ITEM:		ACTION ITEM
16.	CONSIDER APPROVAL OF PROPOSAL TO MODIFY CEASE AND DESIST ORDER 2009-0060
Meeting Date:			July 20, 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: This is an update from Item 16 of the Board’s March 16 meeting. 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 (SWRCB) Cease and Desist Order (CDO) 2009-0060 deadline of December 31, 2016.

The attached proposal (Exhibit 16-A) was developed jointly by representatives of Cal-Am, the District, the Mayor’s Water Authority, Carmel River Steelhead Association, The Sierra Club, the Pebble Beach Company, and attorneys representing Peninsula cities and Carmel Valley pumpers. It reflects many compromises between the parties, but reflects commitments all the parties believe they can support.

The June 19, 2015 version of a Preliminary Draft Proposal for a CDO extension is attached as Exhibit 16-A. A redlined version of the CDO is attached as Exhibit 16-B and a revised Table 1 to the CDO is attached as Exhibit 16-C.

Key principles included in the June 19 version are not materially changed from the March 10 proposal considered by the Board at its March 16^th meeting and include:

· 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.

· Suspension of the reduction would be triggered by a joint written statement from Cal Am, the MPWMD, and the MPRWA that the milestone was missed for reasons outside our control. It is our position that such a statement is to be assumed to be correct, and if the SWRCB staff disagrees, the issue would be referred to the State Board for a decision. In any case, the community retains its rights to litigate the issue if necessary.

RECOMMENDATION: The General Manager recommends the Board authorize the General Manager to sign the Application to Modify Cease and Desist Order WR 2009-0060 on behalf of the Board.

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 a proposal acceptable enough to secure staff concurrence with a formal request for a CDO extension that will be made to the State Board.

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.

Presently, District staff and General Counsel support the proposed draft, but the proposal will leave very little factor of safety against a rebound in consumer demand for water, but the proposal does not appear to trigger immediate adverse impacts under existing conservation and rationing rules.

Further, under Section 3(b) of the original CDO, “the MPWMD may petition the State Water Board Deputy Director for Water Rights for relief from annual reductions imposed under condition 3.a (2). [if] (c) a showing is made that public health and safety will be threatened if relief is not granted.” The District will retain this right. The District does not lose its ability to initiate a new lawsuit if relief is not granted or unexpected future penalties arise from the amended CDO.

EXHIBITS

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

16-B Attachment 1 to Proposal – CDO Showing Changes in Redline Version

16-C Revised Table 1 to CDO

U:\staff\Boardpacket\2015\20150720\ActionItems\16\Item 16.docx