DRAFT CEASE AND DESIST ORDER AGAINST CAL AM (JULY 2009)

ABSTRACT: A “draft Cease and Desist Order in which the State Water Resources Control Board (State Water Board) proposes enforcement action against California American Water for unauthorized diversion and use of water from the Carmel River” was sent via FIRST CLASS MAIL AND ELECTRONIC MAIL to a Service List of Participants on July 27, 2009. The Conclusion and Order are reproduced in their entirety. In short, the Order states that “Cal-Am shall cease and desist from the unauthorized diversion of water from the Carmel River;” commencing October 1, 2009, Cal-Am shall not divert more water from Carmel River than the base of 10,978 afa (acre-feet annually), including immediate reduction diversions by 5% or 549 afa and annual cumulative reductions of 121 afa through 2014, at which time reductions shall increase to 242 af annually until Cal-Am has terminated all unlawful diversions from the Carmel River. Relief from conditions shall only be granted if all of the following conditions are met: Cal-Am has imposed a moratorium on new service connections or has obtained an order prohibiting new connections within 18 months of adoption of Order and MPWMD has imposed a 15% conservation requirement and a showing that public health and safety will be threatened. Furthermore, Cal-Am shall implement one or more small projects that, when taken together, total not less than 500 afa (acre-feet annually) to reduce unlawful diversions from the Carmel River. Tentatively scheduled for September 2, 2009, the State Water Board will receive comments on the DRAFT at a State Water Board Public Workshop in Sacramento.

Draft - July 27, 2009

STATE OF CALIFORNIA
STATE WATER RESOURCES CONTROL BOARD

ORDER WR 2009-00XX

In the Matter of the Unauthorized Diversion and Use of Water
by the California American Water Company

Parties

Water Rights Prosecution Team1
California American Water Company

Interested Parties

Monterey Peninsula Water Management District, City of Carmel by the Sea, City of Seaside, Seaside Basin Watermaster, Pebble Beach Company, Monterey County Hospitality Association, City of Monterey, City of Sand City, Division of Ratepayers Advocates of the California Public Utilities Commission, Public Trust Alliance, Carmel River Steelhead Association, Ventana Chapter of the Sierra Club, California Sportfishing Protection Alliance, Planning and Conservation League, California Salmon and Steelhead Association, National Marine Fisheries Service

SOURCE: Carmel River
COUNTY: Monterey


CONCLUSIONS

Order 95-10 does not authorize Cal-Am to divert water from the Carmel River in excess of its water rights, and Cal-Am is illegally diverting water from the Carmel River in violation of Water Code section 1052. The doctrines of res judicata and collateral estoppel are not a bar to the State Water Board’s adoption of a CDO.

Condition 2 of the Order 95-10 requires Cal-Am to diligently implement actions to terminate its unlawful diversions. Cal-Am has diverted an average of 7,632 afa from the river without a basis of right for the past 13 years, and in the roughly 10-year period since it achieved the 20 percent reduction required by Condition 3 of Order 95-10, Cal-Am has not made any meaningful progress toward reducing the amount of its unlawful diversions. Further, Cal-Am has not diligently pursued several smaller projects that might have been able to alleviate the serious conditions in the Carmel River affecting the survival of steelhead.

Thus, Cal-Am has not diligently implemented actions to terminate its unlawful diversions under Condition 2. Cal-Am’s only action reducing its illegal diversions has been the work done on two projects yielding small amounts of water: the ASR project and the Sand City Desalinization Plant. Significantly, these projects are in place due largely to the efforts made by other agencies, i.e., MPWMD and the City of Sand City.

The lower 9.5 miles of the riverbed are dry for five to six months of each year, due primarily to Cal-Am’s diversions45. Cal-Am’s diversions from the river continue to have an adverse effect on the fish, wildlife and riparian habitat of the river, including the threatened steelhead. Since the adoption of Order 95-10, the California Central Coast steelhead has been declared as threatened under the Endangered Species Act, and the Carmel River has been declared as critical habitat for the steelhead.

The adjudication of the Seaside groundwater basin will decrease the supply of water available to supply Cal-Am’s customers by 417 af in 2009, or by about 2.8 percent of the available supply. Other projects or regulatory actions will make additional water available to Cal-Am, including: (1) the ASR project; (2) the City of Seaside Desalinization Project; (3) the reduction of system losses within the Cal-Am distribution system; (4) the retrofit program; and (5) reducing the use of potable water for outdoor irrigation. Cumulatively, these projects and initiatives may reduce the need to divert water from the river by as much as 1,322 afa.

MPWMD's water allocation program sets aside water for growth within the limits of the supply of water available within its jurisdiction, and for this purpose water being illegally diverted from the river by Cal-Am is treated as available supply. An unintended consequence of this set aside may be that because sufficient water appears to be available for both existing uses and for growth, the peninsula cities and their residents have little incentive to support or pay for a project or projects to obtain a legal supply of water that can be substituted for the illegal diversions from the river.

In consideration of the foregoing, we conclude that Cal-Am should be prohibited from further degrading conditions in the river by diverting water from the river for new service connections, and that Cal-Am should be required to reduce the amount of water being diverted from the river to serve existing service connections. In reaching this conclusion, we are particularly mindful that (a) the lower 9.5 miles of the Carmel River bed are dry for 5 to 6 months of each year, (b) the steelhead is a threatened species, (c) the river has been declared to be critical habitat for the steelhead, and (d) the earliest date which Cal-Am’s illegal diversions may be brought to an end is 2016, some 21 years after the adoption of Order 95-10. We further conclude that the Pebble Beach Company and associated development interests should not be exempt from the conditions restraining Cal-Am from diverting water from the river.

In addition to the foregoing, the State Water Board wishes to highlight the fact that Cal Am has contracted with the National Oceanic and Atmospheric Administration (NOAA) to provide substantial funds for a variety of projects to mitigate the effects of its diversions upon the steelhead in the Carmel River. The funds have not been spent due to administrative problems within the federal government. We strongly urge the NOAA and Cal Am to find a way to resolve the federal administrative problem and free up the funds Cal Am has committed to spend for projects to aid steelhead survival in the Carmel River.

45 See discussion under Section 15.0, supra.

Draft - July 27, 2009

ORDER

NOW, THEREFORE, IT IS ORDERED THAT 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. Cal-Am shall diligently implement actions to terminate its unlawful diversions from the Carmel River as soon as reasonably possible. These measures shall include implementing urban and irrigation water conservation measures and obtaining alternative water supplies.

2. Until Cal-Am has terminated its unlawful diversions; Cal-Am shall comply with all of the following:

a. Cal-Am shall not divert water from the Carmel River for new service connections that were not provided a “will serve commitment” before _________________.46 (Insert date of first public workshop to consider the draft order.)

b. Cal-Am shall not divert water from the river for any increased use at existing service addresses resulting from a change in zoning or use and that was not provided a “will serve commitment” (or similar commitment) before ______________. (Insert date of first public workshop to consider the draft order.)

c. Commencing on October 1, 2009,47 Cal-Am shall not divert more water from the river than the base of 10,978 afa,48 as adjusted by the following:

(1) Immediate Reduction: Commencing on October 1, 2009, Cal-Am shall reduce diversions from the river by 5 percent, or 549 afa.

(2) Annual Reductions: Commencing on October 1, 2009, the base shall be further reduced by 121 afa per year through savings that will accrue from (1) reduced system losses, (2) the retrofit program, and (3) the reduction of potable water used for outdoor irrigation. The 121 af reduction shall be cumulative. For example, 121 af shall be reduced in the first year and 242 af shall be reduced in the second year. Commencing on October 1, 2014, annual reductions shall increase to 242 af per year. Annual reductions shall continue until Cal-Am has terminated all unlawful diversions from the Carmel River.

(3) ASR Project: The amount of water diverted to underground storage under Permit 20808A (Application 27614A) as of May 31 of each year and which will be supplied to Cal Am customers after that date shall be subtracted from the base. 49 On May 1 of each year, Cal Am shall submit an operating plan to the Deputy Director for Water Rights specifying the quantity of water it intends to supply from ASR Project for its customers after May 1 of each year. Water pumped from the project for delivery to customers shall be consistent with the requirements of paragraph “e” below.

(4) Sand City Desalination Plant: 94 af shall be subtracted from the base plus any quantity of production not served to new growth within Sand City.

(5) Small Projects: Water produced from new sources developed pursuant to Condition 3 of this order shall be subtracted from the base.

d. Cal-Am may petition the State Water Board Deputy Director for Water Rights for relief from annual reductions imposed under condition c.(2). No relief shall be granted unless all of the following conditions are met: (a) Within 18 months of the adoption of this order, Cal-Am has imposed a moratorium on new service connections pursuant to Water Code section 350 or has obtained an order prohibiting new connections from the PUC pursuant to Public Utility Code section 2708; (b) MPWMD has imposed a 15 percent conservation requirement pursuant to Regulation XV, or a similar regulation, and consumption is being reduced by no less than 90 percent of the 15 percent requirement;50 51 (c) 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) a prohibition on new service connections remains in effect, and (b) the 15 percent conservation requirement remains in effect and is at least 90 percent effective.

e. ASR project water stored in the Seaside groundwater basin under Permit 20808A (Application 27614A) shall be used to mitigate the effect of Cal-Am’s illegal diversions from the river. ASR water shall be supplied to Cal Am customers only during months when water is most needed in the river to preserve steelhead. Commencing June 1 of each year, Cal-Am shall use stored groundwater to supply the needs of its customers and reduce diversions from the river. Consistent with Cal Am’s operating plan, water shall be pumped from the groundwater basin at the maximum practicable rate for as long as possible; Cal-Am’s diversions from the river shall be reduced at the same rate for as long as stored water is available under the operating plan. The river’s habitat and fish may receive greater benefits from a substitution regime that differs from that required by this condition, a regime requiring that substitution commence at a different date, at a different rate or be coordinated with the level of flow in the river. In addition, it may be desirable to hold stored water from one year to the next to assure that more water is available for the steelhead and its habitat in years when the potential for steelhead survival may be greater. Several substitution trials may be necessary to determine which regime will have the greatest benefit. The National Marine Fisheries Service and the California Department of Fish and Game are encouraged to negotiate different substitution regimes with Cal-Am. The State Water Board will honor such agreements, provided Cal-Am submits the written agreement to the Deputy Director for Water Rights no later than May 1 of each year and the written agreement is approved by the Deputy Director.

3. Cal-Am shall implement one or more small projects that, when taken together, total not less than 500 afa to reduce unlawful diversions from the river. Within 90 days of entry of this order, Cal-Am shall identify to the Deputy Director for Water Rights the projects that it will implement and shall implement the projects within 24 months of entry of this order. Cal-Am may petition the Deputy Director for additional time in which to implement the projects. However, no time extension shall be considered unless the petition is accompanied by detailed plans and time schedules for each project. Detailed justification shall be provided for additional time. No additional time may be granted in order to allow Cal-Am time to obtain prior approval from the PUC. To the maximum practicable extent, small projects shall be operated in conjunction with the ASR project to reduce illegal diversions from the river during the months when surface flow in the river begins to go dry and through the months when surface flow in the river disappears below river mile 9.5.

4. Starting three months following adoption of this order, Cal-Am shall post quarterly reports on its website and file the quarterly reports with the Deputy Director for Water Rights. The quarterly reports shall include the following:

(a) Monthly summaries of the quantity of water it diverts from the river.

(b) Monthly summaries of the quantity of ASR project water diverted from the river under Permit 20808A and stored in the Seaside ground water basin. The monthly reporting shall also state the quantity of water beneficially used under Permit 20808A and the current balance of water in storage.

(c) Monthly summaries of the quantity of water being produced by the Sand City desalinization plant. The reporting shall identify new service connections within Sand City and thereafter report the quantity of water being delivered to the new connections. 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 saved by reducing system losses.

5. Starting six months after adoption of this order, Cal-Am shall file quarterly reports of its progress toward implementing Condition 3 (small project implementation) and note specifically any problems with its schedule of implementation. The Deputy Director for Water Rights is authorized to modify the timing and the content of the reporting required by all of the provisions in this condition in order to more effectively carry out the intent of this order.

6. Cal-Am shall comply with all requirements of Order 95-10, except as follows:

(a) Condition 1 of Order 95-10 is superseded by Condition 2 of this order.

(b) Condition 3(b) of Order 95-10 is superseded by Condition 2 of this order.

(c) The last sentence of Condition 4 is deleted because the Seaside groundwater basin watermaster will determine the manner in which water may be withdrawn from the groundwater basin.

(d) All other conditions of Order 95-10 shall remain in full force and effect until fully implemented.

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 ____________, 2009.

AYE:

NO:

ABSENT:

ABSTAIN:

DRAFT
Jeanine Townsend
Clerk to the Board

Notes:
46 Multiunit residential, commercial or industrial sites may currently be served by a single water meter. The installation of additional meters at an existing service will not be viewed as a new service connection provided that the additional metering does not result in an increase in water use. Metering each unit of a multiunit building tends to increase accountability in the use of water and the effectiveness of water conservation requirements.

47 Each water year runs from October 1 to September 30 of the following year.

48 Cal-Am diverts 3,376 afa under legal rights and, on average, 7,632 afa without a basis or right. (3,376 + 7,632 = 10,978 afa).

49 This condition shall apply to Phase I and Phase II of the ASR project.

50 The State Water Board recognizes that MPWMD may need to modify regulation XV in response to this order.

51 For purposes of measuring compliance, the 15 percent reduction shall measured agsinst the adjusted base required by condition 2.c. for the year in which the conservation requirement is imposed.

Draft - July 27, 2009

(Source: DRAFT CEASE AND DESIST ORDER AGAINST CALIFORNIA AMERICAN WATER FOR UNAUTHORIZED DIVERSION OF WATER FROM THE CARMEL RIVER IN MONTEREY COUNTY, July 27, 2009)

NOTE: A State Water Board Public Workshop to receive comments on the draft is tentatively scheduled for September 2, 2009 in Sacramento. The State Water Board will issue a public notice of the workshop at least ten days in advance. The notice will include procedures for submitting comments concerning the enclosed draft. Contact Paul Murphey at (916) 341-5435 or by e-mail with questions at pmurphey@waterboards.ca.gov.