November 20, 2012

NOTICE OF MEETING

STEERING COMMITTEE ORANGE COUNTY SANITATION DISTRICT

REGULAR MEETING – 5:00 P.M.

Wednesday, November 28, 2012

Administration Building 10844 Ellis Avenue Fountain Valley, California 92708

The Regular Meeting of the Steering Committee of the Orange County Sanitation District will be held at the above location, date and time.

STEERING COMMITTEE AND BOARD MEETING DATES

November 28, 2012 *December 19, 2012 January 23, 2013 February 27, 2013 March 27, 2013 April 24, 2013 May 22, 2013 June 28, 2013 July 24, 2013 August 28, 2013 September 25, 2013 October 23, 2013

*Meeting being held the third Wednesday of the month. STEERING COMMITTEE

(1) Roll Call:

Meeting Date: November 28, 2012 Meeting Time: 5:00 p.m.

Committee Members Troy Edgar, Board Chair ...... ……….._____ John Anderson, Board Vice Chair ...... ……….._____ Brad Reese, Administration Committee Chair ...... ……….._____ Tom Beamish, Operations Committee Chair ...... ……….._____ Larry Crandall, Past Board Chair ...... ……….._____ John Nielsen, Operations Committee Vice Chair ...... ……….._____ John Withers, Administration Committee Vice Chair ...... _____

Others Brad Hogin, General Counsel ...... ……….._____

Staff Jim Ruth, General Manager…………………………………………… _____ Bob Ghirelli, Assistant General Manager……………………………. _____ Jim Herberg, Assistant General Manager…………………………… _____ Nick Arhontes, Director of Facilities Support Services….……...... _____ Jeff Reed, Director of Human Resources ...... _____ Ed Torres, Director of Operations & Maintenance…..……………… _____ Lorenzo Tyner, Director of Finance & Administrative Services……. _____ Michael Gold, Public Affairs Manager………………..……………… _____ Maria Ayala, Clerk of the Board……………….....…………………... _____

Other Staff Present

Wednesday, November 28, 2012 Orange County Sanitation District 5 :00 P.M. Regular Meeting of the Administration Building Steering Committee Conference Rooms A & B 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7130

AGENDA

DECLARATION OF QUORUM:

PUBLIC COMMENTS: If you wish to speak, please complete a Speaker’s Form and give it to the Clerk of the Board. Speakers are requested to limit comments to three minutes.

REPORTS: The Committee Chair and the General Manager may present verbal reports on miscellaneous matters of general interest to the Directors. These reports are for information only and require no action by the Directors.

CONSENT CALENDAR:

1. Approve Minutes of the October 24, 2012 Steering Committee Meeting.

ACTION ITEMS:

2. Recommend to the Board of Directors to:

A. Approve the Five-Year Strategic Plan dated November 2012; and,

B. Direct staff to implement the goals and levels of service contained in the Plan.

3. Recommend to the Board of Directors to:

Receive and file Santa Ana Watershed Project Authority Pretreatment Program Compliance Audit Report from Environmental Engineering & Contracting, Inc.

INFORMATION ITEMS:

4. Legislative & Regulatory Affairs Report

11/28/12 Steering Committee Agenda Page 1 of 3 CLOSED SESSION: During the course of conducting the business set forth on this agenda as a regular meeting of the Board, the Chair may convene the Board in closed session to consider matters of pending real estate negotiations, pending or potential litigation, or personnel matters, pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted.

Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation; (c) employment actions or negotiations with employee representatives; or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Board during a permitted closed session and are not available for public inspection. At such time as the Board takes final action on any of these subjects, the minutes will reflect all required disclosures of information.

Convene in closed session.

(1) CONFERENCE WITH LEGAL COUNSEL RE. ANTICIPATED LITIGATION (Government Code Section 54956.9(b)) Significant Exposure to Litigation

Number of Potential Cases: 1 - Claim from Corona Resource Recovery

(2) CONFERENCE WITH LEGAL COUNSEL RE. EXISTING LITIGATION (Government Code Section 54956.9(a))

Case: Kiewit Infrastructure West v. Orange County Sanitation District, Orange County Superior Court, CASE NO.: 30-2012-00544245

(3) CONFERENCE WITH LEGAL COUNSEL RE. INITIATION OF LITIGATION (Government Code Section 54956.9(c))

Number of Potential Cases: 1

(4) COMPLAINTS or CHARGES BROUGHT AGAINST EMPLOYEES by ANOTHER EMPLOYEE (Government Code Section 54957(b)(1))

Reconvene in regular session.

Consideration of action, if any, on matters considered in closed session.

OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY:

11/28/12 Steering Committee Agenda Page 2 of 3 ADJOURNMENT:

The next Steering Committee meeting is scheduled for Wednesday, December 19, 2012, at 5:00 p.m.

Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board’s office at (714) 593-7130 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested.

Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted outside the main gate of the Sanitation District’s Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item, including any public records distributed less than 72 hours prior to the meeting to all, or a majority of the Board of Directors, are available for public inspection in the office of the Clerk of the Board.

NOTICE TO DIRECTORS: To place items on the agenda for the Committee Meeting, items must be submitted to the Clerk of the Board 14 days before the meeting.

Maria E. Ayala Clerk of the Board (714) 593-7130 [email protected]

For any questions on the agenda, Committee members may contact staff at:

General Manager Jim Ruth (714) 593-7110 [email protected] Assistant General Manager Bob Ghirelli (714) 593-7400 [email protected] Assistant General Manager Jim Herberg (714) 593-7300 [email protected] Director of Facility Support Services Nick Arhontes (714) 593-7210 [email protected] Director of Finance and Lorenzo Tyner (714) 593-7550 [email protected] Administrative Services Director of Human Resources Jeff Reed (714) 593-7144 [email protected]

Director of Operations & Maintenance Ed Torres (714) 593-7080 [email protected]

11/28/12 Steering Committee Agenda Page 3 of 3 Glossary of Terms and Abbreviations

AQMD Air Quality Management District ASCE American Society of Civil Engineers BOD Biochemical Oxygen Demand CARB California Air Resources Board CASA California Association of Sanitation Agencies CCTV Closed Circuit Television CRWQCB California Regional Water Quality Control Board CWA Clean Water Act CWEA California Water Environment Association EIR Environmental Impact Report EMT Executive Management Team EPA U.S. Environmental Protection Agency FOG Fats, Oils, and Grease FSSD Facilities Support Services Department gpd Gallons per day GWR System Groundwater Replenishment System (also called GWRS) LOS Level of Service MGD Million gallons per day NACWA National Association of Clean Water Agencies NPDES National Pollutant Discharge Elimination System NWRI National Water Research Institute O&M Operations and Maintenance OCCOG Orange County Council of Governments OCHCA Orange County Health Care Agency OCSD Orange County Sanitation District OCWD Orange County Water District OOBS Ocean Outfall Booster Station OSHA Occupational Safety and Health Administration POTW Publicly Owned Treatment Works ppm Parts per million RFP Request For Proposal RWQCB Regional Water Quality Control Board SARFPA Santa Ana River Flood Protection Agency SARI Santa Ana River Inceptor SARWQCB Santa Ana Regional Water Quality Control Board Glossary of Terms and Abbreviations SAWPA Santa Ana Watershed Project Authority SCADA Supervisory Control and Data Acquisition system SCAP Southern California Alliance of Publicly Owned Treatment Works SCAQMD South Coast Air Quality Management District SOCWA South Orange County Wastewater Authority SSMP Sanitary Sewer Management Plan SSO Sanitary Sewer Overflow SWRCB State Water Resources Control Board TDS Total Dissolved Solids TMDL Total Maximum Daily Load TSS Total Suspended Solids WDR Waste Discharge Requirements WEF Water Environment Federation WERF Water Environment Research Foundation

Activated-sludge process – A secondary biological wastewater treatment process where bacteria reproduce at a high rate with the introduction of excess air or oxygen, and consume dissolved nutrients in the wastewater.

Biochemical Oxygen Demand (BOD) – The amount of oxygen used when organic matter undergoes decomposition by microorganisms. Testing for BOD is done to assess the amount of organic matter in water.

Biosolids – Biosolids are nutrient rich organic and highly treated solid materials produced by the wastewater treatment process. This high-quality product can be recycled as a soil amendment on farm land or further processed as an earth-like product for commercial and home gardens to improve and maintain fertile soil and stimulate plant growth.

Capital Improvement Program (CIP) – Projects for repair, rehabilitation, and replacement of assets. Also includes treatment improvements, additional capacity, and projects for the support facilities.

Coliform bacteria – A group of bacteria found in the intestines of humans and other animals, but also occasionally found elsewhere used as indicators of sewage pollution. E. coli are the most common bacteria in wastewater.

Collections system – In wastewater, it is the system of typically underground pipes that receive and convey sanitary wastewater or storm water.

Certificate of Participation (COP) – A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues.

Contaminants of Potential Concern (CPC) – Pharmaceuticals, hormones, and other organic wastewater contaminants.

Dilution to Threshold (D/T) – the dilution at which the majority of the people detect the odor becomes the D/T for that air sample. Glossary of Terms and Abbreviations

Greenhouse gases – In the order of relative abundance water vapor, carbon dioxide, methane, nitrous oxide, and ozone gases that are considered the cause of global warming (“greenhouse effect”).

Groundwater Replenishment (GWR) System – A joint water reclamation project that proactively responds to Southern California’s current and future water needs. This joint project between the Orange County Water District and the Orange County Sanitation District provides 70 million gallons a day of drinking quality water to replenish the local groundwater supply.

Levels of Service (LOS) – Goals to support environmental and public expectations for performance.

NDMA – N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent. It has been found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide with extra ultra-violet treatment.

National Biosolids Partnership (NBP) – An alliance of the National Association of Clean Water Agencies (NACWA) and Water Environment Federation (WEF), with advisory support from the U.S. Environmental Protection Agency (EPA). NBP is committed to developing and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory compliance and promote public participation in order to enhance the credibility of local agency biosolids programs and improved communications that lead to public acceptance.

Publicly-owned Treatment Works (POTW) – Municipal wastewater treatment plant.

Santa Ana River Interceptor (SARI) Line – A regional brine line designed to convey 30 million gallons per day (MGD) of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean for disposal, after treatment.

Sanitary sewer – Separate sewer systems specifically for the carrying of domestic and industrial wastewater. Combined sewers carry both wastewater and urban run-off.

South Coast Air Quality Management District (SCAQMD) – Regional regulatory agency that develops plans and regulations designed to achieve public health standards by reducing emissions from business and industry.

Secondary treatment – Biological wastewater treatment, particularly the activated-sludge process, where bacteria and other microorganisms consume dissolved nutrients in wastewater.

Sludge – Untreated solid material created by the treatment of wastewater.

Total suspended solids (TSS) – The amount of solids floating and in suspension in wastewater.

Trickling filter – A biological secondary treatment process in which bacteria and other microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in wastewater as it trickles over them.

Urban runoff – Water from city streets and domestic properties that carry pollutants into the storm drains, rivers, lakes, and oceans.

Wastewater – Any water that enters the sanitary sewer.

Watershed – A land area from which water drains to a particular water body. OCSD’s service area is in the Santa Ana River Watershed. Meeting Date To Bd. of Dir. STEERING COMMITTEE 11/28/12 11/28/12 Item Number Item Number AGENDA REPORT 2 Orange County Sanitation District

FROM: James D. Ruth, General Manager Originator: Robert P. Ghirelli, Assistant General Manager

GENERAL MANAGER'S RECOMMENDATION

A. Approve the Five-Year Strategic Plan dated November 2012; and,

B. Direct staff to implement the goals and levels of service contained in the Plan.

SUMMARY

The Strategic Plan has been updated for Fiscal Year 2012-13 and contains a summary of accomplishments over the past year as well as changes to the levels of service and strategic goals. The plan does not carry any additional costs associated with the changes to the strategic goals and levels of service.

PRIOR COMMITTEE/BOARD ACTIONS

October 2012: The Board of Directors conducted a Strategic Planning Workshop.

ADDITIONAL INFORMATION

Strategic Plan Update Process In 2007, the Board of Directors held a series of workshops to develop a Five-Year Strategic Plan containing strategic goals, levels of service and updated statements of mission, vision and core values. The three month process culminated in adoption of a new plan in November 2007. Every year since, the Board of Directors holds a Strategic Planning Workshop and subsequently approves an updated plan with new strategic goals and levels of service.

Board Input The Executive Management Team met in July 2012 to discuss preliminary ideas and suggestions for updates to the plan. On October 17, the Board of Directors participated in a workshop to discuss the progress to date and heard presentations by members of the Executive Management Team regarding biosolids management, chemical sustainability, odor control, workforce planning and development, and business continuity planning. The discussion resulted in recommendations to add or change several strategic goals and levels of service.

Form No. DW-102.1 Page 1 of 3

Plan Changes Based on the outcome of the Strategic Planning Workshop, the following changes are proposed in this update of the Strategic Plan:

Environmental Stewardship Level of Service – OCSD will be a good neighbor: · Number of Odor Complaints -- Establish a new level of service target = 0 (zero) under normal operating conditions for Treatment Plants 1 and 2.

Business Principle Goals -- add new goals as follows: · Chemical Sustainability – Ensure a reliable and sustainable chemical supply using multiple vendors to reduce the risk of supply disruption while benefiting from competitive pricing. Targeted for completion in FY 2012-13. · Business Continuity Planning – Develop a business continuity plan that will define how OCSD will continue its everyday business functions after an event that interrupts normal operations for an extended period of time. Targeted for completion in FY 2012-13.

Wastewater Management Goals – amend current goals as follows: · Odor Control Update and Action Plan – Assess the performance of current odor control systems, validate the appropriate level of service, align future odor control improvements with asset management objectives, and update the Capital Improvement Program for odor control to meet the level of service target. Targeted for completion in FY 2013-14. · Sustainable Biosolids Program – Assess and revise the 2006 Biosolids Board Resolution to reflect recent developments, experiences, and circumstances. Targeted for completion in FY 2012-13.

Wastewater Management Level of Service – OCSD will provide a safe, reliable effluent for recycling: · Meet Secondary Treatment Standards – Establish a new level of service target for CBOD = 25 mg/l and TSS = 30 mg/l, as required by the Sanitation District’s ocean discharge permit. (CBOD = carbonaceous biological oxygen demand; TSS = total suspended solids).

Wastewater Management Level of Service – OCSD will implement a Sustainable Biosolids Management Program: · Biosolids recycled – establish a new level of service target through 2017 of less than or equal to 100 tons per day to landfill.

Workplace Environment Goal – amend current goal as follows: · Workforce Planning and Workforce Development – Design and implement comprehensive workforce planning and development activities to improve workforce capability, adaptability, efficiency, and accountability.

Form No. DW-102.1 Page 2 of 3

CONTINUAL IMPROVEMENT Overall, the updated Strategic Plan continues OCSD’s goal of moving from good to great through annual assessments and incremental changes. Each year, the Board will be asked to provide strategic leadership and guidance to district staff for setting goals and levels of service.

The Steering Committee and Board are asked to adopt the new Five-Year Strategic Plan, which contains no new costs and will help guide the strategic direction of the organization and staff. Following Board approval of the updated plan, implementation of plan changes will occur through a series of recommended actions proposed by staff for Board consideration at future meetings.

CEQA

Adoption of the Strategic Plan is statutorily exempt from CEQA because it involves only feasibility or planning studies for possible future actions which the board has not approved, adopted, or funded. The Strategic Plan will not have a legally binding effect on later activities.

BUDGET / DELEGATION OF AUTHORITY COMPLIANCE

N/A

ATTACHMENT

The following attachment(s) are included in hard copy as a separate attachment, and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package and attachments:

· November 2012 Strategic Plan (54 pages)

Form No. DW-102.1 Page 3 of 3

{5year} strategic plan november 2012 Orange County Sanitation District Five-Year Strategic Plan

November 2012

{5 year} strategic plan update | november 2012 Table of Contents

OCSD Board of Directors ii Message from the General Manager iii Executive Summary 1 The Strategic Planning Framework 2 Mission Statement 3 Vision Statement 4 Core Values 5 Risk Register 6 Strategic Goals & Levels of Service 7 Goals Completed Since 2007 8 Environmental Stewardship 11 Business Principles 13 Wastewater Management 15 Workplace Environment 17 Appendix A: New Issue Papers 19 Appendix B: Previous Issue Papers 27 Appendix C: Glossary 47

{5 year} strategic plan update | november 2012 i OCSD Board of Directors

Chair Troy Edgar Vice Chair John Anderson

City Active Director Anaheim Gail Eastman Brea Don Schweitzer Buena Park Fred Smith Cypress Prakash Narain Fountain Valley Larry Crandall Fullerton Gregory Sebourn Garden Grove Bill Dalton Huntington Beach Joe Carchio Irvine Jeffrey Lalloway La Habra Tom Beamish La Palma Mark Waldman Los Alamitos Troy Edgar Newport Beach Steven Rosansky Orange Jon Dumitru Placentia Scott Nelson Santa Ana Sal Tinajero Seal Beach Michael Levitt Stanton David Shawver Tustin John Nielsen Villa Park Brad Reese Yorba Linda John Anderson

Sanitary/Water Districts Costa Mesa Sanitary District James M. Ferryman Midway City Sanitary District Joy L. Neugebauer Irvine Ranch Water District John Withers

Orange County Board of Supervisors Janet Nguyen

ii {5 year} strategic plan update | november 2012 Message from the General Manager

Five years ago, the Board of Directors and staff charted a course for success in the future through the development of the first Five-Year Strategic Plan. We committed to the execution of that plan and imple- mentation of the goals necessary to achieve success. The Strategic Plan established Levels of Service to ensure that the quality of wastewater treatment would protect the health of residents served by the District and the environment in which they live. Annually, the Goals and Levels of Service have been adjusted when necessary and new goals have been added to meet the changes in operating, regulatory, and very challenging economic conditions. I am pleased to present successes from attained goals. Many goals have been completed that improved technical operations, biosolids manage- ment, odor control, departmental strategic planning, succession plan- ning, and regulatory compliance. Some very important goals are ongo- ing, such as the Santa Ana River Interceptor relocation, the continuing effort to prepare staff for the future, and the transfer of local sewer lines to responsible cities. The greatest achievement during these last five years has been the construction of nearly $623 million of secondary treatment facilities, meeting all the regulatory requirements ahead of schedule, treating wastewater to secondary treatment standards, and doing it on time and on budget. We focused on four key strategies while developing the original Strategic Plan in 2007 and in subsequent updates while facing complex issues and challenges: • Our most important responsibility is to provide safe, effective wastewater treatment; • We continue to make decisions by incorporating social, environmental and financial considerations; • We remain leaders in the protection of the environment, collaborating with other stakeholders in the watershed to ensure we effectively meet the needs of our customers; and • We continue to provide employees with resources to do their jobs and give them opportunities for career growth. Those same four points have focused staff for the last five-years and still remain the drivers for our Level of Service updates and each new goal that has been presented in subsequent Strategic Plans. Today we set the course for this next year with a new set of goals and modifications to the Levels of Ser- vice. I am confident in the staff and the leadership at the Sanitation District, and I am confident that this organization will continue to remain a leader within our industry, and will continue to protect the public health and environment for our rate payers. My tenure at the Orange County Sanitation District will end soon. I look forward with anticipation to watching the Sanitation District continue to build on our success. I am grateful to the Board of Directors for their leadership and support and to our staff for their continued dedication. Respectfully submitted,

James D. Ruth General Manager

{5 year} strategic plan update | november 2012 iii Executive Summary In November 2007, the Board of Directors adopted the first five-year comprehensive strategic plan to steer OCSD’s efforts and engage the organization to envision service levels and operational needs. This year marks the end of that five-year strategic plan cycle. Since 2007, 31 strategic goals have been completed, two have been cancelled after further evaluation and three new or modified goals remain and are scheduled to be completed by 2014. The plan has continued to provide direction for moving from good to great through annual assessments and incremental changes. As a result of the discussion at the October 17, 2012 Strategic Planning Workshop, three new goals were added, three modifications to existing levels of service were made and two goal modifications were included in the plan.

New Goals: • Chemical Sustainability – Ensure a reliable and sustainable chemical supply using multiple vendors to reduce the risk of supply disruption while benefiting from competitive pricing. Targeted for completion in FY 12-13 • Business Continuity Planning – Develop a business continuity plan that will define how OCSD will continue its everyday business functions after an event that interrupts normal operations for an extended period of time. Targeted for completion in FY 12-13 • Biosolids Recycling Policy – Assess and revise the 2006 Biosolids Board Resolution (Policy) to reflect recent developments, experiences, and circumstances concerning biosolids management. Targeted for completion in FY 12-13

Modification to Level of Service: • Number of Odor Complaints – Establish a new level of service target = 0 (zero) under normal operating conditions for Treatment Plants 1 and 2. • Meet Secondary Treatment Standards – Establish a new level of service target for CBOD = 25 mg/l and TSS = 30 mg/l. (CBOD = carbonaceous biological oxygen demand; TSS = total suspended solids). • Biosolids Recycling – Establish a new level of service target through 2017 of less than or equal to 100 tons per day to landfill.

Goal Modification: • Odor Control Update and Action Plan – Assess the performance of current odor control systems, validate the appropriate level of service, align future odor control improvements with asset management objectives, and update the capital improvement program for odor control to meet the level of service target. Targeted for completion in FY 13-14 • Workforce Planning and Workforce Development – Design and implement comprehensive workforce planning and development activities to improve workforce capability, adaptability, efficiency, and accountability. Targeted for completion in FY 12-13 The issue papers describing these goals and level of service are contained in Appendix A. The Strategic Plan continues to chart a focused roadmap of success for the future of the Orange County Sanitation District. It continues to address critical issues and challenges, and to communicate clear and concise future direction to OCSD staff.

p. 01 {5 year} strategic plan update | november 2012 Strategic Planning Framework

The planning framework is illustrated below and shows how the Board of Directors play a critical role in strategic planning and resource allocation. The strategic planning effort starts with the Board of Directors setting overall policy and priorities for the Sanitation District. Based on that policy direction, staff devel- ops the annual operational plan and budget.

Monitoring Strategic New or altered and Evaluation Planning Levels of Service

Strategic Board Board Planning Approval of Approval of Strategic Plan Budget Framework

Budget Operational Goals and Planning Objectives

{5 year} strategic plan update | november 2012 p. 02 OCSD Mission Statement

The Mission Statement is the basic foundation that defines why we exist.

“We protect public health and the environment by providing effective wastewater collection, treatment, and recycling.”

p. 03 {5 year} strategic plan update | november 2012 OCSD Vision Statement

The Vision Statement supports the Mission Statement by expressing a broad philosophy of what the Orange County Sanitation District strives to achieve now and in the future in the delivery of services to our customers, vendors, other agencies, the general public, and each other.

The Orange County Sanitation District is committed to:

Making decisions in an open and honest way to produce optimum financial, environmental and societal results.

Cooperating with other stakeholders to protect the ocean and regional water resources for the people we serve.

Beneficially recycling wastewater, biosolids and other resources using safe and effective processes and systems.

Developing the best possible workforce by providing employees with opportunities to advance their careers through enhanced growth, responsibility, and professional development.

{5 year} strategic plan update | november 2012 p. 04 Core Values

The Core Values support the Mission and Vision Statements by expressing the values, beliefs, and philosophy that guides our daily actions. They help form the framework of our organization and reinforce our professional work ethic.

Honesty, Trust and Respect We aspire to the highest degree of integrity, honesty, trust, and respect in our interaction with each other, our suppliers, our customers, and our community.

Teamwork and Problem Solving We strive to reach OCSD goals through cooperative efforts and collaboration with each other and our constituencies. We work to solve problems in a creative, cost-effective and safe manner, and we acknowledge team and individual efforts.

Leadership and Commitment We lead by example, acknowledging the value of our resources and using them wisely and safely to achieve our objectives and goals. We are committed to act in the best interest of our employees, our organization, and our community.

Learning/Teaching We continuously develop ourselves, enhancing our talents, skills, and abilities, knowing that only through personal growth and development will we continue to progress as an agency and as individuals.

Recognition/Rewards We seek to recognize, acknowledge, and reward contributions to OCSD by our many talented employees.

p. 05 {5 year} strategic plan update | november 2012 Risk Register

The Risk Register is an annual compilation of the various risks, opportunities and continuity challenges facing the Orange County Sanitation District, as seen by the Sanitation District’s management team. The Risk Register Update in 2012 was conducted as the world dealt with a variety of crises. In the previous several months, there were a number of major earthquakes and floods around the world, a large cruise ship went aground, the San Onofre nuclear plant was shut down due to deteriorating pipes and the Eurozone struggled with high sovereign debt levels. For the Risk Register Update this year, managers and executive management of OCSD focused their attention on District concerns deemed particularly compelling, giving higher scores to several risks than in past years. The 2012 Risk Register Update identified these as the top risks: • California financial instability—points to the continuing monetary turmoil in California state government and the possibility that decisions by the state could impact OCSD funds collected. • Retirement of experienced employees—reflects the fact that many long-time OCSD employees are nearing or are eligible for retirement. The top opportunities for the 2012 update are: • Hire good staff—refers to the opportunity to find and hire competent and experienced people during a time when many are available. • Train staff for new facilities, develop new skills and career growth—identify and value employees with “people skills”—as new construction finishes and comes online, and as long-time employees retire, there is an opportunity to prepare OCSD and its staff for these changes. • Prioritize activities and resources—reflects the fact that money is tight in these economic times, and so it is valuable to carefully allocate money where needed the most. The major continuity challenges include: • Maintaining chemical supply if disruption—refers to the Sanitation District’s use of important chemicals used to treat wastewater, and our need to keep the supply coming even in the face of a disaster. • Development of formal business continuity plan—that reflects that while the District has an emergency response plan, along with safety and risk management procedures, it requires a focus on a formal longer-term business continuity plan which includes the smooth continuation of business operations after a disaster. Staff is in the process of developing plans to mitigate the identified risks and challenges, and take advantage of the opportunities. For example, as the successful effort to commission full secondary treatment is coming to fruition, the Sanitation District recently completed a reorganization of its staff to streamline its operations and eliminate duplicative functions, saving $500,000. The District’s “BLAST” program seeks to give employees opportunities to improve the skills needed to successfully work in a high-performance environment. Regarding continuity, staff is developing a formal business continuity plan that focuses on the ability to continue treating wastewater even under difficult conditions.

{5 year} strategic plan update | november 2012 p. 06 Strategic Goals & Levels of Service

On the following pages are the strategic goals and levels of service for the next five years. New goals for this report are noted and all goals include a projected completion time. The levels of service standards are measures of service that are seen by our customers as high priorities. Goals and levels of service are divided into four areas: • Environmental Stewardship—OCSD participates collaboratively in the protection of regional water resources for the benefit of the people we serve. • Business Principles—OCSD makes every decision based on short and long-term environmental, societal, and financial impacts (the triple bottom line). • Wastewater Management—OCSD beneficially reuses and recycles water and other resources using safe and effective wastewater systems. • Workplace Environment—OCSD provides an environment of partnership, growth, opportunity, responsibility and accountability.

p. 07 {5 year} strategic plan update | november 2012 Goals completed since adoption of the 2007 Five-Year Plan

Environmental Stewardship 1. Contaminants of Potential Concern (CPC)—Complete three phase testing and analysis of 550+ CPC, prepare report on findings and recommendations, develop initial source control strategy if there are CPCs identified that require control. Completed FY 07-08 2. Management System for Environmental Compliance—Implement a management control system for environmental compliance information that incorporates a dashboard-style report. Completed FY 07-08 3. Engine Emission Compliance—Complete study to evaluate alternatives for complying with lower emission limits in the South Coast Air Quality Management’s Rule 1110.2. Initiate planning and design of demonstration testing of the most promising technology(s) identified in the study. Completed FY 07-08 4. Fuel Cell Evaluation—Start up 300 kW demonstration unit. Completed FY10-11 a. Evaluate cost feasibility of replacing or supplementing CGS engines with fuel cells. Completed FY 10-11 5. Climate Change/Environmental Footprint Initiative—Develop an overall strategy for responding to climate change regulations and proactively adapting to the effects of climate change including identification and mitigation of greenhouse gases and adapting to any impacts to our facilities and operations. Completed FY 08-09 a. Develop models to estimate greenhouse gas and traditional pollutant emissions for determination of our environmental footprint. (Functional predictive greenhouse gas model completed.) Completed in FY 10-11 6. Reclaiming Santa Ana River Interceptor Line (SARI) Flows—Meet with stakeholders, develop a list of obstacles that need to be overcome to reclaim the SARI Line and develop a strategy to obtain regulatory approval of reclaiming SARI Line flows. This goal was canceled in FY 08-09 due to inability to obtain regulatory approval.

The tunneling machine entering the receiving shaft indicates the completion of one of the critical tunneling segments of the Santa Ana River Interceptor project. This project is relocating the OCDS’s pipeline to safer ground outside the Santa Ana River alignment.

{5 year} strategic plan update | november 2012 p. 08 Business Principles 1. Sewer Rate for Green Development—Submit for Board approval an amendment to sewer rate ordinance with incentives for green developments. Completed FY 07-08 2. Complete Facilities Master Plan Update—Complete a comprehensive update of the Facilities Master Plan and obtain Board approval. Completed FY 07-08 3. Enterprise Information Technology Strategic Plan—Complete a District-wide Information Technology Strategic Plan. Completed FY 09-10 4. Updating OCSD’s Risk Register—Review and update OCSD’s risk register to include an assessment of technical, regulatory, financial, and political risks (among others) and possible mitigation strategies. Completed FY 07-08 5. Annex Unincorporated Areas—With Board concurrence, annex unincorporated areas into OCSD’s service area. Completed FY 07-08 6. Review Interagency Agreements—Conduct a comprehensive review of agreements with the Santa Ana Watershed Project Authority and Irvine Ranch Water District, and, if appropriate, reopen for discussion. Completed FY 09-10 7. Strategic Business Plan—With Board concurrence, annually update and implement the Strategic Plan and Business Plan. Completed FY 10-11 8. Business Accountability Charters—Create Business Accountability Charters for each department, consistent with those developed by managers and supervisors. Completed FY 10-11 9. Chemical Supplies—Develop a Chemical Sustainability Plan that provides OCSD with options for obtaining wastewater treatment chemicals during chemical shortages, emergencies or complete stoppages. Completed FY 10-11 10. Full-Cost Recovery 2010-11—Conduct a comprehensive review of the Sanitation District’s Urban Runoff Program to ensure a fair share recovery of costs for services. Completed in FY 10-11 11. Full-Cost Recovery 2012-13—Implement a direct charging mechanism to recover the full cost of urban runoff treatment starting July 1, 2013 when the new rate structure is in place. Completed in FY 12-13

p. 09 {5 year} strategic plan update | november 2012 Wastewater Management 1. Groundwater Replenishment System—Maximize the production of GWR System product water to augment and protect the Orange County groundwater basin with a goal of 70 mgd. Completed FY 08-09 2. Sustainable Biosolids Program—Complete new in-county Compost Take-Back Program Plan strategy. Completed FY 07-08 a. Evaluate the feasibility of deep injection/methane recovery including commissioning a study of the geological formations below Plants 1 and 2, and availability and acceptability of any existing wells. Completed FY 08-09 b. Evaluate option of processing some biosolids at the City of Los Angeles Terminal Island demonstration well. Completed FY 08-09 3. Implement Energy Master Plan—After the completion of the plan, assess final recommendations to ensure adequate power resources and energy management. Completed FY 09-10 4. Disinfection of Final Effluent—Develop a cost effective program to sustain protection of public health associated with bacteria in the effluent and incorporate program elements into our NPDES Permit. Completed in FY 10-11

Workplace Environment 1. Space Planning Study Recommendations—Complete relocation of staff housed in Information Technology Trailers to the Administration Building, Control Center and Building 6. Completed FY 07-08 2. Improve the Sanitation District Security—Provide long-term security enhancements at both treatment plants and within OCSD’s Collections System. Completed FY 07-08 3. Safety and Health Strategic Plan—Develop and implement a Safety and Health Strategic Plan for all OCSD activities. Completed FY 08-09 4. Human Resources Strategic Plan—Design, develop and implement human resources policies, practices, systems and tools to ensure OCSD has a workforce that meets future needs of OCSD and the public it serves. Completed FY 08-09 5. Succession Plan—Implement the Succession Management Plan including management training and the creation of a Leadership Academy. Completed FY 08-09 6. North County Yard—Open the North County Maintenance Yard and complete the relocation of selected staff and equipment to the facility. Implement flex space for added agency-wide needs as appropriate. This goal was canceled in FY 10-11 and the facility is leased.

{5 year} strategic plan update | november 2012 p. 10 Environmental Stewardship Goals

OCSD participates collaboratively in the protection of regional water resources for the benefit of the people we serve. 1. Santa Ana River Interceptor Line Relocation—Work in conjunction with the County of Orange and the Federal Government to relocate the Santa Ana River Interceptor Line by June 2013. Targeted for completion in FY 12-13 2. Engine Emission Compliance—Implement capital improvements or operational modifications in order to achieve compliance. Targeted for completion in FY 13-14 3. Fuel Cell Evaluation—Evaluate performance and fuel clean up effectiveness. Targeted for completion in FY 12-13

Environmental Stewardship Levels of Service

FY 11-12 Level of Service OCSD will protect public health and the environment Results Target

Accept dry weather urban runoff diversion flows without imposing fees. 1.8 mgd Up to 4 mgd

Maximum off-site odor impact • Reclamation Plant No. 1 42 D/T 14 D/T • Treatment Plant No. 2 48 D/T 17 D/T (Target dates will be established as part of the Odor Control Master Plan update scheduled for 12/2014.)

Air emissions health risk to community and employees, per one million people (for each treatment plant) 9 < 10

No Notices of Violation (NOVs) with air, land, and water permits 2 0

FY 11-12 Level of Service OCSD will be a good neighbor Results Target

Odor complaint response: • Treatment Plants within 1 hour 100% 100% • Collection System within 1 working day 100% 100%

Number of odor complaints: • Reclamation Plant No. 1 1 0* • Treatment Plant No. 2 4 0* • Collection System 12 34 * New target “under normal operating conditions”

Respond to collection system spills within 1 hour 100% 100%

p. 11 {5 year} strategic plan update | november 2012 Research project for hydrogen fuel cell and Headworks Biotowers—Odor control system to reduce offsite odors. fueling station has been installed and is operational at Plant No. 1, converting digester gas into electricity for on-site use and hydrogen gas for fueling automobiles.

SARI dedication—ground breaking ceremonies at the relocation of the Santa Ana River Interceptor line October 11, 2012. Olfactometry uses the sense of smell or olfactory stimuli in a controlled group of people to measure the concentration of an odorant in an air sample.

Biosoilds—Recycled biosolids used on non-food Chemical dosing station—Odor and corrosion control for the crops as a land application. collection system.

{5 year} strategic plan update | november 2012 p. 12 Business Principles Goals

OCSD makes every decision based on short and long-term environmental, societal, and financial impacts (the triple bottom line). 1. Local Sewer Transfers—Complete the transfer of local sewers to member agencies and cities, focusing on completion of the Tustin transfer. Targeted for completion in FY 12-13 2. Five-Year Rate Plan—Prepare an updated 5-year rate schedule for Board consideration to go into effect July 1, 2013. Targeted for completion in FY 12-13 3. Chemical Sustainability (new)—Ensure a reliable and sustainable chemical supply using multiple vendor contracts to reduce the risk of supply disruption while benefiting from competitive pricing. Targeted for completion in FY 12-13 4. Business Continuity Planning (new)—Develop a Business Continuity Plan (BCP) that will define how OCSD will continue its everyday business functions after an event that interrupts normal operations for an extended period of time. Targeted for completion in FY 12-13

Trickling filter at Plant No. 2.

p. 13 {5 year} strategic plan update | november 2012 Business Principles Levels of Service

FY 11-12 Level of Service OCSD will exercise sound financial management Results Target

COP service principal and interest < O&M expenses < O&M expenses

Annual user fees Sufficient Sufficient to cover all O&M requirements

Actual collection, treatment, and disposal costs million gallons in comparison with the budget 8.7% under budget ≤ 10% of budget

Annual variance from adopted reserve policy 00.1492% ≥ Budgeted reserves

Maintain AAA Bond Rating 100% 100%

FY 11-12 Level of Service OCSD will be responsive to our customers Results Target

Respond to public complaints or inquiries regarding 100% >90% construction projects within 1 working day

New connection permits processed within one working day 100% >90% Comparison of Single-Family Residential Rates Per Year $700

$600

$500

$400

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{5 year} strategic plan update | november 2012 p. 14 Wastewater Management Goals

OCSD beneficially reuses and recycles water and other resources using safe and effective wastewater systems. 1. Sustainable Biosolids Program a. Conduct research to reduce the amount of biosolids produced and increase digester gas production. Targeted for completion in FY 12-13 b. (new) Assess and revise the 2006 Biosolids Board Resolution (Policy) to reflect recent developments, experiences, and circumstances concerning biosolids management. Targeted for completion in FY 12-13 2. Odor Control Update and Action Plan (modified)—Assess the performance of current odor control systems, validate the appropriate LOS, align future odor control improvements with asset management objectives, and update our Capital Improvement Program for odor control to meet our LOS goals. Targeted for completion in FY 13-14 3. Ocean Protection—Undertake studies to determine the cause of benthic community changes near the ocean outfall and take corrective action to return affected areas to reference conditions. Targeted for completion in FY 11-12 (Board presentation 1st quarter 2013)

Ocean Monitoring Program

p. 15 {5 year} strategic plan update | november 2012 Wastewater Management Levels of Service

FY 11-12 Level of Service OCSD will provide a safe reliable effluent for recycling Results Target

Concentration of emerging chemical constituents 11.0 NDMA < 150 ppt of concern in Plant No. 1 secondary effluent 11.24 1,4-Dioxane < 10 ppb

Meet GWRS specification requirements for Plant 1 secondary effluent 3.0 5 NTU

Thirty-day geometric mean of total coliform bacteria in effluent after initial dilution of 250:1 352.5 < 1,000 mpn

Compliance with core industrial pretreatment requirements 100% 100%

Meet secondary treatment standards BOD 12 mg/L CBOD 25 mg/L TSS 8.9 mg/L TSS 30 mg/L

FY 11-12 Level of Service OCSD will manage flows reliably Results Target

Frequency of unplanned use of emergency one-mile 0 0 per year during (78-inch diameter) outfall dry weather less than once per 3 years in peak wet weather

Sanitary sewer spills per 100 miles 0.23 < 2.1

Contain sanitary sewer spills within 5 hours 100% 100%

FY 11-12 Level of Service OCSD’s effluent will be recycled Results Target

Provide up to 104 mgd specification effluent 89 mgd 104 mgd to the Groundwater Replenishment System

OCSD will implement a sustainable biosolids FY 11-12 Level of Service management program Results Target

National Biosolids Partnership Certification for 5 year recertification Maintain Biosolids Management Program July 2008 certification

Biosolids recycled 0 tons to landfill ≤100 tons per day (New Target Level of Service through 2017) 100% recycled to landfill

Respond to all biosolids contractor violations 100% 100% within a week of violation notice

{5 year} strategic plan update | november 2012 p. 16 Workplace Environment Goals

OCSD provides an environment of partnership, growth, opportunity, responsibility and accountability. 1. Workforce Planning and Workforce Development (Updated)—Design and implement comprehensive workforce planning and development activities to improve workforce capability, adaptability, efficiency, and accountability. Ongoing plan for preparing employees for the future.

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BLAST is an internal program that is being developed by employees for employees with the ongoing support from management. BLAST continuously promotes and offers opportunities for lifelong learning in an effort to build OCSD’s bench for future leadership positions.

p. 17 {5 year} strategic plan update | november 2012 Workplace Environment Levels of Service

FY 11-12 Level of Service OCSD will take care of its people Results Target

Training hours per employee 40 45 per year

Employee injury incident rate—accidents per 100 employees 4.3 Industry average 4.6

Meet mandatory OSHA training requirements 91% >95%

Hours worked since last lost work day 140,000 1,000,000

Achieve annual agency target of days away from work, 3.0 2.5 days of restricted work activity, or job transferred as a result of a work-related injury or illness

{5 year} strategic plan update | november 2012 p. 18 Appendix A: New Issue Papers

In preparation for the October 17, 2012 Board of Director Strategic Planning Workshop to discuss the proposed goals for 2012, staff prepared five issue papers related to the new goals. The appendix includes issue papers on the following topics:

• Revisiting OCSD’s 2006 Biosolids Recycling policy • Chemical Sustainability • Odor Control Update and Action Plan • Workforce Planning and Workforce Development • Business Continuity Planning

p. 19 {5 year} strategic plan update | november 2012 OCSD’s Biosolids Recycling Policy

Should OCSD revisit the 2006 Biosolids Recycling policy to reflect recent developments, experiences, and circumstances?

Why is this issue important to the District? Since the 2006 OCSD Board Resolution (OCSD 06‐10) supporting the Long Range Biosolids Management Plan (LRBMP) was adopted, OCSD implemented the diversity guidelines, managed our long-range contracts, changed our biosolids recycling level of service, and renewed our land application commitment as part of our diverse portfolio. The long-term strategy requires modifications since the EnerTech contract has ended and our biosolids volumes will drop significantly by 2017 when IRWD will be processing their own solids and new centrifuge dewatering facilities are operational.

Goals • Recognize historic milestones as key rationale for biosolids policy (e.g., grand jury report, county ordinances banning biosolids, etc.). • Recognize importance of best management practices and contractor investment that build sustainability of OCSD’s biosolids program. Reaffirm the continued importance of onsite research to reduce the volume of biosolids that require offsite management. • Reaffirm our commitment to maintaining an environmental management system (EMS) for our biosolids program for which we were first certified by the National Biosolids Partnership in 2003. • Remain committed to recycling our biosolids with a level of service (updated in 2011) of at least 88% of biosolids recycled (not more than 12% to landfill) through the solids peak in 2017. The Long-Range Plan also recommended the use and development of in-county biosolids options. • Continue to adhere to the diversity goals recommended by the Long Range Plan: ■ Not more than half of our biosolids to any market or contractor; ■ Not more than one-third to any facility; ■ Maintain fail-safe backup options for at least 100% of OCSD’s biosolids production (current more than 1000%) ■ Develop in-county production facilities and markets working with member agencies and local stakeholders. Once the Orange County Waste and Recycling landfill (Prima Deshecha) comes online (anticipated in January 2013), there will be a further increase in our biosolids program diversity and provide an in-county option. ■ Move into energy, composting, and a few other specific markets using merchant facilities as recommended in the Long Range Plan (not risking any OCSD capital). These recommendations were implemented through the EnerTech Rialto and Synagro South Kern compost facilities.

{5 year} strategic plan update | november 2012 p. 20 Given the currently available high-quality, lower-cost biosolids management options, the sustainability of these options, and significant reduction in biosolids produced (one-third of current production) by 2017, OCSD staff believes that we can continue to meet our diversity criteria with the current contracts and without issuing a request for proposals in the near future. The 2015-16 Synagro South Kern Compost facility contract renewal will be the next significant biosolids contract decision point. The new contract with Tule Ranch allows OCSD to provide biosolids to prospective facilities to ensure they meet quality standards before committing to a contract with these facilities. OCSD’s quality and sustainability standards include best management practices, truck cleanliness, onsite housekeeping, and compatibility with our biosolids and certified program requirements. More detailed information can be found online at www.ocsewers.com/bcr. Staff will propose amending the Synagro contract to match the new Tule Ranch contract language to be equally as flexible.

Desired Outcome • Update current Synagro contract to address inadequate “not to exceeds” value and to allow transportation and delivery of OCSD’s biosolids to facilities for research or demonstration purposes to further diversify OCSD’s biosolids management options. • Update OCSD Board Resolution (OCSD 06-10) with considerations listed herein. • Continue to balance biosolids among existing contractors in conformance with diversity goals set by 2003 Long-Range Biosolids Management Plan and to be incorporated into updated Board Resolution until at least 2016 when renewal of the Synagro contract will be considered.

p. 21 {5 year} strategic plan update | november 2012 Chemical Sustainability

Should OCSD provide additional efforts to promote chemical sustainability?

Why is this issue important to the District? The District treatment plants and collection system use several bulk chemicals. A sustainable supply is critical to maintaining an acceptable level of operations and for ensuring compliance with all regulatory requirements. The District spends about $16,500,000 annually on the procurement of eleven key chemicals. For certain chemicals failure in supply could result in violation of our permit or shut-down of key assets such as our Central Generation System engines. Therefore, maintaining a reliable supply at a fair market price is critical to the District’s mission.

Goals • Contract with multiple vendors to provide OCSD chemicals in the quantities required. • Reduce reliance on a particular chemical and establish flexibility to utilize other chemicals/ processes to accomplish the same operational objectives. • Implement chemical optimization measures.

Desired Outcome • Ensure a reliable chemical supply • Ensure that multiple vendor contracts are in place to supply the needed chemicals • Seek options for competitive pricing for the chemicals

{5 year} strategic plan update | november 2012 p. 22 Odor Control Update and Action Plan

Should OCSD defer the offsite odor level of service target dates in order to validate the scope, priority, and measurement approach for the odor control program?

Why is this issue important to the District? Odors are inherent to wastewater and OCSD has a good neighbor policy to not be a nuisance to its neighbors. Controlling nuisance odor represents a significant operational and capital expense to OCSD. In 2007 the Levels of Service (LOS) for Odor Control were adopted by the Board as part of the Five-Year Strategic Plan. The District adopted a dilution to threshold (D/T) measurement system for a level of service goal. The standard was set for 14 D/T at Plant No. 1 by 2016 and 17 D/T at Plant No. 2 by 2018. This means that no odors leave the plant boundaries and affect surrounding communities.

Staff believes that offsite odor impacts have been significantly reduced since the adoption of the 2007 LOS Standards. The District is continuing with its collection system chemical dosing program on four of eleven trunkines. This continuous dosing approach helps reduce corrosion and odors in the collection system and headworks odors of both treatment plants. Additionally, a significant number of projects have been completed, some including new odor control technologies. Projects completed since the 2007 LOS adoption that reduce offsite odor impacts include: • Steve Anderson Lift Station at Plant No. 1 • Trickling Filters at Plant No. 2 • Headworks replacement at Plant No. 2 • Solids Thickening and Processing Upgrades at Plant No. 2 • Conversion of the Plant No. 1 Headworks Scrubbers from hydrogen peroxide to bleach. • Conversion of the Plant No. 2 Primary Scrubbers from hydrogen peroxide to bleach.

The following projects are in the design or construction phases that will further reduce offsite odor impacts: • Sludge Thickening/Dewatering and Odor Control at Plant No. 1 • Trunk Line Odor Control Improvements at Plant No. 1 Headworks. • Sludge Dewatering and Odor Control at Plant No. 2

Much of the basis for the work originally planned while adopting the current odor control standard was based on engineering studies and assumed process performance for new or altered process technologies. Recent testing of a portion of the existing odor control systems shows their performance exceeding planning expectations. Thus, before moving ahead on new odor control projects designed to meet the current standard, further performance assessment of the other components of the newly-installed odor systems including the secondary treatment facilities at both Plants and the new Headworks at Plant 2 is appropriate to verify the performance of the existing odor systems versus the original assumptions.

p. 23 {5 year} strategic plan update | november 2012 Also, new odor measurement technologies have been developed since 2007, which may potentially provide a better odor-impact measurement than the current D/T based LOS standard. Staff is requesting additional time to conduct a performance assessment of the existing odor systems and potentially develop alternatives for the existing D/T based LOS standards.

Goals • The performance of completed odor control projects should be thoroughly evaluated to assess the actual performance versus original performance assumptions. (This will be done through an update of the Odor Control Master Plan Project SP1-166.) • Future planned odor control projects involving the following Plant 1 processes—Headworks, Trickling Filter and Primary Basins, and Plant 2 Primary Basins should be combined with Asset Management scopes of work to implement comprehensive refurbishment plans that limit offsite odor impacts on a priority basis. • Reassess whether dilution to threshold is the most appropriate measurement system. This may include investigating odorant based measurement systems, or shifting the dilution to threshold system to the Engineering Design Guidelines for future comprehensive Asset Management based project designs, or develop a new level of service recommendation as part of the odor control Master Plan (SP-166). • Assess retaining the odor complaint level of service measurement and reporting system, modifying our goal to achieve no offsite odor complaints during normal process operations.

Desired Outcome • The District remains committed to being a good neighbor and limiting offsite odor impacts in a comprehensive and cost effective manner. Completion of the Odor Control Master Plan is necessary to make sure the District’s investment in current and if needed future process systems will produce the benefits intended.

{5 year} strategic plan update | november 2012 p. 24 Workforce Planning and Workforce Development

Should OCSD design and implement comprehensive workforce planning and development activities to improve workforce capability, adaptability, efficiency, and accountability?

Why is this issue important to the District? OCSD faces staffing challenges, including a changing workforce, leadership loss and difficulty finding replacement talent for some core jobs. From March 2010 through March 2012, 88 employees left OCSD, taking 1,898 years of knowledge and experience with them. OCSD has been preparing for these challenges since 2005, focusing on leadership development and technical skills training. However, these challenges continue. Over the next three-years, 50 percent of management personnel and 40 percent of staff members in core wastewater occupations are eligible to retire. Therefore, it is essential that OCSD continues to act on preparing for future staffing needs and ensuring access to qualified applicants while developing the existing workforce. The current budget outlines a commitment to effectively manage staffing resources to meet service level requirements at the lowest cost. Key elements associated with the commitment are authorized staffing levels and strength of the workforce. District-wide workforce planning and development activities will be designed to ensure the ongoing delivery of efficient and effective levels of service and to meet our mission. Workforce planning will reinforce authorized staffing levels while addressing future needs and changing work requirements. Workforce development will strengthen the workforce by preparing employees for future opportunities and focusing efforts on growth of technical skills to ensure staff is well-trained. It is important that workforce planning and workforce development be elevated to the level of an OCSD Strategic Plan Goal for the Board to emphasize to OCSD management that this is an issue requiring organization-wide attention and resource allocation. This Goal will continue to help OCSD get the right people with the right skills in the right positions at the right time.

Goals • Design and implement comprehensive workforce planning processes. • Design and implement comprehensive workforce development plans. • Increase the levels of workplace accountability.

Desired Outcome • Integrate workforce planning and workforce development efforts to improve workforce capability, adaptability, efficiency, and accountability.

p. 25 {5 year} strategic plan update | november 2012 Business Continuity Planning

What level of a Business Continuity Plan should OCSD implement?

Why is this issue important to the District? OCSD has a comprehensive Integrated Emergency Response Plan (IERP) which reflects our commitment to ensuring the safety and health of employees, the community we serve and the environment. In addition, the IERP was developed to ensure that we meet the legal and regulatory requirements to be prepared for and respond to man-made hazards, accidental disruptions, technology failures and natural disasters. Natural disasters include earthquake, flood, tornado, tsunami and other emergencies. The development of the Business Continuity Plan (BCP) will improve OCSD’s ability to prepare for, respond to, remediate and effectively manage an incident in order to return to normal operations as soon as possible. The development of the BCP reflects OCSD’s commitment to the integration of risk management principles into the District’s culture.

Goals The development of the BCP is to enhance OCSD’s resilience and its ability to withstand an emergency or natural hazard without interruption of services to the community or, if the services are interrupted, to restore the services rapidly. The overall goals of the District are: • Identify and protect potentially critical assets. • Identify the critical functions of the District to determine which assets perform or support the critical functions. • Identify response-capable staff for critical operation and maintenance positions that have staff backup. • Determine line of succession for critical operations and maintenance positions. • Establish emergency power for critical operations: establish a minimum benchmark of 72 hours for back-up power for critical operations and assets. • Monitor critical parts and equipment: current longest lead time (e.g., hours or days) for repair, replacement, or recovery of operationally critical parts or equipment that may represent single points of failure. • Documented procedures for protecting and maintaining critical IT and Supervisory Control and Data Acquisition (SCADA) systems. • Documented procedures and protocols for testing and maintaining IT, SCADA and communication systems during emergency response and recovery. • Establish an alternative recovery facility. • Protection of critical records and databases. • Review and update the IERP and Business Continuity Plan as necessary. • Test the Business Continuity Plan regularly.

Desired Outcome Develop a Business Continuity Plan (BCP) that will define how OCSD will continue its everyday business functions in a not-so-everyday environment. This includes potential financial effects of a crisis as well as having the flexibility to adapt human resource policies to meet the changing needs of employees during an event, how to get back into somewhat normal operations, how to keep and pay employees and how to continue to provide effective wastewater treatment for our 2.5 million customers.

{5 year} strategic plan update | november 2012 p. 26 Appendix B: Previous Issue Papers

Due to the complex nature of many of the challenges that went into the preparation of this Strategic Plan, a series of issue papers were created to assist in better understanding the issues facing the Orange County Sanitation District. Included in this appendix are past year position papers on the following subjects:

2011 Issue Papers • Revisiting OCSD’s 95 Percent Recycling Level of Service for Biosolids Management • Full-cost recovery: Urban Runoff Diversion Program • Evaluation of Natural Community Decline Around Ocean Outfall • Leadership of the Future • Updating the Sewer Service Fee Five-Year Rate Plan

2010 Issue Paper • Full-Cost Recovery: Urban Runoff Diversion Program

2009 Issue Papers • Providing Ongoing Leadership Development • Assessing and Mitigating the Risks of Chemical Supply Shortages • Full-Cost Recovery: External Agreements

2008 Issue Papers • Groundwater Replenishment System • Disinfection of Final Effluent • Environmental Footprint Initiative • Updating OCSD’s Risk Register • Human Resources Strategic Plan

2007 Issue Papers • Biosolids Management • Groundwater Replenishment System • Air Quality • Odor Control • Proposition 218 Notification

p. 27 {5 year} strategic plan update | november 2012 Revisiting OCSD’s 95 Percent Recycling Level of Service for Biosolids Management November 2011

Should OCSD consider landfill options for biosolids?

Why is this issue important to the District? OCSD’s Board Resolution (OCSD 06-10) supports biosolids reuse and encourages its member agencies to use OCSD compost. This policy is implemented through a 95 percent recycling Level of Service goal. OCSD’s solids are increasing from a historic average of 650 tons per day to a peak of about 800 tons per day until dewatering centrifuges are installed at both plants and the Irvine Ranch Water District manages its own solids. These projects are all scheduled for completion by 2017. The use of in-county landfills for OCSD’s biosolids could potentially reduce the costs of managing solids during this interim period.

Goals • Use landfills as a biosolids management option during the interim peak production period when there is a clear advantage to OCSD to do so. Clear advantages include: costs, problems with existing contractors, weather, and other management challenges. • Change short term diversion goals to allow greater amounts of biosolids going to the landfill during the interim period. • Continue to investigate and evaluate the use of landfills as a biosolids management option and at the same time consider the triple bottom line (environmental, financial, and societal), State of California’s recycling policies, greenhouse gas emissions, and our recent survey of stakeholders to prioritize biosolids management. • Recognize that there is an interest by the County of Orange to work with OCSD to utilize local landfills as a potential biosolids management option. • Continue dialogue with the County of Orange and local agencies to build relationships and partnerships for local landfill options. • Utilize landfills that use biogas recovery and energy production.

Desired Outcome • Allow the use of landfills as a biosolids management option during the interim peak production period. • Develop a biosolids management strategy that benefits both OCSD and local county landfills. • Continue recycling biosolids and utilizing them for their nutrients, carbon sequestration, and energy values. • Maintain a diversity of biosolids options. • Maintain operational flexibility. • Maintain fail-safe biosolids management options and capacity, including local options.

{5 year} strategic plan update | november 2012 p. 28 Full-Cost Recovery: Urban Runoff Diversion Program November 2011

Should OCSD charge the County of Orange the cost of providing urban runoff treatment or continue to absorb the costs within our budget?

Why is this issue important to the District? In September 2000, the Board of Directors adopted a dry weather urban runoff policy to assist in remediation of the public health and environmental problems associated with urban runoff. The original resolution and its subsequent amendment, (Resolution No. 01-07), initially waived all fees and charges associated with the urban runoff discharges for flows below 4 million gallons per day (MGD). During the past 11 years, the District has treated a total of 5.8 billion gallons of urban runoff from the city of Huntington Beach, Orange County Public Works, city of Newport Beach, Irvine Ranch Water District, and The Irvine Company. The District’s urban runoff treatment cost for 2010-2011 was $976,593 based upon a reported discharge flow of 538 million gallons. These treatment costs are projected to increase steadily. While the program has been successful in reducing beach contamination, OCSD continues to provide benefits to agencies without capturing the cost of delivering this service, while our costs increase as we move to full secondary treatment in 2012. The Board of Directors directed staff to review this matter during its discussion of the 2010 strategic plan update and to return with a recommendation for this year’s strategic plan update. Because of the current economic environment, OCSD must review this program and ensure that our agreements provide full cost recovery for the treatment of urban runoff from participating agencies and cities.

Goals • Meet with participating agencies and cities to explain the issues and costs associated with the current Urban Runoff Diversion Program. • Amend the District’s Fee Ordinance to include Urban Runoff User charges to the appropriate agency or agencies. • Recover the cost of providing the service from the agencies currently receiving the benefit.

Desired Outcome • Charge the County of Orange, the NPDES permit holder of the Municipal Separate Storm Sewer Systems (MS4s), for Urban Runoff costs starting July 1, 2013 when the new rate structure is in place.

p. 29 {5 year} strategic plan update | november 2012 Evaluation of Natural Community Decline Around Ocean Outfall November 2011

Should OCSD reconsider its use of chlorine disinfection?

Why is this issue important to the District? The Clean Water Act requires the District to protect the natural communities that live around the ocean outfall pipe. Communities of small animals that live in the sediments in the vicinity of the outfall pipe began changing in 2005, and showed significant degradation by 2009. Changes in small animal populations have been seen up to one-half mile beyond the pipe. The District is at risk of being non- compliant with its ocean discharge permit requirements unless this trend is reversed. Ocean monitoring data shows this trend is not caused by usual sewage contaminants and is not the result of natural changes occurring in the ocean environment. There are no discernible changes over time in animal populations at clean reference areas, nor are other treatment plants (POTWs) experiencing similar occurrences, including those POTWs that disinfect their effluent. There appears to be a strong correlation between these changes and the District’s use of chlorine as a disinfectant. Total chlorine use and daily maximum chlorine residual concentrations correlate to the changes we are seeing in the communities of small animals. The use of chlorine as an anti-fouling agent for the Groundwater Replenishment System’s (GWRS) reverse osmosis membrane filters may also be a contributing factor. There is also a correlation with decreased final effluent flows discharged out the ocean outfall as a result of water going to GWRS. If chlorine byproducts, and their interactions with the more concentrated solids during periods of low flow are determined to be significant causes of these changes, staff would recommend discontinuing effluent disinfection to eventually reverse these adverse effects in the ocean around our outfall. Such a recommendation would be controversial because some interest groups believe disinfection prevents beach water contamination, despite evidence to the contrary.

Goals • Determine if chlorine is the cause of the decline and changes in animal communities near the outfall. • Develop and implement mitigation strategies to reverse the decline. • Communicate results to regulators and stakeholders and seek approval to cease chlorine disinfection if shown to be the cause.

Desired Outcomes • Definitive identification of the source(s) of the decline and changes. • Successful mitigation of the cause(s). • Return affected area to reference conditions.

{5 year} strategic plan update | november 2012 p. 30 Leadership of the Future November 2011

Should OCSD continue devoting resources toward leadership development programs to meet future challenges of employee attrition?

Why is this issue important to the District? During the past year, we have experienced increasing numbers of employees retiring, resulting in a rapid loss of institutional knowledge. We expect this trend to continue. Currently, fifty-six percent of all managers and supervisors are eligible to retire. Five year projections indicate that the retirement eligibility trend will continue. The Board has indicated that future leadership is important to maintaining service levels and ensuring our continued success. Building a bench of leaders is an important initiative that helps meet this challenge of staff attrition. The retirement impact coincides with plans to reduce the overall number of OCSD management positions; a direction given by the Board to maintain our financial strength and sustainability. While these events are complementary, they emphasize the importance of developing a pool of individuals who possess skillful and competent abilities to be eligible to compete for future leadership positions. Leadership development efforts can also aid in retaining talent.

Goals • Apply Workforce Planning Assessments to advanced development efforts. • Strengthen staffing processes. • Improve talent management programs. • Increase accessibility of leadership development programs. • Support initiatives that provide the essential skills needed to develop successful leaders. • Ensure programs reinforce core values, promote fairness and equity, and are inclusive and open to all. • Partner with other organizations to share resources aimed at leadership development.

Desired Outcome • Enhance and accelerate the development of diverse, dedicated, and talented employees ready to lead OCSD into the future.

p. 31 {5 year} strategic plan update | november 2012 Updating the Sewer Service Fee Five-Year Rate Plan November 2011

Should OCSD develop a new five-year rate plan in 2013?

Why is this issue important to the District? Long-term financial planning is critical to meeting the objectives of the District’s long-term strategic plan. In February 2008, the Board approved a five-year rate plan to meet the objectives of the five-year strategic plan including the design and construction of full secondary treatment facilities by December 2012 as mandated by the U. S. Court Consent Decree. This rate plan is set to expire June 30, 2013. As a result, the District will need to establish a new rate plan. The benefits of implementing a five-year rate plan include the assurance that funding will be available to support the initiatives contained within the five-year strategic plan. It also provides our rate payers the ability to plan for future business expenses and personal finances. Approving a five-year rate plan for sewer service fees is fiscally advisable considering the preparation and cost of annual public notices to our 550,000 rate payers. Lastly, it provides sustainability of wastewater collection and treatment services into the future.

Goals • Identify key stakeholders impacted by sewer service fee rates and develop an outreach strategy. • Prepare an updated sewer service fee rate study for the regional and local areas served. • Utilizing the sewer service fee rate study, update the 10-year forecast. • Prepare a Proposition 218 Notice which includes sewer service fee rates for the next five years. • Present the proposed five-year sewer service fee rate schedule to the Board for approval.

Desired Outcome • The establishment of a new five-year sewer service fee rate schedule that balances users fees, service levels and the use of debt to ensure the sustainability of the Orange County Sanitation District.

{5 year} strategic plan update | november 2012 p. 32 Full-Cost Recovery: Urban Runoff Diversion Program November 2010

Why is this issue important to the District? Dry weather urban runoff is contaminated water that is generated from day-to-day activities such as over- irrigating lawns, washing cars and hosing down driveways. This untreated, bacteria-laden water flows into storm drains and eventually makes its way to the Pacific Ocean. A 1999 Huntington Beach closure investigation found this runoff may have caused or contributed to shoreline contamination and high bacteria levels. As part of a regional best management practice, OCSD agreed to reroute the dry weather urban runoff from storm water pump stations and storm channels located in the cities of Huntington Beach and Newport Beach into OCSD’s sewer system for treatment. The Urban Runoff Program began in December 1999 and was formalized in September 2001 with a Board-approved resolution that allowed up to 10 million gallons per day of runoff into the District’s system and waived any fees associated with the approved discharge of urban runoff into OCSD’s sewer system if the total volume of all dry weather urban runoff discharges does not exceed four million gallons a day. This threshold was established to accommodate the expected volume of runoff from coastal cities that were experiencing beach contamination problems. While the program has been successful in reducing beach contamination, OCSD continues to provide benefits to agencies without fully capturing the cost of delivering this service. As the district moves to full secondary treatment in 2012, the cost of providing this service will increase. And, in light of the current economic environment and requirements of Proposition 218, OCSD must review this program and ensure that our agreements provide full cost recovery from participating agencies.

Goals • Meet with all affected parties to understand the issues and costs associated with the Urban Runoff Diversion Program. • Conduct a comprehensive review of the Urban Runoff Program to delineate the costs and benefits of moving to a full cost recovery business model. • Negotiate new agreements that ensure all agencies are paying a fair share for services provided by the District.

Desired Outcome • Finalize agreements that are comprehensive and agreeable to all agencies and ensure a fair share recovery of costs for District services.

p. 33 {5 year} strategic plan update | november 2012 Providing Ongoing Leadership Development November 2009

Why is this issue important to the District? As baby boomers begin to retire in significant numbers over the next five years, the nation’s workforce will begin to experience a shortage in qualified leaders. OCSD will be impacted by this trend as well. For example, by 2015 around half the current managers and supervisors will be eligible for retirement. While the District has pursued an aggressive strategy to strengthen and grow future leaders through its Profession of Management and Leadership Academy programs, this clearly will not be enough. By next year all management staff will have completed these programs and the Succession Management program will be fully established. However, these tools are only a foundation and in order to maintain a world-class organization, the District needs to take its leadership development to the next level. A broader leadership development program needs to be implemented to identify and train future leaders.

Goals • Identify key employees that will lead OCSD into the future. • Define and build upon the essential qualities needed to develop successful leaders for OCSD’s future. These qualities will focus on dealing with change, motivating others, enhancing morale and promoting productivity and job satisfaction, among others. • Identify what other organizations are doing and what incentives and training might be needed to build a talented and stable leadership team. • Develop a new model for addressing OCSD’s operational, environmental regulatory and leadership priorities in an era of limited resources and greater public scrutiny.

Desired Outcome • Maximize the development of a pool of dedicated and talented employees ready to lead OCSD into the future.

{5 year} strategic plan update | november 2012 p. 34 Assessing and Mitigating the Risks of Chemical Supply Shortages November 2009

Why is this issue important to the District? OCSD uses large volumes of several chemicals to mitigate odors, enhance primary settling of solids, reduce bacteria formation in the activated sludge plants, flocculate solids to enhance dewatering, disinfect and then dechlorinate the effluent prior to discharge into the receiving waters. These wastewater treatment chemicals play a critical role in protecting public health and the environment. OCSD and other large wastewater treatment agencies require large volumes of chemicals that can only be provided by one supplier or a very limited number of suppliers. All of these large agencies have also experienced price increases and chemical shortages in recent years.

Goals • Investigate the domestic and global chemical markets for typical wastewater and odor chemicals. • Identify possible causes of disruptions in the chemical supply chain. • Identify potential temporary suppliers capable and willing to provide chemicals during shortages. • Identify viable alternative chemicals that can be substituted for current OCSD chemicals during shortages. • Identify not only the procurement costs, but the transportations costs, of possible temporary or alternative chemical procurements. • Identify quality control assurances of chemicals procured outside the country.

Desired Outcome • Develop a Chemical Sustainability Plan that provides OCSD with options for obtaining wastewater treatment chemicals during chemical shortages, emergencies or complete stoppages.

p. 35 {5 year} strategic plan update | november 2012 Full-Cost Recovery: External agency agreements November 2009

Why is this issue important to the District? The District has several existing agreements with external agencies including the Santa Ana Watershed Project Authority (SAWPA) and the Irvine Ranch Water District (IRWD) which were originally signed in the 1970’s and 1980’s. There are other existing agreements signed between these agencies in the last 20 years. When many of these agreements were signed, the District often provided funds and resources to assist other agencies in improving the water quality and health of the citizens of the watershed. In this pursuit, OCSD allowed benefits to agencies without fully developing an equitable cost-sharing model. While this was well-intended and generated results, the District’s mission was overly broad. Now, through a series of more focused efforts, OCSD has developed a mission-specific Strategic Plan with detailed goals and objectives. The combination of the District’s new enhanced strategic focus, more stringent regulatory requirements (Federal Clean Water Act secondary treatment standards) and new economic realities (economic environment in general and requirements of Proposition 218), OCSD must review its external agreements and ensure that these agreements provide full cost recovery from the agencies with which it does business. District staff has already began working with these agencies to ensure the District is recovering the full costs of services provided.

Goals • Continue to meet with SAWPA and IRWD staff for consensus or agreement on major issue resolution. • Continue to include future planning issues that may impact new agreements. • When possible, consolidate small agreements into more comprehensive future agreements. • Negotiate new agreements that ensure all agencies are paying a fair share for services provided by the District.

Desired Outcome • Finalize agreements that are comprehensive and agreeable to all agencies and ensure a fair share for District services.

{5 year} strategic plan update | november 2012 p. 36 Groundwater Replenishment System November 2008

Why is this issue important to OCSD? The Orange County Sanitation District (OCSD) has shared in construction costs for Phase 1 of the Groundwater Replenishment (GWR) System with the Orange County Water District (OCWD), each agency paying equal shares of 50 percent. The first phase has been constructed to reclaim up to 70 million gallons per day (mgd) of water, and will defer the need for OCSD to construct a new ocean outfall. Ultimate planning for the GWR System allows for reclaiming up to 130 mgd. The major GWR System pipelines and other components have been sized to accommodate this expansion; however, the advanced water purification facilities are sized for 70 mgd. OCSD has not committed additional funding for expanding the GWR System beyond the present phase. The GWR System began operation in January 2008, and is presently producing about 45 mgd of product water, reducing OCSD’s ocean discharge flow from 225 mgd to 180 mgd. Completion of the Steven Anderson Lift Station (formerly Ellis Avenue Pump Station) will increase the amount of treated secondary effluent (specification water) available to the OCWD, allowing GWR System production to increase to near 70 mgd.

Goals • Continue to strive for 104 mgd supply of specification water for reclamation with no planned OCSD capital cost contribution for expansion of the GWR System; • Complete construction of Steven Anderson Lift Station in the fourth quarter of FY 2008-09 and • Continue to study the potential for treating flow from the Santa Ana River Interceptor at Reclamation Plant No. 1 to increase the supply of specification water for reclamation.

Desired Outcome • Maximizing the production of GWR System product water to augment and protect the Orange County groundwater basin with a goal of 70 mgd of product water by the end of FY 2008-09.

p. 37 {5 year} strategic plan update | november 2012 Disinfection of Final Effluent November 2008

Why is this issue important to OCSD? OCSD began disinfection of our treated effluent in 2002 in response to two factors: • Concern from the public that our effluent might be the cause or contributing to elevated bacteria levels in Huntington State Beach and • Ocean monitoring data suggesting that on at least one occasion our effluent plume had come to within ¼ mile of the Newport Pier. Since 2002 evidence has shown that OCSD’s effluent was not the source of shoreline bacteria in Huntington Beach and that our plume is not coming to shore and creating a public health concern. The annual budget for adding chlorine to the effluent for disinfection and sodium bisulfite to remove most of the chlorine before discharging to the ocean is approximately $7.0 million. Since OCSD’s facilities were not originally designed with disinfection in mind, there are physical constraints to operating in an efficient manner. In 2006, staff believed that it was prudent to have an independent review of our disinfection program to determine if it is meeting the intended purpose of protecting public health in a cost-effective manner and not increasing risks to the marine environment. The independent review panel was composed of nine members including a medical doctor, a wastewater engineer, a marine ecologist, a regulator, and a chemist among others.

Goals • Through the National Water Research Institute (NWRI), commission a panel of experts to review OCSD’s disinfection program and provide feedback and recommendations; • Obtain final recommendations from the NWRI Panel on the appropriateness of our current disinfection program and alternatives that should be considered and • Develop and implement strategies for responding to the recommendations including demonstration testing, regulatory approval and outreach to stakeholders.

Desired Outcome • Cost effective program to sustain protection of public health associated with bacteria in our effluent. • Acceptance of any changes to our disinfection program by regulators, public and stakeholders.

{5 year} strategic plan update | november 2012 p. 38 Environmental Footprint Initiative November 2008

Why is this issue important to OCSD? The issue of global climate change is gaining considerable interest from both the public and policy makers. As a public agency chartered with the mission to protect public health and the environment, OCSD should demonstrate leadership in this area. Moreover, wastewater operations consume large amounts of energy and produce green house gases (GHG). Despite the scientific disagreements about climate change, policy makers are addressing the issue. There are many opportunities for OCSD to also address these issues and shrink our environmental footprint.

Goals • Calculation of the environmental footprint of OCSD’s facilities; • Develop outreach materials describing green initiatives undertaken by OCSD; • Evaluate additional initiatives that the OCSD Board should consider; • Evaluate information from OCSD’s research program on emerging green technologies and • Maximize the use of renewable fuels (digester gas).

Desired Outcomes • Greater awareness of OCSD’s sustainable initiatives; • Reduction in OCSD’s environmental footprint through immediate greenhouse gas reduction measures and • A plan for implementing future sustainable initiatives.

p. 39 {5 year} strategic plan update | november 2012 Updating OCSD’s Risk Register November 2008

Why is this issue important to OCSD? Many leading organizations are formally applying risk management processes to identify and manage risks across many aspects of their business. The formalization of risk management processes is a logical step towards increased accountability and transparency placed on the Board and District management. In February 2006, strategic level risk assessment and mitigation workshops were completed by OCSD’s Executive Management Team and District Managers. In May 2008, the register was updated to include additional information and to ensure alignment with the current Strategic Business Plan. Assessment of these risks and their potential impacts must be identified, reviewed and mitigated in alignment with OCSD’s Strategic Plan.

Goals • Identify and assess strategic and organization-wide risks facing OCSD (including technical, regulatory, financial, and political) and to develop a high level risk register; • Identify mitigation measures that OCSD currently has in place; • Propose additional mitigation measures that OCSD considers appropriate to manage; • Review of risk register to ensure it represents a balanced portfolio of the risks and that the mitigation strategies are appropriate; • Develop a plan to monitor the effect of mitigation strategies to ensure that controls are in place and effective; • Develop a formal reporting process to the Board that includes possible revisions to the overall risk profile; • Develop protocols to provide assurance to stakeholders that the annual Strategic Business Plan processes are in place to manage risks organization wide and • Develop an action plan of responsibilities and timeframes for follow-up.

Desired Outcome • An update of the Risk Register including mitigation strategies (current and proposed) responsibilities, and timeframes.

{5 year} strategic plan update | november 2012 p. 40 Human Resources Strategic Plan November 2008

Why is this issue important to OCSD? Human Resources (HR) management has become more complex, evolving from primarily processing employee transactions to serving as a business partner, change agent and leader. OCSD’s most important asset is its workforce. As a generation of this workforce retires, OCSD must be prepared to fill vacancies and prepare the next generation for opportunities, including leadership continuity. The HR Strategic Plan provides the focus for HR, the outcomes to be achieved and the associated roles and competencies needed. It creates clarity for planning and allocating resources. A long-range HR strategy will assure that actions are aligned with OCSD’s overall vision, mission, values, and strategies.

Goals • Improve HR processes, systems and infrastructure to provide high levels of efficiency, quality, customer service and cost-effectiveness. • Develop leading practices in the recruitment, retention and development of our workforce. • Support and promote the health and well-being of the workforce. • Foster and maintain a working and learning environment that is inclusive, supportive and free from discrimination. • Provide for organizational change initiatives through labor relations program that have been identified by management to grow a performance-based culture. • Focus the HR community on the needs of its customers through programs such as recognition and succession management.

Desired Outcome • Design, develop, fund and implement HR policies, strategies, practices, systems, and tools to ensure OCSD has a workforce that meets the future needs of OCSD and the public it serves.

p. 41 {5 year} strategic plan update | november 2012 Setting OCSD’s Level of Service for Biosolids Management November 2007

Policy Issue for LOS Determination: Recognizing the Board’s Resolution (OCSD 06-10) that supports biosolids reuse and encourages its member agencies to use compost made from biosolids, should OCSD continue to pursue our beneficial reuse policy or include disposal options for the remaining 1/3 of its non-contractually committed biosolids production? Staff Recommendation: OCSD should continue to pursue beneficial reuse of the remaining 1/3 of its biosolids production. Staff will continue to utilize cost-effective land application reuse options in Kern County and Arizona for as long as possible (anticipated to be less than five years) while pursuing a biosolids-to-energy alternative for the balance of its biosolids production. Analysis: OCSD currently produces 650 tons of biosolids per day, by 2012 when the new secondary treatment processes are fully operational, biosolids production is projected to increase by approximately 30% to 840 tons per day. OCSD currently manages its biosolids as follows via two contracts using five options: • 24 percent is land applied as Class A biosolids in Kern County ($43.07/ton) • 26 percent is land applied as Class B biosolids in Yuma County, Arizona ($45.44) • 38 percent is composted to Class A in Kern County ($63.09) • 12 percent is composted to Class A La Paz County, Arizona ($49.74) • 3 percent is land filled in Yuma County, Arizona ($45.44) • In 2003, OCSD adopted the Long-Range Biosolids Master Plan (Plan). The main policy recommendations from the Plan were: • Obtain at least three diverse biosolids management options • Limit participation in any market to one-half of the biosolids produced • Limit contracts to one-third of total biosolids production • Strive for increased biosolids-based compost use in Orange County • Since the completion of the Plan, OCSD has entered into two long-term contracts that will service approximately two-thirds of OCSD’s biosolids production • EnerTech: 225 tons/day of biosolids-to-fuel in Rialto ($72.40) (on line 12/08) • Synagro: 250 tons/day of biosolids composting in Kern County ($63.09)

Staff is primarily investigating biosolids-to-energy technologies and markets for the remaining one- third of OCSD’s biosolids production because of our concern that biosolids composting markets are being saturated which could result in de-valuing of the product, making it non-sustainable. The private sector has already significantly invested in developing biosolids-to-energy technologies which enables wastewater agencies to participate in proven and sustainable markets. Staff will also be investigating biosolids management via deep-well injection and methane production which is currently being evaluated by the City of Los Angeles.

Alternatives: OCSD will pursue long term contracts if possible for non-beneficial reuse landfill disposal. Cost Implications for the remaining 1/3 of OCSD’s biosolids (2007 dollars): Energy Production: $85/ton – Annual cost = $7.8M Deep Well Injection: $40/ton – Annual cost = $3.7M Landfill Disposal: $60/ton – Annual cost = $5.5M

{5 year} strategic plan update | november 2012 p. 42 Setting OCSD’s Level of Service for the GWR System November 2007

Policy Issue for LOS Determination: The Orange County Sanitation District (OCSD) has shared in construction costs for Phase 1 of the Groundwater Replenishment (GWR) System with the Orange County Water District (OCWD), with each agency paying equal shares of 50%. Phase 1 will reclaim up to 70 million gallons per day (mgd) of water, and will defer the need for OCSD to construct a new ocean outfall estimated at $200 million. Ultimate planning for the GWR System allows for reclamation up to 130 mgd. The major GWR System pipelines and other components have been sized to accommodate this expansion; however, the advanced water purification facilities are sized for 70 mgd. OCSD has not committed additional funding for expanding the GWR System beyond the present phase. Staff Recommendation: OCSD will maintain its commitment for Phase 1 of the GWR System. This commitment for Phase 1 of GWR System includes the following: • Providing OCWD with secondary effluent to produce 70 mgd of reclaimed water • Providing 50 percent of capital costs ($250 million) for Phase 1 • Providing 50 percent of O&M costs ($500,000 per year) to remove 1,4-Dioxane and NDMA • In addition to the commitment for Phase 1, staff recommends exploring “low cost” or “no cost” options to expand water availability for the GWR System, including: • Revisiting the potential use of the SARI with the Department of Health Services • Considering grant funding of future sewer diversion projects Analysis: In 1999, the OCSD Board of Directors (Board) approved Phase 1 of the GWR System, a joint funded project of OCSD and OCWD. The objective of Phase 1 is to maximize the use of treated effluent for water recycling and to manage OCSD’s peak flow, deferring the construction of a second ocean outfall beyond 2020. The GWR System is anticipated to be fully operational in November 2007. Currently, OCSD Reclamation Plant No. 1 has sufficient wastewater to allow the GWR System to produce about 55 mgd of reclaimed water for the first year of operations. When the new Ellis Pump Station is completed in 2009, there will be sufficient flow to operate the GWR System at its full 70 mgd capacity. Even though sufficient flows will be available for Phase 1 of the GWR System, the daily low flow period (1:00 am to 8:00 am) will limit water availability for expansion of the System beyond Phase 1. Camp Dresser and McKee (CDM) has analyzed options to pump additional flows to Plant No.1, segregating reclaimable and non-reclaimable (SAWPA flows) wastewater streams, and constructing separate treatment plants. In light of the benefits of the current level of service versus the high costs of making future flow available for the GWR System, staff recommends that OCSD continue to work with OCWD to study lower cost options to maximize the amount of water that can be reclaimed. Alternatives: OCSD will be directing all available reclaimable flows to Plant No. 1 to maximize reclamation. In the future, as OCSD flows increase substantially, staff will recommend implementation of the most feasible and cost-effective options for increasing the quantity of flow available for reclamation. Estimated Cost Implications for Future Phases: • OCSD Diversions and Infrastructure—up to $700 million • Expansion of OCWD Advanced Water Purification Facilities—about $150 million • Every $1 million in OCSD expenditures increases single family user rates by $1.13 per year.

p. 43 {5 year} strategic plan update | november 2012 Setting OCSD’s Level of Service for Air Quality November 2007

Policy Issue: OCSD expects the South Coast Air Quality Management District to amend existing regulations to require significant reductions in common pollutants (smog, visibility impairment) in December 2007. A secondary public health benefit of this regulation is the reduction in air toxic emissions. The estimated capital improvement cost to meet the new requirements is $31 million. • If the new regulations are not approved then OCSD will be required by 2012, under the existing regulations, to notify all affected residents and business surrounding our facilities of health risks associated with our emissions. • OCSD can avoid issuing notifications by proactively installing air pollution control equipment to reduce the air toxic emissions below the notification level. Analysis: Currently, State law and the South Coast Air Quality Management District require facilities to inventory their air toxic emissions and conduct a Health Risk Assessment of the health risk impact of their emissions to surrounding residents and businesses. Public notification is required if the cancer risk exceeds 10 in one million and non-cancer risk exceeds 1. This means that 10 out of 1 million residents exposed to District air emissions, over a 70-year period, can contract cancer. It is anticipated that after completion of full secondary facilities in 2012, OCSD will exceed the threshold established by South Coast Air Quality Management District and OCSD will be required to notify affected communities. New regulations proposed by the South Coast Air Quality Management District would require OCSD to make significant reductions in common pollutants. The most technically feasible and lowest cost solution will be to add air pollution controls to the existing engines, which would provide the added benefit of reducing air toxic emissions below levels that require public notification. Alternatives (If the new regulations are not enacted): • Notify the affected public of the potential health risk from OCSD’s toxic air emissions. OCSD would notify the public via direct mailings to the residents, businesses, and schools followed by public meetings. The corresponding materials will also be listed on the SCAQMD Web site and, possibly, printed in local newspapers. • Add air pollution controls to reduce risk to community below public notification level. Staff Recommendation: OCSD should apply feasible and cost-effective controls in order to reduce the air toxic emissions below the health risk notification level to the surrounding community and OCSD employees.

{5 year} strategic plan update | november 2012 p. 44 Setting OCSD’s Level of Service for Odor Control November 2007

Policy Issue: Thousands of homes surround OCSD’s two treatment plants. Under current operating procedures, OCSD’s goal is to contain odor nuisances within our property boundary. Historically, OCSD based our Level of Service on meeting hydrogen sulfide levels at the exhaust of odor control equipment within the treatment plant and at the fence line of our property. Through significant study, staff has determined that hydrogen sulfide is not the best indicator of odor due to the presence of other odorous compounds. To gauge accurately odor nuisances, OCSD is changing to a scientifically based method of odor detection to determine accurately the Level of Service it wishes to achieve for communities surrounding our treatment plants. The Board must then choose the desired LOS. Analysis: In 2002, OCSD completed the Odor Control Master Plan, which provided specific recommendations and measures to control and reduce odors. Staff conducted an extensive evaluation of OCSD facilities by collecting and analyzing odor samples from the plant processing equipment. OCSD used a panel of 6-8 people, with average olfactory sensitivity, to determine the odor detection thresholds scientifically based on the number of times the sample needed to be diluted before the panelist detected odor. Staff then assigned an odor unit to the sample—the higher the number of dilutions needed to achieve the threshold, the stronger the odor. Staff then fed the data into a computer model to predict the impact to the community. With the modeling analyses completed, staff concluded that under normal operation conditions, by using a guideline of 10 D/T (dilutions to threshold) OCSD would eliminate odor to the surrounding community. OCSD currently meets a 40-50 D/T, which is 4 to 5 times greater than 10 D/T. After the currently approved CIP projects are constructed, OCSD is estimated to reach a level of 25-30 D/T (2.5 to 3 times greater than 10 D/T). Alternatives: • Adopt a treatment plant LOS of 25-30 dilutions/threshold. LOS will be achieved when the projects approved in the current CIP are constructed. Design and construct all future projects to a service level that will keep odors from that project on District property. Staff believes this level is 10 D/T but case-by-case modeling for the projects will be required. The result is no cost impact to the current approved CIP. • Adopt a treatment plant and future project design and construction LOS for odor control of 10 dilutions/threshold (within the fence line of OCSD) and incorporate four additional odor control projects into the CIP. The result is an increase of $69.6 million to the CIP and $648,000 for O&M. Staff Recommendation: Establish OCSD odor standard based on total odor (D/T). Design all new processes, structures and equipment at the wastewater treatment plants so that odors remain within treatment plant boundaries. Add two additional odor control projects (Plant 1 trickling filters and Plant 2 biosolids truck loading) to the CIP. The result is an increase of $17.6 million to the CIP and $300,000 annually for O&M. Conduct research on cost-effective alternatives to control odors from the primary treatment facilities at both plants and report back to the Board on future staff recommendations for any further odor control.

p. 45 {5 year} strategic plan update | november 2012 Proposition 218 Notices for Annual Sewer Service User Fees November 2007

Proposition 218 was a constitutional initiative governing the establishment of any new taxes, property- related fees or assessments. This initiative was approved by the state’s voters in November 1996 and applies to each of California’s nearly 7,000 cities, counties, special districts, schools, community college districts, redevelopment agencies, and regional organizations. In order to raise a new tax, assessment, or property-related fee, or to increase an existing one, local governments must comply with Proposition 218 regulations. In general, these requirements are that local governments may use assessments and property-related fees only to finance projects and services that directly benefit property and that most revenue-raising measures be approved in an election. Sewer service user fees are specifically exempted from some of the requirements of Proposition 218. Most notably, they are exempt from the election requirements, but not the requirement that fees cannot exceed the reasonable cost of service. The Board has agreed with staff, however, that we will comply with all of the rest of the requirements, in a spirit of good governance. A notice of rate changes is mailed to every property owner whenever the rates are proposed to increase. Based on the approval to charge for local sewer services, a second (separate) Proposition 218 notice would be included. The rates are adopted through the ordinance process, and that requires a public hearing, two Board meetings and a 2/3 majority approval of the Board. Proposition 218 Notices notify the property owners of the public hearing that coincides with the second reading of the ordinance. Notices must be mailed to property owners 45 days before the public hearing. Mailing of Proposition 218 notices requires significant Sanitation District resources and staff time as staff works with all stakeholders to ensure that notices are printed correctly and mailed to over 550,000 property owners. Additional temporary staff is needed to answer phone calls from customers. Historically, three OCSD staff and two temporary staff answer phone calls for a minimum of four weeks. In addition to written responses (including email), phone calls are also noted and tallied by city of residence. This information is made available to the Directors prior to the public hearing.

{5 year} strategic plan update | november 2012 p. 46 Appendix C: Glossary

Activated-sludge process—A secondary biological wastewater treatment process where bacteria reproduce at a high rate with the introduction of excess air or oxygen, and consume dissolved nutrients in the wastewater. Biochemical Oxygen Demand (BOD)—The amount of oxygen used when organic matter undergoes decomposition by microorganisms. Testing for BOD is done to assess the amount of organic matter in water. Biosolids—Biosolids are nutrient rich organic and highly treated solid materials produced by the wastewater treatment process. This high-quality product can be recycled as a soil amendment on farm land or further processed as an earth-like product for commercial and home gardens to improve and maintain fertile soil and stimulate plant growth. Business Accountability Charters—A business unit strategic plan. Capital Improvement Program (CIP)—Projects for repair, rehabilitation, and replacement of assets. Also includes treatment improvements, additional capacity, and projects for the support facilities. Coliform bacteria—A group of bacteria found in the intestines of humans and other animals, but also occasionally found elsewhere used as indicators of sewage pollution. E. coli are the most common bacteria in wastewater. Collections system—In wastewater, it is the system of typically underground pipes that receive and convey sanitary wastewater or storm water. Certificate of Participation (COP)—A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. Contaminants of Potential Concern (CPC)—Pharmaceuticals, hormones, and other organic wastewater contaminants. Dashboard—A computer based business tool used to visually track performance. Dilution to Threshold (D/T)— the dilution at which the majority of the people detect the odor becomes the D/T for that air sample. 1,4-Dioxane—A chemical used in solvents for manufacturing, fumigants and automotive coolant. Like NDMA, it occurs in the Groundwater Replenishment System water and is eliminated with hydrogen peroxide and additional ultra-violet treatment. Greenhouse gases—In the order of relative abundance water vapor, carbon dioxide, methane, nitrous oxide, and ozone gases that are considered the cause of global warming (“greenhouse effect”). Groundwater Replenishment (GWR) System—A joint water reclamation project that proactively responds to Southern California’s current and future water needs. This joint project between the Orange County Water District and the Orange County Sanitation District will provide 70 million gallons a day of drinking quality water to replenish the local groundwater supply. Levels of Service (LOS)—Goals to support environmental and public expectations for performance. Million gallons per day (mgd)—A measure of flow used in the water industry. Most Probable Number (MPN)—Number of organisms per 100 ml that would yield a test result or the observed test result with the greatest frequency. Commonly used for coliform bacteria.

p. 47 {5 year} strategic plan update | november 2012 Glossary continued NDMA—N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent. It has been found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide with extra ultra-violet treatment. National Biosolids Partnership (NBP)—An alliance of the National Association of Clean Water Agencies (NACWA) and Water Environment Federation (WEF), with advisory support from the U.S. Environmental Protection Agency (EPA). NBP is committed to developing and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory compliance and promote public participation in order to enhance the credibility of local agency biosolids programs and improved communications that lead to public acceptance. O&M—Operations and maintenance of the treatment plants facilities and collections system. Publicly-owned Treatment Works (POTW)—Municipal wastewater treatment plant. Recycling—The conversion of solid and liquid waste into usable materials or energy. Risk Register—An internal document that describes vulnerabilities of the Sanitation District. Santa Ana River Interceptor (SARI) Line—A regional brine line designed to convey 30 million gallons per day (MGD) of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean for disposal, after treatment. Sanitary sewer—Separate sewer systems specifically for the carrying of domestic and industrial wastewater. Combined sewers carry both wastewater and urban run-off. South Coast Air Quality Management District (SCAQMD)—Regional regulatory agency that develops plans and regulations designed to achieve public health standards by reducing emissions from business and industry. Secondary treatment—Biological wastewater treatment, particularly the activated-sludge process, where bacteria and other microorganisms consume dissolved nutrients in wastewater. Sludge—Untreated solid material created by the treatment of wastewater. Total suspended solids (TSS)—The amount of solids floating and in suspension in wastewater. Trickling filter—A biological secondary treatment process in which bacteria and other microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in wastewater as it trickles over them. Urban runoff—Water from city streets and domestic properties that carry pollutants into the storm drains, rivers, lakes, and oceans. Wastewater—Any water that enters the sanitary sewer. Watershed—A land area from which water drains to a particular water body. OCSD’s service area is in the Santa Ana River Watershed.

{5 year} strategic plan update | november 2012 p. 48 Reclamation Plant No. 1 (Administration Offices) 10844 Ellis Avenue • Fountain Valley, California 92708 • 714.962.2411

Treatment Plant No. 2 22212 Brookhurst Street • Huntington Beach, California 92646

www.ocsewers.com

© OCSD 11/2012 Meeting Date To Bd. of Dir. STEERING COMMITTEE 11/28/12 11/28/12 Item Number Item Number AGENDA REPORT 3 Orange County Sanitation District

FROM: James D. Ruth, General Manager Originator: Jim Herberg, Assistant General Manager Env. Compliance: Jim Colston, Env. Compliance Manager

SUBJECT: SAWPA Audit Report

GENERAL MANAGER'S RECOMMENDATION

Receive and file Santa Ana Watershed Project Authority Pretreatment Program Compliance Audit Report from Environmental Engineering & Contracting, Inc.

SUMMARY

Recently, the Orange County Sanitation District (OCSD) discovered that the Santa Ana Watershed Project Authority (SAWPA) violated a number of provisions contained in the 1991 Memorandum of Understanding (1991 MOU) and the 1996 Wastewater Treatment and Disposal Agreement (1996 Agreement), entered into between OCSD and SAWPA, governing the discharges from SAWPA to OCSD through the Santa Ana River Interceptor (SARI) Line.

In accordance with the 1991 MOU, OCSD exercised its right to “review SAWPA’s pretreatment program activities to ensure that SAWPA, any member agency thereof, and any other agency having discharge rights to the SARI system pursuant to contract with SAWPA is adequately administering its pretreatment program.” OCSD determined to audit SAWPA's entire program. OCSD hired Environmental Engineering & Contracting, Inc. (EEC) to perform a comprehensive audit of SAWPA’s compliance with all the requirements, responsibilities, and practices specified in OCSD's Wastewater Discharge Regulations Ordinance No. OCSD-39, the 1991 MOU and 1996 Agreement. The audit also evaluated SAWPA’s role as an oversight authority, as well as SAWPA’s and its member agencies’ pretreatment programs.

The audit report completed by EEC identifies specific findings of violations, noncompliance, deficiencies, program effectiveness issues, and best management practices, and EEC presented recommendations to address the various findings. In general, the audit revealed that SAWPA failed to comply with important program requirements, and it currently lacks sufficient pretreatment expertise and oversight to effectively manage discharges to the SARI Line. Specifically, there were deficiencies in SAWPA's pretreatment program administration, permitting, monitoring, inspection, enforcement, and data management. EEC recommended major improvements be implemented at all levels of the pretreatment program to ensure SAWPA's compliance with its obligations and to minimize the risk of a repeated instance of serious violations.

To address these significant deficiencies, OCSD staff plans to follow the provisions of the 1991 MOU and issue "a remedial plan containing a description of the nature of the Page 1 of 3 pretreatment deficiencies, an enumeration of steps to be taken by SAWPA, and a time schedule for attaining compliance with all pretreatment requirements." OCSD will then conduct regular follow-up to monitor SAWPA’s progress on the proposed corrective actions. In the future, OCSD should continue to conduct periodic audits to ensure that all the deficiencies are adequately addressed.

PRIOR COMMITTEE/BOARD ACTIONS

None

ADDITIONAL INFORMATION

Specific findings in the Audit Report include, but are not limited to:

1. SAWPA has insufficient legal authority to implement its pretreatment program and carry out enforcement actions in areas under the jurisdiction of SAWPA's member agencies.

2. SAWPA failed to properly oversee its member agencies.

3. SAWPA has not consistently sought approval for accepting waste originating from outside the SAWPA service area as required in the 1996 Agreement. In particular, SAWPA allowed a major discharge into the SARI Line by erroneously permitting a centralized waste treatment facility, the Corona Resource Recovery, to discharge mining waste into the SARI Line. The waste originated from outside the SAWPA service area, and SAWPA did not seek OCSD’s written approval as required in the 1996 Agreement.

4. SAWPA and two of the member agencies, San Bernardino Valley Municipal Water District and Western Municipal Water District, retained the same staff from the same consulting firm, G&G Environmental Compliance, Inc., to develop and implement their respective pretreatment programs. This arrangement makes it virtually impossible for SAWPA to maintain jurisdiction and control over these agencies.

5. Some of the SAWPA discharge permits were based on inaccurate and erroneous information, and they were not properly prepared.

6. Monitoring of discharge facilities was deficient both in terms of the amount and type of monitoring conducted. There was also a lack of appropriate equipment, policies and procedures used to conduct the monitoring.

7. Inspections of permitted facilities are ineffective and insufficient.

8. Where they exist, enforcement plans currently in place may lack the legal authority, under the multijurisdictional agreements, for SAWPA to carry out enforcement actions against permitted facilities and to collect fines.

Page 2 of 3 9. Data management, quality assurance and quality control are lacking and have negatively affected the collaboration between SAWPA and OCSD.

10. Required reviews of compliance data were not performed in a timely fashion, and enforcement and resampling requirements were not performed or were performed very late.

11. Despite the 1991 MOU clearly stating that SAWPA must provide monthly reports to OCSD, monthly reporting only resumed at the outset of this audit.

12. Staff and professional expertise necessary to implement an adequate pretreatment program are lacking in SAWPA’s organization as well as in some of the member agencies.

CEQA

N/A

BUDGET/DELEGATION OF AUTHORITY COMPLIANCE

N/A

ATTACHMENT

The following attachment is included in hard copy:

· EXECUTIVE SUMMARY: Santa Ana Watershed Project Authority Pretreatment Program Compliance Audit Report (8 pages)

The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package and attachments:

· Santa Ana Watershed Project Authority Pretreatment Program Compliance Audit Report o Final Report and Figures (48 pages) o Appendixes A – G (100+ pages)

Page 3 of 3 SAWPA PRETREATMENT PROGRAM COMPLIANCE AUDIT REPORT

ORANGE COUNTY SANITATION DISTRICT CALIFORNIA November 19, 2012

Santa Ana Watershed Project Authority Pretreatment Program Compliance Audit Report

November 19, 2012

Prepared for:

Orange County Sanitary District 10844 Ellis Avenue Fountain Valley, California 92708

Prepared by:

Environmental Engineering & Contracting, Inc. 501 Parkcenter Drive Santa Ana, California 92705 EEC W2422.01T

SAWPA Pretreatment Program Compliance Audit Report November 19, 2012

ES EXECUTIVE SUMMARY

ES.1 Introduction

The Orange County Sanitary District (OCSD) has retained Environmental Engineering & Contracting, Inc. (EEC) to perform a comprehensive audit of the Santa Ana Watershed Project Authority’s (SAWPA’s) compliance with all the requirements, responsibilities, and practices as specified in OCSD’s Wastewater Discharge Regulations Ordinance No. OCSD-39 as well as in the agreements between OCSD and SAWPA; namely, the 1991 Memorandum of Understanding (1991 MOU) and the 1996 Wastewater Treatment and Disposal Agreement (1996 Agreement; Appendix A, OCSD Wastewater Discharge Regulations Ordinance No. OCSD-39; Appendix B, 1991 Memorandum of Understanding Summary; Appendix C, 1996 Wastewater Treatment and Disposal Agreement Summary).

The audit also includes an investigation and description of SAWPA’s role. In addition to acting as an oversight authority for the member agencies that administer local industrial pretreatment activities on direct and indirect industrial dischargers to the Santa Ana River Interceptor (SARI) Line, also known as the Inland Empire Brine Line (IEBL), SAWPA regulates local liquid waste hauling companies and the Chino II desalter facility.

To assist in performing the audit, EEC retained Pretreatment Solutions Inc. (PSI) to create an audit team with more than 30 years of auditing experience and more than 25 years of pretreatment expertise. EEC conducted this audit in accordance with generally accepted government auditing standards and United States Environmental Protection Agency (USEPA) guidelines.

ES.2 Audit Scope

The audit consisted of an evaluation of SAWPA’s compliance with all the pertinent requirements, responsibilities, and practices and all other applicable regulations, including federal regulations (Title 40 of the Code of Federal Regulations [CFR], Section 403), OCSD ordinances, and contractual agreements between OCSD and SAWPA. The audit included all of SAWPA’s delegated member agencies; namely, the Inland Empire Utility Agency (IEUA), the Eastern Municipal Water District (EMWD), the San Bernardino Valley Municipal Water District (SBVMWD) and the Western Municipal Water District (WMWD).

The evaluation of SAWPA’s and its member agencies’ pretreatment program included all elements of the program:

 Administration: policies, procedures, and workflows both internally and with SAWPA as the oversight authority.

 Permitting: permitting process and review of a sample of existing permits.

 Monitoring: monitoring program, including self-monitoring and monitoring by SAWPA.

 Inspection: inspection program and example documents, including a field audit of 16 of SAWPA’s and its member agencies’ permitted facilities.

W2422.01T Orange County Sanitation District 1 EEC SAWPA Pretreatment Program Compliance Audit Report November 19, 2012

 Enforcement: enforcement response plan and its implementation with a review of the latest cases of significant noncompliance. In particular, the case of serious noncompliance involving the Corona Resource Recovery facility was reviewed.  Data Management: review of all types of compliance reports as required by the pretreatment program.

 Reporting: quarterly and annual reporting of permitting and compliance status to OCSD.

 Quality Assurance / Quality Control (QA/QC): review of implemented QA/QC measures throughout the program.

 Resources: assessment of the adequacy of qualifications and resources to implement an effective pretreatment program that ensures compliance with all applicable requirements.

ES.3 Objective

The primary objective of this comprehensive compliance audit of SAWPA’s Pretreatment Program is to identify and address any deficiencies or omissions in the administration, implementation, and enforcement of any of the applicable requirements and regulations.

In order to address the identified omissions, EEC made recommendations to improve the overall pretreatment program. The recommendations, if properly and consistently implemented, will ensure consistent and long-term compliance and ultimately protect OCSD’s treatment plant and its receiving waters while maintaining a viable solution for the nonreclaimable wastewater (brine) generated in the Santa Ana Watershed. Whenever encountered, best management practices (BMPs) were also described and presented in the findings.

ES.4 Methods

The methodology followed by the audit team in performing the audit is similar to the methodology followed by the USEPA and the RWQCB and as generally outlined in the USEPA’s Control Authority Pretreatment Audit Checklist and Instructions document, dated February 2010 (Appendix D, Control Authority Pretreatment Audit Checklist, February 2010).

Interviews were conducted with the 4 member agencies first and then with SAWPA. Following the interviews, the audit team inspected 12 industrial user sites and all 4 liquid waste-hauler (LWH) collection stations.

The documents used by the audit team during the interviews and inspections comprised the USEPA’s checklist and instructions, OCSD’s Wastewater Discharge Regulations ordinance, the 1991 MOU, and the 1996 Agreement.

ES.5 Findings

During the pre-audit meeting with SAWPA and in all subsequent meetings, SAWPA’s staff cooperated with the audit team and expressed willingness to address the audit findings for the purpose of improving its overall pretreatment program. Similarly, all member agencies cooperated with the audit team and expressed the same desire to use the audit findings to improve their pretreatment programs.

W2422.01T Orange County Sanitation District 2 EEC SAWPA Pretreatment Program Compliance Audit Report November 19, 2012

The audit team was granted full and unrestricted access to all 16 industrial user facilities selected by the audit team and OCSD. In regard to the Corona Resource Recovery, the audit team’s investigative efforts were met with a limited flow of information.

In general, the audit revealed that SAWPA and/or its member agencies did not always follow important program requirements. Some of the deficiencies were reportedly corrected after identification by the audit team during the interviewing process. The verification of corrected deficiencies was not in the scope of this audit and should be addressed in the corrective action plan follow-up and in future audits.

Specific findings include the following:

1. In assessing SAWPA’s administration of its pretreatment program, the audit team noted that the multijurisdictional pretreatment agreements among SAWPA and its 4 member agencies, that is, the IEUA, the EMWD, the SBVMWD, and the WMWD, are not all valid and don’t necessarily give the power to SAWPA and/or the member agencies to carry out enforcement actions in areas under the jurisdiction of SAWPA’s member agencies.

2. The audit also revealed that SAWPA allowed a major discharger into the IEBL, the Corona Resource Recovery (CRR), to discharge mining waste into the IEBL. The waste originated from outside the SAWPA service area and consisted of mining waste that was inaccurately referred to as “brine” waste. The origin and nature of the waste warranted a higher level of due diligence than that demonstrated by SAWPA and WMWD in the permitting process. At a minimum, SAWPA should have requested a complete waste stream characterization based on a detailed description of the process generating the waste. In addition, because of the large quantity of waste under consideration, SAWPA and/or WMWD should have performed an on-site assessment of all waste generating processes at the Molycorp’s Mountain Pass facility to confirm the information provided by CRR. In order to categorically determine all the facts surrounding the CRR issue including any correlation between the excursions in arsenic level in OCSD’s biosolids and the discharge of the Molycorp’s waste, access to all records maintained by SAWPA, WMWD and Molycorp pertaining to the CRR issue should be granted.

3. On the program administration level, SAWPA has retained G&G Environmental Compliance, Inc. to develop and implement SAWPA’s pretreatment program. Two of the member agencies, SBVMWD and WMWD, have also retained G&G Environmental Compliance, Inc. to develop and implement their pretreatment programs as they relate to the IEBL. Furthermore, the same individuals from G&G Environmental Compliance, Inc. who were working for SAWPA were also working, at the same time, for SBVMWD and WMWD. With such arrangement, it is virtually impossible for SAWPA to maintain jurisdiction and control over all of its member agencies, including SBVMWD and WMWD.

4. In many instances, permits were not properly prepared and were sometimes based on inaccurate and erroneous information. Some permit errors constitute serious deficiencies, such as misidentification of the applicable categorical pretreatment standards, referencing the incorrect ordinance, and elimination of monitoring requirements.

5. Monitoring deficiencies were encountered at all levels of the program for SAWPA, WMWD, and SBVMWD. Deficiencies included lack of monitoring of field equipment, such as pH and flow meters as well as insufficient monitoring of wastewater discharges.

W2422.01T Orange County Sanitation District 3 EEC SAWPA Pretreatment Program Compliance Audit Report November 19, 2012

6. Inspections that are currently performed by the member agencies are scheduled in advance and do not always reveal changes and modifications to a process or a facility.

7. Enforcement plans currently in place may lack the legal authority, under the current multijurisdictional agreements, for SAWPA to carry out enforcement actions, including collecting fines.

8. Data management has been lacking and has negatively affected the collaboration between SAWPA and OCSD. In addition, the lack of traceability makes quality checking very difficult and ineffective at identifying errors.

9. Required reviews of compliance data were not performed in a timely fashion and enforcement and resampling requirements were not performed or were performed very late.

10. Reporting by SAWPA to OCSD on a monthly basis only resumed at the outset of this audit. The 1991 MOU clearly states that SAWPA must provide monthly reports detailing the number and identification of new and existing permittees, inspections, enforcement actions, and monitoring data.

11. QA/QC measures were lacking throughout the program, especially within SAWPA’s program and the IEBL pretreatment programs for WMWD and SBVMWD.

12. Human resources and expertise necessary to implement an adequate pretreatment program are lacking in SAWPA’s organization as well as in the WMWD’s and SBVMWD’s organizations.

ES.6 Recommendations

Overall, major improvements should be implemented at all levels of the pretreatment program to ensure compliance with all applicable requirements and provide the highest level of protection for the IEBL and OCSD’s treatment facility. Such improvements, if properly and continuously implemented, would minimize the risk of a repeated instance of serious violations, as was the case with Corona Resource Recovery.

On the program administration level, SAWPA must develop and implement the necessary improvements to its pretreatment program. EEC also recommends that SAWPA manage all aspects of the pretreatment program rather than delegating permitting, monitoring, and enforcement responsibilities to its member agencies. This centralized management approach would give SAWPA the necessary control, but the legality of multijurisdictional agreements allowing enforcement actions and the levying of fines must be addressed.

Alternatively, SAWPA could continue to manage its program through multijurisdictional agreements with some or all of its member agencies, but this option is not recommended because it yields a lower level of compliance and protection. Such arrangement relieves SAWPA from the responsibility of issuing permits and monitoring compliance, but would require SAWPA to closely monitor the performance of its member agencies and to conduct announced and unannounced inspections at industrial user facilities. In either arrangement, it is highly recommended for SAWPA to either acquire adequately qualified staff dedicated to SAWPA’s pretreatment program and/or to retain a qualified consultant who is not retained

W2422.01T Orange County Sanitation District 4 EEC SAWPA Pretreatment Program Compliance Audit Report November 19, 2012 by any of its member agencies. At all times, SAWPA must ensure that any conflict of interest is eliminated and that it fulfills its role in providing additional control and program supervision.

Permits are control instruments that must be properly prepared and based on accurate and comprehensive information concerning the industrial user. SAWPA should adopt a uniform permit fact sheet and permit format that addresses all applicable requirements in the federal and state regulations, in OCSD’s ordinance, in the 1991 MOU, and in the 1996 Agreement requirements. It is also recommended that the practice of an agency issuing permits to itself for the control and monitoring of its LWH collection station or its own industrial facility cease throughout SAWPA’s service area. Typically, and as observed in this audit, such a practice leads to many instances of noncompliance due to the inherent lack of control and monitoring.

Monitoring at all levels of the pretreatment program must be improved. The level of monitoring by IEUA and EMWD is adequate, but it is lacking among SAWPA, SBVMWD, and WMWD. SAWPA must develop and implement procedures for the regular calibration and maintenance of equipment, for the sampling and testing of wastewater, for gathering information and issuing permits, and for all other activities that can ensure compliance and a higher level of protection to the IEBL and OCSD’s treatment and receiving waters. SAWPA must regularly monitor the proper implementation of all adopted procedures.

Inspections should consist of a critical examination of the industrial user facility and manufacturing processes. The announced inspections currently performed by the member agencies do not always reveal all changes and modifications. A minimum number of inspections must be unannounced in order to capture facts and information that are more representative of normal operating conditions at the industrial user facilities. The actual number of inspections should be determined in light of the nature of the inspections and the potential risk present.

Enforcement plans that are currently in place for SAWPA and its member agencies must undergo a legal review to assess the effectiveness of the plans under the current multijurisdictional agreements. Enforcement plans must also contain a clear procedure to determine if a violation is considered an instance of significant noncompliance, to identify and undertake a timely and appropriate response and to document resolution of noncompliance. Enforcement response planning is a critical portion of every ordinance and is ultimately SAWPA’s responsibility to implement.

Data management must be improved to increase the level of collaboration and work transferability between SAWPA and OCSD. Traceability also must be improved to facilitate quality checking.

Reporting by SAWPA to OCSD must resume and continue on a monthly basis. As required in the 1991 MOU, SAWPA must provide monthly reports detailing the number and identification of new and existing permittees, inspections, enforcement actions, and monitoring data. SAWPA and OCSD must agree on a report format for smooth and effective transfer of information.

QA/QC measures specific to the IEBL must be implemented by SAWPA throughout its pretreatment program. SAWPA’s primary mission should be to effectively oversee and carry out a robust quality system and quality management plan, including QA/QC activities at the industrial user level. SAWPA should also regularly review its implemented QA/QC measures.

Resources to develop and implement an adequate pretreatment program for SAWPA are critically needed. SAWPA must acquire qualified staff and/or retain a qualified consultant with expertise in both,

W2422.01T Orange County Sanitation District 5 EEC SAWPA Pretreatment Program Compliance Audit Report November 19, 2012 pretreatment as well as program management. If SAWPA chooses to retain a qualified consultant, SAWPA will still need to elevate the pretreatment expertise of its staff members responsible for managing the consultant.

EEC has estimated that, if SAWPA chooses to manage the entire IEBL pretreatment program with the current number of permittees, it would need a total of three full-time equivalent (FTE) employees (staff and/or consultants) the first year in order to develop and implement its pretreatment program without passing on any responsibility to member agencies. The 3 FTEs would be comprised of a clerical position mainly for invoicing, data management, and reporting; a junior staff position focusing primarily on permitting and inspections; and a program manager to develop and oversee the program, review permits, and liaise with OCSD and member agencies. It is expected that, after the first year, SAWPA would need fewer employees to manage the same number or permittees.

The audit findings have been verbally shared with SAWPA and the member agencies throughout the audit, and SAWPA is currently in the process of addressing many of the audit findings. Starting with the recommended corrective actions presented in the report, SAWPA could begin to develop its own corrective action plan and schedule specific to the audit findings. Alternatively, OCSD could, as specified in the 1991 MOU Section 6.D, develop and issue SAWPA a remedial plan with a time schedule for attaining compliance since SAWPA has failed or has refused to fulfill key pretreatment requirements. In either case, follow-up audits by OCSD should be scheduled to determine whether the corrective actions are being implemented adequately and on schedule.

W2422.01T Orange County Sanitation District 6 EEC STEERING COMMITTEE Meeting Date To Bd. of Dir. 11/28/12 -- Item Number Item Number AGENDA REPORT 4 Orange County Sanitation District

FROM: James Herberg, Assistant General Manager Originator: Michael Gold, Public Affairs Manager

SUBJECT: Legislative update

GENERAL MANAGER'S RECOMMENDATION

Information Only

SUMMARY This report is the monthly legislative update that includes legislative and election information from Washington, D.C. and Sacramento, lobbyists’ activities, and other information.

ADDITIONAL INFORMATION

Federal Legislative Update Legislative Advocate: Eric Sapirstein, ENS Resources

The Presidential and congressional elections represented the end of the campaign season and beginning of a renewed effort to address the policy needs of the nation. The voters mostly kept the status quo but nationally, Democrats picked up seven seats in the House and two in the Senate. A listing of the changes to the California delegation is in the below table.

For OCSD, the Congressional delegation changed slightly with Representative Gary Miller moving out of the region and newly elected Democrat Alan Lowenthal picking up a few Orange County cities in a district covering all of Long Beach. Perhaps the most important factor to consider is the remaining members: Representatives Ed Royce, Dana Rohrabacher, and Loretta Sanchez will be central to the District’s legislative agenda.

While some may perceive the return of the status quo a signal of continued gridlock, at the moment it appears that Congress is prepared to work with the White House on deficit reduction. However, the big news that is that the House leadership is considering revisions to the earmark ban to allow for some level of congressionally-directed spending. We will know more about these prospects in December or January when the new Congress begins its work.

Page 1 of 6

California Congressional delegation to witness changes A combination of retirements and successful electoral challenges is bringing several new Members to the delegation roster. A total of thirteen new Members will be coming to Washington, representing almost a quarter of the delegation. Of particular interest is the shift in generations. Most Members-elect represent a diverse collection of ideology, but the one shared attribute is their age that is substantially younger than the delegation prior to the election. This means that we may witness a shift in how legislative priorities are defined and an openness to developing policies that emphasize public private partnerships.

One important election was that of Jared Huffman (D-CA). Huffman is intimately knowledgeable about water quality, water resources and alternative energy issues having served on the Marin Water Board and in Sacramento. As a former attorney with NRDC, he is expected to be a strong voice for environmental policies such as such as addressing TMDLs, coastal protection, alternative energy, and climate change during the 113th Congress. Another important switch is Eric Swalwell. Swalwell is expected to play a pivotal role on infrastructure, citing his priorities for supporting public infrastructure needs as well as green energy.

The following Members are leaving the delegation and their successors will be:

DEPARTING MEMBER NEWLY ELECTED MEMBER David Drier (R) Julia Brownley (D) Elton Gallegly (R) Lois Capps (D) Brian Bilbray (R) Scott Peters (D) Wally Herger (R) Doug LaMalfa (R) Jerry Lewis (R ) Mark Takano (D) Lynn Woolsey (D) Jared Huffman (D) Bob Filner (D) Juan Vargas (D) Joe Baca (D) Gloria McCleod (D) Howard Berman (D Brad Sherman (D) Mary Bono Mack (R) Raul Ruiz (D) Laura Richardson (D) Janice Hahn (D) Pete Stark (D) Eric Swalwell (D) Dan Lungren (R) Ami Bera (D) NEW DISTRICT Paul Cook (R) NEW DISTRICT David Valadao (R) NEW DISTRICT Tony Cardenas (D) NEW DISTRICT Alan Lowenthal (D)

In addition to the new Members, the congressional committees will be restructured. The Committee on Transportation and Infrastructure that governs water quality and biosolids policy is expected to have a new chairman, Representative Bud Shuster (PA). Shuster is a strong advocate of infrastructure assistance and his assumption of the chairmanship duties should boost prospects on action to address POTW assistance needs.

Page 2 of 6

Representative Gary Miller (CA) will serve as one of the most senior Republican Members on the committee as he climbs the seniority ladder. Depending on assignments across all the committees, Miller could become the chair of the Subcommittee on Water Resources and Environment. Within the overall committee, nine slots open up on the Democrat side and three on the Republican side due to the election. Of the nine Democratic slots, Californians held two. This suggests that either Swalwell or Huffman could make a play for an assignment. If appointed it would provide the District with two Members that represent California, albeit from northern California.

The Committee on Appropriations saw only a few changes, but California will lose the senior role that Representative Jerry Lewis (R) served as a past chair with his retirement. Representative Ken Calvert (R) will remain as the sole Republican unless an additional Californian is appointed. The Democratic column is represented by Californians Lucy Royball-Allard, Sam Farr, Barbara Lee, Adam Schiff, and Mike Honda. If the earmark ban is relaxed, Calvert would be expected to take a direct Member interest in Southern California issues and he has been very supportive of District funding priorities in the past.

The Committee on Science, Space and Technology loses Lynn Woolsey (D). Democrats Zoe Lofgren and Jerry McNerney will continue along with Dana Rohrabacher (R) who sits as the third most senior committee member. This means that the District would enjoy the support of a Member of the delegation on this important committee that sets policy on science that underlies environmental mandates among other matters.

On the Senate side, the Committee on Environment and Public Works will remain in the hands of Senator Barbara Boxer. The committee’s agenda will remain with a strong direction toward addressing climate change and alternative energy policies. The District’s priorities with regard to energy efficiency such as hydrogen recovery should be in sync with the Senator’s interests. If the committee pursues an alternative energy and climate bill, it might incorporate policies supportive of the District’s interests.

Senator Dianne Feinstein remains on the Committee on Appropriations as a senior member of the committee. She is expected to continue in her capacity as the chair of the Energy and Water Development Appropriations Subcommittee that has jurisdiction over alternative energy funding programs at DOE. However, there is a remote possibility that she could be in line for another subcommittee slot as Members have retired from the Senate opening up such opportunities on the committee.

Legislative priorities may highlight water infrastructure The agenda for the 113TH Congress remains to be identified by the leadership in both chambers. However, based on the issues left unfinished, it seems highly likely that infrastructure will take center stage and that would incorporate both financing policy as well as regulatory mandates.

Additionally, the impact of Hurricane Sandy is expected to bring back legislative efforts to address the climate change resiliency needs of wastewater and water agencies. In

Page 3 of 6

fact, following the election day results, Senate Majority Leader Harry Reid (NV) informed the press that he intends to make climate change a top priority in the next Congress. This decision means that Congress is likely to promote infrastructure programs and funding of projects that offer new, sustainable energy production. This priority conceivably would target projects that could leverage the energy embedded in the wastewater treatment process.

Finally, it seems clear that support for water infrastructure continues to grow. Senator Boxer appears dedicated to the commitment to address such needs as part of a WRDA rewrite. She has released a WRDA proposal that includes a pilot program that would establish a loan program and other credit enhancements to support projects in excess of $20 million. As part of this approach, the feasibility of relying on public private partnerships is elevated as a priority. This standard suggests that the coming Congress will likely debate the role that the private sector can play in addressing wastewater infrastructure needs.

State Legislative Update Legislative Advocates: Christopher Townsend, Heather Dion and Casey Elliott, Townsend Public Affairs

Going into the election, most of the media focus was on Proposition 30, the Governor’s tax initiative. The Governor had staked much of his reputation, as well as nearly $6 billion in revenue for the state’s education system, on the measure passing. In the end, the voters of California approved the measure, with 53.9% of voters siding with the Governor. Additionally, voters overwhelmingly rejected the tax measure proposed by Molly Munger, with 72.3% of voters opposing Proposition 28.

The passage of Proposition 30 means that the trigger cuts that were written into the State’s 2012-13 budgets, including over $6 billion in cuts to K-14 education, will not go into effect on January 1.

While many were expecting Proposition 30 to be the main story today, the major headline is that Democrats appear poised to gain a super-majority in both Houses of the State Legislature. With the combination of the new “top two” primary, as well as new district boundaries due to redistricting, most believed that the Democrats had a good opportunity to pick up two seats in the State Senate; however, it appears that the Democrats will pick up three seats. If these three seats hold up then the Democrats will hold 28 of the 40 seats, one more than needed for 2/3.

The biggest surprise of the night is in the State Assembly, where the Democrats are currently holding onto slim victories in two districts, which would give them a 2/3 majority with 54 seats. The two seats that Democrats are poised to pick up are AD32, where Rudy Salas is currently leading by 268 votes, and AD65 where Fullerton Mayor Sharon Quirk-Silva is leading incumbent Assemblyman Chris Norby by 1237 votes. Both of these races are still very close and likely will not be officially decided until all of the provisional ballots and remaining absentees are tallied.

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With a super-majority in each House of the Legislature, the Democrats will have significant control over state policy for the next two years. Legislative Democrats will be able to pass urgency measures, as well as tax and fee bills, without any Republican support. Additionally, with a 2/3 majority in both Houses, the Democrats have the ability to override any veto of the Governor.

Another election result to highlight is Proposition 31, a measure sponsored by the California Forward Action Fund and billionaire philanthropist Nicolas Berggruen. Over 60% of California voters rejected this measure. The measure would have mainly affected two areas: the state budget and local governance. In regards to the state budget, Proposition 31 would have required that the Governor and the Legislature enact budgets on a two-year basis as opposed to every year. Furthermore, the initiative would have blocked the Legislature from passing many new spending measures or tax measures or tax cuts above $25 million without identifying new sources of revenues.

The new members of the Assembly from Orange County are Travis Allen (R), Tom Daley (D) and possibly Sharon Quirk-Silva (D) if she holds on to her lead.

2013-2014 legislative forecast Looking forward to the next session, the Legislature will continue to grapple with the implementation of AB 32 (2006) and CEQA reform. On the cap-and-trade program, the Legislature began to address this issue by establishing a framework of how to appropriate revenue from the program through the passage of AB 1532, a bill sponsored by Speaker Perez. Signed by the Governor, this bill would specify an expenditure plan for how revenues from the Cap-and-Trade program should be allocated. The first cap-and-trade auction will be held in early 2013.

There was some momentum to pursue CEQA reform prior to the end of session. Although the language was never formally introduced, there was strong pushback by some Democrats in the Legislature, leading to an opposition letter signed by 33 members opposing any changes whatsoever to CEQA prior to adjournment. Since the decision to delay consideration, Senator Steinberg has announced there will be a series of public forums and at least one legislative committee informational hearing on this issue. Senator Steinberg has also named Senator Michael Rubio as the new Chair of the Senate Environmental Quality Committee. The next legislative session will also see continued discussion related to recycled water reuse. As the Legislature grapples with financing of water projects and infrastructure, the concept of a Public Goods Charge may also appear, similar to the abandoned legislative vehicle of SB 34 (Simitian).

PRIOR COMMITTEE/BOARD ACTIONS

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ADDITIONAL INFORMATION

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CEQA

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BUDGET / DELEGATION OF AUTHORITY COMPLIANCE

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