A. COMPLETION OF DRAFT EIR
B. COST OVERRUN FOR ENGINEERING COMPONENT
C. REPORT ON MOSS LANDING DESALINATION OPPORTUNITIES
Meeting Date: June 21, 2004 Budgeted: $876,500 for FY 03-04
Program/Line Item No.: 1-3-2
Staff Contact: Henrietta Stern Cost Estimate: $0 - $90,000
General Counsel Approval: Staff note provided for review
CEQA Compliance: EIR in progress
SUMMARY: The Board will consider options and provide direction on three aspects of the MPWMD Water Supply Project EIR. These include:
Item A addresses the fact that a “Board Review Draft EIR” (BRDEIR) for the MPWMD Water Supply Project was received at the December 15, 2003 meeting. It has not been authorized to be refined to a formal Draft EIR to be circulated to the public in compliance with the California Environmental Quality Act (CEQA), for which a contract with Jones & Stokes Associates (JSA) is currently active. In December 2003 and March 2004, the Board delayed action until hydrogeologic information was finalized and more information on Moss Landing desalination was received, respectively. Tonight, the Board will provide formal direction on whether the Draft EIR should be completed, which affects the consultant contract. For detailed background information, please refer to the March 31, 2004 workshop materials.
Item B addresses a billing issue that has policy implications associated with Item A. The consultant invoice totals (engineering and environmental work combined) are within the cost limit of the contract (currently at 91% of limit). However, the engineering component has taken more time and effort than expected, based in part on additional requests by the District Board and staff to answer technical questions, resulting in roughly $24,900 more expended than originally budgeted. The policy issue is whether the additional engineering costs should be paid from the remaining environmental funds (which are currently under budget), or whether the environmental funds should be saved for future work on the EIR or related activity.
Item C is an update on meetings and communications with Monterey County/California American Water (Cal-Am) as well as the Pajaro/Sunny Mesa Community Services District (CSD) regarding their respective plans and progress on Moss Landing desalination projects. The Board will provide direction on future action by staff.
Each of these three items will be addressed separately below. The Board should provide policy direction for Items A, B and C in light of the 2004-2005 budget (Agenda Item #16). If an activity is not contemplated as a line item in the adopted budget, the Board should identify the source of funding (e.g., contingency) or be prepared for a budget adjustment later in the fiscal year.
ITEM A, WATER SUPPLY PROJECT EIR
Background: In early 2002, the Board determined that the Water Supply Project EIR contract should be performed in three phases: (1) develop project descriptions for proposed project and alternatives, and issue Notice of Preparation for an EIR; (2) prepare Draft EIR and circulate for public review; and (3) prepare and certify Final EIR. The District is currently nearing the end of Phase 2. Remaining consultant tasks to be performed in accordance with the Phase 2 contract include:
Ø Prepare formal Draft EIR; make numerous copies and CDs; circulate to public, agencies and State Clearinghouse, assuming approval by the Board;
Ø Participate in public workshops and public hearings for the Draft EIR, assuming approval by the Board.
A rough estimate for the remaining Phase 2 tasks to be performed pursuant to the Phase 2 contract is a minimum of $30,000-$40,000 to circulate a Draft EIR and hold workshops and hearings. The actual cost could be much higher, depending on the option selected by the Board.
Recommendation: The Board should provide formal direction on the current JSA/CDM Phase 2 contract (Draft EIR), which is more than 90% complete. If the policy intent is to maximize the accuracy and usefulness of the BRDEIR, then Options A or B should be considered. Options A and B will entail a budget adjustment. If the policy intent is to minimize costs, then Options C or D should be selected. The four action options include:
Option A: Amend JSA contract to circulate Draft EIR as is, except remove discussion of offshore HDD, as it was subsequently determined to be infeasible. EIR focus on desalination with radial well technology.
Time: Four months.
Cost: $30,000-40,000 (3 wells) and up to $60,000-75,000 (4 wells).
Pro: Formal Draft EIR is completed.
Con: Incomplete information on onshore HDD; must amend budget.
Select this option if a completed Draft EIR is desired at least cost.
Option B: Refine EIR to remove discussion of offshore HDD and replace with detailed review of onshore HDD; discuss possible combinations of methods, based on Phase 2 hydrogeologic study results.
Time: Five months
Pro: Formal Draft EIR is completed with most accurate, up-to-date information; can be most easily used by other entities for alternatives review.
Con: Higher cost; need to amend budget.
Select this option if a completed Draft EIR is desired with the most accurate, recent information.
Option C: Defer action on EIR (contract on hold); continue to assess Moss Landing desalination opportunities.
Time: To be determined by Board (assume 6+ months).
Cost: None immediately; deferred until future.
Pro: Limits expenditures in near-term; keeps options open in future.
Con: Limited usefulness of current BRDEIR due to inaccurate or outdated information. Consultants in limbo; time and cost to re-educate on project details in future.
Select this option if limited expenditures are desired in near-term, but wish to keep options open regarding EIR.
Option D: End MPWMD CEQA process for a local desalination project, and terminate consultant services pursuant to procedures specified in the contract.
Cost: None, except for outstanding invoices through termination date (minor).
Pro: Least cost option; consistent with adopted budget.
Con: Limited usefulness of current BRDEIR due to inaccurate or outdated information. Harder to start up again, if desired in future.
Select this option if primary goal is cost savings and there is little chance of further evaluations of local desalination by MPWMD.
Discussion: The selection of the action option involves not only basic policy considerations discussed on March 31, 2004, but also practical concerns such as:
Ø Consistency with the 2004-2005 budget, which has greatly reduced water augmentation funds in comparison to previous years. Would a budget adjustment be needed? Could there be co-funding by other entities?
Ø Roughly $1.5 million has been spent to date on the local desalination project engineering and environmental work. Will that significant financial “investment” in the EIR be lost if the Draft EIR is not completed? (That is, how usable is the current document?) The CDM engineering reports are stand-alone documents. Portions of December 2003 BRDEIR can be cited just like any other technical report or review, but may contain inaccuracies and would need to be updated. The document cannot be referred to as “an EIR” in the CEQA context.
Ø How easily can the current document be used as a reference by MPWMD and/or other agencies that must perform an alternatives analysis for any water supply proposal in an EIR? The BRDEIR cannot be incorporated by reference as an EIR or used for CEQA tiering (must be certified Final EIR). Specific engineering or environmental information can be cited like other technical reports. The BRDEIR does not include the most recent engineering and hydrogeolgic findings, and would be inaccurate in some sections.
Ø How valuable is obtaining near-term formal agency and public feedback on local desalination concepts by circulating a Draft EIR? Circulating a Draft EIR compels public agencies, groups and others to communicate concerns, or they potentially lose standing in future litigation.
The discussion above is focused on continuation of Phase 2 work, that is, completion and circulation of a Draft EIR. Importantly, in order to complete the CEQA process, a future Phase 3 contract is needed to (a) consolidate and evaluate public comment on the Draft EIR, and prepare a Responses to Comments document; and (b) prepare a Final EIR, including a comprehensive Mitigation and Monitoring Plan, for certification by the Board. The time to complete the Final EIR is highly dependent on the volume and substance of agency and public comments on the Draft EIR. The cost is difficult to predict until the comments are received, but could be as high as $100,000.
ITEM B, ENGINEERING COST OVERRUN
Background: The Board approved retaining JSA/CDM in March 2002 with a Phase 1 contract limit of $723,775. JSA/CDM invoices for the period April 2002 through April 4, 2003 totaled $638,267 or 88% of the contract limit for Phase 1. The Board approved of the Phase 2 contract with JSA/CDM in April-May 2003 with a not-to-exceed amount of $946,750. JSA/CDM invoices from April 2003 through May 2004 total about $860,790 (91% of contract limit). Minor additional costs are expected in June 2004. The combined total cost for Phase 1 and Phase 2 desalination EIR studies incurred from April 2002 through May 2004 is about $1.5 million.
The consultant invoice totals (engineering and environmental work combined) are within the cost limit of the contract. However, the engineering component has taken more time and effort than expected, based in part on additional requests by the District Board and staff to answer technical questions, resulting in roughly $24,900 more expended than originally budgeted. The environmental component is well under budget, and funds are available to pay for the engineering work.
Recommendation: Staff believes the engineering costs are justified and recommends that the unanticipated engineering costs be paid from the available funds originally budgeted for environmental work. Total consultant payments would remain well within the contract limit, but there would be fewer funds available to perform future environmental work without a contract amendment (e.g., if Options A or B above are selected). The engineering consultant prepared detailed documentation and communicated monthly about budget status and alerted MPWMD to higher-than-expected costs beyond their control. Many of these costs were associated with extensive requirements from the seven permitting agencies whose approval was needed to perform the Phase 2 hydrogeologic testing. Also, the District Board in December 2003 requested additional information about local desalination production capacity with various HDD options that was not originally budgeted.
Due to an agenda oversight, the Administrative Committee was not presented this item for consideration, and does not have a recommendation.
ITEM C, EXPLORE MOSS LANDING DESALINATION PARTICIPATION
Background: In March 2004, District staff reported on two regional desalination projects that are being pursued by other entities, which may present partnering and/or water service opportunities. Both are in the early stages of development, and have yet to begin the EIR process. Both sponsors have indicated a willingness to provide water to several communities within Monterey County, and to work with the District and others regarding water needs. They include:
Ø Cal-Am/Monterey County plant at Moss Landing: On March 16, 2004, the Monterey County Board of Supervisors approved developing a Letter of Intent to partner with Cal-Am to develop a desalination project in the Moss Landing area to serve Monterey County needs, and directed the Monterey County Water Resources Agency (MCWRA) to work with Cal-Am to implement the project. Based on information presented at a public meeting hosted by Cal-Am/MCWRA on June 14, 2004, a 60,000-gallon-per-day pilot project is proposed to be operated in 2005 in cooperation with Duke Energy. A project of about 20,300 acre-feet per year (AFY) is presently envisioned to meet regional water needs (Exhibit 22-A). A Letter of Intent has been submitted to the California Public Utilities Commission (CPUC), which will serve as the CEQA lead agency. An Environmental Assessment/Draft EIR should be completed in mid-2005, and a Final EIR completed in Winter 2006. Critical state and federal permits should be obtained by late 2006. Exhibit 22-B is a recent news article about the meeting. A project website should be available by July 1, 2004 at www.coastalwaterproject.com . District staff is scheduled to meet with Cal-Am/Monterey County representatives on June 23, 2004 to discuss desalination opportunities.
Ø Pajaro/Sunny Mesa Community Services District (CSD): The agency’s attorney, Marc Del Piero, stated that the Pajaro/Sunny Mesa CSD will serve as the CEQA lead agency for its own Moss Landing desalination project. Over the past several months, the District Board Chair and staff members have had a continuing dialogue with Board and staff members from the Pajaro/Sunny Mesa CSD concerning Moss Landing desalination plant alternatives. A series of meetings focused on joint efforts to create new water supplies that can be made available to the California American Water Company and others. This alternative desalination effort would rely on the former National Refractories site in Moss Landing, with its existing intake and outfall facilities. This concept is advantageous as it does not rely on facilities controlled by Duke Energy and no permit or approval is needed from the CPUC if Cal-Am does not own or operate the desalination facility. Future discussions will refine this project concept, and clarify opportunities to participate.
Recommendation: The Board should direct staff to continue exploring means of participating in opportunities associated with both desalination plants in Moss Landing, including potential partnerships. Continued dialog with Cal-Am/MCWRA and Pajaro/Sunny Mesa CSD is encouraged.
22-A Summary of potential desalination production (Cal-Am/MCWRA)
22-B Herald article on Moss Landing desalination