Meeting Date:

November 15, 2004





David A. Berger,




General Manager

Line Item No.:


Prepared By:


Henrietta Stern

Cost Estimate:


General Counsel Approval:  Yes.

Committee Recommendation:  Rules and Regulations Committee recommended approval.

CEQA Compliance:  Exempt per CEQA Guidelines 15061(b)(3), 15273 and 15321.


SUMMARY:  The Board will consider the first reading of MPWMD Ordinance No. 118 (Exhibit 11-A), which would refine the water distribution system (WDS) permit process, set fees and authorize enforcement of specific WDS rules and regulations.  Ordinance No. 118 is the first of two ordinance concepts (“Ordinance No. XX and YY”) that were approved by the Board at its meeting of August 16, 2004.  Ordinance No. 118 is considered to be a “housecleaning” ordinance that helps clarify the existing WDS permit process, and describes what is expected of applicants and staff.  Please refer to the “Discussion” section below for an overview of the primary components of Ordinance No. 118.


RECOMMENDATION:  Staff recommends that the Board take the following three actions:


  1. Find that Ordinance No. 118 is exempt from CEQA as shown in the draft Notice of Exemption (Exhibit 11-B) pursuant to CEQA Guidelines sections 15061(b)(3), 15273 and 15321, and incorporating the discussion in the “CEQA Compliance” section below. 


  1. In accordance with CEQA Guidelines section 15273(c), find that Ordinance No. 118 is exempt from CEQA under Guidelines section 15273(a)(1), “meeting operating expenses, including employee wage rates and fringe benefits.”  The application fees and other charges described in Ordinance No. 118 are for the express purpose of funding the actual costs incurred for staff time, consultant services, legal services and direct costs associated with each application, include permit processing, enforcement and any possible litigation. The evidence supporting this Finding includes: existing MPWMD Rule 60; schedule of staff salaries and documentation of staff time for each application; contract with and monthly itemized invoices from District consultant who assists staff (currently Idias Consulting); contract with and monthly itemized invoices from District General Counsel; and cancelled checks/receipts for direct costs such as filing fees for CEQA notices posted by the Monterey County Clerk.  This Finding is required in order for statutory exemption 15273 to be claimed. 


  1. Approve the first reading of Ordinance No. 118, and set a public hearing for the second reading and adoption of Ordinance No. 118 for December 13, 2004.  If adopted at that time, the ordinance would become effective on January 12, 2005.  Staff plans to develop Implementation Guidelines for Ordinance No. 118 once the first reading is approved.


The Rules and Regulations Committee reviewed Ordinance No. 118 at its October 27, 2004 meeting and unanimously recommended approval (with minor refinements).


CEQA Compliance:  Staff and counsel recommend that Ordinance No. 118 be considered as exempt from CEQA pursuant to CEQA Guidelines 15061(b)(3) (Review for Exemption) because the ordinance clarifies procedures, fees and enforcement actions already allowed by District and state law, and would not have a physical effect to the environment.   Section 15273 (Rates, Tolls, Fares and Charges) applies because the ordinance includes measures to ensure that the District is paid by the applicant for the actual cost incurred by the District for staff time, consultant services, legal services and direct costs to process an application.  The application fees function as a deposit; additional payment may be needed if the application fee does not cover all costs.  In contrast, a refund of unused application funds may be given if the application is processed to completion with less cost than the application fee.  Section 15321 (Enforcement Actions by Regulatory Agencies) applies because the ordinance includes enforcement measures to ensure compliance with District Rules and regulations relating to water distribution systems.   Pursuant to CEQA, the Notice of Exemption will be filed with the County Clerk upon second reading and adoption of Ordinance No. 118 by the Board.


BACKGROUND:  At its August 16, 2004 meeting, the Board directed staff and counsel to develop two ordinances (then referred to as “Ordinance No. XX and YY”) for future consideration.  Two ordinances were recommended because substantive changes to the permit process take more time, and could hold up the housekeeping changes that are needed as soon as possible.   The first ordinance (“Ordinance XX”) is now called Ordinance No. 118.  Its purpose is to address housekeeping/consistency issues that are needed regardless of changes to the WDS permit process.  For example, the ordinance clarifies the importance of production limits and what procedures would occur if a WDS goes over its limit.  See the “Discussion” section below for more detailed information.


The second ordinance (“Ordinance YY”) will reflect and codify the multi-level, “impact-based” regulatory concepts presented on August 16, 2004, and will be a substantive change to the procedures currently employed.  The first reading is anticipated in January 2005 with a CEQA Initial Study planned for distribution in December 2004.  The Water Demand Committee and Rules and Regulations Review Committee will consider Ordinance No. YY at their January 2005 meetings.  Please refer to the August 16, 2004 meeting materials for more detailed background information on Ordinance No. YY.


DISCUSSION:  Ordinance No. 118 clarifies WDS permit procedures as summarized below.  It also sets fees and authorizes enforcement related to the clarified procedures.


Ø    Section Three adds a new Rule 20.4, Permit Rules Noncompliance, which describes the consequences of not obtaining a WDS permit, if one is required.  It describes a series of actions, including notification to the system owner/operator with adequate time to file a permit application.  If compliance does not occur, subsequent actions include recording a Notice of Non-Compliance, authorization to file a lawsuit and impose liens on the property, or seek prosecution as a misdemeanor.


Ø    Section Four refines Rule 21, Applications.  Refinements include: (a) an application to create or amend a system must be signed by the system owner, but the owner’s signature is not required for a water connection permit for an individual structure; (b) an evaluation of hydrogeologic information (well pumping test data) shall be prepared by a qualified individual or firm as part of the application; (c) annexations to the service area or increases to the production or connection limit are processed as amendments to a WDS. Staff is currently preparing revised Implementation Guidelines that include technical guidance as to the proper procedures to follow for the hydrogeologic evaluation.  The WDS application form will also be changed to alert the applicant to the need for this analysis, including the need to request from the District a list/graphic of existing wells within 1,000 feet of the proposed well if located in a consolidated bedrock setting. 


Ø    Section Five makes minor refinements and adds two subsections to Rule 22, Action on Application.  The new Rule 22-F states that an application can be cancelled without prejudice for failure to respond to a Notice of Incomplete Application letter within the timeframe stated in the letter.  Specific timelines would be set for each application based on a reasonable amount of time for the applicant to provide the requested information.  The Implementation Guidelines will explain that a partial refund of the application fee will provided (fee minus costs to process fee to date of cancellation).  Similarly, the new Rule 22-G states that the WDS permit can be cancelled without prejudice if the applicant fails to perform within 60-days the required follow-up action for the permit to be valid.  Examples of required action include: payment of fees (if required) pursuant to Rule 22-D-1-l and Rule 60, sign required indemnity agreement pursuant to Rule 22-D-1-d, and sign permit condition acceptance form pursuant to Rule 22-D-1-m.  The refund procedure described in Rule 60-A-8 would still apply.


Ø    Section Six amends and reorganizes Rule 40, Determination of System Capacity and Expansion Capacity Limits, as it relates to (a) procedures to track whether a system is in compliance with its limits, and (b) action to take if a system exceeds its limits.  For reference, the “system capacity” is commonly called the “production limit” and is measured in acre-feet per year (AFY).  The “expansion capacity limit” is commonly called the “connection limit” and is measured in number of water connections. 


A new Rule 40-C is added that measures “pro rata expansion capacity” for systems with at least 10 connections, of which at least 50% are active (i.e., built on with water service).  Pro rata expansion capacity is a measure of the balance between the system production and number of connections served to date.  For example, for a hypothetical system with a production limit of 100 AFY for 100 connections, one would expect 1 AFY for each connection.  If the actual water use is 80 AF in a year, one would expect that about 80 connections should be active that same year.  If only 60 connections are using 80% of the supply, then an imbalance exists that should be addressed.  The proposed Rule 40-C describes additional tracking, assessment and other measures that would be required in such a situation.  Proposed Rule 40-C-4 notes that applications for new construction and remodels would not be accepted if a system (or components of a system) is determined to be out of balance for 12 months.  Proposed Rule 40-D describes the public hearing process to be taken if credible experts do not believe the system can come back into balance.  The proposed Rules 40-C and 40-D were added to alert larger WDS that may potentially exceed their production limit before all their connections have been served with water.  It was added to help avoid potential problems such as exist in the Hidden Hills Unit WDS at present.


Ø    Section Seven amends Rule 11, Definitions, to define the terms “pro rata expansion capacity” and “system limits.”


Ø    Section Eight amends Rule 60, Permit Fees, to be more precise about services covered by District permit fees.  It adds a new Rule 60-K regarding legal fees associated with challenges to an MPWMD permit.  A new Rule 60-L describes fees associated with permit and legal enforcement activities by staff and counsel, respectively.  A new Rule 60-M describes the collection process for unpaid fees.  A new Rule 60-N clarifies procedures relating to refunds of application fees.  These four new rules were added at the advise of counsel to ensure the public is properly notified of potential fees.  Rule 60-N stemmed from questions and suggestions by the Rules and Regulations Review Committee.


Ø    Section Nine creates a new Rule 114 that formally notifies the public that creation, establishment, expansion, extension or amendment of a WDS without a written permit from the District is a misdemeanor.


IMPACT TO RESOURCES:  Adoption of Ordinance No. 118 would help improve the balance between staff effort and fees obtained to process WDS permits, and would reduce the staff time needed to evaluate potential impacts of a system.  Staff would review information developed by credentialed professionals rather than perform the assessments. Adoption of Ordinance No. 118 would not change current budgeting associated with WDS.



11-A    Text of Ordinance No. 118, Draft 7 dated November 2, 2004

11-B    Draft CEQA Notice of Exemption