MPWMD BOARD MEETING--JULY 18, 2005--ITEM 15--CONSIDER FIRST READING OF ORDINANCE NO. 122 –REVISING MPWMD RULES AND REGULATIONS TO CREATE IMPACT-BASED PERMIT SYSTEM FOR WATER DISTRIBUTION SYSTEMS

ITEM:		PUBLIC HEARING

15.	CONSIDER FIRST READING OF ORDINANCE NO. 122 –REVISING MPWMD RULES AND REGULATIONS TO CREATE IMPACT-BASED PERMIT SYSTEM FOR WATER DISTRIBUTION SYSTEMS A. Consider Initial Study/Proposed Negative Declaration for Ordinance No. 122 B. Consider First Reading of Ordinance No. 122 C. Consider Resolution 2005-06 to Amend Schedule of Fees

Meeting Date:			July 18, 2005	Budgeted:	N/A

From:			David A. Berger,	Program/	N/A
			General Manager	Line Item No.:

Prepared By:			Henrietta Stern	Cost Estimate:	N/A

General Counsel Approval: Concurs with Version 4A text; concurs with Neg. Dec.
Committee Recommendation: N/A. Board approved concept ordinance on May 16, 2005 (Version 3A) with minor changes (create Version 4). Version 4A has not been reviewed.
CEQA Compliance: Negative Declaration.

SUMMARY: The Board will consider three actions associated with the first reading of Ordinance No. 122. Ordinance No. 122 would amend the water distribution system (WDS) permit process to an “impact-based” system, where the permit approval process is proportionate to the anticipated impacts. The ordinance includes a matrix table used to determine the level of permit review, which is referred to as “Table 22-A” (referring to Rule 22) in the Ordinance. The three Board actions are:

A. Consider adoption of a Negative Declaration for Ordinance No. 122, based on an Initial Study and Proposed Negative Declaration circulated to the public from June 16 through July 8, 2005. The California Environmental Quality Act (CEQA) allows a 20-day review period for items of local importance. One comment letter was received, as described in the “Discussion” section below.

B. Consider approval of the first reading of Ordinance No. 122 (Version 4A). Version 4 was circulated along with the Initial Study, and reflects direction by the Board on May 16, 2005, when it reviewed Concept Ordinance No. 122 (Version 3A). Version 4A is a refinement based on suggestions by District Counsel and also reflects changes in response to public comment, as described below.

C. Consider approval of Resolution 2005-06, which would amend WDS fees to match the multi-level permit review system described in the ordinance. Resolution 2005-06 would become effective concurrent with Ordinance No. 122.

Exhibit 15-A is the Initial Study/Proposed Negative Declaration circulated to the public and provided previously to the Board. Please note that Attachment 3 to Exhibit 15-A provides the Version 4 text of Ordinance No. 122, along with Table 22-A. Exhibit 15-B is the Version 4A text of Ordinance No. 122. The changes from Version 4 are shaded text on Version 4A. Exhibit 15-C is the comment letter dated July 8, 2005 by Michael Stamp. Exhibit 15-D is the proposed Resolution 2005-06.

RECOMMENDATIONS: Staff recommends that the Board take the following actions:

1. Adopt the Negative Declaration for Ordinance No. 122 (Exhibit 15-A). Staff recommends that the Negative Declaration apply to Version 4A of Ordinance No. 122 (Exhibit 15-B). District Counsel has reviewed Version 4A and believes the revised text responds to the comment letter, and that Board adoption of the Negative Declaration fully complies with CEQA. Comments received on the Initial Study/proposed Negative Declaration are addressed in the “Discussion” section below.

2. Approve the first reading of Ordinance No. 122, Version 4A, as shown in Exhibit 15-B. Direct staff to prepare Version 5 with the recommended changes for second reading and adoption on August 15, 2005. If adopted, the ordinance would become effective on September 14, 2005. Staff is concurrently developing revised WDS Permit Implementation Guidelines to accompany the ordinance.

3. Adopt Resolution 2005-06 (Exhibit 15-D and its Attachment 1), which amends the fee schedule for WDS applications to be consistent with the different permit review levels described in Ordinance No. 122. Resolution 2005-06 would not be implemented until the effective date of Ordinance No. 122.

Ordinance No. 122 had evolved into the Version 4 text circulated with the Initial Study based on extensive review by District Counsel, the Rules and Regulations Review Committee on April 5 and May 3, 2005, and the full Board on May 16, 2005 (Version 3A). There were no substantive changes between Version 3A and Version 4. Minor changes were made to the “Level 1/Ministerial Permit” text and format to ensure consistency between various sections of the ordinance.

The Version 4A text was developed on July 12, 2005 based on suggestions by District Counsel received July 5, 2005 as well as suggested text refinements made in a comment letter on the Initial Study (Exhibit 15-C) received on July 11, 2005. Version 4A reflects text changes to foster clarity for the reader and consistency between the Table 22-A matrix and the ordinance text. A key change in Version 4A is changing the Level 1 permit from a ministerial action to a discretionary action, based on the five current criteria and a new sixth criteria that includes a staff review to ensure the application can be processed as a CEQA categorical exemption. The Level 1 permit name would be changed from “Level 1/Ministerial Permit” to “Level 1 (Categorical) Permit” throughout the ordinance. A more detailed review of these changes is provided in the “Discussion” section below.

DISCUSSION: Please refer to the May 16, 2005 board packet (Item 12) for detailed background information and discussion of the major components of Ordinance No. 122 (Version 3A). The following subsections summarize elements of Ordinance No. 122, discuss the Initial Study determinations and comment letter, describe the suggested revised ordinance (Version 4A), and describe Resolution 2005-06 amending WDS application fees.

Highlights of Ordinance No. 122

The following is a brief summary of the primary elements of Ordinance No. 122, and how it would change current MPWMD Rules and Regulations that govern WDS. Where applicable, the differences between Version 4 and Version 4A are noted:

Ø Rule 11 would be amended to add several new definitions of terms used in the revised WDS review process; also, several existing terms would be modified and refined.

Ø Most of Rule 20-C-2 would be deleted and replaced with text stating that applications that meet all of four specific criteria would be exempt from the requirement to obtain a WDS permit. This rule also introduces the concept of Sensitive Environmental Receptors (SER), which include the Carmel Valley Alluvial Aquifer, certain named tributaries to the Carmel River, the Seaside Groundwater Basin, and the Pacific Ocean at the mean high-tide line.

Ø The current Rule 20-C-4 (which would become Rule 20-C-5) would be amended to add a sentence that the “reactivate, refurbish, or replace” exemption does not apply to abandoned wells or wells that have been inactive for more than 10 years.

Ø Rule 21-A-1 would revise the process to add a new first “pre-application” step to enable District staff to determine whether the proposed system is Exempt, or will be processed under one of four “permit review levels” (i.e., Level 1, Level 2, Level 3 or Level 4).

Ø Rule 22 describes the specific protocol on how to determine the permit review level and process the permit for each. The four levels reflect increasing potential to impact the water resources system due to size, complexity, potential water use, location within the Cal-Am service area, or proximity to SER and/or other existing wells.

In brief, the five possible outcomes for a system application are:

Ø Exempt - Meets criteria to not need an MPWMD WDS permit. MPWMD ministerial action exempt from CEQA review pursuant to CEQA Guidelines Section 15268.

Ø Level 1 Permit - Minimal potential impact; MPWMD permit issued, but does not set system limits. Version 4 describes this as an MPWMD ministerial action exempt from CEQA based on required compliance with several specific criteria, pursuant to CEQA Guidelines Section 15268. Version 4A describes this as a discretionary action, based on a staff review to assess whether the application meets the criteria for a CEQA categorical exemption (Guidelines Section 15300 et seq.).

Ø Level 2 Permit - Modest potential impact; full compliance with existing rules, but no public hearing. MPWMD discretionary action subject to CEQA review at staff level.

Ø Level 3 Permit - Moderate potential impact; public hearing conducted by Staff Hearing Officer. MPWMD discretionary action subject to CEQA review.

Ø Level 4 Permit - Highest potential impact; public hearing conducted by MPWMD Board. MPWMD discretionary action subject to CEQA review.

CEQA Initial Study and Comments

Ordinance No. 122 would modify existing rules, procedures and level of review for WDS permits that could potentially result in a less than significant physical effect on certain components of the environment.

Exhibit 15-A is the Initial Study/Proposed Negative Declaration that was mailed to interested agencies, groups and individuals; posted by the Monterey County Clerk; posted on the District website at http://www.mpwmd.dst.ca.us/ceqa/Ord122_NegDecIntent.htm; noticed as a legal advertisement in The Herald; and provided for review at local libraries and the District office. Version 4 of Ordinance No. 122 was attached. This information was circulated between June 16 and July 8, 2005 pursuant to CEQA. The key conclusions of the Initial Study are:

Ø The ordinance focus is to clarify WDS rules and describe a process for categorizing and evaluating each WDS application, including CEQA review, that is responsive to the need for efficient permit processing and also protects the water resource environment.

Ø Adoption of Ordinance No. 122 itself has no impact on the environment. However, to the extent that Ordinance No. 122 would refine regulations that govern practices (i.e., create and amend WDS) that may facilitate new construction and potential new water use, adoption of Ordinance No. 122 may be considered to have a beneficial, neutral or less than significant environmental effect, depending on the situation.

Ø Until the ordinance is applied to a specific application for a WDS, and the facts of that individual application are evaluated in a separate CEQA review process, attempting to determine whether there would be adverse impacts is premature and speculative.

Ø Adoption of Ordinance No. 122 is independent from CEQA review conclusions and permitting processes of land use authorities (cities, Monterey County) or other resource agencies that may also regulate a proposed project. The MPWMD authority is focused solely on approval of a water system, not the approval of a development project.

Ø “No Impact” was checked for all Initial Study checklist categories except for four specific items noted below.

Ø A “Less Than Significant Impact” was identified for the following checklist questions in relation to the proposed change to create a new “Level 1/Ministerial Permit” category. Please refer to the “Level 1/Ministerial Permit” discussion on pages 18, 19 and 20 of the Initial Study (Exhibit 15-A) more information.

o Checklist Section VIII(b) – Hydrology; groundwater supplies

o Checklist Section XVI(b) – Utilities; construct new water systems

o Checklist Section XVI(d) – Utilities; sufficient water supplies

o Checklist XVII(b) – Mandatory Findings; cumulative effects.

Ø The proposed changes to Rule 11, Definitions, are for clarity and would not have an effect on the environment.

Ø The proposed changes to Rule 20, Permits Required, regarding criteria for a permit exemption are more rigorous than at present. More water systems within District boundaries would be subject to regulation by MPWMD than under the current situation. This may be considered as environmentally beneficial.

Ø The proposed changes to Rule 22, Action on Application, regarding procedural changes for Level 1/Ministerial Permit applications would have a less than significant impact on the environment for the four checklist items noted above. As discussed on pages 18, 19 and 20 of the Initial Study (Exhibit 15-A), there would not be individual CEQA review for applications that meet all of the five Level 1 criteria, and the permit would not include production and connection limits. The Level 1 criteria have already considered the environmental consequences consistent with existing MPWMD Rule 22-B (required findings) and Rule 22-C (minimum standards for approval). A limited number of situations are able to meet all five criteria, and the criteria are designed to result in a less than adverse effect. [Note: The comment letter (Exhibit 15-C) focused on this section.]

Ø The proposed changes to Rule 22, Action on Application, regarding procedural changes for Level 2, 3 and 4 applications would not have an impact on the environment. Each of these levels requires individual CEQA review of the application by District staff, as presently occurs. The primary distinguishing point between these three levels is the procedural questions of (a) whether or not a public hearing is held, and (b) who conducts the hearing and serves as decision-maker.

Ø There is no substantial evidence that the project may cause a significant effect on the environment [CEQA Guidelines §15063(b)(2)]. There is an absence of substantial evidence from which a fair argument can be made that adoption of Ordinance No. 122 has measurable and meaningful actual or potential significant adverse environmental consequences.

One comment letter dated July 8, 2005 by Michael Stamp was received (Exhibit 15-C). The letter questioned the validity of the Initial Study if the Level 1 Permit is to remain a ministerial permit, pointed out unclear or inconsistent sections in the ordinance, and made text suggestions. District staff and Counsel do not agree with all the assertions made in the letter. However, District staff with oversight by Counsel, believe that a refined Version 4A (described below and shown as Exhibit 15-B) of Ordinance No. 122 should be crafted to include: (a) the suggested text refinements that improve clarity and consistency; and (b) the change to the Level 1 Permit definition to add a sixth criterion for staff to assess whether the application qualifies for a CEQA categorical exemption (Guidelines Section 15300 et seq). This change from a ministerial action to a discretionary action will not impede the District Board’s goal for lower-impact Level 1 applications to be processed in a more efficient, lower-cost manner than higher levels.

Proposed Text Changes in Version 4A of Ordinance No. 122

Version 4A of Ordinance No. 122 is provided as Exhibit 15-B. Shaded text within the exhibit indicates text that has changed from Version 4, based on an early July 2005 review by District Counsel and the July 8 comment letter received on the Initial Study. The following bullets highlight the suggested changes (page numbers refer to Exhibit 15-B):

Ø Rule 11, Definitions, is amended to refine the description of Levels 1, 2, 3 and 4, with emphasis on the new name and description for the Level 1 Permit. A substantive change is that Level 1 is a discretionary permit, not a ministerial permit, reflecting the addition of a sixth criterion for Level 1 that requires staff review for a CEQA categorical exemption. Changes to Levels 2, 3 and 4 are stylistic only. See pages 4 and 5 of ordinance as well as similar text modifications throughout the ordinance.

Ø Rule 20-C-3-b, Exemptions, is changed to clarify that the parcels must be zoned as residential parcels. See page 7 of ordinance.

Ø Rule 22-A-2, Process, is changed to clarify that Level 1 parcels must be zoned as residential parcels (in subpart “b”), and adds the sixth criterion about staff review for a CEQA categorical exemption. Changes to Levels 2, 3 and 4 are stylistic only. See page 10 of ordinance.

Ø Rule 22-A-4, Process, is changed to refine language for an exempt permit; describe how permit action on a Level 1 application is now discretionary (not ministerial) and may be appealed to the Board; and add a specific condition of approval about restrictions on interties with other systems. See page 11 of ordinance.

Ø Table 22-A of Rule 22, Matrix of Permit Review Levels, is changed for clarity. Minor corrections are made from the previous version.

Resolution 2005-06 to Amend Table of Fees and Charges

Permit fees (Rule 60) may now be changed by Board Resolution, pursuant to Ordinance No. 120, which became effective on April 20, 2005. The multi-level permit process proposed by Ordinance No. 122 entails amending the current “Fees and Charges Table” by Board Resolution. Resolution 2005-06 is provided as Exhibit 15-D. The amended Fees and Charges Table (shown as Attachment 1 to Exhibit 15-D) would add new and revised fees associated with the Pre-Application Request Form process, providing a written Confirmation of Exemption form, and processing applications for Level 1, 2, 3, and 4 permit review. The Fees and Charges Table assumes that the Board approves Version 4A of Ordinance No. 122. In brief, the revised fees are proposed as follows:

Ø Pre-Application Request Form - $200 for review, including assessment of nearby Sensitive Environmental receptors or other wells (assume 3 hours); flat fee for any application. This is in addition to the fees described below, and would not be credited toward any application fee.

Ø Exempt - $50 for Confirmation of Exemption letter; flat fee.

Ø Level 1 (Categorical) Permit - $375 to process and issue Level 1 Permit; flat fee (assume 5

July 18, 2005

Budgeted:

N/A

Henrietta Stern

General Counsel Approval: Concurs with Version 4A text; concurs with Neg. Dec.

Committee Recommendation: N/A. Board approved concept ordinance on May 16, 2005 (Version 3A) with minor changes (create Version 4). Version 4A has not been reviewed.

EXHIBITS