RULES AND REGULATIONS REVIEW COMMITTEE
ITEM:		ACTION ITEM
2.	CONSIDER APPROVAL OF CONCEPTUAL ORDINANCE NO. 123 TO AMEND MPWMD RULES AND REGULATIONS TO CREATE AN IMPACT-BASED SYSTEM FOR WATER DISTRIBUTION SYSTEM PERMITS
Meeting Date:			April 5, 2005	Budgeted:	N/A
From:			David A. Berger,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Henrietta Stern	Cost Estimate:	N/A
General Counsel Approval: **pending**
Committee Recommendation: N/A
CEQA Compliance: Initial Study to be prepared for first reading version of ordinance following approval of Concept Ordinance YY by Board of Directors.

SUMMARY: The Rules and Regulations Review Committee will review Version 1 of Conceptual Ordinance No. 123 (formerly referred to as “Ordinance YY”), and provide direction to staff. Due to time limitations, Version 1 as printed in this package (Exhibit 2-A) does not yet include definitions for a variety of terms. The Committee will provide the following guidance:

Ø Provide comment and suggested refinements on Version 1, excluding the definitions that have not been completed in Section Three of the ordinance.

Ø Determine whether additional Committee review of the Conceptual Ordinance is needed, before it is considered by the Board; either:

o (1) Go forward to the April 18, 2005 Board review of Version 2, including changes suggested by the Committee as well as the set of definitions that have not been reviewed by the Committee; or

o (2) Hold Version 2 for a second Committee review prior to consideration by the Board so that the Committee can review all of the definitions.

Ø If the Committee believes the Board should consider the Conceptual Ordinance on April 18, 2005, the Committee should make a recommendation to the Board regarding the elements of Ordinance No. 123 that the Committee has reviewed.

Concept Ordinance No. 123 (Exhibit 2-A), which includes a matrix used to determine the level of permit review (Exhibit 2-B) and a revised fee schedule (Exhibit 2-C), would amend the water distribution system (WDS) permit process to an ”impact-based” system, where the permit approval process is proportionate to the anticipated impacts. Ordinance No. 123 should result in a more streamlined permit approval process for low-impact applications, such as well for a single-family home on a small parcel located more than 1,000 feet from sensitive receptors or existing systems. The ordinance would result in a potentially more rigorous approval process for applications that have a higher probability of affecting sensitive resources or current water systems. Exhibit 2-D provides an overview of the ordinance components, including the criteria and description of the four permit review levels (Level 1, 2, 3 and 4) and the rationale.

Ordinance No. 123 is the second of two WDS permit concepts (“Ordinances No. XX and YY”) that were approved in outline form by the Board at its meeting on August 16, 2004. Ordinance XX was formally adopted as Ordinance No. 118 on December 13, 2004; it focused on clarifying existing procedures, fees and enforcement. Ordinance No. 123 makes substantive changes to the current WDS permit approval process; it would codify the multi-level, “impact-based” regulatory concepts presented on August 16, 2004. Anticipated impacts to water resources would be based on factors such as intensity of water use, number of parcels, total acreage, and proximity to sensitive environmental resources or existing wells. A second substantive change is the requirement for a “Pre-Application” process, which was described as a “screening” process in August 2004. A third change is setting new fees for each type of permit, which would amend the “Fees and Charges Table” associated with Ordinance No. 120, which was recently adopted by the Board on March 21, 2005. Similar to previous ordinances, Ordinance No. 123 refers to written Implementation Guidelines that will provide specific guidance on procedures. Please refer to the “Discussion” section below for more details.

Process: Due to the complexity of Ordinance No. 123, the Board will first review a Conceptual Ordinance. Based on the Board’s direction, the first reading version of Ordinance No. 123 will be prepared along with an Initial Study, in compliance with the California Environmental Quality Act (CEQA). Staff plans to develop Implementation Guidelines for Ordinance No. 123 once the first reading version is approved. The ordinance would be adopted on second reading, and a Notice of Determination prepared.

CEQA Compliance: Staff and counsel anticipate that Ordinance No. 123 will require the completion of an Initial Study that will likely result in a Negative Declaration pursuant to CEQA. Ordinance No. 123 would substantially modify existing rules, procedures and level of review for WDS permits that could potentially result in a (less than significant) physical effect on the environment.

BACKGROUND: Since the District was created in 1978, the District has adopted 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 to include 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; and some previously exempted multiple-parcel systems.

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.

Ø Ordinance No. 118, adopted December 13, 2004. Refined and clarified WDS Rules and Regulations regarding WDS permit process, non-compliance, fees and enforcement.

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.

At its August 16, 2004 meeting, the Board directed staff and counsel to develop two ordinances (then referred to as “Ordinances No. XX and YY”) for future consideration. Two ordinances were recommended because the substantive changes to the permit process described in Ordinance No. YY take more time, and would have held up the housekeeping changes in Ordinance XX that were needed as soon as possible. Ordinance XX was approved as Ordinance No. 118 by the Board on December 13, 2004, and became effective on January 12, 2005.

Currently, staff closely coordinates with Monterey County Health Department, Division of Environmental Health (MCHD) regarding issuance of new well construction permits by the County. Coordination activities include review of pending County well construction permits located within MPWMD boundaries by District staff, and quarterly meetings to update respective staffs on current regulations and issues of interest. 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: For reference, Exhibit 2-E provides the current language of Rules 20, 21 and 22 (including recent changes made by Ordinance No. 118), which govern water distribution systems. Draft Ordinance No. 123 (Exhibits 2-A, 2-B, and 2-C) would amend MPWMD Rules and Regulations that govern WDS permit procedures as summarized below:

Section Three, Amend Rule 11, Definitions

Rule 11 would be amended to add several new definitions of terms used in the revised WDS review process. These include:

Ø “Exempt,”

Ø “Inactive Well”

Ø “Level 1 – Permit Waiver ”

Ø “Level 2 - Administrative Permit”

Ø “Level 3 - Hearing Officer Review”

Ø “Level 4 – MPWMD Board Hearing”

Ø “Permit Review Level”

Ø “Pre-Application Review”

Ø “Sensitive Receptor”

Ø “Well Source and Pumping Impact Assessments”

The following existing definitions would be amended to be more clear and respond to questions that have arisen in processing previous permit applications:

Ø “active well”

Ø “completion” [of a WDS]

Ø “completion of a well”

Ø “create”

Ø “replace a well” (define timeline for “inactive” and timeline to replace well)

Ø “well” (cross reference to “inactive well” and “existing well”)

Section Four, Amend Rule 20, Permits Required

Rule 20-A would be refined to state that before creating or establishing a water distribution system, the person must first obtain either a written exemption or permit (which includes a simplified waiver).

Most of Rule 20-C-2 would be deleted and replaced with text stating that properties that meet all of the following criteria would be exempt from the requirement to obtain a WDS permit or waiver: (a) one or two parcels totaling less than 2.5 acres; (b) location outside of the Carmel River Basin and Seaside Basin (entire basin); (c) located outside of Cal-Am service area (or not served by Cal-Am as a remote meter); and (d) located more than 1,000 feet from sensitive receptors as defined in Rule 11. Sensitive receptors include the Carmel Valley Alluvial Aquifer, certain named tributaries to the Carmel River, the mean high-tide line, and other existing wells.

Section Five, Amend Rule 21, Applications.

Rule 21-A-1 would be revised to add a new first step in the application process, that is, completion of a “Pre-Application Request Form” and staff assessment prior to receipt of the applicable “Application Form,” if needed. Based on the Pre-Application information provided by the applicant combined with a staff assessment of nearby sensitive receptors, staff will determine whether the proposed system is Exempt, or will be processed under one of four “permit review levels” (i.e., Level 1, Level 2, Level 3 or Level 4). The information requested in the Application Form(s) is based on the potential impact to the water resources system. Rule 22 below describes the specific protocol on how to determine the permit review level and process the permit.

Section Six, Amend Rule 22, Action on Application for Permit

Rule 22-A would be completely replaced by substantive new text that describes the review of the Pre-Application Request Form (PRF), the determination of five potential outcomes (Exempt, or Levels 1 through 4); and the permit processing protocol for each type of permit. An important component of Ordinance No. 123 is Table 22-A of the ordinance (shown as Exhibit 2-B), which is a matrix describing the criteria used to determine Level 1, 2, 3, or 4. The table also indicates changes from the current rules with black and grey shading; this will be removed when the final ordinance is adopted.

As explained in Exhibit 2-D, the four levels reflect increasing potential to impact the water resources system due to size, complexity, potential water use, or proximity to sensitive receptors or other existing users. Location within the Cal-Am service area is an automatic Level 2. In brief, the five possible outcomes for a system are:

Ø Exempt - (meets criteria to not need a WDS permit)

Ø Level 1 - Permit Waiver (minimal potential impact; permit does not set system limits)

Ø Level 2 - Administrative Permit (modest potential impact; full compliance with existing rules, but no public hearing)

Ø Level 3 - Hearing Officer Review (moderate potential impact; public hearing at staff level)

Ø Level 4 – MPWMD Board Hearing (highest potential impact; public hearing by Board)

Ordinance No. 123 is intended to be consistent with existing Rules 22-B, 22-C, and 22-D (i.e., required Findings, minimum standards for granting permit, and mandatory conditions of approval, respectively); compliance with these rules is specifically stated for Level 2, 3 and 4 permits (see text for new Rule 22-A-5, 6 and 7).

Obviously, compliance with Rules 22-B, C and D is not required for an Exempt situation (new Rule 22-A-3). A Level 1/Permit Waiver (new Rule 22-A-4) is “independent of, but consistent with” Rules 22-B, C and D. For a permit waiver, indirect compliance with Rules 22-B and C is assumed, based on the criteria to qualify for the Level 1 waiver. Using the elements of Rule 22-B as a guide, a Level 1 situation would result in: (1) no unnecessary duplication of service; (2) no importation or exportation to/from the District; (3) no significant environmental effects; (4) demonstrated water rights (deed); (5) long-term reliable supply; (6) no significant cumulative effects; (7) source outside the MPWRS and SWRCB jurisdiction; (8) no interties to other systems; and (9) no need for backflow protection.

Section Seven, Amend Rule 60, Fees and Charges

Rule 60 was recently changed significantly by the passage of Ordinance No. 120 on March 21, 2005; the rule changes become effective on April 20, 2005. Ordinance No. 123 would amend the Ordinance No. 120 “Fees and Charges Table.” Some entries would be added, and some would be amended or removed as shown in Exhibit 2-C. Staff’s understanding is that an ordinance is needed to change entries in the Fees and Charges Table; a simple Board Resolution is needed to amend the actual fee for an existing table entry. The Fees and Charges Table would be amended to add new and revised fees associated with the Pre-Application Request Form process, providing a written Confirmation of Exemption form, and processing applications for Level 1, 2, 3, and 4 permit review. In brief, the revised fees are as follows:

Ø Pre-Application Request Form - $150 for review, including assess nearby wells; flat fee

Ø Exempt - $50 for Confirmation of Exemption letter; flat fee

Ø Level 1/Permit Waiver - $300 to process and issue Waiver; flat fee

Ø Level 2/Administrative Permit - $1,400 to process and issue permit (assume 20 hours); variable fee (higher charge for more complex cases; refund possible)

Ø Level 3/Hearing Officer Review - $2,450 to process and issue permit (assumes 35 hours); variable fee (higher charge for more complex cases; refund possible)

Ø Level 4/MPWMD Board Hearing - $2,450 to process and issue permit (assumes 35 hours); variable fee (higher charge for more complex cases; refund possible)

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. As described in Exhibits 2-B, 2-D and 2-F, changes in WDS permit processing would occur as compared to the current situation. More emphasis would focus on situations that have higher potential for environmental impacts. Exhibit 2-G provides pros and cons of the impact-based permit system from the perspective of the Board direction to streamline the permit process and reduce regulatory oversight for lower impact situations. It is acknowledged that the concept of “pro and con” may be subjective.

IMPACT ON RESOURCES: Implementation of Ordinances No. 96 and 105 has significantly increased District staff workload because a full public hearing process is needed for nearly all new well situations. 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, much 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 Ordinances No. 106 and 118 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. Adoption of Ordinance No. 123 would not change current budgeting associated with WDS for FY 2005-2006.

Adoption of Ordinance No. 123 would help focus staff and Board time on situations that demand more rigorous review due to potential environmental effects, and reduce staff time to evaluate systems with less potential for adverse impacts. Staff reviewed the 18 permits that have been issued since Ordinance No. 96 was approved in April 2001 through March 31, 2005. All entailed public hearings, 12 by a staff Hearing Officer (equivalent to Level 3) and six by the full Board (Level 4). If proposed Ordinance No. YY had been in place instead, 11 single-parcel situations would have been processed by staff without a public hearing (Level 2) and two public hearings would have been before the staff Hearing Officer rather than the Board. The application fee for the 11 single-parcel applicants noted above would have been $1,500 rather than $2,450. Staff time would have still been needed to address environmental, hydrologic and water rights questions, but staff time would not have been needed for public hearing notices, logistics, holding the hearing and follow-up – perhaps a savings of 5-10 hours for each.

Of the five applications currently in progress as of March 31, 2005, two will be heard by the full Board (Level 4) and three will be heard by the staff Hearing Officer (Level 3). If Ordinance No. 123 was in effect today, one application would still be heard by the Board (remains Level 4), one alluvial aquifer application would be heard by the Board rather than the Hearing Officer (change from Level 3 to Level 4), and three applications would be processed directly by staff without a public hearing (change from Level 3 to Level 2).

Implementation of Ordinance No. 123 will take more staff time initially to revise and write Implementation Guidelines, train staff and educate the public. However, once in place, the impact-based system should result in less staff time spent for lower-impact situations. 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. After the passage of Ordinance No. 118 in December 2004, staff efforts have focused on writing a technical procedures manual for consultants and creating new WDS permit pre-application and application forms. Some preliminary examples are provided as Exhibit 2-G.

EXHIBITS

2-A Ordinance No. 123 (Version 1 for R&R Committee)

2-B Matrix of criteria used to determine permit review level

2-C Revised Fees and Charges Table (based on Ordinance No. 120)

2-D Overview of Ordinance YY Concept (August 16, 2004)

2-E Current language for Rules 20-22 (includes Ordinance No. 118 changes)

2-F Examples of changes in regulatory process with Ordinance No. 123

2-G Pros and cons of Ordinance No. 123

2-H Examples of pre-application, staff tracking and application forms to be used in future

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