As used in this chapter, the following terms have the following meanings:

The Legislature hereby finds and declares that diversions of water out of the Mono Lake Basin by the City of Los Angeles have lowered the water level of Mono Lake and that future water diversions need to be managed to protect Mono Lake and the Mono Lake Basin. The department, upon acceptance of an application or applications pursuant to Section 12929.21, shall expend money available from the Environmental Water Fund to preserve the wildlife and environment of the Mono Lake Basin.

The City of Los Angeles, jointly with the Mono Lake Committee, may submit one or more grant applications to the department to protect and preserve the Mono Lake Basin. The grant applications shall benefit and enhance the lake’s ecosystem and contribute to permanent protection of the Mono Lake Basin environment, including, but not limited to, nesting and migratory bird populations, air quality, fish, and other wildlife, as well as provide replacement water and power to the city. Any project funded by a grant shall not unreasonably affect fish, wildlife, or other instream beneficial uses.

Funds expended for purposes of Section 12929.20 shall be expended only for an eligible project which is consistent with a grant application pursuant to Section 12929.21. The City of Los Angeles shall be the sole grantee for any funds expended for an eligible project.

For purposes of this section, “eligible project” means a water or power conservation project, a waste water reclamation project, a conjunctive use program, a groundwater recharge project, the enlargement of existing water or power facilities owned by the City of Los Angeles, electric power production facilities, or a water marketing program. Priority shall be given to projects or programs that conserve water or power that has been previously developed.

It is the intent of the Legislature that eligible projects are intended to find replacement water and power for the City of Los Angeles and to limit any impact of reduced diversions from the Mono Lake Basin on statewide water and power supplies, except for any reduced diversions ordered as specified in Section 12929.24. No money made available pursuant to this chapter shall be spent by the city to buy water from the Metropolitan Water District of Southern California.

Until June 30, 1994, 60 percent of the funds that have been appropriated to the Environmental Water Program shall be reserved exclusively for the funding of applications pursuant to Section 12929.21. Applicants may also apply for funds that may be appropriated in the future to the Environmental Water Program. After July 1, 1994, all funds reserved by this section and all other funds that may be appropriated to the Environmental Water Program may be used either to protect and preserve the Mono Lake Basin or for programs and projects listed in Section 12929.26.

The state shall not accept any application for funds pursuant to Section 12929.21 that would expend any state money to replace water or power supplies lost by the City of Los Angeles because of a final court judgment or final board order regarding the Mono Lake Basin.

This chapter does not affect the rights or obligations of any party involved in litigation regarding the Mono Lake Basin.

Other purposes eligible for funding under this chapter, subject to approval by the Legislature in the annual budget process, include all of the following:

The department shall confer with appropriate state and federal agencies on the feasibility of eligible projects.