State Water Resources Control Board Approves Cease-and-Desist ORDER WR 2009-00XX Against Cal Am

ABSTRACT: On Tuesday, October 20, 2009, the State Water Resources Board voted to enforce a CEASE AND DESIST ORDER REQUIRING CALIFORNIA AMERICAN WATER COMPANY TO CEASE ITS UNAUTHORIZED DIVERSION AND USE OF WATER FROM THE CARMEL RIVER IN MONTEREY COUNTY. Selected excerpts from the Cease and Desist Order are reproduced, including as follows: Cal-Am shall diligently implement actions to terminate its unlawful diversions from the Carmel River as soon as reasonably possible and shall terminate all unlawful diversions from the river no later than December 31, 2016 and Commencing on October 1, 2009, Cal-Am shall not divert more water from the river than the base of 10,978 afa, 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. The Order delays an additional 121 acre-foot reduction until October 1, 2011. Additionally, the Order includes programs to retrofit the Cal Am distribution system, impose a moratorium on new water connection permits and reduce the use of potable water for irrigation. Interestingly, according to a study done by CAL-AM, Pebble Beach and Carmel residents use more water than those in any other community on the Peninsula with as much as 138 gallons a day per household being used in Pebble Beach. Residents in Monterey, Sand City and Seaside use far less, approximately 60 gallons per household.

STATE WATER RESOURCES CONTROL BOARD
BOARD MEETING SESSION – DIVISION OF WATER RIGHTS
OCTOBER 20, 2009
ITEM 7

SUBJECT
CONSIDERATION OF A PROPOSED CEASE AND DESIST ORDER REQUIRING CALIFORNIA AMERICAN WATER COMPANY TO CEASE ITS UNAUTHORIZED DIVERSION AND USE OF WATER FROM THE CARMEL RIVER IN MONTEREY COUNTY

DISCUSSION
In January 2008, the Division of Water Rights (Division) issued a draft cease and desist order (CDO) requiring California American Water (Cal Am) to cease and desist from diverting water from the Carmel River in excess of its legal rights by reducing its unlawful diversions pursuant to a schedule set forth in the CDO.

In June, July, and August of 2008, the State Water Board held seven days of evidentiary hearings to determine whether to adopt the CDO.

A draft CDO was released to the public on July 27, 2009, and a public workshop was held on September 2, 2009, in order to receive comments on the draft CDO. Following receipt of comments, a revised draft CDO was issued on September 16, 2009. Comments on the revised draft CDO were due on September 30, 2009.

The proposed CDO sets forth conditions and a schedule for Cal Am to terminate all unlawful diversions from the Carmel River no later than December 31, 2016.

STAFF RECOMMENDATION
Staff recommends that the State Water Board adopt the proposed cease and desist order.

INTRODUCTION
The California American Water Company (Cal-Am or CAW) diverts water from the Carmel River in Monterey County. The water is used to supply the residential, municipal, and commercial needs of the Monterey Peninsula area (peninsula) communities. In 1995 the State Water Resources Control Board (State Water Board) adopted Order WR 95-10 (Order 95-10). Among other matters, the order found that Cal-Am was diverting about 10,730 acre feet per annum (afa) of water from the Carmel River without a valid basis of right and directed that Cal-Am should diligently implement actions to terminate its unlawful diversion. Alleging that 13 years after the adoption of Order 95-10 Cal-Am continues to divert about 7,150 afa from the river without a valid basis of right, the Prosecution Team (Prosecution Team or PT) seeks issuance of a cease and desist order under Water Code section 1831, subdivision (d). Cal-Am requested a hearing. This order (1) finds that Cal-Am: (a) failed to comply with the requirements of Order 95-10, and (b) is in violation of Water Code section 1052; and (2) issues a cease and desist order (CDO).


D R A F T October 8, 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

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 Order 95-10 and 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 7,602 afa from the river without a basis of right for the past 14 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 implemented smaller water supply projects that could have enabled Cal-Am to reduce its illegal diversion from the river and to alleviate the serious condition 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 6.5 miles of the riverbed are dry for five to six months of each year, due primarily to Cal-Am’s diversions.48 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 survival of 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 can make additional water available to Cal-Am, including: (1) the Phase I and II ASR project; (2) the City of Sand City Desalinization Project; (3) the development of temporary small water supply projects (4) the reduction of system losses within the Cal-Am distribution system; (5) the retrofit program; (6) reducing the use of potable water for outdoor irrigation; and (7) other measures to reduce consumer demand for potable water.

MPWMD's water allocation program sets aside water for growth within the limits of the supply of water available within its jurisdiction. MPWMD views water illegally diverted from the river by Cal-Am as available water supply for growth. Because water has been available for growth, the peninsula cities and their residents have had 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 6.5 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.

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 and shall terminate all unlawful diversions from the river no later than December 31, 2016.

2. Cal-Am shall not divert water from the Carmel River for new service connections or for any increased use of water at existing service addresses resulting from a change in zoning or use. Cal-Am may supply water from the river for new service connections or for any increased use at existing service addresses resulting from a change in zoning or use after September 2, 2009, provided that any such service had obtained all necessary written approvals required for project construction and connection to Cal-Am’s water system prior to that date.

3. At a minimum, Cal-Am shall reduce its diversions from the Carmel River in accordance with the following:

a. Commencing on October 1, 2009,51 Cal-Am shall not divert more water from the river than the base of 10,978 afa,52 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, 2010, the base shall be further reduced by 121 afa per year through savings that will accrue from reduced system losses, the retrofit program, the reduction of potable water used for outdoor irrigation, demand reduction and similar measures. 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, 2015, annual reductions shall increase to 242 af per year. The 242 af per year reduction shall also be cumulative. Annual reductions shall continue until all unlawful Cal-Am diversions from the river have been terminated.

(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.53 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 intends to supply from ASR Project for its customers after May 1 of each year. Water pumped from the project for delivery to customers should be consistent with the requirements of paragraph “c” below.

(4) Sand City Desalination Plant: Once the Sand City Desalinization Plant becomes operational, 94 af shall be subtracted from the base In addition, based on actual production from the plant, any other water that is produced and not served to persons residing within the City of Sand City shall be subtracted from the base amount for each water year.

(5) Small Projects: Water produced from new sources developed pursuant to Condition 4 of this order shall be subtracted from the base.

b. Either Cal-Am or the MPWMD may petition the State Water Board Deputy Director for Water Rights for relief from annual reductions imposed under condition 3., a (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 or MPWMD has imposed a moratorium on new service connections under its authority; (b) the demand for potable water by Cal-Am customers has been reduced by 13 percent; and (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 13 percent conservation requirement remains in effect.

c. ASR project water stored in the Seaside groundwater basin under Permit 20808A (Application 27614A) should be used to mitigate the effect of Cal-Am’s illegal diversions from the river. ASR water should be supplied to Cal-Am customers only during months when water is most needed in the river to preserve steelhead. Commencing no later than June 1 of each year, Cal-Am should use stored groundwater to supply the needs of its customers and reduce diversions from the river. Consistent with Cal-Am’s operating plan, water should be pumped from the groundwater basin at the maximum practicable rate for as long as possible. This condition shall apply to both Phase I and Phase II of the ASR project. The river’s habitat and fish may receive greater benefits from a substitution regime that differs from that called for 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.

4. Cal-Am shall reduce its illegal diversions from the river at the same rate ASR Project water is pumped from the groundwater basin as long as stored water is available under the operating plan.

5. 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 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 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 6.5.

11. The conditions of this order and 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 of the Division of 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 October 20, 2009.

AYE:

NAY:

ABSENT:

ABSTAIN:

Jeanine Townsend
Clerk to the Board

ATTACHMENT 1
TABLE 1
PROJECTED REDUCTIONS IN ILLEGAL DIVERSIONS FROM THE CARMEL RIVER