ITEM:		ACTION ITEMS
17.	DESIGNATION OF MPWMD REPRESENTATIVE TO SEASIDE GROUND WATER BASIN WATERMASTER; AUTHORIZATION TO SUBMIT MPWMD PROPOSAL FOR TECHNICAL, ADMINISTRATIVE AND FINANCIAL MANAGEMENT SUPPORT SERVICES TO WATERMASTER
Meeting Date:			February 23, 2006	Budgeted:	N/A
From:			David A. Berger,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Same	Cost Estimate:	N/A
General Counsel Approval: Yes
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: The purpose of this item is for Board consideration and action on appointment of a representative to the Watermaster, activation of which is a key and immediate step Judge Roger Randall is requiring in order to implement his Tentative Decision in the recent Seaside Groundwater Basin adjudication lawsuit. The Board also is being asked to authorize negotiation of an agreement to provide expert technical and financial/administrative support services to the Watermaster.

RECOMMENDATION: It is recommended that the Board:

1. Appoint the General Manager to serve as its representative on the Watermaster; and
2. Direct that a proposal be submitted to provide District technical and other support services to the Watermaster, and a draft service agreement be negotiated for Board consideration.

DISCUSSION: It is clear from the Tentative Decision, which is summarized in the Background section, below, that the court has (or will) make all policy decisions regarding Basin water rights, production and its eventual recovery to Safe Yield. The Watermaster will serve (in Judge Randall’s words) “to administer and enforce its (the Decision’s) provisions…and any subsequent instructions and orders” of the court. The Watermaster will function to ensure that the numerous technical, administrative, and financial obligations required to implement the court’s Physical Solution are accomplished quickly and effectively. A Watermaster is not analogous to a local agency legislative or policy-making body that is comprised of elected officials, nor is it like a joint powers agency (or even the District itself) to which certain elected officials are appointed. Frequent interactions with, and guidance to technical staff and consultants will be among the Watermaster’s most important requirements. This is a managerial function not normally handled directly by elected policy-makers. Also, the private sector companies on the Watermaster will be assigning principals or other management representatives who are not elected officials. For this and other pragmatic reasons, general managers, city managers and other appointed principals of the nine entities should occupy the positions that comprise the Watermaster board, in the opinion of District staff and counsel.

Obviously, opinions may differ from that which is expressed above as to whether elected officials or appointed managers would best represent the interests of the District and the other five public entities that Judge Randall has decided will comprise the Watermaster. The District Board may feel that it is necessary to have a Director serve in that capacity for the first two years, especially if the majority of other public entities choose to appoint elected officials. Regardless, whoever is appointed will be accountable to the Court, must keep the District Board apprised of Watermaster activities and actions, and will require managerial and technical advice from District staff prior to and during Watermaster meetings. As of the date this report was prepared (February 16, 2006) it is unknown what official actions, if any, the other five public entities have taken regarding appointment of their Watermaster representative. The city of Seaside has agendized its appointment for a City Council special meeting on February 16, and their city manager is recommending appointment of Mayor Rubio to the Watermaster. Staff will check on that City Council’s decision, survey the other four public entities, and provide any additional information available on this topic during the oral overview of this item at the February 23 Board meeting. Also, Cal-Am has scheduled a Watermaster “organizing meeting” at 9:30 a.m. on February 22 in the Soper Field community center, Seaside. District staff and counsel will attend, and report to the Board on its outcome.

Finally, staff is requesting Board direction to prepare and submit to the Watermaster a proposal for the District to provide technical, administrative and financial management support services. Clearly this approach is consistent with Judge Randall’s intent to avoid unnecessary waste of taxpayer and ratepayer time and money to attempt to replicate Basin expertise and knowledge that District water resources division staff already possesses. The District also has had a successful track record for the last decade or more performing certain financial management functions on behalf of the Carmel Area Wastewater District and Pebble Beach Community Services District on their multi-million dollar recycled water project. Recognizing that none of them has hydrologic or hydrogeologic staff positions in their organizations, during the adjudication trial the Basin producers and overlyers expressed to the court an interest in having the District provide such support services to the Watermaster. Staff and legal counsel would seek to negotiate a mutually acceptable draft Watermaster service agreement for Administrative Committee review and Board consideration and adoption, hopefully at its March 2006 regular meeting, together with any necessary budget modification. Given the short time line imposed on the Watermaster to submit the Basin Monitoring and Management Plan and other near-term tasks, staff anticipates that this negotiation should proceed quickly, absent any factors unknown at present.

BACKGROUND: On January 12, 2006 Superior Court Judge Randall filed his Tentative Decision in the Seaside Groundwater Basin water rights lawsuit that California American Water filed in 2003. The District later successfully intervened in this lawsuit to ensure that its statutory interest in groundwater management was addressed. This 62-page Tentative Decision was provided previously to the Board, and is on file in the District office. District staff and legal counsel have analyzed the Tentative Decision and concluded that its effects will be immediate, significant and far-reaching.

The decision imposes a detailed “physical solution” aimed at eliminating the over-drafting of native water that Cal Am, city of Seaside, and other original parties to the lawsuit produce from the Basin. The decision also “adjudicates” the relative priority of legal rights and allocates production amounts, among those public and private entities that continue to produce water from the Basin. The decision’s Physical Solution, or a series of management actions required to reduce production of natural Basin water to its perennial safe yield (initially set by the court at 3,000 acre-feet per year), is similar to the District’s management proposal submitted at trial. It consists of 1) aggressively developing Aquifer Storage and Recovery, recycled water and other supplemental resources to inject or spread into the Basin; and 2) reducing pumping from approximately the current level of production in 10% increments starting in three years, to the extent that these supplemental resources and other actions by then have not increased aquifer water levels above sea level at the coast.

The Tentative Decision creates a court-appointed special master, which it refers to by the term “watermaster” that is commonly used in adjudicated groundwater basins, to carry out and submit progress reports to the court regarding the Decision’s numerous and time-specific directives. The District has one of nine seats on the Watermaster, and two of a total of 13 weighted votes on actions taken by the Watermaster to implement the court decision. The other eight entities assigned positions on the Watermaster (and their respective assigned votes in parentheses) are: Cal-Am (three votes); Monterey County/MCRWA (two votes); city of Seaside (two votes); cities of Del Rey Oaks, Monterey and Sand City (one vote each); and two representatives of the property owner group (one vote, combined). Each of the nine entities is required to assign a representative to the Watermaster to serve for a two-year term, and each representative will be removable only at the pleasure of the court. Appointments are subject to challenges filed with the court by any party to the lawsuit, or separate rejection by Judge Randall, within 30 days of appointment. A challenge must be based on allegations that the appointee does not possess the requisite skills necessary to effectively serve on the Watermaster.

Of most immediate significance in terms of implementing Judge Randall’s decision are requirements that the Watermaster: a) submit to the court its proposed Basin Monitoring and Management Plan within 60 days of entry of Judgment; and b) hold its first meeting within 15 days from entry of Judgment. The latter date could be as early as next month, if the Statement of Decision that the Court has ordered Cal-Am to prepare, and on which Judge Randall will make his final Judgment, is issued in the near future. These and other obligations the Tentative Decision imposes are shown in a timeline prepared by the General Counsel (Exhibit 17-A). The court apparently has not imposed a time frame for Cal-Am’s preparation of the Statement of Decision. Regardless, these impending deadlines leave precious little time to comply with the court’s order to activate the Watermaster board and create the proposed Monitoring and Management Plan, unless one or more parties decides to appeal the decision. It is possible that dates shown on the attached timeline may be altered by the final Judgment or Statement of Decision.

The Tentative Decision authorizes the Watermaster to retain technical, administrative and financial management staff and consultants to implement the court’s decision. The Tentative Decision specifically directs the Watermaster to use the existing capabilities of any public or private entity to implement its technical, administrative and financial management responsibilities, where it is more economical to do so. Cal-Am and the cities of Seaside and Sand City are required to fund a Watermaster annual administrative budget initially set at $100,000; and Cal-Am, Seaside and two private entities will fund a Basin monitoring and management budget initially set at $200,000, plus a one-time budget of $1 million to create the Monitoring and Management Plan. In addition, the Watermaster will assess Cal-Am, city of Seaside and certain other producers to create two separate funds to pay for supplemental water supplies required to replenish the Basin, based on their proportionate share of production in excess of Basin Safe Yield and Operating Yield as determined in the Tentative Decision, respectively.

The Tentative Decision states that its Physical Solution and multi-entity Watermaster are not in conflict with the District’s statutory authority. Significantly, the Tentative Decision also declares that the District’s continuing powers to manage and augment the Seaside groundwater basin are preserved, with the exception of its adopting a groundwater management plan. The Tentative Decision states that through the court’s continuing jurisdiction, Judge Randall will resolve any potential conflict between the District’s exercising of those powers and the Watermaster implementing his directives.

IMPACT TO STAFF/RESOURCES: Costs associated with providing technical and other support services would be covered by the Watermaster management and administrative budgets contained in the Tentatative Decision, as described above. The impact on District staff workload and budget will be assessed during the service agreement negotiation, and will be described in any staff report that transmits such a draft agreement.

EXHIBITS

17-A Seaside Groundwater Basin Adjudication Lawsuit Tentative Decision Implementation Timeline, prepared by District General Counsel Laredo

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