EXHIBIT 9-E
DRAFT
FINDINGS OF DENIAL FOR

APPLICATION BY CALIFORNIA-AMERICAN WATER COMPANY TO

AMEND WATER DISTRIBUTION SYSTEM TO

CONSTRUCT CARMEL RIVER DAM AND RESERVOIR PROJECT

All files are available for public review at the MPWMD Office, 5 Harris Court, Building G, Monterey (Ryan Ranch), unless other wise noted

 
 
Cal-Am Application for Reservoir Project

 

FINDING 1:

California-American Water Company (Cal-Am) submitted an application dated November 12, 1996 to the Monterey Peninsula Water Management District (MPWMD) to amend the Cal-Am water distribution system by constructing the 24,000 AF Carmel River Dam and Reservoir.  Concurrently, Cal-Am submitted Application 97-03-052 to the California Public Utilities Commission (CPUC) for a Certificate of Public Convenience and Necessity (CPCN).

 

EVIDENCE:

Cal-Am application dated November 12, 1996, received November 13, 1996.  Application materials leading to CPUC Application 97-03-052 on file at CPUC office in San Francisco.

 

FINDING 2:

The application to MPWMD was deemed to be incomplete.  Additional materials that responded to MPWMD questions and information requests were submitted in February-March 1997; the application was deemed to be complete by MPWMD as of March 24, 1997.  A similar process occurred with the CPUC, which deemed Cal-Am’s CPCN application complete in March 1997.

 

EVIDENCE:

Incompleteness letter #1 from MPWMD to Cal-Am dated December 13, 1996;  Cal-Am response letter and materials dated February 4, 1997.  Incompleteness letter #2 from MPWMD to Cal-Am dated February 21, 1997; Cal-Am response letter and materials dated March 24, 1997.  MPWMD completeness letter dated March 31, 1997 confirming completeness as of March 24, 1997.  Administrative record for Application 97-03-052 on file at CPUC.

 

FINDING 3:

The Cal-Am dam is the same physical structure as MPWMD’s proposed New Los Padres Dam and Reservoir Project (NLP).  MPWMD had obtained key federal and state permits for the NLP project in mid-1995, but funding/construction by the District was not approved by voters in November 1995.  Cal-Am characterized its project as a “no growth dam” because the project did not propose to make water available for new construction and remodels; the project focus was compliance with State Water Resources Control Board (SWRCB) Order WR 95-10.  Operationally, the Cal-Am proposal would have resulted in more carryover storage, thereby improving drought protection and streamflow enhancement as compared to the NLP project. 

EVIDENCE:

Cal-Am application dated November 12, 1996.  Cal-Am news release and media package on reservoir application dated November 12, 1996.

 
 
Environmental Review of Reservoir Project

 

FINDING 4:

Detailed environmental review has been undertaken for the Reservoir Project in compliance with the California Environmental Quality Act (CEQA).  This review has not yet been completed, and a Final EIR is not now ready for certification.

 

EVIDENCE:

MPWMD environmental checklist (Initial Study) and determination to prepare an EIR, April 17, 1997. 

MPWMD Notice of Preparation to prepare an EIR on the Carmel River Dam and Reservoir Project, April 30, 1997.

MPWMD Draft Supplemental EIR on the Carmel River Dam and Reservoir Project, November 1998. 

July 21, 2003 Board meeting package, Item 25, Quarterly Water Supply Project Status Report.

 
New Los Padres Project Documents prepared by MPWMD

SDEIR/EIS on Water Supply Project, August 1991.

SDEIR/EIS-II on Water Supply Project, February 1993.

Final EIR/EIS on Water Supply Project, March 1994.

Certification Findings for Final EIR/EIS on Water Supply Project, September 1994.

Addendum-2 to Final EIR/EIS on Water Supply Project, May 12, 1995.

Certification Findings for Final EIR/EIS on Water Supply Project and Addendum-2, August 1995.

Administrative record supporting U.S. Army Corps of Engineers 404 Permit #20364S09 (June 1995) and SWRCB Water Rights Permit #20808 (October 1995, based on Decision No. 1632 (issued in July 1995).  

 

FINDING 5:

The Reservoir Project is currently being reviewed at the program level of detail in the water supply project EIR currently being prepared by MPWMD. 

 

EVIDENCE:

MPWMD Notice of Preparation for water supply project EIR, submitted June 14, 2002.

 
 
Adverse Environmental Effects of Reservoir Project

 

FINDING 6:

The NLP/Cal-Am Reservoir Project has been controversial and the subject of intense public debate.

 

EVIDENCE:

Comment letters received on EIR/EIS documents prepared in 1991-1995, and November 1998 (see Finding 4).  Responses to Comments on 1991 SDEIR/EIS, prepared February 1993.  Responses to Comments on 1993 SDEIR/EIS-II, prepared March 1994.  Responses to Comments on 1994 Final EIR/EIS, prepared September 1994. Written and oral comments received at MPWMD public protest hearing on NLP in August 1995.  Administrative record in Galante et al. vs. MPWMD (1997) 57 Cal. App. 4th 13, 71 Cal. Rptr. 2d 1.  Campaign materials (pro and con) for November 1995 vote on NLP project.  Letters to the editor and editorials in printed media 1991-present.

 

FINDING 7:

State and federal resource agencies have expressed significant concerns about the potential adverse impacts of the NLP/Reservoir Project, with emphasis on impacts to steelhead fish, California red-legged frogs, and the river habitat to sustain these and other aquatic species. 

 

EVIDENCE:

Comment letters from National Marine Fisheries Service (NMFS); U.S. Fish and Wildlife Service (USFWS) and California Department of Fish and Game (CDFG) received on EIR/EIS documents prepared in 1991-1995, and November 1998 (see Findings #4 and 6).  NMFS and USFWS correspondence in relation to MPWMD/Cal-Am compliance with Section 7 of the Endangered Species Act for Reservoir Project, 1988-2003.

 

FINDING 8:

NMFS, known as “NOAA Fisheries” as of 2003, has expressed opposition to the Reservoir Project, expressed serious question about its regulatory feasibility, has endorsed the non-dam “Plan B” concept, and has requested MPWMD and Cal-Am to abandon pursuit of the project.

 

EVIDENCE:

NOAA Fisheries testimony and letter at May 30, 2000 SWRCB public workshop in Monterey; NOAA letter to MPWMD dated May 24, 2001; MPWMD response to NOAA dated June 28, 2001; NOAA letter to Cal-Am dated October 25, 2002; NOAA letter to CPUC dated June 14, 2001. 

 

 

Lack of Cal-Am Due Diligence on Reservoir Project; Changed Direction Toward Desalination (Coastal Water Project)

 

FINDING 9:

In 2001, Cal-Am requested that the District halt work on required cultural and biological studies being performed by MPWMD consultants on the Reservoir Project due to uncertainty about the future of the project proposal.

 

EVIDENCE:

September 18 e-mail from MPWMD to Cal-Am senior management confirming Cal-Am September 7, 2001 e-mail to MPWMD Project Manager confirming August-September 2001 telephone conversations on termination of work; phone confirmation with MPWMD General Manager and General Counsel.  Notice of potential Stop Work Order to cultural resources consultant (Pacific Legacy, Inc.) dated September 7, 2001; e-mail direction to red-legged frog consultant EcoSystems West dated September 8, 2001. Interim Draft cultural resources Historic Properties Management Plan dated December 2001; Interim Draft Biological Assessment Report on red-legged frog dated December 2001.   Annual cultural resources status (letter report) to SWRCB dated August 23, 2003

 

FINDING 10:

In February 2003, Cal-Am announced its intent to pursue the Coastal Water Project (CWP), a large desalination project located in Moss Landing in combination with aquifer storage and recovery (ASR) in the Seaside Basin.  The CWP is the same project recommended by the CPUC in its Plan B Final Report, in compliance with Assembly Bill 1182 (Keeley). 

 

EVIDENCE:

Cal-Am press conference, news release and public outreach materials dated February 11, 2003.  Printed media news coverage dated February 12, 2003.   Cal-Am motions and request to amend CPUC Application 97-03-052 dated February 11, 2003. CPUC administrative record in year 2003 for Application 97-03-052 on file at the CPUC, San Francisco.  Proposed Decision of ALJ Cooke on rate setting issues (Agenda ID #2480) dated July 16, 2003.

 

FINDING 11:

MPWMD has requested that Cal-Am voluntarily rescind its application to MPWMD for the Reservoir Project based on the information in Findings #7-10; to date, Cal-Am has declined.

 

EVIDENCE:

MPWMD letter to Cal-Am dated January 23, 2002; Cal-Am response letter dated March 7, 2002.  MPWMD letter to Cal-Am dated April 7, 2003; Cal-Am response letter dated April 17, 2003.

 

 

CPUC Recommends Denial of CPCN for Reservoir Project Without Prejudice

 

FINDING 12:

CPUC Administrative Law Judge (ALJ) Cooke issued a Proposed Decision dated July 16, 2003 that included recommendations that Cal-Am’s Application 97-03-052 for a CPCN for the Reservoir Project be dismissed without prejudice for reasons of administrative efficiency; and Cal-Am is expressly directed to file a new application to seek CPUC authorization to pursue the CWP.

 

EVIDENCE:

Proposed Decision Resolving Motions by California-American Water Company Regarding Designation of Lead Agency and Ratemaking Issues, ALJ Michelle Cooke, July 16, 2003. Written and oral testimony for CPUC evidentiary hearings conducted on May 14, 2003 regarding rate-making issues associated with the Reservoir Project and CWP, on file at CPUC, San Francisco.

 

 

Failure of Cal-Am to Reimburse MPWMD for Costs for Evaluation of Reservoir Project and Alternatives

 

FINDING 13:

CEQA enables the lead agency to require an applicant to pay for reasonable costs associated with the EIR preparation.  MPWMD may charge and collect a reasonable fee from the applicant in order to recover the estimated costs incurred in preparing environmental documents and for procedures necessary to comply with CEQA on the project.

 

EVIDENCE:

CEQA Guidelines, Section 15045(a); MPWMD Rule 60.

 

FINDING 14:

MPWMD and Cal-Am signed a Reimbursement Agreement in July 1997 relating to reimbursement to MPWMD for necessary and reasonably incurred expenses associated with compliance with CEQA, National Environmental Policy Act (NEPA), federal Clean Water Act (Section 404, Permit #20364S09), Endangered Species Act, National Historic Preservation Act (Section 106), State Water Resources Control Board Permit 20808 and 7130B, and MPWMD Law.  The original agreement has been subject to nine Task Orders, with the most recent signed in May 2001. 

 

EVIDENCE:

In July 1997, MPWMD and Cal-Am agreement titled “Reimbursement of Expenses for Review and Processing of California-American Water Company’s Application to Amend Its Water Distribution System Permit to Add the Carmel River Dam Project.”  Nine Task Orders to Reimbursement Agreement, most recently signed in May 2001.

 

FINDING 15:

CEQA, NEPA and the Clean Water Act require an analysis of a reasonable range of alternatives to the proposed Reservoir Project.  Alternatives include desalination, ASR, offstream storage, reclamation and others.  Since 2001, District efforts have focused on non-dam alternatives, and Cal-Am has been billed only for the proportion of costs that reflect a program level evaluation of these alternatives; each bill provides extensive documentation on the tasks performed and what proportion of consultant and other costs are being charged to Cal-Am.

 

EVIDENCE:

CEQA, NEPA and Clean Water Act.  MPWMD monthly reports on status of water supply project EIR, year 2001 to the present.  Contract with Jones & Stokes Associates for preparation of environmental document, including Amendments 1-7, July 1997 to the present.  Invoices to Cal-Am since July 1997 with emphasis on year 2001 to the present.

 

FINDING 16:

Cal-Am has failed to reimburse the District for costs associated with environmental review of the Reservoir Project and project alternatives.  The unreimbursed total from September 2002 through April 2003 is $252,860. Invoices to Cal-Am for May and June 2003 as well as a $180 correction to the November 2002 billing result in $329,397 owed as of June 30, 2003.

 

EVIDENCE:

June 10, 2003 letter from MPWMD to Cal-Am General Manager; invoice summary dated August 8, 2003; fiscal year summary prepared August 8, 2003; invoices and documentation submitted to Cal-Am for September 2002 to the present.  Testimony of David P. Stephenson before the CPUC, May 14, 2003.

 

FINDING 17:

The July 16, 2003 CPUC Proposed Decision recommends that a May 14, 2003 cut-off date proposed by Cal-Am for expenditures associated with the Reservoir Project not be approved “because it is possible that there will be additional costs associated with the ongoing review of the Carmel River Dam project or winding down of that review in light of Cal-Am’s new project proposal.” 

 

EVIDENCE:

Proposed Decision Resolving Motions by California-American Water Company Regarding Designation of Lead Agency and Ratemaking Issues, ALJ Michelle Cooke, July 16, 2003.

 

 

 

U:\staff\word\boardpacket\2003\2003boardpacket\20030818\PublicHearings\9A-B\item9a_9b_exh9e.doc