ITEM:		ACTION ITEM
19.	DISCUSS PUBLIC RELEASE OF PROPOSED AMENDMENT TO STATE WATER RESOURCES CONTROL BOARD CEASE AND DESIST ORDER WR 2009-0060 (CDO)
Meeting Date:			February 18, 2015	Budgeted:	N/A
From:			David J. Stoldt	Program/
			General Manager	Line Item No.:
Prepared By:			David J. Stoldt	Cost Estimate:
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: Due to a variety of reasons, many beyond the control of Cal-Am, as well as the community, the Monterey Peninsula Water Supply Project (MPWSP) has been delayed to the point where it is impossible for Cal Am to meet the State Water Resources Control Board CDO 2009-0060 deadline of December 31, 2016.

The public has become increasing concerned as the CDO date approaches and has expressed a desire to be better informed as to how Cal Am and public officials are planning to deal with the problem. Accordingly, previously confidential negotiations are now ready to enter public daylight.

RECOMMENDATION: The General Manager recommends the Board receive and discuss an update on efforts by the settling parties, including California American Water Co. (Cal Am), the Monterey Peninsula Water Management District (MPWMD), and the Monterey Peninsula Regional Water Authority (MPRWA) to obtain an extension of the CDO 2009-60 deadline date of December 31, 2016.

DISCUSSION:

As discussed in previous closed sessions, representatives of the plaintiffs in the earlier, but now suspended, lawsuit over the CDO have been in discussion with the California State Water Resources Control Board (SWRCB) staff in an effort to develop proposals acceptable enough to secure staff concurrence with a formal request for a CDO extension that will be made to the State Board in 2015.

Of particular importance during these discussions is that the District and other public officials are opposed to rationing and financial penalties or other measures that might be mandated by the SWRCB and that could result in unfair or punitive impacts on ratepayers who have exceeded conservation goals and who have no responsibility for the delay. While the potential terms of an extension to any CDO remain under discussion, key principles that might be included in an agreement to extend the CDO include the following:

· A four-year extension of the CDO deadline from December 31, 2016 to December 31, 2020.

· A new reduction schedule in regular increments during the extension, but suspension of the prescribed reductions if MPWSP milestones are satisfied.

· Authority for the SWRCB staff to suspend a reduction corresponding to a missed milestone if staff determines that the milestone was missed due to circumstances beyond the control of Cal-Am, MPWMD, and the Water Authority.

Discussions continue under a tight timeline, since, for a variety of reasons, we believe we need to have an agreement in draft early in 2015.

Presently, District staff and General Counsel support the proposed draft, but we remain concerned that:

· The proposal not trigger immediate adverse impacts under existing conservation and rationing rules;

· Milestone events requiring a 1,000 AF contribution be met with alternative supply, not rationing; and

· The District not lose its ability to reinstate the lawsuit or initiate a new lawsuit if unexpected future penalties arise from the amended CDO.

EXHIBITS

19-A Draft Proposal to Amend SWRCB Order (Carmel River CDO)

19-B Proposed Modifications Chart - Best Case Scenario

19-C Proposed Modifications Chart - Worst Case Scenario