ITEM:		ACTION ITEM
19.	CONSIDER APPROVAL OF SETTLEMENT TERMS FOR DISMISSAL OF PROTESTS TO MONTEREY COUNTY WATER RESOURCES AGENCY WATER RIGHTS APPLICATION FOR PURE WATER MONTEREY
Meeting Date:			June 20, 2016	Budgeted:	N/A
From:			David J. Stoldt	Program/
			General Manager	Line Item No.: N/A
Prepared By:			David J. Stoldt	Cost Estimate:	N/A
General Counsel Approval: N/A
Committee Recommendation:
CEQA Compliance: N/A

SUMMARY: Because the water from the Blanco Drain and Reclamation Ditch are tributary to the Salinas River, withdrawing that water for the Pure Water Monterey Project (PWM) requires a water rights permit from the State Water Resources Control Board - Division of Water Rights. That permit states the amount of water that can be withdrawn, times it can be withdrawn, and the purpose to which the water will be put.

On June 9, 2016, NMFS and CDFW agreed to our proposed settlement terms (with three exceptions, two of which were subsequently worked out). The remaining issue is to find a mutually agreeable way to address a 2 cfs bypass in Blanco Drain related to lagoon conditions/operations in dry years, requested by NMFS. In abbreviated terms, the settlement terms we proposed are as follows:

1. Tembladero Slough would not be further pursued for the Pure Water Monterey Project

2. We will monitor water quality of diverted water for construction and during operations.

3. We will install a flow meter and totalizer on the Blanco Drain Diversion.

4. We will divert no more than 6 cfs (about 2700 gallons per minute) with certain bypass flows at different times of the year for either fish migration or habitat considerations.

5. We will consult NMFS engineering staff on the design of the diversion facility on the Reclamation Ditch.

The unresolved issue is a proposal that in drought years (when the Salinas River Diversion Facility has not operated and the lagoon is closed to the ocean) we would monitor lagoon water levels and if certain conditions occurred, we would either release 2 cubic feet per second (cfs) (about 900 gallons per minute) or find an alternate water source to provide that amount of flow into the lagoon until the situation is remedied.

The full proposed settlement terms are attached as Exhibit 19-A.

The matter will be considered by the MRWPCA Board on June 27, and will be presented to the MCWRA Board on June 27, 2016.

If all three Boards of Directors approve the settlement terms both NFMS and CDFW will notify the State Water Resources Control Board of the terms under which those agencies will then withdraw their protests of the water rights applications on Blanco Drain and the Reclamation Ditch.

RECOMMENDATION: The General Manager recommends the Board approve the proposed settlement, subject to MCWRA discretion to resolve the dry year bypass flow/Salinas River lagoon management issue.

DISCUSSION: In response to water rights filings, the State Water Resources Control Board solicits any protests that a party may have against those water rights being granted. If any are received the filing agency has 30 days to respond to the protest and a maximum of 180 days in which to resolve it.

On February 19, 2016, both National Marine Fisheries Service (NMFS) and the California Department of Fish and Wildlife (CDFW) filed protests against our water rights applications for Blanco Drain, Reclamation Ditch, and Tembladero Slough.

The PWM team submitted a timely response to the protest in mid-March in which we made the case that any potential impacts to fisheries or habitat had been adequately covered and minimized or mitigated in the final Environmental Impact Report for the project. Our response opened up negotiations with the agencies. NMFS and CDFW expressed concern that the three water rights diversions would reduce the amount of water flowing in the lower Salinas Valley watershed area (specifically the Salinas river lagoon, the Tembladero Slough, and the Old Salinas River Channel) possibly resulting in adverse impacts on steelhead populations. The PWM project team expressed concern that any further delays in the project, or any more bypass flows than have already been committed to in the EIR could endanger the project.

Staff from the Monterey County Water Resources Agency, the Monterey Regional Water Pollution Control Agency, and the Monterey Peninsula Water Management Agency represented PWM in several meetings and many submittals from agency to agency since the original response to the protests back in March.

After modeling the impact on the amount of water these sources could now produce and concluding the CSIP and PWM would still work (albeit with slightly less source water than we had planned). Exhibit 19-B shows the proposed yield from the proposed settlement versus the initial water rights application. Please note, an additional 16 acre-feet in June would be lost in dry years under the settlement. The final terms to the settlement agreement were agreed upon by the staff of all agencies contingent upon Board approval.

EXHIBITS

19-A Proposed Protest Dismissal Settlement Terms

19-B Graph of Yield Reduction due to Settlement v Application

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