ITEM:		DISCUSSION ITEM
16.	DISCUSS PUBLIC RELEASE OF PROPOSED AMENDMENT TO STATE WATER RESOURCES CONTROL BOARD CEASE AND DESIST ORDER WR 2009-0060 (CDO)
Meeting Date:			March 16, 2015	Budgeted:	N/A
From:			David J. Stoldt	Program/
			General Manager	Line Item No.:
Prepared By:			David J. Stoldt	Cost Estimate:
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: This is an update from Item 19 of the Board’s February agenda. Due to a variety of reasons, many beyond the control of Cal-Am, as well as the community, the Monterey Peninsula Water Supply Project (MPWSP) has been delayed to the point where it is impossible for Cal Am to meet the State Water Resources Control Board (SWRCB) Cease and Desist Order (CDO) 2009-0060 deadline of December 31, 2016.

The attached proposal (Exhibit 16-A) was developed jointly by representatives of Cal-Am, the District, the Mayor’s Water Authority, Carmel River Steelhead Association, The Sierra Club, the Pebble Beach Company, and attorneys representing Peninsula cities and Carmel Valley pumpers. It reflects many compromises between the parties, but reflects commitments all the parties believe they can support. The proposal was shared with SWRCB staff and Directors on March 10^th.

RECOMMENDATION: The General Manager recommends the Board receive and discuss the proposal to obtain an extension of the CDO 2009-60 deadline date of December 31, 2016.

DISCUSSION:

As discussed in previous closed sessions, representatives of the plaintiffs in the earlier, but now suspended, lawsuit over the CDO have been in discussion with the California State Water Resources Control Board (SWRCB) staff in an effort to develop proposals acceptable enough to secure staff concurrence with a formal request for a CDO extension that will be made to the State Board in 2015.

Of particular importance during these discussions is that the District and other public officials are opposed to rationing and financial penalties or other measures that might be mandated by the SWRCB and that could result in unfair or punitive impacts on ratepayers who have exceeded conservation goals and who have no responsibility for the delay. While the potential terms of an extension to any CDO remain under discussion, key principles that might be included in an agreement to extend the CDO include the following:

· A four-year extension of the CDO deadline from December 31, 2016 to December 31, 2020.

· An immediate reduction of pumping limits by 1,000 AF. At the District’s request this reduction is based on the 2013-14 water year. The previous version reviewed by the Board was based on the 2014-15 water year. This proposal “softens” the new pumping limit by 121 AF.

· A new reduction schedule in regular increments during the extension, but suspension of the prescribed reductions if MPWSP milestones are satisfied.

· At the District’s request, language was revised such that a reduction corresponding to a missed milestone would be suspended if Cal-Am, MPWMD, and the Water Authority determine that the milestone was missed due to circumstances beyond the control of Cal-Am, MPWMD, and the Water Authority.

Discussions continue under a tight timeline, since, for a variety of reasons, we believe we need to have an agreement in draft early in 2015.

Presently, District staff and General Counsel support the proposed draft, but the proposal will leave very little factor of safety against a rebound in consumer demand for water, but the proposal does not appear to trigger immediate adverse impacts under existing conservation and rationing rules.

Further, under Section 3(b) of the original CDO, “the MPWMD may petition the State Water Board Deputy Director for Water Rights for relief from annual reductions imposed under condition 3., a (2). [if] (c) a showing is made that public health and safety will be threatened if relief is not granted.” The District will retain this right. The District does not lose its ability to reinstate the lawsuit or initiate a new lawsuit if relief is not granted or unexpected future penalties arise from the amended CDO.

The Coalition of Peninsula Businesses has expressed their concerns over the January 14, 2015 draft proposal in a letter attached as Exhibit 16-E.

EXHIBITS

16-A Draft Proposal to Amend SWRCB Order (Carmel River CDO)

16-B Proposed Modifications Chart - Best Case Scenario

16-C Proposed Modifications Chart - Worst Case Scenario

16-D Historical Carmel River Production versus Limits

16-E Letter from the Coalition of Peninsula Businesses

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