ITEM:		PUBLIC HEARING
18.	APPLICATION TO Amend California American Water Distribution System – INTERCONNECTION OF RYAN RANCH and BISHOP units IN SEASIDE BASIN FOR EMERGENCY USE
Meeting Date:			June 15, 2015	Budgeted:	N/A
From:			David J. Stoldt	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Henrietta Stern	Cost Estimate:	N/A
General Counsel Review: Counsel has reviewed
Committee Recommendation: N/A
CEQA Compliance: Class 1 Categorical Exemption, Existing Facilities (Guidelines 15301-b), for emergency transfer of water from Bishop Unit to Ryan Ranch Unit.

SUMMARY: The Board will consider Application #20150430RRB (Exhibit 18-A, without attachments) submitted on April 30, 2015 by applicant California American Water (CAW) to intertie CAW’s Ryan Ranch Unit and Bishop Unit for emergency use. CAW refers to this proposal as the “Ryan Ranch-Bishop Interconnection.” Treated Bishop Unit water would augment Ryan Ranch supply during those periods when the Ryan Ranch Unit capacity is insufficient, and would be conveyed by a new 300-foot, one-way pipeline in the vicinity of York Road. No other changes to either Water Distribution System (WDS) are proposed.  The District Board’s consideration focuses on the transfer of water from the Bishop Unit to Ryan Ranch, and also acknowledges construction of Bishop Well #3 in 2010 as previously approved by Monterey County and State health agencies. A schematic of the proposed interconnected water systems is provided as Exhibit 18-B. The location of the proposed pipeline is shown as Exhibit 18-C. The location of Well #3 is shown as Exhibit 18-D.

Both systems are in the Laguna Seca Subarea of the Seaside Groundwater Basin, and were part of the Seaside Basin Adjudication.  The Bishop Unit source would replace the current emergency intertie from the main CAW system, thus reducing extractions from the Carmel River and/or Seaside Coastal Subbasin.  The proposed emergency intertie could also be the subject of a separate future approval by the Seaside Basin Watermaster. The City and/or County of Monterey would be the lead agency and permitting entity for the pipeline construction, which crosses jurisdictional boundaries.

This public hearing has been noticed via postings at the CAW office, pipeline site, Ryan Ranch treatment plant, District office, District website, agenda mailing list, and Watermaster office. MPWMD files associated with this application are available for review at the District office; Seaside Basin Adjudication materials are available electronically from the Watermaster website.

RECOMMENDATIONS: District staff recommends that the Board take the following actions:

1. Adopt the MPWMD Findings of Approval for Application #20150430RRB for the CAW/Ryan Ranch-Bishop Interconnection (Exhibit 18-E).

2. Approve Application #20150430RRB; authorize issuance of MPWMD Permit #M15-03-L3 for the CAW/Ryan Ranch-Bishop Interconnection. This action will result in amended Conditions of Approval for both the Ryan Ranch and Bishops Units, shown as Exhibit 18-F and Exhibit 18-G, respectively. The amended conditions also reflect current formatting and requirements pursuant to MPWMD Rule 22-D.

3. Direct staff to file a Notice of Exemption with the County Clerk; this would be a Class 1 Categorical Exemption for existing facilities of an investor-owned public utility with negligible changes pursuant to CEQA Guidelines Section 15301(b). Please refer to the “Discussion” section below for more information.

CAW was provided copies of the Draft Conditions of Approval, but has not provided feedback as of June 9, 2015. CAW representatives are expected to attend the public hearing.

BACKGROUND: The following paragraphs review the Ryan Ranch and Bishop Units history.

Ryan Ranch WDS: The Ryan Ranch Mutual Water Company was first approved by MPWMD in December 1982 with a System Capacity (annual production limit) of 60 acre-feet per year (AFY) extracted by three wells. This was increased to 100.5 AFY in 1984, assuming an additional two wells, and again to 175 AFY with a requirement of five production wells capable of delivering 250 gallons per minute (gpm). In November 1989, the District approved the annexation of the Ryan Ranch (Monterey Research Park) WDS into the CAW system, to be operated as a separate unit (Ryan Ranch Unit). The 1989 Conditions of Approval are shown as Exhibit 18-H with the System Capacity remaining at 175 AFY and the Expansion Capacity Limit of 190 connections. Notably, Condition #5 stated:

“An interconnection between the existing Cal-Am service area and the proposed Ryan Ranch subunit shall only be allowed during emergency events. Transfers of water between the existing Cal-Am service area and the Ryan Ranch area must be metered and reported to the District within one week of occurrence.”

Based on repeated annual use of the emergency intertie and the fact that only two wells were in service with a combined capacity of 101 gpm, in September 2008 the District General Manager formally advised CAW that the Ryan Ranch water supplies were insufficient, which triggered a series of MPWMD public hearings to determine what changes should be made to the System Limits. These efforts culminated in June 15, 2009 Board action that reduced the production limit (Condition #2 in Exhibit 18-H) to 72 AFY (equivalent to 101 gpm firm yield). Because the previous Water Year production was 82 AFY, a moratorium on any new connections was imposed. The MPWMD Board directed that no Water Permit applications would be received until CAW “develops additional well capacity to sustain a higher System Capacity and has its System Capacity modified” in a future public hearing. For reference, total water production (onsite wells plus emergency intertie) since WY 2010 averaged 60 AF, and served an average of 158 active connections (Exhibit 18-I). Numerous vacancies presently exist in Ryan Ranch commercial buildings.

CAW has funded hydrogeologic studies and test well explorations in Ryan Ranch, but no new supplies have been developed to date. The emergency intertie from the main CAW system has been used in 11 out of the past 12 Water Years (WY 2003 through WY 2014), but the trend is toward much lower amounts in recent years due to infrastructure improvements (Exhibit 18-I). The 12-year average was 13.25 AFY, ranging from 59.10 AF in 2007 to 0.0 AF in 2010. With the exception of WY 2012, when the Ryan Ranch treatment plant was down for several weeks due to a major replacement effort, the average emergency water transfer from the main system was 1.9 AFY for the five most recent data points.

To help address the Ryan Ranch Unit production shortfall, in June 2009 CAW submitted a Pre-Application to fully merge the Ryan Ranch and Bishop Units into one integrated WDS. The District provided guidance on required information and action, but CAW has not submitted an application to date. At this time, only the interconnection for emergency use is proposed.

Bishop WDS: District records indicate that the Bishop Water Company was formed in 1962 to serve 46 lots in the Laguna Seca Estates No. 1 Subdivision. By 1969, York School and Laguna Seca Golf Couse buildings were added to the system. No limits were set by MPWMD as the District was not formed until 1978. In May 1981, the District approved a System Capacity of 99 AFY with an Expansion Capacity of 99 connections, which included service to Laguna Seca Estates No. 2. By 1988, the System Limits grew to 200 AFY production for 194 connections, including service to the Laguna Seca Office Park. In April 1996, the District approved the annexation of the Bishop Water Company into the CAW system, to be operated as a separate unit (Bishop Unit). In October 1996, the District approved annexation of the Pasadera Subdivision (previously called Laguna Seca Ranch) which resulted in the current System Limits of 295 AFY production to serve 454 total connections. The 1996 Bishop Unit Conditions of Approval are provided as Exhibit 18-J. Notably, Condition #5b stated:

“There shall be no use of emergency interties to the [Bishop Unit] from the Cal-Am systems that draw from the Monterey Peninsula Water Resource System.”

Condition #5b refers to the “main” CAW system that draws from the Carmel River and Seaside Basin Coastal Subarea. There is no restriction on an intertie between the Bishop and Ryan Ranch Units. For reference, Bishop Unit water production in WY 2014 was 158.42 AF serving 406 active connections.

CAW General Rate Case: As part of its General Rate Case (GRC) Application A.13-07-002 for years 2015-2017, CAW requested approval from the California Public Utilities Commission (CPUC) to expend funds to: (1) reimburse costs previously incurred to rehabilitate Bishop Unit Wells #1 and #2; and (2) interconnect the Ryan Ranch, Hidden Hills and Bishop Units (“satellite systems”) with the main Monterey System so long as only water from the Seaside Basin Coastal Subarea or other non-Carmel River water source flows through the interconnection. The District supported this request with the understanding that its legislative authority to require WDS Permits is fully recognized. On April 10, 2015, the CPUC issued Decision 15-04-007 approving the GRC. Full integration of the three satellite systems and the main CAW system is envisioned when a secure, fully compliant water supply is provided by the Monterey Peninsula Water Supply Project.

Bishop Well #3: According to CAW staff, Well #3 was constructed in association with the CPUC-approved well rehabilitation described above. It was constructed to replace Well #2, which could not be rehabilitated and had to be destroyed. Well #3 was permitted by Monterey County in May 2010, drilled in October 2010, and completed in December 2010. The addition of Well #3 to the Bishop Unit is included in this WDS Permit. A Replacement Well is an exemption under MPWMD Rule 20-C-6.

DISCUSSION: The following paragraphs describe the proposed Findings and Conditions of Approval as required by MPWMD Rule 22.

Findings of Approval: Findings of Approval for Application 20150430RRB (Exhibit 18-E) are based on evidence provided in the Application materials, including supporting documents received through June 8, 2015 on file at the District office. With the Conditions of Approval and previous action by the Monterey County Superior Court (Adjudication Decision), District staff believes a Finding can be made that the application meets the criteria and minimum standards for Approval set by District Rules 22-B and C. Specifically, this action should “not create an Overdraft or increase an existing Overdraft” (Rule 22-C-4) given that System Limits for both the Ryan Ranch and Bishop Units would not change. Based on the activity in the past five years, the need for the interconnection should be infrequent and nominal, and there is adequate capacity in the Bishop Unit to assist the Ryan Ranch Unit.

Conditions of Approval: For reference, the current conditions for the Ryan Ranch Unit (1989) and Bishop Unit (1996) are provided as Exhibit 18-H and Exhibit 18-J, respectively. Permit #M15-03-L3 results in amended Conditions of Approval for both the Ryan Ranch and Bishop Units, shown as Exhibit 18-F and Exhibit 18-G, respectively. The formatting, text and required standard conditions for each WDS have been completely revised to meet today’s standards, consistent with MPWMD Rule 22-D and the 2014 Implementation Guidelines. No changes have been made to the current System Limits. The key substantive change for both the Ryan Ranch and Bishop Units is new language to allow water from the Bishop Unit to serve the Ryan Ranch Unit in an emergency via the new pipeline across York Road.

For Exhibit 18-F and Exhibit 18-G, Conditions #1 through #4 define the Permitted System, including a service area map, the production and connection limits and sources of supply (wells and hydrogeology). Conditions #5 through #24 are mandatory, including a variety of subjects such as water quality, metering and annual reporting, conservation, required Indemnification Agreement and Acceptance Form, fee payments, timely notice of pending or actual changes to the system, staff access, and other elements. Condition #24 states that the WDS Permit is subject to revocation if CAW does not fully comply with each Condition of Approval associated with Permit #M15-03-L3. Conditions #25 and #26 address water rights and the Endangered Species Act; these conditions are not required by District rules, but are included in all WDS Permits.

Five Special Conditions are imposed for the Ryan Ranch Unit. Condition #27 formalizes the moratorium on new connections due to inadequate supply made by the District Board in June 2009. Condition #28 requires copies of any approval document from the Watermaster regarding this interconnection. Conditions #29 through #31 formalize current practices by CAW regarding monthly well production, water level and consumption information. Four Special Conditions are imposed for the Bishop Unit; these are the same as for Ryan Ranch except there is no moratorium due to inadequate supply.

Ryan Ranch Unit changes for specific conditions (refer to Exhibit 18-H) are as follows:

1989 Condition #2 and #3: The text is deleted and replaced with accurate text (new Condition #3) that reflects previous MPWMD Board action regarding the production and connection limits (i.e., System Capacity of 72 AFY and Expansion Capacity Limit of 190 connections).

1989 Condition #5: The text is rewritten in its entirety (new Condition #13) to state:

No intertie between the Permitted System and any other water system intended to provide regular (non-emergency) service to the Ryan Ranch Unit Parcels shall be allowed without amending this WDS Permit pursuant to Rule 22-E. An intertie between the CAW Bishop Unit and the Ryan Ranch Unit shall only be allowed during emergency events via a one-way pipeline crossing York Road as approved by the City and/or County of Monterey. The term “emergency event” means that water system facilities are not capable of providing sufficient supply to customers, typically due to failure of a facility component. Transfers of water between the Bishop Unit and the Ryan Ranch Unit must be metered and reported to the District within one week of occurrence. Use of the emergency intertie between the Bishop and Ryan Ranch Units shall be subject to MPWMD Board review if such use occurs for more than 60 days. Use of an intertie between the “main” CAW water system (i.e., draws water from the Monterey Peninsula Water Resource System) and the Ryan Ranch Unit is prohibited unless written permission is given by the District General Manager in an emergency event, including documentation that both Ryan Ranch and Bishop Unit supply cannot meet the required demand. The Ryan Ranch Parcels may receive CAW water from any source for emergency fire service, so long as this service is documented and reported in accordance with these conditions. [Rule 22-D-1-h]

1989 Condition #8: The requirement to collect monthly data on metered sales (consumption) is now a Special Condition.

1989 Condition #9a, #9b, #9e, and #9f: The text is deleted as actions have already been performed or are regulated by County or State health agencies.

1989 Conditions #9c and #9d: The requirement for monthly pumping and water level information for each well is now a Special Condition.

Bishop Unit changes for specific (refer to Exhibit 18-J) are as follows:

1996 Condition #1: The text is rewritten to reference the current name of the subdivision (“Pasadera”).

1996 Condition #2: The text is rewritten to reflect information about Bishop Well #3 (new Condition #4). The third, fourth and fifth sentences are deleted as interconnections between potable wells and golf course wells do not exist and are currently not allowed.

1996 Condition #4: The text is deleted as the referenced fee has been paid.

1996 Condition #5b: The text is rewritten in its entirety (new Condition #13) to state:

No intertie between the Permitted System and any other water system intended to provide regular (non-emergency) service shall be allowed without amending this WDS Permit pursuant to Rule 22-E. An intertie between the CAW Bishop Unit and the Ryan Ranch Unit shall only be allowed during emergency events via a one-way pipeline crossing York Road as approved by the City and/or County of Monterey. The term “emergency event” means that water system facilities are not capable of providing sufficient supply to customers, typically due to failure of a facility component. Transfers of water between the Bishop Unit and the Ryan Ranch Unit must be metered and reported to the District within one week of occurrence. Use of the emergency intertie between the Bishop and Ryan Ranch Units shall be subject to MPWMD Board review if such use occurs for more than 60 days. Use of an intertie between the “main” CAW water system (i.e., draws water from the Monterey Peninsula Water Resource System) and the Bishop Unit is prohibited unless written permission is given by the District General Manager in an emergency event, including documentation that Bishop Unit supply cannot meet the required demand. The Bishop Unit Parcels may receive CAW water from any source for emergency fire service, so long as this service is documented and reported in accordance with these conditions. [Rule 22-D-1-h]

1996 Condition #5d and #5e: The requirement for monthly pumping and water level information for each well is now a Special Condition.

1996 Conditions #5f, #5g, and #5h: The text is deleted as these actions are outdated, have already been performed, or are regulated by County or State health agencies.

CEQA Compliance: The Ryan Ranch Unit is located within the City of Monterey, and the Bishop Unit is within unincorporated Monterey County. These two jurisdictions would be responsible for California Environmental Quality Act (CEQA) compliance and approval of the interconnection pipeline construction. The District Board’s action focuses on approving the transfer of water from the Bishop Unit to the Ryan Ranch Unit. A Class 1 Categorical Exemption for minor alterations to existing facilities for an investor-owned public utility applies to this action (CEQA Guidelines 15301-b). For a Class 1 exemption, CEQA Guidelines 15301 states: “The key consideration is whether the project involves negligible or no expansion of an existing use” beyond that existing at the time of the lead agency’s determination.

The rationale for the Class 1 exemption is based on the following facts:

· There will be no change in System Limits (production and connections) for either system.

· Emergency transfer of water to Ryan Ranch already occurs in summer/fall when physical supplies and/or treatment capability at Ryan Ranch are inadequate.

· This action would change the source of supply for Ryan Ranch from the CAW main system to the Bishop Unit.

· The need for an emergency transfer is infrequent.

· The water quantity needed for Ryan Ranch has steadily declined in the past five years as compared to pre-2008 values (Exhibit 18-I).

· If the 20.44 AFY emergency transfer for year 2012 is removed (an unusual case when the Ryan Ranch treatment plant was being rebuilt and was not operational), the average need based on the most recent five data points was 1.9 AFY (WY 2009 through 2014, with WY 2012 excluded), as shown in Exhibit 18-I.

· Production of 1.9 AFY is 1.2% of the most recent Bishop Unit production (158 AF) in 2014. This nominal production amount and percentage may be viewed as “negligible.”

District staff and Counsel also reviewed the CEQA “Exceptions” (Guidelines 15300.2), which can override an exemption in certain situations. Section 15300.2(a) is for a location that is a “particularly sensitive environment” such as designated critical habitat for a listed species. It does not apply to Class 1 exemptions and applies only to Classes 3,4,5,6 and 11.

Guidelines 15300.2(b) applies to cumulative impacts, which are described as “successive projects of the same type in the same place, over time” leading to a cumulative significant effect.  This is the first (and only) approval of an interconnection for emergency use from Bishop to Ryan Ranch.   In contrast, full CEQA review will be necessary when CAW submits a future application to fully integrate the three satellite systems (Bishop, Hidden Hills and Ryan Ranch Units) with the main system, as approved by the CPUC in the most recent General Rate Case. Such action is not expected until completion of the Monterey Peninsula Water Supply Project.

Guidelines 15300.2(c) applies to unusual circumstances where there is a “reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.” Two unusual circumstances exist locally: (1) the State Water Resources Control Board (SWRCB) Cease and Desist Order (CDO) against use of Carmel River sources, and (2) the Seaside Basin Adjudication issued by the Monterey County Superior Court. Approval of the application would actually help CAW comply with the CDO as water would not be transferred from the main CAW system in the future because the Bishop Unit would be the new source of emergency supply for the Ryan Ranch Unit. This may be viewed as an environmental benefit. Regarding the Adjudication, the Superior Court ordered a series of actions to remedy the adverse effects to the Seaside Basin, which are in progress, and should be fully implemented by 2021. These include reduced water production in three-year increments, construction of physical solutions such as regional water projects, and system interties that enable adaptive management of the Seaside Basin. Approval of the application would be consistent with these activities and reduce extractions from the more vulnerable Coastal Subarea.

EXHIBITS

18-A Application #20150430RRB received April 30, 2015 (without attachments)

18-B Schematic of proposed interconnection

18-C Location of proposed pipeline across York Road

18-D Location of Bishop Well #3

18-E MPWMD Draft Findings of Approval dated June 2015

18-F MPWMD Draft Amended Conditions of Approval for Ryan Ranch Unit, June 2015

18-G MPWMD Draft Amended Conditions of Approval for Bishop Unit, June 2015

18-H November 1989 Conditions of Approval for Ryan Ranch Unit

18-I Ryan Ranch Unit water production and transfer summary, WY 1990-2014

18-J October 1996 Conditions of Approval for Bishop Unit

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