MPWMD BOARD MEETNG--AUGUST 17, 2009--EXHIBIT 2A--FINDINGS OF DENIAL

EXHIBIT 2-A

Draft

FINDINGS OF DENIAL

CONSIDER APPEALS OF GENERAL MANAGER’S MARCH 20, 2009 DECISION REGARDING HIDDEN HILLS UNIT OF CALIFORNIA AMERICAN WATER DISTRIBUTION SYSTEM – NOTICE OF VIOLATION OF DISTRICT RULE 40-D AND SUSPENSION OF RECEIPT OF APPLICATIONS FOR NEW OR INTENSIFIED WATER USE

1. GARY E. WIEGAND

2. JAMES DOUGLAS MEADOR AND LUANN MEADOR

3. CALIFORNIA AMERICAN WATER

FINDINGS

1. FINDING: MPWMD Rule 40-C requires the General Manager to produce an annual report that states the quantity of water delivered from each Source of Supply, the total water produced, the average daily number of Connections in the system, and the number of new Connections in the system, and the number of new Connections and disconnections in the previous water year for each Water Distribution System in the District.

EVIDENCE: MPWMD Rule 40-C, attached as an exhibit to Exhibit A, the staff report for the Public Hearing on the Consideration of Appeals of the General Manager’s March 20, 2009 Decision Regarding Hidden Hills Unit of California American Water Distribution System – Notice of Violation of District Rule 40-D and Suspension of Receipt of Applications for New or Intensified Water Use.

2. FINDING: The General Manager must compile the report required by Rule 40-C from the reports submitted by the Owner or Operator of Water Distribution Systems pursuant to Rule 22 and other sources as appropriate. The General Manager shall identify all Water Distribution Systems that meet all three of the following criteria: (1) have ten (10) or more Connections, and (2) of these Connections, at least fifty percent (50%) are active Connections, and (3) the System (production) Capacity exceeds the Pro Rata Expansion Capacity as defined in Rule 11.

EVIDENCE: MPWMD Rule 40-C on file at the District office.

3. FINDING: The Water Production Summary Report for Water Distribution Systems (WDS) within the Monterey Peninsula Water Management District (District) for Water Year (WY) 2008 was adopted as a Consent Calendar item on April 20, 2009.

EVIDENCE: Minutes of the April 20, 2009 Board meeting on file at the District office.

4. FINDING: When a Water Distribution System with ten or more connections and with 50 percent active connections also exceeds its Pro Rata Expansion Capacity[1] (PREC), the General Manager must initiate specific steps set forth in Rule 40-D

EVIDENCE: MPWMD Rule 40-D, on file at the District office.

5. FINDING: The Pro Rata Expansion Capacity is the projected water use anticipated to meet the needs of each Connection as determined by the System Capacity. For example, if the System Capacity (annual production) limit is 10 acre feet and the Expansion Capacity is 20 Connections, the Pro Rata Expansion Capacity shall be 0.50 acre feet per Connection.

EVIDENCE: MPWMD Rule 11, on file at the District office.

6. FINDING: The HHWDS meets the criteria for review of the PREC as set forth in Rule 40-D.

EVIDENCE: The HHWDS reported 433 active connections and has a connection limit of 477 connections as reported on the Water Production Summary Report for Water Distribution Systems (WDSs) within the Monterey Peninsula Water Management District (District) for Water Year (WY) 2008 adopted by the Board as the Consent Calendar Item 11 on April 20, 2009.

7. FINDING: On March 20, 2009, MPWMD General Manager Darby Fuerst, determined that the HHWDS exceeded its PREC and issued a Notice of Violation of Rule 40-D to California American Water.

EVIDENCE: Letter from Darby Fuerst, MPWMD General Manager, to Craig Anthony, California American Water General Manager, attached as an exhibit to Exhibit A, the staff report for the Public Hearing on the Consideration of Appeals of the General Manager’s March 20, 2009 Decision Regarding Hidden Hills Unit of California American Water Distribution System – Notice of Violation of District Rule 40-D and Suspension of Receipt of Applications for New or Intensified Water Use.

8. FINDING: A courtesy letter was sent to California American Water on July 29, 2008, regarding the imbalance in the HHWDS and warning of the possibility that the system would exceed its PREC for Water Year 2008.

EVIDENCE: July 19, 2008 letter from Darby Fuerst, MPWMD General Manager, to Craig Anthony, California American Water General Manager, attached as an exhibit to Exhibit A, the staff report for the Public Hearing on the Consideration of Appeals of the General Manager’s March 20, 2009 Decision Regarding Hidden Hills Unit of California American Water Distribution System – Notice of Violation of District Rule 40-D and Suspension of Receipt of Applications for New or Intensified Water Use.

9. FINDING: The current PREC value (at the time of the March 20, 2009 General Manager’s decision) for the HHWDS was calculated as the average production limit of 226.7 acre-feet for the preceding twelve months divided by the average number of connections (435 connections) during this twelve-month period, i.e., 226.7 AF/Connection/Year ÷ 435 Connections = 0.521 AF/Connection/Year.

10. FINDING: Determinations of the General Manager may be appealed to the District Board, in writing, within twenty-one (21) days after any such determination.

EVIDENCE: District Rule 70, Appeals, on file at the District office.

11. FINDING: Three appeals were filed regarding the March 20, 2009 decision. The appellants were (1) Gary Wiegand, (2) James Douglas Meador and LuAnn Meador, and (3) California American Water. The appeals were initially heard by the Board of Directors on May 21, 2009. The hearing was continued to the July 20, 2009 Board meeting.

EVIDENCE: Staff report from July 20, 2009, attached as Exhibit A. The July 20, 2009 staff report contains the May 21, 2009 staff report and the Applications for Appeal.

12. FINDING: In considering an appeal, the Board must consider the provision(s) of the Rules and Regulations that have been misapplied, as identified by the appellant. The Board may deny, approve or continue any appeal.

EVIDENCE: District Rule 70, Appeals, on file at the District office.

13. FINDING: The Board considered the three appeals during Public Hearings on May 21, 2009. The hearings were closed and continued to the July 20, 2009 Board meeting to allow California American Water and District staff to develop a remedy for the violation, such as increasing the expansion capacity limit in the HHWDS; and (3) continue the moratorium on receipt of applications for intensification of water use in the HHWDS. The motion was adopted unanimously on a vote of 7 – 0.

EVIDENCE: Minutes of the May 21, 2009 Board meeting, attached as Exhibit B.

14. FINDING: At the July 20, 2009 continued Public Hearing, the Board upheld the General Manager’s decision that the HHWDS is in violation of Rule 40-D and except as stated otherwise, each appeal of the General Manager’s decision was denied.

EVIDENCE: Minutes of the July 20, 2009 meeting, attached as Exhibit C.

15. FINDING: In upholding the General Manager’s decision, the Board finds that a specific category of Water Permit applicants should be allowed to submit for and obtain a Water Permit. As of July 20, 2009, applicants that provide evidence that an application for a project that requires a Water Permit was submitted to Monterey County on or before March 20, 2009, may proceed through the permitting process.

EVIDENCE: Minutes of the July 20, 2009 meeting, attached as Exhibit C.

16. FINDING: In upholding the General Managers decision that the HHWDS is in violation of Rule 40-D and has exceeded its PREC, the Board stated that the violation shall remain in effect until the General Manager has determined, with credible expert analysis, that the system can and will remain in compliance pursuant to Rule 40-D.

EVIDENCE: Minutes of the July 20, 2009 meeting, attached as Exhibit C and recordings of the meeting of July 20, 2009 on file at the District office.

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