ITEM:		INFORMATIONAL ITEMS/STAFF REPORTS
22.	QUARTERLY WATER SUPPLY PROJECT STATUS REPORT
Meeting Date:			April 19, 2010	Budgeted:	N/A
From:			Darby Fuerst,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Henrietta Stern	Cost Estimate:	N/A
General Counsel Review: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

This is a quarterly report on Monterey Peninsula Water Management District water supply augmentation projects for the January through March 2010 period. The next quarterly report will be written in July 2010. Detailed quarterly updates have been prepared for the January, April, July and October regular Board meetings through October 2009. Starting with the January 2010 report, limited background information is provided. The reader should refer to previous reports through October 2009 for a detailed historical overview of previous action. A brief monthly report on Strategic Plan objectives is provided at each regular Board meeting. This information can be found by clicking on the pertinent agenda item on the District website at:

http://www.mpwmd.dst.ca.us/asd/board/meetings/meeting.htm.

Updated weekly information is also available in the General Manager’s letter to the Board at:

http://www.mpwmd.dst.ca.us/gmletters/gmletters.htm.

An MPWMD Board Special Workshop on water supply alternatives was held on March 27, 2008, which provided good background information. Please refer to the District website at:

http://www.mpwmd.dst.ca.us/asd/board/boardpacket/2008/20080327/0327agenda_rev.htm

For the past several years, the MPWMD Board has identified water supply goals and objectives at Strategic Planning Workshops. The most recent workshop was held on November 10, 2009, and resulted in 90-day, 3-year and 5-year goals, which were adopted on December 14, 2009.

Action on 90-Day Goals

The following paragraphs describe action on the adopted 90-day water supply goals in the January –March 2010 period; the identified completion date was February 28, 2010, though many goals continue past that date and segue into longer-term goals. The goals are numbered for reference only, and do not reflect priority.

Goal 1: Actively join with Marina Coast Water District (MCWD), California American Water (CAW), Monterey County Water Resources Agency (MCWRA), Monterey Regional Water Pollution Control Agency (MRWPCA), and Jurisdictions to provide input on the regional water supply planning process. Have meaningful influence over the type, management and financing of the selected regional project.

The Final EIR for CAW’s proposed Coastal Water Project (CWP) was received on October 30, 2009 and certified by the California Public Utilities Commission (CPUC) on December 17, 2009. A combination of projects, known as the Regional Project, was identified as the preferred alternative. The Regional Project features a 10 million gallon per day (MGD) desalination project to be constructed by MCWD in north Marina, in concert with CAW and MCWRA, along with aquifer storage and recovery and recycled wastewater components. MPWMD and other parties had not been included in the discussions on how the Regional Project would be constructed, operated, managed and financed. Thus, MPWMD formally requested that the CPUC include MPWMD in the settlement discussions. This request was granted in Fall 2009.

From November 2009 through March 2010, MPWMD participated in CPUC-sponsored “alternative dispute resolution” meetings on the Regional Project, with emphasis on costs, management, oversight and accountability to the community. This effort included MPWMD Counsel legal analysis, consultant financial analysis, and staff technical review, as well as several meetings, including CPUC status conferences. The CPUC set deadlines for settlement resolution or identification of issues remaining to be resolved by April 6 and 7, 2010, respectively.

On January 6, 2010, MPWMD General Manager Fuerst met with the general managers from MCWD, MCWRA, and MRWPCA to discuss the regional planning process to date and ways in which MPWMD’s involvement in the planning process could be more fully recognized. At this meeting, it was suggested that MPWMD could clarify its position by adopting a resolution expressing support for the Regional Project. MPWMD Resolution 2010-01, supporting the Regional Project as the best alternative, based on information available at the time, was approved at the February 28, 2010 meeting. In addition, the resolution stated that MPWMD must be involved in decision-making for the Regional Project “to ensure that the water needs of the citizens and environmental resources within the District are reliably met in a cost-effective manner,” and that the water users within the Monterey Peninsula area are entitled to full and fair representation in all water supply planning efforts that affect their present and future water resources. The resolution may be viewed at: http://www.mpwmd.dst.ca.us/asd/board/boardpacket/2010/20100225/17/item17.htm.

In open session at a special meeting on March 25, 2010, the Board extended the contract of a financing expert. In closed session, the Board voted 4-3 to sign the settlement agreement, which included the water purchase agreement, which would have meant not participating in the CPUC hearings on the rates associated with the Regional Project. On March 30, 2010, the three entities responsible for the Regional Project (MCWD, MCWRA and CAW) made public the final settlement and project financing documents. Peninsula residents, local newspapers, and some elected officials expressed concern regarding the limited opportunity for public review of the documents, the much higher project costs than were previously disclosed, and lack of protection for Peninsula ratepayers. At an April 5, 2010 MPWMD Special Meeting in open session, pursuant to District meeting rules, the Chair requested reconsideration of the March 25, 2010 closed session approval. After extensive discussion, the Board voted 4-3 to not sign the settlement agreement, and directed staff to inform the CPUC by the April 7, 2010 deadline that MPWMD would not be signing the agreement.

Goal 2: For the Aquifer Storage and Recovery Phase 1 Project, (a) inject at least 500 acre-feet of water in the 2010 season (assuming adequate streamflow), with infrastructure in place to enable 100% efficiency, and (b) determine the full project completion date.

Aquifer storage and recovery (ASR) entails diverting excess water flows, if available, in the winter season (December 1 through May 31) from the Carmel Valley Alluvial Aquifer through existing CAW facilities and injecting the water into the Seaside Groundwater Basin for later recovery in dry periods. District staff regularly meets with CAW consultants and staff to coordinate roles, responsibilities and tasks needed to enable operation of the Phase 1 ASR Project at full capacity. A key issue has been potential disruption to the Phase 1 activities during the planned realignment of General Jim Moore Blvd. near the ASR site in early 2010, a crucial injection period. District staff has closely coordinated with FORA contractors and MCWD regarding a bypass pipeline to prevent disruptions; only minor (less than a day) disruptions have occurred to date.

Adequate river flow and Phase 1 start-up operations began on December 13, 2009 and continued through December 30, 2009, when flows fell below the permitted bypass levels. Nearly 130 AF were diverted and injected in this period. Above-normal winter rains enabled injection to begin again on January 15, 2010, with continued diversion and injection through March 31, 2010, with the exception of March 23-28, 2010, when flow became insufficient due to “ramp-down” bypass flow requirements. In the first week of March 2010, the 500 AF injection goal was achieved. As of March 31, 2010, nearly 706 AF had been diverted and injected in WY 2010. This is the largest volume of ASR injection in any one year since the program began in 1998. Early April rains and resulting river flow should enable ASR diversion through late April 2010. The SWRCB diversion permit ends on May 31, 2010. Buoyed by the positive results to date, the Board by consensus set 1,000 AF as an injection goal to strive toward, assuming hydrology and other factors support this level of diversion. .

The ASR facilities have been operating at roughly 2,100 gallons per minute (gpm), or 84% of the current operational capacity of 2,500 gpm, primarily due to CAW system pressure fluctuations, which cause injection rates to vary. Additional infrastructure is required within the CAW system or at the ASR site to completely alleviate this problem and enable injection at the current operational maximum of 2,500 gpm.

A simultaneous task is constructing the Chemical/Electrical building at ASR Phase 1 site. Based on earlier planning permits from the City of Seaside, a request for bids for the building construction was let with a deadline of January 27, 2010. The final building permit was issued in early March and the Board approved a contractor at its March 15, 2010 meeting. Final pre-construction tasks are underway and the 100-day construction period is anticipated to begin in mid-April 2010.

For reference, at its March 15, 2010 meeting, the Board received the ASR Report for Year 2009. Refer the MPWMD website at:

http://www.mpwmd.dst.ca.us/asd/board/boardpacket/2010/20100315/05/item5.htm.

Goal 3: For the Aquifer Storage and Recovery Project Phase 2, determine the timetable for project development/completion.

The project timeline is dependent on a variety of factors, especially selection of an adequate ASR Phase 2 site. MPWMD obtained permission from the Monterey Peninsula Unified School District (MPUSD) and a permit from the City of Seaside to drill a test/monitor well at the Fitch Middle School site in October 2009. The test results were positive, and discussions with MPUSD have continued through March 2010 regarding construction of two permanent wells near Fitch School. District staff is also coordinating with the City of Seaside regarding permitting for a full-scale test well to be drilled in Summer 2010 to be followed by a second permanent well in Summer 2011, if the test well results are positive.

A second major issue affecting project development is water rights. CAW dropped two water rights protests it had previously filed against District’s applications, and focused on functioning as partners in this effort. Through March 2010, District staff has held separate Phase 2 water rights settlement meetings with protestants National Marine Fisheries Services (NMFS) and the Carmel River Steelhead Association (CRSA). Settlement with NMFS appears to be feasible in the near-term, but limited progress has been made in resolving CRSA’s protest.

A third issue is the capacity of the CAW distribution system to deliver injection water to the Phase 2 project. This matter is the subject of ongoing ASR coordination meetings with CAW.

Goal 4: For the MPWMD “95-10 Desalination Project,” determine if the Board should continue pursuit of project development.

In Fall 2009, District consultants completed hydrogeologic field work and laboratory analyses along the Fort Ord coastline. A technical report on desalination project feasibility was prepared and presented to the Board at its December 14, 2009 meeting. The report concludes that the coastal Fort Ord hydrogeology does not support its use as the source of subsurface feedwater for a desalination project, and the District should not pursue the project. This is primarily due to the fact that there is not a clay barrier to protect the lower Paso Robles and Santa Margarita aquifers from contamination by seawater extracted for the desalination project. The Board directed staff to provide a description of desalination projects investigated by MPWMD in the past in order to assess whether there are any remaining viable local desalination options within the District. This staff report was provided to the Water Supply Planning Committee at its March 8, 2010 meeting. The committee recommended that staff proceed with investigation of the potential for a project or projects within the District boundary. The staff report is provided on the District website at:

http://www.mpwmd.dst.ca.us/asd/board/committees/watersupply/2010/20100308/02/item2.htm.

Goal 5: For the MRWPCA Groundwater Replenishment Project (2,000+ AFY), schedule a presentation from MRWPCA to the MPWMD Board on cost, legal issues, timeline and next steps.

The Board directed staff to assess current status of MRWPCA Groundwater Replenishment Project (GRP). Possibilities include purified wastewater for irrigation only, and/or as potable supply through groundwater injection. District staff continues to assist MRWPCA staff, as requested. A presentation by the MRWPCA General Manager was made at the MPWMD Board meeting of January 28, 2010. Notably, the GRP project is temporarily “on hold” so that MRWPCA can focus on its role in the Regional Project described above in Goal 1. The MRWPCA presentation is available on the District website at:

http://www.mpwmd.dst.ca.us/asd/board/boardpacket/2010/20100128/ppt/13_files/frame.htm.

Action on 3-year and 5-Year Goals

3-Year Goal: Resolve Fate of San Clemente and Los Padres Dams

Since mid-2009, District staff has participated in workshops and discussions regarding the removal of San Clemente Dam. These efforts culminated in a January 11, 2009 signing ceremony, hosted by U.S. Rep. Sam Farr, wherein numerous entities, including the District, pledged cooperation on dam removal and re-routing of the Carmel River.

At the direction of the Board, District staff pursued options for increasing storage at Los Padres Dam and Reservoir, owned by CAW. This effort stalled when CAW responded to District inquiries in an October 5, 2009 letter, which stated that CAW has “no interest” in making modifications to the dam. A written report is provided in the January 28, 2010 agenda packet at:

http://www.mpwmd.dst.ca.us/asd/board/boardpacket/2010/20100128/03/item3.htm

5-Year Goal: Operate Within Safe Yield of Seaside Basin

A Court adjudication of the Seaside Groundwater Basin was completed in March 2006 and amended in February 2007. The Court 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 holds one seat on the Watermaster with two out of 13 votes, and regularly participates at the monthly meetings. The District and its consultants have also been retained by the Watermaster to carry out certain technical tasks to help implement the Seaside Basin Monitoring and Management Program (SBMMP). District staff also contributes by serving as a Technical Committee member.

Other Relevant Action Affecting Water Supply

SWRCB Cease and Desist Order: On January 15, 2008, the SWRCB issued a draft Cease and Desist Order (CDO) against CAW. The Draft CDO refers to the 1995 SWRCB Order 95-10, and notes that compliance with Order 95-10 (i.e., find a replacement water supply to offset unlawful diversions from the Carmel River Basin) had not been achieved after 12 years. CAW, MPWMD and several other parties participated in formal hearings before the SWRCB in Summer 2008.

After several draft versions, the final SWRCB Board determination on the CDO was made on October 20, 2009. The District (and other parties) immediately filed suit to challenge this ruling and the Monterey County Superior Court issued a stay on November 3, 2009. In response to a challenge by SWRCB, the Court ruled on November 23, 2009 that the stay will remain in effect until a hearing in Santa Clara to be held on April 22, 2010.

The SWRCB also requested a change in venue due to technical reasons and their concern about receiving an impartial trial in the Monterey area. A January 8, 2010 hearing was held on the change in venue, for which District counsel and staff prepared briefs and other required paperwork. The change in venue was approved by the Court on January 14, 2010. The District appealed this decision on February 4, 2010, and there has been no action by the Court to date.

District Counsel and staff, at the direction of the Board, will continue to actively participate in litigation on the CDO in 2010. In related action, the District Board adopted the second reading of Ordinance No. 142 at its January 28, 2010 meeting which will allow the General Manager to forestall implementation of specified rationing Stages in place of a lower Stage of the plan when there is evidence that implementation of a lesser Stage would be sufficient to comply with the CDO, if it goes forward.

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