# Milton G. Davies

Director, Board of Directors

Fallbrook Public Utility District

Testimony

Before the Committee on Energy and Natural Resources

United States Senate

Hearing on H.R. 29 (Issa) Santa Margarita River, California

April 24, 2008

Mr. Chairman, I am Milton Davies, Chairman of the Board of Directors of
the Fallbrook Public Utility District (FPUD). The people of Fallbrook
appreciate this opportunity to discuss the need for the Santa Margarita
River Conjunctive Use Project. It appears there really may be a light at
the end of the tunnel for this project after 80 years of water rights
litigation, studies, hearings, re-restudies and much frustration. The
spirit of cooperation between the Bureau of Reclamation, the Navy
Department, local Marine Corps officials and the District has never been
better. The time to move forward on this project is not only ripe, but
has reached the point of absolute necessity. Exhibit A is a vicinity map
showing the general location of this project. Exhibit B depicts the
proposed Conjunctive Use Project.

***Project History***

This process started in 1930 when the state of California issued the
first water appropriation permit on the Santa Margarita River to the
Fallbrook Irrigation District (later to become FPUD) for a dam on the
River.

In 1926, the Vail Ranch, a large land grant occupying almost the whole
Temecula Valley was sued by the Rancho Santa Margarita (later to become
Camp Pendleton), over water rights to the Santa Margarita River. The
Fallbrook Irrigation District was unsuccessful in trying to resolve the
dispute amicably. This litigation was settled in 1940 with a stipulated
judgment dividing the water resources between the litigants but setting
the stage for the present, unresolved dispute since it failed to account
for the 1930 appropriative permit issued to Fallbrook. (include 2.5 cfs
direct diversion at the sump)

Since 1941 numerous attempts have been made to develop a "physical
solution" to the water rights issues between Camp Pendleton and FPUD.
From the 1940's through the 1980's these included a 2 dam project and a
1 dam project on the river. There were many studies, starts and stops
during those 4 decades but no project was completed. High costs, and
environmental concerns were the main deterrents to completing any dam
project.

In 1990, a two-party agreement was signed by FPUD and Camp Pendleton
which recognized that if upstream dischargers put recycled water into
the Santa Margarita River, then these two parties would benefit from the
water supply out of those discharges and that they would enter into a
joint project to operate the groundwater basin and treatment facilities.
This was the birth of the Conjunctive Use Project. At that point it was
necessary to pursue feasibility and environmental work. The Conjunctive
Use Study was prepared in 1994 as a follow-up to the two-party
agreement. This study was the basis for the project that is being
proposed today.

One of the two primary objectives of the project presented to you today
is the resolution of eighty years of water rights disputes and
litigation on the Santa Margarita River, over 60 years of which involve
the federal government. Secondly, this project will provide for an
environmentally sound, financially feasible, water resource development
where it is most needed, in coastal Southern California.

The availability of a supplemental local water source from the Santa
Margarita River has become increasingly important to the District's
capability to meet all water demands at a reasonable price. The
long-term safe yield from this project will provide 100% of the needs of
Camp Pendleton and 20 to 40% of the District's total needs.

## Project Description

The proposed Santa Margarita Conjunctive Use Project provides for
enhanced recharge and recovery through aggressive groundwater management
strategies on Camp Pendleton to provide a water supply for both Camp
Pendleton and Fallbrook to resolve a long-standing water rights dispute
between the United States and Fallbrook. In 1954, P.L. 83-547, the Santa
Margarita Project Act, authorized the Bureau of Reclamation to construct
a dam on the Santa Margarita River at a cost of \$22 million
(approximately \$333 million in 2008 \$) with a yield of 14-16,000
acre-feet. The Conjunctive Use Project that this bill authorizes
replaces that project and produces the same amount or possibly more
water at a lower cost.

The project, as proposed, is financially feasible, environmentally
beneficial and will result in the conservation and preservation of the
entire Santa Margarita River riparian zone from Temecula to the Pacific
Ocean, while at the same time providing 16,000 acre-feet per year
(AF/yr) of vitally needed local supply in coastal Southern California.

## Project Facilities

The project facilities include:

> [Enhanced Recharge]{.underline}. Groundwater recharge is enhanced by
> the construction of a new collapsible diversion weir and 46 acres of
> new recharge ponds. The enhanced recharge potential is 14,000 AF/yr in
> addition to the naturally occurring recharge. The collapsible weir
> will divert low flows and permit flood flows to pass, flushing the
> lower river and estuary as well as providing beach sand replenishment.
>
> [Enhanced Groundwater Recovery]{.underline}. Groundwater recovery is
> enhanced by the construction of up to five new wells, predictive
> monitoring, monitoring, and a collection system to provide a total of
> 18,000 AF/yr of extraction capability.
>
> [Advanced Water Treatment]{.underline}. Treatment will be provided to
> exceed all requirements of the Safe Drinking Water Act. The
> construction of membrane filtration, disinfection, and brine disposal
> facilities at the Rattlesnake Canyon site on Camp Pendleton will allow
> treatment of 20 million gallons per day.
>
> [Distribution Facilities]{.underline}. Project water will be
> distributed to the existing Camp Pendleton and Fallbrook distribution
> systems through construction of two pump stations and approximately
> nine miles of transmission pipeline. This pipeline will also provide
> Camp Pendleton with a critically needed connection to San Diego County
> Water Authority's imported water delivery system in case of emergency,
> thus ensuring uninterrupted water service at one of our country's most
> important military establishments.

## Project Yield

Two independent groundwater models predict an average annual project
yield of 16,000 acre-feet (AF/yr). The current Camp Pendleton demand and
use of the groundwater system is less than 8,000 AF/yr so the project
results in 8,000 AF/yr of new water, reducing demand on diversions from
imported supplies from Northern California and the Colorado River.

## Project Cost

The current project cost estimate is \$120-\$150 million resulting in a
higher project yield than the 1954 project, then estimated at \$22
million, an amount that equates to approximately \$333 million today.
Camp Pendleton's share of the project cost will primarily come from
already approved MILCON funds for facilities that will be needed by Camp
Pendleton regardless of whether the Conjunctive Use Project proceeds.
These facilities, if used by the Conjunctive Use Project will provide a
credit against the total project cost in Camp Pendleton's favor.

# ***Current Project Status***

The Conjunctive Use Project is in the forth year of management by the
Bureau of Reclamation's Southern California office in Temecula,
California (located in the upper Santa Margarita River basin). Project
funding currently comes from several Federal sources, including Camp
Pendleton, Military Construction, and Reclamation Planning , as well as
local funds contributed by FPUD. At the direction of Congress, the
Bureau is conducting this feasibility analysis.

The major current activity is the Bureau's in-house feasibility
assessment as well as management of the EIS/EIR outside contract. This
work involves the Bureau's project team completing the preliminary
design of the necessary facilities and alternatives in order to complete
a jointly managed EIR/EIS/FA. The Bureau and Camp Pendleton are joint
Federal leads and FPUD is the state lead agency on the environmental
documentation. An agreement has been reached to codify this effort to
produce an environmental ROD/NOD and completion of the Feasibility
Assessment.

Reclamation staff is conducting these planning operations and
administering the EIR/EIS contract by outside contract funded by Camp
Pendleton and FPUD. This effort is overseen and directed by an Executive
Management Team comprised of Reclamation, Camp Pendleton, and FPUD.

# ***Project Benefits***

The Santa Margarita Project is somewhat unique among water resources
projects in that the benefits are vast and project liabilities are
almost non-existent. The project has failed to proceed over the
preceding eighty years because of institutional, political, and legal
disagreements among and between the basin's stakeholders. At this point,
these issues are largely resolved and the success of H.R. 29 will
provide for the final settlement of the case of *U.S. v. Fallbrook*, .
In identifying project benefits, this settlement should not be
overlooked\--[it is the action from which all other project-related
benefits flow]{.underline}.

Other benefits include:

> [Water Supply]{.underline}. The project develops a new supply of 8,000
> AF/yr from local resources in San Diego at a cost that is competitive
> with today's cost for imported water. San Diego, like much of coastal
> Southern California, is largely dependent upon water imported great
> distances from the Colorado River and Northern California. The recent
> drought in the Colorado River Upper Basin and the emergence of the
> Quantification Settlement Agreement, along with the recent cutback in
> Delta deliveries due to endangered species protection, have
> demonstrated the limits and risks attendant to this imported supply.
>
> In addition to the new component of supply, the total project yield of
> 16,000 AF/yr will receive advanced water treatment prior to
> distribution. Water quality in the Camp Pendleton distribution system
> will be dramatically improved and the operational costs related to
> water hardness will be eliminated.
>
> [Project Cost]{.underline}. The current preliminary studies indicate
> this new supply can be developed for roughly one-third to one-half the
> cost of the project Congress authorized in 1954 (P.L. 547, Chapter
> 593) for the same project yield, making it one of the most
> cost-effective new water supply projects that you will be asked to
> consider.
>
> [Environmental Benefits]{.underline}. The proposed project has no
> opposition from environmental interests and is generally supported by
> them because, aside from localized, construction-related impacts, the
> project is environmentally beneficial. These benefits include:

1.  Preserving the entire riparian length of the Santa Margarita River
    from Temecula to the ocean in public ownership.

2.  Providing 1400 acres of mitigation lands for this and future
    military construction projects on Camp Pendleton.

3.  Operating the groundwater basins on Camp Pendleton to preserve
    critical habitat for the largest population of Least Bell's Vireos
    in the United States.

4.  Permitting periodic high storm flows of the Santa Margarita River to
    flow unimpeded across Camp Pendleton, scouring the lower river
    valley, opening and flushing the estuary, and nourishing the
    beaches.

5.  Over time, the project will improve groundwater quality on Camp
    Pendleton, assist in removing the estuary from the listing of
    impaired waters, and preserve the endangered nesting habitat for the
    Least Tern on the estuary bar.

6.  The Fallbrook portion of the Santa Margarita River, including the
    Sandia and Rainbow Creek tributaries, will provide an extensive
    network of hiking and riding trails, as well as education and
    open-space benefits.

In summary, the need for the Project facilities to provide a
supplemental local water source has become particularly important due to
dwindling imported water supplies. In addition, the economics of the
Project are as good, or better, than future imported water costs.

I am confident that the current effort underway by the Bureau of
Reclamation to update the economic and environmental aspects of the
feasibility study will show the benefit-cost ratio to be extremely
positive and that the extra study time that has been required to achieve
a superior solution will prove to be very beneficial to the
stakeholders.

I urge your speedy favorable action on HR 29 so that final planning and
design can begin on this project that is so vital to the well being of
our District and the Marine Corps.

Thank you very much for this opportunity to appear before you today and
offer this testimony in support of H.R. 29.

**SANTA MARGARITA WATER RESOUCES**

**Historical Timeline 1922-Present**

**1922** Fallbrook Public Utility District established to provide
potable water to downtown Fallbrook (500 acres).

**1925** Fallbrook Irrigation District established to provide

> agricultural water from both San Luis Rey and Santa Margarita Rivers.
> Initial studies began for diversion and storage on Santa Margarita
> River. Fallbrook dam site

selected.

**1926** Vail Ranch sued by Santa Margarita Ranch over Santa

Margarita water rights. Fallbrook Irrigation District tried to

resolve issue unsuccessfully.

**1928** Fallbrook Irrigation District filed condemnation suit for

unused riparian rights on Santa Margarita River.

**1930** Fallbrook Irrigation District issued permit to appropriate

35,000 AF for Santa Margarita River storage and 15,000 AF

for annual use.

**1930-1940** Legal entanglements and financial constraints prevented
Fallbrook Irrigation District from proceeding with construction.
Vail/Santa Margarita Ranch litigation proceeded without Fallbrook
Irrigation District as an interested party.

**1937** Fallbrook Irrigation District dissolved. Consolidated with
Fallbrook Public Utility District.

**1940** Vail/Santa Margarita Ranch lawsuit settled; 67% to Santa

Margarita and 33% to Vail Ranch.

**1941** Navy Department buys Santa Margarita Ranch for Camp

Pendleton.

**1944** San Diego County Water Authority formed to bring

> Colorado River water to San Diego City. Fallbrook Public Utility
> District a charter member, and the Navy a senior rights holder to
> imported water (15,000 AF/yr.)

**1946** Fallbrook Public Utility District diversion and storage

> permits on Santa Margarita River refiled. Storage permits for 30,000
> AF granted in 1948.

**1948** Imported water arrives in Fallbrook.

**1948** Navy Department applied to State Engineering to build DeLuz dam
at Camp Pendleton.

**1949** Tentative agreement reached to build multi-purpose dam at

DeLuz site to serve both Camp Pendleton and Fallbrook

> Public Utility District.

**1951** Federal government sues Fallbrook Public Utility District

and all its citizens over water rights on Santa Margarita

River.

**1954** Congress authorized Santa Margarita Project (PL 83-547)

for single dam at DeLuz site with 60-40 water rights

> between Navy Department and Fallbrook Public Utility District of
> original Santa Margarita Ranch 67% share. U.S. Justice Department
> fails to agree with split of water. The project authorization was for
> \$22 million (1954).

**1955-1958** Fallbrook Public Utility District buys river valley lands
for the Fallbrook Reservoir.

**1961** Each agency pursuing separate projects while litigation

proceeds. Fallbrook Public Utility District files for PL-984

Small Reclamation Projects loan of \$4.5 million for

Fallbrook dam.

**1966** Lawsuit on water rights results in Stipulated Judgment between
the Navy, Justice, Interior, and Fallbrook.

**1968** Memorandum of Understanding and Agreement signed by

U.S. Attorney General, Secretary of the Navy, Secretary of

the Interior, Fallbrook Public Utility District Board of

Directors. Interior directed to prepare feasibility

report for project to satisfy needs and rights, both of

Fallbrook Public Utility District and Camp Pendleton with

Bureau of Reclamation to operate project. Two dam project

declared most economic with 36,500 AF Fallbrook reservoir

and 143,000 AF DeLuz reservoir. Total cost in 1968 dollars

> estimated at \$48,675,000 with Fallbrook Public Utility

District share at \$13,254,000.

**1969** Bureau of Reclamation completed preliminary draft of

Feasibility Report. Environmental Policy Act of 1969

required preparation of environmental impact assessment.

**1971** Draft EI assessment completed and distributed for

comments.

**1972** HR 13299 introduced by Congressman Schmitz.

**1973** HR 3023 introduced by Congressman Veysey. No hearings

scheduled as Feasibility Report and EIR not referred to

committee by Interior or Office of Management & Budget

(OMB). No specific support from Navy Department.

**1976** Final EIR published.

**1978** Severe flood damage at Camp Pendleton.

**1979** HR 6014 introduced by Congressman Burgener. Bill died in

> committee.

**1980** Severe flood damage at Camp Pendleton; 205,000 AF lost to

the ocean.

**1981** HR 1527 introduced by Congressman Burgener. Referred to

House Interior and Insular Affairs Committee.

**1982** S 2684 introduced by Senator S.I. Hayakawa. Referred to

Energy and Natural Resources Committee. Hearings held

on July 20, 1982 in both House and Senate. BUREC starts

updating old studies.

**1983** HR 1581 introduced by Congressman Packard. S 805

introduced by Senator Wilson; passed Committee and

Senate floor by unanimous vote. Authorization for two-dam

plan at \$218,670,000.

**1983-1984** House hearings held on HR 1581 and S 805. Both bills died

in House and sub-committee.

**1984** Bureau of Reclamation released draft supplemental

environmental impact statement and planning report for

Santa Margarita Project. Rancho California Water District

releases facilities Master Plan to expand well field in upper

basin.

**1985** House Armed Services Committee directed Secretary of

Navy to conduct independent study of Camp Pendleton's

water supply and flood control requirements.

**1985-1986** Bureau of Reclamation formulated an alternative project

consisting of a 65,000 AF structure (50,000 AF of storage

and 15,000 AF of flood control) at Fallbrook site with levees

on Camp Pendleton. Cost estimate for the smaller project

\$118,750,000 with a water supply yield of 11,900 AF. U.S.

Fish & Wildlife Service announces intent to list least Bell's

> Vireo as an endangered species and designates proposed critical
> habitat.

**1986** In April, Bureau of Reclamation indicated they were unable

> to continue further studies due to budget constraints. U.S. Fish &
> Wild life lists least Bell's vireo as endangered; critical habitat
> designation deferred for more public input. In September, Department
> of the Navy awards contract for Camp Pendleton water study. FPUD
> awards Phase I contract for development of mitigation plan for smaller
> project. Navy determines that federal real estate not available for
> least Bell's vireo mitigation. USMC signs MOU with U.S. Fish &
> Wildlife Service to maintain 1200 acres riparian lands for Least
> Bell's vireo.

**1987** In January, FPUD awards Phases II, III & IV of environmental

> Study contract for small project. FPUD considers non-federal
> financing. Camp Pendleton puts Rancho California Water District on
> notice regarding over pumping of groundwater basin.

**1988** FPUD/Rancho California WD/Camp Pendleton agree to

Reestablish Watermaster. Camp Pendleton Water Supply

> Study (Leedshill-Herkenhoff) completed. Recommends
>
> Base obtain additional water from MWD in lieu of local dam and
> reservoir project.

**1989** U.S. District court appoints Watermaster; also establishes

> Steering Committee with initial membership from Camp
>
> Pendleton, FPUD, and Rancho California WD. Rancho
>
> California WD and Eastern MWD consider live stream discharge of
> tertiary treated wastewater to Santa Margarita River as least cost
> disposal option.

**1990** BUREC gets State Water Resources Control Board approval

to extend water rights permits (3 for FPUD, 1 for Camp

Pendleton) to 1994. Rancho California WD/Eastern

MWD/FPUD/Camp Pendleton sign Four-Party Agreement

> permitting live stream discharge, with dischargers obligated to
> mitigate water quality impacts on Camp
>
> Pendleton's wells, and providing for year round releases.
>
> FPUD/Camp Pendleton sign Two-Party Agreement for
>
> conjunctive use of Camp Pendleton's groundwater basin as
>
> an alternative to the 2-dam project.

**1994** FPUD/Camp Pendleton complete comprehensive study of

conjunctive use of Camp Pendleton's groundwater basin.

BUREC gets another 2-year extension of the 4 water rights

permits.

**2001** Navy publishes the enhanced recovery program report and

Camp Pendleton concludes negotiations with Rancho

California Water District to provide replacement riverine

flows.

**2002** FPUD, Navy, Reclamation undertake Joint EIR/EIS development for
proposed project.

**2003** Reclamation funding for pre-feasibility established.

**2004** Reclamation and Navy become Joint Federal Lead Agencies;
Fallbrook becomes State Lead Agency, and the Project Management Team is
established in the Temecula Field Office to proceed with the EIR/EIS/FA.