ITEM:		INFORMATIONAL ITEMS/STAFF REPORTS
23.	QUARTERLY WATER SUPPLY PROJECT STATUS REPORT
Meeting Date:			April 17, 2006	Budgeted:	N/A
From:			David A. Berger, General Manager	Program/ Line Item No.:	N/A
Prepared By:			Henrietta Stern	Cost Estimate:	N/A
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

This is a quarterly report on District water supply augmentation projects for the January through March 2006 period. The next quarterly report will be written in July 2006. Limited background information is provided herein. A detailed historical overview of previous action may be found in year 2003 and 2004 reports. Information is also available as part of the weekly General Manager’s letter to the Board, and quarterly updates at the January, April, July and October regular Board meetings, all of which can be found on the District website at www.mpwmd.dst.ca.us.

Based on a Strategic Planning Session held on September 8, 2005, and ratified at the October 17, 2005 regular meeting, the Board identified the following water supply objectives for year 2006:

WS1: Determine existing and future water needs.

WS2: Evaluate water supply options to meet community needs.

WS3: Determine MPWMD role in governance of Regional Urban Water Supply project.

WS4: Encourage public participation and understanding.

WS5: Pursue MPWMD water supply projects.

WS6: Create Board Water Supply Committee and charge (deleted January 26, 2006).

At the November 21, 2005 regular meeting, the Board approved six workshop dates to address specific water supply issues consistent with the six water supply objectives noted above. In February 2006, the workshop schedule was revised to five workshop dates as shown below:

1/25/06: Aquifer Storage and Recovery (ASR) – Overview and Future Possibilities

2/22/06: Regional Urban Water Supply Board Governance

3/23/06: Water Needs Analysis, Existing Setting and Demand

5/18/06: Water Needs Analysis, Future Demand at Buildout

6/29/06: Water Supply Augmentation Update; Desalination Projects Assessment

The following paragraphs describe action on Water Supply Objectives WS1 through WS6 in the January 1 through March 31, 2006 period.

WS1: DETERMINE EXISTING AND FUTURE WATER NEEDS

At the March 23, 2006 special workshop, District staff summarized historical trends and year 2005 information for Cal-Am production, community water demand (metered sales), conservation and legal constraints, such as State Water Resources Control Board (SWRCB) Order 95-10 affecting diversions from the Carmel River Basin and the Monterey County Superior Court Decision for the Seaside Basin Adjudication. All things considered, District staff concluded that 7,690 acre-feet per year (AFY) of replacement water would be needed at a minimum to meet existing water needs. A maximum of 13,236 AFY could be needed, depending on the assumptions made. A second workshop is scheduled for May 18, 2006 to address future water needs.

WS2: EVALUATE WATER SUPPLY OPTIONS TO MEET COMMUNITY NEEDS

At its February 23, 2006 meeting, the District Board approved retaining a team of water supply engineering design experts led by Bookman-Edmonston/GEI Consultants to conduct an independent technical evaluation of three proposed desalination projects previously reviewed in the comparative water supply matrix: (1) Coastal Water Project (CWP) at Moss Landing proposed by California American Water (Cal-Am); (2) the Monterey Bay Regional Desalination Project (MBRDP) at Moss Landing proposed by Pajaro/Sunny Mesa Community Services District (PSM); and (3) MPWMD desalination project proposed in the Sand City area. District staff and consultants worked with Cal-Am and PSM in February and March 2006 to obtain the most recent available engineering and cost information. The consultant work will culminate in a report and presentation at the June 29, 2006 workshop. The consultants will provide independent review of the following attributes for each project:

Ø technical feasibility of major components;

Ø reasonableness of the estimated capital and operation costs;

Ø proposed financing mechanisms, if available;

Ø existing and proposed right-of-way agreements;

Ø physical, regulatory, environmental and other constraints to project implementation, which affects timeline.

WS3: DETERMINE MPWMD ROLE IN GOVERNANCE OF REGIONAL URBAN WATER SUPPLY PROJECT

District staff continues to coordinate with Monterey County Water Resources Agency (MCWRA), Monterey Regional Water Pollution Control Agency (MRWPCA), and Marina Coast Water District (MCWD) on regional water supply solution opportunities. The MPWMD Board held a special workshop on regional water supply governance issues on February 22, 2006. The District General Manager participated in Monterey County-led meetings of water district and city/county representatives regarding a potential governance structure for a regional water supply planning entity currently known as the Monterey Bar Regional Water Authority (MBRWA). The MPWMD and MCWRA are co-hosting a public meeting of local elected officials to discuss the MBRWA governance proposal on April 10, 2006. MPWMD staff issued a news release and invited interested members of the public to the meeting.

WS4: ENCOURAGE PUBLIC PARTICIPATION AND UNDERSTANDING

District staff continues to communicate with the public through weekly updates posted to the District website and monthly presentations at Board meetings, which are carried by public access television. Public participation and understanding of water supply issues are a major goal of the five special workshops noted above.

WS5: PURSUE MPWMD WATER SUPPLY PROJECTS

The primary water supply efforts at this time focus on ASR, including: (1) continued testing of the existing full-scale Santa Margarita Test Injection Well; and (2) pursuit of the permanent Phase 1 ASR Project at the Santa Margarita test site, which entails completion of an Environmental Impact Report (EIR) and Environmental Assessment (EA) to meet state and federal environmental review requirements. Both the existing and future ASR programs require permits from the SWRCB and other entities. The adjudication of the Seaside Basin also affects water project activities.

For reference, at the September 2004 strategic planning workshop, the District Board confirmed that it would not proceed on further analysis of a local MPWMD-owned desalination project in the Sand City area at this time, and instead focus its efforts on collaboration with other agencies on regional water supply solutions, as well as pursue the MPWMD Phase 1 ASR Project planned to be operational in year 2007. In June 2005, the Board approved a user fee adjustment to fully fund the Phase 1 ASR Project.

Conduct ASR Testing in 2006

ASR entails diverting excess water flows (typically in Winter/Spring) from the Carmel Valley Alluvial Aquifer through existing Cal-Am facilities and injecting the water into the Seaside Groundwater Basin for later recovery in dry periods. Since 1996, the District has evaluated the feasibility of ASR at greater levels of detail, including obtaining annual temporary water rights to divert water from the Carmel River Basin water and inject it into the Seaside Basin. From 1998 through March 2005, the District injected approximately 1,450 acre-feet (AF) of excess winter flow from the Carmel River Basin into the Seaside Basin at the MPWMD Santa Margarita Test Injection Well located on the former Fort Ord military base, just east of General Jim Moore Boulevard near Eucalyptus Avenue. During this period, approximately 1,140 AF were recovered and delivered to the community via the Cal-Am system as part of the test program.

On December 14, 2005, the District received a temporary permit #21175 from the SWRCB for continued ASR testing through May 2006, pending adequate flows in the Carmel River as set by the SWRCB in consultation with federal and state fishery agencies. An annual diversion limit of 650 AF was set for 2006. Injection testing began on January 4, 2006 and proceeded until January 31, 2006, when flows dwindled. Diversions began anew on February 27, 2006 and have continued until the present (April 3, 2006). To date in 2006, a total of 273 AF have been diverted and injected into the Seaside Basin. As water is injected, various testing efforts associated with water quality and storage are being conducted.

District and Cal-Am representatives finalized a Management and Operations Agreement (MOA) regarding ASR testing, mutual aid, cost-sharing, water rights and other issues. The MOA was approved by the MPWMD Board on February 23, 2006, and was then reviewed by Cal-Am. The MOA was signed by both parties in late March 2006. Copies were provided to the SWRCB as cooperation on water rights is included in the MOA; copies were also provided to the California Department of Health Services to facilitate Cal-Am’s use of the water extracted from the MPWMD test injection well in 2006.

Prepare Draft EIR/EA to Evaluate MPWMD ASR Project

In Fall 2004, the Board directed staff to prepare an EIR on the District’s ASR project, and retained Jones & Stokes Associates (JSA) and Padre Associates to assist in this effort. A Notice of Preparation of an EIR was issued on December 13, 2004. Based on comments received, the Board in March 2005 directed staff and consultants to focus only on the Phase 1 project. Please refer to the January 2006 quarterly report or weekly reports on the District website for specific details on the project and document preparation history.

The MPWMD Phase 1 project is focused on better management of existing water resources to help reduce current impacts to the Carmel River and Seaside Basins. The project is viewed as being complementary to other larger, long-term water augmentation projects that are currently being explored by various entities. The project entails a maximum diversion of 2,400 acre-feet per year (AFY) from the Carmel River for injection, a maximum extraction of 2,000 AFY from the ASR wells in the Seaside Basin, and an average yield of about 1,050 AFY. The proposed operation of the Phase 1 ASR Project would result in reduced pumping of the Carmel River in the Summer/Fall and increased storage in the Seaside Basin, which are considered to be environmentally beneficial.

At a December 22, 2005 meeting between the staffs of the U.S. Army, MPWMD and Cal-Am, the Army staff confirmed that the EIR/EA adequately addressed the environmental effects of the MPWMD Phase 1 ASR Project. However, the Army also indicated that a permit (easement) for the Phase 1 ASR project could not be issued until another Environmental Assessment was prepared for a temporary Cal-Am pipeline to help improve existing operational flexibility and maximize the Phase 1 ASR Project performance. The pipeline had been scheduled for completion in 2005 and certain portions have already been constructed. The Army position in December 2005 was a significant, substantial change from previous direction to both MPWMD and Cal-Am in consultations conducted in early 2005, and resulted in several months of delay.

The Army recommended that the Cal-Am temporary pipeline information be incorporated into the EIR/EA for the MPWMD Phase 1 ASR project as the most efficient way to facilitate issuance of two separate permits – one to MPWMD for the ASR Project and one to Cal-Am for the temporary pipeline. On January 12, 2006, Cal-Am agreed to separately pay Jones & Stokes to add the pipeline information into the District’s EIR. The new information was incorporated, then reviewed by MPWMD, Cal-Am and the Army prior to formal release for public review in late March 2006.

On March 23, 2006, the District issued the Draft EIR/EA on the MPWMD Phase 1 ASR Project, including information on the temporary pipeline for NEPA (Army) purposes. District action only addresses the CEQA EIR component. CEQA requires a minimum 45-day period for written comments on a Draft EIR, and the comment period ends on May 8, 2006. A public hearing to receive oral or written comments was set for the April 17, 2006 regular Board meeting. A Notice of Availability was provided to several dozen entities regarding the availability of the EIR/EA and the comment deadlines. News articles have also highlighted the availability of the document. This information, along with the Executive Summary of the EIR/EA and a detailed impact table, is also on the District website: http://www.mpwmd.dst.ca.us/asr/EIREA_NOCmailer_031706.htm.

Hard copies of the EIR/EA are available at local libraries and the District office for review. Many public agencies have received courtesy CD copies of the EIR/EA. Individual copies may be purchased for the cost of reproduction ($100 for paper or $5 for CD). Please refer to Item 10 of the April 17, 2006 Board agenda for more information.

Obtain Water Rights for ASR Projects

District staff met with SWRCB staff on March 15, 2006 to update the SWRCB on: (1) completion of the Draft EIR/EA on the Phase 1 ASR project, (2) completion of the MOA with Cal-Am, (3) Seaside Basin status and activities, and (4) determine next steps for the District’s permit application for water rights for the long-term ASR project. Regarding Item 4, two Petitions for Change were originally submitted by the District in October 2001 and revised in September 2003. The SWRCB noticed the District’s Petitions on April 15, 2005. The District prepared formal responses to the National Marine Fisheries Service (NOAA Fisheries) and California Department of Fish & Game (CDFG) protests in mid-June and July 2005, respectively. Since then, the District has worked with NOAA and CDFG regarding protest dismissal terms. Excellent progress has been made with NOAA Fisheries, and the SWRCB considers that protest to be essentially dismissed. CDFG still has certain issues that need resolution. The Draft EIR/EA was distributed to these parties in March 2006, and meetings are planned in April 2006 to hopefully resolve all issues. If successful, the SWRCB could issue a water rights permit for the Phase 1 ASR Project administratively.

In related action, District staff is communicating with SWRCB staff about the water rights for the associated with the New Los Padres Reservoir Project (issued in 1995). As noted above, the District obtained a temporary urgency permit for the 2006 test season for the existing ASR test well. On a positive note, an important element of the MOA between MPWMD and Cal-Am is retraction of previous Cal-Am complaints and other communications to SWRCB challenging various water rights held by or proposed by MPWMD.

Ø

Prepare Seaside Basin Management as Part of Adjudication Decision

District staff and consultants began in October 2004 to prepare a long-term Seaside Basin Groundwater Management Plan (SBGMP) in compliance with protocols set by the State of California (AB 3030 as amended by SB 1938). An Advisory Committee comprised of major groundwater pumpers, agency officials, and stakeholders was formed in October 2004; meetings and information exchanges occurred through Summer 2005. A formal public outreach program also began in 2005. The District’s SBGMP effort was terminated by an order of the Monterey County Superior Court as part of adjudication of the Seaside Basin. A similar task is now the responsibility of the Seaside Basin Watermaster (see below).

Litigation filed by Cal-Am on August 14, 2003 asserted Cal-Am’s water rights and requested a Court adjudication of the Seaside Basin. The Cal-Am lawsuit involved issues of public concern such as: prioritization and quantification of water rights within the basin; rights to aquifer storage within the basin; rights to artificially introduce non-native water into the basin through direct injection or spreading grounds; a judicial determination that the basin is in overdraft; and the appointment of a Watermaster to manage the basin water rights and resources. The District was a recognized interested party in the litigation, and participated in many settlement meetings, mediation and other litigation activities through 2005.

Judge Robert Randall conducted a trial in December 2005 at which several District staff and consultants served as expert witnesses. Judge Randall rendered a Tentative Decision in mid-January 2006, and received comments on the Decision from parties, including MPWMD. A Final Decision was issued on March 27, 2006. The complex and lengthy Decision determined that the Seaside Basin is in overdraft; set a reduced “natural safe yield” and a near-term “operating yield” allowed to be produced by the parties as they work toward a “physical solution” (including ASR and wastewater reclamation) to eliminate the overdraft. A nine-member Watermaster Board was created to implement the Decision with continued oversight by the Court. The MPWMD is one party on the Watermaster with two out of 13 votes. The MPWMD Board selected Chairwoman Michelle Knight as the MPWMD representative to the Watermaster Board. The Watermaster has held two pre-meetings, but will not formally commence until its April 5, 2006 meeting. In a related matter, the District was selected to serve as temporary Secretary to the Watermaster, and in March 2006 submitted a Statement of Qualifications to provide technical, financial and administrative services. A key Watermaster task in the near term is preparation of a Basin Monitoring and Reporting Plan within 60 days of the Final Decision.

Interagency Cooperation

Despite litigation issues, District staff continued to work with Cal-Am staff and consultants to discuss ways to further ASR as a needed component of the “water portfolio” for the Peninsula, both now and in the future. The District continues to work with Cal-Am and resource agencies to develop quarterly management strategies to reduce impacts to the Carmel River and Seaside Basins, while meeting community water needs.

District staff led the effort to obtain $497,000 of Proposition 50 grant funds to prepare an Integrated Regional Water Management Plan (IRWMP) for the Monterey Bay Area. Final written approval of State Department of Water Resources (DWR) funding was made in early January 2006. Since then, the District staff has worked closely with its local public and non-profit partners to complete the IRWMP, including retaining specialized consultants for this type of work. Completion of a professional IRWMP will position our Area to receive implementation funds for specific projects, such as the MPWMD ASR Project.

WS6: CREATE BOARD WATER SUPPLY COMMITTEE AND CHARGE

The Board began consideration of forming a Water Supply Committee comprised of three Board members at the December 2005 meeting. At its January 26, 2006 meeting, the Board determined that this objective should not be pursued, and it will not be addressed in future quarterly reports. The Board felt that the full Board (rather than a committee) should receive detailed information about water augmentation issues.

RELATED WATER AUGMENTATION ACTIVITIES

The following table summarizes related water augmentation efforts in the January–March 2006 period. These activities do not directly reflect the six water supply objectives, but are relevant to overall water supply efforts.

ACTIVITY	ACTION
Seismic Retrofit and Sediment Removal from San Clemente Reservoir.	District staff participates in the EIR/EIS process on the seismic retrofit of San Clemente Dam. Potential removal of sediment from San Clemente Dam continues to be explored by Cal-Am, DWR, and the U.S. Army Corps of Engineers (USCOE). District staff participates in technical meetings and provides technical expertise upon request. The District received an administrative draft EIR/EIS for internal review, and submitted comments by January 30, 2006 deadline. A formal Draft EIR/EIS is expected in April-May 2006. Cal-Am maintains the water level of San Clemente Reservoir at 515 feet (10 feet below spillway elevation of 525 feet) pursuant to direction from DWR’s Division of Safety of Dams.
Implement and Refine Water Distribution System (WDS) Rules and Regulations.	Ordinance No. 122 refining the Water Distribution System (WDS) process became effective on September 14, 2005. The ordinance creates a Pre-Application process for all new wells in the District along with an impact-based, multi-level permit process, based on the size, location and water use of affected parcels. Staff and consultants continue to refine Implementation Guidelines and forms to accompany the ordinance. Several applications are currently at various stages in the permit process. In a related matter, the Board in February 2006 approved a Concept Ordinance to exempt projects in the Former Fort Ord served by water sources other than the Carmel River or Seaside Basin from MPWMD WDS regulations. This is most pertinent to service by Marina Coast Water District for redevelopment as part of Fort Ord Reuse Plan. MPWMD staff is preparing an Initial Study for Board review in May 2006.
Review CEQA Documents for Other Projects	The District logs incoming CEQA notices and comments on selected documents prepared by other agencies for projects within the District boundary that could potentially affect water supply, water quality or environmental resources managed by the District. Projects or issues of note in January-March 2006 included adequate water supply for new development at Ryan Ranch (Monterey), and the Recirculated Portion of a Revised Draft EIR for the proposed September Ranch Subdivision (Carmel Valley).

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SECOND DRAFT 4/4/06 with JO and DAB edits