EXHIBIT 2-A

INTERNAL PLANNING DOCUMENT – SUBJECT TO REVISION

CEQA GUIDELINES APPENDIX G

MPWMD ENVIRONMENTAL CHECKLIST FOR ORDINANCE NO. 146

PROJECT INFORMATION
1. Project Title:		Adoption of Ordinance No. 146: Tolling the Expiration Date for Water Use Credits for the Duration of a California Public Utilities Commission Ordered Moratorium Limiting Their Use
2. Lead Agency Name and Address:		Monterey Peninsula Water Management District, PO Box 85, Monterey, CA 93942-0085 [Street address: 5 Harris Court, Bldg. G, Monterey, CA 93940]
3. Contact Person and Phone:		Stephanie Pintar, 831/658-5630
4. Project Location:		Monterey Peninsula Water Management District, see Attachment 1, map
5. Project Sponsor's Name/Address:		MPWMD, see #2 above
6. General Plan Designation:		Varies throughout District
7. Zoning:		Varies throughout District
8. Description of Project: Proposed Ordinance No. 146 tolls (or suspends) the expiration of a Water Use Credit for the duration of a California Public Utilities Commission (CPUC) ordered moratorium on the California American Water Distribution System that prohibits the use of Water Use Credits.
9. Surrounding Land Uses and Setting: Land uses within the District range from urban and suburban residential and commercial areas to open space/wilderness. The District encompasses the cities of Carmel-by-the-Sea, Del Rey Oaks, Monterey, Pacific Grove, Sand City, Seaside, portions of Monterey County (primarily Carmel Valley, Pebble Beach and the Highway 68 corridor), and the Monterey Peninsula Airport District. Each of these jurisdictions regulates land uses within its boundaries. The District does not regulate land uses. The Monterey Peninsula is dependent on local sources of water supply, which (directly or indirectly) are dependent on local rainfall and runoff. The primary sources of supply include surface and groundwater in the Carmel River basin, and groundwater in the Seaside Basin (Attachment 2). Vegetation communities on the Monterey Peninsula include marine, estuarine, and riverine habitats; fresh emergent and saline emergent (coastal salt marsh) wetland communities; riparian communities, particularly along the Carmel River; a wetland community at the Carmel River lagoon; and upland vegetation communities such as coastal scrub, mixed chaparral, mixed hardwood forest, valley oak woodland, and annual grassland. These communities provide habitat for a diverse group of wildlife. The Carmel River supports various fish resources, including federally threatened steelhead fish and California red-legged frog.
10: Other public agencies whose approval is required: None
ENVIRONMENTAL FACTORS POTENTIALLY AFFECTED:
The environmental factors checked below would be potentially affected by this project, involving at least one impact that is a "Potentially Significant Impact" as indicated by the checklist on the following pages.
 Aesthetics	 Hazards and Hazardous Materials		 Public Services
 Agricultural Resources	 Hydrology and Water Quality		 Recreation
 Air Quality	 Land Use and Planning		 Transportation/Traffic
 Biological Resources	 Mineral Resources		 Utilities & Service Systems
 Cultural Resources	 Noise
 Geology/Soils	 Population and Housing		 Mandatory Findings of Significance
DETERMINATION (To be completed by the Lead Agency)
I find that the proposed project could not have a significant effect on the environment, and a negative declaration will be prepared.				
I find that although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because the mitigation measures described on an attached sheet have been added to the project. A mitigated negative declaration will be prepared.				
I find that the proposed project may have a significant effect on the environment, and an environmental impact report is required.				
I find that the proposed project may have a significant effect(s) on the environment, but at least one effect 1) has been adequately analyzed in an earlier document pursuant to applicable legal standards, and 2) has been addressed by mitigation measures based on the earlier analysis as described on attached sheets, if the effect is a "potentially significant impact" or is "potentially significant unless mitigated." An environmental impact report is required, but it must analyze only the effects that remain to be addressed.				
I find that although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because all potentially significant effects: 1) have been analyzed adequately in an earlier EIR or NEGATIVE DECLARATION pursuant to applicable standards; and 2) have been avoided or mitigated pursuant to an earlier EIR or NEGATIVE DECLARATION, including revisions or mitigation measures that are imposed upon the proposed project. Signature: Date: Printed Name: Stephanie Pintar Title: MPWMD Water Demand Manager				

EVALUATION OF ENVIRONMENTAL IMPACTS:

1. A brief explanation is required for all answers except "No Impact" answers that are adequately supported by the information sources a lead agency cites in the parentheses following each question. A "No Impact" answer is adequately supported if the referenced information sources show that the impact simply does not apply to projects like the one involved (e.g., the project falls outside a fault rupture zone). A "No Impact" answer should be explained where it is based on project-specific factors as well as general standards (e.g., the project will not expose sensitive receptors to pollutants, based on a project-specific screening analysis).

2. All answers must take account of the entire action involved, including off-site as well as on-site, cumulative as well as project-level, indirect as well as direct, and construction as well as operational impacts.

3. Once the lead agency has determined that a particular physical impact may occur, then the checklist answers must indicate whether the impact is potentially significant, less than significant with mitigation, or less than significant. "Potentially Significant Impact" is appropriate if there is substantial evidence that an effect may be significant. If there are one or more "Potentially Significant Impact" entries when the determination is made, an EIR is required.

4. "Negative Declaration: Less Than Significant With Mitigation Incorporated" applies where the incorporation of mitigation measures has reduced an effect from "Potentially Significant Impact" to a "Less than Significant Impact." The lead agency must describe the mitigation measures, and briefly explain how they reduce the effect to a less-than-significant level (mitigation measures from Section XVIII, Earlier Analyses, may be cross-referenced).

1. The explanation of each issue should identify:

a. The significance threshold, if any, used to evaluate each question; and

b. The mitigation measure identified, if any, to reduce the impact to less than significant

6. Earlier analyses may be used where, pursuant to the tiering, program EIR, or other CEQA process, an effect has been adequately analyzed in an earlier EIR or Negative Declaration [Section 15063(c)(3)(D)]. In this case, a brief discussion should identify the following:

a. Earlier Analysis used. Identify and state where they are available for review.

b. Impacts Adequately Addressed. Identify which effects from the above checklist were within the scope of and adequately analyzed in an earlier document pursuant to applicable legal standards, and state whether such effects were addressed by mitigation measures based on the earlier analyses.

c. Mitigation Measures. For effects that are “less Than Significant with Mitigation Measures Incorporated,” describe the mitigation measures which were incorporated or refined from the earlier document and the extent to which they address site-specific conditions for the project.

7. Lead agencies are encouraged to incorporate into the checklist references to information sources for potential impacts (e.g., general plans, zoning ordinances). Reference to a previously prepared or outside document should, where appropriate, include a reference to the page or pages where the statement is substantiated. A source list should be attached, and other sources used, or individuals contacted, should be cited in the discussion.

8. This checklist has been adapted from the form in Appendix G of the State CEQA Guidelines, as amended effective October 26, 1998 (from website).

9. Information sources cited in the checklist and the references used in support of this evaluation are listed in attachments to this document.

U:\demand\CEQA Docs\Ord 146\CEQA GUIDELINES APPENDIX G_Ord 146.doc

ENVIRONMENTAL ISSUES (See attachments for discussion and information sources)	Potentially Significant Impact	Less Than Significant with Mitigation Incorporated	Less Than Significant Impact	No Impact
I. AESTHETICS. Would the project:
a) Affect a scenic vista or scenic highway?				▆
b) Have a demonstrable negative aesthetic effect?				▆
c) Create adverse light or glare effects?				▆
II. AGRICULTURAL RESOURCES. Would the project :
a) Convert Prime Farmland, Unique Farmland, or Farmland of statewide Importance (Farmland), as shown on the maps prepared pursuant to the Farmland Mapping and Monitoring Program of the California Resources Agency, to non-agricultural use?				▆
b) Conflict with existing zoning for agricultural use, or a Williamson Act contract?				▆
c) Involve other changes in the existing environment, which, due to their location or nature, could result in conversion of Farmland to non-agricultural use?				▆
Note: In determining whether impacts to agricultural resources are significant environmental effects, lead agencies may refer to the California Agricultural Land Evaluation and Site Assessment Model (1997) prepared by the California Department of Conservation as an optional model to use in assessing impacts on agricultural and farmland.
III. AIR QUALITY. Would the project:
a) Conflict with or obstruct implementation of the applicable air quality plan?				▆
b) Violate any air quality standard or contribute substantially to an existing or projected air quality violation?				▆
c) Result in a cumulatively considerable net increase of any criteria pollutant for which the project region is non-attainment under an applicable federal or state ambient air quality standard (including releasing emissions which exceed quantitative thresholds for ozone precursors)?				▆
d) Expose sensitive receptors to substantial pollutant concentrations?				▆
e) Create objectionable odors affecting a substantial number of people?				▆
Note: Where available, the significance criteria established by the applicable air quality management or air pollution control district may be relied upon to make the above determinations.
IV. BIOLOGICAL RESOURCES. Would the project:
a) Have a substantial adverse effect, either directly or through habitat modifications, on any species identified as a candidate, sensitive, or special status species in local or regional plans, policies, regulations, or by the California Department of Fish & Game or U.S. Fish and Wildlife Service?				▆
b) Have a substantial adverse effect on any riparian habitat or other sensitive natural community identified in local or regional plans, policies, regulations, or by the California Department of Fish & Game or U.S. Fish and Wildlife Service?				▆
c) Have a substantial adverse effect on federally protected wetlands defined by Section 404 of the Clean Water Act, including, but not limited to, marsh, vernal pool, coastal, etc.) through direct removal, filling, hydrological interruption, or other means?				▆
d) Interfere substantially with the movement of any native resident or migratory fish or wildlife species or with established native resident or migratory wildlife corridors, or impede the use of native wildlife nursery sites?				▆
e) Conflict with any local policies or ordinances protecting biological resources, such as tree preservation policy or ordinance?				▆
e) Conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional, or state habitat conservation plan?				▆
V. CULTURAL RESOURCES. Would the proposal:
a) Cause substantial adverse change in the significance of a historical resource as defined in Sec. 15064.5?				▆
b) Cause substantial adverse change in the significance of an archaeological resource pursuant to Sec. 15064.5?				▆
c) Directly or indirectly destroy a unique paleontological resource or site or unique geologic feature?				▆
d) Disturb any human remains, including those interred outside of formal cemeteries?				▆
VI. GEOLOGIC AND SOILS. Would the project:
a) Expose people or structures to potential substantial adverse effects, including risk of loss, injury or death involving:				▆
i) Rupture of a known earthquake fault, as delineated on the most recent Alquidt-Priolo Earthquake Fault zoning Map issued by the State Geologist for the area or based on other substantial evidence of a known fault? Refer to Division of Mines and Geology Special Publication 42.				▆
ii) Strong seismic ground shaking?				▆
iii) Seismic-related ground failure, including liquefaction?				▆
iv) Landslides?				▆
b) Result in substantial soil erosion or loss of topsoil?				▆
c) Be located on a geologic unit or soil that is unstable, or that would become unstable as a result of the project, and potentially result in on-or off-site landslide, lateral spreading, subsidence, liquefaction or collapse?				▆
d) Be located on expansive soil, as defined in Table 18-1-B of the Uniform Building Code (1994), creating substantial risks to life or property?				▆
e) Have soils incapable of adequately supporting the use of septic tanks or alternative wastewater disposal systems where sewers are not available for the disposal of wastewater?		.		▆
VII. HAZARDS AND HAZARDOUS MATERIALS. Would the project:
a) Create a significant hazard to the public or the environment through the routine transport, use or disposal of hazardous materials?				▆
b) Create a significant hazard to the public or the environment through reasonably foreseeable upset and accidental conditions involving the release of hazardous materials into the environment?				▆
c) Emit hazardous emissions or handle hazardous or acutely hazardous materials, substances, or waste within one-quarter mile of an existing or proposed school?				▆
d) Be located on a site which is included on a list of hazardous materials sites compiled pursuant to Government Code Section 65962.5 and, as a result, would it create a significant hazard to the public or the environment?				▆
e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project result in a safety hazard for people residing or working in the project area?				▆
f) For a project within the vicinity of a private airstrip, would the project result in a safety hazard for people residing or working in the project area?				▆
g) Impair implementation of or physically interfere with an adopted emergency response plan or emergency evacuation plan?				▆
h) Expose people or structures to a significant risk of loss, injury or death involving wildland fires, including where wildlands are adjacent to urbanized areas or where residences are intermixed with wildlands?				▆
VIII. HYDROLOGY AND WATER QUALITY. Would the project:
a) Violate any water quality standards or waste discharge requirements?				▆
b) Substantially deplete groundwater supplies or interfere substantially with groundwater recharge such that there would be a net deficit in aquifer volume or a lowering of the local groundwater table level (e.g., the production rate of pre-existing nearby wells would drop to a level which would not support existing land uses or planned uses for which permits have been granted?				▆
c) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, in a manner which would result in substantial erosion or siltation on-or off-site?				▆
d) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, or substantially increase the rate or amount of surface runoff in a manner which would result in flooding on-or off-site?				▆
e) Create or contribute runoff water which would exceed the capacity of existing or planned storm water drainage systems or provide substantial additional sources of polluted runoff?				▆
f) Otherwise substantially degrade water quality?				▆
g) Place housing within a 100-year flood hazard area as mapped on a federal Flood Hazard Boundary or flood Insurance Rate Map or other flood hazard delineation map?				▆
h) Place within a 100-year flood hazard area structures which would impede or redirect flood flows?				▆
i) Expose people or structures to a property to a significant risk of loss, injury or death involving flooding as a result of the failure of a levee or dam?				▆
j) Inundation by seiche, tsunami or mudflow?				▆
IX. LAND USE AND PLANNING. Would the project:
a) Physically divide an established community?				▆
b) Conflict with any applicable land use plan, policy or regulation of an agency with jurisdiction over the project (including, but not limited to the general plan, specific plan, local coastal program, or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect?				▆
c) Conflict with any applicable habitat conservation plan or natural community conservation plan?				▆
X. MINERAL RESOURCES. Would the project:
a) Result in the loss of availability of a known mineral resource that would be of value to the region and residents of the state?				▆
b) Result in the loss of availability of a locally important mineral resource recovery site delineated on a local general plan, specific plan or other land use plan?				▆
XI. NOISE. Would the project result in:
a) Exposure of persons to or generation of noise levels in excess of standards established in the local general plan or noise ordinance, or applicable standards of other agencies?				▆
b) Exposure of persons to or generation of excessive groundborne vibration or groundborne noise levels?				▆
c) A substantial permanent increase in ambient noise levels in the project vicinity above levels existing without the project?				▆
d) A substantial temporary or periodic increase in ambient noise levels in the project vicinity above levels existing without the project?				▆
e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project expose people residing or working in the project area to excessive noise levels?				▆
f) For a project within the vicinity of a private airstrip, would the project expose people residing or working in the project area to excessive noise levels?				▆
XII. POPULATION AND HOUSING. Would the project:
a) Induce substantial growth in an area, either directly (for example, by proposing new homes and businesses) or indirectly (for example, through extension of roads or other infrastructure)?				▆
b) Displace substantial numbers of existing housing, necessitating the construction of replacement housing elsewhere?				▆
c) Displace substantial numbers of people, necessitating the construction of replacement housing elsewhere?				▆
XIII. PUBLIC SERVICES. Would the project result in:
a) Substantial adverse physical impacts associated with the provision of new or physically altered government facilities, the construction of which would cause significant environmental impacts, in order to maintain acceptable service rations, response times or other performance objectives for any of the following public services:				▆
i) Fire Protection?				▆
ii) Police Protection?				▆
iii) Schools?				▆
iv) Parks?				▆
v) Other public facilities?				▆
XIV. RECREATION. Would the project:
a) Increase the use of existing neighborhood and regional parks or other recreational facilities such that substantial physical deterioration of the facility would occur or be accelerated?				▆
b) Include recreational facilities or require the construction or expansion of recreational facilities which might have an adverse physical effect on the environment?				▆
XV. TRANSPORTATION/TRAFFIC. Would the project:
a) Cause an increase in traffic which is substantial in relation to the existing traffic load and capacity of the street system (i.e., result in a substantial increase in either the number of vehicle trips, the volume to capacity ratio on roads, or congestion at intersections)?				▆
b) Exceed, either individually or cumulatively, a level of service standard established by the county congestion management agency for designated roads and highways?				▆
c) Result in a change to air traffic patterns, including either an increase in traffic levels or a change in location that results in substantial safety risks?				▆
d) Substantially increase hazards due to a design feature (e.g., sharp curves or dangerous intersections) or incompatible uses (e.g., farm equipment)?				▆
e) Result in inadequate emergency access?				▆
f) Result in inadequate parking capacity?				▆
g) Conflict with adopted policies, plans or programs supporting alternative transportation (e.g., bus turnouts, bicycle racks)?				▆
XVI. UTILITIES AND SERVICE SYSTEMS. Would the project:
a) Exceed wastewater treatment requirements of the applicable Regional Water Quality Control Board?				▆
b) Require or result in construction of new water or wastewater treatment facilities or expansion of existing facilities, the construction of which could cause significant environmental effects?				▆
c) Require or result in construction of new storm water drainage facilities or expansion of existing facilities, the construction of which could cause significant environmental effects?				▆
d) Have sufficient water supplies available to serve the project from existing entitlements and resources, or are new or expanded entitlements needed?	▆			
e) Result in a determination by the wastewater treatment provider which serves or may serve the project that it has an adequate capacity to serve the project’s projected demand in addition to the provider’s existing commitments?				▆
f) Be served by a landfill with sufficient permitted capacity to accommodate the project’s solid waste disposal needs?				▆
g) Comply with federal, state and local statutes and regulations related to solid waste?				▆
XVII. MANDATORY FINDINGS OF SIGNIFICANCE
a) Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self-sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal, or eliminate important examples of the major periods of California history or prehistory?				▆
b) Does the project have impacts that are individually limited, but cumulatively considerable? ("Cumulatively considerable" means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects.)	▆			
c) Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly?				▆
XVIII. EARLIER ANALYSES
Earlier analyses may be used where, pursuant to the tiering, program EIR, or other CEQA process, one or more effects have been adequately analyzed in an earlier EIR or Negative Declaration [State CEQA guidelines Section 15063(c)(3)(D)]. In this case a discussion should identify the following on attached sheets. a) Earlier analyses used. Identify earlier analyses and state where they are available for review.
b) Impacts adequately addressed. Identify which effects from the above checklist were within the scope of, and adequately analyzed in, an earlier document pursuant to applicable legal standards. Also, state whether such effects were addressed by mitigation measures based on the earlier analysis.
c) Mitigation measures. For effects that are checked as "Potentially Significant Unless Mitigation Incorporated," describe the mitigation measures which were incorporated or refined from the earlier document and the extent to which they address site-specific conditions for the project. Not applicable.
Authority: Public Resources Code Sections 21083 and 21087. Reference: Public Resources Code Sections 21080(c), 21080.1, 21080.3, 21082.1, 21083, 31083.3, 21093, 21094, 21151; Sundstrom v. County of Mendocino, 202 Cal. App. 3d 296 (1988); Leonoff v. Monterey Board of Supervisors, 222 Cal. App. 3d 1337 (1990).

DISCUSSION OF CHECKLIST ITEMS: This discussion first describes the MPWMD Water Use Credit program and recent action that affects the California American Water (CAW) system, followed by the potential effects of proposed Ordinance No. 146.

Water Use Credits

Water Use Credits are documented when (1) there is a Permanent Abandonment of Capacity (MPWMD Rule 25.5-E). The process allows the reuse of the entire reduced increment of water on the same Site. Non-Residential Water Use Credit may be transferred to another Site that has an expanding use, or may be transferred into a Jurisdiction’s Allocation. The latter two options can only occur when the Water Use Credit has been transferred pursuant to Rule 28.

A Water Use Credit is calculated in one of three ways: (1) by using the District’s factors as displayed in either Rule 24, Table 1: Residential Water Use Factors, or (2) by using Table 2: Non-Residential Water Use Factors, or (3) by using water savings factors that are recognized by the California Urban Water Conservation Council or that are clearly more accurate based on clear and convincing evidence. Water Use Factors are used to document Water Use Credit upon demolition of a building or use that has been recognized by the District as being a lawful water use; upon the permanent disconnection of a lawful water use from a Water Distribution System; and upon removal of Residential water fixtures. The Non-Residential Water Use Factors are based on regional averages; therefore actual water use may be higher or lower than the factored use. Water Use Credits may also be determined using equipment-specific water savings for Ultra-Low Consumption Technology.

A Water Use Credit allows the reuse of the reduced increment of water for up to ten years (up to 20 years at Redevelopment Project Sites) unless that credit is transferred to a Jurisdiction’s Allocation, at which point it does not expire. The Water Use Credit rule was adopted to accommodate reconstruction of demolished buildings if the Water Use Credit was not abandoned or expired or moved to another Site or Allocation. The District’s Water Use Credit rules were also designed to provide incentives for undertaking extraordinary retrofitting and/or installation of proven new technology and to provide a mechanism for offsetting potential intensification in use.

California American Water System

A Cease and Desist Order (CDO) was issued on October 20, 2009, by the State Water Resources Control Board (SWRCB) against California American Water (CAW). The CDO (SWRCB Order WR 2009-0060) prescribes a series of significant cutbacks to CAW’s pumping from the Carmel River from 2010 through December 2016. CAW customers may be subject to water rationing, a moratorium on Water Permits for new construction and remodels, and fines if pumping limits are exceeded. The CDO is expected to remain in place until a permanent supply of water replaces the unlawful diversions of Carmel River water.

In the CDO, CAW was ordered by the SWRCB to not connect water meters to any new projects or remodels that intensify water use. On May 27, 2010, CAW submitted an Amended Application to the CPUC to authorize CAW to refuse to connect new customers in certain areas of its Monterey County District, and to institute a moratorium on new or expanded water service connections for projects that obtained all their necessary governmental permits after October 20, 2009.

On January 25, 2011, a proposed decision on CAW’s request for a moratorium was issued by Administrative Law Judge (ALJ) Gary Weatherford. The draft decision grants CAW’s moratorium request, including a moratorium on the use of Water Use Credits. Specific exceptions include: (a) customers who receive Entitlements of water from the Pebble Beach Wastewater Reclamation Project; (b) customers who receive Entitlements of water from the Sand City Desalination Project; (c) meter splits at apartments, commercial and industrial settings that do not result in increased water use; and (d) certain named water systems, including the Bishop, Hidden Hills and Ryan Ranch systems along the Highway 68 corridor. The moratorium would last until either: (a) Cal-Am shows the CPUC written confirmation from the SWRCB that Cal-Am has obtained a permanent supply of water to replace its unpermitted diversions from the Carmel River, or (b) until litigation on the CDO results in the Court overturning the CDO, whichever comes first.

Potential Impacts

The subject of this environmental review, Ordinance No. 146, delays, suspends or “tolls” the expiration date of a documented Water Use Credit until after a CPUC-ordered moratorium has been lifted. At the conclusion of a CPUC-ordered moratorium, the Water Use Credit would resume with the same value and time to expiration as existed at the time the moratorium was enacted.

MPWMD reviewed its records of documented Water Use Credits for a ten year period, from November 1, 2001 through October 2010. This process identified approximately 60 acre-feet of valid Water Use Credits documented as of October 31, 2010. Almost two-thirds of the Water Use Credit was documented for Non-Residential reductions in use. The remainder of the Water Use Credit is Residential. Although 60 acre-feet is a relatively small amount of water in comparison with the overall demand (only about one-half of one percent of the total production limit), any unnecessary use of water has the potential to contribute to non-compliance with the CDO and the Seaside Groundwater Basin Adjudication. Both regulatory actions have regularly scheduled cutbacks in production that increase the minimal risk of a Water Use Credit being the cause of non-compliance.

MPWMD finds that the project (i.e., the tolling of Water Use Credit expirations) has the potential to result in significant environmental impacts if a moratorium is lifted before the area’s water supply is legalized and additional sources have been developed to provide water for new connections and intensifications in use. The impact of constraining the process and then releasing a potentially large number pent up Water Use Credits could result in significant impacts resulting from increased demand well beyond the obtainment of a new legalized supply, particularly if the amount of pent up demand creates additional unlawful diversions from the Carmel River.

Tolling a Water Use Credit also increases the likelihood that some portion of water that would otherwise have been returned to the community as reduced demand (i.e. conservation savings) will be reused. A moratorium on the use of Water Use Credits would not prevent the transfer of those credits to a Jurisdiction’s Water Allocation. Given that MPWMD has now identified the holders of documented Water Use Credits in combination with the fact that Monterey County is considering outsourcing an Environmental Impact Report on a Commercial to Jurisdiction Water Use Credit Transfer (pursuant to MPWMD Rule 28), the potential for transferring Water Use Credits to the Jurisdiction exists during a moratorium. Jurisdictions could potentially mine significant quantities of water credits through the transfer process to augment their Allocations so that water is available for uses immediately after the moratorium is lifted. Much of this water would, under normal circumstances, expire unused. Once transferred to a Jurisdiction’s allocation, there is no expiration.

Current MPWMD rules allow the continuous documentation of Water Use Credits during a CPUC-ordered moratorium. As no time limit exists regarding application for a Water Use Credit, it is likely that there will be some level of new applications for Water Use Credits for qualifying reductions that have taken place within the past ten years that have not been documented.

In addition, MPWMD adopted new water efficiency standards for existing Non-Residential uses in November 2009 that become mandated in 2013. Compliance with the new mandates prior to January 1, 2013, would result in a Water Use Credit. The amount of potential new Water Use Credit as a result of the new mandates is not quantified. However, given that Non-Residential retrofits tend to result in greater water savings than Residential uses, the potential for this impact to be noteworthy is high. Any newly documented Water Use Credit increases the burden on the community and the environment if the moratorium is lifted before a new water supply exists that provides water above the amount needed to legalize existing diversions and above the amount of water that could potentially be reused as a Water Use Credit.

The ongoing documentation of Water Use Credits in the two years prior to the Non-Residential retrofit mandates will result in a significant increase in available Water Use Credits. Non-Residential use in Water Year 2009-2010 was approximately one-fourth of the total demand or approximately 3,655 acre-feet. MPWMD staff estimates that implementation of the 2013 mandates will result in savings of approximately 5 percent. In addition, a number of Non-Residential Rebates will be marketed to this water use sector in 2011, which will also result in additional Water use Credit documentation. Ongoing documentation of Water Use Credits during a moratorium will increase the pent up Water Use Credit that would be released when the moratorium is lifted. Allowing the reuse of tolled Water Use Credits before water is available to accommodate new and expanded use could potentially place a further burden on the existing users to maintain water demand within available supply.

Mitigation Measures

The following mitigation measures have been identified that would reduce the potential significant impacts of tolling Water Use Credits during a CPUC-ordered moratorium to a level that could be considered without an Environmental Impact Report:

1. MPWMD Rule 25.5-K (proposed) must be amended to toll Water Use Credits from the beginning date of a CPUC ordered moratorium until after the current shortfall has been met and new supply has been developed that is sufficient to offset the Water Use Credit tolled by Ordinance No. 147. This action will ensure that Water Use Credits, once tolled, will not be reactivated until a legalized water supply is available that includes a growth component. This is necessary to avoid a situation where new projects, based on pent up Water Use Credits, drive demand to a level higher than allowed by the regulatory restrictions on the Carmel River and on the Seaside Groundwater Basin. It is recognized that the amount of Water Use Credit documented and constrained during a CPUC-ordered moratorium could be significant, given current regulations and future retrofit mandates. In addition, the escalated cost of water will continue to drive water users to find innovative ways to conserve water, potentially resulting in documentation of Water Use Credits.

2. MPWMD Rule 25.5 must be amended to disallow Water Use Credits for all mandated retrofits, including future requirements that have been adopted and codified in the Rules and Regulations of the District. Consideration must also be given to disallowing Water Use Credits for High Efficiency Toilets (HET) between now and 2014, when all toilets sold or installed in the State of California must be HET[1]. As of January 1, 2011, 67 percent of the toilets sold in California must be HET, with 75 percent by January 1, 2012, and 85 percent by January 1, 2013.

Conclusion

MPWMD staff finds that there are potentially significant impacts from tolling (or suspending) the Water Use Credit program during a CPUC ordered moratorium that warrants preparation of an Environmental Impact Report (EIR). Staff also finds that recommended amendments to the proposed project (Ordinance No. 146) would reduce the impact level such that a Mitigated Negative Declaration would be appropriate.

Staff has prepared this Initial Study Planning Document for planning purposes only.

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[1] Section 17921.3 of the State of California Health and Safety Code