ITEM:		PUBLIC HEARING
20.	CONSIDER ADOPTION OF URGENCY ORDINANCE NO. 143 TEMPORARILY SUSPENDING PROCESSING AND RECEIPT OF APPLICATIONS FOR WATER DISTRIBUTION SYSTEMS IN FRACTURED ROCK FORMATIONS
Meeting Date:			January 28, 2010	Budgeted:	N/A
From:			Darby Fuerst,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Henrietta Stern	Cost Estimate:	N/A
General Counsel Review: Counsel has reviewed the draft Urgency Ordinance.
Committee Recommendation: The Water Demand Committee at its December 7, 2009 meeting recommended preparation of an ordinance to suspend WDS processing. The Technical Advisory Committee reviewed the concept of such an ordinance at its January 5, 2010 meeting. The TAC posed questions and made suggestions, but did not have a specific recommendation because an ordinance was not available for review at that time.
CEQA Compliance: N/A – temporary suspension of permit processing is not a “project” under CEQA.

SUMMARY: At the direction of Chairperson Doyle, the District Board will consider Urgency Ordinance No. 143 (Exhibit 20-A) that temporarily suspends receipt and processing of Pre-Applications and Applications for a Water Distribution System (WDS) permit that is supplied by a well drilled in “fractured rock.” If adopted with the required five votes, the Urgency Ordinance would become effective immediately (i.e., 12:01 AM on January 29, 2010) and will continue through May 31, 2010. The roughly 120-day period will enable staff to obtain data and carefully review the status of wells drilled in fractured rock, address concerns raised by the public and elected officials, review water rights and other legal matters associated with property rights, consult with affected agencies, and craft another long-term ordinance, if needed, to be considered on or before the District Board’s May 17, 2010 meeting.

As written, the Urgency Ordinance affects all new Pre-Applications and Applications for wells in fractured rock throughout the District, and all “applications in progress,” defined as an application that has not been authorized by the District Engineer, Staff Hearing Officer or the Board of Directors, pursuant to MPWMD Rules 21 and 22, on or before January 28, 2010. Exhibit 20-B provides a summary of the Applications and Pre-Applications in progress, as requested by Chairperson Doyle. The “Discussion” section reviews these projects in more detail.

As explained in the “Recommendations” section below, Section Five of the ordinance provides a menu of potential exceptions to the suspension that the Board may wish to consider. As described below, both MPWMD and Monterey County Health Department (MCHD) staff concur that there are certain classes of projects for which permit processing should not be suspended.

The terms “fractured bedrock,” “fractured rock,” “hard rock” or “consolidated rock” are somewhat interchangeable and loosely identify a water-bearing formation with limited production and reliability as compared to the unconsolidated mixture of sand, gravel and clay that characterize alluvial (river-related) strata. The more proper terminology is to refer to geologic formations primarily influenced by “primary porosity” (e.g., alluvium, dune deposits, terrace deposits) and formations primarily influenced by “secondary porosity” (e.g., fractured granitic rocks, shales, etc.). The more user-friendly term “fractured rock” will be used herein. It is noted that several types of fractured rock exist and have different characteristics. For example, the relatively productive Aguajito area (Monterey shale) and the less productive (granitic) Carmel Woods area have different geology, but are both fractured rock. Within the District, fractured rock generally refers to any area that is not in the Carmel Valley Alluvial Aquifer (CVAA) or the adjudicated Seaside Groundwater Basin, as shown in the figure provided as Exhibit 20-C.

The ordinance is characterized as an urgency ordinance due to increasing Board and public concern about continued drilling of wells in the less reliable fractured rock, especially on small lots in urban areas that were originally envisioned to have water (and sewer) service provided by public utilities or governmental entities. There is concern about cumulative environmental effects, and the potential ramifications of well failure on property owners and California American Water (CAW), especially in light of the State Water Resources Control Board (SWRCB) Cease and Desist Order (CDO). These concerns are discussed in more detail in the “Background” section below.

Concerns by the public were also expressed in late 2009 before the Monterey County Planning Commission and Board of Supervisors. The MCHD was directed to consider whether policy changes should be made regarding fractured rock wells on small urban lots, and invited MPWMD and Monterey County Planning staff to a January 20, 2010 meeting to discuss this issue. Due to printing deadlines, this staff note only includes MCHD staff recommendations regarding the options in Section Five of the urgency ordinance (Exhibit 20-A). District staff is available to answer questions about the MCHD meeting at the January 28, 2010 District Board meeting.

Though other areas of Monterey County (e.g., Granite Ridge area in North County, limited hillside area east of Los Laureles Grade) have experienced loss of supply and problems with fractured rock wells, it is notable that there is no current evidence in District files that shows environmental degradation or loss of water supply associated with fractured rock wells within the District boundary.

Exhibit 20-D is a January 4, 2010 letter opposing the proposed ordinance from consulting hydrogeologist Aaron Bierman, who prepares the hydrogeologic assessments for many WDS permit applicants. The “Discussion” section below includes a review of Mr. Bierman’s comments and suggestions by District staff and consultants. Exhibit 20-E is a letter from attorney Myron Etienne expressing dismay about potential suspension of WDS permit processing for a large parcel that is outside of the CAW service area and outside of the Carmel River Basin.

RECOMMENDATIONS: Staff recommends that the Board:

1. Consider whether or not to approve Urgency Ordinance No. 143 (Exhibit 20-A) to suspend WDS permit processing and receipt of new Applications and Pre-Applications, effective immediately (January 29, 2010); and

2. Provide guidance as to the scope of the urgency ordinance via different text options shown in Section Five, Exceptions. The options are described below, using the same numbering as in the ordinance. District and MCHD staff recommendations for each topic are also provided, based on review and discussion at the interagency meeting of January 20, 2010. Importantly, this ordinance does not affect WDS applications for non-fractured rock situations such as alluvial wells, desalination plants, reclamation, etc.

3. Set the duration of the ordinance to be roughly 120 days (January 29 through May 31, 2010) to allow staff time to digest the concerns raised, obtain factual information that addresses the concerns, consult with counsel, affected County agencies and the Technical Advisory Committee (TAC), consider CEQA compliance, and craft a non-urgency ordinance for first reading at the May 17, 2010 meeting (or possibly a special meeting in late May 2010), if needed.

The following subsections address the seven categories of potential exceptions to the ordinance in Section Five, Exceptions. The numbering herein relates to the numbering in Section Five of the ordinance.

Category #1: Exclude Non-CAW Parcels from Urgency Ordinance

Option 1 – District and MCHD staff recommend that wells on parcels that are not in the CAW service area be excluded from the ordinance. The fact that these parcels are outside the CAW service area makes moot several key concerns about the impact of well failure on the CAW system. These parcels have no other source of supply besides the onsite well(s), which raises certain legal issues. Non-CAW parcels also tend to be larger parcels.

Option 2 -- Another option is to not exclude wells outside of the CAW service area from the Urgency Ordinance.

Category #2: Exclude Certain Parcels within CAW Service Area from Urgency Ordinance

Option 1 -- District and MCHD staff recommend that wells on parcels 2.5 acres or larger in size in the CAW service area be excluded from the ordinance so long as they meet all of the following criteria: (a) the well is for irrigation purposes only, (b) the residence and/or business on the property already has CAW service that fully meets the potable needs, and (c) the subject well(s) is not within 1,000 feet of a Sensitive Environmental Receptor, as defined in Rule 11. The 2.5-acre minimum size was selected because is considered by MCHD as the minimum needed to install a septic system and drill a well in fractured rock, with adequate area for groundwater recharge and for well repair/replacement. It also addresses the concern about small lots in urban areas. It is noted that near-term irrigation of property from an on-site well may be environmentally less harmful than using CAW supply derived from the Carmel River Basin or Seaside Basin, both of which have known adverse effects. If the well fails, the owner can truck in water, let vegetation die, or replace it with drought-resistant species. The future high cost of CAW water is a disincentive to replace well water with CAW water for irrigation purposes.

Option 2 – Another option is to not exclude any wells within the CAW service area from the Urgency Ordinance.

Category #3: Exclude Applications Submitted by CAW from Urgency Ordinance

Option 1 -- District and MCHD staff recommend that applications submitted by CAW itself to amend its integrated water system (e.g., merge Bishop and Ryan Ranch Units), which require approval by the MPWMD Board at a public hearing, be excluded from the ordinance. CAW applications tend to be associated with larger projects associated with full Environmental Impact Reports (EIR), and benefit from comprehensive evaluation and scrutiny by many parties prior to approval. Also some CAW WDS applications are submitted as a solution to a previously identified problem.

Option 2 -- Another option is to not exclude applications submitted by CAW for its integrated water system from the Urgency Ordinance.

Category #4: Exclude Seaside Basin Parcels with Adjudicated Water Rights from Urgency Ordinance

Option 1 -- District and MCHD staff recommend that wells on properties in the Seaside Basin with Monterey County Superior Court-designated water rights clearly identified in tables in the Seaside Basin Adjudication Decision, as amended, be excluded from the ordinance. The environmental damage and physical solutions have already been identified for the Seaside Basin, including required reductions by CAW and others to achieve the natural safe yield. Also, the hydrogeology in the Seaside Basin is complex, with some areas showing characteristics with primary and secondary porosity.

Option 2 -- Another option is to not exclude Seaside Basin parcels with adjudicated water rights from the Urgency Ordinance.

Category #5: Exclude Applications Deemed to Be “Complete” from Urgency Ordinance

Option 1 -- District and MCHD staff recommend that the Board not suspend final processing of the four applications that have been previously deemed to be “complete” in Summer 2009 (and are not suspended for other reasons) due to requirements of the State Permit Streamlining Act (PSA). A determination of a complete application includes written confirmation that the District concurs with the hydrogeologic assessment submitted with the application, the application meets Rule 22 criteria for approval, and staff plans to prepare permit documents for approval. The PSA requires action on the application within 180 days of the date of the “complete” determination. The PSA deadline was December 29, 2009 for one application, which staff intends to address immediately. The PSA deadline is mid-February 2010 for the three remaining applications. It is noted that one application is not in the CAW area, and two entail irrigation only situations. There is no evidence that these four projects would result in adverse cumulative impacts.

Option 2 – Applicant consultant Aaron Bierman (Exhibit 20-D) has requested that any application submitted in 2009, and the estimated four new applications he plans to submit in early 2010 be allowed to be processed due to the time and expense already expended for well testing, which may only occur in the summer-fall dry season. Because well testing in fractured rock can only occur in summer-fall, additional new WDS applications beyond those described by Mr. Bierman are not anticipated until late 2010. Due to the short duration of the proposed ordinance (120 days), staff does not believe this option is necessary, but is not opposed to it. Several months transpire between submittal of a WDS Application and approval, including 30-day staff review of the Application for completeness, public hearing noticing (where applicable) and many hours spent preparing permit documentation.

Option 3 – A third option is to not exclude applications deemed to be complete from the Urgency Ordinance. This would likely result in non-compliance with the PSA by the District.

Category #6: Exclude Qualified Exemption Requests from Urgency Ordinance

Option 1 – District and MCHD staff recommend that the nine current Exemption Requests (pursuant to Rule 20-C) associated with existing or replacement wells in fractured rock, most recently submitted in November 2009, continue to be processed (see Exhibit 20-B). This group has been delayed due to the backlog of higher priority WDS Applications to process, and District staff believe they should not be delayed further. Staff also believes that any qualified Exemption Request that is received after January 28, 2010 should be considered, especially for a replacement well for a damaged active well.

Option 2 -- Another option is to not exclude Exemption Requests from the Urgency Ordinance.

Category #7: Exclude Certain Pre-Applications for WDS Permit Submitted On or Before January 28, 2010 from Urgency Ordinance

Option 1 – District and MCHD staff recommend that the Pre-Applications for new WDS permits received on or before January 28, 2010 be reviewed to see if any meet the criteria for a category that is selected by the Board to be included in Section Five, Exceptions. The Pre-Applications that meet the criteria should be reviewed and allowed to submit an Application. For example, if the Board allows Category #1 (non-CAW) applications to be processed, an existing Pre-Application for a non-CAW project greater than 2.5 acres should be reviewed. There are currently 12 Pre-Applications that will eventually result in full WDS Application packages (see Exhibit 20-B). It is possible others may be received on or before January 28, 2010. Some of these projects may meet the criteria in Categories #1 through #5 above. The Pre-Application review performed by staff provides information about nearby wells and environmental areas, and provides guidance on information needed for a complete WDS Application package.

Due to the short duration of the Urgency Ordinance, the staff recommendation is to not accept any new Pre-Applications for a WDS permit for the duration of the Urgency Ordinance. Pre-Applications received on or after January 29, 2010 would not be accepted if the Urgency Ordinance is adopted.

Option 2 – Another option is to not exclude applications Pre-Applications for a WDS permit received on or before January 28, 2010 from the Urgency Ordinance.

Duration of Urgency Ordinance

As noted above, staff recommends a roughly 120-day period to evaluate the fractured rock situation and craft a more permanent ordinance in May 2010, if needed. It is noted that initial concepts presented to the TAC on January 5, 2010 envisioned a much longer period of time for the suspension (12 to 18 months) if the Board wished to conduct more detailed hydrogeologic studies of certain areas of concern before preparing a more comprehensive new ordinance. At that time, the staff discussion suggested focus on “vulnerable areas” but later technical review suggested instead to focus on areas with small urban lots with geology typically characterized by lower productivity. A key issue is determining who will conduct the technical analysis and environmental review, and how will the work be funded. One possibility is to request co-funding from Monterey County and the California Coastal Commission, due to overlapping jurisdiction and concern about well reliability, especially in the Coastal Zone. Staff does not believe such a lengthy period of time should be selected at this time, given the limited time available to analyze the pros and cons of such an ordinance, and the significant delay for applications in progress.

BACKGROUND: This issue first arose in Fall 2009 regarding certain properties within the Coastal Zone, which require an additional approval step from the Monterey County Planning Department to enable a “test well” to become a “permanent well.” Due to concerns expressed by neighbors, the Monterey County Planning Commission and Board of Supervisors have asked the Monterey County Health Department (MCHD) to examine and potentially alter its policies regarding wells in fractured bedrock on properties comprised of small lots in urban areas. A meeting between MPWMD and MCHD is scheduled for January 20, 2010 to discuss this issue.

At its December 7, 2009 meeting, the MPWMD Water Demand Committee (WDC) heard concerns by members of the public about hard rock wells being drilled on small lots in urban areas as well as cumulative effects and the ramifications of well failure. The WDC voted 2-1 to request Board consideration of a first reading of a regular ordinance in January 2010 to suspend receipt and processing of WDS permits. Due to the required work furlough in late December 2009, competing work tasks, a planned January 20, 2010 meeting with MCHD, and January 2010 staff note deadlines, the Chair and Vice-Chair on January 7, 2010 agreed to postpone the first reading until February 25, 2010. Subsequently, this Urgency Ordinance was added to the January 28, 2010 agenda at the direction of Chairperson Doyle on January 13, 2010.

Concerns about fractured rock wells in certain areas were also expressed by citizens at the December 14, 2009 Board meeting. Also, at public hearings for several applications before the MPWMD Board throughout 2009, some MPWMD directors have expressed concern when reading standard language in MCHD and MPWMD documents about the inherent lack of reliability of wells in fractured rock formations. Following is a summary of some of the concerns expressed to date, in light of the possibility of well failure:

Ø Impact on the CAW system if a well fails -- will these homes need to be “bailed out” by CAW over MPWMD objections? Can they be bailed out in light of the CDO? Should they be bailed out, considering related issues such as debiting water from a jurisdiction’s water allocation if no water is available in the jurisdiction’s account and others are already on a lengthy waiting list for CAW water?

Ø Impact to residents if a well fails and CAW service is not allowed -- must they truck in water (not allowed by MCHD on a permanent basis) or abandon the home or business?

Ø Concerns about cumulative effects and whether an area will “go dry” like Granite Ridge in North County.

Ø Concerns about cumulative environmental effects—is there a “downstream effect” to the Carmel Valley Alluvial Aquifer (CVAA), tributaries, or the watershed as a whole from increasing construction of upland wells in fractured rock formations?

The concept of an ordinance was on the TAC’s January 5, 2010 agenda in order to obtain initial feedback from TAC members. No ordinance had been developed at that time and the TAC did not have a specific recommendation. However, the TAC suggested that staff address the potential physical effect on the water resource environment of the relatively few number of pending applications before instituting a long-term suspension of permit processing. The TAC also suggested that staff determine if there are vulnerable areas and focus attention on these areas. District technical staff has since agreed that determining “vulnerable areas” would be nearly impossible without many detailed hydrogeologic studies. Instead, focus on areas with small urban lots that have been the location of multiple well applications is suggested as a more effective use of time and resources.

DISCUSSION: In the nine years since Ordinance No. 96 was adopted in March 2001, more than 70 WDS permits have been issued, primarily for residential use. Roughly seventy five percent (75%) of these permitted WDS (55 approvals) are served by wells extracting water from “fractured rock” formations. An estimated 30 Pre-Applications, Exemption Requests or full WDS Applications in progress could potentially be approved. The Water Year 2008 production report lists more than 400 existing non-CAW wells in fractured rock formations, including 292 in the Carmel Valley Upland area, 96 in the “Miscellaneous” area (primarily Jack’s Peak, Carmel Highlands and Highway 68 near the Monterey Airport), and 20 in the Seaside Groundwater Basin. These figures do not include wells owned and operated by CAW.

Chairperson Doyle requested an overview of WDS applications that are in process for wells in fracture rock formations. Exhibit 20-B provides an overview of Applications and Pre-Applications in four categories:

Ø Applications deemed complete; permit documents in preparation for approval by District Engineer (4 projects);

Ø Applications that are incomplete or are suspended for some other reason, such as County well status for Coastal Zone parcels (6 projects);

Ø Pre-Applications/Exemption Requests received but not completed (9 projects);

Ø Pre-Applications that need review to provide guidance before applicant submits a full Application package (12 projects)

Chairperson Doyle also asked for a technical staff review of Mr. Bierman’s letter (Exhibit 20-D). The District Water Resources Division Manager and the District hydrogeology consultant (Robert Marks of Pueblo Water Resources) generally concurred with Mr. Bierman’s assertions about the rigor of MPWMD technical review of WDS applications in fractured rock. The following statements summarize District review comments as well as MCHD staff input:

Ø It is reasonable to request that permit processing suspension should apply only to new applications received after the suspension date.  The limited number of applicants who have submitted WDS applications to date have already invested time and/or significant resources in the process, and should be allowed to finish the process. There is no evidence that these limited numbers of applicants with projects throughout the District would result in an adverse cumulative impact to water resources.

Ø The District’s Technical Procedures have built into them multiple levels of conservatism for determining individual calculated well yields and requirements for assessing offsite impacts to both neighboring wells and Sensitive Environmental Receptors.

Ø The District’s Technical Procedures (and current County procedures) are significantly more rigorous than the well testing procedures that were previously required by Monterey County when the Granite Ridge area was developed at a rapid rate in the 1970s, and provide for relatively conservative calculated well yields.

Ø Issues associated with setback requirements for wells on small lots (i.e., property lines, sewer lines, septic systems, animal enclosures, etc.) are based on well-accepted State Water Well Standards (Bulletin 84-91).  There is no known reason to conclude that State Standards are insufficient.  This issue is under the purview of MCHD as the agency that allows wells to be drilled, and MCHD is evaluating its current policies.

Ø A well in fractured rock can be a long-term sustainable supply for a single-family setting so long as the homeowner clearly understands the limitations of the well, and does not exceed its capacity. However, not all homeowners are diligent about their water use and/or could be influenced by neighboring well owners who are not careful stewards. Wells in fractured rock do entail an inherent risk and long-term yield is difficult to predict. Extenuating circumstances like droughts can also take their toll. These concerns need to be weighed against the water rights of property owners with overlying rights to percolating groundwater.

Ø Staff and consultants generally did not agree with Mr. Bierman’s recommendations for future action for a variety of reasons, primarily the inability to enforce certain actions, legal issues associated with retroactive action, and whether certain studies of larger regions can be translated to the viability of a specific well.

IMPACT TO DISTRICT RESOURCES: It is difficult to accurately predict the financial effect of Urgency Ordnance No. 143. Given the short period of time involved (120 days), it should be nominal as compared to the overall District budget. Roughly 60% of the Project Manager’s time (roughly 1,000 hours in Fiscal Year 2008-2009) is directed toward WDS permitting, and other members of staff also contribute technical expertise. Time spent on submitted Pre-Applications/Exemption Requests or WDS Applications is 100% reimbursable by applicants, and is charged at a rate of $70 per hour, which is an average of all expenses associated with a staff member, including overhead. Staff time to answer many questions from the public, prepare implementation guidelines, guide consultants, prepare ordinances and other tasks is not reimbursable. Fractured rock applications comprise about 75% of applications approved and submitted to date. In calendar year 2009, 17 WDS applications in fractured rock were approved with an average staff time of 18 hours per application for a total of $21,000. One third of this amount represents about $7,000. It is notable that staff efforts will be directed toward addressing the issues identified in the Urgency Ordinance through mid-May 2010, and these efforts will not be reimbursable.

Increasing restrictions on the availability of CAW supply for new construction and remodels has resulted in a steady increase in volume of WDS applications. Consultant assistance has been essential to adequately process permit applications and assist the Water Resource Division address technical questions relating to the WDS process. The time spent by GSPEC (Matthew Sundt) and Pueblo Water Resources (Robert Marks) on WDS applications is 100% reimbursable, so fewer applications will mean fewer dollars charged by these consultants. So far in Fiscal Year 2009-2010, roughly $11,000 has been expended for consultant review of WDS applications. However, assistance by both these consultants will be needed for the assessment in the 120-day period, which will not be reimbursable. This could mean several thousand dollars of unexpected outlay for the Urgency Ordinance that is not reimbursable, and possible mid-year budget adjustments for both consultants.

EXHIBITS

20-A Draft Urgency Ordinance to Suspend Receipt and Processing of WDS Permits in Fractured Rock Formations

20-B Pending WDS Applications for Fractured Rock

20-C Figure showing alluvial and fractured rock (upland) areas

20-D Jan 4, 2010 letter from Aaron Bierman

20-E January 18, 2010 letter from Myron Etienne

U:\staff\word\boardpacket\2010\20100128\PubHrgs\20\item20.doc

Prepared by H. Stern, revised 1/22/2010 at 10 AM