WATER DEMAND COMMITTEE
ITEM:		ACTION ITEMS
2.	DISCUSS EDITS TO ORDINANCE NO. 125, INCLUDING POSSIBLE ADDITION OF PUBLIC WATER CREDIT TRANSFER CLARIFICATION LANGUAGE TO RULE 28
Meeting Date:			August 10, 2006
From:			David A. Berger,
			General Manager
Prepared by:			Stephanie Pintar
Legal Review:			Yes

SUMMARY: This item addresses recent concerns by legal counsel related to Ordinance No. 125 and Rule 28-B, Property-to-Property and Property-to-Jurisdiction Transfers of Water Use Credits for Non-Residential Uses that were identified as the result of the recent Superior Court decision in SOCR v. MPWMD (H029242). A legal opinion was submitted on July 7, 2006 by Associate Counsel Farina that indicated that the proposed modifications to Rule 25.5 and Rule 28-B do not conflict with the court’s determination. However, a confidential follow-up memo from Ms. Farina was distributed to the Board on July 11, 2006, to address a broader CEQA issue dealing with water credit transfers. The focus of the first memo was on comparing specific issues raised by the court with modifications proposed in the ordinance: It did not address a broader CEQA issue dealing with water credit transfers.

In developing the proposed ordinance last year, the Water Demand Committee and staff operated under the assumption that there was no potential CEQA impact to modifying the language of Rule 28 from referring to “commercial” and “industrial” to “non-residential” transfers. In a memo dated February 11, 2005, General Counsel Laredo advised that water credit transfers were not limited to commercial or industrial use and applies to the transfer of water credits among governmental agencies subject to the remaining conditions of the rule (Exhibit 2-A). Based on this interpretation, the change in terms to “non-residential” would not have any impact on the implementation of the rule.

After reviewing the history of the Water Credit Transfer Program, it became apparent to legal counsel and staff that transfer of water credits originating from publicly owned facilities was not contemplated as a component of Rule 28. Ordinance No. 75, adopted April 17, 1995, added Rule 25.7, Public Water Credits. These credits were allowed to be added to a jurisdiction’s allocation when a publicly owned facility was retrofitted to conserve water. Rule 25.7 was repealed in January 1999 by Resolution 99-01 after a lawsuit was filed in July 1998 in the Monterey County Superior Court (Case No. M40865) by Save Our Carmel River. The lawsuit challenged that the CEQA exemption asserted by the District was not pertinent to the public water credit program. On December 21, 1998, the Monterey County Superior Court ruled the CEQA categorical exemptions filed by the District when Ordinance No. 91 was enacted were inappropriate. The resolution was passed and the Jurisdictions were notified of the action. As water credit transfers from public facilities are not included in Rule 28, staff and Counsel have proposed modifications to clarify Rule 28.

The following three options are proposals to clarify Rule 28 for second reading of Ordinance No. 125 in August 2006. Changes to the proposed language are highlighted in gray. The options are attached as Exhibits B-D and are summarized below:

Option 1: Make no changes to proposed language of Rule 28, contained in Ordinance 125, notwithstanding legal counsel concerns (Exhibit 2-B).

Option 2: Change language of Rule 28, contained in Ordinance 125, to clearly exclude publicly authority facilities from the Water Use Credit transfer program and clarify the title of the rule (Exhibit 2-C).

Option 3: Change language of Rule 28 in Ordinance 125 to include references to “commercial” and “industrial” uses to track the original language of Ordinance No. 71 and clarify the title of the rule (Exhibit 2-D).

Associate Counsel’s July 11, 2006 memo suggested that further review of Rule 25.5 should be conducted. This is discussed further in a memorandum to staff from Ms. Farina dated August 2, 2006 (Exhibit 2-E). Staff is preparing a memorandum on this subject and will address it in the staff report for the second reading of the ordinance. In addition to further review of Rule 25.5 and minor edits to Rule 20 and 24, Ms. Farina recommended retaining several definitions that Ordinance No. 125 deleted (page 4 of Exhibit 2-E): These definitions will not be deleted by the second reading of the ordinance. Staff has also reviewed the issues raised in Exhibit 2-E and has made the appropriate edits to the ordinance.

RECOMMENDATION: Staff recommends the Water Demand Committee consider endorsing Option 2 or Option 3 and recommend to the Board that the selected amendment replace the language of Rule 28 in Ordinance No. 125 during second reading. Counsel has advised that the substitution of one of the two options will not preclude the ordinance from being adopted on second reading at the August 21, 2006 Board meeting.

BACKGROUND: Rule 28 allowing, water credit transfers, was added by Ordinance No. 71, adopted December 20, 1993. The rule was proposed and recommended by the Citizen’s Financial Advisory Committee as a means of easing the permit burden on commercial water permit applicants. It enabled limited transfers of existing commercial Water Use Credits from one site to another within the same Jurisdiction. Rule 28 was amended by Ordinance No. 79 (September 18, 1995) to allow commercial-to-jurisdiction transfers.

EXHIBITS

2-A David Laredo memo dated February 11, 2005

2-B Rule 28 Option 1.

2-C Rule 28 Option 2.

2-D Rule 28 Option 3.

2-E Fran Farina memo dated August 1, 2006

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