long-term habitat improvement program in the delta" for purposes of this section. The memorandum of understanding in effect prior to the amendment required by this section shall continue to apply to levee projects and plans until the memorandum of understanding is amended.
   78544. For the purposes of this article, a levee project includes levee improvements and related habitat improvements which may be undertaken in the delta at a location other than the location of that levee improvement.
   78545. The expenditure of funds under this article shall result in levee rehabilitation improvement projects that, to the greatest extent possible, are consistent with the CALFED program.

Article 5. South Delta Barriers Program

   78550. (a) There is hereby created in the account the South Delta Barriers Subaccount.
   (b) For the purposes of this article, ''subaccount" means the South Delta Barriers Subaccount created by subdivision (a).
   78550.5. The sum of ten million dollars ($10,000,000) is hereby transferred from the account to the subaccount for the purpose of implementing this article.
   78551. (a) Notwithstanding Section 13340 of the Government Code, the money in the subaccount is hereby continuously appropriated, without regard to fiscal years, to the department, to pay the costs incurred by the department that are not attributable to the State Water Project's or the Central Valley Project's share of costs for the South Delta Barriers Program, and for the administration of this article.
   (b) The costs identified in subdivision (a) include costs incurred for the purpose of mitigating non-State Water Project or non-Central Valley Project impacts and for the purpose of environmental enhancement in the delta.
   (c) No funds shall be expended under this article unless the Department of Fish and Game determines, in writing, that a net habitat benefit will result.
   78552. Not more than 3 percent of the total amount deposited in the subaccount may be used to pay the costs incurred in connection with the administration of this article.

Article 6. Delta Recreation Program

   78560. (a) There is hereby created in the account the Delta Recreation Subaccount.
   (b) For the purposes of this article, ''subaccount" means the Delta Recreation Subaccount created by subdivision (a).
   78560.5. The sum of two million dollars ($2,000,000) is hereby transferred from the account to the subaccount for the purposes of implementing this article.
   78562. Notwithstanding Section 13340 of the Government Code, the money in the subaccount is hereby continuously appropriated, without regard to fiscal years, to the Department of Parks and Recreation to provide for, and improve, public access to, and to maximize public recreational opportunities on, the lands and waters of the delta in a way that is consistent with existing uses of the islands, sound resource conservation principles, and appropriate protection for the rights of private property owners, and for the administration of this article.
   78564. The Department of Parks and Recreation may use funds in the subaccount for grants to local public agencies and nonprofit organizations for the purposes of acquiring fee title, development rights, easements, or other interests in land located in the delta to provide for, or improve, public access in the delta. The amount of any grant and the degree of local participation shall be determined by the fiscal resources of the grant applicant, the degree of public benefit provided by the proposed project, and other factors prescribed by the Department of Parks and Recreation.
   78565. Any acquisition pursuant to this article shall be from willing sellers.
   78566. The Department of Parks and Recreation may adopt regulations to carry out this article.
   78568. Not more than 3 percent of the total amount deposited in the subaccount may be used to pay the costs incurred in connection with the administration of this article.

Article 7. CALFED Bay-Delta Program

   78570. (a) There is hereby created in the account the CALFED Subaccount.
   (b) For the purposes of this article, ''subaccount" means the CALFED Subaccount created by subdivision (a).
   78571. The sum of three million dollars ($3,000,000) is hereby transferred from the account to the subaccount for the purposes of Section 78572.
   78572. Notwithstanding Section 13340 of the Government Code, the money in the subaccount is continuously appropriated, without regard to fiscal years, to the department, for the purpose of paying for the state's share of costs incurred in connection with the CALFED Bay-Delta Program.

Chapter 5. Clean Water and Water Recycling Program

Article 1. General Provisions

   78601. Unless the context otherwise requires, as used in this chapter, ''account" means the Clean Water and Water Recycling Account created by Section 78602.
   78602. The Clean Water and Water Recycling Account is hereby created in the fund. The sum of two hundred thirty-five million dollars ($235,000,000) is hereby transferred from the fund to the account.
   78603. The board may adopt regulations to carry out Article 2 (commencing with Section 78610), Article 3 (commencing with Section 78620), Sections 78640 to 78644, inclusive, Article 5 (commencing with Section 78647), and Article 6 (commencing with Section 78648).
   78603.5. The Department of Food and Agriculture may adopt regulations to carry out Section 78645.

Article 2. Clean Water Loans and Grants

   78610. Unless the context otherwise requires, the following definitions govern the construction of this article:
   (a) ''Eligible project" means a project or activity described in paragraph (1), (2), (3), or (4) of subdivision (a) of Section 13480 that is all of the following:
   (1) Necessary to prevent water pollution or to reclaim water.
   (2) Eligible for funds from the State Revolving Fund Loan Account or federal assistance.
   (3) Certified by the board as entitled to priority over other eligible projects.
   (4) Complies with applicable water quality standards, policies, and plans.
   (b) ''Federal assistance" means money provided to a municipality, either directly or through allocation by the state, from the federal government to construct eligible projects pursuant to the Clean Water Act.
   (c) ''Municipality" has the same meaning as defined in the Clean Water Act and also includes the state or any agency, department, or political subdivision thereof, and applicants eligible for assistance under Sections 1329 and 1330 of Title 33 of the United States Code.
   (d) ''Small community" means a municipality with a population of 5,000 persons or less, or a reasonably isolated and divisible segment of a larger municipality encompassing 5,000 persons or less, with a financial hardship as determined by the board.
   (e) ''Treatment works" has the same meaning as defined in the Clean Water Act.
   78611. There is hereby created in the account both of the following subaccounts:
   (a) The State Revolving Fund Loan Subaccount.
   (b) The Small Communities Grant Subaccount.
   78612. The board may, by contract or otherwise, undertake plans, surveys, research, development, and studies necessary or desirable to carry out this article, and may prepare recommendations with regard thereto, including the preparation of comprehensive statewide or areawide studies and reports on the collection, treatment, and disposal of waste under a comprehensive cooperative plan.
   78612.5. Not more than 3 percent of the total amount deposited in the State Revolving Fund Loan Subaccount and the Small Communities Grant Subaccount may be used for both of the following purposes:
   (a) To pay the costs incurred in connection with the administration of this article.
   (b) For the purposes of Section 78612.
   78613. The following amounts are hereby transferred from the account to the State Revolving Fund Loan Subaccount and the Small Communities Grant Subaccount and, notwithstanding Section 13340 of the Government Code, continuously appropriated, without regard to fiscal years, from the subaccounts to the board:
   (a) Eighty million dollars ($80,000,000) to the State Revolving Fund Loan Subaccount for the purposes of providing loans pursuant to the Clean Water Act, to aid in the construction or implementation of eligible projects, and for the purposes described in Section 78612.
   (b) Thirty million dollars ($30,000,000) to the Small Communities Grant Subaccount for grants by the board to small communities for construction of eligible treatment works. If, in the judgment of the board, the money in the Small Communities Grant Subaccount will not be expended within a reasonable time, the board may transfer the money to the State Revolving Fund Loan Subaccount to be used for any of the purposes specified in subdivision (a).
   (c) The board may transfer unallocated funds from the State Revolving Fund Loan Subaccount to the State Water Pollution Control Revolving Fund for the purposes of meeting federal requirements for state matching funds to provide loans in accordance with the Clean Water Act.
   78614. For purposes of subdivision (a) of Section 78613, the board may make loans to municipalities, pursuant to contract, to aid in the construction or implementation of eligible projects.
   78615. For purposes of subdivision (b) of Section 78613, the board may make grants to small communities so that any combined federal and state grant does not exceed 97½ percent of the eligible cost of necessary studies, planning, design, and construction of the eligible project determined in accordance with applicable state law and regulations. The total amount of grants made pursuant to subdivision (b) of Section 78613, for any single project, may not exceed three million five hundred thousand dollars ($3,500,000).
   78616. Any contract entered into pursuant to this article for loans or grants may include provisions determined by the board, and shall include all of the following provisions:
   (a) An estimate of the reasonable cost of the project.
   (b) A description of the type of assistance being offered.
   (c) An agreement by the board to pay to the entity, during the progress of the project or following completion, as agreed upon by the parties, the amount specified in the contract determined pursuant to applicable federal and state laws and regulations.
   (d) An agreement by the public entity to proceed expeditiously with, and complete, the project, commence operation of the project upon completion, properly operate and maintain the project in accordance with applicable provisions of law, and provide for payment of the public entity's share of the cost of the project.
   78617. All contracts entered into pursuant to this article for loans or grants are also subject to both of the following requirements:
   (a) Public entities seeking assistance shall demonstrate, to the satisfaction of the board, that an adequate opportunity for public participation regarding the project has been provided.
   (b) Any election held with respect to the project shall include the voters of the entire municipality unless the municipality proposes to accept the assistance on behalf of a specified portion or portions of the municipality, in which case the election shall be held in that portion or portions of the municipality only.
   78618. Any loan made pursuant to subdivision (a) of Section 78613 shall be for a period not to exceed 20 years, with an interest rate set in accordance with Section 13480.
   78619. All principal and interest payments received pursuant to loan contracts entered into pursuant to this article shall be deposited in the State Revolving Fund Loan Subaccount for additional loans under subdivision (a) of Section 78613, and shall not be transferred to the General Fund.

Article 3. Water Recycling Program

   78620. Unless the context otherwise requires, the following definitions govern the construction of this article:
   (a) ''Eligible recycling project" means a water reclamation project that meets applicable reclamation criteria and water reclamation requirements and that complies with applicable water quality standards, policies, and plans.
   (b) ''Subaccount" means the Water Recycling Subaccount created by Section 78621.
   78621. (a) (1) There is hereby created in the account the Water Recycling Subaccount. The sum of sixty million dollars ($60,000,000) is hereby transferred from the account to the subaccount for the purpose of implementing this article.
   (2) All money repaid to the state pursuant to any contract executed under the Clean Water and Water Reclamation Bond Law of 1988 (Chapter 17 (commencing with Section 14050) of Division 7) shall be deposited in the subaccount for the purposes of subdivision (b).
   (b) Notwithstanding Section 13340 of the Government Code, the money in the subaccount is hereby continuously appropriated, without regard to fiscal years, to the board for loans to public agencies to construct, operate, and maintain eligible recycling projects, for loans to aid in the design and construction of eligible recycling projects, for grants in accordance with Section 78628, and for the purposes described in Section 78629 and subdivision (a) of Section 78630.
   78622. The board may enter into contracts to make loans to public agencies for the purposes set forth in this article. Factors to be considered by the board in determining whether to enter into a contract under this article may include, but are not limited to, whether the project is cost-effective or necessary to protect water quality.
   78623. Any contract for a loan entered into pursuant to Section 78622 may include those provisions determined by the board to be necessary for purposes of this chapter and shall include both of the following provisions:
   (a) An estimate of the reasonable cost of the eligible recycling project.
   (b) An agreement by the public agency to proceed expeditiously with, and complete, the eligible recycling project, commence operation of the project in accordance with applicable provisions of law, and provide for the payment of the public agency's share of the cost of the project, including the principal of, and interest on, the loan.
   78624. (a) A contract for a loan may not provide for a moratorium on the payment of the principal of, or interest on, the loan.
   (b) Any loan made pursuant to Section 78622 shall be for a period not to exceed 20 years.
   (c) The board may enter into a contract for a loan of up to 100 percent of the total eligible cost of design and construction of an eligible recycling project.
   78625. (a) The board shall establish the interest rate for a loan made pursuant to this article at a rate equal to 50 percent of the interest rate paid by the state on the most recent sale of state general obligation bonds, to be computed according to the true interest cost method.
   (b) If the interest rate so determined is not a multiple of one-tenth of 1 percent, the interest rate shall be set at the next higher multiple of one-tenth of 1 percent.
   (c) The interest rate set for each contract shall be applied throughout the repayment period of the contract. There shall be a level annual repayment of principal and interest on the loans.
   78626. (a) All principal and interest payments received pursuant to loan contracts entered into pursuant to this article shall be deposited in the subaccount for additional loans under subdivision (b) of Section 78621, and shall not be transferred to the General Fund.
   (b) The board may transfer any unallocated funds in the subaccount to the Water Reclamation Account in the 1984 State Clean Water Bond Fund for the purposes set forth in Section 13999.10.
   78627. All interest earned by assets in the subaccount shall be deposited in the subaccount.
   78628. The board may make grants to public agencies for facility planning studies for water reclamation projects. The amount of the grants may not exceed seventy-five thousand dollars ($75,000) per study.
   78629. The board may, by contract or otherwise, undertake plans, surveys, research, development, and studies necessary, convenient, or desirable to carry out the purposes of this article, and may prepare recommendations with regard thereto, including the preparation of comprehensive statewide or areawide studies and reports on water recycling and the collection, treatment, disposal, and distribution of wastewater under a comprehensive cooperative plan.
   78630. Not more than 3 percent of the total amount deposited in the subaccount may be used to pay for both of the following purposes:
   (a) To pay the costs incurred in connection with the administration of this article.
   (b) For the purposes of Section 78629.

Article 4. Drainage Management

   78640. Unless the context otherwise requires, the following definitions govern the construction of this article:
   (a) (1) ''Drainage water management units" means land and facilities for the treatment, storage, conveyance, reduction, or disposal of agricultural drainage water which, if discharged untreated, would pollute or threaten to pollute the waters of the state.
   (2) Drainage water management units shall include one or more of the following:
   (A) A surface impoundment that is designed to hold an accumulation of drainage water, including, but not limited to, holding, storage, settling, and aeration pits, and lagoons. A surface impoundment does not include a landfill, a land farm, a pile, an emergency containment dike, tank, injection well, evaporation pond, or percolation pond.
   (B) Conveyance facilities to the treatment or storage site, including devices for flow regulation.
   (C) Facilities or works to treat agricultural drainage water to remove or substantially reduce the level of constituents which pollute or threaten to pollute the waters of the state, including, but not limited to, processes utilizing ion exchange, desalting technologies such as reverse osmosis, and biological treatment.
   (D) Facilities or works to reduce the amount of agricultural drainage water discharged, including, but not limited to, source control projects.
   (E) Diked areas or cells that are (i) used for the purpose of water conservation, water management, or environmental mitigation and (ii) located within inland bodies of saline water in Imperial and Riverside Counties.
   (3) Any or all of the drainage water management units, including the land under the unit, may consist of separable features, or an appropriate share of multipurpose features, of a larger system, or both.
   (4) Drainage water management units do not include facilities for the direct discharge of agricultural drainage water to the bay-delta or Pacific Ocean.
   (b) ''Local agency" or ''agency" means any city, county, district, joint powers authority, or other political subdivision of the state involved with water management.
   (c) ''Project" means drainage water management units.
   (d) ''Subaccount" means the Drainage Management Subaccount created by Section 78641.
   78641. There is hereby created in the account the Drainage Management Subaccount. The sum of thirty million dollars ($30,000,000) is hereby transferred from the account to the subaccount for the purpose of implementing this article.
   78642. (a) Notwithstanding Section 13340 of the Government Code, the sum of twenty-seven million five hundred thousand dollars ($27,500,000) in the subaccount is hereby continuously appropriated, without regard to fiscal years, to the board, for loans to local agencies to aid in the construction of drainage water management units for the treatment, storage, or disposal of agricultural drainage water, and for the purposes described in Section 78644. Priority shall be given to funding source reduction projects and programs.
   (b) Notwithstanding Section 13340 of the Government Code, the sum of two million five hundred thousand dollars ($2,500,000) in the subaccount is hereby continuously appropriated, without regard to fiscal years, to the board, for grants to local agencies for the purpose of providing the nonfederal share of the costs specified in Section 1101 of Public Law 102-575.
   78643. (a) The board may loan an agency up to 100 percent of the total eligible costs of design and construction of an eligible project.
   (b) Any contract for an eligible project entered into pursuant to this article may include provisions as determined by the board to be necessary and shall include, but not be limited to, all of the following provisions:
   (1) An estimate of the reasonable cost of the eligible project.
   (2) An agreement by the agency to do all of the following:
   (A) Proceed expeditiously with, and complete, the eligible project.
   (B) Commence operation of the containment structures or treatment works upon completion and to properly operate and maintain the works in accordance with applicable provisions of law.
   (C) Provide for payment of the agency's share of the cost of the project, including principal and interest on any state loan made pursuant to this article.
   (D) If appropriate, apply for, and make reasonable efforts to secure, federal assistance for the state-assisted project.
   (c) All loans made pursuant to this article are subject to all of the following provisions:
   (1) Agencies seeking a loan shall demonstrate, to the satisfaction of the board, that an adequate opportunity for public participation regarding the loan has been provided.
   (2) Any election held with respect to the loan shall include the voters of the entire agency except where the agency proposes to accept the loan on behalf of a specified portion, or portions, of the agency, in which case the election shall be held in that portion or portions of the agency only.
   (3) Loan contracts may not provide a moratorium on payment of principal or interest.
   (4) Loans shall be for a period of not more than 20 years. The interest rate for the loans shall be set at a rate equal to 50 percent of the interest rate paid by the state on the most recent sale of state general obligation bonds, to be computed according to the true interest cost method. If the interest rate so determined is not a multiple of one-tenth of 1 percent, the interest rate shall be set at the next higher multiple of one-tenth of 1 percent. The interest rate set for each contract shall be applied throughout the repayment period of the contract. There shall be a level annual repayment of principal and interest on loans.
   (5) No single project may receive more than five million dollars ($5,000,000) in loan proceeds from the board under this act and the Water Conservation and Water Quality Bond Law of 1986 (Chapter 6.1 (commencing with Section 13450) of Division 7).
   (d) The board may make loans to local agencies, at the interest rates authorized under this article and under any terms and conditions as may be determined necessary by the board, for purposes of financing feasibility studies of projects potentially eligible for funding under this article. No single project shall be eligible to receive more than one hundred thousand dollars ($100,000), and not more than 3 percent of the total amount of bonds authorized to be expended for the purposes of this article may be expended for loans to finance feasibility studies. A loan for a feasibility study shall not decrease the maximum amount of any other loan which may be made under this article.
   78644. The board may, by contract or otherwise, undertake plans, surveys, research, development, and studies necessary, convenient, or desirable to carry out subdivision (a) of Section 78642.
   78645. (a) Any unallocated funds remaining in the Agricultural Drainage Water Account in the 1986 Water Conservation and Water Quality Bond Fund on November 6, 1996, shall be transferred to the subaccount.
   (b) Notwithstanding Section 13340 of the Government Code, any funds that are transferred pursuant to subdivision (a) to the subaccount are hereby continuously appropriated, without regard to fiscal years, to the Department of Food and Agriculture for programs to develop methods of using drainage water and reducing toxic materials in drainage water through reuse of the water and the use of the remaining salts. Priority shall be given to source reduction projects and programs.
   78645.5. Not more than 3 percent of the total amount deposited in the subaccount for the use of the board may be used to pay for both of the following purposes:
   (a) To pay the costs incurred by the board in connection with the administration of this article.
   (b) For the purposes of Section 78644.
   78645.7. Not more than 3 percent of the total amount deposited in the subaccount for the use of the Department of Food and Agriculture may be used to pay the costs incurred by that department in connection with the administration of this article.

Article 5. Delta Tributary Watershed Program

   78647. (a) (1) There is hereby created in the account the Delta Tributary Watershed Subaccount.
   (2) For the purposes of this article, ''subaccount" means the Delta Tributary Watershed Subaccount created by paragraph (1).
   (3) The sum of fifteen million dollars ($15,000,000) is hereby transferred from the account to the subaccount for the purposes of implementing this article.
   (b) Notwithstanding Section 13340 of the Government Code, the money in the subaccount is hereby continuously appropriated, without regard to fiscal year, to the board for grants for eligible projects in accordance with this article, and for the administration of this article.
   78647.2. (a) The board shall administer a program under which a county, or a joint powers authority in which a county is a participant, may submit an application to the board for an eligible project requesting financial or technical assistance for the purpose of developing a voluntary, incentive-based watershed rehabilitation project. The board shall consult with other federal and state resource agencies, including, but not limited to, the Department of Fish and Game and the Department of Forestry and Fire Protection, in the administration of the program. The Resources Agency shall make a written recommendation to the board regarding each application. The board shall consider the recommendations of the Resources Agency and include, when appropriate, the recommendation in the board's final decision.
   (b) Notwithstanding subdivision (a), if a county, or a joint powers authority in which a county is a participant, after a request to do so by a local public agency, declines to submit an application for an eligible project for a watershed that is all or in part within the boundaries of the county, a local public agency other than the county or that joint powers agency may submit an application in accordance with subdivision (a).
   78647.4. (a) ''Eligible project" means a watershed rehabilitation project undertaken on lands owned or operated by the federal, state, or a local government, or a private person or entity within the delta tributary watershed.
   (b) For the purposes of this article, ''delta tributary watershed" means a watershed which drains into the delta or the Trinity River.
   78647.5. An eligible project shall include one or more of the following purposes:
   (a) A reduction in the presence of contaminants in drinking water by addressing the origins of the contaminants, including, to the maximum extent practicable, the specific activities that affect the drinking water supply of a community or communities. A project with a purpose described in this subdivision shall address contaminants, including those that are pathogenic organisms, for which a national primary drinking water regulation has been established, and that are detected in the community water system for which the application is submitted at levels above the maximum contaminant level or that are detected by adequate monitoring methods at levels that are not reliably and consistently below the maximum contaminant level.
   (b) An increase in the yield of water available from, and water retention capabilities of, the watershed, including projects to reduce dense forest understory, restore upland meadows, and repair stream channels.
   (c) The improvement, restoration, or enhancement of fisheries habitat, including riparian habitat, in and along streams and watercourses in the watershed. Projects may address factors which increase sedimentation in streams and watercourses in the watershed.
   (d) The improvement of overall forest health, including the reduction of factors which may contribute to the severity of wildfires in the watershed.
   78647.6. (a) Every project funded under this article shall comply with state and federal law, regulations, and policies, and shall not degrade the quality of any waters of the state.
   (b) An application submitted to the board under this article shall include all of the following information:
   (1) An identification of any deficiencies in information that may impair the development or implementation of a project.
   (2) A discussion of the efforts undertaken to implement the project and to obtain the participation of both of the following:
   (A) Public agencies with relevant responsibilities in the watershed.
   (B) Persons and entities in the watershed who may be affected by recommendations of the project and whose participation is essential to the success of the project.
   (3) Evidence in the form of a statement from a private person or entity that that person or entity consents to the inclusion of private property in the project, as appropriate.
   (4) A monitoring plan to determine whether project purposes are satisfied.
   (5) An outline of the way in which project participants will, during the development and implementation of the project, identify and take into account any activities being undertaken by persons or entities in the watershed under federal or state law to rehabilitate the watershed. A project shall include voluntary and incentive-based strategies for the long-term rehabilitation of the watershed.
   (6) An identification of the technical, financial, or other assistance that the applicant will request to develop or implement the project.
   (7) When feasible, an identification of quantifiable, innovative, and cost-effective methods for achieving project purposes.
   78647.7. An application submitted to the board under Section 78647.6 shall also include the following information:
   (a) A delineation of the watershed area or areas critical for project purposes using available hydrogeologic or other pertinent information. If no information is available, the project shall conduct, to the extent practicable, vulnerability assessments in the watershed area, including identification of risks to drinking water, a project may use delineations and vulnerability assessments undertaken to identify groundwater sources under a wellhead protection program, surface or groundwater sources under a pesticide management plan, or surface water sources under a state or local watershed initiative, or undertaken in accordance with Subpart H (commencing with Section 141.70) of Part 141 of Title 40 of the Code of Federal Regulations.
   (b) An identification, to the maximum extent practicable, of the origins of drinking water contaminants that may be addressed by a project, including, to the maximum extent practicable, a description of the specific activities contributing to the presence of the contaminants in the watershed.
   78647.8. The board may approve a grant for an eligible project to develop or implement a project, not to exceed one million dollars ($1,000,000) per project. A grant shall not exceed 50 percent of the administrative costs incurred, or estimated to be incurred, by the applicant in connection with carrying out the project.
   78647.10. (a) After providing notice and an opportunity for public comment with regard to an application submitted under Section 78647.6, the board shall approve or disapprove the application, in whole or in part, not later than 120 days after the date of submission of the application. The board shall prepare, and transmit to the Resources Agency and the applicant, written findings with regard to the recommendations of the Resources Agency.
   (b) The board may approve an application if the application meets the requirements established under this article. The notice of approval shall include all of the following:
   (1) The identification of technical, financial, or other assistance that the board agrees to provide to assist in the development or implementation of a project.
   (2) Any necessary coordination that the board will perform.
   (3) A description of any funds available for the purpose of developing and implementing the project, including any funds in a water pollution control revolving fund established in connection with Subchapter VI (commencing with Section 1381) of the Clean Water Act.
   (4) A description of other technical or financial assistance that is available under state or federal law for the purpose of developing or implementing the project.
   (5) A description of activities that are undertaken, or will be undertaken, to coordinate federal and state programs which are relevant to the watershed that is the subject of the application.
   (c) If the board disapproves an application submitted under Section 78647.6, the board shall notify the entity submitting the application in writing of the reasons for disapproval. An application may be resubmitted under either of the following circumstances:
   (1) New information becomes available.
   (2) Conditions affecting the watershed that is the subject of the application change.
   78647.12. The board may adopt regulations to implement this article. The regulations shall include all of the following:
   (a) Criteria for the assessment of watershed areas.
   (b) Procedures for the submission of applications.
   (c) Procedures for the approval or disapproval of an application submitted under Section 78647.6.
   78647.14. Grant recipients shall submit a report on completion of the project to the board indicating whether the purposes of the project have been met. The board shall make the report available to interested federal, state, and local agencies.
   78647.16. Not more than 3 percent of the total amount deposited in the subaccount may be used to pay the costs incurred in connection with the administration of this article.

Article 6. Seawater Intrusion Control

   78648. Unless the context otherwise requires, the following definitions govern the construction of this article:
   (a) (1) ''Eligible seawater intrusion control project" means a project which is all of the following:
   (A) Necessary to protect groundwater that is (i) within a basin that is subject to a local groundwater management plan for which a review is completed pursuant to the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) and (ii) is threatened by seawater intrusion in an area where restrictions on groundwater pumping, a physical solution, or both, are necessary to prevent the destruction of, or irreparable injury to, groundwater quality.
   (B) Is cost-effective. In the case of a project to provide a substitute water supply, the project shall be cost-effective as compared to the development of other new sources of water and shall include requirements or measures adequate to ensure that the substitute supply will be used in lieu of previously established extractions or diversions of groundwater.
   (C) Complies with applicable water quality standards, policies, and plans.
   (2) Eligible projects may include, but are not limited to, water conservation, freshwater well injection, and substitution of groundwater pumping from local surface supplies.
   (b) ''Local agency" means any city, county, district, joint powers authority, or other political subdivision of the state involved in water management.
   (c) ''Subaccount" means the Seawater Intrusion Control Subaccount created by Section 78648.2.
   78648.2. (a) There is hereby created in the account the Seawater Intrusion Control Subaccount. The sum of ten million dollars ($10,000,000) is hereby transferred from the account to the subaccount for the purposes of implementing this article.
   (b) Notwithstanding Section 11340 of the Government Code, the money in the subaccount is hereby continuously appropriated, without regard to fiscal year, to the board for loans to local agencies to carry out eligible seawater intrusion control projects and for the purposes described in this article, and for the administration of this article.
   78648.4. The board may enter into contracts to make loans to local agencies for the purposes set forth in this article.
   78648.6. Any contract for a loan entered into pursuant to Section 78648.4 may include those provisions determined by the board to be necessary for purposes of this article and shall include both of the following provisions:
   (a) An estimate of the reasonable cost of the eligible seawater intrusion control project.
   (b) An agreement by the local agency to proceed expeditiously with, and complete, the eligible seawater intrusion control project, commence operation of the project in accordance with applicable provisions of law, and provide for the payment of the local agency's share of the cost of the project, including the principal of, and interest on, the loan.
   78648.8. (a) A contract for a loan may not provide for a moratorium on the payment of the principal of, or interest on, the loan.
   (b) Any loan made pursuant to Section 78648.4 shall be for a period not to exceed 20 years.
   (c) The board may enter into a contract for a loan up to 100 percent of the total eligible cost of design and construction of an eligible seawater intrusion control project.
   78648.10. (a) The board shall establish the interest rate for a loan made pursuant to this article at a rate equal to 50 percent of the interest rate paid by the state on the most recent sale of state general obligation bonds, to be computed according to the true interest cost method.
   (b) If the interest rate so determined is not a multiple of one-tenth of 1 percent, the interest rate shall be set at the next higher multiple of one-tenth of 1 percent.
   (c) The interest rate set for each contract shall be applied throughout the repayment period of the contract. There shall be a level annual repayment of principal and interest on the loans.
   78648.12. All principal and interest payments received pursuant to loan contracts entered into pursuant to this article shall be deposited in the subaccount.
   78648.14. The board may, by contract or otherwise, undertake plans, surveys, research, development, and studies necessary, convenient, or desirable to carry out the purposes of this article.
   78648.16. Not more than 3 percent of the total amount deposited in the subaccount may be used to pay for both of the following:
   (a) To pay the costs incurred in connection with the administration of this article.
   (b) For the purposes of Section 78648.14.

Article 7. Lake Tahoe Water Quality

   78650. Unless the context otherwise requires, as used in this article, ''subaccount" means the Lake Tahoe Water Quality Subaccount created by Section 78650.2.
   78650.2. (a) There is hereby created in the account the Lake Tahoe Water Quality Subaccount. The sum of ten million dollars ($10,000,000) is hereby transferred from the account to the subaccount for the purpose of implementing this article.
   (b) Notwithstanding Section 13340 of the Government Code, the money in the subaccount is hereby continuously appropriated, without regard to fiscal years, to the California Tahoe Conservancy for the purposes of directly undertaking, or for grants to public agencies for, land acquisition and improvement programs which control soil erosion, restore watersheds, or preserve environmentally sensitive lands and the natural environment, and related implementation costs, pursuant to Title 7.42 (commencing with Section 66905) of the Government Code.
   78650.4. Any acquisition pursuant to this article shall be from willing sellers.

Chapter 6. Water Supply Reliability

Article 1. General Provisions

   78651. Unless the context otherwise requires, as used in this chapter, ''account" means the Water Supply Reliability Account created by Section 78652.
   78652. The Water Supply Reliability Account is hereby created in the fund. The sum of one hundred seventeen million dollars ($117,000,000) is hereby transferred from the fund to the account.

Article 2. Feasibility Projects

   78655. (a) (1) There is hereby created in the account the Feasibility Projects Subaccount.
   (2) For the purposes of this article, ''subaccount" means the Feasibility Projects Subaccount created by paragraph (1).
   (b) The sum of ten million dollars ($10,000,000) is hereby transferred from the account to the subaccount for the purpose of implementing this article.
   78656. Notwithstanding Section 13340 of the Government Code, the money in the subaccount is hereby continuously appropriated, without regard to fiscal year, to the department, for the administration of this article and for feasibility and environmental investigations for any of the following projects:
   (a) Off-stream storage upstream of the delta that will provide storage and flood control benefits in an environmentally sensitive and cost-effective manner.
   (b) Regional water recycling that may include partnerships or other cooperative efforts undertaken by water agencies, wastewater dischargers, or other public agencies to collect and reuse treated municipal wastewater for agricultural, industrial, residential, and environmental purposes.
   (c) Water transfer facilities in a county of the third class that would increase capacity for delivering Colorado River water for use in the southern California coastal plain and reduce demands on the bay-delta.
   (d) Desalination.
   78657. Not more than 3 percent of the total amount deposited in the subaccount may be used to pay the costs incurred in connection with the administration of this article.

Article 3. Water Conservation and Groundwater Recharge

   78670. Unless the context otherwise requires, the following definitions govern the construction of this article:
   (a) (1) ''Groundwater recharge facilities" means land and facilities for artificial groundwater recharge through methods which include, but are not limited to, percolation using basins, pits, ditches and furrows, modified streambed, flooding, and well injection and in-lieu recharge. ''Groundwater recharge facilities" also means capital outlay expenditures to expand, renovate, or restructure land and facilities already in use for the purpose of groundwater recharge and to acquire additional land for retention and detention basins.
   (2) Groundwater recharge facilities may include any of the following:
   (A) Instream facilities for regulation of water levels, but not regulation of streamflow to accomplish diversion from the waterway.
   (B) Agency-owned facilities for extraction.
   (C) Conveyance facilities to the recharge site, including devices for flow regulation and measurement of recharge waters.
   (3) Any part or all of the project facilities, including the land under the facilities, may consist of the separable features, or an appropriate share of multipurpose features, of a larger system, or both.
   (b) ''In-lieu recharge" means accomplishing increased storage of groundwater by providing interruptible surface water to a user who relies on groundwater as a primary supply, to accomplish groundwater storage through the direct use of that surface water in lieu of pumping groundwater. In-lieu recharge is used instead of continuing pumping while artificially recharging with the interruptible surface waters. However, bond proceeds may not be used to purchase surface water for use in lieu of pumping groundwater.
   (c) ''Local agency" or ''agency" means any city, county, district, joint powers authority, or other political subdivision of the state involved with water management.
   (d) ''Project" means both of the following:
   (1) Groundwater recharge facilities.
   (2) Voluntary, cost-effective capital outlay water conservation programs.
   (e) ''Subaccount" means the Water Conservation and Groundwater Recharge Subaccount created by Section 78671.
   (f) (1) ''Voluntary, cost-effective capital outlay water conservation programs" mean those feasible capital outlay measures to improve the efficiency of water use through programs, the benefits of which exceed their costs.
   (2) (A) The programs include, but are not limited to, all of the following:
   (i) The lining or piping of ditches.
   (ii) Improvements in water distribution system controls such as automated canal control, construction of small reservoirs within distribution systems that conserve water that has already been captured for use, and related physical improvements.
   (iii) Tailwater pumpback recovery systems.
   (iv) Major improvements or replacements of distribution systems to reduce leakage.
   (v) Capital changes in on-farm irrigation systems which improve irrigation efficiency such as sprinkler or subsurface drip.
   (vi) Capital outlay features of urban water conservation programs identified in the ''Memorandum of Understanding Regarding Urban Water Conservation in California," as amended on March 9, 1994.
   (vii) Conveyance facilities in a county of the third class, including appurtenances, necessary to implement a long-term conservation program to transfer conserved water from areas not directly receiving water from the bay-delta to areas that receive water from the bay-delta and whose demands on the bay-delta would be reduced as a result of the transfer.
   (B) In each case, the department shall determine if there is a net savings of water as a result of each proposed project and the project is cost-effective.
   78671. (a) There is hereby created in the account the Water Conservation and Groundwater Recharge Subaccount. The sum of thirty million dollars ($30,000,000) is hereby transferred from the account to the subaccount.
   (b) Notwithstanding Section 13340 of the Government Code, the sum of twenty-five million dollars ($25,000,000) is hereby continuously appropriated, without regard to fiscal years, to the department, for loans to local agencies to aid in the acquisition and construction of voluntary, cost-effective capital outlay water conservation programs and groundwater recharge facilities.
   78672. Any loan contract entered into pursuant to this article may include provisions determined to be necessary by the department.
   78672.5. (a) Any loan contract concerning an eligible, voluntary, cost-effective capital outlay water conservation program shall be supported by, or shall include, all of the following:
   (1) An estimate of the reasonable cost and benefit of the program.
   (2) An agreement by the local agency to proceed expeditiously with, and complete, the program.
   (3) A provision that there shall be no moratorium or deferment on payments of principal or interest.
   (4) A loan period of not more than 20 years with an interest rate set at a rate equal to 50 percent of the interest rate paid by the state on the most recent sale of state general obligation bonds, to be computed according to the true interest cost method. If the interest rate so determined is not a multiple of one-tenth of 1 percent, the interest rate shall be set at the next higher multiple of one-tenth of 1 percent. The interest rate set for each contract shall be applied throughout the repayment period of the contract. There shall be a level annual repayment of principal and interest on the loans.
   (5) A provision that the project shall not receive any more than five million dollars ($5,000,000) in loan proceeds from the department.
   (b) The department shall give preference for loans under this section on the basis of the cost-effectiveness of the proposed project, with the most cost-effective projects receiving the highest preference.
   78673. (a) Any loan contract concerning an eligible project for groundwater recharge shall be supported by, or shall include, all of the following:
   (1) A finding by the department that the agency has the ability to repay the requested loan, that the project is economically justified, and that the project is feasible from an engineering and hydrogeologic viewpoint.
   (2) An estimate of the reasonable cost and benefit of the project, including a feasibility report which shall set forth the economic justification and the engineering, hydrogeologic, and financial feasibility of the project, and shall include explanations of the proposed facilities and their relation to other water-related facilities in the basin or region.
   (3) An agreement by the agency to proceed expeditiously to complete the project in conformance with the approved plans and specifications and the feasibility report and to operate and maintain the project properly upon completion throughout the repayment period.
   (4) A provision that there shall be no moratorium or deferment on payment of principal or interest.
   (5) A loan period of not more than 20 years with an interest rate set at a rate equal to 50 percent of the interest rate paid by the state on the most recent sale of state general obligation bonds, to be computed according to the true interest cost method. If the interest rate so determined is not a multiple of one-tenth of 1 percent, the interest rate shall be set at the next higher multiple of one-tenth of 1 percent. The interest rate set for each contract shall be applied throughout the repayment period of the contract. There shall be a level annual repayment of principal and interest on the loans.
   (6) A provision that the project shall not receive more than five million dollars ($5,000,000) in loan proceeds from the department.
   (b) The department shall give preference under this section to projects for groundwater recharge that are located in overdrafted groundwater basins and those projects of critical need, to projects whose feasibility studies show the greatest economic justification and the greatest engineering and hydrogeologic feasibility as determined by the department, and to projects located in areas which have existing water management programs.
   78674. The department may make loans to local agencies, at the interest rates authorized under this article and under any terms and conditions as may be determined necessary by the department, for the purposes of financing feasibility studies of projects potentially eligible for funding under this article. No single project shall be eligible to receive more than one hundred thousand dollars ($100,000), and not more than 3 percent of the total amount of bonds authorized to be expended for purposes of this article may be expended for the purposes of financing feasibility studies. A loan for a feasibility study shall not decrease the maximum amount of any other loan which may be made under this article.
   78675. Any repayments of loans made pursuant to this article, including interest payments, and all interest earned on, or accruing to, any money in the subaccount, shall be deposited in the subaccount and shall be available for the uses described in this article.
   78675.5. Notwithstanding Section 13340 of the Government Code, the sum of five million dollars ($5,000,000) in the subaccount is hereby continuously appropriated, without regard to fiscal years, to the department for a grant to a local agency for the development of supplemental water sources, distribution systems, and recharge facilities in a watershed that is in a state of overdraft and whose ability to locally finance the facilities has been adversely affected by the Base Closure and Realignment Act of 1990 (P.L. 101-510).
   78676. Not more than 3 percent of the total amount deposited in the subaccount may be used to pay the costs incurred in connection with the administration of this article.

Article 4. Local Projects

   78680. (a) (1) There is hereby created in the account the Local Projects Subaccount.
   (2) For the purposes of this article ''subaccount" means the Local Projects Subaccount created by paragraph (1).
   (3) The sum of twenty-five million dollars ($25,000,000) is hereby transferred from the account to the subaccount for the purposes of implementing this article.
   (b) Notwithstanding Section 13340 of the Government Code, the money in the subaccount is hereby continuously appropriated, without regard to fiscal years, to the department, for grants and loans in accordance with this article, and for the administration of this article.
   78680.2. It is the intent of this article to finance a program to further the development, control, and conservation of the water resources of the state by assisting public agencies in the construction of eligible projects undertaken to meet local requirements in which there is a statewide interest.
   78680.4. The following definitions govern the construction of this article:
   (a) ''Feasibility study" means a report on the feasibility of a project, dam, or reservoir. A feasibility study may include an environmental impact report prepared pursuant to Division 13 (commencing with Section 21000) of the Public Resources Code.
   (b) ''Project" means any of the following:
   (1) The construction of a conveyance facility, pumping facility, groundwater extraction facility, clear or ranney well, or facility for diversion from existing storage or conveyance facilities undertaken by a public agency for the diversion, storage, or distribution of water primarily for domestic, municipal, agricultural, industrial, recreation, or fish and wildlife mitigation and enhancement purposes.
   (2) Fish and wildlife mitigation and enhancement measures undertaken by a public agency, including the acquisition of lands which may be necessary for the mitigation of significant impact on fish and wildlife resources resulting from the implementation of a project undertaken pursuant to paragraph (1).
   (c) ''Public agency" means any city, county, city and county, special district or other political subdivision of the state, including a joint powers entity created pursuant to Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 of the Government Code, in a county of the 22nd class or any county having a smaller population than a county of the 22nd class on the date on which this division becomes effective.
   78680.6. The department shall carry out this article and shall give preference to projects undertaken to develop new water supplies and to mitigate significant environmental impacts resulting from those projects.
   78680.8. Applications for grants or loans for financial assistance under this article shall be made to the department in the form and with those supporting materials that are prescribed by the department.
   78680.10. (a) The department may make grants to public agencies for feasibility studies.
   (b) The amount of the grants may not exceed five hundred thousand dollars ($500,000).
   78680.12. (a) The department may make loans to public agencies for projects. Loans for a single project may not exceed five million dollars ($5,000,000).
   (b) All loan applications shall include information relating to the public necessity of the project, the urgency of need, the engineering feasibility, the economic justification, and the financial feasibility of the project, as well as other information that the department may require.
   (c) All loans made pursuant to this section are subject to all of the following requirements:
   (1) Public agencies requesting a loan shall demonstrate, to the satisfaction of the department, that an adequate opportunity for public participation regarding the loan has been provided.
   (2) Any election held with respect to the loan shall include the voters of the entire agency except where the agency proposes to accept the loan on behalf of a specified portion, or portions, of the agency, in which case the election shall be held only in that portion or portions of the agency.
   (3) Loan contracts may not provide for a moratorium on payment of principal or interest.
   (4) Loans shall be for a period of up to 20 years. The interest rate for the loans shall be set at a rate of equal to 50 percent of the interest rate paid by the state on the most recent sale of state general obligation bonds, to be computed according to the true interest cost method. If the interest rate so determined is not a multiple of one-tenth of 1 percent, the interest rate shall be set at the next higher multiple of one-tenth of 1 percent. The interest rate set for each contract shall be applied throughout the contract's repayment period. There shall be a level annual repayment of principal and the interest on the loans.
   78680.14. (a) The department may also make loans to public agencies for the acquisition of interest in lands that are necessary for the construction, operation, or maintenance of a project.
   (b) Loans granted pursuant to this section shall be subject to all of the following conditions:
   (1) The loan may be made for all or any part of the costs of acquiring interests in lands for a project that has been identified as the preferred alternative in an environmental impact report or an environmental impact statement, and the lands may become unavailable to the public agency for the purposes of developing that project.
   (2) The loans shall not exceed one million dollars ($1,000,000) for each acquisition under this section.
   (3) Each loan granted pursuant to this section is subject to subdivision (c) of Section 78680.12.
   78680.16. Each contract which the department enters into for a loan pursuant to Section 78680.14 shall require the sale of the interests in lands that are acquired with the loan funds if, in the department's determination, the construction of the project has not commenced within a period of two years from the date of the first disbursement of loan funds under the contract or within any extension of such period that is granted by the department. In that event, the contract shall require that the interests in lands be offered for sale within six months from the expiration of the two-year period, or any extension thereof, and shall require that the proceeds of the sale be applied toward the repayment of the principal amount of the loan and toward the payment of the accrued interest thereon. Any remaining proceeds, after deducting the administrative costs of the public agency identified in connection with the purchase and sale of the interests in lands, shall be repaid to the department.
   78680.18. Notwithstanding any provision of law, any land acquired with the use of loan funds made available pursuant to Section 78680.14, that is located outside the boundaries of the public agency acquiring the land and which was subject to taxation at the time of acquisition thereof, shall remain subject to taxation.
   78680.20. (a) The department may adopt regulations to carry out this article. Notwithstanding any provisions of law, regulations adopted by the department pursuant to Chapter 2.3 (commencing with Section 450.1) of Division 2 of Title 23 of the California Code of Regulations that are in effect on November 6, 1996, may be used to carry out this article.
   (b) Not more than 3 percent of the total amount deposited in the subaccount may be used to pay the costs incurred in connection with the administration of this article.

Article 5. Sacramento Valley Water Management and Habitat Protection Measures

   78681. (a) There is hereby created in the account the Sacramento Valley Water Management and Habitat Protection Subaccount.
   (b) For the purposes of this article, ''subaccount" means the Sacramento Valley Water Management and Habitat Protection Subaccount created by subdivision (a).
   78681.2. The sum of twenty-five million dollars ($25,000,000) is hereby transferred from the account to the subaccount for the purpose of implementing this article.
   78681.4. Notwithstanding Section 13340 of the Government Code, the money in the subaccount is hereby continuously appropriated, without regard to fiscal years, to the department, for programs or projects in the Sacramento Valley to assist in the implementation of the Water Quality Control Plan for the Bay-Delta adopted by the board in Resolution No. 95-24 on May 22, 1995, and as it may be amended.
   78681.8. The board shall provide adequate public review for proposed programs or projects and shall determine that those programs or projects are consistent with the requirements of Section 78681.4.
   78681.9. Only the programs or projects that are not the obligation of the federal Central Valley Project or the State Water Project may be funded under this article.
   78681.10. Not more than 3 percent of the total amount deposited in the subaccount for the use of the department may be used to pay the costs incurred in connection with the administration of this article by the department.

Article 6. River Parkway Program

   78682. (a) (1) There is hereby created in the account the River Parkway Subaccount.
   (2) For the purposes of this article, ''subaccount" means the River Parkway Subaccount created by paragraph (1).
   (b) The sum of twenty-seven million dollars ($27,000,000) is hereby transferred from the account to the subaccount for the purpose of implementing this article.
   78682.2. The money in the subaccount shall be made available, upon appropriation by the Legislature, for the acquisition and restoration of riparian habitat, riverine aquatic habitat, and other lands in close proximity to rivers and streams and for river and stream trail projects undertaken in accordance with any of the following provisions:
   (a) Chapter 4 (commencing with Section 1300) and Chapter 4.1 (commencing with Section 1385) of Division 2 of the Fish and Game Code.
   (b) Chapter 5 (commencing with Section 31200), Chapter 6 (commencing with Section 31251), and Chapter 9 (commencing with Section 31400), of Division 21 of the Public Resources Code.
   (c) Division 22.5 (commencing with Section 32500) of the Public Resources Code.
   (d) Urban river park acquisition and restoration projects undertaken pursuant to Division 23 (commencing with Section 33000) of the Public Resources Code.
   (e) River parkway projects undertaken by a state agency, city, county, city and county, or pursuant to a joint powers agreement between two or more of these entities.
   78682.4. At least 50 percent of the funds in the subaccount shall be used for projects that are located in, or in close proximity to, major metropolitan areas.
   78682.6. Not more than 3 percent of the total amount deposited in the subaccount may be used to pay the costs incurred in connection with the administration of this article.

Chapter 7. CALFED Bay-Delta Ecosystem Restoration Program

   78684. Unless the context otherwise requires, all of the following definitions govern the construction of this chapter.
   (a) ''Account" means the Bay-Delta Ecosystem Restoration Account created by Section 78684.6.
   (b) ''Bay-delta ecosystem" means the bay-delta and its tributary watersheds.
   (c) ''CALFED Bay-Delta Program" or ''program" means the undertaking by CALFED to develop, by means of the programmatic EIS/EIR, a preferred alternative of programs, actions, projects, and related activities which will provide solutions to identified problem areas related to the bay-delta ecosystem.
   (d) (1) ''Eligible project" means a project or program, or an element of a project or program, identified in the final programmatic EIS/EIR, that is intended to improve and increase aquatic and terrestrial habitats and improve ecological functions in the bay-delta ecosystem.
   (2) Eligible projects may include, but are not limited to, projects or programs with any of the following purposes:
   (A) The protection and enhancement of existing habitat.
   (B) The restoration of tidal, shallow water, riparian, riverine, wetlands, and other habitats.
   (C) The expansion of wetlands protection programs.
   (D) The acquisition of water for instream flow improvements.
   (E) Improved habitat management.
   (F) Improved management of introduced species.
   (G) Improved fish protection and management.
   (3) Eligible projects shall not include any of the following:
   (A) Any water conveyance facilities.
   (B) Any component of the CALFED Bay-Delta Program that is not identified in the final programmatic EIS/EIR as a component of the ecosystem restoration element.
   (C) Any programs or projects undertaken to offset or avoid adverse environmental conditions which the final programmatic EIS/EIR determines would be caused by the construction, operation, or implementation of any element of the CALFED Bay-Delta Program other than the ecosystem restoration element.
   (e) ''Programmatic EIS/EIR" means the programmatic environmental impact statement/environmental impact report that is prepared by CALFED for the CALFED Bay-Delta Program.
   78684.2. The Legislature hereby finds and declares all of the following:
   (a) CALFED is in the process of preparing a programmatic EIS/EIR for a long-term comprehensive plan that will resolve problems related to ecosystem restoration, water quality, water supplies, and water management for beneficial uses of the bay-delta ecosystem, and system integrity.
   (b) The CALFED Bay-Delta Program, to the extent that it relates to restoration in the bay-delta ecosystem, is of statewide and national importance. The state should participate in the funding of eligible projects as a part of its ongoing program to improve environmental conditions in the bay-delta ecosystem.
   (c) The programmatic EIS/EIR will include a schedule for funding and implementing all elements of the long-term comprehensive plan.
   (d) The CALFED Bay-Delta Program elements will achieve balanced solutions in all identified problem areas, including the ecosystem, water supply, water quality, and system integrity.
   78684.4. This chapter does not authorize implementation of the CALFED Bay-Delta Program or any element of the program. The implementation of the CALFED Bay-Delta Program, or any element of the program, shall only be undertaken pursuant to authority provided by law other than this division.
   78684.6. (a) The Bay-Delta Ecosystem Restoration Account is hereby created in the fund for the purpose of funding eligible projects. The sum of three hundred ninety million dollars ($390,000,000) is hereby transferred from the fund to the account.
   (b) Notwithstanding Section 13340 of the Government Code, the money in the account is hereby continuously appropriated, without regard to fiscal years, to the Resources Agency for the purposes set forth in this chapter, and for the administration of this chapter.
   78684.8. The Secretary of the Resources Agency shall carry out this chapter in accordance with procedures established by CALFED for the purposes of ecosystem restoration until the Legislature, by statute, authorizes another entity, that is recommended by CALFED, to carry out this chapter.
   78684.10. No funds in the account may be expended until all of the following conditions have been met:
   (a) The final programmatic EIS/EIR has been certified by the state lead agency and a notice of determination has been issued as required by Division 13 (commencing with Section 21000) of the Public Resources Code.
   (b) The identical final programmatic EIS/EIR has been filed by the federal lead agencies with the Environmental Protection Agency, the required notice has been published in the Federal Register, and there has been federal approval of the identical program approved by the state.
   (c) A cost-sharing agreement has been entered into by the State of California and the United States, pursuant to which the United States agrees to share in the costs of eligible projects.
   78684.12. Due to the importance of issuing permits and otherwise expediting all elements of the CALFED Bay-Delta Program in a timely and balanced manner, the following procedures apply to the use of funds authorized by this chapter:
   (a) After the requirements set forth in Section 78684.10 are met, funds in the account shall become available for use in accordance with the schedule for eligible projects set forth in the final programmatic EIS/EIR, unless and until the Secretary of the Resources Agency determines that the schedule established in the final programmatic EIS/EIR has not been substantially adhered to.
   (b) Prior to November 15 of each year, the Secretary of the Resources Agency, in consultation with state and federal CALFED representatives and other interested persons and agencies, shall review adherence to the schedule.
   (c) The absence of funding from nonfederal or nonstate sources shall not be a basis for a determination that the schedule has not been adhered to.
   (d) If, at the conclusion of each annual review, the Secretary of the Resources Agency determines that the schedule established in the final programmatic EIS/EIR, or a revised schedule prepared pursuant to this subdivision, has not been substantially adhered to, the secretary, after notice to, and consultation with, state and federal CALFED representatives and other interested persons and agencies, shall prepare a revised schedule that ensures that balanced solutions in all identified problem areas, including ecosystem restoration, water supply, water quality, and system integrity are achieved, consistent with the intent of the final programmatic EIS/EIR. Funds shall be available for expenditure unless a revised schedule has not been developed within six months from the date on which the secretary determines that the prior schedule has not been substantially adhered to. Upon the preparation of any revised schedule under this subdivision, funds shall be expended in accordance with that revised schedule.
   (e) Specific project and program decisions involving the expenditure of funds in the account shall be made in accordance with the procedures established by CALFED for the ecosystem restoration program.
   78684.13. On or before December 15 of each year, the Secretary of the Resources Agency shall submit an annual report to the Legislature that describes the status of the implementation of all elements of the CALFED Bay-Delta Program, any determinations made by the secretary pursuant to subdivisions (b) and (d) of Section 74684.12, and other significant scheduling issues. The report also shall include a detailed accounting of expenditures, descriptions of programs for which expenditures have been made, and a schedule of anticipated expenditures for the next year.
   78684.14. Not more than 3 percent of the total amount deposited in the account may be used to pay the costs incurred in connection with the administration of this chapter.

Chapter 8. Flood Control and Prevention Program

Article 1. Definitions

   78686. Unless the context otherwise requires, as used in this chapter, ''account" means the Flood Control and Prevention Account created by Section 78686.10.

Article 2. Flood Control and Prevention Program

   78686.10. The Flood Control and Prevention Account is hereby created in the fund. The sum of sixty million dollars ($60,000,000) is hereby transferred from the fund to the account.
   78686.12. (a) Notwithstanding Section 13340 of the Government Code, the money in the account is hereby continuously appropriated, without regard to fiscal years, to the department for the purposes set forth in subdivision (b).
   (b) (1) The money in the account shall be used to pay for the state's share of the nonfederal costs of flood control and flood prevention projects that have been adopted and authorized in accordance with one or more of the following provisions of law:
   (A) The State Water Resources Law of 1945 (Chapter 1 (commencing with Section 12570) and Chapter 2 (commencing with Section 12630) of Part 6 of Division 6).
   (B) The Flood Control Law of 1946 (Chapter 3 (commencing with Section 12800) of Part 6 of Division 6).
   (C) The California Watershed Protection and Flood Prevention Law (Chapter 4 (commencing with Section 12850) of Part 6 of Division 6).
   (2) The money in the account may only be used to pay for costs for which valid written claims have been submitted to the department on or before June 30, 1996. Funds which are made available under this chapter shall be allocated on a pro rata basis to projects in the Counties of Contra Costa, Fresno, Kern, Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Santa Clara, based on the amount of available funds relative to the total eligible claims.

Chapter 9. Miscellaneous

   78688. Nothing in this division diminishes, or otherwise affects, the requirements of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) or the National Environmental Policy Act of 1969 (42 U.S.C. Sec. 4321 et seq.).

Chapter 10. Fiscal Provisions