ITEM:		PUBLIC HEARINGS
19.	CONSIDER APPROVAL OF APPLICATION TO AMEND STATE WATER RESOURCES CONTROL BOARD ORDER WR 2009-0060
Meeting Date:			November 16, 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 July 20, 2015 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 application (Exhibit 19-A) was developed jointly by representatives of Cal-Am, the District, the Mayor’s Water Authority, the Pebble Beach Company, and attorneys representing Peninsula cities and Carmel Valley pumpers. The proposal was shared with SWRCB enforcement staff in several iterations, and includes modifications and clarifications made in response to SWRCB staff, and contained in the proposed revised Order contained in Exhibit 19-B. The application reflects many compromises between the parties, but reflects commitments all the parties believe they can support. The Carmel River Steelhead Association, the Sierra Club, and the Planning and Conservation League (PCL) were included in the discussions, but may not be able to endorse this application. Specifically, PCL and Sierra Club may seek a lower effective diversion limit (see Paragraphs 3.a.(1) and (2) of Exhibit 19-B) and Sierra Club wants greater authority over the third-party expert to annually review the status of the fishery (see Paragraph 3.a.(2)(viii) of Exhibit 19-B). This latter subject remains under discussion and the parties may agree on language prior to the Board meeting, as noted in the body of the text.

The current version of a preliminary draft application for a CDO extension is attached as Exhibit 19-A. It is expected that non-substantive changes from the version contained in the packet will be made to better describe in the application what is being specifically requested in the revised Order, as noted in the body of the text. If available by the District’s Board meeting, those changes will be presented at the meeting. The proposed revision of the CDO is attached as Exhibit 19-B.

Key principles included in this proposed version include:

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

· Continued moratorium on new service connections.

· An immediate reduction of the diversion limit in Water Year 2015-16 to 8,671 acre-feet. This represents the 2013-14 limit under the existing CDO minus 1,000 acre-feet in recognition of successful efforts in the community to conserve water, allowing a permanent commitment to a lower production limit. (PCL opposes this and seeks a lower limit.)

· A subsequent reduction of the diversion limit in Water Year 2016-17 to 8,310 acre-feet and remaining in place through 2020. This represents a 5-year average of recent diversions from the Carmel River as computed by SWRCB staff. This limit must be evaluated in the context that recent pumping practices reflect consumer conservation in 4 years of drought, attempts by Cal-Am to reduce summer pumping on the Carmel River due to drought stress, well outages that under-report desired production, and the need to accommodate a 2018 triennial reduction on the Seaside Basin resulting from the adjudication. Data shows that following the last three significant droughts, there has been a bounce-back in customer demand in the 1 to 3 years following. (PCL and Sierra Club desire a limit on the order of 7,500-7,600 acre-feet reflective of actual production the past three years, but ignoring any of the factors discussed above.)

· If the actual production on the Carmel River is less than the new diversion limits, Cal-Am can build up a “credit” that can be carried forward and up to 750 acre-feet may be used to offset an exceedance of the diversion limit in a subsequent year.

· Additional 1,000 acre-foot reductions in diversion limit if construction milestones are missed each of the next four years. If the milestone is subsequently met, the reduction in diversion limit is reversed the following year.

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

· Annual reporting to the SWRCB describing progress toward the annual milestone, whether the milestone will be achieved, reasons for a missed milestone, and status of the species. (Sierra Club wants a role in selecting a third-party fisheries expert and allowing it’s recommendations to affect immediate adaptive management.)

RECOMMENDATION: The General Manager recommends the Board authorize the General Manager to sign the Application for Order Modifying State Water Board Order WRO 2009-0060 (Cease and Desist Order), subject to non-substantive changes as determined by District Counsel, 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.

There is substantial risk that the SWRCB will not grant all of the terms and conditions as proposed. Should this be the case, the Parties reserve the right to not immediately accept proposed terms of a revised order, to request evidentiary hearings, or to seek other remedies.

EXHIBITS

19-A Draft Application for Order Modifying State Water Board Order WRO 2009-0060 (Cease and Desist Order)

19-B Attachment 1 to Application – Revised CDO

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