ITEM:            ACTION ITEMS                  




Meeting Date:           June 21, 2004                         Budgeted: N/A

Program/Line Item No.: N/A

Staff Contact:             Henrietta Stern and               Cost Estimate: N/A

Andrew Bell


General Counsel Approval:  Reviewed staff note and Resolution

Committee Recommendation: N/A

CEQA Compliance: N/A


SUMMARY:  The Board will consider approval of Resolution 2004-__, A Resolution of the Board of Directors of the Monterey Peninsula Water Management District Opposing Petition for Tehama/Monterra Detachment from MPWMD (LAFCO File No. 04-02) (Exhibit 23-A).  A map showing the location of the Tehama and Monterra subdivisions is provided as Exhibit 23-B.  This item was discussed at the May 27, 2004 Board meeting.  A number of issues were brought up during public comment, comments by representatives of the Tehama and Monterra Ranch subdivisions, and questions from the Board.  Some of those issues are addressed under “Discussion” below.  The Board closed public comment on this item and continued Board discussion and action to the June 21, 2004 Board meeting.  The staff note for the item for the May 27, 2004 meeting is provided as Exhibit 23-C.


RECOMMENDATION:  Staff recommends that the Board approve Resolution 2004-__ (Exhibit 23-A) and suggest text refinements, if needed.  The Board should also authorize the Chair, staff and counsel to participate in the LAFCO proceedings to oppose the Tehama/Monterra detachment from the District.  This includes commenting on any California Environmental Quality Act (CEQA) document prepared by LAFCO for this or any related matter, such as other detachments proposed by Tehama/Monterra.


DISCUSSION:  Several issues arose during consideration of this item at the May 27, 2004 Board meeting.  These are discussed below.


Issue 1:  Are the water distribution systems for the Tehama/Monterra subdivisions being treated differently from other water distribution systems?  

Derinda Messenger of Lombardo & Gilles, speaking on behalf of Tehama/Monterra, stated that her client’s water distribution systems (WDS) are regulated by other agencies, such as Monterey County Department of Health, the State Water Resources Control Board (SWRCB), and the California Public Utilities Commission (CPUC).  Michael Waxer of Carmel Development Company, also speaking on behalf of Tehama/Monterra, asked how many other CPUC-regulated systems are within the District.  Director Knight asked if other WDS besides those serving Tehama and Monterra are governed by the CPUC and if non-potable and reclaimed water uses by others are included in other WDS permits.


Exhibit 23-D is a list of 49 WDS within the District.  Potable water for what is known as the Tehama development is served by both the Cañada Woods WDS (number 12 on Exhibit 23-D) and the Monterra Ranch Mutual Water Company WDS (number 28).  The Monterra Ranch Mutual Water Company WDS also serves potable water to what is currently known as the Monterra development.  Four other WDS on the list are governed by the CPUC:  the Bishop Unit (owned and operated by Cal-Am, number 6), the Cal-Am main system (number 11), the Hidden Hills Unit (owned and operated by Cal-Am, number 22), and the Ryan Ranch Unit (owned and operated by Cal-Am, number 39).  While many WDS serve both potable and non-potable water, four of the WDS on Exhibit 23-D are for non-potable water use only:  Animal Farm (number 4), Clark/Wells Fargo (number 17), Pelio (also known as Twelfth Tee Investors, number 31), and Tobey/Wagner (number 49).


Although there are three reclaimed wastewater systems within the District in addition to the reclaimed system serving the Tehama/Monterra subdivisions, none of the other systems has a WDS permit.  However, all of the reclaimed wastewater systems began as public agency systems.  The reclaimed water systems for Carmel Valley Ranch and the Bishop Unit (includes the Pasadera subdivision) started out as Community Service Area systems and are now owned and operated by Cal-Am.  The third system, the Carmel Area Wastewater District/Pebble Beach Community Services District Wastewater Reclamation Project was initiated as a public project and remains in public agency ownership and operation.


District Rules & Regulations include provisions for the use and permitting of non-potable and reclaimed water.  These are found in Regulation II – Permits, Regulation XIII – Sub-Potable Water, and Regulation XIV – Water Conservation.  Notably, Ordinance No. 96, which became effective in April 2001, significantly expanded the definition and regulation of WDS.  For example, the definition of a “water distribution system” in Rule 11 was expanded to “any connection” and refers to any works used to collect, store, transmit or distribute water.  The definition of a “water gathering facility” (Rule 11) includes any means to produce water “from dams, groundwater, surface water, water courses, or reclaimed water or any other sources of supply” within the MPWMD boundaries.  MPWMD Rules 20 through 22, as amended by Ordinance No. 96 and 105, include extensive direction to identify, tabulate, monitor, report and regulate water production from all sources of supply.


Issue 2:  Status of the Cañada Woods potable water system authorization from Monterey County Department of Health and the California Department of Health Services. 

As of June 16, 2004, authorizations for the Cañada Woods potable system had not been obtained from the responsible state and county health agencies.  In a June 16, 2004 telephone conversation with MPWMD District Engineer Andy Bell, Pete Garneau, the contractor responsible for the testing, and operation of the Cañada Woods system, reported that testing of the system had been completed and reports prepared, but that the reports had not yet been provided to the state and county agencies.  MPWMD staff members have been in contact with representatives of the Monterey County Department of Health, Division of Environmental Health, since the latter part of 2002.  Monterey County representatives have commented that the applicant was progressing extremely slowly on the permitting process with the Division of Environmental Health.


Issue 3: Existing agreements with the District. 

During the May 27, 2004 discussion of this item, representatives of Tehama/Monterra stated that Cañada Woods has agreements with the District that would continue if the Tehama/Monterra subdivisions were detached from the District.  Although this is a true statement, District staff believes that detachment would unduly limit the District’s regulatory powers because enforcement of a breach of contract (agreement) is much more difficult than enforcement of public agency regulations.


Water Rights Protest Dismissal Agreement and Cañada Woods Water Rights Permit Conditions.

Derinda Messenger of Lombardo & Gilles, representing Tehama/Monterra, stated that Cañada Woods has an agreement with the District to be rationed and to maintain the riparian corridor, and that the agreement would still be in force, even if Tehama/Monterra were detached.  Ms. Messenger may have been referring to section 7 of the April 17, 1995 water rights protest dismissal agreement between the District and representatives of Cañada Woods, as well as SWRCB water rights Permits 20831 and 20832 for diversion and use of water from the Carmel River alluvial aquifer. 


The 1995 protest dismissal agreement reads in part as follows:


6.   Applicants have filed for and shall obtain a permit from the Water Management District to enable creation of the Cañada Woods water distribution system.  User fees for the Cañada Woods system should bear a positive correlation to fees placed on the California-American (“Cal-Am”) water distribution system.


  1. The Cañada Woods Water System shall be subject to the rationing requirements of the Water Management District, in frequency and percentage no greater than required of consumers in the Cal-Am water distribution system.


The May 3, 2003 SWRCB Amended Permits 20831 and 20832 include the following provisions:


Condition 8  

1)      Permittee shall remain subject to all lawful ordinances of MPWMD;

2)      Permittee shall be subject to fees for the use of water from any public utility, including, but not limited to use fees, connection fees, and assessments;

3)      Permittee shall be subject to the rationing requirements of MPWMD, in frequency and percentage no greater than required of consumers in Cal-Am’s water distribution system in times of water supply shortage caused by drought;

4)      Upon forty-eight (48) hours advance notice by DFG, permittee shall minimize or cease, if required, agricultural pumping for a single period not to exceed forty-eight (48) hours in any thirty (30) day period to assist DFG [California Department of Fish and Game], to mitigate adverse flow conditions to benefit public trust fish and wildlife resources of the Carmel River; and

5)      The permittee shall irrigate and maintain the riparian corridor on permittee’s property abutting the Carmel River if MPWMD and Cal-Am fail to perform this obligation.


Public agency regulations have stronger effect and enforcement than contracts or agreements.  A contract is a voluntary obligation assumed by two or more parties.  Each party to a contract has an equal right of enforcement through civil means.  Contracts are interpreted by a specific set of rules.  Neither side holds any presumption that their actions have met or failed to meet the terms of the contract.  The party alleging a breach has the burden to produce evidence in a civil lawsuit.  Courts will independently weigh the evidence of a breach based on a preponderance of evidence.  The legal process to enforce or interpret a contract is subject to a long statute of limitations, and these actions are not entitled to time preference before the court. 


On the other hand, public agency regulations are mandatory obligations imposed by government on behalf of the public.  Enforcement by the public agency is subject to only limited review in court.  Common law gives “great weight” to a public agency’s interpretation of its own laws, and presumes the agency action to be proper.  The party alleging improper governmental action has the burden to produce evidence.  Courts offer only a limited review of challenges by writs of mandate, and will overturn the governmental decision only if the agency has exceeded its authority, has failed to follow required processes, or makes an arbitrary or capricious decision that is unsupported by fact.  The legal process to review governmental action has a short statute of limitations, and actions are entitled to time preference before the court.


Issue 4:  Does the District have powers, responsibilities, or requirements that differ from those of other agencies that regulate the water systems for the Tehama/Monterra subdivisions?

Yes.  Many of the provisions of District WDS permits, including setting limits on both the number of connections and the total system production capacity, are not regulated by other agencies.  Many District regulations regarding water conservation, water use reporting, and activities within the Carmel River riparian corridor are also unique. 


During the May 27, 2004 discussion of this item, Derinda Messenger of Lombardo & Gilles, representing Tehama/Monterra, stated that Exhibit B of the Tehama/Monterra detachment petition to LAFCO shows a comparison of regulatory agencies and duplication with MPWMD regulations.  Exhibit B-1 of the petition is described as a response to “Question 1(e)” of Justification of Proposal.  Section 1(e) of the Justification of Proposal is as follows:  “Indicate and justify the reasons why the proposed action has been requested.”  Exhibit B-1 lists regulations by the following agencies:  Monterey County, SWRCB, CPUC, and California Department of Fish and Game.


In addition to the fact that many MPWMD regulations that apply to Tehama/Monterra are not duplicative of other agencies’ regulations, MPWMD staff is often in the position of being the only agency to enforce its regulations when there is an overlap.  For instance, Monterey County, the California Department of Fish and Game, and the U.S. Army Corps of Engineers all have regulations regarding activities along the river.  District staff members are typically the first among the various regulatory agencies to observe infractions, and members of the public often call the District to report activities or conditions they believe are violations of public agency regulations.  One reason for this is that some of the District staff members are in the field in Carmel Valley in the normal course of their duties, whereas those from other agencies are not.  Also, many of the other agencies have limited resources for enforcement and do not follow up on reports of violations in a timely manner.  As a result, these other agencies rely on the District to inform them of problems, and to proceed with corrective measures.


Issue 5:  Cañada Woods representatives’ statements regarding senior water rights. 

During the May 27, 2004 discussion of this item, both Alan Williams and Michael Waxer of Carmel Development Company, speaking on behalf of Tehama/Monterra, stated that the water rights for the Cañada Woods development are senior.  This statement is not necessarily correct.  While the appropriative rights for Cañada Woods are senior to those of MPWMD, they are junior to all riparian rights holders and to those appropriative rights holders who have earlier priority dates. 


SWRCB Decision 1632, July 6, 1995, states that the District’s appropriative rights shall be junior to any permit issued on the applications listed on Table 13 of the decision.  Table 13 includes the Kaufman/Williams Trust for Cañada Woods’ appropriative rights application.  However, Cañada Woods’ rights are junior to those parties who have riparian, overlying, and pre-1914 appropriative claims of right, as well as those post-1914 appropriative claims on Table 13 whose application dates are senior to Cañada Woods’.  There are many parties who have rights or claims to water from the Carmel River and its alluvial aquifer whose rights are senior to those of Cañada Woods, including all riparian and pre-1914 appropriative rights holders and at least 17 post-1914 appropriative claims, including Cal-Am.




23-A    Draft Resolution 2004-__ -- A Resolution of the Board of Directors of the Monterey Peninsula Water Management District Opposing Petition for Tehama/Monterra Detachment from MPWMD (LAFCO File No. 04-02)

23-B    Location map showing Tehama/Monterra boundaries

23-C    Staff note for Action Item 4 from the May 27, 2004 Special Board Meeting, with Exhibits 4-A, 4-B, 4-C, and 4-D.

23-D    List of water distribution systems