SECTION 1. DEFINITIONS.

    In this Act:
            (1) District.--The term ``District'' means the Fallbrook 
        Public Utility District, San Diego County, California.
            (2) Project.--The term ``Project'' means the impoundment, 
        recharge, treatment, and other facilities the construction, 
        operation, watershed management, and maintenance of which is 
        authorized under section 2.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior.

SEC. 2. AUTHORIZATION FOR CONSTRUCTION OF SANTA MARGARITA RIVER 
              PROJECT.

    (a) Authorization.--The Secretary, acting pursuant to Federal 
reclamation law (the Act of June 17, 1902 (32 Stat. 388, chapter 
1093)), and Acts supplemental to and amendatory of that Act (43 U.S.C. 
371 et seq.), to the extent that law is not inconsistent with this Act, 
may construct, operate, and maintain the Project substantially in 
accordance with the final feasibility report and environmental reviews 
for the Project and this Act.
    (b) Conditions.--The Secretary may construct the Project only after 
the Secretary determines that the following conditions have occurred:
            (1) Contract.--(A) The District and the Secretary of the 
        Navy have entered into contracts under subsections (c)(2) and 
        (e) of section 9 of the Reclamation Project Act of 1939 (43 
        U.S.C. 485h) to repay to the United States equitable and 
        appropriate portions, as determined by the Secretary, of the 
        actual costs of constructing, operating, and maintaining the 
        Project.
            (B) As an alternative to a repayment contract with the 
        Secretary of the Navy described in subparagraph (A), the 
        Secretary may allow the Secretary of the Navy to satisfy all or 
        a portion of the repayment obligation for construction of the 
        Project on the payment of the share of the Secretary of the 
        Navy prior to the initiation of construction, subject to a 
        final cost allocation as described in section 3.
            (2) Permits.--The officer or agency of the State of 
        California authorized by law to grant permits for the 
        appropriation of water has granted the permits to the Bureau of 
        Reclamation for the benefit of the Secretary of the Navy and 
        the District as permittees for rights to the use of water for 
        storage and diversion as provided in this Act, including 
        approval of all requisite changes in points of diversion and 
        storage, and purposes and places of use.
            (3) District agreements.--(A) The District has agreed--
                    (i) to not assert against the United States any 
                prior appropriative right the District may have to 
                water in excess of the quantity deliverable to the 
                District under this Act; and
                    (ii) to share in the use of the waters impounded by 
                the Project on the basis of equal priority and in 
                accordance with the ratio prescribed in section 4(b).
            (B) The agreement and waiver under subparagraph (A) and the 
        changes in points of diversion and storage under paragraph 
        (2)--
                    (i) shall become effective and binding only when 
                the Project has been completed and put into operation; 
                and
                    (ii) may be varied by agreement between the 
                District and the Secretary of the Navy.
            (4) Feasibility studies.--The Secretary has determined that 
        the Project has completed applicable economic, environmental, 
        and engineering feasibility studies.

SEC. 3. COSTS.

    (a) In General.--As determined by a final cost allocation after 
completion of the construction of the Project, the Secretary of the 
Navy shall be responsible to pay upfront or repay to the Secretary only 
that portion of the construction, operation, and maintenance costs of 
the Project that the Secretary and the Secretary of the Navy determine 
reflects the extent to which the Department of the Navy benefits from 
the Project.
    (b) Other Contracts.--Notwithstanding subsection (a), the Secretary 
may enter into a contract with the Secretary of the Navy for the 
impoundment, storage, treatment, and carriage of prior rights water for 
domestic, municipal, fish and wildlife, industrial, and other 
beneficial purposes using Project facilities.

SEC. 4. OPERATION; YIELD ALLOTMENT; DELIVERY.

    (a) Operation.--The Secretary, the District, or a third party 
(consistent with section 6) may operate the Project, subject to a 
memorandum of agreement between the Secretary, the Secretary of the 
Navy, and the District and under regulations satisfactory to the 
Secretary of the Navy with respect to the share of the Project of the 
Department of the Navy.
    (b) Yield Allotment.--Except as otherwise agreed between the 
parties, the Secretary of the Navy and the District shall participate 
in the Project yield on the basis of equal priority and in accordance 
with the following ratio:
            (1) 60 percent of the yield of the Project is allotted to 
        the Secretary of the Navy.
            (2) 40 percent of the yield of the Project is allotted to 
        the District.
    (c) Contracts for Delivery of Excess Water.--
            (1) Excess water available to other persons.--If the 
        Secretary of the Navy certifies to the official agreed on to 
        administer the Project that the Department of the Navy does not 
        have immediate need for any portion of the 60 percent of the 
        yield of the Project allotted to the Secretary of the Navy 
        under subsection (b), the official may enter into temporary 
        contracts for the sale and delivery of the excess water.
            (2) First right for excess water.--The first right to 
        excess water made available under paragraph (1) shall be given 
        the District, if otherwise consistent with the laws of the 
        State of California.
            (3) Condition of contracts.--Each contract entered into 
        under paragraph (1) for the sale and delivery of excess water 
        shall include a condition that the Secretary of the Navy has 
        the right to demand the water, without charge and without 
        obligation on the part of the United States, after 30 days 
        notice.
            (4) Modification of rights and obligations.--The rights and 
        obligations of the United States and the District regarding the 
        ratio, amounts, definition of Project yield, and payment for 
        excess water may be modified by an agreement between the 
        parties.
    (d) Consideration.--
            (1) Deposit of funds.--
                    (A) In general.--Amounts paid to the United States 
                under a contract entered into under subsection (c) 
                shall be--
                            (i) deposited in the special account 
                        established for the Department of the Navy 
                        under section 2667(e)(1) of title 10, United 
                        States Code; and
                            (ii) shall be available for the purposes 
                        specified in section 2667(e)(1)(C) of that 
                        title.
                    (B) Exception.--Section 2667(e)(1)(D) of title 10, 
                United States Code, shall not apply to amounts 
                deposited in the special account pursuant to this 
                subsection.
            (2) In-kind consideration.--In lieu of monetary 
        consideration under paragraph (1), or in addition to monetary 
        consideration, the Secretary of the Navy may accept in-kind 
        consideration in a form and quantity that is acceptable to the 
        Secretary of the Navy, including--
                    (A) maintenance, protection, alteration, repair, 
                improvement, or restoration (including environmental 
                restoration) of property or facilities of the 
                Department of the Navy;
                    (B) construction of new facilities for the 
                Department of the Navy;
                    (C) provision of facilities for use by the 
                Department of the Navy;
                    (D) facilities operation support for the Department 
                of the Navy; and
                    (E) provision of such other services as the 
                Secretary of the Navy considers appropriate.
            (3) Relation to other laws.--Sections 2662 and 2802 of 
        title 10, United States Code, shall not apply to any new 
        facilities the construction of which is accepted as in-kind 
        consideration under this subsection.
            (4) Congressional notification.--If the in-kind 
        consideration proposed to be provided under a contract to be 
        entered into under subsection (c) has a value in excess of 
        $500,000, the contract may not be entered into until the 
        earlier of--
                    (A) the end of the 30-day period beginning on the 
                date on which the Secretary of the Navy submits to the 
                Committee on Armed Services of the Senate and the 
                Committee on Armed Services of the House of 
                Representatives a report describing the contract and 
                the form and quantity of the in-kind consideration; or
                    (B) the end of the 14-day period beginning on the 
                date on which a copy of the report referred to in 
                subparagraph (A) is provided in an electronic medium 
                pursuant to section 480 of title 10, United States 
                Code.

SEC. 5. REPAYMENT OBLIGATION OF THE DISTRICT.

    (a) Determination.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the general repayment obligation of the District 
        shall be determined by the Secretary consistent with 
        subsections (c)(2) and (e) of section 9 of the Reclamation 
        Project Act of 1939 (43 U.S.C. 485h) to repay to the United 
        States equitable and appropriate portions, as determined by the 
        Secretary, of the actual costs of constructing, operating, and 
        maintaining the Project.
            (2) Groundwater.--For purposes of calculating interest and 
        determining the time when the repayment obligation of the 
        District to the United States commences, the pumping and 
        treatment of groundwater from the Project shall be deemed 
        equivalent to the first use of water from a water storage 
        project.
            (3) Contracts for delivery of excess water.--There shall be 
        no repayment obligation under this section for water delivered 
        to the District under a contract described in section 4(c).
    (b) Modification of Rights and Obligation by Agreement.--The rights 
and obligations of the United States and the District regarding the 
repayment obligation of the District may be modified by an agreement 
between the parties.

SEC. 6. TRANSFER OF CARE, OPERATION, AND MAINTENANCE.

    (a) In General.--The Secretary may transfer to the District, or a 
mutually agreed upon third party, the care, operation, and maintenance 
of the Project under conditions that are--
            (1) satisfactory to the Secretary and the District; and
            (2) with respect to the portion of the Project that is 
        located within the boundaries of Camp Pendleton, satisfactory 
        to the Secretary, the District, and the Secretary of the Navy.
    (b) Equitable Credit.--
            (1) In general.--In the event of a transfer under 
        subsection (a), the District shall be entitled to an equitable 
        credit for the costs associated with the proportionate share of 
        the Secretary of the operation and maintenance of the Project.
            (2) Application.--The amount of costs described in 
        paragraph (1) shall be applied against the indebtedness of the 
        District to the United States.

SEC. 7. SCOPE OF ACT.

    (a) In General.--Except as otherwise provided in this section, for 
the purpose of this Act, the laws of the State of California shall 
apply to the rights of the United States pertaining to the use of water 
under this Act.
    (b) Limitations.--Nothing in this Act--
            (1) provides a grant or a relinquishment by the United 
        States of any rights to the use of water that the United States 
        acquired according to the laws of the State of California, 
        either as a result of the acquisition of the land comprising 
        Camp Joseph H. Pendleton and adjoining naval installations, and 
        the rights to the use of water as a part of that acquisition, 
        or through actual use or prescription or both since the date of 
        that acquisition, if any;
            (2) creates any legal obligation to store any water in the 
        Project, to the use of which the United States has those 
        rights;
            (3) requires the division under this Act of water to which 
        the United States has those rights; or
            (4) constitutes a recognition of, or an admission by the 
        United States that, the District has any rights to the use of 
        water in the Santa Margarita River, which rights, if any, exist 
        only by virtue of the laws of the State of California.

SEC. 8. LIMITATIONS ON OPERATION AND ADMINISTRATION.

    Unless otherwise agreed by the Secretary of the Navy, the Project--
            (1) shall be operated in a manner which allows the free 
        passage of all of the water to the use of which the United 
        States is entitled according to the laws of the State of 
        California either as a result of the acquisition of the land 
        comprising Camp Joseph H. Pendleton and adjoining naval 
        installations, and the rights to the use of water as a part of 
        those acquisitions, or through actual use or prescription, or 
        both, since the date of that acquisition, if any; and
            (2) shall not be administered or operated in any way that 
        will impair or deplete the quantities of water the use of which 
        the United States would be entitled under the laws of the State 
        of California had the Project not been built.

SEC. 9. REPORTS TO CONGRESS.

    Not later than 2 years after the date of the enactment of this Act 
and periodically thereafter, the Secretary and the Secretary of the 
Navy shall each submit to the appropriate committees of Congress 
reports that describe whether the conditions specified in section 2(b) 
have been met and if so, the manner in which the conditions were met.

SEC. 10. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to carry out this Act--
            (1) $60,000,000, as adjusted to reflect the engineering 
        costs indices for the construction cost of the Project; and
            (2) such sums as are necessary to operate and maintain the 
        Project.

SEC. 11. SUNSET.

    The authority of the Secretary to complete construction of the 
Project shall terminate on the date that is 10 years after the date of 
the enactment of this Act.
Output: Authorizes the Secretary of the Interior (the Secretary) to construct, operate, and maintain the Santa Margarita River Project in accordance with the final feasibility report and this Act.

Authorizes Project construction only after the Secretary determines that: (1) the Fallbrook Public Utility District, San Diego County, and the Navy have entered into contracts to repay to the United States appropriate construction, operating, and maintenance costs (permits the Secretary to allow satisfaction of the repayment obligation of construction costs through payment of the Navy Secretary's share prior to initiation of construction); (2) the authorized California officer or agency has granted water use permits to the Bureau of Reclamation; (3) the District has agreed that it will not assert against the United States any prior right to water in excess of the quantity deliverable under this Act and will share water based on equal priority and a specified ratio; and (4) the Secretary has determined that the Project has completed applicable economic, environmental, and engineering feasibility studies.

Makes the Navy Secretary responsible to pay only that portion of costs that reflects the extent to which the Navy Department benefits from the Project.

Permits operation of the Project by the Secretary, the District, or a third party, subject to a memorandum of agreement and under regulations satisfactory to the Navy Secretary regarding the Navy Department's share of the Project.

Requires the Secretary and the District to participate in the Project yield on the basis of equal priority, with 60% of the Project's yield allotted to the Navy Secretary and 40% allotted to the District. Sets forth provisions governing contracts for the sale and delivery of excess water.

Requires the District's general repayment obligation to be determined by the Secretary consistent with the Reclamation Project Act of 1939.

Authorizes the Secretary to transfer operation of the Project to the District or a mutually agreed upon third party.