EXECUTIVE SUMMARY Chino Basin Conjunctive Use ... Exec Summary Chino Basin... · The proposed Chino...

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Chino Basin Conjunctive Use Environmental Water Storage/Exchange Program

PROGRAM SUMMARY STATEMENT The proposed Chino Basin Conjunctive Use Environmental Water Storage/Exchange Program (Chino Basin Environmental Water Program - CBEWP) would construct an advanced water treatment facility and distribution system that would treat and store up to 15,000 acre-feet per year of recycled water in the Chino Basin Water Bank (CBWB), creating a new local water supply. Through agreements with the California Department of Water Resources (DWR) and other project partners, the bank would be operated in a way that dedicates blocks of water of up to 50,000 acre-feet per year towards ecosystem benefits north of the Delta. Based upon historic hydrologic conditions, this would provide for important ecological benefits in the Bay-Delta watershed in approximately thirty percent of all years, with a focus on improved ecological flow benefits in dry and critical years. The CBEWP will provide up to 100,000 acre-feet of storage capacity in the CBWB for managing water dedicated to environmental purposes, and an additional 100,000 acre-feet of “borrowing capacity” of previously stored water to provide early environmental benefits ahead of production of the new local water supply, potentially as early as 2020, and additional flexibility in providing blocks of environmental water. Through this approach, the CBEWP can be operated in a way to provide up to 50,000 acre-feet per year for up to three consecutive dry years. In this way, the project is designed to provide the capacity to provide ecological flow benefits during the years when the system most needs these benefits. The CBEWP will leverage a partnership with an existing State Water Project Contractor (SWPC). This partnership, together with agreements to be developed with DWR and the California Department of Fish and Wildlife (DFW), would allow for this new local water supply, stored in the CBWB, to be exchanged with an equivalent amount of State Water Project (SWP) water supply. The CBEWP would operate in the following manner. The new local water supply would be pumped from the CBWB for the SWPC use in lieu of their SWP water supply, allowing an equivalent amount of water supply to be dedicated north of the Delta for environmental benefit. The CBEWP includes developing agreements and infrastructure necessary to produce the additional 15,000 acre-feet per year of new local water supply, and agreements to ensure that blocks of up to 50,000 acre-feet of exchange water are available in years that will provide the greatest environmental benefit for a period of 25 years. The CBEWP would be integrated into the existing CBWB, a successful groundwater banking program Inland Empire Utilities Agency (IEUA) has already undertaken. The CBWB would dedicate storage capacity to the operation of this CBEWP, providing a firm and reliable supply for environmental purposes. The elements of the CBEWP are summarized in the following table.

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Elements of the Chino Basin Environmental Water Program

A. Proposed project assets to be acquired with WSIP funds C. Proposed operational strategy 1 2 3

Secure commitments for continued discharge of 15,000 acre-feet per year of treated wastewater from upstream sources tributary to the Santa Ana River for 25 years. Estimated capital cost: $95 million Construct advanced water treatment and distribution facilities to produce and store 15,000 acre-feet per year and recharge this treated water in the Chino Basin Water Bank (CBWB). Estimated capital cost: $180 million Construct facilities to extract and treat water withdrawn from the CBWB and connect to a partnering State Water Project Contractor (SWPC) (Metropolitan Water District of Southern California (MWDSC) and/or the San Bernardino Valley Municipal Water District (SBVMWD)) distribution system with capacity of 50,000 acre-feet per year. Estimated capital cost: $205 million

1 2 3 4

15,000 acre-feet per year of new water produced by the advanced water treatment facilities will be stored in the CBWB. When an ecosystem need arises (dry and critical years in the operations proposed here), up to 50,000 acre-feet per year for up to three sequential years can be extracted from the CBWB and provided to the partnering SWPC. Partnering SWPC would forebear delivery of SWP Table A delivery of an equivalent amount provided by the CBWB. State of California Department of Water Resources (DWR) would dedicate the equivalent amount of water that would have been delivered to the partnering SWPC to instream flow purposes and release from Lake Oroville per a schedule provided by California Department of Fish and Wildlife (DFW)

B. Proposed financing of ongoing O&M costs D. Proposed institutional arrangements

1 2 3 4

The annual operations and maintenance (O&M) costs will be allocated among the local agencies and SWPC. Inland Empire Utilities Agency (IEUA) to pay approximately 75 percent of total anticipated costs for annual O&M of $910 per acre-foot for 25 years. IEUA to pay all ongoing O&M costs after 25 years. Partnering SWPC to pay approximately 25 percent of total anticipated costs for annual O&M of $910 per acre-foot for 25 years. (To be negotiated) Project assets revert to IEUA after the end of the 25-year project life span for local use.

1 2 3 4

DFW agrees to manage its participation in the CBEWP. DFW agrees to make calls for water for instream flow purposes subject to terms of their participation, including availability of stored water or borrowing capacity, in quantities and schedule DFW determines will provide optimum ecosystem benefit. DWR agrees to seek a water right change under Section 1707 of the Water Code to provide the ability to dedicate water released from Lake Oroville for instream flow purposes. Terms of the water right change would include conditions and requirements for implementing dedicated instream flow, including availability of alternative water to substitute for scheduled delivery of Table A water to SWPC and no injury to other water rights holders and SWP contractors. DWR agrees to release water from Lake Oroville per terms of agreement and an approved Water Code Section 1707 petition and further agrees not to export those releases. DWR agrees to negotiate and complete any needed amendments to the SWP water supply contract with SWPC. IEUA agrees to manage CBEWP operations within the CBWB and provide water to SWPC subject to availability when called by DFW. SWPC agrees to accept alternative supply from CBWB when called by DFW and forebear delivery of SWP Table A. SWPC agrees to pay IEUA a to-be-determined contribution towards operating costs of the water bank, as informed by the cost savings realized by not paying transportation costs for delivery of SWP water and any reduced treatment costs associated with the improved quality of CBEWP supplies compared to imported SWP water. SWPC agrees to negotiate and complete any needed amendments to SWP water supply contract with DWR.

C Proposed project operational parameters

1 2

Reserve 100,000 acre-feet of storage capacity in the CBWB for Chino Basin Environmental Water Program Operations, to be used for deposit of up to 15,000 acre-feet in each year for 25 years of water produced by the project’s advanced water treatment facilities, and accessible for withdrawal at a maximum capacity of 50,000 acre-feet per year, when an ecosystem need arises (dry and critical years in the operations proposed here, and up to three years in sequence). Provide up to 50,000 acre-feet per year of “borrowed water” from the CBWB in advance of deposits, with a maximum “credit limit” of 100,000 acre-feet. Any borrowed water must be returned to the CBWB by the end of 25 years.

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OVERVIEW The proposed Chino Basin Environmental Water Program (CBEWP) is uniquely designed to deliver public benefits including a highly reliable, dedicated environmental water supply to benefit Bay Delta instream flows, as well as enhance water supply reliability and improve water quality for water users in southern California. Among the key attributes of the CBEWP compared to other proposals expected under the Proposition 1, Chapter 8, Water Storage Investment Program (WSIP) is the production of a new source of highly reliable water supply for the environment. The challenges of allocating scarce water supplies among water users and the environment faced by State and federal agencies during California’s recent historical drought clearly demonstrated the value of creating dependable new supplies for all California water uses. Consistent with Governor Brown’s California Water Action Plan, responsible public water agencies across California are adding resiliency to meet their future water needs by diversifying their water management portfolios through investment in a variety of water use efficiency and supplemental local supply programs and projects. The Chino Basin Environmental Water Program offers an important opportunity to similarly diversify the tools available to California’s environmental managers for sustaining our State’s vital aquatic ecosystems. By increasing additional available groundwater supplies in the adjudicated Chino Groundwater Basin through increased water recycling and storage in the Chino Basin Water Bank (CBWB), and then dedicating a like amount of water for environmental flow purposes, the CBEWP provides a compelling example of a conjunctive use storage project operating at both ends of the State Water Project. The reliability of the water designated for groundwater storage is based upon the development of new water supplies from treated wastewater secured from IEUA partner agencies. In the scope of this program, new water is secured, transported, treated and then deposited in the CBWB for ecological benefit in the Bay-Delta watershed while providing water supply reliability and improved water quality benefits to IEUA customers and partner agencies. The proposed project would leverage a partnership with an existing SWPC. The partnership, together with agreements to be developed with DWR and DFW, would allow for locally stored groundwater to be exchanged with north of Delta water supply. The locally stored water would be pumped from the CBWB to deliver water supply for a SWPC to fulfill SWP water delivery obligations and an equivalent amount – stored in Lake Oroville - would then be dedicated to ecosystem benefits. It is anticipated that the Metropolitan Water District of Southern California (MWD) and/or the San Bernardino Valley Municipal Water District (SBVMWD) could be project partners and serve as the SWPC. Pursuant to State laws, water dedicated to ecosystem benefit shall be provided for environmental flows beyond those necessary for environmental compliance. Because new water is created at the bottom of the system through this program for CBWB beneficiaries, this project enables forbearance of a like amount of water at the top of the system for direct environmental benefits that can be delivered with 100% reliability. As a

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result, the water dedicated for environmental purposes under terms of this proposal is secure, a feature which makes this project unique. In summary, the elements for the CBEWP are as follows: Proposed project assets to be acquired with WSIP funds: 1. Secure commitment for ongoing discharge of 15,000 acre-feet per year of treated

wastewater from upstream sources tributary to the Santa Ana River for 25 years. Estimated capital cost: $95 million

2. Construct advanced water treatment and distribution facilities to produce and store 15,000 acre-feet per year and recharge this treated water for storage in the Chino Basin Water Bank (CBWB). Estimated capital cost: $180 million

3. Construct facilities to extract and treat water withdrawn from the CBWB and connect to a partnering State Water Project Contractor (SWPC) (Metropolitan Water District of Southern California (MWDSC) and/or the San Bernardino Valley Municipal Water District (SBVMWD)) distribution system with capacity of 50,000 acre-feet per year. Estimated capital cost: $205 million

Proposed financing of ongoing operations and maintenance costs: 1. The annual operations and maintenance (O&M) costs will be allocated among the local

agencies and SWPC 2. Inland Empire Utilities Agency (IEUA) to pay approximately 75 percent of total

anticipated costs for O&M of $910 per acre-foot for 25 years. IEUA to pay all ongoing O&M costs after 25 years.

3. Partnering SWPC to pay approximately 25 percent of total anticipated costs for annual O&M of $910 per acre-foot for 25 years. (To be negotiated)

4. Project assets revert to IEUA after the end of 25 years for local use. Proposed project operational parameters: 1. Reserve 100,000 acre-feet of storage capacity in the CBWB for CBEWP, to be used for

deposit of up to 15,000 acre-feet per year for 25 years of water produced by the project’s advanced water treatment facilities, and accessible for withdrawal at a maximum capacity of 50,000 acre-feet per year, when an ecosystem need arises (dry and critical years in the operations proposed here, and up to three years in sequence).

2. Provide up to 50,000 acre-feet per year of “borrowed water” from the CBWB in advance of deposits, with a maximum “credit limit” of 100,000 acre-feet. Any borrowed water must be returned to the CBWB by the end of 25 years.

Proposed project operational strategy: 1. 15,000 acre-feet per year of new water produced by the advanced water treatment

facilities will be stored in the CBWB.

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2. When an ecosystem need arises (dry and critical years in the operations proposed here), up to 50,000 acre-feet per year for up to three sequential years can be extracted from the CBWB and provided to the partnering SWPC.

3. Partnering SWPC would forebear delivery of SWP Table A delivery of an equivalent amount provided by the CBWB.

4. State of California Department of Water Resources (DWR) would dedicate the equivalent amount of water that would have been delivered to the partnering SWPC to instream flow purposes and release from Lake Oroville per a schedule provided by California Department of Fish and Wildlife (DFW).

Proposed institutional arrangements: 1. DFW agrees to manage its participation in the CBEWP. DFW agrees to make calls for

water for instream flow purposes subject to terms of their participation, including availability of stored water or borrowing capacity, in quantities and schedule DFW determines will provide optimum ecosystem benefit.

2. DWR agrees to seek a water right change under Section 1707 of the Water Code to provide the ability to dedicate water released from Lake Oroville for instream flow purposes. Terms of the water right change would include conditions and requirements for implementing dedicated instream flow, including availability of alternative water to substitute for scheduled delivery of Table A water to SWPC and no injury to other water rights holders and SWP contractors. DWR agrees to release water from Lake Oroville per terms of agreement and an approved Water Code Section 1707 petition and further agrees not to export those releases. DWR agrees to negotiate and complete any needed amendments to the SWP water supply contract with SWPC.

3. IEUA agrees to manage CBEWP operations within the CBWB and provide water to SWPC subject to availability when called by DFW.

4. SWPC agrees to accept alternative supply from CBWB when called by DFW and forebear delivery of SWP Table A. SWPC agrees to pay IEUA a to-be-determined contribution towards operating costs of the water bank, as informed by the cost savings realized by not paying transportation costs for delivery of SWP water and any reduced treatment costs associated with the improved quality of CBEWP supplies compared to imported SWP water. SWPC agrees to negotiate and complete any needed amendments to SWP water supply contract with DWR.

Through its comprehensive water management strategy, IEUA has demonstrated that water use efficiency can reduce the need for imported water supplies. This foundation helps ensure that water which is conserved on the supply/storage side is in effect, protected from inefficient use of water. The CBEWP outlined here is exemplary of the principles in Proposition 1 and the objectives of the California Water Action Plan: to deliver “more reliable water supplies, restoration of important species and habitat, and more resilient and sustainably managed water infrastructure.” And the proposed project components are consistent with the long-term water resources management as identified in the IEUA’s 2015 Integrated Water Resources Plan.

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IEUA ENVIRONMENTAL WATER PROGRAM DESIGN AND OPERATIONS Chino Basin Groundwater Bank The Chino Basin has been sustainably managed for nearly 40 years under the 1978 stipulated Chino Basin Judgment and overseen by the Chino Basin Watermaster process and the continuing jurisdiction of the California Superior Court. Basin replenishment for groundwater pumping is currently provided through recharge of three supply sources: local stormwater/dry weather runoff, local recycled water, and State Water Project water delivered through the Metropolitan Water District of Southern California (MWD). The 2007 Peace II agreement and Programmatic Environmental Impact Report already authorized development of 500,000 acre-feet of groundwater storage above current operation levels; it is this basis upon which the Chino Basin Environmental Water Program will be developed. The Chino Basin Water Bank (CBWB) is a newly formed coalition of parties with water rights in the Chino Basin and the Inland Empire Utilities Agency, the region’s supplemental water provider. By its charter, CBWB will:

• Develop new sources of groundwater replenishment for a coordinated storage and recovery program to achieve a proposed expansion of the Chino Basin groundwater storage capacity and do so in a way that will provide local, regional and statewide benefits;

• Secure authority from the Chino Basin Watermaster to create a comprehensive storage and recovery program under existing basin rules and with the dedicated quantity of basin storage; and

• Provide additional storage on top of an existing 500,000 acre-feet of storage - available to partner agencies.

IEUA’s proposed program is founded upon this existing successful groundwater banking program that IEUA has already undertaken in the Chino Basin. The proposed CBEWP will provide up to 100,000 acre-feet of storage in the CBWB. Investment from the WSIP will be dedicated to develop and store up to 15,000 acre-feet per year of new advanced treated water in the CBWB, resulting in the ability to dedicate blocks of water of up to 50,000 acre-feet to enhance instream flows in the Feather River below Lake Oroville in approximately thirty percent of all years, including dry and critical years. Additionally, IEUA proposes to commit an advanced supply of exchange water for environmental uses in the amount of 50,000 acre-feet per year, up to a total of 100,000 acre-feet (or 2 years of exchange water). In designing the project this way, the water stored in the Chino Basin serves as a groundwater resource to meet local supply needs, leaving water in the State Water Project system for environmental benefit – a framework for conjunctive water management that links water protected at the top of the system with a new water supply source to meet customer needs in the Chino Basin. It is conceivable that as proposed expansions of the Chino Basin groundwater storage capacity occur, potentially larger portions of the basin

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could support future conjunctive use and banking concepts like that proposed for the CWEBP. This could add flexibility to programs like the CWEBP in terms of considering potential future expansions to further help meet public and non-public benefits. The specific program elements of the CBEWP are discussed in more detail below. New Local Firm Water Supply for Recharge The scope of this project also includes developing agreements and infrastructure necessary to produce 15,000 acre-feet per year of new advanced treated water to deposit in the CBWB. To provide for flow requirements in the Santa Ana River (see Figure 1), a commitment from upstream partnering agencies would be secured to assure that treated wastewater will be discharged in the upper watershed. This will allow IEUA to retain a similar amount of treated wastewater from their facilities to serve as a source for advanced treatment and recharge in the CBWB. IEUA would enter into contractual agreements to create a watershed-wide partnership that would provide a long-term guarantee for continuation of treated wastewater discharges from upstream agencies into the Santa Ana River. Aside from the primary ecological benefits to the Bay-Delta Watershed that would be produced by the CBEWP, securing these discharges would provide an added local benefit of year-round flows in the upper reaches of the Santa Ana River that result in ecological benefits, such as support of the Santa Ana Sucker Fish (see Figure 1). The water discharges will meet and or exceed the recommendations of the Upper Santa Ana River Habitat Conservation Plan, a collaborative effort among the water resource agencies of the Santa Ana River Watershed, in partnership with the U.S. Fish and Wildlife Service, DFW, and several other government agencies and stakeholder organizations aimed at conserving and maintaining the natural rivers and streams that provide habitat for a diversity of unique and rare species in the watershed. IEUA is currently engaged in discussions with upstream agencies to develop a long-term agreement to secure 15,000 acre-feet per year of continuing water discharges in the upper reaches of the watershed. Exchange Water Entitlement for Environmental Uses By storing new local water in the local groundwater basin for use by an existing SWPC, an equivalent amount of water can be dedicated to environmental benefit north of the Delta

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for instream flow augmentation. To achieve maximum environmental benefit, this dedicated water is assumed to be prioritized for use in dry and critical years. The program would provide this water in blocks of up to 50,000 acre-feet per year in up to three years in sequence. IEUA envisions this water supply will be used to help meet instream pulse flow needs along the Feather River below Lake Oroville in the spring months (April, May, or June). The program could begin providing this exchange water upon completion of the Chino Basin Water Bank Storage Expansion EIR and attainment of associated permits for expanded operational storage. This EIR is expected to be certified mid-to-late 2019. Exchanges for environmental benefit could begin in 2020 or anytime thereafter while construction gets underway for the infrastructure to treat, distribute, and recharge the new local water supply. IEUA proposes to commit an advanced supply of exchange water for environmental uses in the amount of 50,000 acre-feet per year, up to a total of 100,000 acre-feet (or 2 years of exchange water). This would be conditioned on balancing any deficit using the 15,000 acre-feet per year of produced new local water for recharge by the end of 25 years. Water Quality and Emergency Response Supply In addition to the environmental benefits provided by this proposed project, the production of higher water quality through advanced water treatment in the basin – lower in TDS than alternative imported water supplies – will also deliver enhanced water quality. And the new water stored in the Chino Basin Groundwater Bank will also enhance emergency water supply availability for IEUA and other participating agencies during crises such as flood or seismic events that disable imported water infrastructure. These benefits, along with the environmental benefits are discussed in more detail later in this discussion. PROGRAM BENEFITS IEUA anticipates the program to provide environmental benefits, water quality improvement benefits in the Chino Basin, and emergency response supply benefits. These are summarized below. Environmental Benefits - Spring Run Chinook Salmon The lower Feather River provides habitat for a variety of native resident and anadromous fish including spring-run Chinook salmon (listed as threatened under the California and federal Endangered Species Acts) and fall-run Chinook salmon that support recreational and commercial fisheries. Low instream flows, increased water temperatures and decreased water quality during dry and critical water years poses a significant threat to the survival of juvenile salmonid species and increased straying of returning adults in California’s Central Valley. Pulse flow operations on the Feather River in dry and critical water years was identified as the most beneficial use of the allotted environmental water. Pulse flows of 50,000 acre-feet

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could be provided in the spring of dry and critical water years for up to three consecutive years. Timing, duration and magnitude of releases would be adaptively managed to optimize effectiveness; however, it is proposed that flows be released as two (2) separate 5-day release events (approximately 5,000 acre-feet per day). Releases of this magnitude equate to an increase of instream flows in the low flow channel of the Feather River by 2,500 cubic feet per second (baseflow is approximately 800 cubic feet per second). These releases would be designed to improve the survival rate of emigrating juvenile Chinook salmon while also providing attraction flows for adult spring-run Chinook. Attraction flows reduce stray rates and promote natal stream homing. Ecosystem benefits provided by pulse flow releases directly address two of the high priority objectives (Ecosystem Priorities 21 and 62) defined by DFW in the Technical Reference (Technical Reference Section 4.7.5.1, Assessment Metrics Table 4-10) while also addressing all 10 of the Relative Environmental Values (REV’s) as described by DFW. Data from DFW 2017 GrandTab3 was used to calculate the average number of adult spring-run and fall-run Chinook salmon to the Feather River between 1975 and 2016 (average 65,347 fish per year). Approximately 6 percent (3,900 fish) of each annual run was comprised of spring-run and 94 percent (61,100 fish) fall-run Chinook. These escapement estimates were then utilized to estimate the spawning population with the subsequent offspring subjected to a survival model based upon published literature. Outputs from the model for the baseline scenario (no pulse flows) and with project scenario (pulse flows) were then used to obtain a net difference in survival. The net difference was then monetized based on grant submittal guidance4 ($100,000 per adult spring-run and $2,500 per adult fall-run Chinook). Each year of pulse flows is estimated to provide $93,537,500 in benefits based on an increase in juvenile outmigration survival. Adult Chinook salmon have been shown to be attracted by pulse flows and to increase upstream migration prior to spawning.5 Pulse flows on the lower Feather River during the adult spring-run Chinook salmon migration period, especially during dry and critical water years when attraction flows are reduced, would be expected to increase adult attraction and reduce the potential for adult straying. Stray rates for spring-run Chinook are reported to be approximately 1 percent. Even though the stray rate is low it is still considered to be a substantial threat to Central Valley stocks. Straying adult salmon, specifically hatchery stock, can interbreed with wild stocks which may reduce genetic diversity and localized adaptations. Any decrease in adult stray rates would provide a substantial benefit to all Central Valley Chinook stocks. By providing spring pulse flows, a reduction of 0.5 percent in the stray rate of spring-run Chinook into the Feather River is anticipated. Utilizing the CDFW

1 Ecosystem Priority 2: Provide flows to improve habitat conditions for in river rearing and downstream migration of juvenile salmonids. 2 Ecosystem Priority 6: Increase attraction flows during upstream migration to reduce straying of anadromous species in non-natal tributaries. 3 California Central Valley Chinook population database report “GrandTab” 4 CWC Technical Reference p. 5-32 5 Peterson et al. 2017; Del Real and Saldate 2013, 2015; NMFS 2009; Marston et al. 2012

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Grand Tab records from 1975-2016 an average of 2,876 adult spring-run Chinook annually return to the Feather River. A reduction in the stray rate of 0.5 percent equates to a net difference of 15 adult spring-run Chinook or $1,500,000 for each year of pulse flows. Through the combination of increased survival for emigrating juvenile Chinook salmon and the reduction in stray rate of adult spring-run Chinook, each year of pulse flow releases is estimated to provide $95,037,500 in ecosystem benefits. Utilizing the application provided 2030 and 2070 hydrologic record, pulse flows would be provided in 30 percent of years under both scenarios. Over 25 years, the project pulse flows would be provided 7.5 (25 years x 30 percent) times. It is anticipated that the ecosystem benefits would total approximately $712,700,000 under both scenarios. When applying a net present value over the 25 years of the project discounted at 3.5%, a total present value of $356,854,008 is anticipated. Water Quality Improvement Benefits in the Chino Basin The primary water quality constituent of concern in the Chino Basin is the management of total dissolved solids (TDS). This conjunctive use project will utilize advanced treated water for groundwater recharge and will help remove TDS prior to recharging in the basin, helping ensure water quality objectives are met and local groundwater is sustainable. Additionally, mitigating TDS in the basin may potentially defer the construction of future desalting facilities and help continue meeting permit conditions, and thus continue operation of the reclaimed water recharge program and Santa Ana River discharge obligations. The potential Water Quality Benefit calculation is summarized in the table below.

Water Quality Benefits Calculation & Assumptions

Year 2015 2030 2070 Volume Treated to Produce 15 TAF/yr

16 MGD 16 MGD 16 MGD

Raw Total Dissolved Solids1) 600 mg/L 635 mg/L 728 mg/L Treated Total Dissolved Solids 100 mg/L 100 mg/L 100 mg/L TDS Removed 500 mg/L 535 mg/L 628 mg/L Unit TDS Removal Cost2) $800/ton $877/ton $1,119/ton Total Cost to Produce 15 TAF/Yr $9.2 M/yr $10.9 M/yr $16.3 M/yr Notes:

1) Based on historic increase of groundwater TDS of 2.3 mg/L per year – Ambient Water Quality for Chino-North Management Zone.

2) Treatment cost is escalated for increase in energy at 1.7% assuming 36% of cost is energy related costs.

Emergency Response Supply Benefit The additional water stored in the CBEWP will enhance emergency response water supply availability for IEUA and other participating agencies during crises such as flood, fire or

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seismic events that disable imported water infrastructure. CBEWP would include a provision to “borrow” up to 50,000 acre-feet of stored water in the Chino Basin Water Bank (CBWB) under emergency conditions to a partnering State Water Project Contractor (SWPC) (e.g., Metropolitan Water District of Southern California (MWDSC) and/or the San Bernardino Valley Municipal Water District (SBVMWD)). This water must be replaced with in-like water after the event by the borrowing agency. Any alternative to the CBEWP that could provide the same degree of reliability in producing emergency supply benefits would need to feature a new source of highly reliable water supply. One such alternative that could provide a similar reliability of emergency supply would be new supplies generated by a desalination facility such as the Carlsbad Desalination Plant serving SDCWA in southern California. According to the provisions stipulated in 2017 WSIP Technical Reference Section 4.11.2.1, Emergency water is only available for a single occurrence of an emergency or catastrophic event over a 50-year period. The estimated Emergency Supply Benefits range between $1.3 million per year (2015), $1.5 million per year (2030), and $1.9 million per year (2070). Monetizing this over 50 years results in a present worth value of approximately $25.6 million (2015 present worth value), with a present worth value of $3.6 million and $24.0 million under 2030 and 2070 conditions, respectively. Flexible Operational Framework Provides Additional Benefits As noted above, benefits to spring-run chinook salmon resulting from spring pulse flow releases from lake Oroville were evaluated for demonstrating public benefits for this WSIP application. However, use of the blocks of water made available by the Chino Basin Environmental Water Program would be highly flexible and could be adapted to produce other ecological benefits as conditions change or scientific understanding evolves. Such a dedication of environmental water supply is consistent with strategies deployed in other States such as Oregon and consistent with recommendations for how environmental water supplies could be more reliable and effectively managed according to scenarios developed by the Public Policy Institute of California (PPIC)6. The Nature Conservancy has also advocated that publicly-funded water supply projects dedicate a portion of the created water storage and yield to the environment.7 Additionally, the proposed project would include a “borrowing capacity” provision8 to provide up to 100,000 acre-feet ahead of production of the new 15,000 acre-feet per year

6 Allocating San Joaquin River Water to the Environment Shows Promise https://www.newsdeeply.com/water/articles/2016/11/23/allocating-san-joaquin-river-water-to-the-environment-shows-promise 7 The Nature Conservancy in California. 2017. “Water for Nature: What we can do today to help California’s rivers, streams, and wetlands.” 8 IEUA requires the borrowing feature to be subject to certain conditions, specifically, that net storage conditions be balanced at the end of the 25-year project lifespan. It is important to note that analysis of

https://www.newsdeeply.com/water/articles/2016/11/23/allocating-san-joaquin-river-water-to-the-environment-shows-promise

https://www.newsdeeply.com/water/articles/2016/11/23/allocating-san-joaquin-river-water-to-the-environment-shows-promise

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local water supply. Access to this additional capacity could be used to provide dedicated environmental water more frequently in successive drought years. This provision could be implemented upon completing the environmental and permitting requirements of the project and prior to the completion of the project infrastructure. IEUA estimates this early-implementation feature could be operational in 2020. This unique feature is not available under most other proposed projects for which project operations may not occur for 10 years or more. Contribution to Sustainable Groundwater Management The project will utilize recycled water for groundwater recharge in the Chino Basin, which is ranked 15th as a high priority area for sustainable groundwater management.9 The vast majority (98 percent) of the Chino Subbasin was adjudicated in 1978 and groundwater resources are managed by a Watermaster. The Sustainable Groundwater Management Act (SGMA) requires annual submittals of water use and other data from the Watermaster. Sustainable groundwater management is based on six sustainability indicators and the adjudication process addresses five of the six indicators. Seawater intrusion is not applicable to the Chino Subbasin. The project will benefit the following sustainability indicators:

• Chronic lowering of groundwater levels: The recharge will raise groundwater levels. • Reduction in groundwater storage: The recharge will increase groundwater in

storage. • Land Subsidence: Land subsidence typically occurs when over-pumping causes

groundwater within aquitards (fine-grained layers) to flow into the aquifers (coarse-grained layers). The structure of the aquitards is dependent on the presence of groundwater and, when this groundwater is removed, this structure collapses and produces subsidence of the land surface. The recharge will reduce the potential of groundwater flow from the aquitards and the potential for subsidence.

• Degraded water quality: Groundwater quality is variable within the Chino Subbasin with relatively high quality water in the northern portion and poor quality water in the southern portion due to historic agricultural practices. The recharge will improve the quality of groundwater in the central portion of the subbasin by displacing the poor-quality groundwater.

The project will not likely affect the sixth sustainability indicator: depletion of interconnected surface water. The Santa Ana River flows along the southern boundary of the Chino Subbasin and provides recharge to the Chino and Temescal Subbasins. However, the adjudication process requires the operation of a hydraulic barrier system up-gradient (north) of the Santa Ana River to prevent poor quality groundwater from discharging into the

different 25-year sequences using the CalSim 82-year hydrologic data set indicates that on average the basin ends in a net positive storage condition, and there is a low likelihood the basin will end in a net negative storage condition. 9 The Sustainable Groundwater Management Act (SGMA) revised the Water Code to direct DWR to develop groundwater basin prioritization rankings of the 127 high and medium priority groundwater basins SMGA applies to. Rankings are based on criteria, including impacts on groundwater in the basin due to overdraft, subsidence, saline intrusion, and other water quality degradation. http://www.water.ca.gov/groundwater/casgem/basin_prioritization.cfm

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river. The project will be located up-gradient (north) of the hydraulic barrier and will not likely affect the river. The program will coordinate with neighboring recently formed Groundwater Sustainable Agency (GSAs) and their development of Groundwater Sustainability Plans (GSPs). Three GSAs have been established around the perimeter of the adjudicated area, including:

• Western Municipal Water District – Southeastern Chino Basin GSA (#1) • Chino Basin San Bernardino County Fringe Areas GSA (#2) • Unadjudicated Portion of the Chino Groundwater Basin Within Los Angeles County

GSA - Pomona Fringe Area GSA (#3) GSA #1 is located along the southeastern boundary and possesses the largest and most contiguous area of the subbasin. The Santa Ana River flows through much of this GSA area. Four very small areas are located to the northeast of the primary area. GSA #2 is located along the southwestern boundary and is comprised of 16 small areas. GSA #3 is located along the western boundary and is comprised of four small areas. Because the proposed program operates with the conditions of the CBWB, and contributes to improving undesirable results as described above, IEUA does not anticipate the program will conflict in any way with the development and implementation of the GSPs in the neighboring GSAs. Summary of Benefits The CBEWP demonstrates a new model of meeting environmental water needs dependably, efficiently, and dynamically. As discussed above, the proposed program produces numerous environment and other public benefits. These benefits are summarized below. Environmental Benefits:

• A highly reliable new water supply of 15,000 acre-feet per year formally dedicated to environmental benefit that can be deployed dynamically and managed flexibly to address varying, changing ecological needs

• Reserved capacity in the CBWB and borrowing provisions that will allow the new dedicated water supply to be deployed north of the Delta in “environmental water blocks” of up to 50,000 acre-feet per year in approximately 30 percent of years

• Environmental water can be released from Lake Oroville as spring pulse flows to benefit migrating Feather River spring run chinook salmon instream, provide rearing habitat on managed floodplains, or flexibly contribute toward other environmental needs as conditions or ecological priorities change.

• Consistent year-round flow in the reaches of the Santa Ana River that provides ecological benefits, such as the support of habitat for Santa Ana Sucker Fish.

Other Public Benefits: • Reliability: Water created by the project through production of advanced water

treatment (annual supply of 15,000 acre-feet) is reliable in all year types. The water can also be stored in all year types.

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• Flexibility: Water created and stored by the project can be flexibly managed and deployed. The storage account may be used for environmental benefits all in one year, spread out across several years, or potentially be pre-delivered with certain agreements in place.

• Short time-to-delivery: New water and storage projects typically require a long development time to secure funding, conduct environmental reviews, complete permitting, etc. This proposed project can provide environmental benefits as early as 2020.

• Enhanced water quality: Provides a mechanism to improve local groundwater quality issues with the recharge of advanced treated water into the groundwater system. Addresses previous Regional Water Quality Control Board’s requirement of salt management needs for the Chino Basin with the removal of TDS through the AWT process. And helps meet Basin Plan objectives established by the RWQCB for water quality

Other Non-Public Benefits • Provides infrastructure for improved water supply reliability after a 25-year

commitment to provide environmental water supplies in completed. • Resilience without side effects: This project will create and store new water to

bolster regional water supply resilience while protecting that additional supply from inefficient water uses or development. Reduces dependence on imported water within the service area by maximizing the use of a locally generated water supply. Improves flexibility for management of the SWP by providing new local supplies to meet SWP water delivery obligations.

• Minimizes Land Subsidence: Alleviates historical land subsidence issues with targeted recharge to appropriate groundwater management zones.

• Delays Costly Future Infrastructure Needs: Helps defer implementation of salinity removal projects within the Santa Ana River Watershed

• Increases Opportunities for Recharge: Provides added underflow which will provide the capability to increase surface spreading of advanced treated water.

PROGRAM ENVIRONMENTAL PLANNING AND COMPLIANCE The Water Storage Investment Program (WSIP) program envisioned by the CWEWP and related benefits will be considered in a programmatic Environmental Impact Report that will be developed and processed over a 20-month period from 2019 through mid-2020. This program includes operational storage of high quality recycled water produced from an Advanced Wastewater Treatment Plant (AWTP) at a rate of about 15,000 acre-feet per year and installation of the infrastructure required to store, recover and distribute the recycled water when needed to offset SWP water from being transported to southern California water agencies. When called upon, this water would be used to meet SWP delivery obligations, allowing an equivalent amount of water in northern California to be dedicated for ecosystem benefit in the Bay-Delta watershed.

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The Chino Basin Water Master is commissioning a hydrogeologic evaluation of the Chino Groundwater Basin (CGB) in 2017 that will evaluate expanding groundwater storage in the CGB. Thus, it will be possible to integrate the CBEWP into this current effort to define expansion of groundwater storage in the CGB. Thus, it is essential that the CBEWP be defined to the extent feasible in the immediate future to ensure it can be integrated into the project description being created to expand groundwater storage in the CGB. It is anticipated that the hydrogeologic evaluation will require approximately one year to complete. Once the hydrogeologic evaluation is completed, it will be possible to initiate the evaluation for compliance with the California Environmental Quality Act (CEQA). At this time, it is anticipated that a Notice of Preparation (NOP) would be distributed for the CGB expanded groundwater storage project (including CBEWP) in January 2019. It’s assumed AB 52 consultation will be initiated concurrent with the issuance of the NOP. Based on IEUA’s current tribal consultation process, we are confident that this effort can be completed within 30 days. Compilation of the Draft Environmental Impact Report (EIR) will require about 18 months. This is considered sufficient time because the hydrogeologic evaluation will already be completed. Thus, early-to-mid 2020 the Notice of Availability for public review of the Draft EIR can be distributed, along with the Mitigation Monitoring and Reporting Program. Following the 45-day mandatory public review period for the Draft EIR, a Final EIR could be compiled. It would be anticipated that the Final EIR could be certified by the IEUA Board in mid-to-late 2020 and the Notice of Determination filed immediately thereafter. Specific CBEWP facilities could begin to be installed in mid-to-late 2021, following completion of design and bidding. As described previously, the CBEWP “borrowing capacity” provision to provide up to 100,000 acre-feet to provide early environmental benefits ahead of production of the new 15,000 acre-feet per year local water supply could be operational upon completing the environmental requirements of the project, or mid-to-late 2020, and prior to the completion of the project infrastructure. PROGRAM FACILITIES Based on the potential partnership with two SWPC’s, the proposed project will include two options: partnering with 1) Metropolitan Water District of Southern California and/or 2) San Bernardino Valley Municipal Water District. Metropolitan Water District of Southern California Option After a request is made by DFW, the Chino basin will produce an agreed upon quantity of stored groundwater and pump it into the Upper Feeder Pipeline (an existing MWDSC pipeline) to supplement water supply within the MWDSC service area. Then, subject to

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future agreements and SWP Water Supply Contract amendments, MWDSC will forebear delivery of an equivalent amount of SWP water stored north of the Delta in Lake Oroville. DWR will release that amount of water at the requested time and location, subject to an approved petition under Section 1707 of the California Water Code to modify its water rights to allow dedication of water for instream flow purposes. The proposed list of project components included in this option include the necessary treatment and distribution facilities to ensure that the supplemented water pumped into the Upper Feeder Pipeline will meet or exceed all water quality requirements. The total estimated capital cost is $425 million with a unit cost of O&M for supply of $910 per acre-foot of delivered water. The proposed project utilizes existing wastewater treatment plants to provide preliminary treatment prior to the advanced treatment process. Costs associated with these facilities are not included and will be locally funded.

Description Quantity Unit Cost ($M) Total ($M)

Pipeline, Pump Station and Connection to CVWD/FWC LS $25 $25

Pipeline, Pump Station and Connection to WFA LS $25 $25

New Production Wells (10) 10 $2 $20

Existing Production Wells (10) 10 $0 $0

New Treatment for (10) Wells 10 $4 $40

Pipeline and Connections for (20) Wells 20 $2 $40

Water Supply Commitment LS $95 $95

Advanced Water Treatment of IEUA's Recycled Water LS $80 $80

Advanced Water Treatment of RW w/Pomona & MVWD LS $100 $100

Total Capital Cost $425

San Bernardino Valley Municipal Water District Option After a request is made by DFW, the Chino basin will produce an agreed upon quantity of stored groundwater and pump it into the Baseline Feeder Pipeline (combination of existing and new pipelines) to supplement water supply within the SBVMWD service area. Then, subject to future agreements and SWP Water Supply Contract amendments, SBVMWD will forebear delivery of an equivalent amount of SWP water stored north of the Delta in Lake Oroville. DWR will release that amount of water at the requested time and location, subject to an approved petition under Section 1707 of the California Water Code to modify its water rights to allow dedication of water for instream flow purposes. The proposed list of project components included in this option include the necessary treatment and distribution facilities to ensure that the supplemented water pumped into the Baseline Feeder Pipeline will meet or exceed all water quality requirements. The total estimated capital cost is $480 million with a unit cost of O&M for supply of $910 per acre-foot of delivered water. To note, the proposed project utilizes existing wastewater treatment plants to provide preliminary treatment prior to the advanced treatment process.

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Costs associated with these facilities are not included in the table below and will be locally funded.

Description Quantity Unit Cost ($M) Total ($M)

Baseline Feeder Extension #1 to CVWD/FWC LS $30 $30

Baseline Feeder Extension #2 to WFA LS $20 $20

Pipelines from Wells to Baseline Feeder 2 $20 $40

Pump Station LS $15 $15

New Production Wells (10) 10 $2 $20

Existing Production Wells (10) 10 $0 $0

New Treatment for (10) Wells 10 $4 $40

Pipeline and Connections for (20) Wells 20 $2 $40

Water Supply Commitment LS $95 $95

Advanced Water Treatment of IEUA's Recycled Water LS $80 $80

Advanced Water Treatment of RW w/Pomona & MVWD LS $100 $100

Total Capital Cost $480

PROGRAM COSTS AND SCHEDULE IEUA intends to specifically apply WSIP funds for the following purposes:

• Undertaking technical analysis of engineering necessary to accommodate the Chino Basin Environmental Water Program.

• Completing environmental documentation and securing permits for the program. • Securing continuation of discharge of treated wastewater from sanitation agencies in

southern California in the upper Santa Ana River watershed. • Implementing agreements with DFW, DWR, and other agencies that are necessary to

secure environmental water supplies. • Developing infrastructure to supply, treat, store, measure and deliver new water to

IEUA customers and partner water agencies. The total estimated capital cost could range between $425 and $480 million based on the project option that is selected and implemented, with a unit Operation and Maintenance (O&M) cost for supply of $910 per acre-foot of delivered water. The project is proposing to pay for 75 percent of the O&M costs, and would seek 25 percent of the O&M costs from the participating SWPC in consideration of the deferred energy costs associated with substituting the CBWB local water supply for SWP water that would otherwise have been conveyed from northern California. The schedule for completing the major components of the program are shown in Figure 2. The project start-up is estimated to occur in 2025, or a little over 7 years from the date of this application. As discussed previously under the Environmental Planning and Compliance

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section, the project could begin providing water following the completion of the Chino Basin Water Bank Storage Expansion PEIR and in advance of completing the CBEWP infrastructure. This would be accomplished using the “borrowing” provisions, providing exchange water for environmental uses beginning in mid-to-late 2020, or a little over three years from the date of this application.

Figure 2: CBWEP Program Schedule

SUMMARY OF PROGRAM BENEFITS AND COSTS For purposes of this application, IEUA has evaluated the public benefits of this project that could be delivered through implementation. Pulse flows of 50,000 acre-feet could be provided in the spring of dry and critical water years for up to three consecutive years represent the public ecosystem benefits. Other benefits of the project include water quality, and emergency response supply. The environmental benefit represents 60.8 percent of the total project benefits. The benefits are listed in the table below. The costs associated with the project include the capital costs for the infrastructure to convey, treat, recharge/store and extract water in conjunction with the proposed CBEWP. The costs are also listed in the table below.

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Project Benefits and Costs

Public Benefit Category

Present Value by Category ($ million)

Percent of Total Public

Benefits

Allocation of Construction

Cost ($ million)

Allocation of WSIP Funds ($ million)

Ecosystem Benefits

$356.9 60.8% $207.6 $291.8

Water Quality Benefits

$204.5 34.8% $119.0 $167.3

Emergency Response Benefits

$25.6 4.4% $14.9 $20.9

Total $587.0 100.0% $341.5 $480.0 The WSIP funding requested for the construction of the proposed Chino Basin Environmental Water Program (CBEWP) project is $480.0 million. The present (2015) value total public costs for this construction is $341.5 million. Compared to the present (2015) value total public benefits of $587.0 million, this represents a Public Benefit-to-Cost (B/C) Ratio of 1.72. When including the non-public cost (e.g., construction financing, operation and maintenance, and equipment replacement costs) of $315.0 million and the non-public benefits (e.g., the avoided SWP conveyance cost and water supply benefits) of $126.3 million, the total present value project cost and benefits amount to $656.5 million and $716.3 million, respectively. This represents a total Project Benefit-to-Cost (B/C) Ratio of 1.09. The detailed cost-benefit analysis spreadsheet is attached as item A.6 of this section. The cost-benefit analysis results are summarized below.

Results of the Cost-Benefit Analysis

Cost/Benefit Component 2015 Present Value Project Cost Components

Public Costs - Santa Ana River Flow Agreement $62,869,413 - AWT Construction Cost $130,290,720 - SWPC Connection Facilities $148,386,653

Total Public Costs $341,546,786 Non-Public Costs $314,980,172

Total Project Cost $656,526,958 Project Benefits

Public Benefits - Ecosystem Benefits $356,854,008 - Water Quality Benefits $204,562,646 - Emergency Response Benefits $25,579,270

Total Public Benefits $586,995,924 Non-Public Benefits $126,321,390 Total Project Benefits $716,317,314 Benefit/Cost Ratios Public Benefits/Cost (B/C) Ratio 1.72 Project Benefits/Cost (B/C) Ratio 1.09

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FINANCIAL FEASIBILITY The proposed CBEWP is a conjunctive use project and the programs capital costs and corresponding benefits will be assigned to meet north of Delta instream flow needs. The project will also deliver water quality improvement and emergency response public benefits. The project will provide up to 15,000 acre-feet per year of new local water supply, 100,000 acre-feet of reserved storage capacity in the CBWB, an additional 100,000 acre-feet of borrowing capacity to provide early environmental benefits and additional flexibility in providing blocks of environmental water. The estimated O&M unit costs are approximately $910 per acre-foot. IEUA anticipates providing approximately 75 percent costs to be recovered through local Chino basin water rates and/or connection fees, with the other 25 percent covered by the participating SWPC. The project will evaluate and update a Cost of Service (COS) study to determine the most appropriate means to collect project required revenue, either from water rates and/or connection fees. The last COS study was completed in 2015.

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