EXHIBIT 1-B
DRAFT MINUTES Regular Meeting Board of Directors Monterey Peninsula Water Management District March 26, 2009
The meeting was called to order at 7:00 PM in the District Conference Room.	CALL TO ORDER/ROLL CALL
Directors Present: Kristi Markey, Chair -- Division 3 (arrived at 7:45 PM) Regina Doyle, Vice Chair – Division 4 Alvin Edwards – Division 1 Judi Lehman – Division 2 Bob Brower – Division 5 David Pendergrass – Mayoral Representative David Potter – Monterey County Board of Supervisors Directors Absent: None General Manager present: Darby Fuerst District Counsel present: David C. Laredo
The assembly recited the Pledge of Allegiance.	PLEDGE OF ALLEGIANCE
The following comments were directed to the Board during Oral Communications	ORAL COMMUNICATIONS
On a motion by Director Pendergrass and second by Director Lehman, the Consent Calendar was adopted unanimously on a vote of 6 – 0. Directors Brower, Doyle, Edwards, Lehman, Pendergrass and Potter voted in favor of the motion. Director Markey was absent.	CONSENT CALENDAR
Adopted.	1.	Consider Adoption of Minutes from the February 18, 2009 Special Board Meeting and February 26, 2009 Regular Board Meeting
Adopted.	2.	Consider a Change to the Organization Chart Replacing the Assistant Fisheries Biologist Position with a Second Associate Fisheries Biologist Position
Adopted.	3.	Consider Expenditure of Budgeted Funds for the Periodic Maintenance of the Three Main Intake Pumps at the Sleepy Hollow Rearing Facility
Adopted.	4.	Schedule Date for Hearing on Apparent Insufficient Physical Supplies to Serve Ryan Ranch Water Distribution System and Determination as to Whether, and to What Extent, System Capacity and/or Expansion Capacity Limits Should be Modified
Adopted.	5.	Consider Adoption of Treasurer’s Report for January 2009
	PRESENTATIONS
Mr. Anthony reported the following. (1) California American Water (CAW) replaced a meter at the ASR well, and discovered that the previous meter was underestimating production by 10 percent. The production record for that well has been corrected. (2) A 30-inch potable water pipeline will be installed at General Jim Moore Blvd. It will be owned by Marina Coast Water District (MCWD). CAW will pay 49 percent of the cost of the project. The above-ground pipeline that is currently on General Jim Moore Blvd. will be given to MCWD for the distribution of non-potable, purified wastewater. The recycled water will be used for irrigation at various locations such as golf courses and Monterey Peninsula College. (3) CAW signed a Memorandum of Understanding with MCWD regarding cooperation on development of additional information that the Public Utilities Commission (PUC) can incorporate into the EIR on the Coastal Water Project. The MOU calls for an agreement with Monterey County Water Resources Agency (MCWRA) and also the Monterey Regional Water Pollution Control Agency (MRWPCA) on use of its outfall. General Manager Fuerst requested a copy of the MOU.	6.	Monthly Report from California American Water General Manager, Craig Anthony
Henrietta Stern, Project Manager, presented the report. An outline of Ms. Stern’s presentation is on file at the District office and can be viewed at the District’s website.	7.	Water Supply Project Alternatives Update
Stephanie Pintar, Water Demand Manager, presented the report. An outline of Ms. Pintar’s report is on file at the District office and can be viewed at the District’s website. Ms. Pintar confirmed that the District would no longer accept applications for water permits in the Hidden Hills area that would intensify water use. During the public comment period on this item, Craig Anthony stated that Ms. Pintar incorrectly characterized the situation as one in which Hidden Hills water users “are using more than their fair share.” He described the situation as a problem with the water distribution system that must be corrected.	8.	Water Conservation Program Report
	GENERAL MANAGER’S REPORT
Darby Fuerst, General Manager, presented the report. An outline of the presentation is on file at the District office and can be viewed at the District’s website. Mr. Fuerst reported that for the period of October 1, 2008 through March 24, 2009, CAW production from the Carmel River was 457 acre-feet under the production limit of 4,755 acre-feet established as a result of State Water Resources Control Board (SWRCB) Order 95-10. Production from the Coastal Subareas of the Seaside Basin was 242 acre-feet under the production limit of 1,200 acre-feet established by the Seaside Groundwater Basin Adjudication. Production from the Laguna Seca Subarea was 62 acre-feet over the production limit of 121 acre-feet established by the Seaside Groundwater Basin Adjudication. Therefore, total CAW production from the Seaside Basin was 175 AF under the adjudication limit of 1,321 AF. Mr. Fuerst also stated that rainfall measured at San Clemente Dam between October 1, 2008 and March 26, 2009 was 90 percent of normal, and runoff was 70 percent of normal. This has resulted in a change in the water year status from dry-year conditions to below-normal conditions.	9.	Status Report on California American Water Compliance with State Water Resources Control Board Order 95-10 and Seaside Groundwater Basin Adjudication Decision
	ATTORNEY’S REPORT
District Counsel Laredo stated that he provided a status report on all items listed on the closed session agenda, but no action was taken by the Board. Mr. Laredo provided an update on the Scoping Ruling issued on March 26, 2009 by Administrative Law Judge (ALJ) Angela K. Minkin and Public Utilities Commission (PUC) Commissioner Bohn regarding Application No. 04-09-019 for the Coastal Water Project. He reported that parties to the proceeding were identified as Citizens for Public Water, Surfrider Foundation, Public Trust Alliance, MPWMD, MCWRA, CAW, PUC Division of Ratepayer Advocates, MCWD and the MRWPCA. A tentative schedule for completion of the Phase 2 proceedings within 18 months was established. It assumes a ruling will be issued on selection of a water supply project by September 25, 2010. The schedule calls for facilitated workshops on project costs to be conducted July 7 through 9, 2009; on July 27, 28 and 29 public participation hearings will be conducted on the Monterey Peninsula; and September 8 through 18, 2009 evidentiary hearings will be conducted in San Francisco. The optimum date for a decision on certification of the Final EIR would be February 2010. A final decision could be issued by March 2010.	10.	Report on 5:30 PM Closed Session of the Board
		3.	Conference with Legal Counsel – Existing Litigation (Gov. Code 54945.9 (a))
		A.	Application of California American Water Company to the Public Utilities Commission Application No. 04-09-019 – Coastal Water Project
		B.	Application of California -American Water Company for an Order Authorizing a Special Conservation Program and Modifications to its Rate Design in its Monterey District, and Authorization to Increase its Rates for Water Service in its Monterey District to the CPUC – Conservation Program Application (Applications No. 07-12-010, 08-02-018)
		C.	Application of California -American Water Company for Authorization to Increase its Revenues for Water Service in its Monterey District in years 2009; 2010; and 2011 General Rate Case (Application No. 08-01-027)
		D.	SWRCB Cease and Desist Order WR 2008-00XX-DWR
		E.	SWRCB Complaint re CAW (Sierra Club, Ventana Chapter, and Carmel River Steelhead Association)
		F.	MPWMD v. Nick and Gerda Marotta, Monterey Superior Court (M83498)
		G.	MPWMD v. Roy Woods, WOODS 1995 Trust, Monterey Superior Court (M83499)
		4.	Conference with Labor Negotiators (Gov. Code §54957.6)
			Agency Designated Representatives: Rick Dickhaut, Cynthia Schmidlin, Darby Fuerst
			Employee Organization: General Staff and Management Bargaining Units Represented by United Public Employees of California/LIUNA, Local 792
			Unrepresented Employees: Confidential Unit
	DIRECTORS’ REPORTS (INCLUDING AB 1234 REPORTS ON TRIPS, CONFERENCE ATTENDANCE AND MEETINGS)
Director Brower reported on the February 24 through February 27, 2009 Association of California Water Agencies 2009 Washington D.C. Conference that he attended. There was discussion at the conference about the American Recovery and Reinvestment Plan (Stimulus Plan) that offers loans and grants for public projects, and also allows for loans to be forgiven. In order to receive stimulus plan funding, a project must already have received permits and be ready to construct. Mr. Brower also learned that the Clean Water Act may be amended to cover all water sources, not just navigable waterways. Nancy Sutley, Chair of the Whitehouse Council on Environmental Quality told the attendees that EPA will play a greater role in water issues. P.J. Crowley, Director of Homeland Security, told the attendees that the transport of chlorine gas is a concern of the Obama administration and will be addressed. The conference attendees met with California Representatives Tom McClintock and Jackie Spear, and also Grace Napolitano, Chair of the House Natural Resources Subcommittee on Water and Power. Representative Ken Calvert addressed the group on Peripheral Canal issues. Representative Jim Costa reported that California’s water system was built to accommodate a population of 20 million people and now serves 38 million water users. Director Doyle reported that she attended a meeting of the Pacific Grove Ad Hoc Water Allocation Committee as a non-voting member. She referred members of the committee to District staff for additional information on issues that were raised at the meeting. In response to a question from Director Edwards, General Manager Fuerst reported that he attended a March 23, 2009 meeting organized by Representative Sam Farr to inform public agencies about the stimulus plan. The meeting was not focused on water protection efforts. Mr. Fuerst advised the Board that the District is pursuing grant funding for projects that would be constructed on CAW property, such as removal of a ford across the Carmel River that is an obstacle to migration of steelhead, and a gravel injection project. The grant application deadline is April 6. Director Markey joined the meeting at approximately 7:45 PM, during the Oral Report on Activities of County, Cities, Other Agencies/Committees/ Associations.	11.	Oral Report on Activities of County, Cities, Other Agencies/Committees/ Associations
	PUBLIC HEARINGS
On a motion by Director Lehman and second by Director Potter, the Board voted unanimously to defer this item to the April 20, 2009 Board meeting. The motion was approved on a vote of 7 – 0. No comments were directed to the Board during the public hearing on this item.	12.	Consider Approval of Draft 2008 MPWMD Annual Report
On a motion by Director Edwards and second by Director Brower, the Water Supply Strategy and Budget was adopted unanimously on a vote of 7 – 0. During the public comment period on this item, Craig Anthony opined that a reduction in local tourism could be the reason that water use in the CAW system has dropped. He noted that residential water use does not tend to fluctuate, but when the number of visitors to the area is reduced, the result is lower water consumption.	13.	Consider Adoption of April through June 2009 Quarterly Water Supply Strategy and Budget
	ACTION ITEMS
Director Doyle made a motion to adopt the Findings of Denial. The motion was seconded by Director Lehman. Director Doyle amended the motion to adopt the Findings of Denial, and delete the second sentence of Finding 9 that begins with the words “CAW management is concerned.” Director Lehman seconded the motion to amend. The motion was adopted on a vote of 4 – 3. Directors Doyle, Lehman, Markey and Potter voted in favor of the motion. Directors Brower, Edwards and Pendergrass were opposed. The following comments were directed to the Board during the public comment period on this item. (1) Sheri Damon representing Security National Guarantee, took issue with Findings 4, 11, 17, 18, 19, 20 21 and 23. She stated that the Watermaster has authority to manage the Seaside Basin. She requested that the Board reconsider its denial of the application, and refer the decision on reconsideration to the April 20, 2009 Board meeting. (2) John Rubin, representing CAW, requested that the District not adopt the Findings of Denial. Mr. Rubin maintained that Findings 5, 6 13 and 14 incorrectly state that the February 5, 2009 letter from James Kassell of the State Water Resources Control Board advises that use of Carmel River to serve the project would be prohibited. Mr. Rubin asserted that the Findings of Denial are inconsistent with SWRCB Order 95-10 because it does not constrain water service to the project. (3) Craig Anthony, representing CAW, requested that the second sentence in Finding 9, beginning with the words “CAW management is concerned” be deleted. (4) Paul Bruno, a member of the Watermaster and owner of a well with an alternative production allocation, read from a letter dated March 23, 2009 from the Seaside Groundwater Basin Watermaster (on file at the District office). He expressed concern as a ratepayer and consumer that if the Board adopts the Findings of Denial, the decision would be challenged in court, and money wasted to defend the District’s position. (5) George Riley urged the Board to require that additional environmental studies be conducted on the request for an amendment of the CAW water distribution system to serve the Monterey Bay Shores Ecoresort.	14.	Adopt Findings of Denial of Application to Amend California American Water (CAW) Distribution System to Serve Monterey Bay Shores Ecoresort in Sand City; California American Water and Security National Guaranty, Co-Applicants; MPWMD Application #20080915MBS-L4; APN# 011-501-014
Director Edward offered a motion that was seconded by Director Potter to conduct a half-day strategic planning session. The Chair and Vice Chair were authorized to work with staff to select a facilitator, and determine the scope of the planning session discussion. The motion was adopted unanimously on a vote of 7 – 0. No comments were directed to the Board during the public comment period on this item.	15.	Determine if Strategic Planning Session will be Conducted in 2009
On a motion by Director Brower and second by Director Potter, the Board voted to prepare a letter for the Governor expressing support for the Carmel River Dam Reroute and San Clemente Dam Removal Project, and encourage the state to redouble its efforts to work with Caw on the dam removal project. In addition, staff was authorized to contact organizations specified in the staff report to offer the District’s assistance in facilitating a discussion on the San Clemente Dam Removal Project The motion was adopted on a vote of 6 – 1. Directors Brower, Doyle, Edwards, Lehman, Markey and Potter voted in favor of the motion. Director Pendergrass was opposed.	16.	Consider Request from the Carmel River Watershed Conservancy Regarding Support for Carmel River Reroute and San Clemente Dam Removal Project
There was no discussion of the Informational Items/Staff Reports.	INFORMATIONAL ITEMS/STAFF REPORTS
	17.	Letters Received
	18.	Committee Reports
	19.	Strategic Plan Update
	20.	Carmel River Fishery Report for January 2009
	21.	Water Conservation Program Report
	22.	Monthly Allocation Report
	23.	Monthly California American Water Production Report
	24.	Monthly Water Supply Status Report
	25.	Semi-Annual Financial Report on the CAWD/PBCSD Wastewater Reclamation Report
The meeting was adjourned at 9 PM.	ADJOURNMENT

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Darby Fuerst, Secretary to the Board

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