ITEM:		PUBLIC HEARING
13.	CONSIDER SECOND READING AND ADOPTION OF ORDINANCE NO. 165 AMENDING RULES 11, 21, 23 AND 23.1 AND ADDING RULE 23.7 TO ESTABLISH A WATER ENTITLEMENT FOR MALPASO WATER LLC
Meeting Date:			August 17, 2015	Budgeted:	N/A
From:			David J. Stoldt,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Stephanie Locke	Cost Estimate:	N/A
General Counsel Review: Yes
Committee Recommendation: On March 17, 2015, the Water Supply Planning Committee recommended the Board conduct the first reading of a draft ordinance that would amend Rules 11, 21, 23 and 23.1, and add Rule 23.7 to establish a Water Entitlement for Malpaso Water LLC.
CEQA Compliance: District is a Responsible Agency relying on an EIR certified by the SWRCB

SUMMARY: Ordinance No. 165 (Exhibit 13-A) establishes a Water Entitlement for the Malpaso Water Company LLC (Malpaso Water Company) of 80 Acre-Feet Annually (AFA) (85.6 AFA of production water) to be used for new and intensified water uses by properties located within the California American Water service area. Ordinance No. 165 also streamlines the ordinance process for future Water Entitlements by reducing the number of amendments needed throughout the District’s Rules.

A Water Entitlement is a discrete quantity of water designated by a District ordinance to a specified Water Entitlement Holder for new or Intensified Water Use. Water Entitlement Holders established by previous MPWMD ordinances include the Pebble Beach Company and the other fiscal sponsors of the CAWD/PBCSD Wastewater Reclamation Project, the City of Sand City, and Cypress Pacific Investors LLC. For the Malpaso Water Company Water Entitlement, the Water Entitlement Holder assigns water to its subscribers via Assignment Documents that the subscribers then use to obtain Water Use Permits from the District. The Water Use Permit can then be used to permit new or intensified water use up to the amount specified.

Before water from the Malpaso Water Entitlement is complete, the Board must approve an amendment to the California American Water Water Distribution System to allow Malpaso Water Company and the California American Water Company to divert and use water from the Carmel River system in the manner and for the purposes authorized by Water Right License 13868A. This action will be considered as a separate agenda item at the August 2015 Board meeting.

The development of existing legal lots of record in California American Water’s service area is currently constrained by a lack of available MPWMD Allocations and Water Credits, and State Water Board Order WR 2009-0060, which prohibits California American Water from diverting water from the Carmel River for new service Connections or increased uses of water at existing service addresses resulting from changes in zoning or use. In July 2015, the State Water Board split License 13868 into two new licenses: Licenses 13868A and 13868B. License 13868A authorizes the municipal use of 85.6 acre feet per year for existing lots of record within the parts of Cal-Am’s service area that are within the Carmel River watershed or the City of Carmel-by-the-Sea. After adjustment for system losses, License 13868A will allow a Water Entitlement of 80 AFA. License 13868B dedicates the remaining portion of the existing water right to instream uses.

CEQA: The MPWMD is a responsible agency under the California Environmental Quality Act (CEQA). As a CEQA responsible agency, the MPWMD may rely on the SWRCB’s Eastwood/Odello Water Rights Change Petition certified Environmental Impact Report (EIR) for CEQA compliance. In the review of this WDS application, MPWMD has followed those guidelines adopted by the State of California and published in the California Administrative Code, Title 14, Sections 15000, et seq.  Specifically, the MPWMD, as a Responsible Agency, has complied with Guidelines section 15096.  The MPWMD has independently reviewed and considered the applicable Eastwood/Odello Water Right Change Petition EIR sections prepared by the SWRCB that relate to water resources and water supply.  The EIR documents were provided to each Board member via email in early July 2015 in relation to the first reading of Ordinance No. 165. The Draft and Final EIR are available at the District office for public review.

The State Water Board was the lead agency for preparation of environmental documentation for the project (Eastwood/Odello Water Right Change Petition Project). A Notice of Preparation (NOP) for the draft EIR was circulated to a project-specific mailing list and to the State Clearinghouse. The 30-day NOP comment period commenced on March 4, 2014 and ended on April 2, 2014. The State Water Board also posted the NOP for the draft EIR to its website. The State Water Board held a scoping meeting on April 2, 2014 to receive oral and written comments on the NOP. The NOP and comments received are included in Appendix A of the draft EIR. The State Water Board considered oral and written comments received during the scoping period in preparing the draft EIR.

A public Notice of Availability (NOA) of the draft EIR was mailed to adjacent landowners and interested parties on October 30, 2014, and was posted in the Office of the County Recorder, County of Monterey, on October 30, 2014. In addition, the NOA was also physically posted in several locations near the location of the project, including on State Route 1 near Palo Corona Regional Park, Carmel Valley Road at Via Mallorca, Carmel Valley Road at Williams Ranch, and Carmel Valley Road at Prado Del Sol. The Notice of Completion for the draft EIR was filed with the State Clearinghouse on October 30, 2014. The draft EIR was circulated to the State Clearinghouse, to federal, state, and local agencies, and to organizations and individuals that had expressed interest in receiving the draft EIR. The draft EIR public review period commenced on October 31, 2014 and ended on December 15, 2014.

On May 29, 2015, the State Water Board provided proposed written responses to all public agencies that commented on the draft EIR. The State Water Board received no suggested revisions to the proposed responses.

As disclosed in the final EIR, approval of the individual well alternative has the potential to result in significant effects based on erosion from well and pipeline construction, and based on the potential for introducing hazardous substances into the environment during well and pipeline construction. With implementation of best management practices in construction, impacts will be minimized to a less-than significant level. This mitigation measure was included as Condition 18 to License 13868A. This condition requires that, prior to commencement of construction, the Malpaso Water Company will submit a construction plan including best management practices to minimize erosion and to prevent the accidental release of a potentially hazardous material from entering the environment. Upon completion of construction, the Malpaso Water Company must report on implementation of the measures, and on any breaches. Changes or alterations have been incorporated into the project which mitigate or avoid the significant effects on the environment of erosion and hazardous materials during construction. (See Pub. Resources Code, § 21081, subd. (a)(1).)

On July 3, 2015, the State Water Board certified the final EIR. The Board found that, on the basis of the whole record, there was no substantial evidence that the State Water Board’s approval of the petitions would have a significant effect on the environment. The SWRCB also concluded that the Project, including the delivery of water represented by the Water Entitlement to the Benefited Properties, does not violate any provision of Order WR 95-10 or Order WR 2009-0060. A Notice of Determination was filed with the State Clearinghouse on July 7, 2015.

The District Board action must comply with CEQA as well as MPWMD regulations.  In the review of this ordinance, MPWMD has followed those guidelines adopted by the State of California and published in the California Administrative Code, Title 14, Sections 15000, et seq.  Specifically, the MPWMD, as a Responsible Agency under CEQA for this action, has complied with Guidelines section 15096.  The MPWMD has considered the applicable Eastwood/Odello Water Right Change Petition EIR sections prepared by the State Water Board that relate to hydrology, water quality and water supply.  A package of these excerpts was provided to each Board member via email.     

Copies of the full EIR associated with the Eastwood/Odello Water Right Change Petition Draft are available for public review at the District office in hard copy or CD.  The EIR and related documents can be found at

http://www.waterboards.ca.gov/waterrights/water_issues/programs/ceqa.

RECOMMENDATION:

1. As a CEQA Responsible Agency, the Board should find that the SWRCB’s Eastwood/Odello Water Rights Change Petition certified Environmental Impact Report (EIR) sufficiently analyzed the impacts related to water and hydrology and that the evaluation was adequate to rely upon for establishment of the Malpaso Water Company LLC Water Entitlement. Staff should file a Notice of Determination with the Monterey County Clerk.

2. The Board should approve the second reading and adopt Ordinance No. 165, establishing a Water Entitlement for the Malpaso Water Company LLC, conditioned on approval of the Malpaso Water Distribution System and amendment of the California American Water Company Water Distribution System.

EXHIBIT

13-A Draft Ordinance No. 165 U:\staff\Boardpacket\2015\20150817\PubHrngs\13\Item13.docx