ITEM:		ACTION ITEM
13.	Consider Sending the State Water Resources Control Board Correspondence Addressing Timelines and Penalties under the Cease and Desist Order WR2016-0016
Meeting Date:			July 20, 2020	Budgeted:
From:			David J. Stoldt,	Program/
			General Manager	Line Item No.:
Prepared By:			David J. Stoldt	Cost Estimate:
General Counsel Approval: N/A
Committee Recommendation: None
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines Section 15378.

SUMMARY: On April 29, 2020 California American Water (Cal-Am) filed with the State Water Resources Control Board its 2nd Quarterly Report for the 2019-2020 Water Year Addressing Operations for the Period of January 1, 2020 to March 31, 2020. Such a report is required under the extended Cease and Desist Order (CDO). In the report, Cal-Am stated that it is unlikely to meet Milestone 5 under the CDO due to reasons outside of Cal-Am’s control (see “DISCUSSION” below.)

The penalty for missing a Milestone is a reduction in the allowable Effective Diversion Limit from the Carmel River by 1,000 acre-feet. In effect, it reduces water available for Cal-Am pumping by that amount.

The District is defined as one of the “Applicants” under the CDO. If the report indicates that a Milestone is likely to be missed for reasons beyond Applicants’ control, the State Water Board may make a determination whether the cause for delay is beyond Applicants’ control. If the State Water Board determines that the cause is beyond Applicants' control, it may suspend any corresponding reductions under Condition 3.b.vi until such time as the Applicants can reasonably control progress towards the Milestone.

At this time, the District as an Applicant, may seek to request suspension of a reduction in the diversion limit in order to protect the interests of the community, especially in light of the economic consequences of Covid-19 on the local economy. Additionally, it is quite apparent that the final December 31, 2021 Milestone will not be met by any proposed water supply project, hence the proposed letter attached as Exhibit 13-A also includes a request to begin discussions for a reasonable accommodation and extension of the CDO.

RECOMMENDATION: The General Manager recommends the Board approve sending the correspondence attached as Exhibit 13-A.

DISCUSSION: Cal-Am’s 2nd Quarterly Report for the 2019-2020 Water Year Addressing Operations for the Period of January 1, 2020 to March 31, 2020 filing included the following passages (emphasis added):

· “Milestone 5, Water Year 2019-2020 ((1) Drilling activity for at least one MPWSP Desalination Plant source water production well complete; (2) foundation and structural framing complete for MPWSP Desalination Plant pretreatment seawater reverse osmosis, and administration buildings at desalination plant; (3) excavation complete for MPWSP Desalination Plant brine and backwash storage basins; and (4) 25% of Desalination Plant transmission pipelines installed based on total length, including 100% installation of the "Monterey Pipeline and other ASR related improvements".)

· The stay on physical construction of the desalination plant imposed by the Monterey Superior Court currently remains in place until at least April 21, 2020. Although Cal-Am had been on track to complete permitting and begin construction activities at the site, the court's stay precludes Cal-Am from starting the necessary activities at the plant site in order to be able to complete construction of the various plant facilities required under Milestone 5 by September 30, 2020. It is therefore unlikely that Cal-Am will be able to complete all of the activities required under Milestone 5 by September 30, 2020. This setback resulting from the court's stay is beyond Cal-Am's control.

· The Coastal Commission has not set a date for the continued hearing and determination on Cal-Am's application for a coastal development permit for the project's slant wells. Without a permit, Cal-Am cannot begin the necessary activities in order to complete drilling activities for a slant well, as required under Milestone 5. The delay caused by the Coastal Commission's decision to continue the hearing, based on a determination made just 10 days before the scheduled hearing that additional investigation was required, is beyond Cal-Am's control.”

This highlights a need to revisit what the CDO milestones dictate going forward. The attached letter offers an opening to renew discussions with the State Water Board.

EXHIBIT

13-A Proposed Correspondence to SWRCB

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