ITEM:		ACTION ITEMS
12.	CONSIDER CONFIRMATION OF POLICY FOR PROCESSING water distribution system APPLICATIONS WITH WELLS IN CARMEL VALLEY ALLUVIAL AQUIFER
Meeting Date:			October 16, 2006	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: Prepared memo and reviewed policy
Committee Recommendation: Rules and Regulations Review Committee unanimously recommended approval at its September 19, 2006 meeting.
CEQA Compliance: N/A

SUMMARY: MPWMD Rules & Regulations require a Water Distribution System (WDS) permit for any new or amended WDS within the District, unless specific criteria for an exemption are met. A series of ordinances, most recently Ordinance No. 124, have defined or amended the WDS permit process. Staff implements the MPWMD Rules & Regulations through its Implementation Guidelines or other written direction by the General Manager, as needed.

The Board will consider confirmation of recent administrative direction by the General Manager, based on advice from the District’s General Counsel, regarding compliance with the California Environmental Quality Act (CEQA) for the WDS permit process or other related action for wells that extract water from the Carmel Valley Alluvial Aquifer (CVAA or “alluvium”), which are also referred to as “alluvial” wells or water systems. The impact of this legal advice is that all WDS permit applications to drill new CVAA wells will require applicants to pay for preparation of an Initial Study/Mitigated Negative Declaration or an Environmental Impact Report (EIR) in order for their application to be considered. Previously, the District has considered WDS alluvial well applications either as Categorically Exempt from CEQA, or processed them under CEQA Initial Study/Negative Declaration procedures.

Specifically, staff is recommending that the Board confirm as District policy the General Manager’s WDS Memorandum #3 – Protocol for Applications and Requests Involving Wells in Carmel Valley Alluvial Aquifer dated August 18, 2006 (Exhibit 12-A) as amended September 14, 2006. This direction attaches an August 15, 2006 memorandum from District Counsel and two June 2006 letters from state and federal resource agencies expressing concerns about use of the CEQA Negative Declaration procedure for approval of WDS permits for alluvial wells. One letter is from California Department of Fish & Game (CDFG) dated June 7, 2006; the second letter is from National Marine Fisheries Service (NMFS, also known as NOAA Fisheries) dated June 9, 2006. Highlights of the agency letters and the General Manager’s direction are provided in the “Background and Discussion” section below. No change to the MPWMD Rules & Regulations is contemplated at this time as this policy, if confirmed by the Board, would be included in the WDS Implementation Guidelines.

RECOMMENDATION: Staff recommends that the Board confirm the General Manager’s administrative direction (Exhibit 12-A), or identify specific elements that need changing. The Rules and Regulations Review Committee considered this item at its September 19, 2006 meeting and unanimously recommend that the Board confirm the procedures.

BACKGROUND AND DISCUSSION: Since Ordinance No. 96 was adopted in 2001, the District Board or staff has approved a total of eight WDS permits that involve alluvial wells, as shown in Exhibit 12-B. Five WDS permits involved new wells representing a total production limit of 16.46 acre-feet per year (AFY). These permits were either for new homes on vacant single parcels or for less expensive irrigation on developed parcels where existing homes have California American Water (Cal-Am) service. Three WDS permits involving existing alluvial wells with a documented water history and/or previous approval by the State Water Resources Control Board (SWRCB) or Superior Court represent 133.35 AFY, with 118.44 AFY slated for previously approved major subdivisions.

Presently, five pending applications involving wells that are located within the mapped area of the CVAA are in the Pre-Application or formal Application stage. It is notable that some of these wells may not actually extract water from the CVAA based on the well logs and hydrogeologic data. District staff has developed a written protocol for inclusion in the WDS Implementation Guidelines by which the technical determination would be made as to whether or not proposed wells would draw water from the CVAA. .

In processing the eight WDS alluvial permits noted above, wells for new single-parcel residences or irrigation on existing homes were processed under a CEQA Categorical Exemption, typically pursuant to CEQA Guidelines Sections 15301 (Existing Facilities) and 15303 (New Construction or Conversion of Small Structures). The three existing WDS permits were based on environmental documents prepared by Monterey County, with the District serving as a CEQA Responsible Agency.

The new approach to processing alluvial wells described in Exhibit 12-A originated from letters by CDFG and NMFS commenting on an Initial Study and proposed Negative Declaration circulated by the District on May 19, 2006 for the St. Dunstan’s Episcopal Church WDS in compliance with CEQA. The letters question the CEQA protocol used for the St. Dunstan’s application (which is relevant to all future WDS applications for alluvial wells) and the conclusion of a less than significant impact. The agencies assert that a Negative Declaration is not appropriate due to the existing cumulative significant adverse impacts that currently affect federally threatened steelhead, red-legged frogs and associated critical habitat under the Endangered Species Act (ESA).

In meetings with the CDFG and NMFS representatives about these letters, the agencies expressed strong opposition to future District approval of any quantity of additional alluvial extractions, no matter how small, due to the existing adverse cumulative effects on threatened species and the determinations of the State Water Resources Control Board (SWRCB) associated with Order WR 95-10. The agencies asserted that a CEQA exemption is not appropriate, even for small single-family uses, citing CEQA Guidelines Section 15300.2, Exceptions. This section of CEQA declares that exemptions are not applicable when a project with ordinarily insignificant effects is located in a particularly sensitive environment, or when significant cumulative impacts are involved. The agency representatives stated that an EIR with overriding considerations should be prepared for WDS applications that result in increased water use, and a Negative Declaration would be appropriate for applications that result in no greater use than documented historical use. The agencies assert that a Mitigated Negative Declaration would be appropriate only if mitigation measures could be identified that fully offset other non-Cal-Am use; measures that address Cal-Am use are not acceptable because Cal-Am is already under order to reduce Carmel River diversions by the SWRCB as well as via Conservation Agreements with NMFS.

In response to these letters, District Counsel met with staff to provide guidance on permit processing protocol and provided the August 15, 2006 memorandum attached as part of Exhibit 12-A, based on review of the agency letters. The memorandum first focuses on historical use and setting a baseline from which to judge whether new or increased extractions would occur. It then focuses on Mitigated Negative Declarations. In essence, District Counsel concurs with the federal and state resource agencies’ assertions.

The General Manager, with assistance from technical staff, then developed WDS Memorandum #3 (Exhibit 12-A). Key elements of the memorandum (assuming MPWMD as CEQA Lead Agency) include:

Ø MPWMD staff may determine that a well is not actually in the CVAA or would not extract water from the CVAA based on adequate documentation.

Ø “Actual historical use” or “historical baseline” is defined as the average of the past 10 years of metered data, or the average of the years of data that are available. In certain cases, other factors may be considered pursuant to MPWMD Rule 40-A.

Ø The District will not issue any Notice of Exemption for well that extracts water from the CVAA. An Initial Study will be prepared and circulated for 30 days unless it is clear that an EIR will be prepared, pursuant to CEQA.

Ø Cal-Am and non-Cal-Am water use for the affected parcels will be considered, as applicable, in light of cumulative impacts issues.

Ø An EIR will be prepared for applications that result in new or increased water use greater than the historical baseline, considering combined Cal-Am and non-Cal-Am use.

Ø A Mitigated Negative Declaration will be considered for applications that result in total water use no greater than the historical baseline, considering combined Cal-Am and non-Cal-Am use.

Ø For setting system baselines for pre-existing systems that do not need WDS permits (see MPWMD Rules 20 and 40-A), CEQA review is not needed of the baseline conforms to actual historical use. CEQA review would be needed if a baseline is set that is greater than actual historical use pursuant to Rule 40-A.

Ø Unusual circumstances or unique situations may result in variations to this protocol as determined by the General Manager.

Ø All staff determinations may be appealed to the Board pursuant to Rule 70.

It is notable that the administrative guidance states that the “District will serve as the CEQA Responsible Agency for any development project for which discretionary approval is needed by a jurisdiction within the District (City or County); that jurisdiction will serve as the CEQA Lead Agency.”

St. Dunstan’s Update

District staff, including the General Manager, has met on several occasions and have informally and formally communicated with St. Dunstan’s representatives about the alluvial well issue and how it affects their WDS application. Copies of pertinent documents have been provided to the designated church representative. The church is currently evaluating several options and questions posed by the District as to how the church wishes to proceed, with emphasis on the project description and estimates of outdoor water use. Additional Cal-Am water use data have also been requested in compliance with WDS Memorandum #3. A revised Initial Study will be re-circulated by the District for 30 days to ensure procedural compliance with CEQA once the church provides the guidance and information requested in District letters dated June 29 and August 25, 2006.

IMPACT TO DISTRICT RESOURCES: The change in District CEQA review from a simple Notice of Exemption to a more involved preparation of an Initial Study/Negative Declaration (at a minimum) and likely an EIR for applications that increase alluvial water use has fiscal and workload ramifications for District staff, counsel and the Board. Environmental consultants will need to be retained and managed to assist staff for many alluvial WDS applications in additional to the standard hydrogeologic review that technical consultants currently perform. For many applications that are presently processed by staff administratively as “Level 2” permits, the Board will need to certify an EIR and make formal Findings of Overriding Considerations, if necessary, at a public hearing. The MPWMD Rules & Regulations regarding alluvial well applications presently designated as Level 2 (staff administrative) and Level 3 (staff hearing officer) may need to be amended to “Level 4” (Board action) if the Board is required to certify EIRs associated with these applications. District Counsel’s time will increase to ensure compliance with CEQA and to address various legal issues that arise.

The MPWMD budget should not be adversely affected as the applicant is required to reimburse the District for all expenses associated with processing a WDS permit. However, the cost of the WDS process to the alluvial well applicant will be much higher than in previous years due to the greater number of staff and consultant hours needed to comply with CEQA. The Board, by resolution, pursuant to Rule 60, may need to consider increasing fees for WDS applications that result in increased water use from the alluvial aquifer given the increased workload that will be required. Staff will be in a better position to evaluate this impact, once it is known how many pending WDS alluvial applications will proceed under the new CEQA compliance policy.

EXHIBITS

12-A August 18, 2006 WDS Memo #3 from General Manager (revised 9/14/06) with attachments

12-B Table of WDS permits issued for alluvial wells since 2001

U:\staff\word\boardpacket\2006\2006boardpackets\20061016\ActionItems\12\item12.doc

Revised 10/5/06 with DAB edits