Mprwa & Tac Joint Meeting Agenda Packet 08-11-16

Agenda
Monterey Peninsula Regional Water Authority (MPRWA)

And Technical Advisory Committee (TAC)
Joint Meeting
7:00 PM, Thursday, August 11, 2016
Council Chambers
580 Pacific Street
Monterey, California
CALL TO ORDER
ROLL CALL
PLEDGE OF ALLEGIANCE
REPORTS FROM BOARD DIRECTORS AND STAFF
PUBLIC COMMENTS
PUBLIC COMMENTS allows you, the public, to speak for a maximum of three minutes on any
subject which is within the jurisdiction of the MPRWA and which is not on the agenda. Any person
or group desiring to bring an item to the attention of the Authority may do so by addressing the
Authority during Public Comments or by addressing a letter of explanation to: MPRWA, Attn:
Monterey City Clerk, 580 Pacific St, Monterey, CA 93940. The appropriate staff person will contact
the sender concerning the details.
CONSENT AGENDA
CONSENT AGENDA consists of those items which are routine and for which a staff
recommendation has been prepared. A member of the public or MPRWA Director may request
that an item be placed on the regular agenda for further discussion
1.
Approve Minutes of Director's Meeting of July 14, 2016 - Romero
2.
Approve and File Authority Checks Through July 31, 2016 - Romero
3.
Receive Report on FY 2015-2016 Year-End Financial Status - Cullem
4.
Receive Report and Copies of the Motion to Strike and Comment Letters on the Marina
Coast Water District Motion to Delay CPUC Hearings on the Return Water Agreement and
the Brine Disposal Agreement - Cullem
5.
Receive Report on Decision of the State Water Resources Control Board (SWRCB) on
the Cease and Desist Order (CDO) 2009-0060 Extension Application - Cullem
6.
Appoint Councilmember Bill Peake of Pacific Grove to the Technical Advisory Committee Cullem
***End of Consent Agenda***
Thursday, August 11, 2016
AGENDA ITEMS
7.
Receive a Report and Provide Direction on the Contract for the Executive Director - Cullem
8.
Receive an Update on the Summary Project Schedule for the Monterey Peninsula Water
Supply Project (MPWSP) - Crooks
9.
Receive Presentation, Discuss, and Provide Staff Direction on the People's Desal Project Balch
10.
Receive Presentation, Discuss, and Provide Staff Direction on the Deep Water Desal
Project - Armanesco
ADJOURNMENT
The City of Monterey is committed to including the disabled in all of its services, programs and
activities. In compliance with the Americans with Disabilities Act, if you need special assistance
to participate in this meeting, please contact the City Clerks Office at (831) 646-3935.
Notification 30 hours prior to the meeting will enable the City to make reasonable arrangements
to ensure accessibility to this meeting [28 CFR 35.102-35.104 ADA Title II]. Later requests will
be accommodated to the extent feasible. For communication-related assistance, dial 711 to use
the California Relay Service (CRS) to speak to City offices. CRS offers free text-to-speech, speechto-speech, and Spanish-language services 24 hours a day, 7 days a week. If you require a hearing
amplification device to attend a meeting, dial 711 to use CRS to talk to the City Clerk's Office at
(831) 646-3935 to coordinate use of a device.
Agenda related writings or documents provided to the MPRWA are available for public
inspection during the meeting or may be requested from the Monterey City Clerks Office at 580
Pacific St, Room 6, Monterey, CA 93940. This agenda is posted in compliance with California
Government Code Section 54954.2(a) or Section 54956.
M I N U TE S
MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA)
Director's Meeting
7:00 PM, Thursday, July 14, 2016
COUNCIL CHAMBERS
580 PACIFIC STREET
MONTEREY, CALIFORNIA
Directors Present:
Directors Absent:
Director Dallas, Director Edelen, Director Pendergrass, Director Roberson,

Director Rubio, President Kampe
None
Staff Present:
Legal Counsel Freeman, Executive Director Cullem, Clerk Romero
ROLL CALL
President Kampe called the meeting 7:00pm.
PLEDGE OF ALLEGIANCE
REPORTS FROM BOARD DIRECTORS AND STAFF
President Kampe introduced Pacific Grove Councilmember Bill Peake, who will be an Alternate
Representative on the Monterey Peninsula Regional Water Authority (MPRWA). He welcomed
Director Roberson back to the Board, and the Board thanked Director Downey for her service.
Don Freeman reported on an article in the paper regarding a lawsuit by the Water Ratepayers
Association of the Monterey Peninsula against the County Board of Supervisors, California
American Water (Cal Am), Monterey Water Resources Agency, and the California Coastal
Commission. He gave a brief summary of the lawsuit, explaining that it wants to ensure that
surcharges are being spent appropriately, that Cal Am ceases illegal pumping of water, states
that the test well pumping violates the Local Coastal Plan, and that Monterey County and
Coastal Commission are required to enforce the Local Coastal Plan. He clarified that the
Authority is not involved in this lawsuit. Mr. Freeman also announced that the County sent a
check to the Authority $88,160 for last years fiscal year payment.
The Board voiced appreciation for the County's support. Executive Director Cullem announced
that the County Board of Supervisors also wrote a letter in support of the request for the
extension of the Cease and Desist Order (CDO) to the State Water Resources Control Board
(SWRCB). He announced that the Authoritys end of the year financial report will be available at
the next meeting.
PUBLIC COMMENTS
None
CONSENT ITEMS
1.
Approve and File Authority Checks Through June 30, 2016

Action: Approved Checks
PUBLIC COMMENTS
None
MPRWA Minutes
Thursday, July 14, 2016
On a motion by Director Pendergrass, seconded by Director Rubio, and carried by the following
vote, the Monterey Peninsula Regional Water Authority Approved the Authority Checks
Through June 30, 2016:
AYES:
DIRECTORS:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
0
0
0
0
DIRECTORS:
DIRECTORS:
DIRECTORS:
DIRECTORS:
Dallas, Edelen, Pendergrass, Roberson, Rubio,

Kampe
None
None
None
None
APPROVAL OF MINUTES
2.
Approval of Minutes from June 9, 2016

Action: Approved
PUBLIC COMMENTS
None
On a motion by Director Rubio, seconded by Director Edelen, and carried by the following vote,
the Monterey Peninsula Regional Water Authority Approved the Authority Checks Through
June 30, 2016:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
5
0
0
1
0
DIRECTORS:
DIRECTORS:
DIRECTORS:
DIRECTORS:
DIRECTORS:
Dallas, Edelen, Pendergrass, Rubio, Kampe

None
None
Roberson
None
AGENDA ITEMS
3.
Receive Copy and Discuss Water Authority Response to the Preliminary SWRCB Staff
Proposal on the Amended Application for Modification of CDO 2009-0060
Action: Received Report; Discussed
Executive Director Cullem stated the Authority sent a letter with additional comments to the
SWRCB in support of an amendment to the application for modification of the CDO. The letter
emphasized the negative effects enforcing the current CDO would have on the economy,
Military, and on the Peninsula.
PUBLIC COMMENTS
4.
Tom Rowley, representing Monterey Peninsula Taxpayers Association (MPTA), stated

that MPTA also sent a letter to SWRCB in support of modifying the CDO, and in support
of the comments submitted by the Authority.
John Narigi, representing the Coalition of Monterey Peninsula Businesses, said the
Coalition has sent several letters to the SWRCB, and has hired lawyers to support the
revision of the CDO.
Elect Water Authority Board Officers for FY 2016-2017

Action: Elected Officers for FY 2016-17
Executive Director Cullem stated that Article 3 of the adopted Bylaws requires an election be
held for Board officers at the first meeting of each fiscal year.
Monterey Peninsula Regional Water Authority
Director's Meeting Minutes - Thursday, July 14, 2016
2
MPRWA Minutes
PUBLIC COMMENTS
None
On a motion by Director Rubio, seconded by Director Edelen, and carried by the following vote,
the Monterey Peninsula Regional Water Authority Elected Bill Kampe, Water Authority Board
President for FY 2016-2017:
AYES:
DIRECTORS:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
0
0
0
0
DIRECTORS:
DIRECTORS:
DIRECTORS:
DIRECTORS:

Kampe
None
None
None
None
PUBLIC COMMENTS
None
On a motion by Director Edelen, seconded by Director Dallas, and carried by the following vote,
the Monterey Peninsula Regional Water Authority Elected Ralph Rubio, Water Authority Vice
President for FY 2016-2017:
AYES:
DIRECTORS:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
0
0
0
0
DIRECTORS:
DIRECTORS:
DIRECTORS:
DIRECTORS:

Kampe
None
None
None
None
PUBLIC COMMENTS
None
On a motion by Director Kampe, seconded by Director Rubio, and carried by the following vote,
the Monterey Peninsula Regional Water Authority Elected David Pendergrass, Water Authority
Secretary, and Jerry Edelen, Water Authority Treasurer, for FY 2016-2017:
5.
AYES:
DIRECTORS:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
0
0
0
0
DIRECTORS:
DIRECTORS:
DIRECTORS:
DIRECTORS:

Kampe
None
None
None
None
Review and Discuss Burnett's List of Remaining Issues and Provide Staff Direction
Action: Reviewed and Discussed To-do List
Executive Director Cullem introduced the list To-do items, and suggested that the Board go
through the list and discuss the priorities and status of each item. The Board reviewed and
received updates on the following items:
1. Extending the CDO (Cease and Desist Order on the Carmel River) Amendment filed,
hearing set for July 19th and a decision will be made
3
MPRWA Minutes
2. Finalize Water Purchase Agreement with Castroville Currently being reviewed by the
California Public Utilities Commission (CPUC) and may finalize by end of August
3. Extend National Oceanic and Atmospheric Administration (NOAA) mitigation agreement
for Carmel River Discussions in progress; NOAA delay
4. Complete Environment Impact Report/Study (EIR/EIS) for desal Under CPUC review;
estimated a 1 year delay (2018)
5. Advance Ground Water Replenishment/Pure Water Monterey GWR is ready to
proceed as soon as the CPUC makes a decision; Fall 2016
6. Legal Challenges from Marina Coast Water District/Ag Trust Cal Am primarily involved
in legal challenges with Marina Coast Water District
7. Certificate of Public Convenience and Necessity (CPCN) Will be considered after
EIR/EIS (sometime in early 2018)
8. Obtain Various City/County permits after CPCN Will be required for pipelines after
CPCN; The permits will be focused on by the Technical Advisory Committee (TAC)
9. Post Monterey Peninsula Water Supply Project (MPWSP) water allocation plan Likely
to require an EIR
10. Ongoing public agency collaboration Contain costs; monitor water usage; focus on
water supply; adapt to events
Completed Tasks:
1. Finalize brine discharge agreement Imminent completion
2. Finalize Return Water agreement Imminent completion
3. Restart Test Well - Restarted
PUBLIC COMMENTS
Libby Downey, MPRWA Alternate Director, said she spoke to Paul Scuito from
Monterey Regional Water Pollution Control Agency (MRWPCA), and gave the following
comments on the To-Do list regarding to Pure Water Monterey (PWM):
CEQA Plus is needed, not NEPA
The Cal Am pipeline is necessary for maximizing PWM
The signatures for the water rights are being obtained
George Riley, TAC Member, said he hopes the Authority will pay attention to potential
litigation and implications. He said that the two major issues the Authority should focus
on are the CDO and water rights. He opined that there should be plans for future
transition.
Tom Rowley, MPTA, said that long term land use issues need to be addressed, as well
as reorganization of the Water Management District. He added that the EIR has been
delayed, and the Authority needs to be ready to go when it is.
Director Edelen commented that Jason Burnett created this To-do list and had many political
connections. He suggested that Supervisor Dave Potter be explored as a liaison for the
Authority due to his connections in Sacramento.
Director Pendergrass responded to Mr. Rowley has looked into the possibility of members of
the Authority join the Water Management District in the past, and suggested it be revisited.
4
MPRWA Minutes
President Kampe responded to Mr. Riley, saying that any discussion on potential litigation must
be done in public, and the Authority does not want to get involved if not necessary. He
responded to Mr. Rowley saying that the role of the Authority is to remain until a water supply is
available, and continue to be flexible in terms of future involvement with the Water Management
District. He added that when the EIR/EIS is ready the Authority will review it.
Executive Director Cullem announced that the next meeting of the Authority will be a joint
meeting with the TAC, including presentations from Deep Water Desal and other agencies to
provide information and address questions.
ADJOURNMENT
President Kampe adjourned the meeting at 7:58 pm.
ATTEST:
Nova Romero, Clerk of the Authority
MPRWA President

5

Agenda Report
FROM:
Date: August 11, 2016

Item No: 2.
Executive Director Cullem
SUBJECT: Approve and File Authority Checks Through July 31, 2016
RECOMMENDATION:
It is recommended that the Authority approve and file the payments invoiced as of July
31, 2016.
DISCUSSION:
At its meeting on September 12, 2013, the Authority Board approved a staff
recommendation to provide the Directors a listing of financial obligations since the last
report for inspection and confirmation. Each invoiced expense has been reviewed and
approved by the Executive Director and Finance personnel prior to payment to insure that
it conforms to the approved budget.
The following checks are hereby submitted to the Authority for inspection and
confirmation (check amounts will be provided by 8/11/16):
$------- City of Monterey for Executive Director Services, Quarter --- 2016
$-------- To Brownstein Hyatt Farber & Schreck for Services Rendered through --------2016
$------- to McGilloway, Ray Brown & Kaufman for Financial Audit Services
$------- to Access Monterey Peninsula
$------- to Perry and Freeman for Legal Counsel Services ------- 2016
$------- to Separation Processes Inc
$------- To City of Seaside for Financial Services for -------
$------- To City of Monterey for Principal Office of the Authority for ----
The bank balances as July 31, 2016 is sufficient cover the above check therefore, staff
is recommending approval.
BUDGET UPDATE:
None
ATTACHMENTS:
A-Budget to Actual Report through July 31, 2016 (will be available on 8/11/16)

Agenda Report
FROM:

Item No: 3.
SUBJECT: Receive Report on FY 2015-2016 Year-End Financial Status
RECOMMENDATION:
It is recommended that the Authority Board receive a report on the FY 2015-2016 yearend budget status.
DISCUSSION:
At a meeting on June 21, 2016, the County committed to paying its $88,160 FY 20152016 fair-share which insured that the fiscal year ended with a small ending balance.
In accordance with paragraph 13.3 of the Joint Exercise of Powers Agreement, any
year-end balances can be credited towards the following fiscal year contributions.
Since the amended budget for FY 16-17 has little room for unanticipated expenses, the
Authority staff noted that supplemental contributions throughout the year may be
required if services cannot be provided by City or County in-house staffs. To date, no
City or County staff resources have been identified to perform services in support of the
Water Authority.
At this point it looks likely to staff that a supplemental request will be needed to fund
additional special counsel services as we return to the CPUC hearings on the MPWSP
and GWR and for possible late year contractual review of the re-circulated MPWSP
DEIR/DEIS, similar to the $40,000 Geosyntec study commissioned in June 2015.
Accordingly, to avoid possible mid-year budget requests, staff recommends that the
Authority place the estimated year-end balance of approximately $50,000 in a reserve
fund for emergencies or extenuating circumstances, as authorized by paragraph 6.6 of
the JPA Bylaws. Disbursements from the reserve fund requires a 70% supermajority of
the Board. If not required throughout the remainder of the fiscal year, the reserve funds
would be returned to member agencies as a credit against future contributions or next
year's reserve fund.
06/12
FISCAL IMPACT:
Staff recommends the FY 2015-2016 year-end balance of approximately $50,000 be
held in a reserve fund for FY 2016-2017.
ATTACHMENTS:
A- FY 2015-2016 Year-End Fund Balances (will be available on 8/11/16)

Agenda Report
FROM:

Item No: 4.
SUBJECT: Receive Report and Copies of the Motion to Strike and Comment Letters
on the Marina Coast Water District Motion to Delay CPUC Hearings
on the Return Water Agreement and the Brine Disposal Agreement
RECOMMENDATION:
Staff recommends that the Water Authority receive a copies of the "Motion to Strike"
portions of The Marina Coast Water District motion to delay CPUC hearings on the
Return Water Agreement and the Brine Disposal Agreement as well as the joint
comment letters.
DISCUSSION:
On July 18, the MCWD served or filed a motion with the CPUC to delay the CPUC
decision on the Return Water Agreement and the Brine Disposal Agreement, both of
which were the subject of CPUC ALJ Hearings in April 2016.
Our special legal counsel (Russ McGlothlin) requested the Authority co-file a Motion to
Strike as discussed in attachments A and B. The final motion was filed on July 22. Joint
comment letters (attachments C and D) were also submitted at the end of July.
Since time was of the essence there was insufficient time to call a special meeting to
discuss this motion prior to the submission deadline. However, it was the position of the
Executive Director, with the concurrence of Authority Counsel, that previous Water
Authority Board approvals for co-application of the Return Water and the Brine
Disposal Agreements intended both in spirit and in letter for the Authority to take
reasonable actions to support those prior decisions.
President Kampe was so advised and made the decision to approve a co-filing of the
motion and submit joint reply comments on behalf of the Water Authority over Russ'
signature.
ATTACHMENTS:
A- Joint Motion to Strike dated July 22, 2016
B- Exhibit A to Joint Motion dated July 18, 2016
C- Joint Reply Comments on MCWD Motion on Brine Agreement dated 29 July 2016
D- Joint Reply Comments on MCWD Motion on Return Water Agreement dated 29 July
2016
06/12
ATTACHMENT A
BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF CALIFORNIA
Application of California-American Water

Company (U210W) for Approval of the
Monterey Peninsula Water Supply Project and
Authorization to Recover All Present and
Future Costs in Rates.
Application 12-04-019
(Filed April 23, 2012)
JOINT MOTION TO STRIKE

MARINA COAST WATER DISTRICTS CONSOLIDATED COMMENTS AND
REQUEST FOR DEFERRED HEARING ON MOTIONS TO APPROVE
SETTLEMENT AGREEMENT ON DESALINATION PLANT RETURN WATER
Sarah E. Leeper
Nicholas A. Subias
Cathy A. Hongola-Baptista
California American Water
555 Montgomery Street, Suite 816
San Francisco, CA 94111
For: California-American Water Company
sarah.leeper@amwater.com
(415) 863-2960
Dated: July 22, 2016
ATTACHMENT A
TABLE OF CONTENTS
I.
INTRODUCTION ............................................................................................. 1
II.
BACKGROUND ............................................................................................... 3
III.
DISCUSSION ................................................................................................... 4
IV.
A.
MCWDs Attacks on the MPWSP as a Whole Should Be

Stricken as Irrelevant and Improper ....................................................... 4
B.
MCWDs Attachments Should Be Stricken as an Improper

Attempt to Introduce New Evidence ...................................................... 7
C.
MCWDs Request to Have Environmental Impacts

Addressed at Evidentiary Hearings Is Improper, Irrelevant
and Has Been Repeatedly Rejected........................................................ 8
D.
The Commission Should Also Strike Other Irrelevant

Material from the Comments. .............................................................. 11
CONCLUSION ............................................................................................... 12
ATTACHMENT A


JOINT MOTION TO STRIKE MARINA COAST WATER DISTRICTS

CONSOLIDATED COMMENTS AND REQUEST FOR DEFERRED HEARING ON
MOTIONS TO APPROVE SETTLEMENT AGREEMENT ON DESALINATION PLANT
RETURN WATER
I.
INTRODUCTION
Pursuant to Rule 11.1 of the California Public Utilities Commissions

(Commission) Rules of Practice and Procedure, 1 California-American Water Company
(California American Water), Coalition of Peninsula Businesses (CPB), the
Monterey County Water Resources Agency (Agency), the Monterey Peninsula
Regional Water Authority (Authority), the Monterey County Farm Bureau (MCFB)
and the Salinas Valley Water Coalition (SVWC) 2 (Joint Parties) 3 move to strike all
of the attachments to and portions of Marina Coast Water Districts (MCWD)
Consolidated Comments and Requests for Deferred Hearing on Motions to Approve
Brine Discharge Settlement Agreement and Settlement Agreement on Desalination Plant
Unless otherwise stated, all further references to Rules are to the Commissions Rules of
Practice and Procedure.
2 The MCFB and SVWC join in Section III(A)-(B).
3 Pursuant to Commission Rule 1.8(d), counsel for all Joint Parties other than California
American Water have authorized counsel for California American Water to sign this Joint
Motion on their behalf.
ATTACHMENT A
Return Water (Comments). 4 Portions of MCWDs Comments and all of the

attachments should be stricken as improper and immaterial.
First, the scope of comments on a proposed settlement is set by Commission Rule
12.2. Such comments are limited to comments on the proposed settlement. Rule 12.2
permits parties to file comments contesting all or part of the settlement 5 Rule 12.2
further makes clear comments are to be directed to the settlement, stating comments
must specify the portions of the settlement that the party opposes, the legal basis of its
opposition, and the factual issues that it contests. 6
MCWDs Comments blatantly disregard the limits stated unambiguously in Rule
12.2. The Comments do not identify alleged irregularities or other issues with the Brine
Discharge Settlement Agreement (Brine Settlement Agreement) or the Settlement
Agreement on Desalination Plant Return Water (Return Water Settlement Agreement)
(collectively the Settlements). Instead, the Comments repeatedly focus not on the
Settlements but on purported defects of the Monterey Peninsula Water Supply Project
(MPWSP) as a whole. The Commission should reject and strike MCWDs attempt to
challenge the entire project through comments on two discrete settlement agreements.
Second, not content to ignore clear requirements of the Commissions rules,
MCWD illegitimately attempts to submit new evidence, not admitted in the record, to
support its purported opposition to the Settlements. MCWD cites to no authority
permitting MCWD to shoehorn these documents into the record through its Comments.
MCWDs efforts to improperly supplement the record with these attachments to its
4
On July 18, 2016, MCWD served Amended Consolidated Comments And Request For
Deferred Hearing On Motions To Approve Brine Discharge Settlement Agreement And
Settlement Agreement On Desalination Plant Return Water (Amended Comments). It is
unclear if these Amended Comments were filed with the Commission or just served to the
service list. Nonetheless and out of an abundance of caution, this Motion will address the
Amended Comments.
5 Emphasis added.
6 Emphasis added.
ATTACHMENT A
Comments is wholly improper. The Commission should strike each attachment to

MCWDs Comments.
Finally, MCWD uses the Comments as yet another opportunity to reargue its
repeatedly rejected position that the Commission is legally required to address project
alternatives and environmental impacts in evidentiary hearings. In light of the prior
explicit rejections of this MCWD position, it is a waste of party and Commission
resources to address MCWDs argument yet again. Further, MCWDs arguments
regarding the need for environmental review before approval of the Settlements ignore
the fact that each of the Return Water Settlement Agreement and the Brine Settlement
Agreement is expressly contingent upon completion of environmental review pursuant to
the California Environmental Quality Act (CEQA). The Commission should reject and
strike MCWDs arguments seeking evidentiary hearings on CEQA and order MCWD
not to reassert those arguments in future briefing. 7
Accordingly, Joint Parties urge an assigned Administrative Law Judge to: (1)
strike the portions of its Comments set forth in Exhibit A; (2) order MCWD not to
reargue the alleged necessity of evidentiary hearings on environmental review; and (3)
strike each of the three attachments to MCWDs Comments.
II.
BACKGROUND
California American Water filed Application (A.) 12-04-019 (the Application)

on April 23, 2012, for Commission approval to implement the MPWSP and for
authorization to recover the costs associated with the MPWSP in rates. Phase 1 of the
proceeding addresses California American Waters request for a Certificate of Public
7
The Administrative Law Judges assigned to this proceeding have authority to make both
requested orders under Rule 9.1, which among other things allows them to receive evidence
(which includes the power not to do so), rule upon all objections or motions which do not
involve final determination of proceedings, and take such other action as may be necessary and
appropriate in the discharge of their duties. See also Pub. Util. Code 311(b) & (c)
(administrative law judge may receive and exclude evidence as permitted in the Commissions
rules of practice and procedure).
ATTACHMENT A
Convenience and Necessity (CPCN) for the MPWSP. Phase 2 addresses matters
related to the Groundwater Replenishment Project. The Commission is separately
undertaking environmental review of the MPWSP through the CEQA process.
The MPWSP is a large project with many components, including, inter alia, a
desalination plant and related facilities including slant intake wells, brackish water
pipelines, the desalination plant, product water pipelines, brine disposal facilities, and
other appurtenant facilities. The Brine Settlement Agreement, signed by six parties,
represents a compromise as to how brine from the proposed MPWSP desalination facility
will be discharged. In the Return Water Settlement Agreement, signed by nine parties,
the settling parties agree that California American Water will deliver Return Water to
the Salinas River Groundwater Basin (SRGB) for use in lieu of existing groundwater
production. Both Settlements are necessarily contingent upon issuance of the CPCN and
expressly contingent on the completion of the CEQA review process. 8
III.
DISCUSSION
A.
MCWDs Attacks on the MPWSP as a Whole Should Be Stricken as

Irrelevant and Improper
Pursuant to Rule 12.2, comments on a settlement agreement must specify the

portions of the settlement that the party opposes, the legal basis of its opposition, and the
factual issues that it contests. The Settlements are the result of efforts of various parties
to resolve two discrete subissues among the many issues the Commission will resolve in
acting on the Application. The Return Water Settlement Agreement resolves among its
settling parties various issues recited in that agreement related to return of water to the
8
Brine Settlement Agreement 6.9 (The legal effectiveness of this Agreement is contingent on
the completion of CEQA review The Commission, as the lead agency under CEQA and all
other responsible agencies will retain full discretion with respect to deciding whether to approve
or disapprove any commitments... alternatives and/or adopt mitigation measures.; Return
Water Settlement Agreement 17 (The legal effectiveness of this Agreement is contingent on
the completion of CEQA review The Parties acknowledge and intend that the lead agency and
responsible agencies will retain full discretion with respect to deciding whether to approve the
Return Water Supply Agreements or any other commitments necessary or convenient for Cal
Am to meet the Annual Return Water Obligation.
ATTACHMENT A
SRGB.. The Brine Settlement Agreement resolves among its settling parties various
issues recited in that agreement related to discharge of brine that results from
desalination. 9
Despite the transparent requirements of Rule 12.2, MCWD permeates its
Comments with arguments that have nothing to do with the Settlements. MCWDs
Comments treat the Settlements as an invitation to explain why the MPWSP as a whole
purportedly cannot be approved. MCWD cites to no authority which permits it to
transform these two discrete Settlements into a jumping off point for attacking the
entirety of the MPWSP. By requesting approval of the Settlements, the settling parties
did not put the entirety of California American Waters Application at issue. Forcing
California American Water and other parties to this proceeding to respond to and the
Commission to consider arguments that go far beyond the Settlements ignores Rule 12.2
and wastes the time and resources of both the Commission and parties. The arguments
should be stricken as improper and irrelevant.
For example, MCWD argues that the Commission cannot approve the Settlements
because the record concerning supply and demand sources demonstrates material factual
disputes concerning Cal-Ams need for a desalination source of supply, and the record
shows that Cal-Am can [satisfy its obligations to meet the requirements of SWRCB
Order 95-10] through its own customers continuing conservation efforts in combination
with purchased water from the GWR Project and with full utilization of legal ASR
sources. 10 These are arguments that there is no need for the MPWSP an issue
regarding issuance of a CPCN that is not addressed to the Settlements. The place to
argue such need for the MPWSP is not in comments to these Settlements, which are
limited to discrete aspects of the overall project. MCWD has taken full advantage of
9
Indeed, MCWD agrees the Settlements involve discrete aspects of the overall proceeding.
See MCWD Comments, at pp. 1, 19 & 21.
10 MCWD Comments, at pp. 9, 10.
ATTACHMENT A
numerous opportunities it has already been granted to raise its opposition to the MPWSP.
[Should examples of such briefing be cited in a footnote?] In fact, MCWD will have
yet another opportunity to do so, in the Legal and Policy Briefing to follow the draft
report addressing state/federal environmental review.
MCWD also argues that the MPWSP not the Settlements themselves would
violate various laws, alleging:
California American Waters proposal to operate the MPWSP by
unlawfully and unsustainably pumping source water from SRGB at the
CEMEX site is contrary to multiple requirements of law. 11
The MPWSP would improperly circumvent local control, local decisionmaking, and local protection in ground water matters. 12
California American Water may not lawfully seek the Commissions
determination of whether the MPWSP would interfere with others
groundwater rights, whether as a factual or legal question. 13
Operation of the MPWSP as proposed would require violation of the 1996
Annexation Agreement. 14
The MPWSP if approved would be in direct conflict with the Monterey
County ordinance that requires public ownership of desalination facilities. 15
None of these arguments supports rejection of the Settlements themselves. They
do not even address the issues of return water and brine discharge. As the Commission is
aware, the parties have already extensively briefed the issue of the Annexation
Agreement in connection with the Large Settlement Agreement and Sizing Settlement
11
Id. at p. 12.
12 Id. at p. 13.
13 Id. at p. 14.
14 Id. at p. 15.
15 Id. at p. 16.
ATTACHMENT A
Agreement. MCWD provides no authority for why it is proper or necessary to ask the
Commission to consider this argument a second time. MCWD has repeatedly argued that
approval of the MPWSP would conflict with the Monterey County Desal Ordinance,
arguments the Commission soundly rejected in D.12-10-030, and again in D.13-07-048.
MCWDs calculated effort to force California American Water and other parties to
respond yet again to arguments that have already been rejected is improper, would result
in a waste of resources of the Commission and parties, and should not be countenanced.
There is nothing in Rule 12.2, or any other Commission rule, that permits a party
to use the settlement comment procedure as a platform to voice arguments that are not
relevant to the settlements at issue. As set forth in Exhibit A, all MCWDs comments
which attack the MPWSP or are otherwise not relevant to the Settlements should be
stricken.
B.
MCWDs Attachments Should Be Stricken as an Improper Attempt to

Introduce New Evidence
MCWDs attachments to its Comments are an illicit attempt to insert new

evidence into the record of this proceeding. Without any authentication, sponsoring
witness or legal citation permitting it simply to add evidence at this point, MCWD
attached to its Comments (1) California American Waters written response to MCWDs
Fifth Data Request, (2) Marina Coast Water Districts Amended Application for Order
Modifying State Water Board Order WR 2009-0060, and (3) a Technical Memorandum
from Curtis J. Hopkins with Hopkins Groundwater Consultants. None of these
documents is in evidence or part of the record of this proceeding. MCWD has no
grounds to unilaterally add these documents to the record of this proceeding by attaching
them to its Comments. Attachments 1, 2 and 3 should, therefore, be stricken in their
entirety.
ATTACHMENT A
C.
MCWDs Request to Have Environmental Impacts Addressed at Evidentiary

Hearings Is Improper, Irrelevant and Has Been Repeatedly Rejected
MCWD argues that the Commission cannot approve the Settlements without
having completed its environmental review of the entire proposed project and without
having considered the influence on the environment of the project in an evidentiary
hearing. 16 As to MCWDs first issue, the Settlements are both expressly contingent on
completion of CEQA review. 17 Apparently MCWD either failed to read the Settlements
thoroughly, thus missing Sections 6.9 of the Brine Settlement Agreement and 17 of the
Return Water Settlement Agreement, or chooses to ignore those provisions in favor of
presenting a palpably meritless argument. Regardless, MCWDs predictable argument
for delay in considering the Settlements should be stricken as directly contrary to the
unambiguous terms of Sections 6.9 and 17.
MCWDs second point, that environmental impacts must be addressed at an
evidentiary hearing, has been previously raised and rejected numerous times. Including
the same tired and repeatedly rebuffed argument in the Comments is improper and
MCWD should be admonished not to reargue this issue again.
Specifically, on June 28, 2012, President Peevey issued the Scoping Memo and
Ruling, which set forth a schedule to govern the non-CEQA part of the proceeding. 18 On
July 7, 2012, MCWD responded with a Motion to Modify and Clarify Assigned
Commissioners Scoping Memo and Ruling. MCWDs motion conceded that the
Commission intended to conduct the proceeding on two separate tracks (one for CEQA
compliance and another for the CPCN). MCWD then argued the Commission must
consider the environmental impacts of the project in making the CPCN
determinations. 19 And it claimed the Scoping Memo should be changed to assure
16
MCWD Comments, p. 2.
17 Brine Settlement Agreement 6.9; Return Water Settlement 17.
18 Scoping Ruling, at p. 3.
19 MCWD Motion to Modify Scoping Ruling, p. 4.
ATTACHMENT A
evidentiary hearings take place only after the FEIR. 20

On August 29, 2012, ALJ Weatherford ruled a finding that the deferral of
prepared testimony or evidentiary hearings, or both, in the CPCN track until after the
issuance of either the draft or final EIR is not in the public interest because it would
substantially increase the risk of non-compliance by CAW with the December 2016 statemandated deadline to reduce California American Waters diversions from the Carmel
River. 21
On May 2, 2013, MCWD filed a Motion to Modify Procedural Schedule, which
sought modification of the schedule to (again) require further hearings and full briefing
on the issue of the proposed projects influence on the environment, pursuant to section
1002, subdivision (a) of the Public Utilities Code. 22
On May 30, 2013, ALJ Weatherford issued a ruling that made clear the CDO was
not the only support for denial of this MCWD argument. ALJ Weatherford ruled [a]s
stated earlier in this proceeding, no evidentiary hearing is required or, given the
outstanding cease and desist order (CDO), appropriate for the environmental reporting
track. 23 His ruling continued: Consistent with CEQA, parties will have the
opportunity to comment on the DEIR before the FEIR is certified. Those comments,
reflected in the FEIR, will be considered in the Proposed Decision, and parties will also
have the opportunity to comment on that PD before the Commission acts. 24 ALJ
Weatherfords ruling specifically rebuked MCWD for seeking a second bite at the apple,
stating MCWDs effortto have project alternatives and environmental impacts
20
Id. at p. 5.
21 Administrative Law Judges Directives to Applicant and Ruling on Motions Concerning
Scope, Schedule and Official Notice, filed August 29, 2012, at p. 7 (emphasis added).
22 MCWD Motion to Modify Procedural Schedule at p. 1.
23 Administrative Law Judges Ruling After Evidentiary Hearings, filed May 30, 2013 (Ruling
After Evidentiary Hearings), at p. 4 (emphasis added).
24 Id. at p. 4.
ATTACHMENT A
addressed in evidentiary hearings was rejected in the August 29, 2012 ALJs Directives
to Applicant and Ruling on Motions (at 5-7)). 25
These rulings do not in any way depart from normal Commission practice and
procedure, a fact MCWD surely knows. In CPCN proceedings, the Commission has
repeatedly found that the CEQA review process is the proper vehicle for consideration of
a proposed projects environmental impacts. 26 It is therefore not surprising that MCWD
failed to seek reconsideration of the prior rulings, the proper course if it wanted to
challenge them. Instead, on August 30, 2013, a scant three months after issuance of the
Ruling After Evidentiary Hearings, MCWD filed comments to the Large Settlement
Agreement and the Sizing Agreement which argued for a third time that evidentiary
hearings on potential environmental impacts were necessary. 27 During the April 2016
evidentiary hearings, MCWD yet again was told by ALJ Weatherford: We are not going
to entertain testimony here about the Environmental Impact Report and the EIR
process. 28
In response to the Settlements, and despite prior rulings against it on the issue,
MCWD repeats the same arguments in its Comments by again arguing that the
Commission must hold evidentiary hearings on environmental impacts as part of the
CPCN determination. 29 ALJ Weatherford has already rejected that argument and
specifically stated that MCWD will have its chance to debate environmental impacts
25
Ruling After Evidentiary Hearings, p. 4.

26 See D.10-12-025, Application of Wild Goose Storage, LLC to Amend Its Certificate of Public
Convenience and Necessity to Expand and Construct Facilities for Gas Storage Operations
(U911G), 2010 PUC LEXIS 463, *8; D.10-07-043, In the Matter of the Application of Southern
California Edison Company (U-338-E) for a Certificate of Public Convenience and Necessity for
the San Joaquin Cross Valley Loop Transmission Project, 2010 Cal. PUC LEXIS 285, *8.
27 MCWDs Consolidated Comments on the Settling Parties 1) Motion to Approve Settlement
Agreement and 2) Motion to Approve Settlement Agreement on Plant Size and Operation, filed
August 30, 2013, pp. 10-13.
28 Reporters Transcript, Vol. 18, April 15, 2016, at p.2964: 6-9.
29 MCWDs Comments, pp. 23.
10
ATTACHMENT A
through its comments on the DEIR. 30

Enough is enough. MCWD has preserved the issue for an effort at appellate
review, if that is its concern. It is patently unfair to the Commission and other parties to
permit MPWD to repeat the same rejected arguments over and over and over again,
requiring response of parties each time. MCWDs attempts to backdoor its repeatedly
rejected request to have evidentiary hearings on CEQA impacts is improper. It should be
stricken from the Comments and MCWD should be ordered not to repeat the argument
again. It is hoped such an order will put an end to MCWDs repetition of this rejected
argument, since its failure to follow that order could subject MCWD to action for
violation of Rule 1.1 for failure to comply with the laws of this State and to maintain the
respect due the Commission.
D.
The Commission Should Also Strike Other Irrelevant Material from

the Comments.
MCWDs wide-ranging and irrelevant attacks on the MPWSP are not its only
forays into territory having nothing to do with the Settlements. MCWD also raises issues
long ago decided in another proceeding, A.13-05-017, in a frankly difficult to
comprehend argument about alleged inconsistency with law somehow related to the
Commissions decisions on preemption issued in this proceeding (D.12-10-030 and D.1307-048). MCWD references but does not provide the citation to D.15-10-052, the
decision denying (not modifying, as MCWD asserts) D.15-03-002, issued in A.13-05017. 31 The Comments do not explain why either D.15-03-002 or D.15-10-052 are
relevant to the Settlements. The Comments then state in a footnote the Supreme Court
has granted hearing of the Commissions decision in A.13-05-107, admitting that grant is
on other grounds, 32 thus taking that observation even further afield than the reference
30
Ruling After Evidentiary Hearings, at p. 4.

31 MCWDs Comments, p. 17. No portion of D.15-10-052 modifies D.15-03-002. Ordering
Paragraph 3 unequivocally states Rehearing of D.15-03-002 is denied.
32 Id.
11
ATTACHMENT A
in the text to preemption and D.15-10-052. The Commission should therefore also strike
the material from page 17 of the Comments shown in Exhibit A.
IV.
CONCLUSION
For the foregoing reasons, Joint Parties respectfully request that the Commission
strike (1) portions of MCWDs Comments as shown in Exhibit A, and (2) all of
MCWDs attachments to the Comments.
By:
/s/ Sarah E. Leeper

Sarah E. Leeper, Attorney
California-American Water Company
12
ATTACHMENT B
EXHIBIT A
ATTACHMENT B

In the Matter of the Application of CaliforniaAmerican Water Company (U 210 W) for

Approval of the Monterey Peninsula Water
Supply Project and Authorization to Recover
All Present and Future Costs in Rates.
A.12-04-019
MARINA COAST WATER DISTRICTS AMENDED

CONSOLIDATED COMMENTS AND REQUEST FOR
DEFERRED HEARING ON MOTIONS TO APPROVE
BRINE DISCHARGE SETTLEMENT AGREEMENT AND
SETTLEMENT AGREEMENT ON DESALINATION PLANT
RETURN WATER
MARK FOGELMAN
RUTH STONER MUZZIN
FRIEDMAN & SPRINGWATER LLP
350 Sansome Street, Suite 210
Telephone: (415) 834-3800
Facsimile: (415) 834-1044
Email: mfogelman@friedmanspring.com
Email: rmuzzin@friedmanspring.com
Attorneys for Marina Coast Water District
Date: July 13, 2016
Amended July 18,
2016
(Amendment to p.17
shown in redline on
Attachment A)
ATTACHMENT B
TABLE OF CONTENTS
Page
I.
INTRODUCTION ...................................................................................................... 1
II.
CRITERIA FOR COMMISSION APPROVAL OF SETTLEMENTS ........................ 4

A.
III.
The Settlements are not Reasonable in Light of the Whole Record.................. 5

1.
Groundwater Impacts .......................................................................... 5
2.1.
Mitigation with Return Water. .......................................................... 7
3.
Supply and Demand ............................................................................ 9
4.
Other Feasible Replacement Sources ............................................... 10
B.
The Settlements are not Consistent with Law .............................................. 12
C.
The Settlements are not in the Public Interest .............................................. 21
REQUEST FOR HEARING FOLLOWING RESOLUTION OF PHASE 2

AND FURTHER DEVELOPMENT OF THE RELEVANT FACTUAL
RECORD .............................................................................................................. 22
IV.
CONCLUSION ........................................................................................................ 24
ATTACHMENT B
TABLE OF AUTHORITIES
Page
Cases
Allen v. California Water and Tel. Co. (1946)
29 Cal.2d 466.................................................................................................................. 13
Atlantic Refining Co. v. Public Service Com. (1959)
360 U.S. 378 ................................................................................................................... 24
Banning Ranch Conservancy v. City of Newport Beach (2012)
211 Cal.App.4th 1209........................................................................................... 7, 8, 18, 20
California American Water v. City of Seaside (2010)
183 Cal.App.4th 471 ....................................................................................................... 14
City of Barstow v. Mojave Water Agency (2000)
23 Cal.4th 1224............................................................................................................... 12
City of Pasadena v. City of Alhambra (1949)
33 Cal.2d 908.................................................................................................................. 12
City of Santa Maria v. Adam (2012)
211 Cal. App. 4th 266 ..................................................................................................... 14
Corona Foothill Lemon Co. v. Lillibridge (1937)
8 Cal.2d 522.................................................................................................................... 12
Greyhound Lines, Inc. v. Public Utilities Com. (1967)
65 Cal.2d 811.................................................................................................................. 22
Laurel Heights Improvement Assn. v. Regents of University of Calif. (1988)
47 Cal. 3d 376............................................................................................................... 18, 19
Mira Mar Mobile Community v. City of Oceanside (2004)
119 Cal.App.4th 477....................................................................................................... 8, 20
Monolith Portland Cement Co. v. Mojave Public Utility District (1957)
154 Cal.App.2d 487 ........................................................................................................ 13
Northern California Power Agency v. Public Utilities Com. (1971)
5 Cal.3d 370.................................................................................................................. 23, 24
Paulek v. Department of Water Resources (2014)
231 Cal.App.4th 35 ......................................................................................................... 18
Rio Vista Farm Bureau Center v. County of Solano (1992)
5 Cal.App.4th 351 ........................................................................................................... 18
Save Panoche Valley v. San Benito County (2013)
217 Cal.App.4th 503 ....................................................................................................... 20
Save Tara v. City of West Hollywood (2008)
45 Cal.4th 116................................................................................................................. 19
Southern Pacific Co. v. Public Utilities Com. (1968)
68 Cal.2d 243................................................................................................................ 12, 22
Summit Media LLC v. City of Los Angeles (2012)
211 Cal.App.4th 921 ....................................................................................................... 17
ii
ATTACHMENT B
Statutes
Code Civ. Proc., 830-852 ............................................................................................. 14
Pub. Resources Code 21002.1, subd. (b) ......................................................................... 7, 20
Pub. Resources Code 21061 ........................................................................................... 18
Pub. Resources Code 21082.1, subd. (c)(3) ..................................................................... 19
Pub. Resources Code 21168.5 ........................................................................................ 19
Pub. Util. Code 1002, subd. (a) ............................................................................... 18, 19, 23
Pub. Util. Code 1705 ..................................................................................................... 12, 22
Pub. Util. Code 1757 ...................................................................................................... 12
Pub. Util. Code 1757.1 ................................................................................................... 12
Water Code, 2000-2900 ................................................................................................ 14
Water Code 10720-10736.6 .......................................................................................... 13
Water Code App. ch. 52, 52-8 ....................................................................................... 14, 16
Water Code App. ch. 52, 52-9 ........................................................................................ 16
Water Code App. ch. 52, 52-9, subd. (h)(7) .................................................................... 14
Water Code App. ch. 52, 52-21 ..................................................................................... 14, 16
Local Ordinances
Monterey County Code of Ordinances, ch. 10, 10.72.030, subd. B .................................. 16
Commission and Other Administrative Decisions
D.94-04-088 ..................................................................................................................... 12
D.96-01-011........................................................................................................................ 4, 12
D.09-12-017 ..................................................................................................................... 19
D.10-12-016 ..................................................................................................................... 14
D.12-10-030 ..................................................................................................................... 16
D.13-07-048...................................................................................................................... 17, 18
SWRCB Order WR 2009-0060 .......................................................................................... 3, 11
SWRCB Order WR 95-10 ................................................................................................... 3
Commission Rules of Practice & Procedure
Rule 12.1(a) ...................................................................................................................... 12
Rule 12.1(d) .............................................................................................................. 2, 4, 12, 17
Rule 12.2 ............................................................................................................................ 1
ATTACHMENT B
Rule 12.3....................................................................................................................... 3, 22, 23

Regulations
Cal. Code Regs. tit. 14, 15370 ......................................................................................... 7, 20
Cal. Code Regs. tit. 14, 15378(a)...................................................................................... 18
Cal. Code Regs. tit. 14, 15384, subd. (a) .......................................................................... 19
Constitutional Provisions
Cal. Const. art. I, 9 ........................................................................................................... 16
U.S. Const. art. I, 10, cl. 1 ................................................................................................ 16
ATTACHMENT B
In accordance with Rule 12.2 of the Commissions Rules of Practice and Procedure
(Rules), Marina Coast Water District (MCWD) respectfully submits its comments on the
Settling Parties Motion to Approve Brine Discharge Settlement Agreement (the Brine
Settlement Motion) and the Joint Motion for Approval of Settlement Agreement on
Desalination Plant Return Water (the Return Water Settlement Motion), both filed in this
proceeding on June 14, 2016 (together, the Motions). MCWD also requests an evidentiary
hearing on each of the settlement motions following the resolution of Phase 2 of this
proceeding, completion of the joint federal/state environmental review process, and further
development of the relevant factual record.
I.
INTRODUCTION
MCWD participated in good faith in the multi-party discussions that led to the
Motions. MCWD generally supports the goal of achieving the settlement of contested
applications or of contested issues, subject to the Commissions overarching public
convenience and necessity determination and the public interest. In addition, in connection
with settlements proposing to resolve discrete aspects of an application that is subject to
California Environmental Quality Act (CEQA) review, MCWD supports the careful
assessment of the potential environmental impacts of the application or project in its entirety
and the goal of planning for adequate mitigation of such impacts. For a number of reasons,
as discussed more fully below, MCWD cannot support the Motions here. Settlement of
discrete brine discharge and return water issues improperly assumes approval of the full
project.
MCWD must at this time oppose approval of the settlements concerning the proposed
Monterey Peninsula Water Supply Project (MPWSP), primarily on the basis that the
ATTACHMENT B
settlements assume the MPWSP is necessary and can be carried out legally without
engendering significant harms. However, the MPWSP cannot be legally constructed as the
project is currently proposed by the California-American Water Company (Cal-Am), and
therefore the Motions, and the settlements they address, cannot satisfy the criteria of Rule
12.1(d). As set forth in MCWDs August 30, 2013 consolidated comments opposing the two
July 31, 2013 settlement motions in this application and in its more recent Protest of the
Amended Application, MCWD continues to believe there are fundamental and irremediable
legal and evidentiary deficiencies underlying Cal-Ams application as formulated in this
proceeding. In addition, MCWD does not believe the Commission may lawfully approve
settlements involving environmental impact mitigations without having completed its
environmental review of the entire proposed project and without having considered the
influence on the environment of the project in an evidentiary hearing.
Furthermore, MCWD believes that there are contested material facts relevant to its
grounds for opposing the MPWSP and, therefore, the Motions. These material facts were not
known or not adequately explored at the time of the 2013 evidentiary hearings, or they rest
on an incomplete record that is outdated and impermissibly stale. These disputed material
facts concern:
(1) the likely impacts on groundwater of Cal-Ams proposed extraction of up to 22
million gallons per day (mgd) of sourcewater for a 9.6 or 6.4 mgd desalination
plant from the CEMEX property (which overlies the 180/400 Foot Aquifer
Subbasin of the Salinas Valley Groundwater Basin (SVGB), south of the
Salinas River in close proximity to MCWDs service area);
ATTACHMENT B
(2) whether delivering desalinated water from the MPWSP to the SVGB north of the
Salinas River will mitigate harms south of the Salinas River to the SVGB and
lawful existing users of the basin; and
(3)(1) the volume, if any, of additional replacement water supply Cal-Am must obtain
in order to cease its illegal Carmel River withdrawals in light of the full scope of
its available water supply portfolio and upon implementation of the Monterey
Regional Water Pollution Control Agencys (MRWPCAs) Pure Water
Monterey or Groundwater Replenishment (GWR) Project and expansion of the
Monterey Peninsula Water Management District (MPWMD)s Aquifer Storage
and Recovery (ASR) program, including any SVGB return water obligation
arising from extraction of SVGB groundwater for MPWSP operation;
(4)(2)
whether other feasible, less harmful alternative replacement water
supplies that would fully satisfy the requirements of State Water Resources
Control Board (SWRCB) Orders WR 95-10 and WR 2009-0060 (the Ceaseand-Desist Order or CDO), and thus obviate any need for the MPWSP, are
available to Cal-Am.
A hearing is required in order to resolve contested issues of fact. (Rule 12.3.)
However, MCWD believes that the Commissions prompt resolution of Phase 2, which seeks
approval of Cal-Ams entry into a Water Purchase Agreement (WPA) for the GWR
Project, should move forward expeditiously and should precede any hearing on contested
factual issues. None of the foregoing issues affects the Commissions ability to act on the
matters before it in Phase 2.
ATTACHMENT B
Resolution of some, if not all, of the foregoing contested factual issues should await
development of data that may become available upon completion of the Commissions
environmental review and the conclusion, or halting, of Cal-Ams test slant well project.
Resolution of the third and fourth of the foregoing contested issues of fact will affect the
actual volume of return water, if any, and brine discharge, if any, that is the subject of the
Motions. Resolution of the first issue above is closely related to the legal issue of Cal-Ams
lack of an appropriative groundwater right to pump source water for the MPWSP from the
SVGB via slant wells located on the CEMEX property, as it proposes to do. As noted on
page six of MCWDs April 8, 2016 Protest of Cal-Ams Amended Application herein, and as
the Commission has repeatedly and consistently recognized in its own past decisions, that
issue must be resolved in the appropriate judicial forum before the Commission may render a
decision on Cal-Ams pending application.
II.
CRITERIA FOR COMMISSION APPROVAL OF SETTLEMENTS

Settlements approved by the Commission, whether or not they are contested, must be
(1) reasonable in light of the whole record, (2) consistent with law, and (3) in the public
interest. (Rule 12.1(d).) The Commissions Rules of Practice and Procedure forbid it from
approving a settlement unless all three criteria are satisfied. (Ibid; In re Application of
Southern California Edison (Cal. P.U.C. 1996) 1996 Cal. PUC LEXIS 23 (D.96-01-011) at
*33-34.) Neither of the proposed settlements meets these three criteria, because both
settlements assume that the MPWSP can be carried out legally as proposed, without harm,
and because they assume that the MPWSP is required by the public convenience and
necessity. The record belies these assumptions.
ATTACHMENT B
A.
Neither of the Settlements is Reasonable in Light of the Whole Record
First, the record pertaining to each of the settlements is incomplete. The Motions and
the settlements for which they seek approval assume that the Commission will approve the
MPWSP, as Cal-Am proposes the project, for either 6.4 or 9.6 mgd (approximately 6,752 or
10,627 acre-feet per year (AFY)) of capacity, drawing as much as 22 mgd from up to ten
brackish groundwater source wells on the CEMEX property. (Amended Application, p. 1,
Amended Att. H thereto, p. 1; see Reporters Transcript (RT), Vol. 9, pp. 1606:17-1607:4
(product to sourcewater ratio of approximately 42%).) The settlements assume, in the face of
contradictory evidence, that Cal-Am will demonstrate that the public convenience and
necessity require the construction of a 6.4 or 9.6 mgd desalination project. (Return Water
Settlement Motion, pp. 1-2, Ex. A thereto at pp. 1-2; Brine Settlement Motion, p. 2, Att. A
thereto at pp. 1-2.) The settlements also assume, in the face of contradictory evidence, that
Cal-Am could legally operate the MPWSP without significant, unmitigable injury to (1) the
groundwater basin underlying the proposed source well location, (2) existing water rights
holders and users of that basin including MCWD, and (3) the environment generally. (Ibid.)
But the record demonstrates that these assumptions are false. Therefore the settlements
cannot be found reasonable on the current record.
1.
Groundwater Impacts
The Commissions now-withdrawn April 2015 draft environmental impact report

(draft EIR) failed to demonstrate that many important, potentially significant project
impacts including emission of greenhouse gases, damage to sensitive habitat for
endangered species, and adverse impacts to groundwater could be sufficiently mitigated.
(See Sept. 30, 2015 comment letter of the Salinas Valley Water Coalition on the draft EIR,
ATTACHMENT B
pp. 8-11, and Sept. 18, 2015 Technical Memorandum of Timothy Durbin, P.E., attached
thereto1; see also Sept. 15, 2015 comment letter of the Monterey Peninsula Regional Water
Authority on the draft EIR, pp. 3-52; and Sept. 30, 2015 comment letter of Surfrider
Foundation on the draft EIR, pp. 2-133.4) Cal-Ams witness testified in 2016 that the
MPWSP would not result in significant adverse impacts to groundwater. (Ex. CA-39, App.
B thereto at p. 2, 3.) Yet the evidentiary record shows that the MPWSP would significantly
impact groundwater in the project vicinity and in close proximity to MCWDs source wells
for its municipal supply. (RT Vol. 17, pp. 2832:26-2833:16; Ex. MCD-20, pp. 3-7, 7-13 and
figures there referenced; Ex. MCD-27, pp. 2-5 and figures there referenced.) Indeed, CalAms hydrogeological expert, Mr. Leffler, testified that one objective of the MPWSP is to
establish a direct connection between the aquifer and the seawater. (RT, Vol. 14, p.
2369:5-7.) This statement is plainly inconsistent with the simultaneous claim that the
MPWSP would purportedly benefit the aquifer. (Id. at p. 2369:21-25.)
Available at
http://www.cpuc.ca.gov/environment/info/esa/mpwsp/deir_comments/G_SVWC3.pdf.
The Commission has made available all written comments regarding its April, 2015 EIR, at
http://www.cpuc.ca.gov/environment/info/esa/mpwsp/deir_comments.html.
2
Available at
http://www.cpuc.ca.gov/environment/info/esa/mpwsp/deir_comments/L_MPRWA2.pdf.
3
Available at
http://www.cpuc.ca.gov/environment/info/esa/mpwsp/deir_comments/G_Surfrider.pdf.
4
Available at
http://www.cpuc.ca.gov/environment/info/esa/mpwsp/deir_comments/L_MCWD5.pdf.
MCWDs written comments of July 29, 2015 were served on all parties when submitted. Its
comments at that time were limited, but included discussion of its concerns regarding the
incomplete state of the record (pp. 10-16), questionable integrity of the now-withdrawn draft
EIRs groundwater modeling (pp. 1-7), and various other transparency and procedural issues
under CEQA.
ATTACHMENT B
One of MCWDs production wells is within two miles of the project intake well
location at the CEMEX property. (RT Vol. 17, pp. 2832:26-2833:16.) Protective freshwater
present in the Dune Sand and 180/400 FTE aquifers south of the Salinas River would be
subject to significant, unreasonable lowering of water levels, increased salinity and increased
seawater intrusion from operation of the MPWSP. (RT Vol. 14, p.2369:2-11; 2370:4-27; Ex.
MCD-20, pp. 3-7, 7-13 and figures there referenced; Ex. MCD-27, pp. 2-5 and figures there
referenced.) The record developed during recent hearings confirms that operation of the
MPWSP source wells as planned at the CEMEX site will would generate adverse impacts to
groundwater over at least a five-mile range. (Ibid; RT, Vol. 18, pp. 3048:23-3051:2, 3061:912 and Exs. RWA-25 and MCD-34 as there referenced.)
2.1.
Mitigation with Return Water
Cal-Am and the other parties to the Return Water Settlement Motion take the
positions that their agreement for provision of desalinated water to the Castroville
Community Services District (CCSD) would satisfy the anti-export provision of the
Agency Act and that it would adequately mitigate any harm to the groundwater basin
engendered by the MPWSP source wells. (Return Water Settlement Motion, p 5.) However,
Cal-Am has presented no evidence whatsoever that its providing desalinated MPWSP
product water to CCSD, north of the Salinas River, would mitigate in any way adverse
impacts to groundwater in the immediate area of the source wells from which groundwater is
proposed to be withdrawn, including adverse impacts to MCWD and its groundwater rights.
(Pub. Resources Code 21002.1, subd. (b); Cal. Code Regs. tit.14 (CEQA Guidelines),
15370; Banning Ranch Conservancy v. City of Newport Beach (2012) 211 Cal.App.4th
1209, 1232-1233.) The settlement states that it addresses the moving parties groundwater
ATTACHMENT B
concerns (see, e.g., Return Water Settlement Motion, Ex. A thereto at p. 2, G, H, I and p.
4, AA; see Ex. CA-44, the Large Settlement, pp. 4 and 9-10 at 3, 5). The moving
parties agreement does nothing to mitigate the actual impacts of the project on the basin,
MCWD, or others.
Nor is there any evidence whatsoever that the proposed 1:1 ratio of desalinated water
to withdrawn source water deemed-to-be-groundwater could constitute sufficient mitigation
for physical impacts resulting from the volume of withdrawals out of the groundwater basin
at the CEMEX property. (Banning Ranch Conservancy v. City of Newport Beach, supra, 211
Cal.app.4th at 1233 (upholding 2:1 ratio for habitat impact mitigation, based on substantial
record evidence), citing Mira Mar Mobile Community v. City of Oceanside (2004) 119
Cal.App.4th 477, 495.) The Commissions environmental review should address whether or
not the adverse impacts of MPWSP groundwater pumping south of the Salinas River can
possibly be mitigated to insignificant levels merely by providing desalinated water to the
basin north of the Salinas River. If mitigation to a less-than-significant level of impact were
feasible, then the Commission would have to determine the volume and location for that
sufficient mitigation of the MPWSPs adverse impacts from project pumping. (Ibid.)
Moreover, the Return Water Settlement Motion does not acknowledge evidence
recently adduced concerning the state of the groundwater basin. As Mr. Hopkins, MCWDs
hydrogeologist, testified, Cal-Ams own test slant well monitoring data indicate the presence
of a much higher percentage of SVGB groundwater than anticipated in the water being
pumped from the test slant well. (Ex. MCD-20, pp. 3-7, 7-13 and figures there referenced;
Ex. MCD-27, pp. 2-5 and figures there referenced; RT, Vol. 17, pp. 2893:22-2894:6; see also
id. at pp. 2847:25-2849:5.) The Return Water Settlement is premised upon the parties
ATTACHMENT B
agreement concerning a formula for determination of that percentage. (Return Water

Settlement Motion, p. 4 and Ex. A thereto as referenced.) Yet testimony by Cal-Ams and
the Regional Water Authoritys experts likewise confirmed that the assumptions concerning
the state of the groundwater basin, upon which the return water settlement is based, are
outdated and unsupported. (RT, Vol. 15, pp. 2426:2-2433:17 and Ex. MCD-33 as there
referenced; RT, Vol. 18, pp. 3033:21-3035:4 and Ex. MCD-33 as there referenced, 3105:253106:7.) Discovery by MCWD on these issues is ongoing, as is Cal-Ams periodic
publication of groundwater data gleaned from its test slant well program. (See Cal-Ams
written response to MCWDs Fifth Set of Data Requests, Attachment 1 hereto.) However,
the grossly incomplete record on these contested issues of material fact does not support the
sweeping assumption of the Return Water Settlement Motion that significant harms to
groundwater can be adequately mitigated by providing desalinated water to CCSD.
3.
Supply and Demand
The record concerning supply and demand sources demonstrates material factual
disputes concerning Cal-Ams need for a desalination source of supply. Cal-Am claims that
it requires at least a 6.4 mgd, or approximately 6,752 AFY, desalination project. (Amended
Application, p. 1, Amended Att. H thereto, p. 1.) But Cal-Ams entire system requirements
in calendar year 2015 were only 9,545 AFY. (Ex. CA-41, pp. 7, 8.) Future supply of
approximately 4,800 AFY is anticipated from the ASR program and the GWR Project. (Ex.
JE-2, pp. 13-15.) Cal-Ams current sources include legal Carmel River supply of 3,376
AFY, plus permitted ASR supply (depending upon winter river flow), the Sand City
desalination plant, the Seaside Basin, and illegal Carmel River supply. (Id. at p. 10 and Att.
1 thereto.) These factual inconsistencies also call into serious question the propriety of the
ATTACHMENT B
Sizing Settlement that was presented to the Commission on July 31, 2013. (See MCWDs
Consolidated Comments of August 30, 2013 in opposition, pp. 4, 9.)
The Commission recently noted in its own comments to the SWRCB that Cal-Ams
average volume of Carmel River diversions over the past four years was 7,656 AFY. (Ex.
PCL-7, p.3.) Subtracting Cal-Ams legal diversions of 3,376 AFY from that number leaves
only 4,280 AFY of illegal Carmel River diversions that must be replaced. This portion of
Cal-Ams annual supply may readily be replaced with 3,500 AFY from the GWR Project and
by utilizing system improvements that will permit access to an estimated 1,300 AFY of ASR
supply beginning in 2018. (Ex. JE-2, pp. 13-15; see also RT, Vol. 18, pp 2988:24-2992:2,
especially at p. 2990:14-16.) Yet Cal-Am still insists, even with implementation of the
GWR Project and maximum ASR utilization, that it requires a 6.4 mgd desalination project.
The record does not support Cal-Ams application.
4.
Other Feasible Replacement Sources
Cal-Am states that the chief purpose of the MPWSP is to satisfy Cal-Ams
obligations to meet the requirements of SWRCB Order 95-10. (Amended Application of
March 14, 2016, Attachment H, p. 1.) The record shows that Cal-Am can do so through its
own customers continuing conservation efforts in combination with purchased water from
the GWR Project under the WPA currently before the Commission in Phase 2 of this
proceeding, and with full utilization of legal ASR sources. (Ex. CA-41, pp. 7, 8, 10; JE-2,
pp. 13-15; see also RT, Vol. 18, pp 2988:24-2992:2.)5 True, the volume of available ASR
5
To MCWDs knowledge, Cal-Am has not provided current information in this

1
proceeding regarding its efforts to reduce the volume of non-revenue water use in its
Monterey service area. However, its recent report to the SWRCB indicates that good
progress has been made by Cal-Am on that aspect of conservation as well. (See First
Quarterly Report for WY 2015-
10
ATTACHMENT B
supply may be uncertain depending upon winter flows in the Carmel River. (RT, Vol. 16, p.
2663:3-18; Vol. 19, pp. 3166:18-3167:8, 3185:13-3186:7.) But other unexplored alternatives
may also be available to Cal-Am, such as additional supply from GWR, making permanent
certain temporary payments for pumping forbearance to other Carmel River rights holders
(see, e.g., Ex. PCL-8, Apr. 28, 2016 Amended Application to SWRCB at pp. 18-19), and
additional supply above 94 AFY from the Sand City desalination plant (SWRCB Order WR
2009-0060, pp. 41, 58). Other potential sources include storm water capture from the lower
Salinas River, and additional supply may also be available from the Seaside Basin. (See
MCWDs July 12, 2016 comments to the SWRCB on Cal-Ams Amended Application for
modification of the CDO, Attachment 2 hereto, pp. 5-12 and sources and authorities there
cited.) Other parties have also argued that alternatives to desalination as a supply source
merit the Commissions attention. (See Phase 2 Opening Brief of Public Trust Alliance, pp.
16-17, Phase 2 Reply Brief of Public Trust Alliance, p. 12.6) Environmental review of the
MPWSP should address all of these alternatives, but such review is still under way and thus
does not at this time support the Motions. (See Sept. 30, 2015 Notice to All Parties.) Indeed,
without having considered these and other feasible alternatives, it cannot be said that the
MPWSP is necessary at all. On the current record, there is no adequate showing that an
alternative other than the no action alternative is appropriate and in the public interest.
16, p. 5 at Table Five, available at
http://www.amwater.com/files/SWRCB%201Q%20CDO%20WR%202009_0060%20WY%
2015_16.pdf.)
6
See also a recent opinion letter by Public Water Nows Managing Director:
2
George T. Riley, Parallel universes on local water, Monterey Herald, July 10, 2016,
available at http://www.montereyherald.com/opinion/20160709/george-t-riley-paralleluniverses-on- local-water.
11
ATTACHMENT B
In light of the foregoing contested factual issues, the unsettled state of the record
cannot support a Commission finding that the Return Water Settlement is reasonable. (Pub.
Util. Code 1705, 1757, 1757.1; see Southern Pacific Co. v. Public Utilities Com. (1968)
68 Cal.2d 243, 244 (a mere statement of necessity is insufficient for certification, the
Commission must make sufficient findings on a sufficient record for each fact supporting its
ultimate finding).)
B.
Neither of the Settlements is Consistent with Law
In evaluating whether or not settlements are in the public interest, one of the factors
the Commission must consider is whether or not such settlements are consistent with law.
(Rule 12.1(d); D.96-01-011 at *33-34, citing D.94-04-088, slip op. at p. 8 (we consider
individual elements of the settlement in order to . . . assure that each element is consistent
with our policy objectives and the law.) emphasis added.) The Commission may approve
settlement of contested issues, as well as the settlement of an application as a whole. (Rule
12.1(a).) However, as will be discussed below, the MPWSP as a whole is contrary to law for
numerous reasons. Therefore in this instance the Motions which necessarily assume
approval of the MPWSP may not be separately granted by the Commission.
Cal-Ams proposal to operate the MPWSP by unlawfully and unsustainably pumping
Formatted: Left, Right: 0.08", Space Before:

3.35 pt
sourcewater from the SVGB at the CEMEX site is contrary to multiple requirements of law.
In the first place, Cal-Am has no appropriative right to pump groundwater from the critically
overdrafted 180/400 Foot Aquifer Subbasin of the SVGB. (City of Barstow v. Mojave Water
Agency (2000) 23 Cal.4th 1224, 1241-42; City of Pasadena v. City of Alhambra (1949) 33
Cal.2d 908, 925-26; Corona Foothill Lemon Co. v. Lillibridge (1937) 8 Cal.2d 522,
531-32 (overlying users reasonable beneficial use of all basin water left no surplus for
12
Formatted: Body Text, Indent: Left: 0", First

line: 0.5", Right: 0.08", Space Before: 3.35 pt,
Line spacing: Double
ATTACHMENT B
appropriation); Monolith Portland Cement Co. v. Mojave Public Utility District (1957) 154
Cal.App.2d 487, 493-94 (public utility violated overlyers rights by exporting water when
there was no surplus available); see Jan. 22, 2016 Direct Testimony of Nancy Isakson, p. 4,
fn. 1 and Att. 2 thereto, Dept. of Water Resources publication listing the 180/400 Foot
Aquifer Subbasin of the SVGB (rather than the SVGB as a whole) as critically
overdrafted.)) It is true, notwithstanding the existing body of case law, that the SWRCBs
2013 review opined that if Cal-Am could demonstrate that it could operate the project
without harming the basin or existing users of the basin such as MCWD then Cal-Am
might be able to legally pump sourcewater for the project at the CEMEX site. (Ex. MCD-17,
pp. 33, 38, 40, 46-47, 48.) But the burden is and must be on Cal-Am to affirmatively prove
that such pumping will not harm the basin or existing water rights holders in the basin. (Id. at
pp 46-47 (the burden is on Cal-Am to show no injury) and p. 35; Allen v. California Water
and Tel. Co. (1946) 29 Cal.2d 466, 481; see also Monolith Portland Cement Co. v. Mojave
Public Utility District, supra, 154 Cal.App.2d at 494.) This Cal-Am cannot do. Even the
incomplete record presently before the Commission plainly shows that pumping for the
MPWSP from the CEMEX location would result in harm to the basin and to existing lawful
users of the basin. (RT, Vol. 14, p. 2369:4-27; RT Vol. 17, pp. 2832:26-2833:16; Ex. MCD20, pp. 3-7, 7-13 and figures there referenced; Ex. MCD-27, pp. 2-5 and figures there
referenced.)
In addition, the MPWSP would improperly circumvent the local control, local
decision-making, and local protection in groundwater matters that is required under
Californias new Sustainable Groundwater Management Act. (SGMA, Water Code
10720-10736.6), effective January 1, 2015.)
13
ATTACHMENT B
What is more, it would be improper and unlawful for Cal-Am to seek the
Commissions determination of whether or not the MPWSP would interfere with others
groundwater rights, whether as a factual or legal question. (See Code Civ. Proc., 830-852;
see also Water Code, 2000-2900.) As the Commission has frequently stated in prior
decisions, consistent with long-standing statutory and decisional law in California, the
Commission is without authority to determine water rights. (D.10-12-016, p. 17 (The
Commission does not have jurisdiction over water rights . . . .) Rather, the jurisdiction to
make such a determination lies with the judiciary or the SWRCB. (City of Santa Maria v.
Adam (2012) 211 Cal. App. 4th 266, 286; California American Water v. City of Seaside
(2010) 183 Cal.App.4th 471, 480; see Ex. MCD-17, pp. 46-47, fn. 65.)
Second, although Cal-Am and the parties to the so-called return water settlement
assert that their agreement ensures the MPWSP will comply with the anti-export provision of
the Agency Act, they ignore that statutes equally important requirement of avoiding harm to
the basin. (Water Code App. ch. 52, 52-8, 52-9 at subd. (h)(7), 52-21.) As noted above,
the record shows and Cal-Ams expert admits that the MPWSP is intended to and will
exacerbate seawater intrusion and degrade water quality in the basin, over at least a five-mile
range in the project area. (RT, Vol. 14, p. 2369:2-11.) It will also lower water levels in the
basin. (Id. at p. 2370:4-17.) Therefore, operation of the MPWSP as proposed would clearly
harm the basin and existing lawful users of the basin. (Ex. MCD-20, pp. 3-7, 7-13 and
figures there referenced; Ex. MCD-27, pp. 2-5 and figures there referenced; see RT, Vol. 14,
p. 2369:5-7 (objective of the MPWSP is to establish a direct connection between the
aquifer and the seawater).)
14
Formatted: Indent: First line: 0.5", Right:

0.09", Space Before: 0.5 pt, Line spacing:
Double
ATTACHMENT B
Cal-Ams proposal to provide desalinated water to Castroville on the other side of the
Salinas River from the CEMEX property from which Cal-Am plans to withdraw its
sourcewater will do nothing to diminish or mitigate these harms. Recent additional analysis
by Mr. Hopkins confirms that there will be no mitigation for reduced water levels and no
mitigation for increased seawater intrusion south of the Salinas River. (Attachment 3
hereto, July 13, 2016 memorandum of Curtis G. Hopkins, especially at pp. 13-157; see also
Ex. MCD-27, pp. 2-3; RT; Vol. 18, pp. 3039:10-3041:11 and exhibits there referenced
(reflecting groundwater flow toward Salinas, not Marina).) Violation of the Agency Acts
protective provisions would work against the public interest, to the detriment of MCWD and
all of the SVGB users of groundwater that have worked so diligently for so many years and
at great expense to protect the basin. (Ex. MCD-16, pp. 6-8 and Ex. MCD-21, pp. 5-6, and
exhibits there referenced; see also Ex. MCD-1A, Revised Direct Testimony of Lloyd W.
Lowrey, Jr., pp. 3, 7-10, 13-15, and exhibits there referenced.)
Third, operation of the MPWSP as proposed would require violation of the 1996
Annexation Agreement. (Ex. MCD-6.) The record shows that a primary purpose of the 1996
Annexation Agreement is to protect and enhance groundwater resources in the North Marina
area, including efforts to reverse chronic seawater intrusion in local aquifers. (Id. at
Executive Summary and p. 1).) Pumping of groundwater on the CEMEX property is
limited to 500 AFY, a mere fraction of the volume of sourcewater required for the MPWSP,
and under the terms of the agreement, all groundwater so pumped must be used on the
Documents and data being produced by Cal-Am on a rolling basis in response to

3
MCWDs Fifth Set of Data Requests (Att. 1 hereto) were not received in sufficient time to
permit Mr. Hopkins review prior to his preparation of Attachment 3.
15
ATTACHMENT B
CEMEX property and not exported, regardless of its chemical composition or potable nature.
(Ex. MCD-6, 1996 Annexation Agreement, 5.1.1.3, 7.2.)
Groundwater pumping inconsistent with the limits set in the 1996 Annexation
Agreement would be subject to litigation to enforce the agreement. (Id. at p. 22, 9.3.)8
During evidentiary hearings in 2013, no party challenged MCWDs understanding of either
its own rights under the 1996 Annexation Agreement or the existence of the pumping
limitation, as set forth in Mr. Lowreys Revised Direct Testimony, as modified on the
witness stand on April 30, 2013, and the referenced exhibits. (RT, Vol. 10, pp. 1824-1826;
Ex. MCD-1A, Revised Direct Testimony of Lloyd W. Lowrey, Jr., pp. 14-15; Ex. MCD-6,
4.1, 4.4, 5.1.1.3, 7.) Any decision by the Commission approving Cal-Ams preferred
sourcewater configuration at the CEMEX property would violate the constitutionallyguaranteed sanctity of contract, as well as lawful pumping restrictions set forth in the
Annexation Agreement in accordance with the authority of the Monterey County Water
Resources Agency under the Agency Act. (U.S. Const. art. I, 10, cl. 1; Cal. Const. art. I
9; Water Code App. ch. 52, 52-8, 52-9, 52-21.)
Fourth, the MPWSP if approved would be in direct conflict with the Monterey
County ordinance that requires public ownership of desalination facilities. (Monterey
County Code of Ordinances, chapter 10, section 10.72.030, subd. B (the Desal
Ordinance).) The Commission considered this possibility when it issued hypothetical
advisory opinions earlier in this proceeding. (D.12-10-030, pp. 25-26, as modified by D.138
MCWDs challenges to the California Coastal Commissions grant of Cal-Ams

4
application for a Coastal Development Permit to operate its test slant well on the CEMEX
property and the Coastal Commissions modification of that permit are subject to ongoing,
separate litigation.
16
ATTACHMENT B
07-048, p. 4 (unlike courts, the Commission may issue advisory opinions).) The settlements
necessarily assume that the Commission will find it necessary to preempt the Desal
Ordinance. But the Commission may not do so if the MPWSP is not certificated.
In other words, if a different replacement supply source, or combination of sources,
for Cal-Ams Carmel River supply can equally or better serve the public convenience and
necessity, the Commission may not lawfully preempt the Desal Ordinance and certificate the
MPWSP. Moreover, the Commissions hypothetical advisory opinions purporting to
address the preemption issue did not consider the effect of the enactment of Californias new
Sustainable Groundwater Management Act, which accords local authorities, not statewide
agencies, the responsibility and authority to protect local groundwater resources. In
modifying D.15-03-002, after MCWD sought rehearing, the Commission clarified that a term
of settlement between Cal-Am and Monterey County approved by the Commission in
proceeding A.13-05-017 whereby Monterey County appeared to grant Cal-Am a special
exemption from the Desal Ordinance (which would be patently unconstitutional (see Summit
Media LLC v. City of Los Angeles (2012) 211 Cal.App.4th 921, 933, 937)), was merely the
parties agreement to follow the Commissions decisions concerning preemption.9 A
settlement agreement in which a public agency unconstitutionally confers a special
exemption from legal requirements on a single private party without repealing the legal
requirements generally is not consistent with law. (Summit Media LLC v. City of Los
Angeles, supra, 211 Cal.App.4th at 933, 937; see Commission Rule 12.1(d).)
9
See D.15-10-052, p.8 and fn.9. The Supreme Court granted MCWDs petition for a
writ of review challenging the Commissions decision approving the settlement in A.1305-017 on other grounds. (See Marina Coast Water Dist. v. Pub. Util. Com., Supreme
Court Case No. S230728, review granted Mar. 23, 2016.)
17
ATTACHMENT B
Parties to the proceeding have proposed a number of alternatives for consideration

and, as noted above and in MCWDs comments to the SWRCB concerning Cal-Ams
application for modification of its Order WR 2009-0060, there are a number of other feasible
approaches available to Cal-Am. These alternatives must be fully explored by the
Commission, both under its Public Utilities Code certification responsibilities and under
CEQA, and all relevant factors must be considered, before the Commission may grant a
CPCN for the MPWSP or approve any of the proposed settlements. (Pub. Util. Code 1002,
subd. (a); Pub. Resources Code 21061.) Unless and until the Commission considers and
rejects all other feasible water supply alternatives and actually certificates the MPWSP, its
prior determinations concerning preemption of the Desal Ordinance, resting on less than a
full record and a complete legal analysis, necessarily remain advisory in nature. (D.13-07048, p. 4.)
Fifth, the settling parties here are proposing to settle an issue that cannot lawfully be
resolved without completion of the Commissions review under CEQA. (See Pub. Resources
Code 21065, 21100 (project approval requires the lead agencys certification of an
environmental impact report); CEQA Guidelines, 15378(a) (a project evaluated under
section 21065 of the Public Resources Code must include the whole of an action that will
have an impact on the environment)). CEQA does not permit piecemeal review or approval
of a project. (Paulek v. Department of Water Resources (2014) 231 Cal.App.4th 35, 45-46
(integral parts of the same project must be reviewed together), citing Banning Ranch
Conservancy v. City of Newport Beach, supra, 211 Cal.app.4th at 1223; Rio Vista Farm
Bureau Center v. County of Solano (1992) 5 Cal.App.4th 351, 370, citing Laurel Heights
Improvement Assn. v. Regents of University of Calif. (1988) 47 Cal. 3d 376, 394.) The
18
ATTACHMENT B
Commission cannot approve less than the whole project under CEQA, and it cannot curtail or
shortcut its review merely because discrete issues have been settled among certain of the
parties to the proceeding. The piecemeal settlement of discrete issues does not relieve the
Commission of its statutory responsibility to balance and weigh all relevant factors in
making a CPCN determination.
Instead, CEQA requires the Commission itself to consider the potential significant
adverse effects of the project on the environment. (Pub. Resources Code 21068, 21100.)
The Commission must then base its approval or disapproval of the MPWSP on substantial
evidence in the record. (Pub. Resources Code 21168.5; see CEQA Guidelines 15384,
subd. (a); Laurel Heights Improvement Assn. v. Regents of University of Calif., supra, 47
Cal. 3d at 393.) CEQA does not permit the Commission, or any public agency, to approve a
project that may have significant impacts in advance of completing its required
environmental review. (Pub. Resources Code 21100, 21151 (project approval requires the
lead agencys certification of an environmental impact report); Save Tara v. City of West
Hollywood (2008) 45 Cal.4th 116, 128-132. See also, e.g., D.09-12-017, p. 20, citing Pub.
Resources Code 21082.1, subd. (c)(3) (lead agency must certify environmental impact
report for a project, reflecting its independent judgment).) Even without considering the
Commissions duty to hold a hearing on the environmental impacts of the project (Pub. Util.
Code 1002, subd. (a)), under CEQA the Commission cannot approve the settlements or
grant the requested Certificate of Public Convenience and Necessity (CPCN) until it has
completed and certified its EIR.
The Commissions review must include consideration of whether or not the 1:1 ratio
of desalinated water to withdrawn water deemed-to-be-groundwater proposed in the Return
19
ATTACHMENT B
Water Settlement Motion could constitute sufficient mitigation for physical impacts of
pumping groundwater at the CEMEX property. (Save Panoche Valley v. San Benito County
(2013) 217 Cal.App.4th 503, 527 (substantial record evidence supported 3:1 mitigation
ratio); Banning Ranch Conservancy v. City of Newport Beach, supra, 211 Cal.app.4th at
1233 (upholding 2:1 ratio for habitat loss mitigation, based on substantial record evidence),
Mira Mar Mobile Community v. City of Oceanside, supra, 119 Cal.App.4th at 495 (three to
one mitigation ration adequate).) As noted above, the Commissions environmental review
must address whether or not adverse impacts to groundwater south of the Salinas River can
even be mitigated to insignificant levels by Cal-Am providing desalinated water to the
SVGB north of the Salinas River. Then, if such mitigation were feasible, the Commission
would still have to consider evidence of what volume of return water could achieve
mitigation to a level of no significance, as well as precisely where that water should be
delivered in order to effectively mitigate the adverse impacts of project pumping. (Pub.
Resources Code 21002.1, subd. (b); CEQA Guidelines 15370; Save Panoche Valley v.
San Benito County, supra, 217 Cal.App.4th at 527; Banning Ranch Conservancy v. City of
Newport Beach, supra, 211 Cal.app.4th at 1233; Mira Mar Mobile Community v. City of
Oceanside, supra, 119 Cal.App.4th at 495.)
Each of these five legal issues prevents the Commissions approval of either of the
settlements before it. Even assuming that a desalination project were shown to be necessary
to eliminate Cal-Ams illegal withdrawals from the Carmel River, at least three of these
issues Cal-Ams absence of water rights, violation of the Agency Act and violation of the
Annexation Agreement and likely CEQA review as well, could never be resolved in CalAms favor as long as it insists on pursuing its illegal, unsustainable and patently harmful
20
ATTACHMENT B
intake of desalination sourcewater on the CEMEX property. However, as discussed above,

MCWD believes the record clearly demonstrates that no desalination project is needed in
order for Cal-Am to reduce its Carmel River withdrawals to lawful levels in compliance with
the requirements of the SWRCBs CDO.
C.
The Settlements are not in the Public Interest
Because the MPWSP as a whole, as it is presently proposed by Cal-Am, would harm

the basin, MCWD and other lawful users of the basin; would violate statutes and water law,
as detailed above; and would far exceed the volume of replacement supply required to be
provided by Cal-Am, approval of the Motions is not in the public interest. In addition, the
MPWSP would needlessly impose significant costs on Cal-Am ratepayers, including
businesses on the Monterey Peninsula that employ many of MCWDs own ratepayers.
Furthermore, the settlements improperly seek the Commissions unlawful prejudgment of
impact and mitigation issues that must first be fully vetted in the environmental review
process.
The Brine Settlement Motion (unlike the Return Water Settlement Motion) does cite
certain record evidence that might be found to support certain terms of that settlement,
assuming that the terms of the settlement would also be supported by the Commissions final
environmental review. (See Brine Settlement Motion, pp. 3-7.) In contrast, the Return
Water Settlement Motions only citations to support in the record concern the settling
parties own agreements. (Return Water Settlement Motion pp. 7-8, citing Ex. CA-44
(Large Settlement), Att. 3 to Ex. CA-41 (Return Water Planning Term Sheet) and Ex. A to
the Return Water Settlement Motion.) However, even a facially reasonable settlement of
discrete issues is not in the public interest if the settlement requires the Commission to
21
ATTACHMENT B
premise its decision upon premature and false or unproven assumptions rather than facts.
(Greyhound Lines, Inc. v. Public Utilities Com. (1967) 65 Cal.2d 811, 813 (sufficient
findings based on record facts help the Commission avoid careless or arbitrary action),
citing Pub. Util. Code 1705; see also Southern Pacific Co. v. Public Utilities Com., supra,
68 Cal.2d at 244.) The mere fact that the parties to a settlement met and negotiated the
settlement does nothing to supply the Commission with a factual record upon which it could
approve their settlement, particularly when, as here, the only record evidence the motion
cites is their own agreements. (Return Water Settlement Motion, pp. 7-8.) The public
interest would not be served by the Commissions piecemeal approval of brine discharge or
groundwater impacts mitigation issues where the MPWSP as a whole is contrary to, and not
required to serve, the present or future public convenience and necessity.
III.
REQUEST FOR HEARING FOLLOWING RESOLUTION OF PHASE 2 AND

FURTHER DEVELOPMENT OF THE RELEVANT FACTUAL RECORD
Where a settlement raises contested issues of fact, the Commission must grant a
hearing of those issues, on a schedule that includes the opportunity for completion of
discovery. (Rule 12.3.) Investigation of factual issues related to groundwater is and has
been ongoing by and among the parties for some years now. (E.g., Ex. CA-44, 3, 5; Exs.
MCD-28, 29, 30, 31, 32; Att. 1 hereto.) Although MCWD has challenged the permitting of
Cal-Ams test slant well, information that is still being gathered from the related groundwater
monitoring program instituted under section five of the so-called Large Settlement of July
31, 2013 (Ex. CA-44), along with expert evaluation of the test well and monitoring data
which could include the Commissions forthcoming EIR will be crucial to resolving
contested factual issues regarding likely groundwater impacts of the MPWSP and mitigation,
22
ATTACHMENT B
return water and the related issue of the volume of brine discharge. Information concerning
demand that is now being periodically provided by Cal-Am pursuant to the November 17,
2015 Ruling of the Administrative Law Judge (p. 5), as well as supply portfolio information
from ongoing proceedings in other fora, will be necessary to evaluate the contested factual
issue of what volume of replacement water if any is necessary to eliminate Cal-Ams
illegal Carmel River withdrawals.
Current supply and demand data are relevant to the ultimate question of public
convenience and necessity, as well as issues of any potential requirement for return water
and the volume of MPWSP brine discharge. The Commissions resolution of Phase 2, and
Cal-Ams potential entry into a Water Purchase Agreement (WPA) for the GWR Project
along with the possible construction of the Monterey Pump Station and Monterey Pipeline
allowing for full implementation of the ASR program, will provide additional, necessary
information for the factual record concerning supply and demand. Thus, although Rule 12.3
contemplates promptly completing discovery and setting a hearing on contested factual
issues related to proposed settlements, it is MCWDs view that the best interests of the
Commission, the parties and the public would be served by deferring any hearing on the
Motions until such time as a more robust factual record is available on the foregoing issues.
Moreover, as MCWD has argued previously, a CPCN determination must be made on
the basis of the Commissions consideration after a full hearing of all relevant factors. (Pub.
Util. Code 1002, subd. (a); see Northern California Power Agency v. Public Utilities Com.
(1971) 5 Cal.3d 370, 378.) Impact, or influence, on the environment is a relevant factor to be
considered at the CPCN hearing in determining whether the public convenience and
necessity requires the construction of the project. (Pub. Util. Code 1002, subd. (a).) As the
23
ATTACHMENT B
Supreme Court stated the Commissions view in the Northern California Power Agency
case:
Indeed, the answer of the Commission in this case . . . states: When a hearing
is requested under Section 1005 [of the Public Utilities Code], as in this case,
the Commission will notice and hold a hearing, and may do so on its own
motion, so that it may be apprised of any relevant factors bearing on the issue
of public convenience and necessity. [Par.] Such factors include the effect on
the environment . . . .
(Northern California Power Agency, supra, 5 Cal.3d at p. 378; see also Atlantic Refining Co.
v. Public Service Com. (1959) 360 U.S. 378, 391 (in determining public convenience and
necessity, the decision-making agency is required to evaluate all factors bearing on the
public interest.).) Thus, the Commission may not approve any of the settlements before it,
or the MPWSP as a whole, and grant a CPCN unless it has considered all relevant factors,
including the evidence garnered through the conduct of a hearing that provides it with the
opportunity for the parties exploration of the evidence through testimony and crossexamination concerning each of those factors.
IV.
CONCLUSION
The Brine Settlement Motion, the Return Water Settlement Motion, and the MPWSP
as a whole, raise contested issues of fact that prevent the Commissions approval without
(a) further development of an adequate record, including completion of environmental
review, and (b) conduct of a deferred hearing on contested factual matters related to the
settlements after all required information becomes available.
In addition, the MPWSP as a whole as it is presently proposed is not reasonable,
consistent with law or in the public interest, as set forth above. Unless the threshold legal
issues described above can be resolved in Cal-Ams favor and MCWD maintains that they
24
ATTACHMENT B
cannot the Commission must ultimately deny the application and therefore the Motions for
approval of the settlements as well.
DATED: July 13, 2016
Respectfully submitted,
FRIEDMAN & SPRINGWATER LLP
/s/ Mark Fogelman
Mark Fogelman
Ruth Stoner Muzzin
Attorneys for
MARINA COAST WATER DISTRICT
By:
25
ATTACHMENT C

In the Matter of the Application of California
American Water Company (U210W) for
Supply Project and Authorization to Recover All
Present and Future Costs in Rates
Application A.12-04-019
JOINT REPLY COMMENTS IN SUPPORT

OF BRINE DISCHARGE SETTLEMENT AGREEMENT
GABRIEL M.B. ROSS

EDWARD T. SCHEXNAYDER
SHUTE, MIHALY & WEINBERGER LLP
396 Hayes Street
San Francisco, California 94102
Telephone: (415) 552-7272
Facsimile: (415) 552-5816
ross@smwlaw.com
schexnayder@smwlaw.com
SARAH E. LEEPER
NICHOLAS A. SUBIAS
CALIFORNIA AMERICAN WATER
COMPANY
Telephone: (415) 863-2470
nicholas.subias@amwater.com
Attorneys for Surfrider Foundation
Attorneys for California-American Water

Company
JAMES W. MCTARNAGHAN
LAURA G. ZAGAR
PERKINS COIE LLP
505 Howard Street, Suite 1000
Telephone: (415) 344-7000
jmctarnaghan@perkinscoie.com
lzagar@perkinscoie.com
JONAS MINTON
PLANNING AND CONSERVATION
LEAGUE FOUNDATION
1107 9th Street, Suite 901
Sacramento CA 95814
jminton@pcl.org
Attorneys for Monterey Regional Water

Pollution Control Agency
For Planning And Conservation League

Foundation
ATTACHMENT C
BOB MCKENZIE
COALITION OF PENINSULA
BUSINESSES
P.O. Box 223542
Carmel, California 93922
Telephone: (831) 596-4206
jrbobmck@gmail.com
RUSSELL M. MCGLOTHLIN
BROWNSTEIN HYATT FARBER
SCHRECK, LLP
1020 State Street
Santa Barbara, California 93101
Telephone: (805) 963-7000
rmcglothlin@bhfs.com
For Coalition of Peninsula Businesses
Attorneys for Monterey Peninsula Regional

Water Authority
ATTACHMENT C

In the Matter of the Application of California
American Water Company (U210W) for
Supply Project and Authorization to Recover All
Present and Future Costs in Rates
Application A.12-04-019
JOINT REPLY COMMENTS IN SUPPORT

OF BRINE DISCHARGE SETTLEMENT AGREEMENT
I.
Introduction
Pursuant to Rule of Practice and Procedure 12.2, Surfrider Foundation (Surfrider),
California-American Water Company (Cal-Am), Monterey Peninsula Regional Water

Authority (MPRWA), Monterey Regional Water Pollution Control Agency (MRWPCA), the
Coalition of Peninsula Businesses and the Planning and Conservation League submit these reply
comments in support of the Brine Discharge Settlement Agreement (Brine Settlement).
Of the 20 parties in this proceeding, only Marina Coast Water District (MCWD) filed
comments contesting the Brine Settlement. But MCWDs comments do not raise substantive
challenges to the Brine Settlement. Instead, they purport to challenge the proposed return water
settlement and other aspects of Cal-Ams application.
As MCWD apparently recognizes, there is no factual or legal dispute regarding the
reasonableness of the Brine Settlement. For these reasons, the Commission should disregard
MCWDs comments on the Brine Settlement and deny its request for an evidentiary hearing on
this agreement.
II.
Background
Cal-Ams application to construct the Monterey Peninsula Water Supply Project
3
ATTACHMENT C
(MPWSP or Project) has been pending before the Commission since April 2012. During this
time, parties have had the opportunity to develop a factual record through multiple rounds of
testimony and evidentiary hearings. On November 17, 2015, ALJ Weatherford issued a ruling
setting issues and schedule for evidentiary hearings . . . necessary to complete the record for
both Phases 1 and 2 of this proceeding.1 Among other issues, that ruling instructed parties to
submit evidence addressing post-approval monitoring of the impacts of brine disposal on the
marine environment and organisms and measures to reduce or avoid impacts detected by such
monitoring.2
In response to this ruling, on January 22, 2016, MPRWA served testimony from its
expert, Al Preston, that discussed the Projects proposed brine discharge and the need to monitor
and (potentially) mitigate that discharge.3 No party served rebuttal testimony that challenged Mr.
Prestons written testimony or sought to cross examine him.
On June 14, 2016, Surfrider, Cal-Am, MPRWA, MRWPCA, the Coalition of Peninsula
Businesses, the Monterey Peninsula Water Management District, and the Planning and
Conservation League filed a Motion to Approve Brine Discharge Settlement Agreement (Brine
Settlement Motion). That same day, Cal-Am and other parties filed a motion seeking approval
of a separate settlement agreement regarding supplying return water to the Salinas Valley
groundwater basin (Return Water Settlement).4
The Brine Settlement relies on Mr. Prestons testimony, as well as earlier testimony from
1
See Administrative Law Judges Ruling Setting Evidentiary Issues and Schedule to Complete the
Record for Phases 1 and 2 at 1.
2
Id. at 5.
3
See RWA-22 (Preston Testimony).
4
See Joint Motion for Approval of Settlement Agreement on Desalination Plant Return Water, filed June
14, 2016.
ATTACHMENT C
Surfriders witnesses.5 If the Commission ultimately approves a certificate of convenience and

necessity for Cal-Ams Project, the Brine Settlement establishes a monitoring and mitigation
protocol for discharge of Project Brine into Monterey Bay.6 In this manner, the Brine Settlement
seeks to resolve one of the key remaining contested issues in this proceeding.7
III.
The Brine Settlement Does Not Prejudge the Commissions CPCN Determination.
MCWD bases its objection to the Brine Settlement on a fundamental misconception
that the settlement somehow assume[s] that the MPWSP can be carried out legally as proposed,
without harm, and . . . assume[s] that the MPWSP is required by the public convenience and
necessity.8
MCWD is twice wrong. Neither the Brine Settlement nor the related motion prejudge the
ultimate impact, approval or public convenience and necessity of Cal-Ams MPWSP. Instead,
the Brine Settlement focuses solely on the brine that the Project would discharge in the event it is
approved. Under that scenario, the settlement establishes a framework for monitoring and
mitigating the MPWSPs brine discharge. This contingent framework is clear on the face of the
Brine Settlement Motion:
The Parties request that the Commission approve the [Brine]
Settlement Agreement without modification as part of any decision
to grant California American Water a certificate of public
convenience and necessity for the Project.9
The Brine Settlement thus does not assume, or advocate for, a decision one way or the other
See Brine Settlement Motion at fn 3, 6.

See Brine Settlement at 3-11.
7
See July 31, 2013 Settling Parties Motion to Approve Settlement Agreement, Attachment A 3.1(a)
(conditioning Surfriders support of a CPCN upon a reasonable resolution of brine discharge for the
MPWSP).
8
MCWD Comments at 4.
9
Brine Settlement Motion at 1-2, 7 (emphasis added).
6
ATTACHMENT C
regarding the Project approval. It similarly recognizes that its effectiveness is contingent on the
Commissions completion of CEQA review and discretionary decision on the MPWSP.10
While the Brine Settlement exclusively focuses on monitoring and mitigation of the
proposed brine discharge, MCWDs comments ignore these issues entirely.11 MCWD thus fails
to carry its burden of specify[ing] the portions of the settlement that [it] opposes, the legal basis
of its opposition, and the factual issues that it contests.12 Instead, MCWDs comments are a
transparent attempt to challenge other aspects of the MPWSP, including project sizing and
alleged groundwater harms.13 To the extent that MCWD intends to make these arguments
directly, it should do so in merits briefing. The Brine Settlement does not raise these issues, and
comments on this agreement are a wholly inappropriate forum for MCWDs challenges. The
Commission should therefore reject MCWDs attempt to thrust its unrelated legal and
evidentiary disputes upon the Brine Settlement.
IV.
MCWDs Request for An Evidentiary Hearing on the Brine Settlement Is

Unjustified.
Had MCWD identified any contested factual questions regarding the Brine Settlement, it
could have requested an evidentiary hearing.14 But MCWD has not made any such factual
identification. Without material issues of contested fact, there is no basis for an evidentiary
hearing on a proposed settlement.15
10
Brine Settlement 6.9.

MCWDs Response in Opposition to the July 22, 2016 Joint Motion to Strike Its Consolidated
Comments adds nothing, entirely ignoring the terms of the Brine Settlement.
12
Commission Rule of Practice and Procedure 12.2.
13
See MCWD Comments at 5-22 (challenging the MPWSPs proposed slant well intake, return water
mitigation, project sizing issues, CEQA compliance, but not the Brine Settlements proposed monitoring
and mitigation program.)
14
15
11
ATTACHMENT C
Instead of challenging any fact underlying the Brine Settlement, MCWD generally asserts
that the ultimate size of the desalination project will determine the quantity of brine discharged
into Monterey Bay.16 This is true, but irrelevant. This factual issue is not contested: Numerous
parties have recognized that brine impacts increase with the size of the desalination plant.17
Another evidentiary hearing would add nothing useful to this record. Moreover, this uncontested
point does nothing to undermine the Brine Settlement, which establishes a monitoring and
mitigation program that would apply to any discharge of MPWSP brine into Monterey Bay,
regardless of the Projects ultimate size.18
Indeed, MCWD acknowledges that the Brine Settlement Motion . . . does cite certain
record evidence that might be found to support certain terms of that settlement.19 But MCWD
does not contest any of this cited record evidence in its comments. Nor did MCWD conduct
cross examination on the proposed settlement term sheet attached to Al Prestons testimony or
the reasonableness of proposed brine monitoring and mitigation program.
MCWD has failed to raise any contested facts material to the proposed Brine Settlement.
As a result, there is no basis for MCWDs requested hearing on the Brine Settlement.20
V.
Conclusion
For all of these reasons, the Commission should disregard MCWDs comments on the
Brine Settlement, and deny its request for evidentiary hearings on this issue.
16
MCWD Comments at 22-23.

CA-41 at 5-6 (Svindland Testimony); WD-9 at 9 (Stoldt Testimony); WD-14 at 2-3 (HDR Final
Report, Economic Evaluation of GWR Project Externalities); DRA-16 at 9 (Rose Testimony); RWA-17
at 5 (Burnett Testimony); see also Surfrider Foundations Comments on the Proposed Settlement
Agreement on Plant Size and Level of Operation at 6-8.
18
See generally Brine Settlement.
19
MCWD Comments at 21.
20
See Commission Rules of Practice and Procedure 12.2 and 12.3.
17
ATTACHMENT C
SHUTE, MIHALY & WEINBERGER LLP

By: /s/ Gabriel M.B. Ross
GABRIEL M.B. ROSS
Attorneys for Surfrider Foundation
CALIFORNIA AMERICAN WATER COMPANY

By: /s/ Nicholas A. Subias
NICHOLAS A. SUBIAS
Attorneys for California American Water Company
PERKINS COIE LLP

By: /s/ James W. Mctarnaghan
JAMES W. MCTARNAGHAN
Attorneys for Monterey Regional Water Pollution
Control Agency
COALITION OF PENINSULA BUSINESSES

By: /s/ Bob McKenzie
BOB MCKENZIE
Coalition of Peninsula Businesses
BROWNSTEIN HYATT FARBER SCHRECK, LLP

By: /s/ Russell M. McGlothlin
RUSSELL M. MCGLOTHLIN
Attorneys for Monterey Peninsula Regional Water

Authority
PLANNING & CONSERVATION LEAGUE

FOUNDATION
By: /s/ Jonas Minton
JONAS MINTON
Planning and Conservation League Foundation
804740.5
ATTACHMENT D


JOINT CONSOLIDATED REPLY COMMENTS IN SUPPORT OF THE JOINT

MOTION FOR APPROVAL OF THE SETTLEMENT AGREEMENT ON
DESALINATION PLANT RETURN WATER
Sarah E. Leeper
Nicholas A. Subias
Cathy Hongola-Baptista
California American Water
(415) 863-2960
Bob McKenzie
Water Issues Consultant
P.O. Box 223542
Carmel, CA 93922
For: Coalition of Peninsula Businesses
jrbobmck@gmail.com
(831) 596-4206
John H. Farrow
M.R. Wolfe & Associates, P.C.
555 Sutter Street, Suite 405
For: LandWatch Monterey County
jfarrow@mrwolfeassociates.com
(415) 369-9400
Norman C. Groot
Monterey County Farm Bureau
P.O. Box 1449
1140 Abbott Street, Suite C
Salinas, CA 93902-1449
For: Monterey County Farm Bureau
norm@montereycfb.com
(831) 751-3100
ATTACHMENT D
Dan L. Carroll
Downey Brand, LLP
621 Capitol Mall, 18th Floor
Sacramento, CA 95814
For: Monterey County Water Resources
Agency
dcarroll@downeybrand.com
(916) 444-1000
Eric Robinson
Kronick Moskovitz
For: Salinas Valley Water Coalition
erobinson@kmtg.com
(916) 321-4500
Russell M. McGlothlin
Brownstein Hyatt Farber Schreck, LLP
21 East Carrillo Street
Santa Barbara, CA 93101
For: Monterey Peninsula Regional Water
Authority
rmcglothlin@bhfs.com
(805) 963-7000
ATTACHMENT D
TABLE OF CONTENTS
I.
INTRODUCTION ............................................................................................. 1
II.
DISCUSSION .................................................................................................... 2
A.
MCWDs Comments Should Be Disregarded Because They

Are Irrelevant and Without Merit ........................................................... 2
1.
In Arguing the Commission Lacks Authority to

Approve the Settlement Agreement Without First
Approving the Entire Application MCWDs
Comments Get It Wrong and Miss the Point .............................. 2
2.
MCWDs Request for Hearings Should Be Denied .................... 4
3.
B.
a.
MCWDs Comments Fail to Show Hearings

on the Settlement Agreement Is Warranted ..................... 4
b.
MCWDs Comments Attempt an End-Run

Around Prior Commission Rulings .................................. 5
Because They Focus on Matters Outside the

Settlement Agreement, MCWDs Comments Should
Be Disregarded ............................................................................ 7
a.
The Settlement Agreement Is Limited in Scope

and Straight-Forward........................................................ 7
b.
Because They Focus on Matters Outside the

Settlement Agreement MCWDs Comments
Should Be Disregarded..................................................... 9
Water Pluss Comments Are Legally Incorrect and Should

Be Ignored ............................................................................................ 14
1.
Ample Law Supports Use in the MPWSP of Return

Water to Prevent Export of Water from the Salinas
River Groundwater Basin .......................................................... 15
2.
Both Logic and the Agency Act Compel Rejection of

the Argument that Salty Water Must be Returned to
the SRGB ................................................................................... 18
ATTACHMENT D
3.
C.
III.
The Petition for Writ of Mandate Submitted as

Attachment A to the Water Plus Comments Should be
Ignored....................................................................................... 19
Public Water Nows Comments Should Be Disregarded ..................... 19
CONCLUSION ............................................................................................... 22
ii
ATTACHMENT D


JOINT CONSOLIDATED REPLY COMMENTS IN SUPPORT OF THE JOINT

MOTION FOR APPROVAL OF THE SETTLEMENT AGREEMENTS ON
DESALINATION PLANT RETURN WATER
I.
INTRODUCTION
Pursuant to Rule 12.2 of the California Public Utilities Commission (Commission)
Rules of Practice and Procedure, 1 California-American Water Company (California American

Water), Coalition of Peninsula Businesses (CPB), LandWatch Monterey County
(LandWatch), 2 Monterey County Farm Bureau (MCFB), 3 Monterey County Water
Resources Agency (Agency), Monterey Peninsula Regional Water Authority (Authority),
and Salinas Valley Water Coalition (SVWC) 4 (collectively, the Joint Parties) provide these
reply comments in support of the Joint Motion for Approval of Settlement Agreement on
Desalination Plant Return Water, which was filed on June 14, 2014 in this proceeding (the
Settlement Agreement). 5 These reply comments consolidate the Joint Parties responses
1
Unless otherwise stated, all further references to Rules are to the Commissions Rules of
Practice and Procedure.
2 LandWatch signs on to all portions of these Joint Consolidated Reply Comments except section
II(A)(2)(B).
3 MCFB signs on to all portions of these Joint Consolidated Reply Comments except section
II(A)(2)(B).
4 SVWC signs on to all portions of these Joint Consolidated Reply Comments except section
II(A)(2)(B).
5 The Return Water Settlement was entered by California American Water, Coalition of
Peninsula Businesses, LandWatch Monterey County, the Monterey County Farm Bureau, the
ATTACHMENT D
(hereafter Consolidated Reply Comments) to the comments submitted by the following parties:
Marina Coast Water District, Water Plus, and Public Water Now. 6
II.
DISCUSSION
A.
MCWDs Comments Should Be Disregarded Because They Are Irrelevant

and Without Merit
Although long and filled with arguments, citations, allegations, and conclusions
MCWDs Comments kick up a lot of dust but do not address the actual issues raised by the
Settlement Agreement. MCWDs Comments do not focus on provisions of the Settlement to
which MCWD objects. Instead, the Comments, often relying on misleading contentions, make
arguments in opposition to the entire MPWSP, including whether a CPCN should be issued and
whether the environmental review for the project can be approved. Thus, the Settlement
Agreement should be approved and MCWDs comments should be disregarded because they are
both incorrect and irrelevant.
1.
In Arguing the Commission Lacks Authority to Approve the

Settlement Agreement Without First Approving the Entire
Application MCWDs Comments Get It Wrong and Miss the Point
The Commission has broad authority to approve settlements. Rule 12.1 provides that
parties may propose settlements resolving any material issue of law or fact or on any mutually
agreeable outcome to a proceeding. Settlement of issues of law or fact need not be joined by all
parties to an application. The Rule requires only that the applicant be among the parties signing
onto the settlement. 7 Moreover, nothing in Rule 12.1 even suggests the Commission must wait
Monterey County Water Resources Agency, Monterey Peninsula Regional Water Authority,
Planning and Conservation League Foundation, and the Salinas Valley Water Coalition
(collectively, the Settling Parties).
6 Public Water Now (PWN) provided comments by email on June 16, 2016, which focused on
the issue of potential impacts to customers. There is no indication those comments were filed
with the Commission. On July 26, 2016, PWN states it filed Reply Comments to Marina Coast
Comments and Request for Deferred Hearing on Motion to Approve Settlement Agreement on
Desalination plant Return Water. PWNs Reply Comments, however, are mostly just a
repackaging of PWNs June 16, 2016 un-filed comments. While the use of reply comments to
serve what are in essence untimely initial comments is improper and should be rejected, this
Joint Consolidated Reply will (below) nonetheless address PWNs concerns.
7 Rule 12.1(a) (emphasis supplied).
ATTACHMENT D
until the final decision in a proceeding before approving a settlement limited to only certain
issues of fact or law. Yet the primary argument in MCWDs Comments argues the
Commission must wait. This argument is wrong on the law and misses the point.
MCWDs argument is wrong because without citing any on-point authority, MCWDs
Comments oppose approval of the settlements primarily on the basis that the settlements
assume the MPWSP is necessary and can be carried out legally without engendering significant
harm. 8 MCWDs main argument is that [t]he Motions and the settlements assume that the
Commission will approve the MPWSP, as proposed, and according to MCWD this is
improper because such assumptions are somehow prohibited. 9 MCWDs position makes no
sense. Rule 12.1 specifically permits settlement of individual issues, i.e., those that do not
comprise a resolution of the entire application. Nothing in the Rule even suggests the
Commission must wait until it enters a final decision on all aspects of the proceeding before
ruling on a motion to approve a settlement of individual or limited issues. 10 The absence of such
a limitation makes sense. Allowing earlier decisions on settlements concerning individual issues
provides the opportunity for the proceedings to then be narrowed so the final decision must only
address the matters remaining unsettled.
MCWDs argument misses the point because the Settlement Agreement is necessarily
contingent on issuance of the Certificate of Public Convenience and Necessity (CPCN) based
on the application for the Monterey Peninsula Water Supply Project (MPWSP). The
Settlements impact comes only if the MPWSP approved. So there is no expectation the
8
MCWD Comments, at pp. 1-2 (emphasis supplied).

9 Id. at p. 5, see also pp 1, 2, 4 (emphasis supplied).
10 In most, if not all, cases where an individual issue is settled there is a general assumption the
ultimate application would be approved. Without such an assumption, there would be no point
to enter settlements. Indeed, without an assumption that an application will eventually be
granted, there would be no point in even filing an application in the first place or for a party to
take steps to move forward in a proceeding. Assuming the granting of an application for the
purposes of proposing a settlement, contingent on approval of the application, is not the same as
actually approving the application. Conflating the two unmistakably distinct concepts, as the
primary argument in MCWDs Comments does, is neither compelling nor warranted.
ATTACHMENT D
Commission will necessarily rule on the Settlement Agreement before issuing its final decision
in the proceeding. MCWD seeks to create an issue where none exists so its Comments should be
disregarded.
2.
MCWDs Request for Hearings Should Be Denied

a.
MCWDs Comments Fail to Show Hearings on the Settlement

Agreement Is Warranted
MCWDs Comments repeatedly request evidentiary hearings on each of the settlement

motions. 11 MCWD claims hearings should occur after completion of the joint federal/state
environmental review process, and further development of the relevant factual record. 12 And
MCWD contends that hearings are required in order to resolve contested issues of fact. 13
Finally, MCWD concludes the Commission may not approve any of the settlements before it, or
the MPWSP as a whole, and grant a CPCN unless it has considered all relevant factors,
including the evidence garnered through the conduct of a hearing that provides it with the
opportunity for the parties exploration of the evidence through testimony and cross-examination
concerning each of those factors. 14
As will be discussed in greater detail below, the Settlement does not ask for the granting
of the CPCN. Nor does it purport to be a substitute for the joint federal/state environmental
review being undertaken in connection with this proceeding. The Settlement merely resolves
limited factual or legal issues between and among certain parties. MCWDs Comments ignore
this. They also ignore the fact that over several years, the Commission has held extensive
hearings in this proceeding, which included written testimony as well as cross examination.
There are at least 18 volumes of hearing transcripts spanning more than 3,000 pages. MCWDs
Comments, although they request more hearings, do not show why hearings are even needed
11
MCWD Comments, at pp. 1, 3, 23, 24.

12 Id. at pp. 1, 23.
13 Id. at pp. 3, 22.
14 Id. at p. 24 (emphasis supplied).
ATTACHMENT D
especially in connection with the Settlement.

The contested issues MCWDs Comments purport to raise (and which relate to CPCN
and environmental review issues outside of the scope of the Settlement) rely mainly on testimony
either supplied in written testimony prior to the hearings that have already occurred or on
examination at those hearings. 15 Hearings are an important tool to produce a full record. They
are not, as MCWDs Comments suggest, a means to generate more hearings. MCWDs request
for even more hearings, therefore, should be denied.
b.
MCWDs Comments Attempt an End-Run Around Prior

Commission Rulings
In MCWDs current Comments, MCWD attempts an end-run around prior Commission

rulings. Those prior rulings stated the Commission would not hold evidentiary hearings on
potential environmental impacts. Specifically, on June 28, 2012, President Peevey issued the
Scoping Memo and Ruling, which set forth a schedule for the non-CEQA part of the
proceeding. 16 On July 7, 2012, MCWD responded with a Motion to Modify and Clarify
Assigned Commissioners Scoping Memo and Ruling. MCWDs motion conceded the
Commission intended to conduct the proceeding on two separate tracks (one for CEQA
compliance and another for the CPCN). MCWD then argued the Commission must consider
the environmental impacts of the project in making the CPCN determinations. 17 And it claimed
the Scoping Memo should be changed to assure evidentiary hearings take place only after the
FEIR 18 just as MCWDs current Comments now claim hearings are necessary after the FEIR.
On August 29, 2012, ALJ Weatherford ruled a finding that the deferral of prepared
testimony or evidentiary hearings, or both, in the CPCN track until after the issuance of either the
15
Further, many of the citations in MCWDs Comments appear to come from new information
MCWD improperly seeks to introduce through its Comments. California American Water, CPB,
the Agency, the Authority, MCFB and SVWC have, in a separate motion to strike, moved to
strike that material.
16 Scoping Ruling, at p. 3.
17 MCWD Motion to Modify Scoping Ruling, p. 4.
18 Id. at p. 5.
ATTACHMENT D
draft or final EIR is not in the public interest because it would substantially increase the risk of
non-compliance by CAW with the December 2016 state-mandated deadline to reduce
California American Waters diversions from the Carmel River. 19
On May 2, 2013, MCWD filed a Motion to Modify Procedural Schedule, which sought
modification of the schedule to (again) require further hearings and full briefing on the issue of
the proposed projects influence on the environment, pursuant to section 1002, subdivision (a) of
the Public Utilities Code. 20
On May 30, 2013, ALJ Weatherford ruled [a]s stated earlier in this proceeding, no
evidentiary hearing is required or, given the outstanding cease and desist order (CDO),
appropriate for the environmental reporting track. His ruling continued: Consistent with
CEQA, parties will have the opportunity to comment on the DEIR before the FEIR is certified.
Those comments, reflected in the FEIR, will be considered in the Proposed Decision, and parties
will also have the opportunity to comment on that PD before the Commission acts. 21 Indeed,
ALJ Weatherfords ruling specifically recognized that MCWD was seeking a second bite at the
apple, stating MCWDs effortto have project alternatives and environmental impacts
addressed in evidentiary hearings was rejected in the August 29, 2012 ALJs Directives to
Applicant and Ruling on Motions (at 5-7)). 22
On August 30, 2013, rather than seek reconsideration of the prior rulings, as it should
have done if it sought to challenge them, MCWD filed comments to the Large Settlement
Agreement and the Sizing Agreement which argued for a third time that evidentiary hearings on
potential environmental impacts were necessary. 23 During the April 2016 evidentiary hearings,
19
Administrative Law Judges Directives to Applicant and Ruling on Motions Concerning

Scope, Schedule and Official Notice, filed August 29, 2012, at p. 7 (emphasis added).
20 MCWD Motion to Modify Procedural Schedule at p. 1.
21 Administrative Law Judges Ruling After Evidentiary Hearings, filed May 30, 2013 (Ruling
After Evidentiary Hearings), at p. 4.
22 Ruling After Evidentiary Hearings, p. 4.
23 MCWDs Consolidated Comments on the Settling Parties 1) Motion to Approve Settlement
Agreement and 2) Motion to Approve Settlement Agreement on Plant Size and Operation, filed
ATTACHMENT D
MCWD yet again was told by ALJ Weatherford: We are not going to entertain testimony here
about the Environmental Impact Report and the EIR process. 24 In CPCN proceedings
generally, the Commission has repeatedly found that the CEQA review process is the proper
vehicle for consideration of a proposed projects environmental impacts. 25
Ignoring the Commissions prior rulings and directives, MCWD repeats the very same
arguments in its Comments by again arguing that the Commission must hold evidentiary
hearings on environmental impacts as part of the CPCN determination. 26 ALJ Weatherford
rejected that argument and specifically stated that MCWD will have its chance to debate
environmental impacts through its comments on the DEIR. 27 MCWDs attempt in its current
Comments to backdoor its repeatedly rejected request to have evidentiary hearings on CEQA
impacts must be rejected.
3.
Because They Focus on Matters Outside the Settlement Agreement,

MCWDs Comments Should Be Disregarded
a.
The Settlement Agreement Is Limited in Scope and StraightForward
When the contents of the Return Water Settlement Agreement are considered, the
irrelevance of MCWDs Comments is clear. The Return Water Settlement was negotiated and
entered by ten parties to this proceeding, representing a broad range of interests agricultural,
governmental, business, utility, and environmental. Under it, California American would deliver
Return Water 28 to the Castroville Community Service District (CCSD) and to the
August 30, 2013, pp. 10-13.
24 RT, Vol. 18, April 15, 2016, at p.2964: 6-9.
25 See D.10-12-025, Application of Wild Goose Storage, LLC to Amend Its Certificate of Public
Convenience and Necessity to Expand and Construct Facilities for Gas Storage Operations
(U911G), 2010 PUC LEXIS 463, *8; D.10-07-043, In the Matter of the Application of Southern
California Edison Company (U-338-E) for a Certificate of Public Convenience and Necessity for
the San Joaquin Cross Valley Loop Transmission Project, 2010 Cal. PUC LEXIS 285, *8.
26 MCWDs Comments, pp. 23.
27 Ruling After Evidentiary Hearings, at p. 4.
28 Return Water is defined at H of the Return Water Settlement, which states: The Projects
slant intake wells are designed to produce source water for treatment by the selected desalination
plant. To meet applicable requirements of the Agency Act, Cal Am has proposed as part of
ATTACHMENT D
Castroville Seawater Intrusion Project (CSIP) to satisfy possible return water requirements of
the Monterey County Water Resources Agency Act, CEQA, or California groundwater law,
subject as set forth in section 17 of that Agreement to completed CEQA review. 29
The Return Water Settlement does not purport to eliminate the Agency Act, CEQA, or
water rights requirements. The Settlement unmistakably states Cal Am shall comply with the
Agency Act and the Agency will retain all rights under the Agency Act to ensure that the
pumping complies with the Agency Act, and to protect the long-term viability of the SRGB
. 30 Nor does the Return Water Settlement suggest it represents a substitute for environmental
review or mitigation of water right impacts. It notes [t]he CPUC is conducting environmental
review of the Project under CEQA and the Monterey Bay National Marine Sanctuary is
conducting environmental review of the Project under NEPA. 31 And Cal Am could be
legally required by a regulatory agency, including the CPUC in this proceeding, or by a court, to
make water deliveries to other locations in the SRGB to the extent necessary to mitigate any
groundwater impacts from the Project that were demonstrated in relation to a specific location
overlying the SRGB. 32 Thus, the Return Water Settlement is not incompatible with and
does not prejudge potential CEQA mitigation requirements. Instead, it helps to define a stable
and finite project description that will facilitate the CPUCs completion of CEQA review for the
Project. 33
The Settlement Agreement recognizes the Commission retains full discretion with respect
to CEQA. The settling parties to the Return Water Settlement agreed the legal effectiveness of
the Project to make available for delivery to groundwater users overlying the SRGB a volume of
water (Return Water) equal to the percentage of SRGB groundwater in the total Project Source
Water Production.
29
Return Water Settlement, at AA.

30 Id. at 3.
31 Id. at L.
32 Id. at 4.
33 Id. at 17.
ATTACHMENT D
this Settlement Agreement is contingent on the completion of CEQA review. 34 Thus,

regardless of whether the Commission approves the Settlement, the Commission, as lead agency
under CEQA, retains its full discretion to approve or disapprove the project, to consider and
approve project alternatives, and to consider and adopt other mitigation measures (including
alternatives and other mitigation measures involving return water). 35
As such, contrary to the broad arguments in MCWDs Comments attacking the MPWSP
as a whole, the Settlement Agreement in question covers narrow issues and does not purport to
piecemeal or commit the Commission to a course of action with respect to CEQA review of the
MPWSP. Indeed, as noted above, the Settlement Agreements impact comes if the MPWSP is
approved, so the Settlement will take effect if the EIR is certified so that a CPCN for the
MPWSP may issue.
b.
Because They Focus on Matters Outside the Settlement

Agreement MCWDs Comments Should Be Disregarded
Rule 12.2 requires a detailed, targeted assessment that addresses the specific portions of a
settlement the party supplying the comments opposes. Although MCWDs Comments contain a
flood of citations, just a handful are to the Settlement Agreement at issue. 36 And few of those
citations focus on specific issues MCWD claims to have with the actual provisions from the
Settlement. 37 Instead, MCWDs Comments are a parade of old and new arguments MCWD
makes not against the Settlement but in connection with the MPWSP, i.e., as to the CPCN and
environmental review for the project. Because they focus on matters outside of the Settlement,
MCWDs Comments should be ignored. MCWD, like all the parties to this proceeding, will
34
Ibid.
35 Ibid.; for this reason, many of MCWDs arguments regarding CEQA fail. For example,
MCWDs argument concerning the proposed 1:1 ratio of desalinated and source water really
addresses not the ratio but alleged potential mitigation issues. MCWD Comments, at p. 8.
Mitigation is to be examined during the CEQA process.
36 See, e.g., MCWDs Comments, at pp. 5, 7, 8, 9, 21, 22.
37 See, e.g., MCWDs Comments at p. 5 (not citing specific provisions of the Settlement
Agreement that MCWD takes issue with, but instead citing them for the general proposition the
Settlement assume the MPWSP will be approved).
ATTACHMENT D
have an opportunity for briefing on the CPCN and to comment on the DEIR. Comments on the
Settlement Agreement at issue in the motion, however, are not the proper vehicle for MCWD to
raise issues concerning those matters.
While mostly disregarding the Settlement, MCWDs Comments attack the MPWSP.
MCWD argues the record demonstrates public convenience and necessity for the MPWSP
cannot be shown 38 and Cal-Am cannot legally operate the MPWSP without significant,
unmitigable injury to the groundwater basin and the environment. 39 Oddly, on the one hand
MCWD argues the Settlement cannot be approved because doing so improperly assumes the
approval of the MPWSP, while on the other hand MCWD argues the Settlement cannot be
approved because MCWD assumes the MPWSP will not be approved. Similarly, MCWD claims
additional hearings are needed when its very same Comments claim there is already enough in
the record to establish the project cannot be approved. 40
In focusing on the CPCN for the MPWSP, MCWD misses the point. It is the Settlement
not the CPCN that the pending motion currently ask the Commission to address. And, as
noted above, the Rules permit the Commission to do just that.
MCWDs Comments also take a CEQA detour rather than directly addressing the
Settlement. The Comments argue that CEQA does not permit piecemealing, 41 and CEQA
38
MCWDs Comments, at p. 5.
39 Ibid.
40
The arguments and precedent MCWD relies upon to challenge the MPWSP, when fully
considered, do not support is position. For example, there is nothing in the discussions of
groundwater rights law in City of Barstow v. Mojave Water Agency (2000) 23 Cal.4th 1224, City
of Pasadena v. City of Alhambra (1949) 33 Cal.2d 908, Allen v. California Water & Tele. Co.
(1946) 29 Cal.2d 466, Corona Foothill Lemon Co. v. Lillibridge (1937) 8 Cal.2d 522, or
Monolith Portland Cement Co. v. Mojave Public Utility District (1957) 154 Cal.App.487, all
cited by MCWD, that renders the MPWSP unlawful. Indeed, City of Barstow, City of
Pasadena, Allen, and Corona Foothill were all addressed in the SWRCB Final Review of
California American Water Companys Monterey Peninsula Water Supply Project dated July 31,
2013, and the SWRCB concluded that California American Water could pump brackish water,
subject to certain conditions. (See MCWD Ex. MCD-17 at pp.33-48.)
41 MCWDs Comments, at p. 18. It should, however, be noted that MCWD fails to cite any
authority supporting its claim that approval of the Return Water Settlement Agreement is
piecemealing the CEQA review process. In Paulek v. Department of Water Resources (2014)
231 Cal.App.4th 35 and in Rio Vista Farm Bureau Center v. County of Sonoma (1992) 5
10
ATTACHMENT D
requires the Commission to consider potential significant adverse effects of the project on the
environment. 42 MCWD then goes on to discuss the now withdrawn April 2015 DEIR 43 and
what the Comments claim are alternatives to the MPWSP.44 The Comments then provide a
general recitation of what MCWD believes the Commission must do to undertake a proper
review under CEQA. 45 None of this is relevant to the Settlement. The Settlement does not
purport to piecemeal CEQA review. Quite the opposite: it recognizes that CEQA/NEPA review
is taking place 46 and the Settlement helps to define a stable and finite project description that
will facilitate the Commissions completion of CEQA review. 47 Indeed, the Return Water
Settlement recognizes the environmental review is taking place and that Cal Am could be legally
required by a regulatory agency or a court to make other water deliveries to other locations in the
SRGB. 48 Thus, the CEQA-related arguments in MCWDs Comments are irrelevant to a
decision on whether to approve the Return Water Settlement.
In attacking the MPWSP (and not focusing on the Settlement Agreement), MCWDs
Comments also invoke a number of irrelevant legal issues. In one instance, and despite a
Commission decision already addressing the issue, MCWD asserts the MPWSP would violate
the Monterey County ordinance that requires public ownership of desalination facilities. 49
MCWD then argues MPWSP would improperly circumvent the local control and local
Cal.App.4th 351, the two cases cited by MCWD, the court rejected challenges to final EIRs on
the grounds of piecemealing because the projects at issue in each case were separate projects,
each of which had or would have its own CEQA review process. Here, there is only one project
going through one CEQA review process, and both the Brine Settlement Agreement and the
Return Water Settlement Agreement explicitly recognize they are subject to that CEQA process.
42 MCWDs Comments, at p. 19.
43 Id. at p. 5.
44 Id. at p. 18.
45 Id. at pp. 19-20.
46 Return Water Settlement, at L and 17.
47 Id. at 17.
48 Id. at 4.
49 MCWDs Comments, at p. 16.
11
ATTACHMENT D
protection in groundwater matters that is required under Californias new Sustainable

Groundwater Management Act [SGMA]. 50 And MCWD asserts the Commissions decision
concerning the Monterey County ordinance did not consider the effect of SGMA and that the
terms of the settlement between Cal Am and the county would allegedly be unconstitutional. 51
MCWD neither explains how it reaches these conclusions nor, more importantly, why they
would be relevant to specific provisions of the Settlement Agreement in question. Such
arguments are another reason why MCWDs Comments should be disregarded.
MCWDs Comments also argue there are four disputed issues: (1) impacts on
groundwater from wells obtaining source water for the desalination plant, (2) locations where
return water must be provided, (3) whether the MPWSP is necessary, and (4) if there are other
feasible, less harmful alternatives to the MPWSP.52 Three of these broad claims (numbers 1, 3,
and 4) made by MCWD are not relevant to the specific provisions of the Settlement Agreement
at issue and instead simply attack the MPWSP as a whole and its environmental review, which is
ongoing. With respect to MCWDs second issue, that matter was the subject of extensive written
and oral testimony at the April 2016 hearings. 53 No need exists for further evidentiary hearing
on this issue. MCWD will have opportunities to submit comments on the DEIR/DEIS
concerning groundwater impacts and will be able to discuss the competing evidence on the return
water location submitted in the prior hearing in its briefing on the CPCN. MCWDs comments
should be disregarded.
Finally, MCWDs Comments should be rejected for the additional reason that they rely
on incomplete or misleading descriptions of the record. Not only are MCWDs Comments
50 Id. at p. 13.
51 Id. at p. 17. The Commission roundly rejected these constitutional arguments in D.15-10052, stating the arguments lack merit. Id., mimeo, at p. 8. This MCWD argument should be
rejected as an impermissible collateral attack on D.15-10-052. Pub. Util. Code 1709 &
1731(b)(1); D.02-01-037, mimeo, pp. 14-15.
52 Id. at pp. 2-3.
53 See e.g., MCWD Rev. Ex. MCD-27 at pp.2-4; EX RWA-19 pp. 2-3 and Attachment 2, pp. 46; RT Vol. 17, pp 2848-2851; 2876-2877, 2922-2923.
12
ATTACHMENT D
irrelevant to the narrow issues to be addressed by the Commission in determining whether to

approve the Return Water Settlement Agreement, but in making its Comments MCWD relies on
misrepresentations concerning the record.
For example, MCWD claims California American Water has admitted the MPWSP is
intended to and will exacerbate seawater intrusion. Specially, MCWDs Comments state the
following:
Indeed, Cal-Ams hydrogeological expert, Mr. Leffler, testified that one

objective of the MPWSP is to establish a direct connection between the
aquifer and the seawater. (RT, Vol. 14, p. 2369:5-7). 54
*
*
*
As noted above, the record shows and Cal-Ams expert admits that the
MPWSP is intended to and will exacerbate seawater intrusion and degrade
water quality in the basin, over at least a five-mile range in the project
area. (RT, Vol. 14, p. 2369:2-11.) 55
A review of the portions of the record that MCWDs Comments cite for this proposition shows
MCWDs Comments are misleading. At RT, Vol. 14, p. 2369:2-10, MCWDs counsel asks Cal
Ams expert, Mr. Leffler, the following question:
Is it true that if the Monterey Peninsula Water Supply Project were to
operate as intended the project would take in very little groundwater,
would establish a direct connection between the aquifers and the seawater
at the project site by inducing downward leakage of ocean water through
the sea floor, and yet would not harm the inland aquifers; is that correct?
MCWDs question is vague and compound. It asks at least three separate questions, so
MCWDs effort to unequivocally latch onto any one of them is misleading. Moreover, Mr.
Leffler responded to the compound question, at RT, Vol. 14, p. 2369:11, by stating I think that
is generally correct. He did not mention an intent or objective to exacerbate seawater intrusion.
His answer to the question was general, equivocal, and not absolute. MCWDs counsel did not
follow-up to clarify, leaving a general answer on the record that does not state what MCWD
claims. Moreover, MCWDs question states the MPWSP would not harm the inland aquifers.
It is misleading for MCWD to now claim Cal-Ams expert admits that the MPWSP is
54
MCWDs Comments, at p. 6.
55 Id. at p. 14.
13
ATTACHMENT D
intended to and will exacerbate seawater intrusion and degrade water quality in the basin, over at
least a five-mile range in the project area. MCWDs question stated the very opposite: the
MPWSP would not harm the inland aquifers. And on the same transcript page, California
American Water's expert, Mr. Leffler, testified, and it is California American Water's position,
the MPWSP would "improve the situation" with respect to seawater intrusion and not exacerbate
it. 56 While all settling parties may not agree with Mr. Lefflers testimony, it speaks for itself.
The point here is that MCWDs mischaracterization of the testimony does not advance its
argument. Because they are misleading, MCWDs comments should be disregarded.
B.
Water Pluss Comments Are Legally Incorrect and Should Be Ignored
Water Pluss Comments include several legal arguments opposing the Return Water
Settlement. Water Plus argues the Agency Act requires all water taken from the MPWSP slant
wells to be returned to the SRGB because Water Plus contends that all such water is
groundwater. 57 Water Plus attacks the MPWSPs use of return water to ensure compliance
with the Agency Acts anti-export provisions, claiming such use has no basis in law or fact 58
and mischaracterizing the anti-export provisions of the Monterey County Water Resources
Agency Act 59 (Agency Act). 60 Water Plus also claims after source water is desalinated, any
salty water remaining must also be returned to the Basin. 61 Water Pluss erroneous legal
arguments require no hearings and miss the mark for several reasons.
56
RT, Vol. 14, p. 2369:24-27.

57 Water Plus Comments, at pp. 5-7.
58 Id. at pp. 3-4.
59 The Agency Act was adopted in 1990 (Stats. 1990 c. 1159), not in 1995 as Water Plus
erroneously states. See Water Plus Comments, at p. 3. The Agency Act succeeded the Monterey
County Flood Control and Water Conservation District Act (Stats 1947, c. 699), which was
repealed in 1990. The Agency Act is found in c. 52 of the Appendix to the Cal. Water Code.
60 Water Plus Comments, at p. 3.
61 Id. at p. 7.
14
ATTACHMENT D
1.
Ample Law Supports Use in the MPWSP of Return Water to Prevent

Export of Water from the Salinas River Groundwater Basin
Water Plus cites to only one of a number of provisions of the Agency Act relating to
extraction and exportation in an effort to fashion an anti-exportation rule that prohibits the use of
a return water plan in the MPWSP. Water Pluss spokesperson, Mr. Weitzman, asserts he has
not seen the basis for the return water concept expressed explicitly anywhere. 62 Water Plus
omits key introductory language in citing to the anti-export provision of the Agency Act, i.e.,
section 21. 63 The pertinent portions of section 21 provide:
The Legislature finds and determines that the Agency is developing a project
which will establish a substantial balance between extraction and recharge within
the Salinas River Groundwater Basin. For the purpose of preserving that
balance, no groundwater from that basin may be exported 64
However, numerous other provisions of the Agency Act are also relevant to the issue of
prevention of exportation of SRGB water with respect to the MPWSP, including various
subsections of section 9, which empower the Agency to reclaim water, enter into an agreement
to exchange water or transfer water or deliver water or a water right for other water, water right,
or water supply with a public or private entity, and to otherwise manage and control water for
the beneficial use of persons or property within the Agency. 65
First, a simple statutory analysis of sections 9 and 21 of the Agency Act reveals that
Water Pluss argument is inconsistent with the purposes and express provisions of the Agency
Act relating to exportation. One of the objects and purposes of the Act is to increase and
prevent the waste or diminution of the water supply in the Agency, including the control of
groundwater extractions as required to prevent or deter the loss of usable groundwater through
intrusion of seawater and the replacement of groundwater ... through ... a substitute surface
62
Id. at p. 4.
63 Id. at p. 3.
64 Agency Act 21 (emphasis supplied).
65 See Agency Act 9(d)(2), (h)(6) & (o); see also 9(d)(7) (Agency may prevent unlawful
exportation of water) & (m) (Agency may exchange water).
15
ATTACHMENT D
supply. 66 The Return Water Settlement Agreement, as part of the MPWSP Agency Act
compliance, requires that there will in effect be an exchange of the freshwater component of
SRGB groundwater for an equal amount of desalinated water which will be returned to the
SRGB through the delivery of the desalinated water for use by Castroville and at the CSIP in lieu
of equivalent production of native groundwater by each of them. Through this process, the
Agency, exercising its authority under the Agency Act, reclaims water for present and future use,
prevents unlawful export of SRGB water, and manages and controls water for beneficial use.
Statutes are to be construed as a whole, 67 and it is clear that the Return Water Settlement
Agreement advances the Agency Acts purpose to maintain balance in the SRGB while
preventing export of groundwater and in fact helping to develop usable groundwater in exchange
for unusable water.
Second, the Agency is charged with interpretation and implementation of the Agency
Act, and as discussed above, section 8 of the Agency Act expressly allows the control of
groundwater extractions as required to prevent or deter the loss of usable groundwater through
intrusion of seawater 68 and section 9 authorizes Agency reclamation and exchange of water,
including by contract, and further authorizes the Agency to otherwise manage and control water
for the beneficial use of person or property within the Agency. The Agency Act need not use
the precise words return water for it to authorize what Water Plus calls the return water
doctrine, 69 as envisioned in the MPWSP. Water Pluss assertion that the basis for the return
water doctrine is not explicitly expressed ignores that the Agency Act does not in any manner
prohibit the return water doctrine. As already shown, the overall statute supports use of return
water in the MPWSP to maintain basin balance while complying with Agency Act exportation
restrictions, both of which fall within section 9(o)s authorization of the Agency to otherwise
66
Agency Act 8.
67 Cummins Inc. v. Superior Court (2005) 36 Cal.4th 478, 487.
68 Agency Act 8 (emphasis added).
69 Water Plus Comments, p. 4.
16
ATTACHMENT D
manage and control water for the beneficial use of persons or property within the Agency.
It is also of note that the SWRCBs analysis of the MPWSP supports the return water
concept. In its July 2013 review of the MPWSP,70 the SWRCB concluded that returning only
the fresh water portion of treated water to the Basin would lead to no net effect and be consistent
with the purposes of the Agency Act. 71
Further, in D.10-12-016, the Commission approved of the return water concept in the
context of the withdrawn Regional Desalination Project (RDP). The Commission recognized
that [c]ompliance with the Agency Act is within [the Agencys] jurisdiction. 72 It fully
indicated its understanding of the use of brackish source water containing groundwater and
ocean water. 73 The Commission found that the RDP, which also included a return water
component, satisfies the prohibitions on exporting water from the SRGB. 74 The Commission
approved the Settlement Agreement and Implementing Agreements, the latter of which
included the Water Purchase Agreement in issue in A.04-09-019. 75 As part of that approval, the
Commission necessarily approved a formula, contained in Exhibit E to the Water Purchase
Agreement approved in D.10-12-016, used to calculate of the percentage of SRGB water in
brackish source water:
(seawater salinity)(Percentage of seawater) + (inland water salinity)(Percentage of
Salinas Basin water) = brackish water salinity
This previously-approved formula is precisely the same formula agreed to on the first
page of Appendix D to the Return Water Settlement Agreement to determine the percentage of
70
See Exhibit MCD-17.

71 Id. at 40; see also discussion related to return of only the fresh water component of the source
water at pp. 42 & 49.
72 D.10-12-016, mimeo, p. 113; see also FoF 149-152, p. 181.
73 Id., pp. 109-110.
74 Id., FoF 65, p. 168.
75 Id. Ord. 1, p. 203 & p. 8 (defining Implementing Agreements); see also CoL 61, p. 202
(It is reasonable to find that the Settlement Agreement and Water Purchase Agreement are
reasonable in light of the entire record, in compliance with the law, and in the public interest.)
17
ATTACHMENT D
SRGB water in brackish water:

(seawater salinity) x (Percentage of seawater) + (inland water salinity) x
(Percentage of Salinas Basin water) = (brackish water salinity) 76
The Commission previously approved, in D.10-12-016, both the return water concept and
the very formula to be used to determine the amount of desalinated water that must be returned
to the SRGB a key component to the return water concept for the MPWSP. Since D.10-12016 approved a settlement, it is not precedential, but it is binding. 77 D.10-12-016 remains
subject to law forbidding collateral attacks on Commission decisions. In light of the
Commissions approval of the precise same formula at issue in D.12-12-016, Water Pluss attack
on the return water concept at this point is not only wrong, it is an impermissible collateral attack
on that decision. 78
2.
Both Logic and the Agency Act Compel Rejection of the Argument
that Salty Water Must be Returned to the SRGB
Water Plus nonsensically argues that after water is desalinated, any salty water that
remains must be returned to the SRGB. 79
Through the Return Water Settlement Agreement and Return Water Purchase Agreement,
the Agency has exercised its discretion to determine that the exchange of water under the
MPWSP and included in the implementation of agreements to return water to the Salinas River
Groundwater Basin complies with the Agency Act. If the Commission approves the MPWSP
and the project thereafter is implemented, product water from the desalination plant will be
returned to the CCSD and to the CSIP for in lieu use and groundwater recharge. In both of those
instances, Cal-Am's exchange (or return) of water in an amount equivalent to the water that is
extracted will slow the rate of well pumping in areas where seawater intrusion is advancing and
76
Italics in original. MCWDs argument about the 1:1 ratio of desalinated water to source water
ignores the identity of these two formulae. See MCWD Comments, at p. 8.
77 Rule 12.6.
78 Pub. Util. Code 1709 & 1731(b)(1); D.02-01-037, mimeo, pp. 14-15.
79 Water Plus Comments, at p. 7.
18
ATTACHMENT D
threatening the quality of the groundwater.

As already demonstrated, the previously-cited provisions of the Agency Act amply
support that plan for the MPWSP.
Further, it would defy logic as well as the purposes of the Agency Act to require water
whose saltiness has only become more concentrated to make its way back into the SRGB. Under
section 21 of the Agency Act, SRGB groundwater is not to be exported so that the balance
between extraction and recharge within the SRGB may be preserved. That balance would not be
preserved, but instead would be decidedly tilted toward salinity, if Water Pluss bizarre argument
were accepted.
3.
The Petition for Writ of Mandate Submitted as Attachment A to the

Water Plus Comments Should be Ignored
Water Plus complains that it has made some filings with the Commission indicating the
MPWSP violates the Agency Act, but [t]hese filings have not deterred the Commission from
continuing to countenance the violations. To address this problem, Water Plus has filed a
petition for writ of mandamus against the County of Monterey, the Agency and the California
Coastal Commission.80
First, the Commission has not yet approved the MPWSP and thus cannot have
countenanced any violations. Second, the Petition for Writ of Mandate may well interfere with
the function and jurisdiction of the Commission in this proceeding, leading to a question
regarding the propriety of Superior Court jurisdiction in the Petition action. Regardless, for the
present, the Commission need only know that the Agency (and County) will respond to the
Petition in due course and expect to seek its dismissal on various grounds.
C.
Public Water Nows Comments Should Be Disregarded
The Return Water Settlement provides the formulas used to determine pricing for Return
Water and Excess Water. Generally, the CCSD rate for Return Water is intended to represent the
80
Water Plus Comments, p. 7. The Petition was actually filed by Water Ratepayers Association
of the Monterey Peninsula on behalf of and in the name of the State of California. Water Plus
Comments, Att. A, 1.
19
ATTACHMENT D
avoided costs to produce groundwater to meet customer demand. 81 For CSIP, the rate for
Return Water is intended to represent the CSIP customers marginal avoided cost for
groundwater produced for use by CSIP customers. 82 The CCSD rate for Excess Water is
intended to represent the marginal operation and maintenance for the MPWSP to produce one
acre-foot of potable water. 83 Given that these prices are based on the avoided costs for CCSD
and CSIP they are not, as PWN, claims, subsidies. Moreover, the Commission has accepted this
approach previously, in connection with the Regional Desalination Project. 84
PWN is incorrect when it claims that that no attention of any significance was given to
ratepayer interests. The Return Water Settlement Agreement furthers customer interests by
forestalling future disagreement and litigation regarding the planned production of source water
for the MPWSP desalination plant, the anti-export provisions of the Agency Act, and the SRGB
conditions and potential groundwater rights. It also helps define the MPWSP project description,
which will facilitate the Commissions completion of CEQA review.
Moreover, as noted in the Settlement Motion, the rates are subject to annual review and
update through Tier 2 advice letter filings. 85 This ensures that the rates take into account
changing circumstances and costs, provides for additional Commission review and oversight,
and gives interested parties the opportunity to evaluate and protest. Additionally, the Return
81
Settlement Agreement on MPWSP Desalination Plant Return Water (Return Water

Settlement), 5.a.i, p. 10.
82
Return Water Settlement, 5.a.ii, p. 11.

83 Return Water Settlement, 5.b, p. 11.
84 See D.10-12-016, Application of California American Water Company (U210W) for a
Certificate of Public Convenience and Necessity to Construct and Operate its Coastal Water
Project to Resolve the Long-Term Water Supply Deficit in its Monterey District and to Recover
All Present and Future Costs in Connection Therewith in Rates, Decision Approving Regional
Project, Adopting Settlement Agreement and Issuing Certificate of Public Convenience and
Necessity for California-American Water Facilities. Indeed, MCWD advocated for this same
approach in connection with the Regional Desalination Project. While under Rule 12.6 the
Commissions adoption of the settlement in D.10-12-016 is binding but not precedential, it is
nonetheless of note that the Return Water Settlements avoided cost pricing approach is not
novel and has in similar circumstances previously been found persuasive.
85 Return Water Settlement, 5, pp. 10-11.
20
ATTACHMENT D
Water Settlement includes provisions that protect against duplicative liability should California
American Water be ordered to undertake other Return Water obligations. 86 Finally, if, upon
termination, expiration or nonrenewal of the Return Water Purchase Agreements, California
American Water demonstrates Return Water is not needed to prevent legal injury to prior
groundwater rights holders in the SRGB or to avoid significant adverse effects to SRGB
groundwater resources, California American Water may end its obligation to continue to make
Return Water available for delivery to the SRGB for use in lieu of existing groundwater
production. 87
While the Settling Parties believe that the Return Water Settlement reflects a fair and
equitable resolution of the disputed issues, it also reflects certain compromises. Some of the
assurances that PWN criticizes are necessary to justify needed capital investments. For example,
it would be unreasonable to expect CCSD to invest in the capital facilities necessary to convey
the Return Water from the MPWSP to the CCSD without assurances of a specific volume of
Return Water. The conditions that PWN would place on the agreement are unreasonable and
would prevent any agreement from being reached.
Contrary to PWNs claims, the Return Water Settlement is not excessively open-ended.
PWN criticizes the Return Water Settlement for its reliance on existing models and notes that
circumstances may change when data from the new models becomes available. However, the
Return Water Settlement takes into account the data currently available and provides for the
possibility of new information and/or changed circumstances. Some of the issues raised by
PWN are not appropriate here as they will be clarified as part of the CEQA review process.
Indeed, the Settling Parties made the Return Water Settlement expressly contingent on the
Commissions completion of the CEQA review for the MPWSP.88
Instead of dealing with the specifics of the Return Water Settlement, PWN, as did
86
Return Water Settlement Agreement, 4, p. 9.

87 Id., 8, pp. 11-12.
88 Id., 17, p. 14.
21
ATTACHMENT D
MCWD, focuses more on criticizing the MPWSP in general. PWN simply repeats complaints
that it has made before. The viability of the MPWSP as a whole, as well as the costs and impact
on customers, will be addressed by the Commission when it issues its decision on California
American Waters request for a CPCN.
The Return Water Settlement benefits customers and the community because it
establishes a return water delivery arrangement that assures compliance with the Agency Act,
delivers Return Water for beneficial use in the SRGB, and helps to address the public health and
water supply challenges CCSD has experienced due to water quality degradation of its water
supplies. 89 It is reasonable in light of the whole record, consistent with law, and in the public
interest. As such, it should be approved and adopted by the Commission.
III.
CONCLUSION
For the foregoing reasons, the Joint Parties respectfully request that the Commission
reject the comments filed by MCWD, Water Plus, and PWN. The Joint Parties respectfully
request the Commission to approve the Return Water Settlement Agreement.
89
By:
/s/ Sarah E. Leeper

Sarah E. Leeper, Attorney
California-American Water Company
Joint Motion for Approval of Settlement Agreement on Desalination Plant Return Water, p. 7.
22
ATTACHMENT D
By:
/s/ Bob McKenzie

Bob McKenzie
Water Issues Consultant
P.O. Box 223542
Carmel, CA 93922
For: Coalition of Peninsula Businesses
By:
/s/ John H. Farrow

John H. Farrow, Attorney
M.R. Wolfe & Associates, P.C.
555 Sutter Street, Suite 405
For: LandWatch Monterey County
By:
/s/ Norman C. Groot

Norman C. Groot
Monterey County Farm Bureau
P.O. Box 1449
931 Blanco Circle
Salinas, CA 93902-1449
For: Monterey County Farm Bureau
By:
/s/ Dan L. Carroll

Dan L. Carroll
Downey Brand, LLP
For: Monterey County Water Resources Agency
By:
/s/ Russell M. McGlothlin

Russell M. McGlothlin, Attorney
Brownstein Hyatt Farber Schreck, LLP
21 East Carrillo Street
Santa Barbara, CA 93101
For: Monterey Peninsula Regional Water Authority
23
ATTACHMENT D
By:
/s/ Eric Robinson

Eric Robinson
Kronick Moskovitz
For: Salinas Valley Water Coalition
24

Agenda Report
FROM:

Item No: 5.
SUBJECT: Receive Report on Decision of the State Water Resources Control Board
(SWRCB) on the Cease and Desist Order (CDO) 2009-0060 Extension
Application
RECOMMENDATION:
Staff recommends that the Water Authority Receive a Copy of the final decision on the
Application for Order Modifying State Water Board Order SWB 2009-0060 (Cease and
Desist Order- CDO)
DISCUSSION:
On July 19, 2016, the State Water Resources Control Board (SWRCB) conducted a
hearing on the Amended Application for an Extension of Cease and Desist Order (CDO)
2009-0060.
In general, the SWRCB approved most of what Cal Am and the co-applicants, including
the MPRWA, had requested. The final CDO Extension, as approved by the Board, is
attached.
ATTACHMENTS:
A- CDO Extension approved by the SWRCB July 19, 2016
06/12
ATTACHMENT A
STATE OF CALIFORNIA
STATE WATER RESOURCES CONTROL BOARD
ORDER WR 2016-0016
In the Matter Of Application of

California American Water Company
To Amend State Water Board Order 2009-0060
SOURCE:
Carmel River
COUNTY:
Monterey County
ORDER AMENDING IN PART REQUIREMENTS OF
STATE WATER BOARD ORDER WR 2009-0060
BY THE BOARD:
1.0
OVERVIEW
For decades, California-American Water Company (Cal-Am) has been unlawfully diverting water
from the Carmel River to provide municipal water to a large area of the Monterey Peninsula.
State Water Resources Control Board (State Water Board) Order WR 2009-0060 (hereafter,
WR 2009-0060) is a cease and desist order that, among other requirements, established a
compliance timeline for cessation of Cal-Ams unlawful diversions from the Carmel River by
December 31, 2016. This timeline was based on evidence gathered at hearing that indicated
that a regional desalination plant would be built, enabling the areas municipal water needs to be
met by new water supplies. It is now clear that no desalination plant will be in operation by the
end of this year. In light of this recognition, Cal-Am has proposed modifying the compliance
schedule to accommodate the anticipated pace for approval and implementation of several
proposed projects (1) a different desalination plant, the Monterey Peninsula Water Supply
Project; (2) a water recycling project, entitled Pure Water Monterey; and (3) the expansion of the
facilities for an existing groundwater storage project entitled Aquifer Storage and Recovery
(ASR). These projects are undergoing review by permitting agencies.
Since the adoption of WR 2009-0060 in 2009, Cal-Ams diversions from the Carmel River have
consistently been well below the annual diversion levels set by WR 2009-0060, but still remain
thousands of acre-feet per annum above the amount available under Cal-Ams lawful water
rights.(See Table 1, p. 2.) The reductions in Carmel River diversions have resulted from a
number of factors, including conservation and efficiency measures and implementation of local
supply projects, combined with a moratorium on increased water use within Cal-Ams service
area. To address the impacts of its diversions, Cal-Am has also applied significant resources to
fishery conservation and habitat improvement programs.
1
ATTACHMENT A
Seven years after adoption of WR 2009-0060, the State Water Board is again placed in a
position of deciding whether to adopt a compliance schedule that may allow for obtaining lawful
supplies with less disruption to existing communities than meeting the required legal pumping
limit by December 31, 2016. For the reasons described herein, this order adopts a new
compliance schedule that essentially maintains an ongoing diversion level as long as specified
progress towards alternative supplies is met, but sharply drops allowable diversions should the
progress towards these supplies slip. In taking this action, the State Water Board is facilitating
local cooperation in development of alternate water supplies and at the same time requiring that
unauthorized diversions end by December 31, 2021, regardless of whether the envisioned
projects are timely built.
2.0
BACKGROUND
WR 2009-0060 and State Water Board Order WR 95-10 (hereinafter WR 95-10) detail specific
information regarding Cal-Ams lawful and unlawful diversions from the Carmel River, which
does not require repetition here.
Since the adoption of WR 2009-0060, Cal-Am has lowered its diversions from the Carmel River
more rapidly than the minimum compliance terms in the CDO required, and has not missed the
CDO diversion reduction requirements in any year.
Table 1
Water Year
(Oct. 1 Sept. 30)
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
Carmel River Pumping

(to nearest acre-foot)
9,786
8,559
7,646
8,008
7,744
7,228
Pumping Limit under

Order 2009-0060
10,209
9,994
9,883
9,772
9,661
9,550
The pumping limit under Order 2009-0060 for Water Year (hereinafter also WY) 2015-2016 is
9,318, and there is no indication from current reporting or based on recent historical use, to
think that Cal-Am will not fall well under this mark.
The reductions in pumping are the result of demand reductions as well as new supplies, both of
which were required under WR 2009-0060. In terms of demand reduction, Cal-Am and the
Monterey Peninsula Water Management District (District) have adopted programs encouraging
conservation by business and residential customers, including turf replacement programs, water
efficiency requirements, and tiered conservation rates. Cal-Am has also implemented new
technologies to identify and address leaks. Additionally, Cal-Am has proposed revisions to its
water rationing program pending at the California Public Utilities Commission (CPUC). The
CPUC anticipates making a decision on the proposed changes in October 2016.
Three new non-Carmel River supplies have either already come online, expanded or have
received regulatory approval since 2009. Sand Citys desalination plant provides to Cal-Am, in
the form of offset deliveries, a minimum of 94 acre-feet per annum (afa), and the balance of its
2
ATTACHMENT A
capacity which is not needed for expanded use in Sand City. Pebble Beachs water recycling
facility has expanded its capacity and technology, and increased its offset of Cal-Ams unlawful
pumping to an average of 970 afa. Its average offset prior to the technology changes
completed in 2008 was 450 afa. This increase far out-measures the modest increase in usage
entitlements, which now measure 65 afa, and are expected to reach on the order of 140 afa1 by
the end of the proposed compliance period. As of June 2016, the City of Pacific Grove was
scheduled to have begun construction of a recycled water plant that will offset 100 to 125 afa of
current Cal-Am deliveries for golf course and cemetery irrigation.
Additionally, Cal-Am has pursued lawful water rights in the Carmel River. Cal-Am has obtained
water right Permit 21330, allowing lawful diversion in the high flow season, under certain bypass
flow conditions, at a rate of 4.1 cubic feet per second with an limit of 1,488 afa. This water may
only be used within the Carmel River watershed, rather than throughout the Cal-Am service
area. In WY 2014-2015, Cal-Am diverted approximately 42 acre-feet under this water right.
Joint owners Cal-Am and the District have lawful water rights under Permit 20808A and Permit
20808C to develop and use up to 5,326 afa (2,426 afa and 2,900 afa, respectively) of pumping
from the Carmel River under certain bypass flow conditions for operation of the ASR project.
The ASR project has expanded its capacity since the adoption of WR 2009-0060, although
increased water has not been available for diversion during the recent drought. The ASR
project diverted just over 1,110 afa of water in WY 2009-2010 and WY 2010-2011, and between
0 and 210 afa in the drier water years from WY 2011-2012 through WY 2014-2015. The ASR
water is pumped to the Seaside Groundwater Basin and WR 2009-0060 requires Cal-Am to
recover the ASR water during the months most beneficial to the fishery. By June 1 of each
year, Cal-Am, National Marine Fisheries Service (NMFS) and the California Department of Fish
and Wildlife (CDFW) agree on a schedule for using the ASR water by reducing Carmel River
pumping for fishery benefits. Cal-Ams diversions from the Carmel River are reduced on a oneto-one basis with the scheduled recovery. NMFS and CDFW can and have agreed to allow
some ASR water to be carried over in Seaside Groundwater storage for the next water years
use, as allowed under WR 2009-0060. Cal-Am carried over 215 acre-feet of ASR water, and
WY 2015-2016 storms allowed for an additional 699 acre-feet of ASR diversions such that
Cal-Am had 914 acre-feet of available ASR water stored in the Seaside Groundwater Basin by
June 1, 2016. NMFS and DFW agreed that Cal-Am would recover the ASR water from June
through September of 2016, and carry over approximately 315 acre-feet for WY 2016-2017.
Water previously pumped from the Carmel River for the Odello Ranch under License 13868A, is
being provided to offset Cal-Ams unlawful diversions on an interim basis. The water will not be
available on a long-term basis. The project provided 85 acre-feet of water to offset Cal-Ams
unlawful diversions in 2015, and will provide a minimum of 50 acre-feet in 2016 and 25 acre-feet
in 2017. Cal-Am and the Eastwood Trust have reached an agreement for Cal-Am to divert up to
85 afa on an interim basis, to the extent that the water is not being sold by the Malpaso Water
Company to other users.
Pebble Beach estimates that deliveries of water under new entitlements through the end of December 2020 will be
140 afa. While the application now requests an extension of the compliance deadline for an additional year, there is
no reason to think that this number will be significantly different by 2021, given the prior rate of growth in the area and
the necessarily imprecise nature of such estimates.
ATTACHMENT A
Since adoption of WR 2009-0060, Cal-Am has also funded or otherwise implemented significant
measures to improve fish habitat and survival. WR 2009-0060 required some of these
measures, while others were implemented as part of an agreement with the NMFS and the
CDFW.
After the failure of efforts to build the Coastal Water Project and the Regional Desalination
Project2, it became clear that there would not be a lawful alternative supply of water for the
Cal-Am service area prior to the end of 2016, when WR 2009-0060 requires Cal-Am to end all
unlawful diversions from the Carmel River.
In 2014, Cal-Am approached State Water Board staff regarding the possibility of reaching an
agreement on a proposal to amend the CDOs compliance schedule which State Water Board
staff would recommend to the State Water Board for consideration. Staff met with Cal-Am and
other stakeholders over a period of two years in an effort to craft a proposal that staff, Cal-Am,
and a range of stakeholders could endorse. At points over the two year period, the discussion
included representatives from Cal-Am, the District, the Monterey Peninsula Regional Water
Authority, the Sierra Club, the Planning and Conservation League, the Pebble Beach Company,
and NMFS.3 The group was able to reach an agreement on a framework for a proposal to
amend the Cal-Am CDOs compliance schedule until the end of December 2020, even as some
of the specifics remained contested. The broad area of agreement was maintaining a diversion
limit significantly lower than that required for WY 2015-2016 in the current CDO as long as
milestones based on securing alternative water supplies are met. Failure to meet the
milestones would result in significant reductions of the diversion limits under the compliance
schedule, such that Cal-Ams diversions from the Carmel River would be limited to lawful
diversion limits prior to the end of the compliance period.
Cal-Am, in conjunction with the District, Monterey Peninsula Regional Water Authority, the City
of Pacific Grove and the Pebble Beach Company, submitted an application to amend the
Cal-Am CDO on November 20, 2015. On April 28, 2016, Cal-Am submitted a revised
application to amend the CDO, in light of significant delays in the CPUCs schedule for
consideration of a proposed desalination facility, the Monterey Peninsula Water Supply Project
(MPWSP) Desalination Project. These delays resulted from the CPUCs desire to prepare a
joint environmental impact statement and environmental impact report in conjunction with a
federal partner, the Monterey Bay National Marine Sanctuary. In addition, the CPUC needed to
evaluate a potential conflict of interest issue involving one of the contractors evaluating the
project under the California Environmental Quality Act. There have also been repeated
interruptions in operations of the test wells used to evaluate the impacts and viability of the
proposed facilitys slant well technology.
3.0
CAL-AMS PROPOSAL
Cal-Ams April 28, 2016 revised application to amend WR 2009-0060 was submitted pursuant to
Water Code section 1832, which allows the State Water Board to modify, revoke or stay cease
and desist orders.
2
The CPUC approved an alternative to the Coastal Water Project the Regional Desalination Project.
Cal-Am and other stakeholders indicated that a broader group met in preparation for meetings with staff, including
participation by the Carmel River Steelhead Association, Quail Lodge, Bernardus Lodge, and Carmel Valley Ranch.
3
ATTACHMENT A
The primary change Cal-Am proposes is maintaining an effective diversion limit (or EDL) of
8,310 afa from the Carmel River from the start of WY 2015-2016 until December 31, 2021, as
long as alternate water supply projects meet defined approval and construction milestones.
Cal-Am proposes a milestone for each water year from 2017-2018 until the end of December
2021. If Cal-Am fails to achieve a milestone by the last day of the water year, then the effective
diversion limit would be reduced by 1,000 afa for the following water year.4 For example, if
construction on the Pure Water Monterey project fails to begin and the CPUC fails to issue a
certificate of public convenience and necessity for the proposed MPWSP Desalination Project
by September 30, 2018, then the proposed effective diversion limit for WY 2018-2019 would be
7,310 acre-feet. Thus, if Cal-Am fails to meet each milestone, the effective diversion limit would
fall by 1,000 afa each water year from WY 2018-2019 on. The limit for WY 2021-2022 would be
4,310 acre-feet until the end of December 2021. As discussed above, WR 2009-0060 requires
all unlawful diversions from the Carmel River to end by December 31, 2016. This EDL would
replace the base level that formed the foundation for diversion limits under WR 2009-0060.
Cal-Am also proposes several changes to the manner of calculating the diversion limit, or of
assessing compliance with that limit.
One significant change in determining compliance with a diversion limit is Cal-Ams proposal
that it be allowed to accrue credits in years in which its diversions are lower than the EDL for a
particular water year, starting in WY 2015-2016. Cal-Am could then apply any such credits to
be able to pump more than the EDL in future years, without penalty. WR 2009-0060 had no
such credit system. Cal-Ams proposal includes a Cap on Carryover Credits that would need to
be calculated to confirm that the sum of non-ASR diversions from the Carmel River plus the
amount of ASR water recovered that year cannot exceed the EDL plus 750 afa.
Another substantial calculation change that Cal-Am proposes is to amend the accounting for
winter pumping under the ASR.
Under WR 2009-0060, any ASR diversions are counted towards the annual limit on Carmel
River diversions: Here, Cal-Am proposes to count only the first 600 afa towards the diversion
limit. Thus, as proposed, diversions to storage under the ASR program above 600 afa could
occur without impacting Cal-Ams subsequent diversions from the Carmel River in a particular
water year. For example, Cal-Am reported diversion of 699 afa to ASR storage in
WY 2015-2016, so 99 afa would not be considered in measuring compliance with the EDL.
A third significant change to calculating the diversion limits would be the manner in which the
limit is changed by the addition of lawful supplies. Under WR 2009-0060, production from new
sources of water generally lowered the Carmel River diversion limit acre-foot by acre-foot.
Under Cal-Ams proposed application, the EDL would be lowered for water delivered under the
Pure Water Monterey water recycling project in this same manner, and the reductions for Sand
City desalination project and for accounting for Pebble Beach entitlements would continue
unchanged (except that the provision on unlawful diversions to serve Pebble Beach entitlements
would be extended until December 31, 2021). However, Cal-Am proposes that fifty percent of
4
The deadline for measuring achievement of a milestone for the 2021-2022 water year is December 31, 2021.
Because this is the end of the compliance period, failure to meet this milestone would not result in a reduction of the
effective diversion limit, as the limit to Carmel River diversions after that time is the limit of Cal-Ams lawful water
rights.
ATTACHMENT A
any water Cal-Am may acquire from other willing water right holders on the Carmel River be
added to the EDL, with the other fifty percent being added to instream use. Additionally, Cal-Am
proposes that water rights purchased from the Malpaso Water Company LLC to Cal-Am be
added to the EDL. Finally, Cal-Am proposes that the EDL not apply to excess pumping that any
of the petitioners establish was necessary to meet reductions required by mitigation measures
imposed by the Seaside Basin watermaster or the court to address seawater intrusion within the
Seaside Groundwater Basin.
Cal-Ams application also includes new reporting requirements. The first new reporting
requirement is an annual report to the State Water Board regarding progress towards each
milestone due 120 days prior to its deadline. In the event that the annual milestones report
anticipates a delay in achieving a milestone, Cal-Am proposes that the State Water Board
determine whether the delay is beyond the control of the applicants, and, if so, that the State
Water Board determine whether or not to lower the EDL by 1,000 afa after a missed milestone.
The second proposed reporting requirement is Cal-Ams funding of an annual report on the
status of the Carmel River steelhead population that may include adaptive management
recommendations.
Cal-Ams application also notes Cal-Ams substantial completion of downstream fish passage
facilities at Los Padres Dam, and states that the company will endeavor to remove the Old
Carmel River Dam and Sleepy Hollow Ford prior to September 30, 2017.
4.0
NOTICE AND COMMENTS RECIEVED
The State Water Board noticed Cal-Ams application on May 6, 2016. The State Water Board
received 16 comments prior to June 1, 2016, the deadline for consideration of comments by
staff prior to releasing a preliminary staff recommendation. Staff released a preliminary staff
recommendation, along with a rationale document explaining the reasoning behind the
proposed adoption of the broad framework of the extension, and for the recommended changes
from certain terms in the submitted application. The document further set notice of a comment
deadline of July 13, 2016 for written comments. The State Water Board received an additional
77 comments prior to the written comment deadline of July 13, 2016. All comments received
were posted on the State Water Board, Division of Water Rights page for the Cal-Am CDO
Change Application:
http://www.waterboards.ca.gov/waterrights/water_issues/projects/california_american_water_co
mpany/index.shtml.
5.0
ANALYSIS
5.1
Adoption of Proposed Approach to Extension of CDO
Seven years after adoption of Order 2009-0060, the State Water Board finds itself in a situation
that is in some respects analogous to the situation before it at the Cal-Am CDO hearings. A
project that was presented to the State Water Board as a solution to end unlawful diversions
has failed to come to fruition: then, the Los Padres Dam, here the Coastal Water Project.
ATTACHMENT A
Cal-Ams service area continues to depend on thousands of acre-feet of unlawful diversions

from the Carmel River each year. Cal-Am has plans to develop a substitute supply that could
resolve reliance on unlawful diversions, and proposes a CDO compliance schedule that would
allow continued diversions at recent historic levels during the foreseeable timeframe for
construction. The plans are supported by a number of stakeholders, but there is also
substantial opposition. Permitting is incomplete and construction not yet begun.
In other ways, however, the situation is different than that in 2009. Cal-Am has complied with
the compliance schedule in WR 2009-0060, including making significant reductions in diversions
from the Carmel River despite the ultimate failure of the Coastal Water Project and the Regional
Desalination Project. WR 2009-0060 required Cal-Am to reduce diversions from the Carmel
River as much as possible and set minimum reductions. Cal-Am reduced diversions at a faster
rate than the minimum required under the order. (See Table 1, p. 2.) The pumping limit Cal-Am
is currently requesting is approximately 2,000 afa less than the first limit for diversions imposed
under WR 2009-0060, and the actual reductions top 3,000 af of reduction in some years. These
amounts constitute a reduction of approximately one third to almost half of the average annual
unlawful diversions found in 2009.
Additionally, Cal-Am has undertaken or funded a number of fishery restoration actions since
2009. As required under an agreement with NMFS and CDFW, Cal-Am has funded a number
of significant habitat improvement and fishery recovery projects as mitigation for unlawful
diversions. Cal-Am helped fund removal of the San Clemente Dam, with benefits for not only
the steelhead fishery, but also public safety. Under an agreement with NMFS, Cal-Am has
contributed funding towards a series of steelhead recovery projects identified by the State
Coastal Conservancy in consultation with NMFS, CDFW and Carmel River stakeholders. These
include ongoing projects to facilitate fish passage by removing barriers, including removal of Old
Carmel River Dam and Sleepy Hollow Ford anticipated by the end of September 2017,5 to
restore habitat upstream of San Clemente Dam and in the Carmel Lagoon and to augment
water availability for fisheries purposes in the Carmel Lagoon and during the summer. Cal-Am
and other stakeholders have also constructed downstream fish passage facilities at Los Padres
Dam and the company is helping fund a planning effort to address long-term disposition of
Los Padres Dam. These actions are in addition to ongoing habitat restoration and steelhead
rescue operations on the lower Carmel River. NMFS has commented that the habitat has
improved since 2009, and that an additional four years of diversion at levels similar to recent
years would be unlikely to cause jeopardy.
Further significant habitat restoration actions have also been set in motion, indicating that
habitat improvement will continue over the next few years even absent an immediate cessation
of Cal-Ams unlawful diversions.
Cal-Am has also funded a forbearance agreement with Rancho Caada to add approximately
300 afa to the Carmel River for the next three years. This agreement is part of a larger effort to
convert much of the property to riparian habitat, with additional potential ecological benefits.
Cal-Am is also a purchaser of water from Malpaso Water Company, to offset unlawful
5
This order adds reopener provisions if these anticipated efforts to undertake major habitat expansion efforts do not
continue to develop according to the schedule set forth. That schedule would enable realization of the project
benefits for almost the entire duration of the extension of the compliance schedule.
ATTACHMENT A
diversions, and with the funds from the purchase to facilitate the transfer of the Eastwood/Odello
Ranch for wetland restoration near the Carmel Lagoon.
Thus, the current situation on the Carmel River has improved in that the Cal-Am service area
has meaningfully reduced its dependence on unlawful diversions, fish habitat has undergone
improvement and expansion, plans are underway to undertake additional large fishery habitat
improvements, robust fish rescue and habitat restoration efforts have been ongoing for years
and will continue throughout the requested extension period, and additional instream flows have
been secured. These factors all indicate that the impact of extending the compliance period will
not be as great as the impacts found in 2009. The broad terms of the proposed revisions to the
compliance plan also provide a framework that encourages success in constructing new water
supplies, and that allow for planned reductions to lawful levels of diversions regardless of the
success of supply projects.
Cal-Am is proposing a more diversified approach to water supply on the Monterey Peninsula
than the efforts in 2009, so that the water supply does not depend so heavily on the success of
any one project. In 2009, the State Water Board required Cal-Am to diligently pursue small
projects, including requiring implementation of small projects that would result in at least 500 afa
of additional water supply, and also required annual reductions in Carmel River diversions of
between 121 and 242 afa. The central element of the effort to reduce diversions to sustainable
levels, however, required construction of the Coastal Water Project. Development of a water
supply project large enough to address the regions water needs has proven a challenge, given
the failure of several major proposed water supply projects: the New Los Padres Dam, the
Carmel River Dam and Reservoir Project, the Coastal Desalination Project, and the Regional
Water Supply Project. Here, Cal-Am has proposed three potential projects to substitute for
unlawful Carmel River diversions: a 6,250 to 9,752 afa desalination facility currently undergoing
environmental review and permitting at the CPUC; a 3,500 afa water recycling project with
completed environmental review that is currently undergoing expedited permitting review at the
CPUC, with a decision expected in August 2016; and a proposed expansion of facilities to
complete the ASR groundwater storage project, which is permitted to produce up to 5,326 afa,
albeit subject to water availability. Each of these projects has the potential to provide a
significant amount of new lawful water supplies to the Cal-Am Service area, and to greatly
reduce Cal-Ams remaining unlawful diversions of approximately 3,500-4,500 afa.
The application changes the incentive for conservation and for adopting smaller-scale projects.
WR 2009-0060 required yearly reductions in diversion amounts and did not specify whether
these reductions stem from conservation measures or small water supply projects. As
described above, conservation and small projects have resulted in a combined reduction of
approximately 2,000 to 3,000 afa of demand from the Carmel River. As these projects were the
first to be implemented, they likely represent some of the lowest-hanging fruit in terms of
demand reduction. Rather than imposing additional reductions, the application proposes
adopting a credit system that incentivizes conservation and small projects. Should the larger
projects fail to proceed on their expected timelines, Cal-Am can draw on these credits to offset
the majority of the required reduction in diversions. Thus, Cal-Am and other stakeholders can
anticipate whether the milestones will be met, and undertake efforts to build credits in
anticipation of failures to meet milestones, but are otherwise not required to expend additional
resources on conservation and small projects. Stakeholders can thus focus efforts on working
to make implementation of the larger supply projects go more smoothly.
8
ATTACHMENT A
The Board implements the overall concept of credits in this order, but imposes more limits on
the accrual and use of credits so as to avoid overwhelming other incentives and results of the
extended compliance schedule. (see explanation below)
The milestones approach proposed is similarly broadly acceptable, as it accomplishes two
important goals. First of all, it provides structural encouragement to timely develop lawful water
supplies for the Cal-Am service area. Implementing a large municipal water supply project is a
long-term decision that affects a wide range of stakeholders and involves impacts to costs of
service to existing users, to the environment, and to the cost of and potential for municipal
growth. The potential for sharp reductions in water availability provides an incentive to multiple
stakeholders to make diligent progress, and to shift the baseline of a discussion regarding the
areas water needs away from a status quo that relies on cheap unlawful diversions. If the
alternative to implementation of a project is severely limited access to water there is an
incentive to implement change from the status quo.6 It is the Boards hope that the focus on
annual deadlines with large but achievable reductions of up to 1,000 afa for failure to meet them
will be an effective incentive. The fact that Cal-Am did meet the more incremental annual
reductions each year under WR 2009-0060 provides reason to believe that the incremental
approach may be an effective inducement to alternate water supply development. Secondly, in
the event that one or more of the proposed projects fails to move forward as envisioned, the
step-wise reduction of diversions ensures a staggered approach to ending reliance on unlawful
Carmel River diversions through continued conservation, efficiency and smaller supply
development. This step-wise reduction approach allows for greater planning for reductions and
implementation of alternative projects. As discussed below, this order does make changes to
the milestones proposal to better serve the goals described above.
This more diversified approach, in combination with diversion reductions for failure to achieve
milestones allows for Cal-Am to reduce its diversions to lawful levels by the end of
December 2021, regardless of whether any one of the proposed projects or any of them at all
- are built. Implementation of one or more of these projects in combination with diversion limits
for any failure to reach particular milestones provides sufficient assurance that the State Water
Board will not again find itself in the same position of again extending the compliance deadlines
in the CDO at the end of December 2021.
The proposed annual reporting on milestone progress will give the State Water Board the
opportunity to track compliance. This order adopts the annual reporting requirement with minor
timeline modifications that better accommodate State Water Board processes. The report gives
time for a formal warning should progress towards a milestone be lacking, which will allow CalAm and other stakeholders to prepare for step-wise reductions through development of
additional supplies, to generate additional credits, or to implement additional conservation
6
Numerous commenters have asserted that the milestone approach inappropriately burdens ratepayers and water
users for Cal-Ams unlawful diversions, and that therefore the CDO should impose monetary fines in-lieu-of requiring
diversion reductions. The remedies of issuing a CDO and imposing penalties for unlawful diversions are not mutually
exclusive, however, and payment of a penalty does not authorize continuing violations. The penalty addresses past
violations; the law still requires elimination of future violations. Moreover, the argument that the State Water Board
should impose penalties in-lieu-of requiring elimination of unlawful diversions fails to recognize the connection
between Cal-Ams diversions and the ratepayers Cal-Am diverts water only for the purpose of serving it to
ratepayers, whose costs have been artificially lowered and expectations of supply have been artificially raised
because of diversions in excess of the available lawful supply. California law prohibits both the diversion and the use
of water without a lawful right. The State Water Boards concern is not forcing one party or another to bear a burden,
but is rather to encourage compliance, and both Cal-Am and its customers have a role in achieving that outcome.
ATTACHMENT A
measures. It also provides for the opportunity for the State Water Board to re-assess whether
to impose EDL cuts where the anticipated failure to meet a milestone is not reasonably within
the control of the Applicants.
The annual report on the state of the fishery gives the State Water Board additional assurance
that an extension of the compliance period will not cause undue harm to the fishery. If the
restoration measures planned are not undertaken or fail to achieve the improvements that this
order relies on in part, then the report will recommend adaptive management measures.
The foreseeable consequences if State Water Board were not to extend the compliance
schedule also provide reasons to extend the schedule.
Without amendment of WR 2009-0060s deadline, Cal-Am would need to cease its unlawful
diversions from the Carmel River by the end of December 2016. This would mean that CalAms diversions from the Carmel River would be limited to 3,376 afa, plus whatever lawful
diversions are available in the diversion seasons under Permit 21330, and Permits 20808A and
20808C for the ASR project, plus any water available under transfers from other rights holders
on the Carmel River. Because the Cal-Am service area continues to rely on thousands of acrefeet per year of unlawful diversions, a reduction to lawful levels would require immediate and
substantial curtailment of use, and the purchase and importation of additional supplies at costs
previously believed to be untenable. Since 2009, the average total reported diversions in the
Carmel River basin under other confirmed or claimed rights are approximately 2,000 afa. But,
there is no indication that users are willing or able to transfer that amount of water for use in the
Cal-Am service area. State Water Board staff have calculated that the annual average
residential per-capita usage in the Cal-Am service area from June 2014 through May 2016 was
55 to 57 gallons per person per day, based on reporting required under emergency
conservation regulations. This level is in the lowest 12% of urban water users in the state.
During this period, such residential use accounted for between 40 and 70% of total usage.
Numerous commenters have suggested that additional measures would cause economic harm,
and could potentially affect health and safety.
With respect to the claims of potential health and safety impacts, there is no established level of
per capita water use required for health and safety in the U.S. or California. The State Water
Board has used 50 gallons per person per day as a benchmark for drought evaluation of
diversions just slightly under the amount typically considered for indoor use. Some Coastal
California communities have achieved averages of approximately 40 gallons per person per day
during the ongoing drought emergency. The standards adopted by the United Nations General
Assembly in 2010 to implement a basic human right to water require 50-100 liters per person
per day (13-26 gallons).
The State Water Board recognizes that requiring major reductions in water use rates over a
relatively short period could cause substantial adverse economic impacts, and even greater
inconvenience. Rapid curtailments in water use and implementation of rationing may be
necessary, however, to end unlawful diversions on the Carmel River if the area continues to fail
to develop alternative supplies. Economic impacts are a consideration in establishing a
schedule of compliance, but cannot justify a decision not to require compliance. This order
allows for cuts to occur on a predictable schedule, should the planned projects not meet
development milestones, and also sets forth a clear method to address health and safety
10
ATTACHMENT A
concerns as the reductions of 1,000 afa for each milestone missed occur. The plans also allow
time for and provide incentive for additional innovation in water supply planning should the
processes underway fail.
To the extent that additional demand reduction and immediate supply acquisition efforts fail,
Cal-Am would face significant fines. Each day of violation of a CDO accrues a potential
administrative penalty of $10,000 in certain drought years, or of $1,000 in wetter years.
(See Wat. Code, 1845, subd. (b)(1).)
This administrative penalty is in addition to the potential administrative civil liability penalties for
unlawful diversion of water under Water Code section 1052, which may be imposed for all
unlawful diversions, not just those which are in excess of the levels set in the CDO. Such
penalties are up to $1,000 per day and $2,500 per acre-foot of unlawfully diverted water in
certain drought years, and up to $500 per day in wetter years. (See Wat. Code, 1052, subd.
(c).) Thus, in wetter years, Cal-Am would face approximately $550,000 for each year of
violation of the CDO. In certain drought years, such as those the state is currently experiencing,
Cal-Am could face over $4 million per year of violation in per-diem penalties, in addition to up to
$2.5 million in penalties for every 1,000 acre-feet that the company diverts unlawfully. These
penalties would be deposited in the Water Rights Fund for the state, rather than being used
directly to fund a more stable water supply for the Monterey Peninsula. To the extent that
Cal-Am or others dispute the imposition of fines, the process could result in additional
expenditures of time and resources on issues related to the peninsulas lack of water supply, but
that do not have the potential to provide a long-term solution. The CPUC would determine the
question of whether these penalties would ultimately be borne by Cal-Am as a corporation or by
the areas ratepayers, or whether the burden of these penalties would be shared.
(See Cal. Const., Art XII, 6; Pub. Util. Code, 427, 727.5.)
The result of an immediate reduction in pumping such that Cal-Am is taking only lawful supplies
by the end of December 2016 is likely to divert time and resources from building a permanent,
lawful supply, and to cause significant hardship to the residents of the Monterey Peninsula and
to have broad economic impacts.
An immediate end to unlawful diversions would provide significantly more water for the fishery,
and NMFS continues to have serious concerns regarding the impact of diversions on the
fishery. However, NMFS supports extension of the CDO for the 6 years requested, under the
conditions outlined for fishery protection, habitat restoration and rescue efforts, so long as
sufficient monitoring of the fishery occurs.7 Environmental organizations with longstanding and
immediate experience in the area similarly support the limited extension of the compliance
period, as conditioned.
Some comments have proposed specific additional measures during the compliance period in order to mitigate
impacts to the Carmel River fisheries. The State Water Board does not have before it sufficient information regarding
the potential efficacy, need for, and cost of these measures, and is reluctant to re-balance the suite of priorities that
NMFS has expressed without this information. This order provides for an annual fisheries report that includes the
opportunity for recommendations for any adaptive management measures, including those suggested by
commenters.
11
ATTACHMENT A
Amending the existing compliance schedule in WR 2009-0060 is appropriate in light of the

fishery agencys support, the substantial mitigation measures that are completed, ongoing and
planned for the immediate future, and the substantial hardships in immediately cutting off
unlawful diversions where there is no clear alternative supply.
For the reasons discussed above, the Board will extend the CDO in a manner following the
applications broad approach. This order does, however, make modifications to the
applications proposal, as discussed below.
5.2
Adoption of Initial Effective Diversion Limit
Cal-Ams application proposes a starting Carmel River diversion limit of 8,310 acre-feet per
annum, which is approximately 1,000 acre-feet less than the requirement of WR 2009-060 for
WY 2015-16, and approximately the five-year average of pumping from WY 2009-2010 until
WY 2012-2013. Staffs Preliminary Recommendation had suggested reducing this limit to
7,990, which is the most recent six-year average of diversions with adjustments to reflect
modifications to ASR accounting.8
A table comparing the various average diversion levels over the past few years is below:
Requested Limit
8,310 af
Unadjusted Averages
WY 2009/10 to 2013/14
WY 2009/10 to 2014/15
WY 2010/11 to 2014/15
8,348 af
8,162 af
7,836 af
Averages Adjusted - New ASR Accounting

WY 2009/10 to 2013/14
WY 2009/10 to 2014/15
WY 2010/11 to 2014/15
8,143 af
7,990 af
7,733 af
Applicants submitted a letter in response to the preliminary recommendation requesting again

that the State Water Board set the EDL at 8,310.9 The submittal included additional information
on the proposed EDL, demand levels during the historic drought, and the scheduled decreases
in pumping from the Seaside Basin10 under the management plan ordered under the Seaside
Groundwater Basin Adjudication, California American Water v. City of Seaside (Monterey
County Superior Court, Case Number M66343). This information indicates that, because of a
scheduled reduction in allowable pumping from the Seaside Groundwater Basin of
approximately 400 afa starting in WY 2017-2018, setting the diversion limit at 7,990 afa would
require improvement on conservation levels from those achieved during the historic drought.
8
As described above, the application proposes counting only the first 600 acre-feet of ASR pumping in any water
year towards the EDL.
9
A number of additional commenters also wrote in support of setting the diversion level at 8,310, either
independently or in explicit support of the Applicants letter.
10
Cal-Ams major alternative supply to Carmel River water is groundwater extracted from the Seaside Groundwater
Basin, an adjudicated basin regulated by a watermaster. Due to a continued negative gradient for seawater intrusion,
there is a ten percent reduction every three years in to the production allocations to the Basin users, including CalAm. According to the Watermaster Report for WY 2014-15, the watermaster has implemented another ten percent
reduction. Cal-Am exceeded its allotments from the Basin in 2014-2015.
12
ATTACHMENT A
Thus, setting the EDL at 7,990 would therefore require immediate efforts to lower demand or
cultivate alternate sources, rather than only requiring such efforts if milestones are missed. This
would potentially undermine one of the benefits of the milestone structure namely, allowing
parties to focus on development of the primary water supply projects already underway.
The only comments submitted in support of lowering the proposed EDL were submitted by
Planning and Conservation League and the Sierra Club, prior to the submittal of Cal-Ams
revised application. The two environmental organizations have submitted a new joint letter
explaining that they now support the EDL level of 8,310 for two primary reasons: (1) Cal-Am
has entered into a forbearance agreement with Rancho Caada which will increase flows in the
river by 300 afa, reducing the fisheries impact of a slightly higher pumping level than that used
over the past three years; and (2) the agreements to accelerate the Pure Water Monterey
project indicate that it will provide water by 2018, resulting in an EDL after that date of 4,810.
For the reasons discussed above, this order adopts an initial EDL of 8,310, despite the fact that
diversions at this level would constitute an actual increase in Carmel River diversions over those
in recent years, and would likely result in Cal-Am accruing a significant number of credits prior
to implementation of further restrictions on Seaside Groundwater Basin diversions.11
5.3
Modifications to Cal-Ams Application
5.3.1
Changes to Proposed Credit Framework
As discussed above, allowing Cal-Am to generate credits for reducing unlawful diversions from
the Carmel River below the EDL is a worthwhile tool to encourage continued efficiency and
conservation measures, as well as to encourage investment by various parties in development
of water supply and re-use projects. Any additional reductions in diversions are likely to assist
the fishery. However, allowing too generous accrual and use of credits threatens to undermine
the basic principle of having a substantial drop in diversions for failure to meet a milestone and
of ensuring that the diversion limits are ratcheted down such that unlawful diversions end by
December 31, 2021 regardless of whether Cal-Am meets the milestones.
Therefore, this order adopts the concept of credits, but makes a minor adjustment to the
proposed method of their accrual and use.
The order sets a clear limit to the number of credits that can be used in any year to 750 acrefeet. This 750 acre-foot limit prevents the entire reduction from a missed milestone (and its
associated incentive to meet deadlines) from being cancelled out by significant accrual of
credits.
Cal-Am also proposes limiting the quantity of credits available for use in any one year, but using
a different calculation for this limit. The application proposes limiting carryover credits once the
non-ASR total production from the Carmel River plus the amount of ASR water recovered that
year exceeds the sum of EDL + 750 acre-feet. Because Cal-Ams pumping from Carmel River
to ASR storage typically often exceeds the amount of ASR recovered that year (due to
allowable ASR carryover), the value of non-ASR water plus ASR recovery is less than the
Carmel River production counted under the EDL in most years. Thus, under the calculation
method in the application, Cal-Am could use credit to pump up to 1,350 acre-feet above the
11
Since the adjusted average for usage in the last six years is 7,990 afa, using an EDL for 8,310 afa is likely to result
in accrual of approximately 400 afa of credits in 2015-2016 and in 2016-2017, prior to enactment of the next
reductions in Seaside Groundwater Basin pumping.
13
ATTACHMENT A
otherwise-applicable limit, if it had diverted 600 or more acre-feet to storage in that year and had
not recovered that amount from storage. In simpler terms, there would potentially be no
reduction in diversions for missing a milestone during a year when there is water banking under
the ASR, which could undermine the incentives for compliance, and the step-down structure
towards ending unlawful diversions by the end of December 2021.
Additionally, it is easier to understand, comply with, and enforce the order when it treats ASR
water in the same manner, rather than counting it in different ways for different purposes.
5.3.2
Changes to Proposed EDL Following Late Achievement of Milestones
This order adjusts Cal-Ams proposed accounting system by modifying the requested
elimination of step-wise reductions when compliance with a milestone is achieved late. Under
the application, Cal-Am proposes that the 1,000 afa reduction in the EDL be eliminated in the
water year following late achievement of a milestone. This proposal reduces too greatly the
incentive to meet a milestone. Additionally, it does not provide meaningful incentives for
stakeholders to adhere as closely as possible to proposed timelines, even in the event of a
delay. The order requires that for milestones achieved within the month following the deadline,
the continuing reduction shall be 250 afa. For those achieved between one and six months
after the deadline, the continuing reduction shall be 500 afa. For milestones achieved between
six and nine months after the deadline, the continuing reduction shall be 750 afa. The 1,000 afa
reduction to the EDL shall remain for milestones achieved more than nine months after the
deadline. This structure provides meaningful incentives for adhering as closely as possible to
the timelines proposed. Additionally, as discussed below in the Changes to EDL Accounting
section, this order permits the accrual of credits for up to 50 percent of instream flow
agreements, upon approval of the Deputy Director for the Division of Water Rights.
5.3.3
Changes to Milestones
5.3.3.1 New Milestones

This order adds two milestones to those proposed. These additions are necessary to track
progress towards completion of the Pure Water Monterey recycled water project, even in the
face of delays for the review of the desalination project. The first added milestone, for WY
2015-2016, is for CPUC approval of the Water Purchase Agreement for Cal-Ams purchase of
water from the Pure Water Monterey Project, and of construction of the Cal-Am components of
the Pure Water Monterey facilities. On April 25, 2016, Administrative Law Judge Sandoval ruled
that the Pure Water Monterey portions of Cal-Ams pending request for a certificate of public
convenience and necessity should be expedited. The order set an accelerated schedule for
hearings and a decision on Cal-Ams ability to purchase and convey water from the recycled
water project, with a decision anticipated in August 2016. The joint Applicants letter of
June 29, 2016 informed the Board that the CPUC has subsequently issued a ruling, on
June 10, 2016, that includes a newly-noticed workshop and public hearing that will address the
Pure Water Monterey Project. Cal-Am has filed a motion to the CPUC to confirm whether a
decision is still anticipated on August 18, 2016. Absent such confirmation, Applicants have
requested that the deadline for meeting this milestone be set for the end of December 2016,
rather than the September 30, 2016 date proposed in the preliminary staff recommendation.
This order sets December 31, 2016 as the deadline for meeting the milestone, but notes that,
should there be additional delay in the decision or a denial, the entire 1,000 afa reduction in use
would occur for the 2016-2017 water year, despite the extension of the deadline.
14
ATTACHMENT A
The order also adds a second milestone for start of construction of the Cal-Am portion of Pure
Water Monterey Project to track progress on this Pure Water Monterey Project, for WY 20162017.
The Applicants have affirmed in their April 2016 application, and in their letter of June 29, 2016,
that they anticipate water deliveries to begin under the Pure Water Monterey project in 2018.
This timeline is significantly accelerated compared to the timeline in the initial application, and is
based on the CPUCs ruling expediting proceedings for this project. In the initial application, the
start of construction of the Pure Water Monterey project facilities constituted part of a WY 20172018 milestone. However, in the April 2016 application, this milestone was pushed back to
2018-2019 in its entirety, including the Pure Water Monterey portions. This order returns the
Pure Water Monterey construction milestone to WY 2017-2018, as there is no indication that
such an extension is necessaryacceleration rather than delay of the project is anticipated.
5.3.1.2 New Limit to Milestone Reductions
This order additionally limits the cuts to the EDL for missing a milestone when the diversions
from the Carmel River in a particular water year are reduced to lawful levels. This addition is
necessary because the Pure Water Monterey Project is anticipated to begin providing 3,500 afa
to the Cal-Am service area, with water deliveries beginning in 2018. While this amount of water
is insufficient on its own to eliminate the threat of unlawful diversions, implementation of the
project followed by a failure to meet milestones related to the desalination project could result in
the EDL falling below lawful pumping levels. Implementation of Pure Water Monterey and use
of significant ASR water in the same water year could allow Cal-Am to pump lawfully at a level
above the EDL if milestones are missed. However, as ASR water is not always available, the
CDO would not likely be lifted under this scenario: termination of the CDO requires that Cal-Am
have a permanent supply available.
5.3.1.3 Requirement to Revisit Milestones Based On Alternative Supply Projects
In a final change to the proposed milestones, this order adds the requirement that Cal-Am
submit revised milestones within 60 days of CPUC approval of any water purchase agreement
with Cal-Am for a major water supply project not specified in the milestones receives CPUC
approval.
Two competing desalination projects at Moss Landing are currently undergoing environmental
review: the Peoples Moss Landing Water Desalination Project and the Deep Water Desal
Project. Proponents of both projects project that they could be permitted and built to begin
serving water by 2019. The Peoples Moss Landing Water Desalination Project is a proposed
13,400 afa project that could serve the North Monterey County and Monterey Peninsula
communities. The Moss Landing Harbor District is the lead agency for environmental review.
The facility would use existing open ocean intakes that operate under proven technologies, and
would be built on a previously-used industrial site. The use of these facilities could significantly
reduce the cost of the facilities, and therefore of the water produced.
The Deep Water Desal Project is a proposed 25,000 afa project that could serve from
Santa Cruz to the Monterey Peninsula, and east to Salinas. The facility would use open ocean
intakes that draw deep ocean water, with the goal of lessening impacts on ocean organisms. It
would be run conjunctively with a computer data center, to reduce the energy demand of each
15
ATTACHMENT A
of the two facilities, as compared to separate operation. The District has identified the Deep
Water Desal Project as a potential supply project for the service area, should Cal-Ams
proposed desalination facility not be built.
Open ocean intakes can cause significant impacts to the ocean. The State Water Boards 2015
amendments to the Ocean Plan require that subsurface intakes be infeasible, including
consideration of alternative siting and sizing of facilities, before issuance of a permit for a
surface intake of ocean water. (State Water Board Resolution No. 2015-0033, approved by
Office of Administrative Law on January 28, 2016.) The Coastal Commission would also need
to permit construction of either of these facilities, and The Public Utilities Commission would
need to issue a Certificate of Public Convenience and Necessity in order for the facilities to sell
water in the Cal-Am Service Area.
Additionally, the Central Coast Regional Water Quality Control Board has suggested that there
is significant untapped potential in recycling water from wastewater treatment plants owned by
Cal-Am and others in the Salinas area. Discharges that are not currently recycled could be
routed through the existing water recycling facilities operated by the Monterey Peninsula
Reginal Water Pollution Control Agency.
Cal-Ams application does not include milestones for either of these larger desalination facilities,
and neither of the project proponents have submitted usable potential amendments to the
existing milestones.12 Yet, the construction of either Moss Landing facility could provide
sufficient water to end unlawful diversions from the Carmel River, were its water approved for
sale within the Cal-Am Service Area. Other large projects, such as the wastewater recycling
augmentations mentioned above, may emerge as review of the proposed projects continues.
The State Water Boards interest is in ending unlawful diversions from the Carmel River, rather
than in supporting a particular facility. The specification of the MPSWP desalination and water
recycling facilities in the milestones in this order are based on
Cal-Ams application and on evidence suggesting that they have made regulatory progress and
are capable of ending unlawful diversions by the end of 2021. Should either of the other large
desalination projects, or any other major water supply project, emerge as an alternative to all or
part of the MPWSP, the State Water Board should have the opportunity to consider amendment
of the proposed milestones.
5.3.1.4 Changes to EDL Accounting
The order adopts some of the new water diversion accounting methods proposed, in order to
encourage full development of new water supplies. But it also amends or rejects other
proposed changes that undermine the principle that new supplies must offset current unlawful
diversions. It also clarifies whether or not various sources of additional supply count towards
the EDL, rather than raising the EDL for specific supplies, in order to reduce confusion about
what the EDL actually is.
12
Water Plus has suggested requiring Cal-Am to support the Peoples Water Supply Project, but as discussed above,
the State Water Board supports a more diversified approach at this point, given the track record for large water
supply projects in the area.
16
ATTACHMENT A
The order adopts a new method of accounting for lawful winter diversions from the Carmel River
to aquifer storage for later recovery, under the ASR. These changes encourage Cal-Am to
maximize diversion during the winter months when sufficient water is available to meet bypass
flows, and encourage further development of facilities to capture flows when they are available.
The ASR permits authorize diversion of 5,326 afa of winter high flows, but the pumping and
transportation pipeline facilities have limited the diversions to a maximum of about 1,110 af.
Because the fisheries impact of diversions during periods of higher flow in winter, and under
specified bypass requirements, are significantly less than the impact of the same amount of
diversion in the lower-flow summer months, it makes sense to implement a strong incentive
signal in the pumping limits to encourage reliance on this pumping rather than on summer
diversions. Because the pumping continues to have some impact on the fishery, the first
600 afa will continue to count towards determination of the EDL. Additional pumping will not be
counted in the EDL.
The application recommends that water delivered on an interim basis by the Malpaso Water
Company LLC to Cal-Am under State Water Board License 13868A be added to the EDL for the
water year. License 13868A requires that all water diverted under the right and provided to
Cal-Am for municipal purposes be for the purpose of reducing Cal-Ams unlawful diversions13 in
2015, that 50 afa be used to reduce unlawful diversion in 2016, and that 25 afa be so used in
2017. Because these amounts are used to offset unlawful diversions rather than increase
deliveries, they should not increase the EDL. The order does add clarification, provided in State
Water Board Division of Water Rights Decision 2005-0001, regarding the extent to which
Condition 2 of WR 2009-0060 applies to water that Cal-Am may wheel on behalf of Malpaso
Water Company. Namely, where Cal-Am is the purchaser of the water, Condition 2 applies.
Where Malpaso Water Company sells to a customer outside the current service area, however,
Condition 2 does not apply. The order also establishes monthly reporting requirements to
monitor implementation of this condition.
The application additionally requests that fifty percent of the water from other water supply
projects and from forbearance agreements be used to increase the EDL, with the other fifty
percent of the water being used for instream use. Increasing the EDL is contrary to the basic
premise of the enforcement action that new water supplies must offset current unlawful
diversions. However, in the event that a milestone is missed, small projects and instream flow
agreements may prove to be the fastest and best way to obtain supplies and river protection in
the short term. The credit system as proposed provides incentives for small water supply
projects and conservation: it does not, however, provide incentives for instream flow projects,
as increasing instream flows does not directly14 affect water supplies or demand. Therefore,
this order adds provisions to incentivize such projects.15 This order provides that fifty percent of
the flows provided through forbearance agreements or other instream water dedications may be
accrued as carryover credits, provided that the Deputy Director reviews the agreements to
ensure that the agreement provide increased flows in the river as envisioned.
13
See Division of Water Rights Decision 2005-0001, Condition 2.

In certain winters, increasing instream flows above the ASR points of diversion may have minor impacts on the
number of days that ASR pumping can occur, by affecting whether bypass flows are achieved. However, these
changes are likely to be minimal as the bypass flows are set to be triggered only when there are high flows. It is
unlikely that flows would remain in the range where an instream flow dedication makes the difference in the ability to
pump ASR supplies.
15
This change did not appear in the preliminary staff recommendations distributed on June 17, 2016.
14
17
ATTACHMENT A
It is worth noting that the temporary non-diversion of water, and its use instream for fisheries
and instream habitat improvement purposes may be considered a reasonable and beneficial
use of water in some circumstances. Consistent with state policy and water rights law, the State
Water Board encourages appropriately-documented forbearance agreements to improve
fisheries flows. Short-term agreements and agreements regarding riparian rights may be
structured in such a manner that the subject rights are not prejudiced. The substantive
standards of Water Code section 1707, and various decisions approving such instream flow
dedication, provide guidance as to the appropriate manner by which to construct forbearance
agreements that provide real benefits to instream flow and which do not prejudice the water
holder dedicating the flow or the rights of other lawful water users.
The application requests that the State Water Board provide assurances regarding a particular
forbearance agreement with Rancho Caada for a significant amount of water in calendar years
2016-2019. This agreement generates funding for a planned permanent land conservation and
restoration project, and for the potential permanent retirement of associated water diversions.
This proceeding is not the context to make definitive findings regarding the water rights at issue
in the agreement: This is neither a noticed adjudicative proceeding regarding the rights at
issue, nor a rulemaking regarding instream fishery needs. However, it is worth noting that a
four-year cessation of diversion cannot be the basis for forfeiture, and that the State Water
Board has recently approved a water right change petition to add instream beneficial use and
use for wetland protection in the vicinity.
5.3.1.5 Changes as to Form
Attachment 1 to the Application recommends embedding the changes proposed in the ordering
section of WR 2009-0060. Because WR 2009-0060 was issued after an evidentiary hearing,
and is based on the evidence presented therein, the State Water Board has determined that it is
clearer to issue a separate order based on the Water Code section 1832 application.
5.3.1.6 Modifications to Reporting
This order generally adopts the reporting provisions requested in the application, but modifies
the timelines to better fit State Water Board needs and to give NMFS additional authority over
the selection of a contractor to prepare the fisheries report, in the event that NMFS cannot itself
prepare the report.
6.0
CONCLUSION
For the reasons discussed above, the State Water Board approves, with modifications,
Cal-Ams application to modify the compliance schedule in WR 2009-0060.
18
ATTACHMENT A
ORDER
NOW, THEREFORE, IT IS ORDERED THAT as of the effective date of this Order, Cal-Am
shall cease and desist from the unauthorized diversion of water from the Carmel River in
accordance with the following schedule and conditions.
1.
This Order shall supersede the requirements in State Water Board Orders WR 20090060, 95-10 and any other State Water Board orders affecting Cal-Ams diversions from the
Carmel River, to the extent stated herein, or to the extent that there is an irreconcilable conflict
between the requirements here and those orders. All other requirements in State Water Board
orders affecting Cal-Ams diversions from the Carmel River remain in effect until terminated by
operation of law or action of the Stat Water Board.
2.
Cal-Am shall diligently implement actions to terminate its unlawful diversions from the
Carmel River and shall terminate all unlawful diversions from the river no later than
December 31, 2021. This date supersedes the December 31, 2016 date in State Water Board
Order WR 2009-0060, ordering paragraph 1.
3.
At a minimum, Cal-Am shall adjust its diversions from the Carmel River in accordance
with the following terms and conditions. These terms and conditions supersede the annual
reductions in State Water Board Order 2009-0060, ordering paragraph 3.a.(2), after the
effective date of this Order:
Effective Diversion Limit: The limit set forth in this Condition 3.a., as may be further
a.
reduced or increased pursuant to the terms and conditions of this Order, is referred to as the
"Effective Diversion Limit."
i.
Immediate Reduction: Commencing on October 1, 2015 (Water Year 2015-2016) the
Effective Diversion Limit shall be 8,310 acre-feet per annum (afa). This Effective Diversion
Limit shall not be exceeded through December 31, 2021 except as provided in condition 3.b.ii
or 3.c. of this Order. This limit supersedes the reduction limit required under Order 2009-0060
for Water Year 2015-2016.
b.
Adjustments to the Effective Diversion Limit:
i.
Pure Water Monterey Groundwater Replenishment Project Offset: In any year that
Cal-Am delivers water stored in the Seaside Groundwater Basin as part of the Pure Water
Monterey Groundwater Replenishment Project to its customers for use, the Effective Diversion
Limit shall be reduced by one acre foot for every acre foot of Pure Water Monterey Groundwater
Replenishment Project Water so delivered. If this reduction will result in the Effective Diversion
Limit for that year being lower than Cal-Ams available lawful diversions from the Carmel River
in that year, Cal-Am may apply to the Deputy Director for a limitation of this condition such that
the provision will not limit lawful diversions.
19
ATTACHMENT A
ii.
Seaside Groundwater Basin Limitations: The Board may adjust the Effective
Diversion Limit if an unexpected reduction in Cal-Ams production allocation from the
Seaside Groundwater Basin, or access to water pumped makes the supply unavailable.
The Applicants 16 may request such relief whenever they can establish that access to water
in the Seaside Groundwater Basin is limited due to unexpected mitigation measures
imposed pursuant to the Seaside Basin Watermaster's Seawater Intrusion Response Plan, or
by the court pursuant to the Seaside Groundwater Basin Judgment in response to a detection
of seawater intrusion within the Seaside Groundwater Basin.
iii.
Carryover: After October 1, 2015 if Cal-Am's diversions from the Carmel River during a
given water year are less than the Effective Diversion Limit for that water year, Cal-Am will
accumulate credit for the difference between the Effective Diversion Limit and Cal-Am's actual
diversions. Additionally, Cal-Am may generate credits through instream flow agreements, as
described in 3.b.xii, below. Any such credit may be carried over to offset an exceedance of the
Effective Diversion Limit prior to December 31, 2021, subject to the restriction in Paragraph
3.b.iv below, and subject to the overall cap on diversions in Paragraph 3.a.i., above.
iv.
Cap on Carryover: The amount of carryover water accumulated under Paragraph
3.b.iii that may be credited in any one water year shall not exceed 750 afa.
v.
Milestones: For purposes of calculating a reduction to the Effective Diversion Limit,
the following Milestones and Deadlines will apply:
Water Year
Milestone17
Deadline
2015-2016 CPUC approval of (1) the Water Purchase Agreement for

December 31, 2016*
Cal-Ams purchase of Pure Water Monterey water, and of
(2) construction of the Cal-Am components of the Pure
Water Monterey conveyance facilities,18 including the
Monterey Pipeline and pump station.
2016-2017 Start of construction of the Cal-Am components of the Pure September 30, 2017
Water Monterey project, meaning commencement of
physical work after issuance of required regulatory permits
and authorizations to begin work.
16
Applicants refers to the joint applicants for the request to modify State Water Board Order WR 2009-0060: CalAm, the Monterey Peninsula Regional Water Authority, the Monterey Peninsula Water Management District, the
Pebble Beach Company, and the City of Pacific Grove.
17
If at any point prior to completion of the facilities listed in these Milestones the CPUC authorizes Cal-Am to acquire
more than 1,000 afa of water from an alternative source, then the following shall occur. Cal-Am shall submit to the
Executive Director within 60 days a revised set of milestones taking this water supply source into account. If the
proponents of the alternative project are unable to reach concurrence with Cal-Am on revised milestones to propose,
the proponents may also submit revised milestones within that time period. The Executive Director shall determine
whether to bring forward a recommendation to the State Water Board regarding amendment of the milestones.
18
Cal-Am components of the Pure Water Monterey Project refers to the pump station and pipeline within or leading
to Cal-Ams Service Area needed to transmit water to Cal-Ams service area.
20
ATTACHMENT A
Water Year
2017-2018
Milestone17
Issuance of a Certificate of Public Convenience and
Necessity to Construct the Monterey Peninsula Water
Supply Project Desalination Plant ("MPWSP Desalination
Plant") by the California Public Utilities Commission.
Deadline
September 30, 2018
September 30, 2019

2018-2019 Start of construction for any of the Cal-Am Components of
19
the MSWSP Desalination Plant , meaning commencement
of physical work after issuance of required regulatory
permits and authorizations to begin work.20
2019-2020 (1) Drilling activity for at least one MPWSP Desalination Plant September 30, 2020
source water production well21 complete; (2) foundation and
structural framing complete for MPWSP Desalination Plant
pretreatment seawater reverse osmosis, and administration
buildings at desalination plant; (3) excavation complete for
MPWSP Desalination Plant brine and backwash storage
basins; and (4) 25% of MPWSP Desalination Plant
transmission pipelines installed based on total length,
including 100% installation of the Monterey Pipeline and other
ASR related improvements.
September 30, 2021
2020-2021 For MPWSP Desalination Plant: (1) 50% of drilling activity
complete for source water production wells based on total
number of wells required; (2) mechanical systems for brine
and backwash storage basins complete; (3) construction of
filtered water tanks and finished water tanks complete; (4)
50% of transmission pipelines installed based on total length.
December 31, 2021
2021-2022 Substantial completion of the Cal-Am Components of the
and beyond MPWSP Desalination Plant, meaning the Cal-Am Components
are sufficiently complete and appropriately permitted to allow
delivery of MPWSP Desalination Plant produced potable water
to Cal-Am's Monterey Main system, eliminating further CalAm diversions of Carmel River water without valid basis of
right
* It is anticipated that this milestone will be achieved during Water Year 2015-2016. The deadline
provides a three-month extension in the event that it occurs soon after the end of the water year.
vi.
Reductions to the Effective Diversion Limit Based on Missed Milestones: The
following reductions to the Effective Diversion Limit shall apply if an applicable Milestone
Deadline is not met:
19
For purposes of this proposal the Cal-Am Components of the MPWSP Desalination Plant include: source water
production wells; desalination plant; brine disposal system; and transmission pipelines
20
Such work may include, among other things, any of the following: desalination plant site grading and preparation;
electric utility installation; yard piping; subsurface excavation for structural foundations; and transmission pipeline
installation.
21
Not including construction of the MPWSP Desalination Plant Test Well completed in 2015.
21
ATTACHMENT A
Water Year
Milestone
Missed
Reduction in Effective Diversion Limit
Date
Reduction
Assessed
2016- 2017
1,000 AFA
Dec. 31, 2016*
2017- 2018
1,000 AFA
Oct. 1, 2017
2018- 2019
1,000 AFA
Oct. 1, 2018
2019- 2020
1,000 AFA
Oct. 1, 2019
2020-2021
1,000 AFA
Oct. 1, 2020
Oct. 1, 2021
Dec 31, 2021
1,000 AFA
Oct. 1, 2021
* The entire 1,000 AFA reduction for failure to meet this milestone must occur in the 9 remaining months
of WY 2016-2017.
If a Milestone is not achieved by its Deadline but is subsequently achieved, the 1,000 afa
reduction to the Effective Diversion Limit shall be amended on the first day of the water year
following achievement of the Milestone, as follows. For Milestones achieved within the first
month following the deadline, the reduction shall be 250 afa. For Milestones achieved between
one and six months after the deadline, the reduction shall be 500 afa. For Milestones achieved
between six and nine months after the deadline, the reduction shall be 750 afa. The 1,000 afa
reduction to the Effective Diversion Limit shall remain for milestones achieved 9 months after
the deadline or later.
If the reductions required under this subparagraph will result in the Effective Diversion Limit for
that year being lower than Cal-Ams available lawful diversions from the Carmel River in that
year, Cal-Am may apply to the Deputy Director for Water Rights for a limitation of this section
such that the provision will not limit lawful diversions.
vii.
Illustration: The following table illustrates the effect of the reduction in the Effective
Diversion Limit over the term of this Order, and assumes no Deadlines have been met and no
carryover credits have been applied under Paragraph 3.b.iii, and no additional water rights have
been obtained or other adjustments made to the Effective Diversion Limit. The result is an
elimination of unauthorized diversions from the Carmel River on October 31, 2020 if no
Deadlines are met.
Water Year
EDL if All Milestones Missed, No Other

EDL Adjustments
2015-2016
8,310 AFA
2016- 2017
7,310 AFA
2017- 2018
6,310 AFA
2018-2019
5,310 AFA
2019-2020
4,310 AFA
22
ATTACHMENT A
Water Year
EDL if All Milestones Missed, No Other

EDL Adjustments
2020-2021
Legal limit
Thereafter
Legal limit
viii.
Joint Annual Report: Commencing in water year 2016-2017, at least 120 days prior
to each Milestone Deadline described in Condition 3.b.v, Cal-Am, in coordination with
Applicants, shall submit a joint report to the Deputy Director for Water Rights, describing
progress towards that Milestone, whether Applicants expect the Milestone to be achieved by
its Deadline and, if not, whether the Milestone will be missed for reasons beyond Applicants
control. Sufficient evidence supporting the reasons that missing a milestone is beyond the
control of Applicants shall be included for any further action related to such a claim.
If requested, Cal-Am, in coordination with Applicants, shall present written and/or oral
comments on the progress towards Milestones at a regularly scheduled State Water Board
meeting that falls at least 60 days after submission of the report. If the report indicates that a
Milestone is likely to be missed for reasons beyond Applicants control, the State Water Board
may make a determination during that meeting or at a subsequent meeting whether the cause
for delay is beyond Applicants control. If the State Water Board determines that the cause is
beyond Applicants' control, it may suspend any corresponding reductions under Condition
3.b.vi until such time as the Applicants can reasonably control progress towards the Milestone.
ix.
ASR Project: Commencing for water year 2015-2016, only the first 600 afa of the
amount of any water diverted to underground storage under State Water Board Permits 20808A
and 20808C as of May 31 of each water year shall be included in determining compliance with
the Effective Diversion Limit: Diversions greater than 600 afa in a single water year shall not
count as annual production of Carmel River water for the Effective Diversion Limit calculation.
This section supersedes State Water Board Order WR 2009-0060, ordering paragraph 3.a.(3).
x.
Sand City Desalination Plant: Any volume of water that is produced by the Sand City
Desalination Plant and not served to persons residing within the City of Sand City shall be
subtracted from the Effective Diversion Limit for the water year in which it is produced.
xi.
Pebble Beach: Pebble Beach Company (PBC) shall continue to annually submit, on
September 30, a report to the Deputy Director for Water Rights accounting for any additional
water that is diverted from the Carmel River as the result of an increased use of its remaining
District water entitlement. Any diversions from the river by Cal-Am to satisfy PBC remaining
entitlements from District shall not be considered in calculating compliance with the Effective
Diversion Limit. After December 31, 2021, Cal-Am shall not illegally divert water from the river
to supply the holders of PBC entitlements. This order supersedes the last sentence of
paragraph 3.a.(6) of State Water Board Order WR 2009-0060.
23
ATTACHMENT A
xii.
Supplemental Water Rights and Acquisitions: Provided Cal-Am is able to identify
suitable and willing transacting parties, Cal-Am will acquire supplemental Carmel River water
rights, and/or will pursue other Carmel River water acquisitions and water right changes in order
to increase flows in the Carmel River and decrease Cal-Am's unauthorized Carmel River
diversions ("Carmel River Flow Enhancement Program"). Cal-Am will implement the Carmel
River Flow Enhancement Program to the extent it can negotiate agreements with water right
holders. Such acquisitions or water right changes may include forbearance agreements, leases
and/or purchases of water rights along the Carmel River on a temporary or permanent basis,
and may include water right change approvals or permits (permanent or temporary) from the
State Water Board. The acquisitions may increase the proportion of Cal-Ams diversions that
are made under lawful right, or increase Carmel River instream flows during periods of lower
flow on the Carmel River. Instream flow agreements made with other parties can generate
carryover credits described in 3.b.iii. at 50% of the amount that the Deputy Director confirms
that the agreements have increased Carmel River flows without being diverted by other
downstream users. To claim the credits, Cal-Am must first submit the agreement and a
monitoring and reporting plan to the Deputy Director for concurrence. After concurrence in the
plan, Cal-Am shall implement the monitoring and reporting, and shall annually submit the
proposed credit amount for the water year within 2 months of the end of the instream flow
agreement or of the water year, whichever comes first. The amount shall become available as
credit in the amount approved by the Deputy Director.
xiii.
Malpaso Water Company: Water provided by the Malpaso Water Company LLC to
Cal-Am under water right License 13868A shall not be counted towards calculation of
compliance with the Effective Diversion Limit for the water year in which the water is provided to
Cal-Am to the extent that Cal-Am is merely transporting the water on behalf of Malpaso Water
Company to serve Malpaso Water Companys contracts with water users. To the extent such
water is used by Cal-Am to serve its customers, this water will be counted towards calculation of
compliance with the EDL, and shall serve to increase the portion of such diversion that are
made under lawful rights. Any use of the Malpaso Water Companys diversions shall be
consistent with the terms of License 13868A and Division Decision 2015-0001.
c.
Either Cal-Am or the District may petition the Deputy Director for Water Rights for relief
from reductions imposed under this Order. No relief shall be granted unless all of the following
conditions are met: (1) Cal-Am and the District continue the moratorium on new service
connections; (2) the demand for potable water by Cal-Am customers meets all applicable
conservation standards and requirements; and (3) a showing is made that public health and
safety will be threatened if relief is not granted. Any relief granted shall remain in effect only as
long as a prohibition on new service connections remains in effect, and compliance with
applicable conservation standards and requirements remains in effect. This section supersedes
ordering paragraph 3.b. of State Water Board Order WR 2009-0060.
4.
Status of Steelhead Fishery Report. During the extension period Cal-Am will provide
funding in an amount up to $175,000 per year for the preparation of an annual report that
evaluates the status of the threatened South-Central California Coast Steelhead Distinct
Population Segment ("SCCC Steelhead DPS") in the Carmel River ("Status of Steelhead
Fishery Report"). If possible, the annual Status of the Steelhead Fishery Report will be
24
ATTACHMENT A
prepared by the National Marine Fisheries Science ("NMFS") Southwest Fisheries Science
Center ("SWFSC"). If NMFS West Coast Region finds a significant change in the status of the
SCCC Steelhead DPS since the previous report (or, in the case of the first report, since the
effective date of this Order), NMFS West Coast Region may provide recommendations for
additional adaptive management measures to be taken with respect to the SCCC Steelhead
DPS in the Carmel River. If SWFSC cannot complete the Status of the Steelhead Fishery
Report for any or all years during the extension period, Cal-Am will designate another individual
or entity, in consultation with the other Applicants and other stakeholders, with requisite
expertise to complete the report. If NMFS objects to the choice, Cal-Am shall designate a
different individual or entity. If the NMFS West Coast Region cannot review the Status of the
Steelhead Fishery report in any or all years, Applicants and other stakeholders may develop an
alternative system for making adaptive management recommendations. Cal-Am will deliver the
report in a cost effective and efficient manner, and will work with Applicants, stakeholders, and
the preparer of the Status of the Steelhead Fishery Report to share resources, and to avoid
duplication of effort to lower the cost of the report to the extent practicable. The Status of the
Steelhead Fishery Report and any adaptive management recommendations shall be submitted
to the State Water Board by Cal-Am each year with the corresponding joint annual report.
5.
Additional Conservation Measures: Cal-Am has stated that it will implement an
additional $2.5 million of projects to improve fish passage and habitat during the four years
following adoption of this Order, as follows: improvements to the existing upstream fish
passage ladder and trap at Los Padres Dam ($0.2 million); installation of a fish screen at the
lower outlet pipe on Los Padres Dam ($0.8 million); a pit tagging program ($1.0 million); and a
through-reservoir survival study for Los Padres Reservoir ($0.5 million). If the above projects
are not implemented according to plans developed in coordination with the California
Department of Fish and Wildlife and the National Oceanic and Atmospheric Administration, the
State Water Board may revisit this Order to determine whether to make further adjustments to
protect public trust resources in the Carmel River.
6.
Carmel River Volitional Fish Passage: Cal-Am has substantially completed
downstream fish passage facilities at Los Padres Dam. If Cal-Am fails to remove the Old
Carmel River Dam and the Sleepy Hollow Ford before September 30, 2017, the State Water
Board may reopen this order to determine whether to make further adjustments to improve fish
passage in the Carmel River or otherwise restore public trust resources.
7.
On June 1 of each year, Cal-Am shall submit an operating plan to the Deputy
Director for Water Rights specifying the quantity of water it will supply from the ASR Project
for its customers after May 31 of each year. This plan shall provide for use of the water
between June 1 and September 30 of the water year the water was pumped from the Carmel
River, unless otherwise authorized by the fishery agencies. Cal-Am shall reduce its illegal
diversions from the Carmel River at the same rate ASR water is recovered from the
groundwater basin. ASR diversions remain subject to State Water Board Order
WR 2009-0060, ordering paragraph 3.c. This section supersedes ordering paragraph 4 of
WRO 2009-0060.
25
ATTACHMENT A
8.
In addition to the reporting required elsewhere in this order or required under
WRO 2009-0060 ordering paragraph 6, except as specified, Cal-Am shall provide and post on
its website the following information in quarterly reports:
a.
Monthly summaries of the total quantity of water produced from the Carmel River, and
other separate sources of water used by Cal-Am within the service area.
b.
Monthly summaries of the total quantity of ASR project water diverted from the river
under water right Permits 20808A and 20808C and stored in the Seaside Groundwater Basin,
including the separate accounting of the amounts pumped in excess of 600 afa. The monthly
reporting shall also state the quantity of ASR water recovered from aquifer storage and
beneficially used, and the current balance of ASR water remaining in storage in the Seaside
Groundwater basin. This paragraph supersedes WRO 2009-0060, ordering paragraph 6.(b).
c.
Monthly summaries of the quantity of water being supplied by the Malpaso Water
Company to Cal-Am and to Malpaso customers supplied using Cal-Am facilities. The reporting
shall identify the amount of water used at Cal-Ams existing meter connections and within the
Cal-Am service area, and the amounts used at new service connections served by Malpaso
Water Company. The monthly reports shall specify the quantity of water used to reduce
diversions from the river during the reporting period.
d.
Monthly summaries of the quantity of water produced by the City of Pacific Grove, and
the quantity of water used to reduce diversions from the river during the reporting period.
Cal-Am shall not deliver water produced by the City of Pacific Grove unless such use is
consistent with Resolution 2015-0070, paragraph 4.
e.
For the final quarter of each water year, the report shall include the quantification and
basis of any credits earned and of any amount being carried over for future years.
f.
An accounting of the progress towards completion of the Water Supply Project MPWSP
Desalination Plant and Pure Water Monterey Project that identifies all progressive steps
completed during the previous 12 months and the upcoming 12 months anticipated progress,
and discussion of potential setbacks that may beyond the Applicants control.
10.
Each report submitted by Cal-Am shall be certified under penalty of perjury and shall
include the following declaration: "I declare under penalty of perjury, under the laws of the State
of California, that all statements contained in this report and any accompanying documents are
true and correct, with full knowledge that all statements made in this report are subject to
investigation and that any false or dishonest statement may be grounds for prosecution."
11.
Cal-Am shall file quarterly reports of its diversions under Paragraph 5 (small project
implementation) of State Water Board Order WR 2009-0060. This section corrects an error in
State Water Board Order WR 2009-0060 ordering paragraph 7, which incorrectly identified the
relevant paragraph as State Water Board Order WR 2009-0060 ordering paragraph 3.
12.
The Deputy Director for Water Rights is authorized to modify the timing and the
content of the reporting required by all of the provisions of this Order to more effectively carry
out the intent of this Order.
13.
Cal-Am shall comply with all requirements of State Water Board Order 95-10, except
as provided in State Water Board Order WR 2009-0060, ordering paragraph 9, or except as
inconsistent with this Order.
26
ATTACHMENT A
14.
The Deputy Director for Water Rights is directed to closely monitor Cal-Am's
compliance with State Water Board Order 95-10, State Water Board Order WR 2009-0060, and
this Order. Appropriate action shall be taken to insure compliance with these Orders including
the issuance of additional cease and desist orders under Water Code section 1831, the
imposition of administrative civil liability under Water Code section 1055, and referral to the
Attorney General under Water Code section 1845 for injunctive relief and for civil liability. If
additional enforcement action becomes necessary, the Deputy Director is directed to consider
including in such actions all Cal-Am's violations of Water Code section 1052 since the adoption
of Order 95-10.
15.
The conditions of this Order, State Water Board Order WR 2009-0060 and State Water
Board Order 95-10 shall remain in effect until (a) Cal-Am certifies, with supporting
documentation, that it has obtained a permanent supply of water that has been substituted for
the water illegally diverted from the Carmel River and (b) the Deputy Director for Water Rights
concurs, in writing, with the certification.
CERTIFICATION
The undersigned Clerk to the Board does hereby certify that the foregoing is a full, true, and
correct copy of an order duly and regularly adopted at a meeting of the State Water Resources
Control Board held on July 19, 2016.
AYE:
NAY:
ABSENT:
ABSTAIN:
Chair Felicia Marcus

Vice Chair Frances Spivy-Weber
Board Member Tam M. Doduc
Board Member Steven Moore
Board Member Dorene DAdamo
None
None
None
Jeanine Townsend
Clerk to the Board
27

Agenda Report
FROM:

Item No: 6.
President Bill Kampe
SUBJECT: Appoint Councilmember Bill Peake of Pacific Grove to the Technical

Advisory Committee (TAC)
RECOMMENDATION:
It is recommended that the Water Authority Board Appoint Councilmember Bill Peake of
Pacific Grove to the Technical Advisory Committee.
DISCUSSION:
From our Joint Powers Agreement, Article 11:
The Board shall determine the purpose and need for such committees and the
necessary qualifications for individuals appointed to them. The chair and membership of
each committee may be constituted by such individuals approved by the Board of
Directors for participation on the committee.
Pacific Grove Councilmember Peake holds a Ph.D. in Mechanical Engineering and
spent his private industry career with Chevron in the area of reservoir engineering,
gaining considerable experience in how fluids flow through soils and rock. That
expertise would be particularly helpful to the Water Authority as it considers the upcoming Cal Am desal EIR/EIS.
Accordingly, staff recommends that the Water Authority Board appoint Bill Peake to the
TAC where he can contribute his expertise to future deliberations on the Water Supply
project and subsequent TAC recommendations to the Board.
FISCAL IMPACT:
None

Agenda Report

Item No: 7.
FROM:
SUBJECT:
Receive a Report, Consider Resolution 2016- 04 and Provide Direction

on the Contract for the Executive Director
RECOMMENDATION:
It is recommended that the Water Authority Board consider Resolution
2016-04 and provide direction to staff with regard to obtaining Executive
Director services for FY 2016-2017.
DISCUSSION:
At its meeting of March 10, 2016, the Water Authority Board approved the Board
President to extend the contract with the City of Monterey for Executive Director (ED)
services for FY 2016-2017. The Authority Board also requested the City extend Jim
Cullem's contract to June 30, 2017.
However, Monterey has since advised that it does not want to extend the Executive
Director contract into FY 2016-2017. The current contract expires on August 16, 2016.
In addition, the December 2015 decision of the Water Authority Board to remain
functioning throughout the recently approved 5-year CDO extension could create
problems with the TEMPORARY classification in an ED contract with any of the
Peninsula cities past December 31, 2016.
Accordingly, staff recommends the Authority obtain ED services by means of a direct
contract. Should the Authority Board decide to continue with Jim Cullem as ED, it could
do so by means of a contract with Cullem Management Services LLC. The contract
would be prepared by the Authority Attorney and signed by the Authority President.
Additional options could include the following:
- Rotate ED Duties between City Managers without a Designated ED
- Obtain ED services on a pro-bono basis
- Contract with one of the member cities for part-time PERMANENT ED
- Competitively advertise and award a contract for ED services
06/12
BUDGET CONSIDERATIONS:
The Executive Director (ED) compensation for FY 2016-2017 is budgeted at not-toexceed $85,000. Since the City of Monterey will not be providing the ED services in the
coming year, the $5000 budgeted for the City could be reallocated to the ED
reimbursement account.
Although the ED cost has historically been less than $75,000 per year, staff
recommends an additional $10,000 from the Reserve Account be appropriated for the
ED position, for a total budget of approximately $100,000 ( 33% increase).
Should the Board decide to enter into a contract with Cullem Management Services
LLC, the hourly rate would have to be increased to cover the overhead costs of the LLC.
ATTACHMENTS:
A- Resolution 2016-04
MPRWA RESOLUTION NO. 2016-XX
A RESOLUTION OF THE MONTEREY PENINSULA REGIONAL WATER AUTHORITY

AUTHORIZING THE AUTHORITY PRESIDENT TO EXECUTE A CONTRACT WITH
CULLEM MANAGEMENT SERVICES, LLC FOR EXECUTIVE DIRECTOR SERVICES
WHEREAS, Cullem Management Services, LLC (Cullem LLC) has been requested to
provide James. M. Cullem to serve the Monterey Peninsula Regional Water Authority
(MPRWA) as Executive Director, and
WHEREAS, Cullem is currently serving as the Executive Director for the MPRWA as a
part-time temporary employee of the City of Monterey through an Executive Director Services
contract between the MPRWA and the City of Monterey, and
WHEREAS, the City of Monterey has indicated that it will be unable to continue
providing Executive Director Services as described in Exhibit A to the MPRWA in FY 20162017, and
WHEREAS, Cullem has advised the Water Authority that his future service as the
Executive Director would have to be provided through Cullem LLC in order to provide adequate
insurance and liability protection and to avoid public sector employment classification issues,
and
WHEREAS, costs for provision of Executive Director Services through an LLC are
estimated to increase approximately 33% over current budget estimates to a revised total of
$100,000, and
WHEREAS, $5000 in funds budgeted for the City of Monterey to provide Executive
Director services as well as $10,000 from the Reserve Account could be reprogrammed to the
Executive Director compensation account,
NOW, THEREFORE, BE IT RESOLVED, that the Board President of the MPRWA is
hereby authorized to execute on behalf of MPRWA a Contract with Cullem LLC, at a total price
not-to-exceed $100,000, for Executive Director Services as defined in Attachment A for FY
2016-2017.
PASSED AND ADOPTED BY THE MONTEREY PENINSULA REGIONAL WATER
AUTHORITY this ____day of ____ 20____, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
0
0
0
0
DIRECTORS:
DIRECTORS:
DIRECTORS:
DIRECTORS:
APPROVED:
ATTEST:
Bill Kampe, President
Nova Romero, Clerk to the Authority
EXHIBIT A
SCOPE OF SERVICES/PAYMENT PROVISIONS
EXECUTIVE DIRECTOR SERVICES
A. Executive Director Duties and Services- Policy Functions

Work to prepare agendas and packets for Board & TAC meetings
Prepare recommendations on policy matters and action items
Respond to Authority requests for information or agenda items
Keep press/media informed of MPRWA actions
Address requests for information or statements by public or media as appropriate
Coordinate with Chair of the Technical Advisory Committee regarding board delegations
and placing TAC matters before the Authority for consideration/action
B. Administrative Functions
Serve as liaison to the City Mangers of the member cities

Maintain listing of forthcoming CPUC workshops and hearings, assist Authority in
developing positions and instructing their representatives
Coordinate with legal services so board requests are met in a timely way
Work with agency proving clerk services for agenda management, recordation of
minutes, maintenance of records, complying with Public records act requests, and
related matters
Coordinate with the designated fiscal agent, on financial matters, and coordinate with
the Authority Treasurer to maintain accounts of MPRWA
Prepare budget necessary to support agency's ability to perform functions
Maintain list of contracts approved by the MPRWA
Develop policy binder of all board adopted policies
Develop programs as necessary to implement policy direction of Board
Maintain working files as necessary to administer the core functions
Arrange for places for regular and special meetings of MPRWA, unless delegated to
another party
Protect, maintain and keep inventory of MPRWA property and equipment
Schedule meetings of such Committees (Regular and Ad HOC) as the MPRWA have
created, and coordinate with Chair to see that the work of MPRWA proceeds
Performs other duties as required to best ensure the smooth operation of MPRWA

Agenda Report
FROM:

Item No: 8.
SUBJECT: Receive an Update on the Summary Project Schedule for the Monterey
Peninsula Water Supply Project (MPWSP) and the Status of Test Slant
Well Operations
RECOMMENDATION:
It is recommended that the Water Authority Board receive a report from Cal Am on the
latest "Summary" MPWSP schedule and on the status of test well operations and
results.
DISCUSSION:
Cal Am will provide the most recent Summary MPWSP schedule, including an update of
the "dashboard", and provide current status of test slant well operations and results.
ATTACHMENTS:
None
06/12

Agenda Report
FROM:

Item No: 9.
SUBJECT: Receive Presentation, Discuss, and Provide Staff Direction on

the People's Desal Project
RECOMMENDATION:
It is recommended that the Board of the Monterey Peninsula Regional Water Authority
(MPRWA) receive a briefing on the proposed People's Desal Project and provide staff
direction.
DISCUSSION:
More information on the People's Desal Project can be found at the project web site at
www.thepeopleswater.com.
As of this date, the Moss Landing Harbor District may serve as a public partner for the
People's Desal Project.
To provide the public and the Water Authority an update on the progress of the People's
Desal project, its proponents have been invited to make a presentation to the Water
Authority at the August 11, 2016 meeting. In addition, the Authority has requested the
proponents answer the following questions as part of their presentation, or in response
to questions from the Board or the public:
- How do you plan to get support/approval for your project source water
prior to exhausting all alternatives for sub surface intake as required by
the CCC, SWRCB and CPUC?
- What are the overall project features (land, data center, water facilities,
Salinas- related features, etc.)?
- What is the desalination configuration and facilities layout?
- Who are potential product water purchasers?
- What is your Intake/Outfall strategy?
- What is the CEQA/NEPA status and timeline?
- What hurdles do you see and what are the contingencies?
- What is status of discussions with state permitting agencies?
- What is current financial status and total investment required?
- What is the overall schedule for delivery of water to end user?
06/12
- What is your method for water delivery to the existing Cal Am system?
- What is the pipeline routing from your facility to the Cal Am system?
- Estimated cost of water at point of entry into the existing Cal Am system?
ATTACHMENTS:
None

Agenda Report
FROM:

Item No: 10.
SUBJECT: Receive Presentation, Discuss, and Provide Staff Direction on

the Deep Water Desal Project
RECOMMENDATION:
It is recommended that the Board of the Monterey Peninsula Regional Water Authority
(MPRWA) receive a briefing on the proposed Deep Water Desal Project and provide
staff direction.
DISCUSSION:
More information about Deep Water Desal can be found at the project web site at
www.deepwaterdesal.com.
As of this date, the City of Salinas has expressed its intention to serve as a public
partner for the Deep Water Desal Project.
To provide the public and the Water Authority an update on the progress of the Deep
Water Desal project, its proponents have been invited to make a presentation to the
Water Authority at the August 11, 2016 meeting. In addition, the Authority has
requested the proponents answer the following questions as part of their presentation,
or in response to questions from the Board or the public:
- How do you plan to get support/approval for your project source water
prior to exhausting all alternatives for sub surface intake as required by
the CCC, SWRCB and CPUC?
- What are the overall project features (land, data center, water facilities,
Salinas- related features, etc.)?
- What is the desalination configuration and facilities layout?
- Who are potential product water purchasers?
- What is your Intake/Outfall strategy?
- What is the CEQA/NEPA status and timeline?
- What hurdles do you see and what are the contingencies?
- What is status of discussions with state permitting agencies?
- What is current financial status and total investment required?
- What is the overall schedule for delivery of water to end user?
06/12
- What is your method for water delivery to the existing Cal Am system?
- What is the pipeline routing from your facility to the Cal Am system?
- Estimated cost of water at point of entry into the existing Cal Am system?
ATTACHMENTS:
None

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Agenda

Monterey Peninsula Regional Water Authority (MPRWA)

Approve Minutes of Director's Meeting of July 14, 2016 - Romero

Receive Report on FY 2015-2016 Year-End Financial Status - Cullem

Thursday, August 11, 2016

Director Dallas, Director Edelen, Director Pendergrass, Director Roberson,

Legal Counsel Freeman, Executive Director Cullem, Clerk Romero

Approve and File Authority Checks Through June 30, 2016

Thursday, July 14, 2016

Dallas, Edelen, Pendergrass, Roberson, Rubio,

Approval of Minutes from June 9, 2016

Dallas, Edelen, Pendergrass, Rubio, Kampe

Tom Rowley, representing Monterey Peninsula Taxpayers Association (MPTA), stated

Elect Water Authority Board Officers for FY 2016-2017

Thursday, July 14, 2016

Dallas, Edelen, Pendergrass, Roberson, Rubio,

Dallas, Edelen, Pendergrass, Roberson, Rubio,

Dallas, Edelen, Pendergrass, Roberson, Rubio,

Thursday, July 14, 2016

Thursday, July 14, 2016

Nova Romero, Clerk of the Authority

Monterey Peninsula Regional Water Authority

Monterey Peninsula Regional Water Authority

Date: August 11, 2016

Executive Director Cullem

$------- to Access Monterey Peninsula

$------- to Separation Processes Inc

$------- To City of Seaside for Financial Services for -------

Monterey Peninsula Regional Water Authority

Date: August 11, 2016

Executive Director Cullem

SUBJECT: Receive Report on FY 2015-2016 Year-End Financial Status

Monterey Peninsula Regional Water Authority

Date: August 11, 2016

Executive Director Cullem

BEFORE THE PUBLIC UTILITIES COMMISSION

Application of California-American Water

JOINT MOTION TO STRIKE

MCWDs Attacks on the MPWSP as a Whole Should Be

MCWDs Attachments Should Be Stricken as an Improper

MCWDs Request to Have Environmental Impacts

The Commission Should Also Strike Other Irrelevant

BEFORE THE PUBLIC UTILITIES COMMISSION

Application of California-American Water

JOINT MOTION TO STRIKE MARINA COAST WATER DISTRICTS

Pursuant to Rule 11.1 of the California Public Utilities Commissions

Return Water (Comments). 4 Portions of MCWDs Comments and all of the

Comments is wholly improper. The Commission should strike each attachment to

California American Water filed Application (A.) 12-04-019 (the Application)

MCWDs Attacks on the MPWSP as a Whole Should Be Stricken as

Pursuant to Rule 12.2, comments on a settlement agreement must specify the

MCWDs Attachments Should Be Stricken as an Improper Attempt to

MCWDs attachments to its Comments are an illicit attempt to insert new

MCWDs Request to Have Environmental Impacts Addressed at Evidentiary

evidentiary hearings take place only after the FEIR. 20

Ruling After Evidentiary Hearings, p. 4.

through its comments on the DEIR. 30

The Commission Should Also Strike Other Irrelevant Material from

Ruling After Evidentiary Hearings, at p. 4.

Dated: July 22, 2016

/s/ Sarah E. Leeper

BEFORE THE PUBLIC UTILITIES COMMISSION

In the Matter of the Application of CaliforniaAmerican Water Company (U 210 W) for

MARINA COAST WATER DISTRICTS AMENDED

Mprwa & Tac Joint Meeting Agenda Packet 08-11-16

Mprwa & Tac Joint Meeting Agenda Packet 08-11-16