ITEM:		ACTION ITEMS – SUPPLEMENT
15. AND 16.	receive update on Agreement with California American Water Regarding Management and Operation of SEASIDE BASIN Aquifer Storage and Recovery Facilities DISCUSS BOARD OPTIONS IN THE EVENT AGREEMENT IS NOT REACHED WITH CALIFORNIA AMERICAN WATER ON THE AQUIFER STORAGE AND RECOVERY PROJECT MEMORANDUM OF AGREEMENT, INCLUDING BECOMING A LICENSED WATER DISTRIBUTOR
Meeting Date:			November 21, 2005	Budgeted:	N/A
From:			David A. Berger,	Program/	N/A
			General Manager	Line Item No.: N/A
Prepared By:			Joe Oliver	Cost Estimate:	N/A
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

SUPPLEMENT TO INFORMATION IN BOARD PACKET FOR ITEMS 15 AND 16: At the District’s request, a meeting was held on November 15, 2005 at the California Department of Health Services (CDHS) office in Monterey. Staff representatives from CDHS, California American Water (Cal-Am), and the District were in attendance. The meeting was held to further explore options for moving forward with the District’s Aquifer Storage and Recovery (ASR) project within CDHS’s regulatory compliance, and focused on two topics, as described below.

Long-term ASR management and operations agreement between MPWMD and Cal-Am. At the meeting, CDHS staff was brought up-to-date on the status of the long-term agreement that CDHS requires as a condition of issuing Cal-Am a water system permit amendment allowing delivery of water from the District’s Santa Margarita Test Injection Well (SMTIW) into the Cal-Am system. The Cal-Am representative, Steve Leonard, confirmed that processing of the draft agreement has been on hold by Cal-Am. He indicated that the District’s ASR project is currently being reviewed along with other potential mitigations as part of ongoing negotiations between Cal-Am and the National Marine Fisheries Service (NMFS). These negotiations are in regards to NMFS concerns that Cal-Am’s Carmel Valley well pumping and Carmel River surface diversions are resulting in violations of the federal Endangered Species Act. A workshop to begin discussions on prioritization of potential mitigations was scheduled for November 18, 2005. Staff will report on the outcome of this workshop in terms of the ASR project at the November 21, 2005 Board meeting. Regarding Cal-Am’s consideration of the ASR agreement, Steve Leonard indicated that the major issue with the draft agreement is with the water right assignment section. Mr. Leonard indicated that he would take the agreement back before Cal-Am management to further explore joint water right provision language that would be acceptable to Cal-Am for discussion with the District. He stated that the term of the agreement required by CDHS is acceptable to Cal-Am.

Additional clarification was also provided as to the question about the need for a long-term agreement in the event that the District applied for and received a CDHS water system permit for the ASR project. CDHS explained that the District could be issued a permit as a wholesaler to Cal-Am, as the retailer, for this activity. However, an amendment to Cal-Am’s existing water system permit would also have to be issued, and a long-term contract commitment between the wholesaler and retailer would still be required as evidence of the reliability of this new source of supply.

A long-term agreement would not be needed under a scenario where water is injected into the basin at the District’s ASR facilities and recovered from Cal-Am owned Seaside basin wells. The problem with this scenario in the long term is that Cal-Am’s Seaside basin well production capacity would not be increased to offset summertime Carmel Valley pumping impacts unless Cal-Am installed an additional well or wells in the Seaside basin that could take advantage of the additional groundwater storage available from injection.

Short-term ASR testing. The CDHS representatives concurred that the ASR testing that the District and Cal-Am have been cooperating on up to this point in time does not, by itself, constitute a long-term supply project. Therefore, a long-term agreement does not need to be in place in order to conduct recovery testing from the SMTIW into the Cal-Am system during the upcoming season. The CDHS also recognized that there have been considerable expenditures on ASR thus far by both the District and Cal-Am, and agreed that continued ASR testing during this next season would provide multiple benefits, including provision of additional data on the water quality effects of ASR in the basin. Accordingly, the District will be working with Cal-Am to prepare a detailed monitoring plan of the coming season’s planned recovery testing for review and approval by CDHS.

U:\staff\word\boardpacket\2005\2005boardpackets\20051121\ActionItems\item15_16_SUPPLEMENT_21nov05REVISED.doc

J. Oliver, 11/8/05, 2 pages.