Order WR 2009-0060: State Water Board Cracks Down on Cal-Am’s Carmel River Water Addiction

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The Carmel River

A few weeks ago, Monterey Peninsula residents were treated to an unusual spectacle as much of the local business and political leadership boarded busses for Sacramento for a humiliating session of begging and pleading with the State Water Resources Control Board (SWRCB).

They were begging the SWRCB not to implement a draft Cease and Desist Order limiting the ability of Cal-Am, the Monterey Peninsula’s water purveyor, to divert water from the Carmel River. They would explain to the SWRCB, they said, how unfair this would be – how the Monterey Peninsula has already done such a great job of water conservation that it just can’t do anymore – that the Order would destroy the tourist industry and lead to draconian rationing for residents – that it would endanger public health and safety – that we’ve done, and are doing, everything possible to develop new water sources.

Yet, it was all for naught. The SWRCB ignored the pleas of the local VIPs and adopted the Order on a 3-1 vote. And the Board member who voted no did so on the grounds that the Order wasn’t tough enough. Ouch!!

Last week, the final Order WR 2009-0060 was released and both Cal-Am and the Monterey Peninsula Water Management District immediately filed suit in a last ditch effort to prevent it from taking effect.

So what is this all about? How did we get to this point? And what does this really mean for the average resident of the Monterey Peninsula who depends on Carmel River water to brush her teeth in the morning?

To answer these questions, we present here an abbreviated, yet still far too long, review of the incidents, events, misapprehensions, and mistakes that brought Cal-Am and the Monterey Peninsula to this point.

We hope you’ll enjoy it …

Diverting Carmel River water to Monterey has a Long History

The Monterey Peninsula’s dependence on Carmel River water began in 1883, when the Pacific Improvement Co., a subsidiary of the Southern Pacific Railroad, built the Hotel Del Monte and put 700 of their Chinese railroad laborers to work building a dam and laying 23 miles of 12-inch iron pipe down Carmel Valley and around the Peninsula to the hotel. This elegant system delivered water from the river to the hotel by gravity alone and the Pacific Improvement Co. was soon selling water to the residents of Monterey. Until that time the people of Monterey, as recalled by Robert Luis Stevenson, had used windmills to fill “their cisterns with the brackish waters of the sands.”

The Pacific Improvement Co. was later bought out by Del Monte Properties Co., which later changed its name to the Pebble Beach Co. Along the way, the original dam was replaced by the San Clemente Dam, the water system sold off to a private utility company, and the Los Padres Dam added further upstream.

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The San Clemente Dam

The service was bad enough, and the unfair pricing offered to Del Monte Properties outrageous enough, that attempts at public takeover of the system occurred at regular intervals. After finally defeating a particularly serious public takeover movement, which lasted from the late 1950s until 1966, the water company sold out to Cal-Am and the modern era of water woes began.

The Pipe Capacity Crisis

Rapid growth on the Monterey Peninsula soon had the pipes delivering water from Carmel Valley running at near capacity, but in spite of pressure from the California Public Utilities Commission (PUC), Cal-Am took no action to install larger pipes.

In 1973, the PUC finally issued an order prohibiting Cal-Am from extending service to new developments until they got to work on replacing the pipes. This was the Monterey Peninsula’s first official “water crisis.” Peninsula leaders reacted with horror. Burke Pease, of the Monterey Peninsula Chamber of Commerce, even suggested that imposing rationing might be preferable to slowing development projects. Anger, at first, focused on the PUC, rather than on Cal-Am.

Cal-Am, saying they would need a 20% rate hike in order to begin work on a pipeline project, continued to do nothing to improve the capacity of their transmission lines.

In 1975, with no progress made by Cal-Am, the PUC tightened the restriction to ban nearly all new connections and ordered Cal-Am to make building a larger transmission line from Carmel Valley their top priority. Community leaders were even more horrified. Hal Green, of the Monterey Peninsula Board of Realtors, described the ban as a “moral” issue. The Chamber of Commerce predicted “irreversible” damage to the economy.

This time, anger began focusing on Cal-Am, as well as the PUC. The Monterey Herald, which had played a key role in defeating public acquisition in the 1960s, now began to warm to the idea, editorializing that:

It is far from satisfactory that the administration of our essential water system is directed out of a complicated corporate set-up headquartered across the continent. And one that seems patently more interested in drawing down on its assets than in maintaining them. Considering the past history of Cal-Am’s problems, public acquisition may be the inevitable conclusion of this controversy.

The Peninsula mayors, together with Supervisors Sam Farr and Roger Poyner, began petitioning to PUC to allow connections to lots of record while, simultaneously, asking Peninsula residents to conserve water. The Herald noted the inconsistency, reporting that the mayors and supervisors were “asked to explain how they can convince residents of the area that there is a critical water shortage while at the same time they are pressuring the PUC to lift its ban on new water connections.” Sam Farr’s response was that they weren’t asking people to curtail their normal use of water, but simply asking them to waste less. (We’re not making this up. We swear. We wish we were.)

But the PUC hadn’t imposed the ban for no reason. The problem was very, very real. As spring turned to summer in 1976 the pipes were running at full capacity, but it still wasn’t enough. The water level of Forest Lake, at the Peninsula end of the pipe, was ominously dropping. Soon, real rationing had to be imposed.

The rationing was an immediate success and consumption quickly dropped to levels that Cal-Am’s transmission lines could sustain, but the event ended all efforts to persuade the PUC to ease their ban and, instead, focused anger on Cal-Am. The Monterey City Council voted to resurrect the idea of public acquisition. The mayor of Seaside said the idea should receive “serious consideration.” The Carmel City Council directed their attorney to explore the possibility of a class action suit against Cal-Am. “80 per cent of the people of California are served by publicly owned water systems,” noted the Herald. “Indeed, if there is a trend it is toward public control over this essential commodity.”

But local officials weren’t ready to let the PUC completely off the hook. The mayors, together with Supervisors Farr and Poyner, now sent a letter to the PUC taking them to task for not having forced Cal-Am to build the pipeline sooner. The pipeline, they wrote, was Cal-Am’s responsibility to provide. “Yet, after more than one year, there appears to be equivocation on the part of both the company and the PUC in terms of completion of those facilities … Simply put, gentlemen, it is our strong, urgent and collective judgment, that the PUC should stop allowing Cal-Am to avoid or evade the issue and to order them to build those facilities and upgrade their system as required and that this be done expeditiously.”

The irony of this criticism was not lost on the Herald. “In an about face from last fall,” they wrote, “mayors of the cities of the Monterey Peninsula this morning criticized the state PUC for not being tough enough on Cal-Am … Last October, the mayors asked the PUC to relax its ban on new water connections on the Peninsula.” Three days later, PUC president, David Holmes showed up in Monterey and denounced the letter as a “cheap shot.” “I don’t greatly mind the PUC being the whipping boy in all this,” he said, “but after all the PUC is the only entity at all that has taken any affirmative action concerning this water crisis – and that includes the mayors and the board of supervisors.”

The renewed interest in public acquisition led to talk of forming a public water district capable of buying out Cal-Am and running the water system in the public interest. The Herald was strongly in favor, editorializing that:

A district would provide a ready vehicle for assuming public ownership of the water system if residents desire, a step which The Herald believes must ultimately come to pass if this area’s water problems are to be solved. The case for public ownership of the water utility on the Monterey Peninsula hardly needs any other argument than that provided by the sorry performance of Cal-Am in its 11 years here.

In January, 1977, the PUC finally found a way to get Cal-Am’s attention. They ordered Cal-Am to stop paying dividends or transferring funds to its parent company until work on the pipeline was started. Cal-Am promised to have the project underway by July.

The Drought Crisis

The rain, which had been below average for several years, hardly arrived at all in the winter of 76/77 and it was soon apparent that there wasn’t going to be enough water available for normal consumption with or without adequate pipes. Rationing was imposed limiting residents to 50 gallons per person per day. In spite of the rationing lacking any real enforcement, it was a huge success. Even with numerous water hogs continuing to use as much as ever, average use dropped all the way down to 30 gallons per person per day.

Total water consumption in 1977 was only 8,468af (acre feet), 47% less than the 15,978af consumed in 1976 – a year in which there had also been a short period of rationing due to the inadequate pipes.

Although it was believed that larger transmission lines and new Carmel Valley wells would be able to supply the Peninsula with all the water it needed in the short-term, the rationing focused attention on the need to develop new water supplies for the long-term, if the Peninsula was going to continue to grow. As a result, the mandate of the proposed new water district began to expand to include partnering with Cal-Am to develop new sources of water. The Herald remained an enthusiastic supporter, editorializing that:

For 11 long years Monterey Peninsula residents have been treated to the spectacle of Cal-Am dawdling along, doing as little as possible, while the amount of water available to each customer has dwindled. Now we, the consumers, have the privilege of paying more money for less water.

Already property tax dollars are being spent so we can ration ourselves to 50 gallons of water a day. Now through the surcharge, just approved by the PUC, we’re going to start paying a monthly tribute to Cal-Am to cover the company’s big conservation program last year.

Surely you remember the conservation program. Cal-Am inserted notices in our bills – after the PUC ordered rationing – asking us to use less water, even though the water company itself continued to operate its system on a “business as usual” basis. … And you can be sure that before the year is out, we’ll get further tidings from the PUC and Cal-Am about an increase in water rates to make up for all the money the company isn’t earning because it can’t give us water.

…Clearly this is going to require public acquisition of Cal-Am. Eleven years of non-performance by this appendage of the American Water Works Co. should be enough to convince even the most ardent supporter of private enterprise that there are situations and issues which demand public action.

Meanwhile, in spite of everything, the building trades continued to boom. With an almost total ban on new hookups nearly two years old, the construction industry continued to defy all predictions of disaster. While issuance of building permits had declined somewhat in Seaside and Pacific Grove, it had remained constant in Monterey and Carmel and was up sharply in Carmel Valley.

Rationing ended in January 1978 as heavy rains filled the reservoirs and the new, larger capacity pipes went into service. The way had been opened for large-scale pumping of the Carmel Valley aquifer.

The Monterey Peninsula Water Management District Gets Going

In June 1978, the voters approved the formation of the new Monterey Peninsula Water Management District (MPWMD), empowered to either work in partnership with or buy out Cal-Am.

As rain eased the water problems, and the cities and county went back to approving as many new water connections as they liked, the impetus for public acquisition faded and the MPWMD turned its attention to figuring out what kind of water project to pursue for future growth and drought protection. Cal-Am turned its attention to drilling wells in Carmel Valley.

Valley residents complained that the wells were drying up the river and, while “experts” were trotted out to claim that the wells were drawing from aquifers unconnected to the stream, the fact that the river was running dry right at the well sites made it obvious that the wells were pumping river underflow.

Objections of residents and the Carmel Valley Steelhead Association eventually resulted in Cal-Am being required to irrigate riparian vegetation near its wells, in the hopes of keeping the banks of the dewatered river stabilized.

The First Complaint is Filed

In 1987, the Carmel Valley Steelhead Association filed a formal complaint with the SWRCB alleging that the water being pumped by Cal-Am was river underflow, that Cal-Am had no right to divert this water from the river, and that Cal-Am’s diversions were damaging public trust resources (fish, riparian vegetation, etc.). The Steelhead Association was later joined in this complaint by the Carmel Valley Residents Water Committee, the Sierra Club, and the California Department of Parks and Recreation.

Cal-Am did not bother to contest that the water was river underflow, instead claiming appropriative rights to an insane 751,608afa (acre feet annually) of Carmel River water. Insane because they could only have appropriative rights to the amount of water they, or their predecessor in interest, had been diverting and putting to beneficial use before the current statutory scheme for adjudicating water rights was put into place in 1914 – and the total discharge of the Carmel River during the wettest year on record is only about 325,000af.

The SWRCB began considering the complaints and Cal-Am’s claims, but seemed in no hurry to issue an order resolving the controversy.

Plans to Build a New San Clemente Dam Collapse

Meanwhile, for reasons that had more to do with politics than with practicality, the MPWMD began focusing on building a new dam on the main stem of the Carmel River, near the location of the existing San Clemente Dam. The impetus behind this focus was a desire of Carmel Valley residents to get water flowing year round in the lower river, something they thought would both beautify the river and help the steelhead. What made a main stem dam less than practical were a lack of good dam sites (the best places available on the Carmel River require massive dams to back up small amounts of water) and the need to minimize further damage to the steelhead (something pretty hard to do when you’re blocking their stream with a huge dam).

The idea that the way to help the steelhead was to keep the lower river from drying up in the summer was a fatal error. Steelhead fry and adults summering over in the river generally spend their time in the cold, higher altitude reaches of the river and its tributaries or in the lagoon. Much more important to the survival of the steelhead is access to those high altitude reaches – access that main stem dams block.

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Access to cold, clean tributaries, like this one deep in the Ventana Wilderness, is much more important to steelhead than keeping the lower river flowing all summer

In 1988, the US Environmental Protection Agency (EPA) put the MPWMD on notice that by making “enhancement of the river environment” a project purpose for purposes of state and federal environmental review, they might be setting a standard that they would be unable to meet. They warned the MPWMD that they could not issue a permit for a project unless that project’s stated purposes were capable of being fulfilled and pointed out that since the dam being planned would almost certainly have a negative impact on steelhead, they would be unable to find that the dam would achieve its stated purposes.

The EPA proposed that the MPWMD make the project purpose simply to supply water to the Monterey Peninsula and, understanding that “enhancement of the river environment” was code for maintaining year round flow in the river’s lower reaches, suggested that the current dual project purpose was rigging the analysis of alternatives in favor of a main stem dam – since only a main stem dam would be able to release the water needed to keep the river flowing through the summer.

Due to their nearly religious dedication to the idea that making the lower river flow year round would provide environmental benefits outweighing all else – and their belief that the public would not support a project that did not at least appear to be a boon to the environment, the MPWMD Board refused to make the change and called on powerful Congressman, Leon Panetta, for help. Under pressure from Panetta, the EPA stopped making an issue of the faulty project purpose, but warned that the problem had not gone away.

It hadn’t. Despite continued behind the scenes negotiations led by Panetta, on February 15, 1989, Water Board member, golf course developer and dam proponent, Nick Lombardo, announced that the New San Clemente Dam project was dead. “We’re now convinced,” he said, “that federal and state agencies will not issue permits for that site due to the fact that steelhead trout would be interfered with.” Planning would shift, he said, to building a new dam further upstream near the current Los Padres Dam. Water Board member, Ed Lee accused the EPA of “a blatant abuse of power and appalling ignorance.” But EPA specialist Tom Yocum responded that “the Los Padres option has less environmental impact than the San Clemente site, and if you want to disagree with that, you’ll have to overcome the opinions of dozens of fish and wildlife experts.”

Planning Begins for a New Los Padres Dam

Under pressure from Panetta, the EPA agreed to look more favorably on a new dam built near the site of the current Los Padres Dam. Being further upstream, the new dam would preserve access for the steelhead to at least some of their spawning grounds, but it was a much worse dam site, requiring a much larger and more expensive dam to impound sufficient water. Building the New Los Padres Dam would also require an Act of Congress, since some of the land to be flooded would have to be taken out of Wilderness designation – and, over the objections of national environmental organizations concerned about the precedent being set, Panetta soon passed legislation making this possible.

The switch to the Los Padres site was strenuously opposed by the one person on the Monterey Peninsula who knew more than any other about the realities of dam building. William Gianelli, retired Director of the California Department of Water Resources, who had built many large dams in his time, declared that the New Los Padres dam would never be built due to its crippling expense and the infeasibility of the site. Cold water was also thrown on the idea by Steve Macola, the Chief Consultant to the State Senate’s Agriculture and Water Resources Committee. He estimated that, given the number of practical and legal hurdles the New Los Padres dam would have clear, it would take at least 30 to 40 years to get it built. Both Gianelli and Macola were ignored.

Although Lombardo assured the public that switching dam sites would not cause any delay, and other members of the Water Board predicted that the dam would be completed and in service by 1996, it was announced, only a month later, that the MPWMD had used the wrong methodology in preparing their studies of required fish flows and that the California Department of Fish & Game was going to require them to be redone – a process that would delay the dam by two to three years.

The MPWMD Directors threatened to sue, called the DFG “idiots,” threatened to “tell them where to put it,” and claimed to be the victims of “high-handed treatment,” but it soon came out that DFG had been warning MPWMD about this problem for some time. The Board had simply taken no action in the belief that Panetta would be able to talk DFG out of insisting on a meaningful study. And the problem was very serious indeed. The MPWMD fish flow calculations started with the amount of water their proposed dam could provide, rather than with the amount of water actually needed by the fish at various stages of their lifecycle.

Clint Eastwood, by this time, was offering land for an offstream 20,000af reservoir and the Board of Supervisors were suggesting taking a new look at importing water from the Arroyo Seco River and other sources. Both Gianelli and Cal-Am expressed support for these ideas, but the MPWMD waved these suggestions away, remaining firmly focused on building a Carmel River main stem dam.

In 1991 the MPWMD finally issued a draft EIR/EIS for the New Los Padres Project. The EIR/EIS identified a 16,000af dam at the New Los Padres site combined with a 3,000afa desal plant as the preferred alternative. As before, putting water in the lower river remained a project purpose, helping to eliminate alternatives, like offstream storage, that would not achieve this dubious goal. DFG responded to the EIR/EIS by saying that the proposed New Los Padres Dam “would, in our opinion, eliminate steelhead trout as a viable, self-sustaining resource of the Carmel River.” They suggested more desal and taking a harder look at off-channel storage options. The National Marine Fisheries Service (NMFS) concurred, saying “we do not agree with the District’s position that a New Los Padres Dam is preferable to offstream storage or desalination.”

The Desal Election

By 1993, the MPWMD, which, pursuant to its enabling legislation, could not undertake a major project without a vote of the people, was ready to bring the desal portion of their “preferred project” to the voters for approval. But then a funny thing happened. The dam’s top supporters on the Water Board, joined forces with elements of the real estate, hospitality and development communities to oppose the desal project.

They opposed desal because they feared that by reducing or eliminating the need for rationing during droughts it would make it impossible to get the voters to approve the extremely expensive dam. And they needed the dam to supply water for growth. They made no secret of this. MPWMD Director, Dick Heuer, wrote an op/ed stating: “If desalination is approved, it jeopardizes future voter approval for the real solution – the New Los Padres Dam. … What a tragedy if impatience and frustration with the Water District cause people to vote for desalination – and destroy our ability to build the dam!”

With the environmental community unenthused with the idea of desal – some pointed out that a retrofitting program could save as much water as the desal plant would create at a fraction of the cost – the desal proposal had few friends and, unsurprisingly, was rejected by the voters. With desal out of the way, the MPWMD quickly bumped up the size of their pet project, the New Los Padres Dam, to 24,000af.

The Final EIR/EIS

The Final EIR/EIS for the New Los Padres Dam was released in 1994. Its most notable feature was the way it used accounting tricks to grossly underestimate the dam’s cost, something denounced as “pure public relations” by Dale Hekhuis, a former dam supporter and Water Board member. Residents of Cachagua, the community that would have to host the enormous dam, and the environmental community, led by the Sierra Club, quickly organized in opposition. Vintners in Cachagua filed suit alleging the EIR/EIS had not sufficiently analyzed impacts to their industry.

Although the political leadership of the Monterey Peninsula was solidly behind the dam and voter approval was more or less considered a done deal, Cachagua residents and the Sierra Club began a campaign focused on the dam’s growth inducing impacts, particularly on the fact that the dam would allow thousands of new water connections to be approved, but would still run dry in times of drought – making future rationing episodes even worse, as there would be more people connected to the system.

The SWRCB Suddenly Rules on the Question of Illegal Diversions

An election asking the voters to give the MPWMD permission to build the New Los Padres Dam, and also permission to sell bonds to pay for it, was set for November 1995. Just as the campaigns for and against the dam were really getting underway, the SWRCB, on July 6, 1995, released Order 95-10, ruling on the complaint first filed by the Carmel Valley Steelhead Association 8 years earlier.

Order 95-10 found that, rather than the 751,608afa of pre-1914 appropriative rights claimed by Cal-Am, Cal-Am actually had pre-1914 appropriative rights to only 1,137afa. This number was the most generous estimate of the amount of water that had been diverted from the Carmel River to the Monterey Peninsula in a year prior to 1914 that the SWRCB was able to find. They could easily have picked a lower estimate.

The SWRCB also noted that under License 11866, issued in 1986, Cal-Am had a right to divert 3,030afa to storage behind Los Padres Dam – and eventually to the Monterey Peninsula. They pointed out, however, that Cal-Am could not take full advantage of this right, because siltation had left less than 3,030af of storage behind Los Padres Dam available. As they estimated that only 2,179af of storage remained behind the dam, they concluded that no more than that was currently available to Cal-Am under License 11866.

Finally, they ruled that Cal-Am had a riparian right to divert 60afa from the river to use in irrigating the riparian vegetation, as they were being required to do as mitigation for dewatering the river. This meant that while Cal-Am’s total rights amounted to 3,376afa, they could only divert 3,316afa for delivery to their customers. As Cal-Am was actually diverting about 14,106afa at that time, Order 95-10 found that they were illegally diverting about 10,730afa.

Order 95-10 went on to find that the river’s public trust resources were, in fact, being harmed by the illegal diversions, but the SWRCB said they would temporarily suspend ordering the illegal diversions to stop if Cal-Am would take action to:

a)     mitigate the impact to pubic trust resources of the diversions; and

b)    develop and diligently pursue a plan for getting legal water from the river or other sources.

Order 95-10 also required that Cal-Am not increase diversions and that urban water conservation measures be implemented with a goal of 15% conservation in 1996 and 20% in each subsequent year. It also suggested that Cal-Am immediately reduce its illegal diversions by pumping more water from the Seaside Groundwater Basin.

And – the very same day, July 6 1995 – the SWRCB handed Cal-Am a way to legalize its Carmel River diversions. They issued Decision 1632 granting the MPWMD the right to divert 24,000afa to storage behind the New Los Padres Dam, should it be built. As the plan was for Cal-Am to contract with the MPWMD to use the water from the dam for their customers on the Monterey Peninsula, Cal-Am’s diversions could be legalized and the problem solved.

The timing of the release of Order 95-10 and Decision 1632, right at the start of the dam campaign, seemed more than a little suspicious. It appeared that the SWRCB was threatening to cut off water to the Monterey Peninsula unless voters approved the dam. This suspicion was strengthened by the fact that local dam supporter and former Supervisor, Marc Del Piero was a member of the SWRCB.

If that was the reason Order 95-10 was released when it was, it backfired.  People didn’t like the idea of being strong-armed into voting for a growth-inducing and monumentally expensive dam. When the election arrived, the dam was soundly rejected.

Cal-Am Says They’ll Build the Dam Themselves

Following the defeat of the dam at the polls, Cal-Am announced they would take over the dam from the MPWMD and build it themselves. They could do this because, as a private company, they had no need to ask permission from the voters.

Cal-Am justified the decision to cram the dam down the throats of voters who had just rejected it, by claiming that people really supported the dam, but had voted against it only because they didn’t like the MPWMD’s financing scheme. This was ridiculous not only because the financing scheme for the dam had been a complete non-issue during the campaign, but also because, as a public agency with the ability to sell lower interest bonds, the MPWMD could clearly have financed the dam more cheaply than Cal-Am. Cal-Am was essentially arguing that people had rejected the dam because they wanted to pay more for it.

But things didn’t go Cal-Am’s way. First, the courts ruled in favor of the Cachagua vintners in their suit challenging the adequacy of the EIR/EIS. This meant a long delay as new studies were undertaken and portions of that document rewritten and recirculated for comment.

Then, in 1996, the United States Fish & Wildlife Service listed the California Red-Legged Frog as threatened under the Endangered Species Act and, a year later, the NMFS added the Central Coast steelhead population to the threatened list. These rulings made permits for a main stem dam much more difficult, if not impossible, to obtain.

Cal-Am failed to meet Order 95-10’s 20% conservation goal in 1997 and the SWRCB proposed to fine Cal-Am $168,000. Cal-Am managed to settle with the SWRCB by agreeing to work with the Pebble Beach Co. on water saving measures and by agreeing to reduce illegal Carmel River diversions by 15%.

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Fishing the Carmel River Lagoon

Fred Keeley gets Involved

Local Assemblyman, Fred Keeley, convened a group of stakeholders, including hospitality, real estate and environmental representatives to try to work out a compromise project or set of projects. The environmentalists were willing to agree to a plan that would replace the water being illegally diverted from the Carmel River, but they didn’t want projects that would provide extra water for growth. The real estate representatives said this was unacceptable because people with undeveloped legal lots of record should have the opportunity to build on their lots. They demanded a plan that would provide enough water, over and above that needed to replace the illegal diversions, to allow construction on legal lots of record.

When the environmentalists asked the real estate representatives to define how much water would be needed to service existing lots of record and they were unwilling to do so, the environmentalists began to suspect that the legal lots of record argument was simply a smokescreen and what the real estate people really wanted was enough water to support new subdivisions. Accordingly, the environmentalists called the bluff by agreeing to support a plan that would provide water for legal lots of record, provided new connections would actually be legally limited to existing lots.

The real estate people rejected this proposal and the negotiations broke down.

The PUC then demanded that Cal-Am prepare a contingency plan describing how they intended to obtain a legal source of water if the dam wasn’t built. But, wisely lacking confidence in Cal-Am’s willingness or ability to do this, Keeley got a bill passed into law requiring the PUC to study the alternatives themselves and to prepare the contingency plan.

The MPWMD, meanwhile, attempted to resurrect the idea of a small local desal plant that could provide drought protection while helping to offset the illegal diversions, but the idea was strenuously opposed and soon killed by dam proponents who, as before, feared construction of such a plant would doom the dam.

The PUC Takes Over

As required by Keeley’s legislation, the PUC began the process of developing a “Plan B,” and, by 2002, had begun focusing on a desalination plant, called the Coastal Water Project, that would eliminate the illegal diversions and drought-proof the Monterey Peninsula by producing 10,379afa. In early 2003, Cal-Am bowed to reality and declared the dam dead, indicating that they now preferred to move forward with the PUC’s Plan B desal plant.

Since that time, the debate has mainly focused on how large a desal plant to build, whether it should provide extra water for growth, and whether it should be owned by Cal-Am or a public agency. We’re not going to go into all of that here. Suffice it to say that the Final EIR for the Coastal Water Project has recently been released and can be viewed here.

Though the New Los Padres Dam still has its supporters, the prospects of it being resurrected have grown ever dimmer as the Carmel River was officially listed as Critical Habitat for Central Coast Steelhead, in 2005, and the steelhead’s listing was reaffirmed in 2006.

In 2007, the SWRCB issued Permit 20808, giving Cal-Am the right to divert 2,426afa from the Carmel River for injection into the Seaside Groundwater Basin, as part of the “Aquifer Storage & Recovery Project” (ASR). The diversions can only take place during the rainy season, when there is sufficient water in the river to ensure that public trust resources will not be harmed. The idea is to store the water in the Seaside Groundwater Basin and pump it back out when it is needed. The problem is that only a small amount of the injected water will actually be recoverable.

Cal-Am has also applied to the SWRCB (Application A30215) for the right to divert an additional 2,964afa from the Carmel River – an amount which they hope the SWRCB will find, together with their existing rights, can be safely diverted without harm to steelhead or riparian vegetation. An EIR for this application is currently being prepared by the MPWMD.

Meanwhile, tiny Sand City, frustrated that lack of water is hindering their grandiose development plans, is building their own 300afa desalination plant. 206afa of that water is slated to fuel Sand City’s growth plans, while the extra 94afa will be sold back into the Cal-Am system.

And while all of this has gone on, Cal-Am has continued its illegal diversions; diverting an average of 10,978afa from 1995 through 2007, with illegal diversions ranging from a high of 9,471af to a low of 7,007af.

Adjudication of the Seaside Groundwater Basin

The reduction from the pre-1995 average of 14,106afa in diversions to 10,978 was achieved through a combination of conservation and, in accordance with the SWRCB’s suggestion, increased pumping of the Seaside Groundwater Basin.

But the Seaside Groundwater Basin is unable to sustain the increased level of pumping and, with saltwater intrusion becoming an increasingly serious threat, water rights to the Basin have now been adjudicated by the courts and, beginning this year, Cal-Am must reduce its pumping there.

Cease and Desist

In January 2008, the SWRCB issued their momentous draft Cease and Desist Order. Click here to see what we had to say about it at the time.

On October 20, 2009 came the fatal vote to adopt a slightly modified version of the Order.

The final version of the Order (Order WR 2009-0060) was released last week. Here’s the core of what it says and does:

It finds that Cal-Am has violated Order 95-10 and orders Cal-Am to end all illegal diversions from the Carmel River by 12/31/2016 (the year the Coastal Water Project is expected to come online).

It forbids Cal-Am to increase illegal diversions from the Carmel River to replace the water being lost due to reduced pumping of the Seaside Groundwater Basin.

It demands that Cal-Am reduce illegal diversions by the full amount recovered from the ASR project each year.

It demands that Cal-Am reduce illegal diversions by the amount entering the broader Cal-Am system from the Sand City desal plant.

It orders Cal-Am to reduce their system losses from the current 12%, to 7% by fixing leaks and replacing pipes and rejects Cal-Am’s request to wait until the PUC grants them a rate increase before doing this. In the words of the SWRCB: Private businesses acting illegally are not excused from immediately complying with the law in order to make sure they can recoup their costs from their customers.

It asks Cal-Am to offset another 100afa of illegal diversions by putting programs in place to reduce the use of potable water for irrigation of landscaping.

It specifies that any community wishing to develop its own water supply, in the manner of Sand City, must first eliminate its share of the illegal diversions before using the water to support additional growth.

It forbids Cal-Am from diverting Carmel River water for service to new connections, or intensifications of use at existing connections, unless all approvals and permits were obtained prior to 9/2/09.

And, perhaps most importantly, it provides a schedule under which illegal diversions must be reduced in the coming years. This schedule declares 10,978afa (the average total diversion from the Carmel River between 1995 and 2007) to be the “baseline.” In the current 09/10 water year (water years begin on October 1), Cal-Am must reduce diversions by at least 549af from the baseline. Allowed diversions for this year will be further reduced by the 145af expected to be recovered from the ASR project, and the 75af expected to be produced by the Sand City desal plant, for a total reduction of 769af from baseline. This leaves Cal-Am with the right to divert no more than 10,209af from the Carmel River in the current water year.

This reduction is not nearly as draconian as some would suggest. In fact, it’s very close to the amount Cal-Am’s been diverting in recent years with normal or better than normal rainfall. So unless this turns out to be a dry year, Cal-Am would probably be able to achieve these reductions with very little hardship to themselves or their customers. And remember that only 549af of this reduction is actually lost water. The rest of the reduction will be replaced from other sources.

In the 10/11 water year, the mandatory reduction from baseline remains at 549, but after that it increases by 121af each year until the 15/16 water year, when it jumps to a 242af increase. The bottom line is that, even in the 15/16 water year, the total amount of mandatory reduction from baseline will be only 1,275af. Any other reduction in diversions will be for water that has been replaced by another source. 1,275afa is the total amount of water that the Monterey Peninsula could actually lose under this order until the final elimination of all illegal diversions in the 16/17 water year – and by that time the Coastal Water Project is expected to have replaced all the illegally diverted water.

And if the Coastal Water Project hasn’t been completed on schedule, there’s still an out. Either the MPWMD or Cal-Am can apply for relief from the Order if a moratorium on new connections has been imposed within 18 months of the adoption of the Order, demand for potable water by Cal-Am customers has been reduced by 13% from the adjusted baseline for the year in question, and health and safety would be threatened without relief from the Order.

So why are so many people treating this like the end of the world? Why have the MPWMD and Cal-Am filed suit? Are they genuinely afraid that these reductions, combined with the court mandated reductions in pumping from the Seaside Groundwater Basin, will add up to something that really will destroy the hospitality and real estate industries and put residents back on 50 gallon per day rationing? We’re skeptical.

We’re guessing that Cal-Am’s biggest problem with the Order is the requirement that they get going with replacing their leaky pipes before they get permission to charge the ratepayers for it. We’re guessing that most of the local notables who rode the busses to Sacramento allowed themselves to be whipped into hysteria without actually reading the draft Order or really understanding what the SWRCB was proposing. We’re not going to speculate about the MPWMD.

A Few Final Twists

The SWRCB decided, at the last moment, to recognize a 365afa water entitlement granted years ago to Pebble Beach by the MPWMD in exchange for Pebble Beach building a reclamation plant that has helped reduce the use of potable water for watering golf courses. Pebble Beach has been selling off these water rights to people looking to build homes. Carmel River diversions made by Cal-Am in order to serve people holding rights under this entitlement will be exempted from the prohibitions of the Order (in other words, the baseline will be increased by the amount of water being diverted to serve these entitlements – further reducing the impact of the Order on Cal-Am customers), but the people receiving water under the entitlement will still be subject to any conservation programs imposed to reduce illegal diversions. The right to divert Carmel River water to serve these entitlements will end December 31, 2016.

The Order also decrees that within 2 years Cal-Am must implement one or more small projects sufficient to produce or save at least 500afa (to be offset against illegal diversions). They must identify what these projects will be within 90 days or “fully justify” why more time is needed.

In addition, Cal-Am will now be required to post on their website quarterly reports, signed under penalty of perjury, providing monthly summaries of pretty much everything happening with local water. The amount being diverted from the Carmel River, the amount being produced by Sand City and any other projects, lists of new connections, etc.

Sounds like a new era of openness and accountability. No wonder they can’t stand it!

November 6, 2009 Update: A local Monterey County Court has granted the MPWMD’s request for a temporary injunction preventing Order WR 2009-0060 from going into effect – for now anyway.

April 22, 2010 Update: The case has been transferred to Santa Clara County and a Santa Clara County judge has, predictably, removed the temporary injunction. The Cease and Desist Order is now in effect. See this post for more details.

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One Response to Order WR 2009-0060: State Water Board Cracks Down on Cal-Am’s Carmel River Water Addiction

  1. Sparky says:

    Excellent briefing notes! So I take it that if CalAm really does commence a leak repair program, the Valley road will be torn up on a scale that we have never seen!

    Most public water agencies have a annual budgeted fund for such programs – it is responsible asset management. Not having CalAm’s budget available, I wonder how their asset management allocations compare with similar sized publicly owned water retailers.

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