RULES and REGULATIONS REVIEW COMMITTEE

1. DISCUSS PROPOSED MODIFICATIONS TO ORDINANCES 96 AND 105 REVISING THE DEFINITION AND REGULATION OF WATER DISTRIBUTION SYSTEMS

Meeting Date: June 22, 2004 Budgeted: N/A

Staff Contact: Henrietta Stern Cost Estimate: N/A

General Counsel Approval: Staff note provided

Committee Recommendation: The Rules & Regulations Review Committee reviewed this item on June 22, 2004 and recommended __________.

CEQA Compliance: Needed to pursue new ordinance with substantive changes.

SUMMARY: This item is continued from the June 3, 2004 committee meeting. Staff has defined the June 3, 2004 text in an effort to simplify and clarify the proposed concepts.

District staff will briefly review MPWMD Rules and Regulations governing water distribution systems (WDS), including registration and metering of wells, and provide concepts for potential changes to streamline the permit process while continuing to protect water resources. The California Environmental Quality Act (CEQA) requirements for a new ordinance will also be reviewed.

RECOMMENDATION: The Committee should discuss the regulatory concepts presented herein, and provide direction regarding preparation of materials for formal Board consideration at a future meeting. At its June 22, 2004 meeting, the Rules & Regulations Review Committee recommended that _________.

BACKGROUND AND HISTORY: Since the District was created in 1978, the District has enacted a series of ordinances, beginning with Ordinance No. 1 in 1980, that created or amended MPWMD Rules and Regulations that govern WDS within the District as well as metering and registration of wells. Ordinances since 1980 are briefly summarized below:

Ø Ordinance No. 3, adopted July 7, 1980. Enacted the MPWMD well registration and reporting requirements. Allowed well owners three options to report water usage: (1) land use method (parcels less than 2.5 acres only); (2) power consumption method; or (3) water meter method.

Ø Ordinance No. 48, adopted March 12, 1990. Deleted the power consumption method of reporting for large wells, and required water meters for those wells.

Ø Ordinance No. 56, adopted November 25, 1991. Required that all medium, large and new wells be measured and reported by the water meter method.

Ø Ordinance No. 96, adopted March 19, 2001. Expanded requirements for a permit to create a WDS. Single-parcel systems within the Carmel River Alluvial Aquifer, 1,000 feet from the alluvial aquifer and specific tributaries, and the Seaside Basin Coastal Subareas as well as some previously exempted multiple-parcel systems need a WDS permit.

Ø Ordinance No. 105, adopted December 16, 2002. Changed and refined Ordinance No. 96 requirements, including a WDS permit required for all wells within Carmel River Basin (watershed) located within the MPWMD boundary.

Ø Ordinance No. 106, adopted February 27, 2003. Revised fee structure to ensure that the WDS permit program is self-funded. Set a standard of $70 per hour for all MPWMD staff time.

In April 2001, the District Board approved draft Implementation Guidelines, including a Supplement to the Guidelines, which provide guidance on the water distribution system permit process, and include worksheets, information sheets, an application form and other relevant information. At its July 15, 2002 meeting, the Board authorized additional refinements to the Guidelines recommended by staff.

Current Status

Since Ordinance No. 96 was adopted, staff has processed nine (9) permit applications; all were eventually approved, with conditions that varied with the complexity of the project. The approved permits include seven single-parcel residential situations, one multiple-parcel (4 or fewer lots), and one major subdivision application. Twenty requests for written Exemption Confirmation letters were also completed, along with numerous phone consultations.

Currently, there are eight active pending applications, including five single-parcel applications (residential, agricultural and a church) and three multiple-parcel systems. Three applications that were deemed as incomplete appear to be inactive, and will be confirmed in the near future. Many inquiries regarding potential new applications have been received in the past few months.

Based on the nine permits processed to date, the current permit process takes a minimum of roughly 25 to 35 staff hours and 2 to 4 months between receipt of an application and final approval. Incomplete applications or more complex applications take longer.

The District well registration program currently tracks water use for 49 permitted WDS as well as many individual wells. In water year 2003 (October 1, 2002-September 30, 2003), there were 996 registered wells, with 696 active and 257 inactive (and 43 unknown). Ninety-nine percent (99%) of the groundwater production within the District was reported by the water meter method and 95% of registered well owners reported their water production.

Currently, staff closely coordinates with Monterey County Health Department, Division of Environmental Health (MCHD) regarding issuance of new well construction permits by the County. All County permits for wells within the District include a requirement to comply with MPWMD regulations for WDS; many County permits specifically state that an MPWMD WDS permit must be obtained before the County permit is valid.

DISCUSSION:

Concepts for Streamlining WDS Permit Process

The Board Chairperson asked staff to develop proposed modifications to current regulations to streamline the process and lessen financial impact to smaller property owners (“the little guy”), reduce unnecessary staff effort, and continue to protect sensitive water resources and the environment. The concept described in the following paragraphs is termed an “impact-based” review of water distribution systems.

Staff recommends a new process whereby all owners of new wells permitted by the County (or other types of systems not based on wells), except for specific situations defined as exempt, submit an application form to MPWMD that briefly describes key characteristics of the property and proposed uses so that a rough estimate of water use or potential impact can be made. A preliminary mock-up of this worksheet is provided as Exhibit 1-A.

Based on this first screening, the application would be assigned as Exempt, Level 1, Level 2, Level 3, or Level 4 as shown in Exhibit 1-B. The level of regulation is proportional to anticipated impact based on the sensitivity of the geographic area, size of parcel, number of parcels served, and whether the application is residential or non-residential. In short, the five types of action include:

Ø Exempt from MPWMD Rule 20.

Ø Level 1, Permit Waiver – simplified permit issued but no system limits set.

Ø Level 2, Staff Permit – staff sets system limits and other conditions; no public hearing; can be appealed to General Manager and Board.

Ø Level 3, Public Hearing – Staff hearing officer makes decision; can be appealed to Board.

Ø Level 4, Public Hearing – Board makes decision.

The five types of action are described in more detail below.

Criteria to Determine Level

The determination of whether an application is Exempt or Level 1 through 4 will depend on the characteristics, or combination of characteristics, of an application. These factors can include:

Ø Geographic area, such as inside or outside the alluvial aquifer; based on environmental sensitivity of the area, or similar compelling reason such as water rights, overdraft etc.

Ø Size of lot.

Ø Purpose of use, such as single-family residential, or commercial or agricultural.

Ø Number of parcels/connections, that is, how many parcels are served by the water system.

Ø Relation to Cal-Am, that is, is a property inside or outside the Cal-Am service area, and is it already served by Cal-Am.

Importantly, with one exception, there is no distinction between a potable (domestic drinking water) and subpotable (agricultural/irrigation only) supply. The reason is that the quantity of water being extracted out of the ground is the key factor in assessing environmental effect, not how it will be treated and used by the property owner. The one exception is any potable supply proposed within the Cal-Am service area begins at Level 2. Until SWRCB Order 95-10 is resolved, the District does not wish to encourage situations where a private potable system may fail, leading to a petition for Cal-Am service.

Characteristics of Action Levels

Following are proposed characteristics for each of the five action levels. In the discussion below, the term “parcel” means an existing legal lot of record (see Rule 11), and refers to a residential setting unless noted otherwise. The term “subdivision” means creation of new legal lots. For all situations, the well must be properly registered and metered, and report use annually.

Exemption/No Permit Needed:

Staff would continue to screen all Monterey County well construction permits sent to the District to assess whether an MPWMD WDS permit is needed. As shown in Exhibit 1-B, properties that meet all of the following criteria would not need an MPWMD WDS permit:

Ø one or two parcels totaling less than 2.5 acres;

Ø location outside of the Carmel River Basin and Seaside Basin;

Ø location not within the Cal-Am service area (or not served by Cal-Am as a remote meter).

Level l, Permit Waiver

Level 1 properties are distinguished from exempt properties by being located in the Carmel River watershed as shown in Exhibit 1-B. A Permit Waiver would be issued with a basic set of assumptions that must hold true, or the waiver is invalid. No production or connection limits would be set. Characteristics for Level 1 include:

Ø one or two parcels totaling less than 2.5 acres;

Ø located in Carmel Valley Upland more than 1,000 feet from sensitive receptors (defined as any combination of a nearby well, Carmel River alluvium or named tributaries);

Ø location not within the Cal-Am service area (or not served by Cal-Am as a remote meter).

Level 2, Staff Permit

Level 2 would be similar to the Corps of Engineers "Nationwide Permit," where the process is streamlined for certain situations. There would be no public hearing, but production and connection limits would be set, along with other conditions, as determined by staff (General Manager or designee). Additional information from the applicant, such as a hydrogeologic study, and analysis by staff (or consultant, if needed) may be required in certain situations, such as location of a well within 1,000 feet of certain named creeks known to support habitat for sensitive species. Water rights are not a key issue because Level 2 permits are for parcels outside the Carmel River Alluvial Aquifer (see Exhibit 1-B). Level 2 is the minimum level for situations where potable supply would be supplied within the Cal-Am service area.

Level 3, Public Hearing before Staff Hearing Officer

Level 3 would entail formal notice and a public hearing before the MPWMD staff Hearing Officer, similar to the current situation. As shown in Exhibit 1-B, Level 3 situations reflect sensitive areas such as the Carmel River Alluvial Aquifer and Seaside Basin (Laguna Seca and Coastal Subareas); or larger parcels in less sensitive areas. All non-residential situations are Level 3 or 4.

Level 4, Public Hearing before MPWMD Board

Level 4 would entail formal notice and a public hearing before the MPWMD Board, similar to the current situation. As shown in Exhibit 1-B, hearings before the Board would be reserved for larger, potentially controversial projects, and/or well location within known sensitive areas. All non-residential situations are Level 3 or 4. Subdivisions with total acreage greater than 2.5 acres are Level 4.

Comparison to the Existing Situation

This proposed structure would expand the MPWMD “regulatory net” in sensitive areas, but streamline it in less sensitive areas or lower impact situations. Staff believes this is a reasonable compromise to focus staff and Board attention on situations that require the most oversight and could cause the most impact to the community water resources. All boxes shown in gray in Exhibit 1-B are situations where the level of review is streamlined. All boxes shown in black are situations where the level of review is increased. Boxes in white are the same as the existing situation. Exhibit 1-C provides a variety of examples where the permit process would be decreased, increased or the same.

Expanded Regulation: The most prominent example of expanded regulation is the need for a Level 3 or 4 permit for single parcels within the Laguna Seca Subarea as well as the Coastal Subareas of the Seaside Basin. Previously, no permit was needed for a single-parcel system in the Laguna Seca Subarea. This change reflects the findings of the Phase III Hydrogeologic Study for the Laguna Seca Subarea, which demonstrated that current water extractions are roughly double the reliable yield of the Subarea, and that the Subarea is in a water supply deficit.

Streamlined Regulation: An example of a more streamlined process (Level 1 or 2, depending on the situation) is that a public hearing would not be required for two-parcel systems outside of the alluvial aquifer. Currently, any two-parcel system would require a public hearing before the MPWMD Board. Under the proposed concept, staff would handle these applications administratively.

Pros and Cons of Impact-Based System

The multi-level revisions described above were developed to address concerns about regulatory impact to the “small” property owner, increase efficiency, and continue to properly manage and protect sensitive water resources. Exhibit 1-D provides pros and cons of the impact-based permit system from the perspective of the Chair’s direction to streamline the permit process and reduce regulatory oversight for lower impact situations. It is understood that “pro and con” may be in the eye of the beholder.

Fee Structure

A sliding scale fee structure is proposed as follows, based on staff’s best estimate of actual time needed to process the permit, follow up on conditions, and track use annually. The staff hourly rate is $70 per hour; fees may be rounded for simplicity.

Ø Basic Application/Screening: $50 for review and determination of exemption or level.

Ø Exemption Confirmation: $50 for written Confirmation of Exemption.

Ø Level 1: $300 to review application, provide Permit Waiver with Conditions, track use.

Ø Level 2: $1,500 application fee, assuming 20 hours as base, plus County CEQA Exemption fee, etc. Charge at $70 per hour (over 20 hours) and all other expenses for more complex cases similar to Ordinance No. 106.

Ø Level 3 or 4: $2,500 application fee, assuming 35 staff hours as base. Charge $70 per hour for all time over 35 hours as well as actual legal and consultant costs (See Ord. 106).

Other Important Considerations for New Ordinance

The current Rules and Regulations do not reflect the importance of remaining within the production limit set as part of the permit conditions; text revisions to the Rules and Regulations should be made to make this more clear. The Rules and Regulations should also clearly state what happens when a system goes over its limit, and describe options available (or required) to correct the situation. For example, Rules 40-C and 40-D direct the Board to hold an annual public hearing to determine whether any system has exceeded its annual “expansion capacity limit” (connection limit), to notify the system owners, and for staff to deny any application for water in a system that has exceeded the connection limit. Rules 40-C and 40-D should be amended to also include the “system capacity limit” (production limit) to be consistent with Rules 40-A and 40-B. From a hydrologic impact perspective, compliance with the production limit is more important than compliance with the connection limit.

In a related matter, the Rules and Regulations should clearly state the process of enforcement and penalties associated with the need to obtain a permit, including characterization of the proposed water distribution system. Currently, the emphasis is on revocation of a permit if conditions of approval are not carried out.

Staff has delayed revising the Implementation Guidelines until changes to the Rules and Regulations are finalized. A major effort is needed to create procedures manuals for staff as well as worksheets and booklets for applicants, and put all relevant information on the District website. Training of staff in the Water Demand Division will be helpful, as many members of the public first contact the District through that division. Expansion of the District website to include guidelines, application forms and other information will help educate the public.

CEQA Review for New Ordinance

Case law has determined that creation of an ordinance may be considered a “project” under CEQA. Previous Ordinances No. 96, 105 and 106 complied with CEQA via a Categorical Exemption or via a Negative Declaration. It is assumed that an Initial Study will be circulated for a new ordinance with any substantive change (excludes text solely for clarification or changes that result only in a fiscal effect). Depending on the extent and impact of the changes, an EIR could be required. Staff’s initial assessment is that the concepts described above could be covered under a Negative Declaration, as there are adequate safeguards to protect environmentally sensitive areas.

IMPACT ON RESOURCES: Implementation of Ordinances No. 96 and 105 has increased District staff workload. Each week, District staff consistently receives many requests for assistance regarding WDS regulations from property owners, real estate agents and agency staff. Each permit application processed to completion to date has taken roughly 25-35 hours minimum of total staff time, more if complex hydrologic issues are involved. A consultant has assisted District staff on a regular basis since April 2003 in order to ensure that the tight timelines associated with the State Permit Streamlining Act are met. To date, the staff members most affected by the water distribution system regulations are the Water Resources Division Manager (registered hydrogeologist reviews technical data) and Project Manager within the Planning and Engineering Division (permit processing and CEQA review). The fee structure associated with Ordinance No. 106 has helped enable the WDS permit program to be self-funding; staff recommends that the existing fee structure be continued with the refinements noted above.

The impact-based system described above will take more staff time in the beginning to develop new rules, write implementation guidelines, train staff and educate the public. However, once in place, the impact-based system should result in less time spent with lower-impact situations.

EXHIBITS:

1-A: Mock-up of information sheet

1-B: Level of permit review based on impact

1-C: Examples of whether regulation increases or decreases

1-D: List of pros and cons to impact-based system

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REVISED 6/18/04