MPWMD BOARD MEETING--SEPTEMBER 21, 2009--EXHIBIT 4A--MOU REGARDING THE CARMEL RIVER REROUTE AND SAN CLEMENTE DAM REMOVAL PROJECT

F. The MCWRA is the entity charged with responsibility for the flood and storm waters of Monterey County. The MCWRA has the authority under the Monterey Water Resources Agency Act to cCooperate and act in conjunction with, the state, or any of its engineers, officers Boards, commissions, departments, or agencies, or with the United States, or any of its engineers, officers, Boards, commissions, departments, or agencies, or with any public or private corporation, or with the County, in the construction of any work for the controlling of flood or storm waters of, or flowing into, the Agency, or for the protection of life or property therein, or for the purpose of conserving those waters for beneficial use within the Agency, or in any other works, acts, or purposes provided for herein, and adopt and carry out any definite plan or system of work for any such purpose.

G. The MPWMD is a special district created by the State Legislature ~~in 1977~~ ~~with~~ for the integrated management of ground and surface water supplies of the Monterey Peninsula and Carmel River basin. MPWMD functions include, but are not limited to, conserving and fostering the scenic values, environmental quality, and native vegetation and fish and wildlife and recreation in the Monterey Peninsula and Carmel River basin.~~jurisdiction over the recreational uses of, and work within, the Carmel River watershed.~~ The MPWMD has the power to control the flood and storm waters of the district and the flood and storm waters of streams that have their sources outside of the district, which streams and floodwaters flow into the district, and to conserve such waters for beneficial and useful purposes of the district by spreading, storing, retaining, and causing to percolate into the soil within or without the district, or to save or conserve in any manner all or any of such waters and protect from damage from such flood or storm waters the watercourses, watersheds, public highways, life and property in the district, and the watercourses outside of the district of streams flowing into the district. However, as stated in Agreement No. A-06181 dated December 15, 1991 among MCWRA, MPWMD, and the Pajaro Valley Water Management Agency regarding the exercise of the three agencies’ respective responsibilities, MCWRA has the primary responsibility for flood control and drainage activities in the County of Monterey.

H. California-American owns the San Clemente Dam (“the dam”), located on the Carmel River in Monterey County approximately 18 miles upstream from the mouth of the river in Monterey Bay,. The dam was built in 1921 as a point of diversion for potable water serving California-American’s Monterey Peninsula service area.

I. The Carmel River and the area surrounding the dam constitute valuable watershed area and habitat for many species of plants and animals.

J. DSOD has determined that the dam presents a safety hazard, and is requiring California-American to remediate the hazard. In December 2007, DWR completed the San Clemente Dam Seismic Safety Project Final Environmental Impact Report/Environmental Impact Statement (“EIR/EIS”), under the California Environmental Quality Act and the National Environmental Policy Act, analyzing alternatives for addressing the safety issues. Alternatives reviewed include buttressing the dam and removing it. DWR certified the Final EIR on December 31, 2007.

K. Buttressing the dam would resolve the immediate safety issue, and has the lowest construction costs of the alternatives evaluated by DSOD, and would provide no benefits to water supply.

L. Various government agencies, including NOAA Fisheries, contend the dam constitutes a significant barrier to steelhead trout, a threatened species under the federal Endangered Species Act; and a partial barrier to the dispersal of the California red-legged frog, a federally threatened species.

M. The Parties agree that the River Reroute and Dam Removal Project would result in multiple public environmental benefits. These benefits include improving ~~restoring~~ access to 40 25 miles of spawning and rearing habitat located upstream of the dam for steelhead trout, restoring a portion of the natural sediment supply to the downstream river and Carmel River State Bbeach, restoring the ecological connectivity of the river and riparian corridor, and providing new public recreational opportunities.

N. The Conservancy has funded several recent studies concluding that the River Reroute and Dam Removal Project is a feasible alternative.

O. California-American is amenable to removal of the dam instead of buttressing it, provided that the project will timely satisfy the safety concerns of DSOD and will not burden California-American’s ratepayers and shareholders with excessive costs.

In light of the facts above, the parties agree as follows:

1. Purpose

a. The main purpose of this MOU is to memorialize the commitment of all parties to devote staff time and other available resources for the duration of this MOU to develop an implementation strategy for the River Rereoute and Dam Removal Project that meets the needs and constraints of all Parties.

b. To fulfill this purpose, the parties agree that an evaluation of the comparative risks of buttressing to the River Reroute and Dam Removal Project is necessary to informed decisionmaking, and agree to pursue several efforts for the duration of this MOU ~~in the next year~~ including studies necessary to fully and properly identify, evaluate, and, if possible, quantify, the comparative risks and long-term management costs to either (a) removing San Clemente Dam and re-routing the Carmel River through San Clemente Creek; or (b) buttressing San Clemente Dam in place, and constructing and maintaining fish passage over the buttressed San Clemente Dam.

c. Another purpose of this MOU is to express the willingness of various regulatory agencies, including but not limited to, DSOD and NOAA Fisheries, to exercise prosecutorial discretion in enforcing various orders or other mandates relating to San Clemente Dam while the aforementioned studies are being completed.

d. All Parties agree that during the period of this MOU careful consideration must be given to the risks and which Party is best positioned to assume these risks to enable the River Reroute and Dam Removal Project to proceed. Although it is understood the Parties will require more information on the project risks before deciding whether they are positioned to assume them, it is understood that for the River Reroute and Dam Removal Project to proceed, these risks will need to be apportioned between the Parties, or to other entities. The Parties agree to cooperate in achieving this objective through participation in this MOU.

2. Cooperative Efforts For Risk Assessment

a. Quarterly Meetings. All Parties agree to commit staff to participate in quarterly meetings to discuss the progress and implementation strategy. The first meeting will occur in mid- to late- October 2009 and subsequent meeting dates will be selected at the first meeting.

b. Risk Management Analysis. The Conservancy provided California-American with a rough comparison of the major risks for both the buttressing and the dam removal project and an analysis of the dam removal project’s potential long-term failures based upon risk assessment work performed by Environmental Risk Services (ERS) under contract to the Conservancy. The Conservancy agrees to fund the approximately $7,000 for ERS to complete the risk table that identifies and qualitatively assesses the risks of the Dam Removal project. Further work will be based on recommendations from all Parties pursuant to Paragraph 2.g.

c. Draft Long Term Sediment Monitoring and Management Plan. URS Corporation, under contract to the Conservancy has developed a scope of work for preparing a Long Term Sediment Monitoring and Management Plan. This plan would recommend tasks necessary to manage and monitor sequestered sediment from San Clemente Dam to ensure the sediment does not mobilize and become a safety hazard. California-American will fund implementation of this scope of work, estimated to cost approximately $40,000.

d. Geotechnical Analysis of San Clemente Creek. URS Corporation and its subconsultants under contract to the Conservancy completed geotechnical field work, and had begun preparing a Draft Geotechnical Data Report (GDR) to summarize the findings. In addition, the consultants conducted a geomorphologic survey to inform design of the channel restoration. The Parties agree that the Draft GDR and a summary memo of geomorphologic work need to be completed. The Conservancy ~~SCC~~ will fund completion of these reports, estimated to cost $25,000.

e. Total Cost of Ownership. The Parties agree that it is important to understand any differences in the long-term operation and maintenance costs of a buttressed dam with fish passage facilities, compared to the River Reroute and Dam Removal project. California-American, with the assistance of the other Parties, will prepare an analysis of the long term costs of maintaining the buttressed dam and assess the long-term costs of the River Reroute and Dam Removal project.

f. Available Funding. The parties agree that the estimates to remove San Clemente Dam and re-route the Carmel River exceed the estimates for buttressing. The Parties agree that placing this additional burden on California-American’s customers is not the preferred method of funding. The parties agree that it is important to identify alternative sources to fund the increased construction costs. All parties will cooperate in identifying funding sources.

g. Review and Consultation. The MPWMD, MCWRA, DSOD, NOAA Fisheries, California-American and the Conservancy will make staff and other resources available for consultation in the preparation of the above-referenced studies, and shall review and provide comments on the accuracy, and completeness of the studies, and whether there is a sufficient benefit to additional studies to justify the expenditure of public and customer funds on such additional studies.

3. Exercise of Prosecutorial Discretion

a. State of California. California-American is under orders from State of California, through DSOD, to improve the stability of San Clemente Dam. The State of California agrees that for the duration of this MOU, it will exercise prosecutorial discretion in enforcing its orders to California-American relating to the stability of San Clemente Dam. The State of California, through the Department of Fish and Game, which is a department under the Natural Resources Agency, enforces laws with regard to the effect of dam operations on fish habitat. The Department of Fish and Game agrees to exercise prosecutorial discretion in enforcing Chapter 3 of Part 1 of Division 6 of the Fish and Game Code with respect to San Clemente Dam for the duration of this MOU.

b. NOAA Fisheries. NOAA Fisheries has contended that San Clemente Dam presents a barrier to fish passage and may constitute a take of South Central California Coast Steelhead. NOAA Fisheries also contends that the removal of San Clemente Dam would represent a major improvement in steelhead habitat. NOAA Fisheries agrees that for the duration of this MOU it will exercise prosecutorial discretion in enforcing the federal Endangered Species Act with respect to fish passage at San Clemente Dam.

5. Miscellaneous

a. Sharing of information. The Parties will share information with the other parties as needed to facilitate the completion of the studies identified in Section 2.

b. Cooperation. Each of the parties will use its contacts and abilities to assist in completion of the necessary studies and assessments.

c. Duration of MOU. This MOU shall take effect when fully signed, on the date last signed below and shall expire on July 6, 2010.

d. Authority. The persons signing below represent that they have authority to sign the MOU on behalf of their respective entities.

e. Signatures and counterparts. This MOU may be signed in counterpart originals, which, when assembled together, shall constitute one original agreement. The Conservancy shall collect and collate the original signature pages, and shall then provide to each signatory entity a copy of the fully signed MOU.

CONGRESSMAN SAM FARR

_________________________ _____________________

Sam Farr Date

Member, House of Representatives, California 17th District

ASSMEBLYMAN BILL MONNING

_________________________ _____________________

Bill Monning Date

Member, California State Assembly, 27th District

SUPERVISOR DAVE POTTER

_________________________ _____________________

Dave Potter Date

Supervisor – Fifth District

NATURAL RESOURCES AGENCY

_________________________ _____________________

Michael Chrisman Date

Secretary of Natural Resources

CALIFORNIA PUBLIC UTILITIES COMMISSION

_________________________ _____________________

John Bohn Date

Commissioner

DIVISION OF SAFETY OF DAMS, DEPARTMENT OF WATER RESOURCES

_________________________ _____________________

Dave Guiterriez Date

Chief, Division of Safety of Dams

NATIONAL MARINE FISHERIES SERVICE

_________________________ ______________________

Rodney McInnis Date

Regional Administrator

CALIFORNIA STATE COASTAL CONSERVANCY

_________________________ _____________________

Samuel Schuchat Date

Executive Officer

MONTEREY COUNTY WATER RESOURCES AGENCY

_________________________ _____________________

Curtis Weeks Date

General Manager

MONTEREY PENINSULA WATER MANAGEMENT DISTRICT

_________________________ _____________________

Darby Fuerst Date

General Manager

CALIFORNIA-AMERICAN WATER CO.

_________________________ ______________________

Robert MacLean Date

President

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EXHIBIT 4-A

Memorandum of Understanding

Recitals