5-C.

REVIEW RULES AND REGULATIONS GOVERNING WATER DISTRIBUTION SYSTEMS, AND DISCUSS POTENTIAL CHANGES

Meeting Date:           February 2, 2004                    Budgeted:  N/A

Staff Contact:             Henrietta Stern                      Cost Estimate:  N/A

General Counsel Approval:  Has not reviewed draft staff note

Committee Recommendation:  N/A

CEQA Compliance:  Needed to pursue new ordinance with substantive changes.

SUMMARY: District staff will provide an historical overview of MPWMD Rules and Regulations governing water distribution systems (WDS), including registration and metering of wells, and provide concepts for potential changes to streamline the permit process while continuing to protect water resources.  The California Environmental Quality Act (CEQA) requirements for a new ordinance will also be reviewed.

RECOMMENDATION:  The Board should discuss the regulatory concepts presented herein, and provide direction regarding preparation of materials for formal Board consideration at a future meeting.

BACKGROUND AND HISTORY: Since the District was created in 1978, the District has approved 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 1988 are briefly summarized below; an expanded description will be available at the February 2, 2004 workshop.

Ø            Ordinance No. 31, adopted January 11, 1988.  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. Single-parcel systems within the Carmel River Alluvial Aquifer, 1000 feet from the alluvial aquifer and specific tributaries, and the Seaside Basin Coastal Subareas as well as some previously exempted multiple-parcel systems need a WDS permit.

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. 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. Current Status Since Ordinance No. 96 was adopted, staff has processed seven permit applications; all were eventually approved, with conditions that varied with the complexity of the project. The approved permits include five single-family parcels, one multiple-parcel (4 or fewer lots), and one major subdivision application. Twenty requests for written Exemption Confirmation letters were also completed, along with numerous oral confirmations that a parcel is outside of the regulatory area for single-parcels. Currently, there are five active pending applications, including three single-parcel applications (residential, agricultural and a church) and two large subdivisions. Three applications that were deemed as incomplete appear to be inactive, and will be confirmed in the near future. Several inquiries regarding potential new applications have been received in the past 2-3 months. The District well registration program currently tracks water use in 44 water distribution systems. In water year 2002, there were 948 registered wells, with 652 active and 250 inactive (and 46 unknown). Ninety-nine percent (99%) of the groundwater production within the District was reported by the water meter method and 95% of registered well owners reported their water production. Concepts for Streamlining WDS Permit Process The current permit process takes a minimum of roughly 35 staff hours and 2-4 months between receipt of an application and final approval. At the request of the Board Chairperson, staff has proposed modifications to current regulations that would lessen impact to property owners and reduce staff effort, while continuing the District’s mandate to protect water resources and the environment. Staff recommends a new process whereby all owners of new wells permitted by the Monterey County Health Department (or other types of systems), except for specific situations that would be exempt, submit an application form that briefly describes key characteristics of the property and proposed uses so that a rough estimate of water use can be made. Based on this first screening, the application would be assigned as Level 1, 2, or 3, which reflects the level of scrutiny needed. The level of regulation is proportional to anticipated impact and sensitivity of the geographic area. A basic assumption is that the higher the water use, the higher the potential impact. The three levels are described below: Level l, Permit Waiver: A Permit Waiver would be issued with a basic set of assumptions that must hold true, or the waiver is invalid. No production or connection limits would be set. The well must be registered and metered, and report use annually. Level 1 is geared toward anticipated low impact use such as single-family residential situations on a small lot in a non-sensitive area. Level 2, Staff Permit: This would be similar to the Corps of Engineers "Nationwide Permit," where the process is streamlined for situations that meet certain criteria. There would be no public hearing, but there would be a production and connection limit associated with a permit, along with other conditions, as determined by staff (General Manager or her designee). Additional information from the applicant, such as a hydrogeologic study, and analysis by staff may be required in certain situations, such as location of a well within 1,000 feet of certain named creeks known to support habitat for sensitive species. Level 3, Public Hearing: This would entail formal notice and a public hearing before the MPWMD Board or staff Hearing Officer, depending on the situation. Hearings before the Board would be reserved for larger, potentially controversial projects, and/or well location within known sensitive areas such as the Carmel River alluvial aquifer. Selection Criteria: Placement in one of the three levels will depend on the characteristics, or combination of characteristics, of an application. These factors can include: Ø Geographic area, such as inside or outside the alluvial aquifer; based on environmental sensitivity of the area, or similar compelling reason such as water rights, overdraft etc. Ø Size of lot, with a cut-off assumption that less than "x" acres is low impact. Ø Purpose of use, such as single-family residential, or commercial or agricultural. Ø Number of parcels/connections, that is, single-parcel versus multiple parcel. Ø Type of water, that is, subpotable (agricultural/irrigation only) versus potable (domestic drinking water supply. Ø Relation to Cal-Am, that is, inside or outside the Cal-Am service area, and whether or not a property is already served by Cal-Am. Until SWRCB Order 95-10 is resolved, the District does not wish to encourage situations where a poorly planned private system fails, leading to a petition for Cal-Am service. Conversely, applicants who are drilling a well in non-alluvial situations to avoid high Cal-Am bills to irrigate gardens and livestock could benefit the Carmel River by reducing demand from the main Cal-Am system. A rough estimate of anticipated water use and potential impact would be based on the factors above. Following are proposed characteristics for each level. In the discussion below, the term “parcel” means an existing legal lot of record (see Rule 11), and refers to a residential setting unless noted otherwise. The term “subdivision” means creation of new legal lots. Exemption/No Permit Needed: (must meet all characteristics) --One or two parcels totaling less than 2.5 acres, outside of the Carmel River Basin and Seaside Basin, and not within the Cal-Am service area; potable or subpotable supply. Level l, Permit Waiver: (must meet all characteristics) --One or two parcels totaling less than 2.5 acres within the Carmel River Basin, but more than 1,000 feet from any other well, named tributary, alluvium or other designated receptor. If potable supply, must be outside Cal-Am service area; subpotable supply can be within Cal-Am. --One or two parcels totaling 2.5 to 10 acres, outside of the Carmel River Basin and Seaside Basin. If potable supply, must be outside Cal-Am service area; subpotable supply can be within Cal-Am. --Commercial/industrial of any parcel size with estimated water use less than 1 AFA; outside of the Seaside Basin; if within Carmel River Basin, must be more than 1,000 feet from any other well, named tributary, alluvium or other designated receptor. May not be within Cal-Am service area. Level 2, Staff Permit: --All situations other than Exemption, Level 1 or Level 3. Any situation where potable supply is involved within Cal-Am service area. Level 3, Public Hearing: --Any application within Carmel River alluvial aquifer (except for one-parcel system with SWRCB Domestic Registration or riparian rights demonstrated; becomes Level 2). Goes to Board if one or two parcels with total acreage over 10 acres. --Any application with 3-4 parcels totaling over 2.5 acres (Board level only if within alluvial aquifer). --Any application involving 5 or more parcels is at Board level. --Any subdivision of any size; Board level if within alluvial aquifer, or 3+ lots involved. --Any commercial/industrial application using more than 1 AFA is at Board level. ###### Comparison to the Existing Situation This proposed structure expands the MPWMD “regulatory net” in sensitive areas, but streamlines it in many others. Staff believes it is a reasonable compromise to focus staff and Board attention on situations that require the most oversight and could cause the most impact to the community water resources. An example of expanded regulation is the need for a Level 2 permit for single parcels within all areas of the Seaside Basin, not just the Coastal Subareas. This reflects the recent hydrogeologic work in the Laguna Seca Subarea as well as other Basin-wide issues. Another example is Level 1 or 2 review is needed for larger (over 2.5 acres) single parcels in areas other than the Carmel River and Seaside Basins. Currently, no permit is needed for these two types of uses. Examples of a more streamlined process (Level 1 or 2, depending on the situation) is that a public hearing is not required for (a) two-parcel systems outside of the alluvial aquifer; (b) 3-4 parcels with total acreage less than 2.5 acres outside of the alluvial aquifer; and (c) multi-parcel commercial situations with expected water use less than 1 AFA outside of the alluvial aquifer. Currently, all these situations would require a public hearing before the MPWMD Board. Under the proposed concept, staff would handle these applications administratively. ### Fee Structure A sliding scale fee structure is proposed as follows, based on staff’s best estimate of actual time need to process the permit, follow up on conditions, and track use annually. The staff hourly rate is$70 per hour; fees may be rounded for simplicity.

Basic Application/Screening: $50 for review and determination of level. Exemption Confirmation:$50 for written Confirmation of Exemption, provided upon request (not required).

Level 1:  $300 to review application, provide Permit Waiver with Conditions, track use. Level 2:$1,500 application fee, assuming 20 hours as base, plus County CEQA Exemption fee, etc.  Charge at $70 per hour (over 20 hours) and all other expenses for more complex cases similar to Ordinance No. 106. Level 3:$2,500 application fee, assuming 35 staff hours as base.  Charge \$70 per hour for all time over 35 hours as well as actual legal and consultant costs (See Ord. 106).

#### Other Considerations for New Ordinance

Staff has noticed that the current Rules and Regulations do not reflect the importance of remaining within the production limit set as part of the permit conditions; text revisions should be made to make this more clear.  The Rules and Regulations should also clearly state what happens when a system goes over its limit, and describe options available (or required) to correct the situation.   In a related matter, the Rules and Regulations should clearly state the process of enforcement and penalties associated with the need to obtain a permit, including characterization of the proposed water distribution system.  Currently, the emphasis is on revocation of losing a permit if conditions of approval are not carried out.

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.  Additional staff should be trained to help applicants rather than the few individuals who now answer nearly all questions.

##### CEQA Review for New Ordinance

Case law has determined that creation of an ordinance is a “project” under CEQA.  Previous Ordinances No. 96, 105 and 106 complied with CEQA via a Categorical Exemption or via a Negative Declaration.  It is assumed that an Initial Study will be circulated for a new ordinance with any substantive change (rather than just clarification or financial effect).  Depending on the extent and impact of the changes, an EIR could be required.  Staff’s initial assessment is that the concepts described above could be covered under a Negative Declaration, as there are adequate safeguards to protect environmentally sensitive areas.

IMPACT ON RESOURCES: Implementation of Ordinances No. 96 and 105 has increased District staff work load.  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 takes roughly 35 hours of total staff time, more if complex hydrologic issues are involved.  A consultant has assisted District staff on a regular basis since April 2003; the consultant has helped reduce the existing conflict between water distribution system permit tasks and water augmentation tasks. The staff members most affected by the water distribution system regulations are the Water Resources Division Manager (Hydrogeologist) and Project Manager within the Planning and Engineering Division. Both have significant water augmentation duties as well.  The new fee structure associated with Ordinance No. 106 has helped enable the program to be self-funding, and is recommended to be continued.

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