Meeting Date:

February 25, 2010





Darby Fuerst




General Manager

Line Item No.:




Prepared By:


Larry Hampson

Cost Estimate:


General Counsel Review:  N/A

Committee Recommendation:  N/A

CEQA Compliance:  N/A


SUMMARY:  On March 3, 2009, a Settlement Agreement was executed by California American Water (Cal-Am or CAW), the U.S. Department of Commerce/National Oceanic and Atmospheric Administration/National Marine Fisheries Service (NMFS), and the California Department of Fish and Game (CDFG) with regards to impacts resulting from water withdrawals by Cal-Am from the Carmel River system and consistent with the federal Endangered Species Act (ESA). The Settlement Agreement, provided as Exhibit 18-A, identifies a payment schedule to fund mitigation projects and activities that address impacts to steelhead resulting from water withdrawals. These payments began on July 1, 2009 and will continue until July 1, 2016, unless the agreement is terminated “… in the event that (1) CAW fully complies with subsection (2) of Ordering Paragraph 2 of the State Water Resources Control Board Order 95-10, or (2) CAW obtains appropriate incidental take authorization under the ESA from NMFS authorizing incidental taking of SCCC [South-Central California Coast] steelhead, whichever occurs first.”  [See paragraph VI.A on page 2 of Exhibit 18-A.] The payment schedule is provided as Table 1 on page 11 of Exhibit 18-A.


At their Regular Meeting on October 15, 2009, the District’s Carmel River Advisory Committee unanimously adopted the following resolution:


“Whereas, local ratepayers are funding a Settlement Agreement between the National Marine Fisheries Service, California American Water and the California Department of Fish and Game; and


Whereas, MPWMD represents local ratepayers;


Now therefore, the Carmel River Advisory Committee recommends that the MPWMD Board of Directors consider requesting that Settlement Agreement funds be transferred to MPWMD for distribution to projects along the river for steelhead enhancement.”


RECOMMENDATION:  The Board should consider whether or not to request that Settlement Agreement funds be transferred to the District for disbursement to qualified local projects.  If the Board desires to make such a request, the General Manager should be directed to contact the Settlement Agreement parties (i.e., Cal-Am, NOAA Fisheries, and CDFG) to discuss whether such a transfer can be undertaken and to recommend a process for determining which projects should be funded.


BACKGROUND:  Settlement Agreement.  Under the Settlement Agreement, Cal-Am made the initial payment of $3.5 million in July 2009 to CDFG, which is the agency charged with administering these funds to projects that improve habitat conditions for, and production of, South-Central California Coast steelhead.


CDFG is allowed to use up to 13% of each mitigation payment as adjusted for inflation, on an ongoing basis throughout the term of the Agreement for reimbursement of any costs it incurs to administer, manage, and monitor the funds and projects funded. CDFG has proposed to fund projects through its annual statewide Fisheries Restoration Grant Program (FRGP).  By utilizing the existing FRGP the time and cost of permitting specific projects should be reduced.  Because of the combined restrictions imposed by the Settlement Agreement and FRGP on project types and the process used for funding and permitting projects, it is unclear whether or when several projects identified as having a high priority, including improvements to the Sleepy Hollow Steelhead Rearing Facility, could be funded and permitted through the FRGP.


It is the District’s understanding that the next Proposal Solicitation Notice (PSN) for projects to be funded by the FRGP will be distributed in February 2010.  Proposals will be due in April 2010, with grants awarded in April 2011.


Carmel River Steelhead Resource.  The South-Central California Coast (SCCC) steelhead is “currently not endangered but likely to become so in the foreseeable future…” according to NOAA Recovery Priority Guidelines[1] and as stated in the “2007 Federal Recovery Outline for the Distinct Population Segment of South-Central Coast prepared by the National Marine Fisheries Service, Southwest Regional Office, September 2007.” The South-Central California Coast DPS consists of 36 watersheds with steelhead runs that have declined from an estimate of 25,000 adults annually to less than 500 returning adult fish. The Carmel River Basin has experienced a decline in its run size of 90% or more.


Several agencies and organizations have a common interest in protecting Carmel River steelhead and have come together to discuss complementary actions that could be taken with the Settlement Agreement funds.  These actions are intended to maintain the existing tenuous population of Carmel River steelhead while the community makes progress toward the completion of a set of water supply projects for the Monterey Peninsula and for portions of northern Monterey County. The water supply projects are not a part of the actions proposed in the Settlement Agreement, but when completed will result in reduced diversions from the Carmel River Basin.


Potential Projects.  Collectively, the projects and actions proposed to be funded from the Settlement Agreement involve increasing flow or maintaining adequate water levels to the Carmel River lagoon, reducing diversions from the basin, and direct mitigation actions to address limiting factors that result from water withdrawals and well pumping (see Exhibit 18-B).  These projects are consistent with the goals and requirements of the Settlement Agreement; however, it appears that only a subset of these proposed projects could be funded and permitted through the CDFG Fisheries Restoration Grant Program. 



18-A    Settlement Agreement by and between California American Water Company, the National Marine Fisheries Service, and the California Department of Fish and Game, executed as of March 3, 2009

18-B    Carmel River Basin: Proposal for Watershed-Wide Comprehensive Steelhead Recovery Actions for Settlement Agreement Fund Application, January 2010