RULES AND REGULATIONS REVIEW COMMITTEE
ITEM:		ACTION ITEM
2.	CONSIDER APPROVAL OF CONCEPTUAL ORDINANCE NO. 122 TO AMEND MPWMD RULES AND REGULATIONS TO CREATE AN IMPACT-BASED SYSTEM FOR WATER DISTRIBUTION SYSTEM PERMITS
Meeting Date:			May 3, 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: Rules and Regulations Review Committee provided suggestions for refinement of Version 1 (previously numbered as Ordinance No. 123) on April 5, 2005
CEQA Compliance: Initial Study to be prepared for first reading version of ordinance following approval of Concept Ordinance No. 122 by Board of Directors.

SUMMARY: The Rules and Regulations Review Committee will review Version 2 of Conceptual Ordinance No. 122 (formerly referred to as “Ordinance YY”), and provide a recommendation to the Board. Version 2 is based on suggestions made by the Committee on April 5, 2005 and also includes revised definitions of existing terms as well as definitions of new terms to be added to Rule 11. Version 2 of Ordinance No. 122 is provided as Exhibit 2-A.

Concept Ordinance No. 122 (Exhibit 2-A) 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. The ordinance includes a matrix table used to determine the level of permit review (Exhibit 2-B). As allowed by Ordinance No. 120, a draft Board Resolution is provided as Exhibit 2-C to revise the permit application fee schedule to reflect the different levels described in Ordinance No. 122. Ordinance No. 122 should result in a more streamlined permit approval process for lower-impact applications, such as a well for a single-family home on a small parcel located more than 1,000 feet from a Sensitive Environmental Receptor (SER), defined in Rule 11, and/or an existing well. The ordinance would result in a more rigorous approval process for applications that have a higher probability of affecting SER and/or existing wells. Please refer to the “Discussion” section below for additional detail.

Process: Due to the complexity of Ordinance No. 122, the Board will first review a Conceptual Ordinance. Based on the Board’s direction, the first reading version of Ordinance No. 122 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. 122 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. 122 will require the completion of an Initial Study that will likely result in a Negative Declaration pursuant to CEQA. Ordinance No. 122 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. It is notable that each discretionary permit decision for a WDS application is also subject to CEQA review.

RECOMMENDATION: The Committee should make recommendations to staff about text refinements to Ordinance No. 122 to bring to the full Board for concept review at its May 16, 2005 meeting.

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.

Ø Ordinance No. 120, adopted March 21, 2005. Set and amended administrative fees for various services, including permit processing, and enabled future amendment of fees by Board Resolution rather than by ordinance.

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. These are being revised based on recent ordinances.

Ordinance No. 122 is the second of two WDS permit concepts (“Ordinances No. XX and YY”) that were approved in outline form by the Board at its August 16, 2004 meeting. Ordinance XX was formally adopted as Ordinance No. 118 on December 13, 2004 and became effective on January 12, 2005; it focused on clarifying existing procedures, fees and enforcement.

Ordinance No. 122 would make substantive changes to the current WDS permit approval process. First, 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 SER and/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, adopted by the Board on March 21, 2005. Similar to previous ordinances, Ordinance No. 122 refers to written Implementation Guidelines that will provide specific guidance on procedures.

Exhibit 2-D provides an August 2004 overview of Ordinance YY components, including the criteria, description and rationale for the four permit review levels (Level 1, 2, 3 and 4), that was previously approved by the Board at its August 16, 2004 meeting. Minor text updates are made for clarity, consistency and to reflect the current situation in May 2005. Please refer to the “Discussion” section below for more details.

Coordination with Monterey County. 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.

In recent informal discussions with MCHD, District staff learned that MCHD is considering reinstating a 2.5-acre minimum parcel size for new wells in areas that are served by septic systems. This is due to health concerns about the potential interaction of septic systems and water wells in a series of adjacent, smaller parcels in parts of Carmel Valley and other areas of Monterey County. If Monterey County amends its ordinance or permit procedures, this could affect Ordinance No. 122 and the information on permit level matrix (Exhibit 2-B). District staff will monitor the situation and advise the Board regarding County action.

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. 122 (Exhibits 2-A and 2-B) would amend the MPWMD Rules and Regulations 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 “Amend a Water Distribution System”

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 “Sensitive Environmental Receptors (SER)”

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 a Water Distribution System”

Ø “Reactivate a Well”

Ø “Replace a Well”

Ø “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: (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 SER, as defined in Rule 11, or existing wells. Sensitive environmental receptors include the Carmel Valley Alluvial Aquifer, certain named tributaries to the Carmel River, the Seaside Groundwater Basin, and the Pacific Ocean at the mean high-tide line.

Rule 20-C-4 would be amended to add a sentence that the “reactivate, refurbish, or replace” exemption does not apply to abandoned wells or wells that have been inactive for more than 10 years. **Committee Members -- This is new for May 3, 2005**

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 SER and existing wells, 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. 122 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.

The four levels reflect increasing potential to impact the water resources system due to size, complexity, potential water use, or proximity to SER and/or other existing wells. Location within the Cal-Am service area is an automatic Level 2. In brief, the five possible outcomes for a system application are: **Committee revisions**

Ø Exempt - Meets criteria to not need a WDS permit; ministerial action exempt from CEQA review pursuant to CEQA Guidelines Sections 15268 and 15300.1.

Ø Level 1/Permit Waiver - Minimal potential impact; permit does not set system limits. MPWMD discretionary action, but meets CEQA criteria for exemption pursuant to Guidelines 15301 et seq; Notice of Exemption filed.

Ø Level 2/Administrative Permit - Modest potential impact; full compliance with existing rules, but no public hearing. MPWMD discretionary action subject to CEQA review.

Ø Level 3/Hearing Officer Review - Moderate potential impact; public hearing at staff level. MPWMD discretionary action subject to CEQA review.

Ø Level 4/MPWMD Board Hearing - Highest potential impact; public hearing by Board. MPWMD discretionary action subject to CEQA review.

Levels 1-4 are discretionary permits and would be reviewed pursuant to CEQA. Please refer to Exhibit 2-D for more information about each permit level, including examples.

Ordinance No. 122 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 application (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 application 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.

Draft Resolution to Amend Table of Fees and Charges **Committee revisions**

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 and allow changes to administrative fees by Board Resolution. Associated action for Ordinance No. 122 includes amending the Ordinance No. 120 “Fees and Charges Table” a by a Board Resolution, shown in draft form as Exhibit 2-C. 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 receptors; flat fee for any application.

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

Ø Level 1/Permit Waiver - $375 to process and issue Waiver; flat fee (assume 5 hours plus $25 County Clerk filing fee for CEQA Notice of Exemption).

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).

Changes Compared to Existing 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 water resources. As shown in the permit level matrix (Exhibit 2-B), changes in WDS permit processing would occur as compared to the current situation. More emphasis would focus on applications that have higher potential for environmental impacts. At its August 2004 meeting, the Board previously addressed the pros and cons of this concept, and directed staff to move forward to develop a new ordinance.

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 applications. 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. 122 would not change current budgeting associated with WDS for FY 2005-2006.

Adoption of Ordinance No. 122 would help focus staff and Board time on applications 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 April 30, 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 applications 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 $1,400 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 six applications currently in progress as of April 30, 2005, three will be heard by the full Board (Level 4) and three will be heard by the staff Hearing Officer (Level 3). If Ordinance No. 122 was in effect today, two applications 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. 122 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 applications. 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.

EXHIBITS

2-A Ordinance No. 122 (Version 2 for R&R Committee on May 3, 2005)

2-B Matrix of criteria used to determine permit review level for May 3 Committee review

2-C Draft Resolution for Revised WDS Permit Fees

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

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

U:\staff\word\committees\RulesRegsReview\2005\20050503\02\item2.doc

Draft 2, prepared April 26, 2005 at 4:00 PM by Henrietta Stern, Project Manager -- includes suggestions by DAB