RULES AND REGULATIONS REVIEW COMMITTEE
2.	CONSIDER CONCEPTUAL CHANGES TO MPWMD RULES AND REGULATIONS FOR WATER DISTRIBUTION SYSTEMS
Meeting Date:		October 28, 2013	Budgeted:	N/A
From:		David J. Stoldt,	Program/	N/A
		General Manager	Line Item No.:	N/A
Prepared By:		Henrietta Stern	Cost Estimate:	N/A
General Counsel Review: Provided guidance to staff
Committee Recommendation:
CEQA Compliance: N/A Concept review

SUMMARY: The Board’s Strategic Plan Update, adopted on April 15, 2013, included a goal to evaluate and revise the Water Distribution System (WDS) regulations, including:

· Assess District interests and overall goals;

· Identify benefits to the District and to customers;

· Explore alternative frameworks;

· Assess which target areas need most regulation;

· Recommend amendments to rules; and

· Potentially consider more exemptions.

The Board desired a more streamlined and “user-friendly” process. Additionally, in the process of evaluating the existing WDS permit process it was determined that the District’s authority to set well production limits was narrower than previously thought (see “Legal Issues” under BACKGROUND, below.)

An overview of the conceptual changes recommended by District staff appears in a series of tables in Exhibit 2-A attached. The staff recommendation is to expand the situations that qualify for an exemption, and (with a few exceptions) reserve the setting of System Limits and the current full WDS Permit process to Wells within the Monterey Peninsula Water Resources System (MPWRS), comprised of the Carmel Valley Alluvial Aquifer (CVAA) and the Seaside Groundwater Basin (SGB). The concept envisions additional scrutiny for non-MPWRS Wells that exist within a defined buffer zone adjacent to the CVAA (presently 1,000 feet) and also considers the number of Parcels served. In addition, non-Well situations (e.g., desalination plants, springs, or trucked-in water) are also addressed.

Two alternative options are presented which entail: (1) less regulation, similar to the situation before Ordinance No. 96 was adopted in 2001; and (2) regulation similar to the current situation, except production limits would not be set for Wells outside of the MPWRS. The recommended concepts and two alternative options are described in the “Discussion” section below.

Based on the guidance provided by the Committee, staff will present these concepts to the full Board and ask for direction in crafting a draft ordinance that would comprehensively amend the WDS Rules and Regulations (primarily Rules 20, 21, and 22). This new ordinance will be subject to the California Environmental Quality Act (CEQA). It should be noted that Monterey County is going through a similar assessment and revision of its Well Ordinance; District and County staff are coordinately closely to ensure consistency and avoid duplication.

Staff believes the protocol in Exhibit 2-A is the best option to make the WDS process more streamlined and reduce duplication, comply with the District enabling legislation (District Law), incorporate recent legal advice from Counsel, consider current and pending Well regulations and procedures by Monterey County agencies, and comply with the District’s mandate to protect water resources.

RECOMMENDATION: The Committee should consider the options for changing the Water Distribution System Rules and Regulations and make a recommendation to the full Board.

BACKGROUND: The District has comprehensive authority to integrate management of the ground and surface water resources in the Monterey Peninsula area. This includes a written permit system to regulate WDS, regardless of the number of connections served or the source of the water supply. District Rule 11 defines the terms used in the regulation of WDS and Mobile WDS. District Rules 20, 21, 22, 40, 54 – 56, 60, 114 and 173 further define procedural and substantive rules that regulate these systems. The first regulation was enacted with Ordinance No. 1 in February 1980. Significant refinements, changes and additions to the WDS Rules and Regulations were adopted as part of Ordinance No. 96 on March 19, 2001. The WDS Rules were then refined through Ordinance No. 105 on December 16, 2002; Ordinance No. 106 on February 27, 2003; Ordinance No. 118 on December 13, 2004; Ordinance 122 on August 15, 2005; Ordinance 127 on July 17, 2006; Ordinance 128 on June 18, 2007; Ordinance 136 on August 18, 2008; Ordinance 145 on September 20, 2010; and Ordinance No. 150 on May 12, 2012. The MPWMD Rules & Regulations are provided on the District website.

At its July 22, 2013 meeting, the District Board adopted Resolution 2013-12, due in part to a revised view of District authority to set System Limits in certain situations (see “Legal Issues”, below.) The Resolution directed the General Manager to suspend for one year several actions for Fractured Rock Wells located on a single Parcel until the WDS regulations could be amended. The District would not: (a) set System Limits, (b) require hydrogeologic testing above and beyond the standard testing required by the Monterey County Health Department, and (c) perform other MPWMD staff activities relevant to setting a System Limit.

Legal Issues: District Law gives MPWMD the authority to regulate Wells within its boundaries. Water Code Appendix 118-363 states that a written permit from the MPWMD Board is needed to create, establish, extend or expand a WDS, with various rules and regulations to guide that process. Further, it states that “The board may provide by ordinance for exceptions to the requirement for approval for systems furnishing domestic water to three or fewer parcels or lots in the District.” Thus, an exemption may be given for a WDS serving three or fewer Parcels, but a WDS serving four or more Parcels must obtain a WDS Permit. MPWMD Rule 20C describes several conditions under which a well could be exempt from the need to obtain a WDS permit; however, prior to adoption of Resolution 2013-12, MPWMD set production limits for exemptions.

In May 2013, District Counsel advised the District that it does not have the authority to set baseline production limits for exempt, non-alluvial Wells on single Parcels within the District in the absence of evidence of overdraft. This conclusion was partially based on the correlative water rights doctrine, which gives equal standing among property owners overlying the water source.

Staff asked Counsel to also address the District’s authority to set System Limits for non-exempt Fractured Rock Wells that must obtain a WDS Permit. In July 2013, Counsel advised the District that MPWMD does not have the authority to establish System Limits for non-exempt, non-alluvial Wells on single Parcels in the absence of evidence of some physical or legal constraint affecting a specific water body. If a water source is uncertain, the District has the authority to require additional hydrogeologic data pertinent to the application.

In September 2013, Counsel advised the District that MPWMD does not have the authority to establish System Limits for many non-exempt, non-alluvial Wells serving multiple-Parcels in the absence of evidence of some physical or legal constraint affecting a specific water body. However, the District could require additional hydrogeologic data if multiple uses, Neighboring Wells and/or intensification of use are involved. Counsel also recommended revising the definition of a Single-Parcel Connection System to a Well or Wells on one legal Parcel that serves only that legal Parcel.

An overdraft has not been declared for areas outside of the MPWRS (i.e., non-CVAA, non-Seaside Groundwater Basin) areas. To date, the monitoring data available and the analyses performed for non-CVAA WDS applications have indicated a lack of hydrogeologic connectivity between Neighboring Wells in some cases, while connectivity is evident in other cases at similar distances from the pumping Well. In most cases where hydrogeologic connectivity is assumed to occur, adverse impacts have not been determined to be significant within standard hydrogeologic measurement practices. Overall, the existing hydrogeologic testing and monitoring data available are inconclusive regarding the degree of connectivity between Wells outside of the CVAA and wells within the CVAA. The District plans to continue its hydrogeologic monitoring program to assess if any adverse changes are occurring. In fact, a cornerstone of all proposed WDS Permits or Exemptions is the ability for District staff to monitor Well production and water levels.

In summary, MPWMD has the authority to regulate Wells within its boundaries, including requiring a WDS Permit (or Confirmation of Exemption). MPWMD has the authority to require additional hydrogeologic data for Wells that could potentially impact water resources such as the CVAA or the Seaside Groundwater Basin. For many non-MPWRS situations, MPWMD does not have the authority to set production limits due to correlative water rights shared among Well owners. Because there is a declared overdraft in the Seaside Basin, the District has the authority to set System Limits in that area, consistent with the Superior Court’s 2006 Final Decision (as amended).

Monterey County Efforts: According to Monterey County documents, the Monterey County Codes need to be updated to implement policies adopted in the 2010 General Plan for the non-coastal unincorporated areas of the County. Existing County well regulations need clarification and updating to address on-going policy matters, update language to reflect changes in State regulations (State Bulletins), and resolve some recurring problems. The County Board of Supervisors will be considering changes to County well regulations in the coming months.

In recent months, District staff has been coordinating with Monterey County agencies regarding their Well-related activities. Registered hydrogeologists at the Monterey County Water Resources Agency (MCWRA), working as consultants to the Monterey County Environmental Health Bureau (MCEHB), currently perform calculations on the potential of a Well to adversely affect nearby Wells and in-stream flow of specified rivers and creeks that sustain steelhead, including those in Carmel Valley. This evaluation is performed as part of the process to approve a MCEHB Well Construction Permit in compliance with Monterey County General Plan Policy 3.3. Monterey County is also revising its Well Ordinance and has met with stakeholder groups and other agencies, including MPWMD. On October 22, 2013, the Monterey County Board of Supervisors considered various Well Ordinance concepts, and provided direction to its agency staff. Exhibit 2-B is a letter submitted by the MPWMD General Manager encouraging coordination between the County and MPWMD on Well regulations, especially for specific areas within the District.

The County assesses (via calculations) impacts to in-stream flow or neighboring Wells before a Well Construction Permit is issued. The MCEHB issues a “Source Water Quality and Quantity Analysis Certification Form” after Well testing that indicates the flow in gallons per minute (gpm) that the Well is expected to reliably produce and whether water quality is satisfactory. Both the County and MPWMD require a 72-hour test at a minimum pumping rate of 3 gpm, and the amount and type of data collected during the test are similar. MPWMD currently requires more detailed analysis of the data and issues a memorandum quantifying the reliable supply and whether there are impacts to Sensitive Environmental Receptors or Neighboring Wells, as applicable.

DISCUSSION: The following paragraphs first review the current regulatory setting and then describe the changes recommended by staff. Alternative options are then discussed.

Current Regulations: The Rules & Regulations currently require a WDS Permit for all Wells within the District except for a few exemptions defined in Rule 20-A and 20-C. Examples of exemptions include: Wells older than March 1980; replace/refurbish/reactivate a Well; and certain single-Parcel situations outside of the California American Water (CAW) service area. MPWMD Rule 21 identifies the required application information to be submitted and is linked to Implementation Guidelines found on the District website. Ordinance No. 150, adopted in May 2012, added additional notification and monitoring requirements for Neighboring Wells.

Applicants start with a simple MPWMD Pre-Application Form, which can be submitted before the Well is drilled. For Well-based systems, the applicant must attach the MCEHB Well Construction Permit before the District will accept the Pre-Application Form. After the Well testing and analysis are completed, a full WDS Permit Application package may be submitted. Rule 21 describes required components of an application.

Rule 22 identifies: (a) the protocol for the four different levels of WDS Permits; (b) required Findings; (c) minimum standards of approval; and (d) mandatory conditions of approval, which include setting System Limits and at least 15 other requirements. Except for those situations covered by Resolution 2013-12, applicants must define the quantity of water to be produced in acre-feet per year (AFY), and submit a hydrogeologic report that demonstrates that this quantity can be reliably produced by the WDS without harming Sensitive Environmental Receptors and/or Neighboring Wells, as defined by Rule 11.

The applicant’s report is reviewed by District staff and consultants, who confirm in writing whether they concur with the report conclusions. Based on this evidence, District staff prepares a WDS Permit package that includes a Staff Determination, hydrogeologic review memorandum, Findings and Conditions of Approval pursuant to Rule 22, CEQA documentation, invoice documentation for final fees (or refund), Acceptance Form, Indemnification Agreement and Deed Restriction that attaches the WDS Permit and related enclosures for the County Recorder. The latter three documents are signed and notarized by the applicant.

An Exemption Request is included as an option in the Pre-Application Form. Staff determines whether the exemption criteria in Rule 20-C are met and prepares an abbreviated document that provides the rationale/evidence for the exemption and sets certain conditions of approval. Currently, Rule 20-A directs staff to set baseline System Limits for “previously existing systems” (exemptions) according to the protocol defined in Rule 40. The Confirmation of Exemption document is signed and notarized by the applicant, and recorded.

New Regulatory Concepts Recommended by Staff: The staff recommendation is to expand the situations that qualify for an exemption, and (with a few exceptions) reserve the setting of System Limits and the current full WDS Permit process to Wells within the MPWRS (CVAA and Seaside Basin). Staff would rely on assessments performed by Monterey County for non-MPWRS situations to determine adequacy of flow and potential impacts to Neighboring Wells or Sensitive Environmental Receptors. This would reduce the MPWMD staff workload and create a more streamlined process for most applicants. Notably, non-MPWRS Wells on less than four Parcels comprise about 90% of the WDS Permit applications.

Staff proposes to delete the Pre-Application phase, which would save applicants from a $665 charge, and have maps and necessary guidance information clearly delineated on the District’s website. Staff would still be available to answer questions via phone or e-mail.

Staff also recommends discontinuing most of the MPWMD reviews of hydrogeologic tests that duplicate Monterey County Well impact assessments in the non-MPWRS areas. MCWRA hydrogeologists currently assess whether there would be an impact to in-stream flows or nearby Wells before the Well Construction Permit is issued by MCEHB. MCEHB staff confirms whether there is adequate water quality and quantity after reviewing the 72-hour Well test results. Assuming that the future revised Monterey County Well Ordinance includes coordination with MPWMD regarding mutually agreeable thresholds and buffer distances for impacts to streams and Wells within the District, especially in Carmel Valley, County analyses for the non-MPWRS situations should satisfy MPWMD interests. If there is a concern about potential impacts or reliability of supply, the District has the option of requiring further evaluation or analysis for good cause.

Exhibit 2-A provides a “road map” for the recommended conceptual changes to the WDS Regulations. Specific numerical values are still being developed for certain criteria, and will be included in future ordinance text. The current goal is to obtain Board direction on the degree of regulation appropriate for different situations, given the current legal and regulatory setting.

The roadmap is based on a series of questions, which lead the reader to matrix tables, similar to current Rule 22, Table 22-A. Based on the situation, the level of regulation is identified in the matrix. Questions include:

Ø Is the proposed WDS a Well or not?

Ø Is the Well located within or outside the MPWRS (CVAA or Seaside Basin)?

Ø Is the Well located within 1,000 feet (or other distance to be determined) of the MPWRS?

Ø How many Parcels are served by the Well(s)?

Based on the answers, the application would follow one of four pathways:

Ø Type A Exemption (basic, standard text);

Ø Type B Exemption (additional analysis may be required; possible restrictions);

Ø Type C WDS Permit (multi-Parcel, no System Limits); and

Ø Type D WDS Permit (full analysis and includes System Limits).

Type A and B would be used for situations that have a lower probability of adverse effect due to location, fewer Parcels served, production below a threshold, or other factors such as correlative water rights. Hydrogeologic analysis above and beyond that already performed for the MCEHB would not be required. Type C is for situations where a WDS Permit is more appropriate but does not include System Limits. With a few exceptions, there would not be assessments of impacts to Neighboring Wells. Type D would be very similar to current requirements and applies to more sensitive areas (such as the CVAA) or larger projects.

It is noted that the suspension of the requirement to set production limits for non-alluvial Well owners with correlative water rights will result in fewer notifications of owners of Neighboring Wells as currently embodied in Ordinance No. 150, which was passed in 2012 to increase awareness of new Well construction. Many of the Ordinance No. 150 requirements would not apply to most of the non-alluvial situations. However, the County has increased its review of impact to neighbors before a MCEHB Well Construction Permit is issued, so there is greater protection sooner in the process.

Importantly, all regulatory paths include the requirement for the applicant to enable the District to physically monitor the Wells or other facilities as needed. This is in addition to current requirements to register, meter, and annually report production each water year.

Alternative Concepts: Put simply, two alternatives to the staff recommendation are less regulation or more regulation, as follows:

Option 1 is for the District to simply not regulate non-MPWRS WDS that serve a Single-Parcel (or up to three Parcels under the same ownership), and revert to the set of Rules and Regulations that were in effect before Ordinance No. 96 was approved in 2001. This would have the following effects: (a) The District would lose the ability to physically monitor new Wells on the property, a right that is tied to regulating Wells in some way (e.g., imposing conditions of approval on an Exemption); and (b) the District would not record an Exemption document with the County Recorder that ensures that a future property owner is adequately informed about the rights and responsibilities associated with the Well. District staff does not recommend this option.

Option 2 is to have fewer Type A or Type B exemptions as described above, and instead use Type C WDS Permits (no System Limits) for non-MPWRS Wells that serve three or fewer Parcels. Staff believes the actions necessary and costs associated with a Type C permit would make this option unnecessary regulation due to the current and future level of review by Monterey County agencies. Also, the Type A and B exemptions recorded with the County Recorder adequately protect the interests of the District in protecting water resources due to the conditions of approval that are agreed to by the property owner

IMPACT TO DISTRICT RESOURCES: In the near-term, a comprehensive revision to the MPWMD Rules & Regulations governing WDS will be a time-consuming undertaking that will affect staff in the Water Resources and Planning & Engineering Divisions as well as review by District Counsel. However, in the long-term, such an endeavor will reduce the staff workload, reduce costs for applicants, avoid duplication with Monterey County and be consistent with California water rights law. The non-MPWRS submittals must still be processed, but much less time will be spent assessing hydrogeologic testing results or reviewing historical water use that would be needed to determine production limits. Extra time coordinating monitoring of Neighboring Wells also would be significantly reduced.

EXHIBITS

2-A Conceptual changes to regulations (staff recommendation)

2-B David Stoldt letter to Board of Supervisors dated October 21, 2013

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