TAC MPRWA Agenda Packet 06-20-16

Agenda
Monterey Peninsula Regional Water Authority (MPRWA)

Technical Advisory Committee (TAC)
Regular Meeting
10:30 AM, Monday, June 20, 2016
Monterey Council Chambers
580 Pacific Street, Monterey
Monterey, California
CALL TO ORDER
ROLL CALL
PLEDGE OF ALLEGIANCE
REPORTS FROM TAC MEMBERS
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 TAC and which is not on the agenda. Any
person or group desiring to bring an item to the attention of the Committee may do so by
addressing the Committee during Public Comments or by addressing a letter of explanation to:
MPRWA TAC, Attn: Monterey City Clerk, 580 Pacific St, Monterey, CA 93940. The appropriate
staff person will contact the sender concerning the details.
APPROVAL OF MINUTES
1.
Approve Minutes from March 7 and April 4, 2016 - Romero

CONSENT ITEMS
CONSENT AGENDA consists of those items which are routine and for which a staff
recommendation has been prepared. A member of the public or a Councilmember may request
that an item be placed on the regular agenda for further discussion.
2.
Receive Report on the Submission of a Brine Disposal Agreement and a Return Water
Agreement to the CPUC - Cullem
3.
Receive Report on Water Authority Motion on April 19, 2016 for Modification to the CPUC
Phase 2 Process to Include the 36 inch Monterey Transfer Pipeline in the GWR Decision Cullem
4.
Receive Report on Joint Meeting with the Water Authority Board on August 11 for
Presentations on Deep Water Desal and People's Desal- Cullem
AGENDA ITEMS
5.
Receive Update on GWR Schedule and Financing - Stoldt
6.
Receive Report and Discuss the Detailed MPWSP Schedule Including Status of Upcoming
Permit Requirements and the Status of the Test Slant Well - Crooks
Created date 06/16/2016 3:52 PM
Monday, June 20, 2016
7.
Receive Report and Discuss the Technical, Financial and Environmental Reasons for Cal
Am Use of a Transfer Pipeline Through Monterey Rather Than Through Los Laureles
Grade - Crooks
8.
Receive Report and Discuss the Water Supply Needs of the Marina Coast Water District VanderMaaten
ADJOURNMENT
The Monterey Peninsula Regional Water Authority 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 Monterey 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 35.10235.104 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, speech-to-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 Monterey 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.
MI NUT E S
MONTEREY PENINSULA REGIONAL WATER AUTHORITY
TECHNICAL ADVISORY COMMITTEE (TAC)
Regular Meeting
10:30 AM, Monday, March 7, 2016
COUNCIL CHAMBER
580 PACIFIC STREET
MONTEREY, CALIFORNIA
CALL TO ORDER
ROLL CALL
Members Present
Members Absent:
Alternate Scott Dick, Huss, Riley, Sciuto, Stoldt,

Van Der Maaten, Executive Director Cullem
Riedl
Staff Present:
Legal Counsel Freeman, Clerk Romero
Member Stoldt reported that Dale Hekhuis passed away in February, who was a former
member of the Water Management District. Director Cullem acknowledged
remembrance of Dale Hekhuis.
PUBLIC COMMENTS
Executive Director Cullem opened comments, and receiving no requests to speak
closed public comments.
CONSENT ITEMS
1.
Receive Latest CPUC Schedule for Consideration of the Monterey Peninsula Water
Supply Project (MPWSP) - Cullem
Action: Received schedule; Discussed; Accepted amended CPUC schedule
Member Riley said that the date on the California Public Utilities Commission (CPUC)
report is incorrect, instead of April 11 & 12 it should be April 14 & 15.
Chair Cullem pointed out that all rebuttal testimony to the CPUC is due by March 22,
2016.
On a motion by Member Sciuto, seconded by Member Stoldt, and carried by the
following vote, the Technical Advisory Committee accepted the CPUC Schedule for
Consideration of the Monterey Peninsula Water Supply Project as amended with dates
revised to April 14 & 15:
AYES:
7 MEMBERS:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
0
1
0
0
MEMBERS:
MEMBERS:
MEMBERS:
MEMBERS:
Huss, Dick, Stoldt, Sciuto, Van Der Maaten,

Riley, Cullem
None
Riedl
Nine
None
MPRWA Minutes
Monday, March 7, 2016
AGENDA ITEMS
2.
Review Report, Discuss, and Make Recommendations to the Water Authority Board on
the Supplemental Testimony Submitted to the CPUC for the MPWSP - Cullem
Action: Discussed; Recommended no action be taken
Chair Cullem said that the Monterey Peninsula Regional Water Authority (MPRWA) has
requested that the Technical Advisory Committee (TAC) discuss whether rebuttal
testimony should be submitted to the California Public Utilities Commission (CPUC) by
March 22nd. He said that specifically the testimonies by Thomas Moore and Curtis
Hopkins have information that the TAC may want to recommend be disputed in rebuttal
testimony.
Member Riley said that Thomas Moores testimony included a letter from the State
Water Board from 2013 that suggested that Cal Am has an intake under the ocean bed
and salvaged water rights apply. He said this is incorrect and Cal Ams intake is not
under the ocean, but under land. He questioned whether this misinformation changes
the CPUC argument.
Don Freeman said that rebuttal testimony must reference testimony submitted on
January 22nd, or its too late.
Member Van Der Maaten said that if rebuttal involves water quality, then it can be
included. He referenced Svindlands testimony which mentions water quality.
Don Freeman suggested submitting two rebuttals, one referencing the testimony on
water quality, and one referencing testimony on Cal Ams intake location.
Chair Cullem opened public comment:
Michael Bear, resident, stated in reading Curtis Hopkins testimony, his data says
there may be 12% more return water. He also said that Hopkins testimony says
the water is being pumped south of the river and being returned north of the river
which he believes is a legal problem.
Tom Rowley, representing Monterey Peninsula Taxpayers Association (MPTA),

said that the medias report regarding the January 22nd CPUC hearing did not
have much emphasis on ratepayer taxes. He said MPTA believes Ground Water
Replenishment (GWR) should be a backup project and use the portfolio
approach with the larger desal plant. He voiced concerned about the ratepayers
having an increase in water bills and are not being considered. He asked the
TAC if anyone can testify in person during the rebuttal CPUC hearings on behalf
of the ratepayers.
MPRWA TAC Meeting Minutes
Regular Meeting Minutes - Monday, March 7, 2016
2
MPRWA Minutes
Chair Cullem and the board addressed public comments.

Member Sciuto said that the rebuttal is submitted in writing on March 22nd, there is no
public hearing opportunity. Member Stoldt commented that the impact on ratepayers is
the first priority for the CPUC.
Chair Cullem said that a cost comparison study has been prepared by Member Stoldt,
and the Authority is concerned about the impact to the ratepayer. He continued that
there is risk on both sides and that is why the portfolio approach is being pursued. He
said the issue at hand is how and if the Authority should respond to the testimonies by
Hopkins and Moore.
Member Huss responded to Michael Bear saying that the growers have been affected
by seawater intrusion.
Member Van Der Maaten said that the Salinas Valley basin has sub basin lines and
there is a big difference in water quality between the north and south and that has not
been looked at in terms of the modeling. He said it is important to recognize that the
water intake should be recognized in the modeling and should be mitigated
appropriately.
Member Stoldt said that in data from the pause in the test well pumping, there was a
clear decline in water level from the 180, and if its not coming from agricultural
pumping, then there could be a pressure zone. He said there is a lot of information to
weave together in a rebuttal.
Member Riley said that the reason there is opposition to slant wells, is because there is
no solid science behind it. He said he does not believe Cal Ams test period data they
presented to the public as a continuous pumping, when he knows that the test well did
not pump for 3 months. He continued that the Coastal Commission also acknowledges
that there are differences in Cal Ams data points, and questions which agency is going
to parse together this data.
Chair Cullem responded that the CPUC has a process and all the data from the test
wells will be fed into the model and revised EIR, and at that time address issues being
raised about the test wells.
Member Riley said he has been asking the TAC to look at potential litigation risk, and
the Authority has been going along with blinders on as far as litigation. He questioned
what plan B is if there is litigation that stops or slows the slant wells.

3
MPRWA Minutes
Chair Cullem voiced his understanding of Member Rileys concerns about potential
litigation and said that the Authority could agendize this issue at a future meeting and
have legal counsel address it.
Don Freeman said that all parties are aware of potential litigation, but if the Authority
focuses on litigation risks and doesnt move forward in its process, it may hurt the Water
Supply Projects outcome.
Member Sciuto said the Authority should agendize an item to discuss potential litigation
scenarios so they are acknowledged.
Member Van Der Maaten said he believes that having a matrix of potential risks with the
corresponding mitigation to the risks would be beneficial.
Member Riley said that Cal Am has contingencies in place and he wants to know the
Water Management Districts contingency plan or plan B is for a water source.
Chair Cullem said that Plan B should be established so the Authority knows where to go
if the current plan fails. He said to find out what the matrix of liability is, its going to cost
money to have legal counsel prepare this. Member Riley suggested that the discussion
about potential litigation does not need to include a legal presentation.
Member Huss said that if the Authority starts looking at potential litigation problems for
the current plan, then Plan B litigation risks will also have to be looked at, and so on.
Member Riley said that a discussion on potential litigation can wait.
Chair Cullem opened public comments:
Tom Rowley, representing MPTA, questioned why a representative from Cal Am

isnt at the meeting, and opined that an updated timetable for the Water Supply
Project available at each meeting.
Michael Bear, resident, said that the Environmental Impact Report (EIR) may
provide guidance to answer these questions. He said if aquifer intake isnt
available at Cemex then Potrero Road should be looked into. He continued that
at the monitoring well, the water was 49 percent seawater, now its 60 percent,
and it can be used as a buffer even if it doesnt have agricultural use.
Receiving no further requests to speak Chair Cullem closed public comments.

4
MPRWA Minutes
Chair Cullem asked the TAC to return to the question at hand regarding whether the
TAC should recommend that the Authority submit rebuttal testimony to the CPUC on
March 22nd.
Member Sciuto asked for clarification on which testimonies and issues to submit rebuttal
testimony for. Chair Cullem said that the issues in the testimonies are primarily those
regarding water return and intake, and if the Authority should authorize funds for
Hydrogeologist Thrupp from Geosyntec to submit technical rebuttal testimony to CPUC.
Member Stoldt said that the draft EIR may not be ready by April, depending on the
CPUC hearings. He said he believes there may be a lawsuit when the EIR comes out.
Alternate Member Dick said that in Carlsbad there were several lawsuits that delayed a
water supply project for 14 months.
Chair Cullem said there are potentially 3 testimonies that the Authority should analyze
and address during rebuttal, and the TAC needs to come to a decision on what to
recommend in time for the rebuttal deadline on March 22nd.
Member Riley said that Authority has prided itself in avoiding litigation, but questions if
the Authority will be more exposed to litigation when analyzing technical information.
On a motion by Member Riley, seconded by Member Huss, and carried by the following
vote, the Technical Advisory Committee will make no recommendation the Monterey
Peninsula Regional Water Authority regarding submitting rebuttal testimony to the
CPUC by March 22nd:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
3.
5
2
1
0
0
MEMBERS:
MEMBERS:
MEMBERS:
MEMBERS:
MEMBERS:
Huss, Riley, Sciuto, Stoldt, Van Der Maaten

Dick, Cullem
Riedl
None
None
Member Stoldt said that the Authority may choose to make rebuttal testimony
regardless of the TACs recommendation.
Review and Discuss the Policy Position Statement Adopted by the Water Authority
Board on July 11, 2013, and Make Recommendations as to Whether any Changes,
Updates, or Additional Studies are Appropriate at this Time - Cullem
Action: Discussed; Will recommend to the Authority that this item be tabled until
it is reviewed by the TAC
Chair Cullem briefly described the four basic project criteria listed current Policy
Position Statement Adopted by the Water Authority Board, and asked the Board if
anything that should be changed in the Policy Statement.
5
MPRWA Minutes
Member Riley questioned how urgent the review of this Policy Position Statement is.
Chair Cullem responded the Authority needs to have input from the TAC before
President Burnett steps down from MPRWA.
Member Sciuto said that the policy is from 3 years ago and could stand to be updated
and more inclusionary as far as the four criteria, such as having project economics be
competitive. Member Stoldt said that the four criteria in the Policy Statement should be
more defined.
Chair Cullem briefly explained the Policy Position Statement spoke about some of the
suggested additions from the Authority and some other areas that may need to be
updated.
Member Riley voiced his concern about Monterey County being part of the Governance
Committee since they have not committed to contributing to MPRWA.
Don Freeman made the suggestion that the TAC recommend that the Authority
continues this item so there would be time to go over the Position Policy Statement in
detail and make suggestions. He also suggested forming an ad-hoc committee to focus
on evaluating and making changes to the Policy.
Several members volunteered and Executive Director Cullem selected members Sciuto
and Riley to join him as the subcommittee to review and rewrite the policy, and the
board discussed tabling this item until the draft rewrite is ready.
Executive Director Cullem opened public comment:
Tom Rowley, said that until the EIR EIS comes out there arent enough facts to
evaluate risks and said updating the Policy Statement is premature. He said that
Monterey council meeting addressed rate increases but said there is a lot of
confusion in the public.
On a motion by Member Riley, seconded by Member Stoldt, and carried by the following
vote, the Technical Advisory Committee recommends that the Monterey Peninsula
Regional Water Authority table the rewriting of the Policy Position Statement until it has
been reviewed by the Subcommittee:
AYES:
7 MEMBERS:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
0
1
0
0
MEMBERS:
MEMBERS:
MEMBERS:
MEMBERS:
Huss, Dick, Stoldt, Sciuto, Van Der Maaten,

Riley, Cullem
None
Riedl
None
None

6
MPRWA Minutes
ADJOURNMENT
Meeting adjourned at 12:09 pm.
ATTEST:
Nova Romero, Committee Clerk
MPRWA President

7
MINUTES
MONTEREY PENINSULA WATER AUTHORITY (MPRWA)
TECHNICAL ADVISORY COMMITTEE (TAC)
Regular Meeting
10:30 AM, Monday, April 4, 2016
COUNCIL CHAMBER
580 PACIFIC STREET
MONTEREY, CALIFORNIA
Members Present:
Members Absent:
Narigi, Riedl, Riley, Stoldt, Van Der Maaten, Cullem

Scuito, Huss
Staff Present:
Legal Counsel Freeman, Clerk Romero
CALL TO ORDER
Executive Director Cullem called the meeting to order at 10:31am.
ROLL CALL
Member Huss and Sciuto absent. Member Van Der Maaten came in at 10:34am.
None
PUBLIC COMMENTS
None
APPROVAL OF MINUTES
1.
Approve Minutes from January 27, 2016 - Romero

Action: Approved
PUBLIC COMMENTS
None
On a motion by Member Narigi, seconded by Member Riley, and carried by the following vote,
the MPRWA Technical Advisory Committee approved the January 27, 2016 minutes:
AYES:
MEMBERS:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
0
2
0
0
MEMBERS:
MEMBERS:
MEMBERS:
MEMBERS:
Narigi, Riedl, Riley, Stoldt, Van Der Maaten,

Cullem
None
Huss, Sciuto
None
None
MPRWA TAC Minutes
Monday, April 4, 2016
CONSENT ITEMS
PUBLIC COMMENTS
Tom Rowley, from the Monterey Peninsula Taxpayers Association (MPTA), asked for
clarification on the time of the California Public Utilities Commission (CPUC) workshop
in April.
Receiving no further requests to speak Director Cullem closed public comments.

Member Stoldt responded to Mr. Rowley that the workshop on April 14th with the CPUC during
the next Monterey Regional Peninsula Water Authority (MPRWA) meeting, and the topic will be
the extended schedule for the Environmental Impact Study (EIR), and the conversation will
include causes for the delay in the schedule and what can be done to expedite it. He added that
the CPUC staff present at the Workshop will be able to answer questions on behalf of the entire
organization.
On a motion by Committee Member Narigi, seconded by Committee Member Riley and carried
by the following vote, the MPRWA Technical Advisory Committee Approved the Consent Items:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
2.
6
0
2
0
0
MEMBERS:
MEMBERS:
MEMBERS:
MEMBERS:
MEMBERS:
Narigi, Riedl, Riley, Stoldt, Van Der Maaten, Cullem

None
Huss, Sciuto
None
None
Receive "Notice to Parties" Concerning the CPUC Schedule for the Monterey Peninsula Water
Supply Project (MPWSP) - Cullem
Action: Approved
AGENDA ITEMS
3.
Receive Update on GWR Schedule and Financing - Sciuto/Stoldt

Action: Received update; Discussed
Member Stoldt gave an update on the Ground Water Replenishment (GWR) schedule and
briefly explained different processes that are affecting the schedule, such as: water rights
negotiations and protests, the water purchase agreement, and the biological opinion on wildlife.
The Office of Ratepayer Advocates (ORA) has found that most of their criteria on GWR has
been met but want to know what the soft cost cap will be. He added that an energy purchase
agreement was approved which will provide the power needed for the advanced water
treatment facility and pump station at a discounted rate compared to the desal project. He also
said the Marina Coast Water District approved a contract for the design of the pipeline from the
water treatment facility to the Seaside Basin. Member Stoldt said that GWR will be more cost
effective with a smaller desal plant.
MPRWA TAC Minutes
PUBLIC COMMENTS
Tom Rowley, MPTA, asked for clarification on the soft cost cap. He also asked if there is
anything that will cause a delay to GWR.
Receiving no further requests to speak Director Cullem closed public comments.

Member Stoldt responded to public comment saying that he doesn't see anything that would be
a show stopper to GWR. He explained that the soft cost cap is the process in which a public
authority looks at all the bids for a project and if the cost comes in below a certain amount that
has been pre-established as a cap, then the project will be approved by the public authority.
Member Riley asked about debt equivalency for GWR. Member Stoldt responded that ORA
considers debt equivalence a non-issue and all effects have been mitigated.
Director Cullem said GWR is the most promising project that will get through the milestones
before desal starts.
No action was taken by the Committee.
4.
Receive Report, Discuss, and Make Recommendations as to Whether Cal Am Can Receive
and Utilize Ground Water Replenishment (GWR) Water Should the PWM/GWR Project Come
on Line Before Cal Am's Desal Facility - Crooks
Action: Received report; Discussed; No action taken at this time
Ian Crooks from California American Water (Cal Am) gave a presentation on whether they can
receive and utilize Ground Water Replenishment (GWR) should GWR come online before the
desal facility. He showed slides of the existing pipelines and hydraulic trough area in Monterey,
wells in Seaside, and the Aquifer Storage and Recovery (ASR). He explained that in order to
get water through the existing grid, pressures have to be increased and there is a limitation to
take GWR and get around Seaside. He specified that a 36 pipeline is needed in order allow
transfer and delivery of water anywhere in the system.
During the discussion the Committee questioned whether the 36 pipeline would be necessary
without a desal plant, and the consensus was that the pipeline would be good for the long term
and it is already approved environmentally. It was discussed that the pipeline would be bidirectional to allow a larger capacity of water to be stored in ASR.
The Committee discussed the total cost of the pipeline project, which is estimated at $41
million. It was reiterated by Mr. Crooks that the 36 pipeline is necessary for multiple water
projects in the portfolio, and allow maximizing the use of GWR, ASR, and the permits for
extracting from the Carmel Valley River when the levels are high. In summary, the 36 pipeline
would allow the utilization of all excess water and store it for when water demands are higher
and the flexibility to get water around the hydraulic trough.
The Committee established that the 36 pipeline is a high priority, and although the cost is
significant the pipeline has many long term benefits to the entire water supply project. The
Committee discussed the surcharges for taxpayers to fund the pipeline project and the
possibility that they may be increased slowly over time. The Committee deliberated that the
3
MPRWA TAC Minutes
pipeline project is necessary to maximize GWR and ASR, and will accommodate the small or
large size desal plant.
Member Van Der Maaten questioned if the pipeline project funding could be included with the
approval of funding for the GWR. Member Stoldt said that this is worth looking into. Mr. Crooks
said that the 36 pipeline is a standalone Cal-Am project and can be funded and approved
separately before the desal plant. Executive Director Cullem said that it may be an advantage
to the public to have phase II of the surcharge collected earlier and at a lower level to help fund
the pipeline project.
Member Stoldt said that the Committee should give a technical recommendation to the
Monterey Peninsula Regional Water Authority (the Authority) in May or June of this year after
more information is obtained. Member Riley suggested requested expedited the surcharge to
get the funding started for the pipeline project to avoid have a steep increase for the rate payer.
PUBLIC COMMENTS
Tom Rowely, MPTA, said that another $41 million for extra for the pipeline project will be
an added burden to the ratepayer. He also said that the Authority should know that the
excess flow in the Carmel River will be counted against the pumping from the river and
affects the cease and desist (CDO) extension.
Member Stoldt reported in response to Mr. Rowley that in 2010 and 2011, 1,100 acre feet of
excess water was able to be stored for later use. He said ideally any excess water would be
stored for later when it is needed, but the Fish and Wildlife group would like the water removed
from the Carmel River put back in the same year. Ian Crooks responded to Mr. Rowley and
said that the $41 million for the pipeline project is just an estimate, and some money is already
applicable toward this amount.
At the end of their discussion, the Committee decided to bring back this item at a future meeting
when there is more information available before giving a recommendation to the Authority.
No action was taken on this item.
5.
Receive Suggestions from Authority President Jason Burnett on Modifications to the Policy
Position Statement and Discuss Progress of the TAC Ad Hoc Committee Considering Changes
to the Statement - Cullem
Action: Received Suggestions to Policy; Discussed Progress of the Ad Hoc Committee
Executive Director Cullem explained that at the last meeting the Committee formed an Ad Hoc
Committee consisting of George Riley and Paul Sciuto, and has met to discuss modifications to
the Policy Position Statement for the Authority. It was agreed that the policy should be more
succinct and clear, and possibly separate the objectives and tasks. Authority President Burnett
has given some suggestions on modifications to the existing Policy Position Statement, and the
Ad Hoc Committee will discuss these suggestions at their next meeting.
MPRWA TAC Minutes
PUBLIC COMMENTS
None
The Committee reviewed the input from Authority President Burnett, and agreed that the Ad
Hoc Committee will have another meeting to modify and shorten the Position Policy Statement,
and bring back the modified Statement to the Committee when it is finalized.
ADJOURNMENT
Meeting adjourned at 11:44am.
Respectfully Submitted,
Approved,
Nova Romero, Committee Clerk
President MPRWA
Monterey Peninsula Regional Water Authority

Agenda Report
FROM:
Date: June 20, 2016

Item No: 2.
Executive Director Cullem
SUBJECT: Receive Report on the Submission of a Brine Disposal Agreement and a

Return Water Agreement to the CPUC
RECOMMENDATION:
It is recommended that the Water Authority TAC receive an update on the Brine
Disposal Agreement and an update on the Return Water Agreement.
DISCUSSION:
BRINE DISPOSALSupplemental testimony on the issue of "brine disposal" was presented to the CPUC
Administrative Law Judge (ALJ) on January 22, 2016. At that time a draft term sheet on
brine disposal was submitted to the CPUC by representatives of Cal Am, the MPWMD,
the MPWPCA, the Surfriders Association, and the MPRWA. Its purpose was to reduce
the likelihood of extensive rebuttal or litigation over brine disposal monitoring, resolve
one of the outstanding issues in the "large" supplemental agreement of 2013, and incur
the least possible cost to the ratepayers.
Rebuttal testimony on brine disposal was submitted to the ALJ on March 22, 2016
following two months of settlement discussions, during which the Authority had the
assistance of expert Al Preston, Ph.D., P.E., of Geosyntec (SPI sub-consultant).
A proposed final brine term sheet was presented to the ALJ at the CPUC hearings the
week of April 11, 2016. Since that time, negotiations led to a draft Brine Disposal
Agreement that was presented to the Water Authority Board at its meeting of May 12,
2016. At that meeting the Board authorized the Board President and/or Special Counsel
to finalize negotiations, sign the agreement on behalf of the MPRWA, and submit it to
the CPUC ALJ by the due date of June 14, 2016 (accomplished).
RETURN WATEROn January 14, 2016, the Authority voted to support a draft term sheet submitted to the
CPUC as supplemental testimony on January 22 in which Cal Am would sell "return
water" to the CCSD. In addition any additional "excess return water" is to be sold to the
Castroville Seawater Intrusion Project (CSIP). Though return water and excess return
water will be sold at different rates, both are below that charged for water delivery to
ratepayers. In the case of "return water" to the CCSD, the price is based on their
"avoided costs of pumping" and for "excess water" it is the "marginal cost of production"
at the desal facility.
06/12
This situation is less than desirable from a ratepayer perspective, but the MPSWP is
required to return that portion of the water to the Salinas River Basin, and if it cannot be
sold at some price to an eligible buyer, it would have to be returned for free. Staff
supports the idea of recovering at least some funds to help offset ratepayer costs.
Since January, the involved parties, including MPRWA legal support and staff, have
negotiated a draft settlement agreement, and draft water purchase agreements (WPAs)
with the CCSD and CSIP. A complicating issue was how to assist the CCSD bridge the
gap between the funding available to build a pipeline for the return water (or construct a
new well) versus the estimated cost of construction. This issue will be addressed in the
WPAs. At its meeting of April 14, 2016 the Board authorized the Board President and/or
Special Counsel to sign the agreement on behalf of the MPRWA, and submit it to the
CPUC ALJ by the due date of June 14, 2016 (accomplished).
At that meeting, the Board authorized the Authority President and/or the Special
Counsel to send sign the final Return Water Settlement Agreement and to support the
WPAs as well as to support a grant or a reasonable loan arrangement to enable the
CCSD to build the return water pipeline.
ATTACHMENTS:
A- Final Brine Settlement Agreement as of June 14, 2016
B- Final Return Water Settlement Agreement as of June 14, 2016
ATTACHMENT A
BRINE DISCHARGE SETTLEMENT AGREEMENT (A.12-04-019)

1.
GENERAL
1.1
Pursuant to Article 12 of the Rules of Practice and Procedure of the
California Public Utilities Commission (Commission), California-American Water
Company (California American Water), Monterey Peninsula Regional Water
Authority (MPRWA), Monterey Regional Water Pollution Control Agency
(MRWPCA), the Coalition of Peninsula Businesses, the Monterey Peninsula Water
Management District, Surfrider Foundation (Surfrider), and the Planning and
Conservation League, (collectively, the Parties), to avoid the expense and
uncertainty of litigation of some of the matters in dispute between them before the
Commission, agree on the terms of this Brine Discharge Settlement Agreement
(Agreement), which they now submit for review, consideration, and approval by
the Commission.
1.2
On April 23, 2012, California American Water initiated Commission
proceeding A.12.04.019 (the Proceeding) by filing an application for a Certificate
of Public Convenience and Necessity (CPCN) for the Monterey Peninsula Water
Supply Project (Project) and Authorization to Recover All Present and Future
Costs in Rates (Application). The purpose of the Project is to replace a significant
portion of the existing water supply from the Carmel River, as directed by the State
Water Resources Control Board (SWRCB). (SWRCB Order Nos. WR 95-10 (July 6,
1995) and; WR 2009-0060 (Oct. 20, 2009).) The Project requires, inter alia, a
desalination plant and related facilities including slant intake wells, brackish water
pipelines, product water pipelines, brine disposal facilities, and related appurtenant
facilities.
1.3
The proposed brine disposal facilities would consist of a 3 million
gallon brine storage basin and a brine discharge pipeline, which would connect to a
new brine mixing structure that will connect in turn to the existing MRWPCA outfall.
The outfall rests on the ocean floor and terminates in a diffuser with 171 2-inch
ports 129 of which are open, spaced 8 feet apart. During the non-irrigation season
(November through March), Project brine would be diluted prior to discharge with
treated wastewater from the MRWPCA Regional Wastewater Treatment Plant.
During the irrigation season (April through October), that wastewater is diverted
for irrigation purposes and undiluted Project brine would be discharged into
Monterey Bay.
1.4
The Draft Environmental Impact Report (DEIR) for the Project
determined that the Projects environmental impact related to brine discharge
would be less than significant. The DEIR is presently under revision and will be
recirculated as a combined revised draft environmental impact
1
ATTACHMENT A
report/environmental impact statement (RDEIR/DEIS) pursuant to the California

Environmental Quality Act (Public Resources Code sections 21000 et seq.) (CEQA)
and the National Environmental Policy Act (42 U.S.C. sections 4321 et seq.)
(NEPA), with the Commission and the Monterey Bay National Marine Sanctuary
(the Sanctuary) as lead agencies. It is the Parties understanding that the analysis
of brine-related impacts may be revised as well.
1.5
Surfrider submitted comments on the DEIR challenging the
assumptions and methodology supporting the DEIRs conclusions concerning the
impacts of brine discharge on benthic communities and the Sanctuary ecosystem as
a whole. MPRWA also submitted comments regarding the assumptions and
methodology respecting impacts of brine discharge.
1.6
This Agreement, if adopted by the Commission, would provide a
compromise resolution of Surfriders concerns about marine impacts related to
brine discharge. This Agreement would avoid the uncertainty of a continued
challenge, based upon those marine impacts, to the adequacy of environmental
review and to Commission issuance of a CPCN for the Project, without excessive
costs to ratepayers.
1.7
The Effective Date of this Agreement shall be the date on which the
last Party executes the Agreement. Subsequent to the Effective Date, the Parties
contemplate obtaining the Commissions approval of this Agreement, and if such
approval is not obtained or if the Agreement is modified by the Commission, any
Party may exercise the options afforded in such circumstances by Section 6.6.
Nevertheless, as of the Effective Date and continuing during the period until the
Commission approves the Agreement, approves the Agreement with modifications
which are agreed to by two or more Parties, or rejects the Agreement, the
Monitoring Program obligations set forth in Section 3.1(c) shall be in force. In the
event that the Commission approves the Agreement or approves the Agreement
with modifications which are accepted by two or more Parties (unless the
Agreement is void pursuant to Section 6.6), such obligations shall continue in effect
pursuant to Section 3.1(c), as modified if appropriate. In the event that the
Commission rejects the Agreement, such obligations shall be of no effect as of the
date of the Commissions rejection. Additionally, as of the Effective Date and during
the period until the Commission grants or denies the CPCN, the Parties shall abide
by the procedures and obligations set out in Sections 2, 3.2(a), and 3.2(d).
2.
AGREEMENT TO NOT OPPOSE BRINE DISCHARGE
Surfrider will not oppose in the Proceeding the use of the MRWPCA outfall to
discharge brine from the Project desalination facility, as currently proposed in the
Proceeding. Surfrider reserves the right to support or oppose other potential Project
brine discharge locations and methods, including locations that have been identified
as contingencies or alternatives in the Proceeding. Notwithstanding the foregoing, if
any Party requests that the Commission not impose any mitigation measure
2
ATTACHMENT A
identified by a revised and recirculated DEIR to reduce or avoid the Projects

environmental impacts related to brine, Surfrider may advocate for the imposition
of such mitigation. Additionally, if a revised and recirculated DEIR identifies
significant and unavoidable environmental impacts related to the Projects brine
discharge, Surfrider may advocate for mitigation measures to reduce such impacts
to less-than-significant levels.
3.
MONITORING PROGRAM
3.1
Monitoring and Data Collection. California American Water shall
implement a brine monitoring program (the Agreed Monitoring Program) as
follows:
a.
At least one year prior to the first discharge of the Projects
brine into the Sanctuary, California American Water shall install equipment
required either to monitor the salinity levels in the seawater (Salinity) by
measuring the specific conductivity of the monitored seawater at intervals of
no more than 15 minutes or to perform any equivalent protocol required
pursuant to either an Alternative Monitoring Program (as defined in Section
3.2 below) or a standard imposed pursuant to Section 4.1(a)(B) below (the
Monitoring Equipment). California American Water shall install the
Monitoring Equipment in at least four locations (the Monitoring Locations).
Unless modified pursuant to Section 3.2 below, the Monitoring Locations
shall be within 3 meters of the ocean floor in each of the following locations,
which are depicted for illustrative purposes only on Exhibit A:
i.
The Zone of Initial Dilution Location: 10 meters
downslope of the outfall;
ii.
The Compliance Point Location: 100 meters downslope
of the outfall;
iii.
The Far Field Location: 1000 meters downslope of the
outfall, intended to measure far-field effects;
iv.
The Reference Location: 1000 meters north of the
outfall, and along the same elevation contour as the outfall, which is
intended to measure conditions without the influence of the outfall.
b.
Commencing at installation of the Monitoring Equipment and
continuing throughout the life of the Project, California American Water shall
operate and maintain the Monitoring Equipment in good working order,
ensuring that it is collecting and recording data at intervals of no more than
15 minutes or is performing all data collection required under an Alternative
Monitoring Program, as appropriate. California American Water shall replace
and maintain the Monitoring Equipment as necessary to ensure such data
collection.
3
ATTACHMENT A
c.
Beginning on the Effective Date and continuing until the date
that the Project begins to regularly provide customers with water from the
desalination component of the Project (the Project Commencement Date),
California American Water shall collect data on the Salinity, and any other
brine constituent for which a standard is imposed pursuant to Section
4.1(a)(B) below, from each Monitoring Location no less than once each
calendar month. Prior to the time the Monitoring Equipment is installed, data
shall be collected from at least the following four approximate locationson
the outfall, 500 meters north of the outfall, 500 meters south of the outfall,
and 1000 meters downslope of the outfall. After the Monitoring Equipment
is installed, data shall be collected from each Monitoring Location. Each data
collection shall include the following protocol:
i.
Collect all data recorded since the last collection, or,
during the period of monthly monitoring, take sufficient samples to
analyze Salinity, and any other brine constituent for which a standard
is imposed pursuant to Section 4.1(a)(B) below.
ii.
After the installation of the Monitoring Equipment,
check and re-calibrate the Monitoring Equipments Salinity probe
using standard commercial practices.
iii.
Record the amount of re-calibration required.
iv.
Measure and record a vertical Salinity profile, taking
measurements at depth intervals of less than one meter.
d.
Beginning at Project Commencement Date, California American
Water shall collect data at each Monitoring Location no less than once every
sixty (60) days, using the protocol described in Section 3.1(c).
e.
Following each data collection, California American Water shall
analyze the collected data and post the analyzed data on the Project website
and/or the California American Water website. Upon posting the data,
California American Water shall notify the Parties and the Commission of
such posting and shall inform them of how to obtain the raw data, which it
shall make freely available to any Party and the Commission. If at the later of
two years after the Project Commencement Date and the close of the period
of Watershed Sanitary Survey mandated by the State Water Resources
Control Boards Division of Drinking Water pursuant to the California Surface
Water Treatment Rule (California Code of Regulations Title 22, Division 4,
Chapter 17, Article 7 - Sanitary Surveys), the 24-hour average Salinity
measured at the Compliance Point Location is less than 75% of the Salinity
standard specified in section 4.1 below, for 45 days without interruption,
California American Water may reduce the frequency of data collection to not
less than once every three months.
4
ATTACHMENT A
f.
California American Water shall use commercially reasonable
efforts to obtain any regulatory approvals required for the installation of the
Monitoring Equipment or operation of the Agreed Monitoring Program or
Alternative Monitoring Program (as defined below). The other Parties shall
use commercially reasonable efforts to support California American Waters
efforts. If California American Water fails to obtain any required approval,
the Parties will meet and confer to consider how to implement a monitoring
program that achieves the purposes of this Agreement, giving preference to
programs that include in situ monitoring rather than intermittent sampling
by boat. Prior to the implementation of any such revised monitoring
program, and if California American Water is unable to obtain all necessary
approvals for such revised monitoring program, California American Water
shall undertake the following monitoring program (the Monthly Monitoring
Program), which shall in those circumstances suffice to meet the
requirements of this Agreement: (1) measure the Salinity, including the
vertical Salinity profile, at each of the Monitoring Locations not less than
once per calendar month and (2) share such data pursuant to Section 3.1(e)
above.
3.2
Alternative Monitoring Programs
a.
Consideration of Proposed Alternative Monitoring
Program. If a public agency with jurisdiction over the Project requires a
monitoring program that differs from the program set out in Section 3.1
above, California American Water shall promptly provide written notice of
such requirement to the other Parties, including a proposal to implement
such program or a combination of such and some portion of the Agreed
Monitoring Program (a Proposed Alternative Monitoring Program). The
Parties shall consider, and upon the request of any Party, meet to discuss,
whether the Proposed Alternative Monitoring Program is equally or more
protective of natural resources within the Sanctuary than the Agreed
Monitoring Program or otherwise a suitable substitute for the Agreed
Monitoring Program, with consideration given to the frequency or accuracy
of monitoring and data collection of the Proposed Alternative Monitoring
Program. Within thirty (30) days following receipt of California American
Waters notice of the Proposed Alternative Monitoring Program, each Party
may provide California American written notice of whether or not it
approves the Proposed Alternative Monitoring Program. If every Party that
responds to such notice informs California American Water that it approves
the Proposed Alternative Monitoring Program, then such program shall be
deemed the Alternative Monitoring Program that California American
Water shall implement in lieu of the Agreed Monitoring Program. A Party
that does not respond to California American Waters notice within the time
set out above shall be deemed to have approved the Proposed Alternative
Monitoring Program. The Parties hereby agree that adoption of an
Alternative Monitoring Program pursuant to this Section 3.2(a) or Section
5
ATTACHMENT A
3.2(b) below does not constitute an amendment to this Agreement, but that
such Alternative Monitoring Program shall be enforceable as if it were set out
herein.
b.
Disputes regarding the adequacy of a Proposed Alternative
Monitoring Program shall be resolved as follows:
i.
If one or more Parties inform California American
Water by their written notice that they do not approve the Proposed
Alternative Monitoring Program, then California American Water shall
either continue to implement the Agreed Monitoring Program in
addition to any monitoring program required by any public agency
with jurisdiction over the Project or initiate dispute resolution by
designating a scientist or engineer with expertise in brine discharge
and diffusion into marine environments (a Brine Expert). The Party
(or Parties) that does not approve the Proposed Alternative
Monitoring Program shall also designate (jointly, if more than one
Party does not approve the Proposed Alternative Monitoring
Program) a single Brine Expert and the two designated Brine Experts
shall promptly select a third Brine Expert (the Deciding Brine
Expert, and along with the other two, the Designated Brine
Experts). The Deciding Brine Expert shall determine whether the
Proposed Alternative Monitoring Program will be deemed an
Alternative Monitoring Program, with consideration given to the
frequency or accuracy of monitoring and data collection of the
Proposed Alternative Monitoring Program. Each Party shall have the
opportunity to present its position and supporting arguments to the
Deciding Brine Expert in writing; the Parties and the Deciding Brine
Expert shall agree on a schedule for such briefing. The reasonable
costs of the retention of all three Designated Brine Experts for the
tasks assigned them under this Section 3.2(b)(i) shall be paid or
reimbursed by California American Water. Any Party may retain at its
own discretion and expense any Brine Expert (other than the Deciding
Brine Expert) to assist in submitting comments to the Deciding Brine
Expert.
ii.
If the Deciding Brine Expert determines that the
Proposed Alternative Monitoring Program should be deemed an
implement the Alternative Monitoring Program in lieu of the Agreed
Monitoring Program. If the Deciding Brine Expert determines that the
Proposed Alternative Monitoring Program should not be deemed an
continue to undertake the Agreed Monitoring Program in addition to
any monitoring program required by any public agency with
jurisdiction over the Project.
6
ATTACHMENT A
c.
California American Water agrees to make commercially
reasonable efforts to obtain any Commission approval required for the
implementation of an Alternative Monitoring Program. The other Parties
agree to support such efforts.
4.
d.
The Parties acknowledge that pending revisions to the DEIR
may include analysis demonstrating that one or more of the Monitoring
Locations or another aspect of the Agreed Monitoring Program should be
revised. The Parties shall meet and confer promptly following the release of a
revised and recirculated DEIR to determine whether its analysis warrants
modification to the Agreed Monitoring Program. If the Parties agree to such
modification, they will memorialize such modification by a memorandum
signed by each Party and will inform the Commission by joint motion. If the
Parties do not agree to such modification, any Party may individually move
the Commission for a modification of the Agreed Monitoring Program. The
Parties hereby agree that modification to the Agreed Monitoring Program
pursuant to this Section 3.2(d) does not constitute an amendment to this
Agreement, but that such Agreed Monitoring Program as modified shall be
enforceable as if it were set out herein.
COMPLIANCE, ENFORCEMENT, AND MITIGATION
4.1
Salinity Standard.
a.
The Project shall, from the Project Commencement Date and
continuing through the life of the Project, comply with the Salinity standard
of this Agreement. The Project shall be in compliance with the Salinity
standard if the 24-hour average of measured Salinity (or, under the Monthly
Monitoring Program, each monthly Salinity measurement) is no greater than
(A) 2 parts per thousand greater than the Salinity at the Reference Location,
or (B) any other Salinity or other brine constituent standard established by a
public agency with jurisdiction over the Project, including a standard of
significance applied to the Project pursuant to either CEQA or NEPA. The
standard set out in clause (A) of this subsection shall be applied to Salinity at
the Compliance Point Location and the Far Field Location.
b.
If a public agency with jurisdiction over the Project imposes a
Salinity standard on the Project that differs from that set out in clause (A) of
Section 4.1(a) above, California American Water shall promptly notify the
other Parties. The Parties shall meet and confer to determine whether that
standard shall be incorporated into this Agreement. If the Parties fail to reach
consensus, they shall use the dispute resolution mechanism set out in Section
5 below.
4.2
Exceedances.
ATTACHMENT A
a.
If data collected from the Agreed or Alternative Monitoring
Program shows an exceedance of the standard described in Section 4.1 at the
Compliance Point Location, California American Water shall provide notice of
such exceedance to all Parties and the Commission no more than ten (10)
days following the collection of the data showing the exceedance. Promptly
upon determining that an exceedance has occurred California American
Water shall perform a thorough review to determine if the exceedance was
caused entirely by a factor or factors other than the Projects normal brine
discharge, such as but not limited to erroneous measurement or temporary
or unusual circumstance related to plant operations or the marine
environment, such that the exceedance should be excused. This review shall
consider all relevant data, including without limitation brine discharge
operational data, Salinity data from all four Monitoring Locations, the vertical
profile data from all four Monitoring Locations, any re-calibration of the
Salinity probes, and the duration of the exceedance. California American
Water may, at its sole discretion, take additional measurements of Salinity or
other brine constituents as a part of its review.
Not more than forty (40) days following the collection of the
data showing an exceedance at the Compliance Point Location, California
American Water shall provide a report of its review to the other Parties and
the Commission. The report shall include a conclusion as to whether the
exceedance should be excused. If the report determines that the exceedance
should be excused, then each Party and the Commission may determine, in
its sole discretion, whether it concurs with that conclusion and convey its
determination to California American Water in writing. Any Party or the
Commission that does not respond to the report in writing within twentyone (21) days following its receipt of the report shall be deemed to have
concurred with the reports conclusion.
b.
If data collected from the Agreed or Alternative Monitoring

c.
Program shows an exceedance of the standard described in Section 4.1 at the
Far Field Location while Salinity at the Compliance Point Location does not
exceed the Salinity standard, the Parties shall promptly and in good faith
meet and confer to develop a protocol for determining the Projects
contribution to the exceedance, which shall include a deadline for providing
the Parties a report regarding such contribution. California American Water
shall implement such protocol. Following such implementation, California
American Water shall issue a report stating its conclusion regarding the
degree of the Projects contribution to the exceedance, including a statement
expressing such degree as a percentage. The report shall make one of the
following conclusions: (i) that the exceedance was caused entirely by a factor
or factors other than the Projects normal brine discharge, such as but not
limited to erroneous measurement or temporary or unusual circumstance
related to plant operations or the marine environment, such that the
exceedance should be excused, in which case the exceedance shall be deemed
8
ATTACHMENT A
excused; (ii) that the exceedance is not excused but that the Project was
responsible for less than 51% of the total exceedance (i.e., the amount of
Salinity greater than the standard described in Section 4.1), in which case the
report shall conclude that the exceedance should be partially excused; or (iii)
that the Project was responsible for 51% or more of the total exceedance, in
which case the report shall conclude that the exceedance is not excused.
If a report provided pursuant to Section 4.2(b) or (c)
determines that the exceedance should be excused or partially excused, then
each Party and the Commission may determine, in its sole discretion,
whether it concurs with that conclusion, and convey its determination to
California American Water in writing.
d.
In the event a Party or the Commission, based on a

reasonable assessment of the report and any other evidence, declines
to concur with a report finding that an exceedance at the Compliance
Point Location should be excused, the Party or Commissions writing
shall explain the reasons for its determination. California American
Water may accept such written explanation or may opt to resolve the
variance by, first, engaging in the dispute resolution mechanism
described in Section 5 below (in attempts to resolve disputes under
this Section 4.2(d)(i), the Commission shall be considered a Party
for purposes of Section 5), and then, if no resolution is achieved,
initiating a proceeding in a court of competent jurisdiction seeking
declaratory relief as to the unreasonableness of the Party or
Commissions non-concurrence.
i.
In the event of an exceedance at the Far Field Location,

ii.
such writing shall state the Party or Commissions alternative
determination among the options set out in Section 4.2(c). California
American Water may accept such alternative determination or may
opt to resolve the variance between its determination and that of the
non-concurring Party or Commission through the procedure set out in
Section 3.2(b), except that the Deciding Brine Expert shall determine
the Project's degree of responsibility for the exceedance and make the
appropriate determination among the options set out in Section
4.2(c).
iii.
Any Party or the Commission that does not respond to
the report in writing within twenty-one (21) days following its receipt
of the report shall be deemed to have concurred with the reports
conclusion.
4.3
Non-Compliance. California American Water shall be out of
compliance with Salinity standard described in Section 4.1 if an exceedance of such
Salinity standard is not excused or is partially excused, either because: (a) a report
9
ATTACHMENT A
prepared pursuant to Section 4.2(b) or (c) determines that an exceedance should

not be excused or should be partially excused; (b) any Party or the Commission has,
based on reasonable assessment, declined to concur with a report regarding an
exceedance at the Compliance Point Location determining that such exceedance
should be excused and such declined concurrence has not been resolved in favor of
an excuse for exceedance pursuant to the process specified in Section 4.2(d)(i); or
(c) any Party or the Commission makes an alternative determination pursuant to
Section 4.2(d)(ii) and California American Water accepts, or the Deciding Brine
Expert confirms, such determination.
4.4
Mitigation.
a.
Upon a determination that the Project is out of compliance
with the Salinity standard described in Section 4.1 , California American
Water shall promptly identify and report to the Parties mitigation measures
that can further dilute the Projects brine to comply with the standard set out
in Section 4.1. Such measures may include, without limitation:
i.
Retrofitting the existing outfall to increase pressure at
the diffuser ports and/or make other modifications, potentially
including without limitation changing the angle, diameter, number, or
elevation of the ports and providing additional treatment processes or
facilities to MRWPCA to ensure that such retrofit does not
compromise that agencys ability to comply with any permits
regulating the outfall pursuant to the National Pollutant Discharge
Elimination System;
ii.
Constructing a new pressurized diffuser structure
designed solely for the discharge of brine. This would likely have
ports inclined vertically upwards and other design considerations
(e.g., increased discharge velocity) to maximize dilution;
iii.
Operating the desalination plant at a lower permeateto-brine ratio in order to produce brine effluent at reduced
concentration; or
iv.
Achieving rapid dilution of brine through another
discharge method or design that the Parties determine is mutually
agreeable.
b.
Following receipt of California American Waters list of
potential mitigation measures, the Parties shall meet and confer to select a
mutually agreeable measure, or set of measures, that will allow the water
receiving the Projects discharge to meet the standard set out in Section 4.1,
except that where an exceedance at the Far Field Location has been
determined to be partially excused pursuant to the procedures set out in
Sections 4.2(c) and 4.2(d)(ii) (for avoidance of doubt, because the Projects
10
ATTACHMENT A
contribution to the exceedance is greater than zero but less than 51%), the
selected measure need be sufficient only to eliminate the Projects
contribution to the total exceedance. The Parties shall give preference to
measures that are cost effective, capable of timely implementation, and
otherwise reasonable. The Parties shall not select any measure that would
materially interfere with MRWPCAs ability to comply with any permits
regulating the outfall pursuant to the National Pollutant Discharge
Elimination System. If after sixty (60) days from the date of the collection of
the data showing the exceedance, the Parties have not designated a mutually
agreeable mitigation option, California American Water shall undertake
either 4.4.a(i), 4.4.a(ii), or 4.4.a(iii) above.
c.
California American Water shall use all commercially
reasonable efforts to commence implementation of the selected mitigation
option within four months of its selection.
d.
The Parties agree to explore, immediately upon the execution
of this Agreement, the best mechanisms to expedite the time required for
Commission approval of the selected mitigation. In particular, the Parties
agree to investigate cost recovery mechanisms for the mitigation measures,
including the filing of a Tier 2 advice letter, which the Commission may
approve, as part of the CPCN under consideration in this proceeding. The
Parties may request modification of this Agreement to include such
ratemaking provisions.
4.5
Breach. If a Party breaches any of its obligations under this
Agreement, the Party to whom the obligation was owed may notify the breaching
Party, in writing, of such breach. The Parties shall then promptly engage in the
dispute resolution mechanism described in Section 5 below, concerning the
appropriate means to remedy such alleged breach. If the alleged breach is not
waived by all Parties or resolved pursuant to the dispute resolution mechanism
described in Section 5 below, the Party or Parties claiming the breach may initiate
proceedings in a court of competent jurisdiction seeking injunctive relief or specific
performance to the extent permitted by law. For avoidance of doubt, noncompliance as described in Section 4.3 is not in itself a breach of an obligation under
the Agreement.
4.6
Remedies. The Parties have determined that (1) monetary damages
are generally inappropriate as remedy for breach of this Agreement, (2) it would be
extremely difficult and impractical to fix or determine the actual damages suffered
by any Party as a result of a breach, and (3) equitable damages and remedies at law
not including damages are the appropriate remedies for enforcement of this
Agreement. No Party would have entered into this Agreement if it were to be liable
in damages under this Agreement. Consequently, the Parties agree that equitable
damages and remedies at law not including damages shall be the sole remedies
available to each Party for breach of this Agreement by another Party.
11
ATTACHMENT A
5.
DISPUTE RESOLUTION.
5.1
If a dispute arises concerning any controversy or claim arising out of
or relating to this Agreement (except as set forth in Sections 3.2(b) and 4.2(d)) or
the breach thereof or relating to its application or interpretation, including without
limitation those types of disputes expressly directed to this mechanism in the
Agreement, the aggrieved Party will notify the other Parties of the dispute in
writing. If the Parties fail to resolve the dispute within fifteen (15) days after
delivery of such notice, each Party will promptly nominate a senior officer or agent
of its organization to meet at any mutually-agreed time and location to resolve the
dispute. The Parties shall use commercially reasonable efforts to reach a just and
equitable solution satisfactory to the Parties. If the Parties are unable to resolve the
dispute within thirty (30) days after the initial notice of the dispute, any Party may
request the dispute be submitted to mediation, pursuant to Section 5.2. The time
periods set forth in this Section 5.1 are subject to extension as agreed to by the
Parties.
5.2
If a dispute is not resolved pursuant to Section 5.1 the Parties agree to
first endeavor to settle the dispute in an amicable manner, using mandatory nonbinding mediation initiated and conducted under the applicable rules of the
American Arbitration Association in effect as of the Effective Date or other rules
agreed to in writing by the Parties, before having recourse in a court of law. The
Parties shall select a mediator no more than fifteen (15) days following the running
of the thirty-day deadline set out in Section 5.1, unless the Parties, each in their sole
discretion, agree to extend the deadline. Each Party shall bear its own legal
expenses, and the expenses of witnesses for either side shall be paid by the Party
producing such witnesses. All expenses of the mediator, including required travel,
and the cost of any proofs or expert advice produced at the direct request of the
mediator, shall be paid or reimbursed by California American Water. Any resultant
agreements from mediation shall be documented in writing. All mediation
proceedings, results, and documentation, including without limitation any materials
prepared or submitted or any positions taken by or on behalf of either Party, shall
be confidential and inadmissible for any purpose in any legal proceeding (pursuant
to California Evidence Codes sections 1115 through 1128), unless such admission is
otherwise agreed upon in writing by the Parties. Mediators shall not be subject to
any subpoena or liability, and their actions shall not be subject to discovery. If the
dispute is not resolved within thirty (30) days after selection of the mediator, the
mediation shall be deemed closed and the dispute deemed unresolved unless the
Parties, each in its sole discretion, agree to extend the mediation period until a date
certain; the Parties may, each in its sole discretion, agree to any number of such
extensions but such extensions shall always be until a date certain.
6.
GENERAL
6.1
This Agreement reflects a settlement and compromise of putative
claims and remedies of the Parties. The Parties have therefore entered into each
12
ATTACHMENT A
stipulation contained in the Agreement on the basis that its approval by the
Commission not be construed as an admission or concession by any Party regarding
any fact or matter of law in dispute in this proceeding.
6.2
The Parties agree that no signatory to this Agreement assumes any
personal liability as a result of the Agreement.
6.3
Each of the Parties hereto and their respective counsel and advocates
have contributed to the preparation of this Agreement. Accordingly, the Parties
agree that no provision of this Agreement shall be construed against any Party
because that Party or its counsel drafted the provision.
6.4
This Agreement supersedes any prior representations by the Parties
regarding each stipulation contained herein.
6.5
The Parties agree to use commercially reasonable efforts to obtain
Commission approval of this Agreement. The Parties shall request that the
Commission approve the Agreement without change and find the Agreement to be
reasonable, consistent with the law, and in the public interest.
6.6
The Parties agree that this Agreement is an integrated agreement
such that if the Commission rejects or modifies any portion of this Agreement, the
Parties request the Commission to provide a reasonable period for the Parties to
consider and respond to such modification. In that event, each Party shall determine
no later than two business days before the deadline imposed by the Commission for
acceptance of the modification whether it will accept the modification and shall
notify the other Parties in writing of its determination. Such acceptance may not be
unreasonably withheld. If any Party declines to accept the Commissions
modification, the other Parties may still accept the modification and request the
Commission to approve the revised Agreement in the absence of the agreement of
the Party or Parties who decline to accept the Commissions modification; provided,
however, that if California American Water or the Surfrider Foundation is among the
Parties who decline to accept the Commission's modification, the Agreement shall
be void and the Parties will request that the Commission establish a procedural
schedule to address the disputed issues.
6.7
As between the Parties, this Agreement may be amended or changed
only by a written agreement signed by all of the Parties, except that modification
made by the Commission, the adoption of an Alternative Monitoring Program
pursuant to Section 3.2, or the modification of the Agreed Monitoring Program
pursuant to Section 3.2(d) shall not be considered amendments to the Agreement.
6.8
If the Commission does not approve this Agreement, Surfrider
reserves its rights to challenge the Project on any ground available, including the
impacts of brine discharged from the Project, in any appropriate forum, Section 1
and any other provision of the Agreement notwithstanding.
13
ATTACHMENT A
6.9
Among other things, this Agreement helps to define a stable and finite
project description that will facilitate the Commissions completion of CEQA review
for the Project. The legal effectiveness of this Agreement is contingent on the
completion of CEQA review and does not irretrievably commit the Parties to
carrying out any physical activities that would be required for California American
Water to meet its obligations under this Agreement. The Commission, as the lead
agency under CEQA, the National Oceanic and Atmospheric Administration/
Monterey Bay National Marine Sanctuary , as the lead agency under NEPA, and all
responsible agencies will retain full discretion with respect to deciding whether to
approve or disapprove any commitments necessary or convenient for California
American Water to address matters relating to the discharge of brine from the
Project, including full discretion to consider, approve or disapprove alternatives,
and also including full discretion to modify commitments and/or adopt other
mitigation measures relating to brine discharge to avoid or reduce any significant
adverse physical environmental effects from the activities that are within their
jurisdiction.
6.10 Surfrider has made a substantial contribution to this Agreement and
to the resolution of other issues in the Proceeding.
6.11 This Agreement does not impact the terms of sections 3.1(a) of the
document known as the Large Settlement Agreement.
6.12 This Agreement may be executed in any number of counterparts.
14
ATTACHMENT B
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 FOR APPROVAL OF SETTLEMENT AGREEMENT

ON DESALINATION PLANT RETURN WATER
[SETTLEMENT AGREEMENT ATTACHED]
In accordance with Article 12 of the Rules of Practice and Procedure (Rules) of the
California Public Utilities Commission (Commission), California-American Water Company
(California American Water), Coalition of Peninsula Businesses (CPB), LandWatch
Monterey County (LandWatch), the Monterey County Farm Bureau (MCFB), the Monterey
County Water Resources Agency (Agency), the Monterey Peninsula Regional Water Authority
(Authority), Planning and Conservation League Foundaton (PCL), and the Salinas Valley
Water Coalition (SVWC) (collectively, the Settling Parties) 1 hereby respectfully move the
Commission to approve the Settlement Agreement on Monterey Peninsula Water Supply Project
(MPWSP) Desalination Plant Return Water (Return Water Settlement). 2 The Settling
Parties executed and entered into the Return Water Settlement on June 14, 2016, for the purpose
1
Monterey Peninsula Water Management District (MPWMD) intends to join the Settlement
Agreement upon formal delegation of authority to do so, which is anticipated to be granted by
the MPWMD board of directors at its June 20, 2016 regular board meeting. Monterey Regional
Water Pollution Control Agency (MRWPCA) also intends to join the Settlement Agreement
upon formal delegation of authority to do so, which is anticipated to be granted by the
MRWPCA board of directors at its June 27, 2016 regular board meeting.
2 California American Water files this response on behalf of the above-named parties and
provides electronic signatures in accordance with Rule 1.8 of the Commissions Rules of
Practice and Procedure.
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1463074.1 9202-008
ATTACHMENT B
of resolving certain issues presented in the above-captioned proceeding. The Return Water
Settlement is appended hereto as Exhibit A. Pursuant to Rule 12.1(a) and an extension granted
by the assigned Administrative Law Judge on May 12, 2016, this Motion is timely. 3 The
Settling Parties also convened a telephonic settlement conference on May 6, 2016, after notice of
that conference was provided to all parties on April 29, 2016, thus complying with Rule 12.1(b).
I.
PROCEDURAL 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. On September 13, 2013, the thenAssigned Commissioner, Michael R. Peevey,4 granted California American Waters motion to
bifurcate the proceeding into two phases, which have been conducted on parallel tracks.
Evidentiary hearings on Phase 1 and Phase 2 issues were held on April 11 through 15, 2016. On
April 18, 2016, eighteen parties filed a joint motion requesting the Commission issue a separate
Phase 2 decision, which joint motion was conditionally granted by Assigned Commissioner and
Administrative Law Judges Ruling on April 25, 2016. The April 25, 2016 Ruling also adopted
a schedule for future testimony, hearings and briefing on issues relevant to the development of
two alternative water sources that would precede operation of the full-scale MPWSP (assuming
the Commission eventually approves the MPWSP).
During the pendency of the proceeding described above, a controversy arose
regarding the planned production of source water for the MPWSPs desalination plant, on one
hand, and the relationship of such production to the anti-export provisions of the Monterey
3
The Return Water Settlement is submitted after the prehearing conference, held on April 11,
2016. By e-mail ruling, the assigned Administrative Law Judge granted the May 11, 2016 Joint
Motion Requesting Extension of Time to Submit Settlement Agreements and extended the
deadline for submittal of Phase 1 settlement agreements to the Commission from May 15, 2016
(30 days following the last day of Phase 1 evidentiary hearings) until June 14, 2016.
4 Commissioner Catherine J.K. Sandoval is the current Assigned Commissioner.
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1463074.1 9202-008
ATTACHMENT B
County Water Resources Agency Act (Agency Act) and to SRGB conditions and groundwater
rights of the SVWCs and MCFBs members, on the other hand. 5
II.
OVERVIEW OF THE RETURN WATER SETTLEMENT

The MPWSP includes a desalination plant that will provide a potable water supply for
California American Waters Monterey Peninsula service area. Source water for the desalination
plant will be generated from subterranean slant wells drilled adjacent to the ocean, which will
draw water from strata underlying the ocean. The location of the wells overlies the western
portion of the Salinas River Groundwater Basin (SRGB).
As part of the MPWSP, California American Water has proposed to make available
for delivery Return Water equal to the percent of SRGB groundwater in the total source water
production, as distinguished from seawater in the source water. The Settling Parties propose that
California American Water deliver Return Water to the Castroville Community Services District
(CCSD) and to the Castroville Seawater Intrusion Project (CSIP) to satisfy its Return Water
obligations. Return Water deliveries will be made in accordance with the terms, conditions, and
general principles contained in the Return Water Settlement and separate Return Water Purchase
Agreements executed between California American Water as seller and CCSD and the Agency,
respectively, as purchasers of Return Water.
The major aspects of the Return Water Settlement are as follows:
A.
Return Water Deliveries

In the Return Water Settlement, the Settling Parties agree that California American
Water will deliver Return Water to the SRGB for use in lieu of existing groundwater production.
While the specific terms of the Return Water Settlement and separate Return Water Purchase
Agreements will govern, California American Waters Return Water obligations are summarized
as follows:
Water Code, Appendix, Ch. 52.

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1463074.1 9202-008
ATTACHMENT B
(1) Reserve Water. In order to ensure California American Waters compliance with
the Agency Act, California American Water will deliver a quantity of Reserve Water in the
amount of 175 acre-feet of Return Water to CSIP upon start-up of the MPWSP.
(2) Annual Return Water Obligation. California American Waters Annual Return
Water Obligation will be calculated based on the percentage of SRGB groundwater in the
MPWSPs total source water production. Section 2.c and Appendix D of the Return Water
Settlement sets forth the formula by which the volume of the Annual Return Water Obligation
will be determined.
(3) 30 Year Obligation. California American Waters obligation to make Return
Water available for use in the SRGB to meet its Annual Return Water Obligation shall survive
for a period of 30 years following MPWSP start-up. Upon termination, expiration or nonrenewal of the Return Water Purchase Agreements, California American Water shall continue to
make Return Water available for delivery to the SRGB for use in lieu of existing groundwater
production, unless California American Water demonstrates that Return Water is not needed
either to prevent legal injury to prior groundwater rights holders in the SRGB or to avoid
significant adverse effects to SRGB groundwater resources.
(4) CCSD Delivery Volume. The Return Water Settlement provides that California
American Water will make available for delivery to CCSD a CCSD Delivery Volume of 690
acre-feet of Return Water and triggers certain delivery obligations in the event that California
American Waters Annual Return Obligation is determined to be greater than or less than the
CCSD Delivery Volume. If California American Waters Annual Return Obligation is less than
the CCSD Delivery Volume, California American Water will make potable water available for
delivery in the amount of the difference between the Annual Return Water Obligation for that
year and the CCSD Delivery Volume (the Excess Water). If California American Waters
Annual Return Obligation exceeds the CCSD Delivery Volume, California American Water will
make such surplus available for delivery to CSIP.
{00362289;1}
1463074.1 9202-008
ATTACHMENT B
(5) Reporting. California American Water will provide quarterly reports on the
quantity of Return Water delivered to each recipient under the Return Water Settlement for the
first two years of Return Water deliveries. For the subsequent three years, reports will be made
on a semi-annual basis. Thereafter, California American Water will report to the Settling Parties
on an annual basis.
B.
Compliance with the Agency Act and Protection of SRGB Groundwater

The Return Water Settlement expressly affirms California American Waters
obligation to comply with the Agency Act. The Return Water Settlement also protects SRGB
groundwater by returning water produced from the SRGB to SRGB groundwater users for use in
lieu of existing SRGB groundwater production.
C.
Reconciliation with Judicial or Regulatory Requirements

In the Return Water Settlement, the Settling Parties acknowledge that a court or
regulatory agency, including the Commission, could require California American Water to
undertake other Return Water obligations. To avoid duplicative liability to California American
Water and its ratepayers, the Return Water Settlement provides for the reduction of California
American Waters obligation to make available the CCSD Delivery Volume where such
duplication would otherwise occur.
D.
Pricing
The Return Water Settlement sets forth the formulas by which the pricing for Return
Water and Excess Water are to be determined. In general terms, the rates CCSD will pay for
Return Water and Excess Water are intended to represent, respectively: (1) the avoided costs to
produce groundwater to meet customer demand; and (2) the marginal operation and maintenance
costs for MPWSP to produce one acre-foot of potable water. CSIP will pay a rate for Return
Water intended to represent the CSIP customers marginal avoided cost for groundwater
produced for use by the CSIP customers. The Return Water Settlement contains provisions for
the annual review and update of these rates through Tier 2 Advice Letter filings.
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1463074.1 9202-008
ATTACHMENT B
E.
Service Area Extensions

Through the Return Water Settlement, the Settling Parties agree that California
American Waters certified service area for the Monterey County District shall be extended to
include certain specified delivery points and territories necessary for California American Water
to provide the deliveries and services contemplated by the Return Water Settlement. CCSD and
CSIP will not be added to California American Waters Monterey County District.
F.
Tariffs
Appendix E of the Return Water Settlement contains a set of proposed tariffs
intended to govern the rates and service for the provision of service to CCSD and the Agency,
which may be adjusted from time to time.
G.
CEQA
The Return Water Settlement is expressly contingent on the completion of CEQA
review. In the Return Water Settlement, the Settling Parties acknowledge that the lead agency
and responsible agencies under CEQA will retain full discretion to decide whether to approve the
commitments necessary or convenient for California American Water to meet the Annual Return
Water Obligations.
H.
Cooperation
Through the Return Water Settlement, the Settling Parties agree to support California
American Water negotiating and entering into Return Water Purchase Agreements substantially
in the form attached to the Return Water Settlement as Appendix C. The Settling Parties further
agree to support California American Waters ability to implement and update its tariffs to reflect
the service area extensions described in Section II.D above through a Tier 2 Advice Letter.
Additionally, the Return Water Settlement contains good faith meet and confer, as well as
dispute resolution, provisions that are intended to reconcile conflicts, if any, in the negotiation of
Return Water Purchase Agreements, specifically, and arising out of the Return Water Settlement,
generally.
{00362289;1}
1463074.1 9202-008
ATTACHMENT B
III.
BURDEN OF PROOF
Rule 12.1(d) of the Commissions Rules requires that a settlement be reasonable in
light of the whole record, consistent with law, and in the public interest in order to gain
Commission approval. The Return Water Settlement meets that standard.
The Settling Parties met and discussed the contested issues in good faith, negotiated
in defense of their respective positions, and considered various proposals to resolve the issues.
Their discussion initially led to a Return Water Planning Term Sheet, submitted to the
Commission on January 22, 2016. Negotiations to reach the Return Water Settlement followed
that filing, occurring in March through May 2016. These two sets of negotiations led to the
building of a consensus on the terms of the Return Water Settlement among a number of parties
with disparate goals and perspectives. The Settling Parties believe that this comprehensive and
inclusive process has generated a settlement document that reflects a fair and equitable resolution
of the disputed issues and represents an appropriate compromise of their well-developed and
vigorously-supported positions.
Moreover, the Return Water Settlement establishes a return water delivery arrangement
that is in the public interest, in that it assures compliance with the Agency Act, delivers Return
Water for beneficial use in the SRGB in a manner that is in lieu of groundwater pumping from
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, primarily from increased
salinity.
Accordingly, the Settling Parties respectfully submit that the Return Water Settlement, as
Rule 12.1(d) requires, is reasonable in light of the whole record, consistent with law, and in the
public interest.
IV.
COMPLIANCE WITH RULE 12.1(b)

Rule 12.1(b) requires parties to convene at least one settlement conference for the
purpose of discussing settlements in the proceeding. Notice and an opportunity to participate
{00362289;1}
1463074.1 9202-008
ATTACHMENT B
must be afforded all parties. Such notice is required to be provided at least seven (7) days before
a settlement is signed.
On April 29, 2016, counsel for California American Water notified all parties on the
service list in this proceeding of the time and place for a settlement conference, which was
convened by telephone on May 6, 2016 at 10:00 a.m. Representatives of both the Settling
Parties and of many other parties to the proceeding participated in the settlement conference.
Following lengthy settlement negotiations, the Settling Parties completed the execution of the
proposed Return Water Settlement, in compliance with the rules for notice and opportunity for
participation set forth above.
V.
FURTHER PROCEDURES
Rule 12.2 accords all parties the opportunity to file comments contesting all or part of
a settlement within 30 days of the date that a motion for adoption of the settlement is served.
Rule 12.3 provides for the setting of a hearing on a contested settlement.
As noted above, other parties to this proceeding did not execute the Return Water
Settlement. However, as these non-settling parties expressed concerns over different issues than
those resolved by the Return Water Settlement, the Settling Parties are hopeful that the nonsettling parties will not contest the Return Water Settlement.
In the event that the non-settling parties file comments expressing concerns about the
Return Water Settlement, the Settling Parties expect that there will be no disputed issues of
material fact warranting an evidentiary hearing. In either case, if the Assigned Commissioner or
the presiding ALJ wishes the Settling Parties to present one or more witnesses to testify in
explanation or support of the Return Water Settlement, the Settling Parties are fully prepared and
willing to do so.
VI.
CONCLUSION
As demonstrated above, the Return Water Settlement is reasonable in light of the
whole record, consistent with law, and in the public interest. Accordingly, the Settling Parties
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1463074.1 9202-008
ATTACHMENT B
respectfully move for the Commission to approve and adopt the Return Water Settlement as
attached hereto as Exhibit A, without modification, in the course of its decision in this
proceeding.
{00362289;1}
1463074.1 9202-008

Agenda Report
FROM:
Date: June 20, 2016

Item No: 3.
SUBJECT: Receive Report on Water Authority Motion on April 19, 2016

for Modification to the CPUC Phase 2 Process to Include the
36 Inch Monterey Transfer Pipeline in the GWR Decision
RECOMMENDATION:
It is recommended that the Water Authority TAC receive an update on the
MPRWAs motion on April 19, 2016 to include the 36 in Monterey Transfer
Pipeline in the CPUC's consideration of Phase 2 (GWR) of the Monterey
Peninsula Water Supply Project (MPWSP).
DISCUSSION:
The current Cal Am system is not capable of receiving and utilizing Ground
Water Replenishment (GWR) water should the PWM/GWR project come
on line before Cal Am's desal facility due to a "hydraulic barrier" at Lake El
Estero in Monterey.
It should be noted that the GWR EIR already includes the need for the
Monterey transfer pipeline. However, it had been anticipated that Cal Am's
desal facility, inclusive of all pipelines, would be in place before GWR was
available. With the CPUC's recent one-year delay in the desal EIR/EIS
process, the situation is now reversed.
In recognition of the schedule reversal, the amended application for CDO
extension includes a request for progress on GWR to count as a qualifying
milestone.
Cal Am already has contracts for approximately $100 million in pipelines,
tanks, etc. inclusive of the $41 million transfer pipeline. What is needed
now is CPUC approval to build the transfer pipeline earlier and to establish
a mechanism to pay for it in advance of the MPWSP Certificate of Public
06/12
Convenience and Necessity (CPCN). After the CPCN is issued, Cal Am

can request funding the remaining $60 million in pipelines, pumps, and
tanks in the CPUC rate structure eventually approved for the project.
The TAC discussed this topic extensively on April 4, 2016, but decided the
it did not have enough information to provide a recommendation to the
Authority Board (see minutes of that meeting above). At the TAC meeting
of June 20 there will be an opportunity to further address this subject under
agenda item 7.
However, due to a tight time schedule, at its meeting of April 14, 2016, the
Board decided to participate in an April 19 joint motion on the issue
(attachment A). The CPUC ALJ conducted evidentiary hearings on May 26
and is expected to render a proposed decision in July with a final decision
by August 18, 2016.
ATTACHMENTS:
A-CPUC Application 12-04-019
ATTACHMENT A


JOINT MOTION FOR A SEPARATE PHASE 2 DECISION
Sarah E. Leeper
Nicholas A. Subias
California American Water
555 Montgomery Street, Suite 816
San Francisco, CA 94111
For: California-American Water Company
sarah.leeper@amwater.com
(415) 863-2960
Bob McKenzie
Water Issues Consultant
Coalition of Peninsula Businesses
P.O. Box 223542
Carmel, CA 93922
For: Coalition of Peninsula Businesses
jrbobmck@gmail.com
(831) 596-4206
Dan L. Carroll
Attorney at Law
Downey Brand, LLP
621 Capitol Mall, 18th Floor
Sacramento, CA 95814
For: Both County of Monterey &
Monterey County Water Resources Agency
dcarroll@downeybrand.com
(916) 444-1000
John H. Farrow
M.R. Wolfe & Associates, P.C.
1 Sutter Street, Suite 300
For: LandWatch Monterey County
jfarrow@mrwolfeassociates.com
(415) 369-9405
[ADDITIONAL COUNSEL LISTED BELOW]
Dated: April 18, 2016
ATTACHMENT A
Mark Fogelman
Friedman & Springwater LLP
350 Sansome Street, Suite 210
For: Marina Coast Water District
mfogelman@friedmanspring.com
(415) 834-3800
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
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
David C. Laredo
De Lay & Laredo
606 Forest Avenue
Pacific Grove, CA 93950-4221
For: Both Monterey Peninsula Water
Management District & City of Pacific Grove
dave@laredolaw.net
(831) 646-1502
Robert Wellington
Wellington Law Offices
857 Cass Street, Suite D
Monterey, CA 93940
For: Monterey Regional Water Pollution
Control Agency
attys@wellingtonlaw.com
(831) 373-8733
Marcelo Poirier
California Public Utilities Commission
505 Van Ness Avenue
For: Office of Ratepayer Advocates
mpo@cpuc.ca.gov
(415) 703-2913
Roger B. Moore
Rossmann and Moore, LLP
2014 Shattuck Avenue
Berkeley, CA 94704
rbm@landwater.com
For: Planning and Conservation League
Foundation
rbm@landwater.com
(510) 548-1401
Michael Warburton
The Public Trust Alliance
187 East Blithedale Avenue
Mill Valley, CA 94941
For: Public Trust Alliance
warburton@sonic.net
michael@rri.org
(510) 610-0868
George Riley
1198 Castro Road
Monterey, CA 93940
For: Public Water Now
georgetriley@gmail.com
(831) 645-9914
Nancy Isakson
President
Salinas Valley Water Coalition
3203 Playa Court
Marina, CA 93933
For: Salinas Valley Water Coalition
nisakson@mbay.net
(831) 224-2879
ATTACHMENT A
Laurens H. Silver
Attorney
California Environment Law Project
P.O. Box 667
Mill Valley, CA 94942
For: Sierra Club
larrysilver@earthlink.net
(415) 515-5688
Gabriel M.B. Ross

Attorney
Shute, Mihaly & Weinberger LLP
396 Hayes Street
For: Surfrider Foundation
ross@smwlaw.com
(415) 552-7272
ATTACHMENT A


JOINT MOTION FOR A SEPARATE PHASE 2 DECISION
I.
INTRODUCTION
Pursuant to Article 11 of the Rules of Practice and Procedure of the California Public
Utilities Commission (Commission) and the November 17, 2015, Administrative Law
Judges Ruling Setting Evidentiary Issues and Schedule to Complete the Record for Phases 1
and 2 (ALJ Ruling), California-American Water Company (California American Water),
City of Pacific Grove, Coalition of Peninsula Businesses, County of Monterey, LandWatch
Monterey County, Marina Coast Water District, Monterey County Farm Bureau, Monterey
County Water Resources Agency, Monterey Peninsula Regional Water Authority, Monterey
Peninsula Water Management District (MPWMD), Monterey Regional Water Pollution
Control Agency (MRWPCA), Office of Ratepayer Advocates, Planning and Conservation
League Foundation, Public Trust Alliance, Public Water Now, Salinas Valley Water Coalition,
Sierra Club, and Surfrider Foundation (collectively Joint Parties) hereby submit this motion
for a separate Phase 2 decision. 1 Specifically, the Joint Parties request that the Commission
address the following issues in a separate Phase 2 decision: (1) the Water Purchase Agreement
between California American Water, MPWMD and MRWPCA, (2) California American
1
Pursuant to Commission Rule 1.8(d), the Joint Parties have authorized California American
Water to sign this motion on their behalf.
1
ATTACHMENT A
Waters construction of the Monterey pipeline and pump station in advance of a decision on the
Certificate of Public Convenience and Necessity (CPCN) for the Monterey Peninsula Water
Supply Project (MPWSP), and (3) financing and ratemaking related to the Monterey pipeline
and pump station facilities.
II.
NEED FOR A SEPARATE PHASE 2 DECISION

It is undisputed that the Monterey Peninsula faces substantial water supply shortages in
light of the impending deadline in the 2009 Cease and Desist Order (CDO) issued by the
State Water Resources Control Board that would greatly reduce California American Waters
ability to withdraw water from the Carmel River. The Commissions recent announcement that
the Final Environmental Impact Report/Environmental Impact Statement (EIR/EIS) for the
MPWSP will not be available until late 2017 has caused further significant delay in the
Commissions consideration of California American Waters request for a CPCN for the
MPWSP.
In light of this delay and the need for alternative sources of water for California
American Water customers, the Commission should issue a separate decision in Phase 2 on the
issues identified above, which could allow California American Water to take full advantage of
two alternative water sources: (1) the MPWMD/MRWPCA Pure Water Monterey Groundwater
Replenishment Project (GWR Project) and (2) Aquifer Storage and Recovery (ASR).
The GWR Project could supply up to 3,500 acre feet to the community as early as 2018.
MRWPCA certified the GWR Projects Environmental Impact Report (EIR) on October 8,
2015 and no litigation was filed challenging the GWR Projects EIR within the statute of
limitations. As MPWMD and MRWPCA have noted, however, the GWR Project cannot go
forward without a Water Purchase Agreement with California American Water. Thus, prompt
authorization for California American Water to enter into the Water Purchase Agreement is
essential. Similarly, an expeditious decision on the GWR Project Water Purchase Agreement is
critical to take advantage of the 1% interest rate available through the Clean Water State
2
ATTACHMENT A
Revolving Find (CWSRF), which would result in savings for California American Waters
ratepayers.
Additionally, California American Water asserts that the Monterey pipeline is necessary
for full deliverability of GWR Project water to California American Waters customers from
the GWR Project. California American Water also asserts that the Monterey pipeline would
also be used to transport water for ASR and the Monterey pump station would allow California
American Water to maximize its existing ASR facilities.2 Assuming a normal-to-wet rainy
season, California American Water asserts the Monterey pipeline and pump station facilities
would allow it to get the most out of its current ASR operating permits and potentially enable it
to inject an additional 1,000 acre feet of winter water from ASR in the winter of 2017-2018.
If the Commission issues a timely decision in Phase 2, California American Water
would be able to complete construction of the Monterey pipeline and pump station by
December 2017. Before California American may proceed with the Monterey pipeline and
pump station, however, the Joint Parties request that the Commission address the associated
financing and ratemaking.
Although Commissioner Sandoval pledged at the recent prehearing conference to
introduce a resolution to address CDO milestones, that is no reason to delay a decision on these
three issues identified by the Joint Parties. As discussed in more detail below, it is possible to
treat the Phase 1 and Phase 2 issues reasonably and fairly in separate decisions. Moreover, the
public interest is served by acting quickly and efficiently to reach a decision on these issues.
III.
PHASE 1 AND PHASE 2 ISSUES CAN BE TREATED REASONABLYAND

FAIRLY IN SEPARATE DECISIONS
The ALJ Ruling directs any party seeking a separate Phase 2 decision to explain how
the Phase 1 and Phase 2 issues, which the Ruling characterizes as substantially if not
inextricably intertwined, could be reasonably and fairly treated in separate decisions. 3
2
The Monterey pump station would not be used in connection with the GWR Project.
3 ALJ Ruling, p. 11.
3
ATTACHMENT A
Moving forward with a decision in Phase 2, however, would not pre-judge California American
Waters request for a CPCN for the MPWSP.
The GWR Project is a stand-alone project with independent utility from the MPWSP.
The GWR Project is pertinent to the MPWSP in this proceeding only because the availability of
the GWR Projects product water means that California American Water could build smaller
desalination facilities than would be needed if the GWR Project did not exist. Similarly, the
ASR wells have already been constructed and are in use, and thus they already exist completely
independent of the MPWSP.
Authorizing the construction and use of the Monterey pipeline for the GWR Project and
ASR and the Monterey pump station for ASR does not commit the Commission to a position
on the MPWSP. The Monterey pipeline and pump station can be used independently of the
MPWSP. As new facilities within California American Waters existing service territory, the
pipeline and pump station do not require a separate CPCN application. 4 The Commissions
approval can be limited to the construction of these facilities and their use for the GWR Project
and ASR only.
Additionally, the potential environmental impact of the Monterey pipeline was analyzed
in the GWR Projects EIR. 5 Issuing a decision including the Monterey Pipeline and pump
station as part of Phase 2 does not commit the CPUC to the MPWSP, and does not foreclose
This article shall not be construed to require any such corporation to secure such certificate
for an extension within any city or city and county within which it has theretofore lawfully
commenced operations. Pub. Util. Code 1001.
5 The potential environmental impacts of the Monterey pipeline were analyzed in the
Consolidated Final Environmental Impact Report for the Pure Water Monterey Groundwater
Replenishment Project (GWR Project EIR), available at
http://purewatermonterey.org/reports-docs/cfeir/. See 2.11 (discussion of CalAm Distribution
System component of GWR Project including Monterey Pipeline); 6.3.2.4 (discussion of
alternative alignments for CalAm Distribution Pipeline, including Alternative Monterey
Pipeline) and 2.3.2.6 (comparison of GWR Project to MPWSP, noting that The Proposed
Project could provide this quantity of replacement water even if the CPUC denies CalAms
application to construct and operate a desalination plant. (Id. at p. 2-12.) ). MPWMD and
MRWPCA as necessary will prepare an EIR addendum to address the Monterey pump station.
4
ATTACHMENT A
analysis of the MPWSP projects environmental impacts or of alternatives or mitigation

measure that may reduce or avoid those impacts.
Finally, addressing limited cost recovery issues related to the Monterey pipeline and
pump station in Phase 2 does not pre-approve the MPWSP or the cost recovery proposals
associated with the MPWSP as a whole.
IV.
THE COMMISSION SHOULD ACT QUICKLY AND EFFICIENTLY TO

RESOLVE THE PHASE 2 ISSUES
While the ALJ Ruling did not commit to a separate Phase 2 decision, it did provide a
target of July 2016 for a proposed decision and August 2016 for a final decision if separate
decisions were issued. 6 Considering that a separate Phase 2 decision is now necessary, the
Joint Parties urge the assigned Commissioner and Administrative Law Judge to retain these
target dates.
Although there is already information in the record regarding the Water Purchase
Agreement, the Monterey pipeline and related cost recovery, the Joint Parties recognize that it
may be necessary to provide supplemental testimony to ensure a full and complete record.
Additionally, to the extent that there are disputed issues of fact, a one-day hearing on the
supplemental testimony may be helpful. Thus, the Joint Parties propose the following
schedule:
May 9, 2016
Supplemental Testimony
May 19, 2016
Rebuttal Testimony
Week of May 23, 2016
Limited Evidentiary Hearing (if needed) and/or Possible

Settlement
June 1, 2016
Opening Briefs and/or Comments on Settlement
June 8, 2016
Reply Briefs and/or Reply Comments on Settlement
July 2016
Proposed Decision
August 18, 2016
Final Decision
ALJ Ruling, p. 12.

5
ATTACHMENT A
V.
CONCLUSION
For the reasons discussed above, the Joint Parties request that upon a showing the
Commission issue a separate Phase 2 decision on the following issues: (1) authorizing the
Water Purchase Agreement for the GWR Project, (2) moving up the construction of the
Monterey pipeline and pump station, and (3) addressing limited financing and cost recovery for
the Monterey pipeline and pump station facilities.
Dated: April 18, 2016
By:
/s/ Sarah E. Leeper

Sarah E. Leeper, Attorney
California-American Water Company
555 Montgomery Street, Suite 816
For: California-American Water Company

Agenda Report
Date: June 20, 2016

Item No: 4.
FROM:
SUBJECT:
Receive Report on Joint Meeting with the Water Authority

Board on August 11 for Presentations on Deep Water
Desal and People's Desal
RECOMMENDATION:
It is recommended that the TAC receive a report on a joint meeting with the
Authority Board on August 11, 2016 in order to receive an update on the
Deep Water Desal (DWD) Project and the People's Desal Project.
DISCUSSION:
To provide the public and the MPRWA information on the progress of the
DWD And People's Desal projects, the Authority Board has invited
proponents to make presentations to the Water Authority at its August 11
meeting.
On June 9, the Water Authority Board voted to make this a joint meeting
with the TAC. The joint meeting would be in lieu of the regular TAC
meetings for August.
Last year, the Authority requested the proponents to 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.)?
06/12
- 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?
ATTACHMENTS:
None

Agenda Report
Date: June 20, 2016

Item No: 5.
FROM:
SUBJECT:
Receive Update on GWR Schedule and Financing
RECOMMENDATION:
It is recommended that the Water Authority TAC receive an update on the
current schedule and financing for the Pure Water Monterey (PWM) /
Ground Water Replenishment (GWR) project.
DISCUSSION:
At the Water Authority TAC meeting of April 4, 2016, the General Manager
Dave Stoldt of the MRWPCA provided a comprehensive verbal report on
the status of the PWM/GWR project including the status of the CPUC
review financing considerations. See the minutes of the April 4 meeting
above.
Dave Stoldt has been requested to provide an update as of June 20.
ATTACHMENTS:
None
06/12

Agenda Report
FROM:
Date: June 20, 2016

Item No: 6.
SUBJECT: Receive Report and Discuss the Detailed MPWSP Schedule Including
Status of Upcoming Permit Requirements and the Status of the Test Slant
Well
RECOMMENDATION:
It is recommended that the Water Authority TAC receive a report from Cal Am on the
latest "Detailed" MPWSP schedule including upcoming permit requirements and receive
a report on the test well operation and results.
DISCUSSION:
Cal Am has reported that the test well started back up again on May 2, 2016 and is
currently running at 2,000 GPM with no problems. Salinity is reported about 91 to 92%.
Cal Am will present the most recent "Detailed" MPWSP schedule and the status of test
slant well operations. Of particular interest is a discussion of the permit requirements
that will follow the issuance of the CPCN expected in early 2018.
ATTACHMENTS:
None
06/12

Agenda Report
Date: June 20, 2016

Item No: 7.
FROM:
SUBJECT:
Receive Report and Discuss the Technical, Financial, and

Environmental Reasons for Cal Am Use of a Transfer
Pipeline Through Monterey Rather Than Through Los
Laureles Grade
RECOMMENDATION:
It is recommended that the Water Authority TAC discuss a proposal to
utilize an alternate transfer pipeline route over the Los Laureles Grade as
opposed to Cal Am's proposed City of Monterey route.
DISCUSSION:
See the discussion of the currently proposed 36 inch Transfer Pipeline at
agenda item number 3 above.
Attached are materials that were provided to the Water Authority Board
during the Public Comments session on June 9, 2016. They suggest use of
a transfer line over Los Laureles Grade as opposed to a transfer pipeline
through Monterey that is already included in the MPWSP DEIR.
Though Cal Am has responded to this issue at a previous Water Authority
meeting, the TAC should receive a more detailed explanation from Cal Am
as to the technical, environmental and financial rational for rejection of the
Los Laureles route.
ATTACHMENTS:
A-Chuck Cech materials
06/12
ord,
Monterey Pipeline
PC-buil
ou 101
efrHr)
frice,A.)-
(Map) A 36 inch high tech concrete lined plastic covered pipe runs from Seaside, to Pacific Grove.
(Pipe Fabrication Video Link) http://www.american-usa ,com/resourcesivideosispiralweld-pipe-how-its-made
This seven mile long route requires digging an estimated 3.5 foot wide X 4.5 foot deep trench disrupting
residential and commercial streets for months.
It also requires removing 9000 cubic yards of dirt and hauling it away.
The Monterey Pipeline route has 14 right angle (90 degree) elbows and 7 less than 90 degree elbows. Each of
these elbows creates a point of resistance to water flow and requires two connections to pipes.
A total of 42 compression fit seams, each 113 inches in circumference, all represent potential future leak joints.
Cal Am has estimated that Monterey Pipeline will cost them $41 million to install, assuming no major problems
during the installation.
Cal Am ratepayers will pay for this project for 30 years. Based on an 8.4 % Rate Base interest, plus state and
federal taxes, the total cost to ratepayers well be over $150 million, averaging approximately $10 per
connection per month.
ASR Route
(Map) The ASR route would be less expensive and less disruptive! It was disclosed to the Cal Am Board of
Directors during their public meeting held at Cachaqua Hall in Pacific Grove; it has been ignored by Cal Am.
The ASR route is a 15 foot wide easement. This route could be built without any 90 degree connections and
could possibly utilize much less expensive plastic pipe.
Based on input from David Stoldt rough $1 million per mile estimate, this route cost might be less than $10
million
During a meeting at the fairgrounds, Ian Crooks disclosed that Cal Am is already planning an additional 36 inch
ASR pipeline. This pipeline could possibly be used to deliver water in the opposite direction during the 10
months when ASR is not operating.
If this route was owned by the MRWPCA or MPWMD (Not Cal Am), it could be financed with a low interest
State loan or a Municipal Bond and there would be no profit collected or taxes paid.
Using a municipal bond with a 20 year 5% interest rate the ASR route would cost Cal Am ratepayers around
$16 million approximately $1.50 per month.
If Cal Am uses this route, the 30 year cost to rate payers would be approximately $32 million. That's only
$2.25 per month.
Will it cost a lot to pump water over the hill to Cal Am Valley Greens connection?
If it costs $250 thousand more per year, it will increase ratepayers monthly water bills about 52 cents.
Monterey Pipeline Route

Approx. 35,000 feet of 36" inch pipeline
'Connection to Existing Cal Am
System at HiIlcrest Ave &
Sinex Ave
Connection to Existing
Pipeline near
General Jim Moore Blvd.
Lily St
Hoffman Ave
Spencer St
Hillby Ave
Stillwell Ave
Cypress (Alt.)
Airport Rd
Franklin &
Clay St (Alt)
High St
Freemont Ave
Jefferson St
Freemont St
Munras Ave
Aguajito Rd
Fairgrounds Rd
Mark Thomas Dr
General Jim
Moore Blvd.
ASR Well Siting]

Study Area
1
.
.1
/
'
klpi)t:..711-. ,/
I '
. -
.'"
'1
Terminal
.0
/
.,
Valley Greens
Pump Station at
Valley Greens Drive
Crest Tank
Segunda
Reservoir
ft
,/

Agenda Report
FROM:
Date: June 20, 2016

Item No: 8.
SUBJECT: Receive Report and Discuss the Water Supply Needs of the Marina Coast
Water District
RECOMMENDATION:
It is recommended that the Water Authority TAC receive a report from the Marina Coast
Water District (MCWD) representative on the future water needs of the District and
opportunities for cooperation in the future.
DISCUSSION:
On March 13, 2015, the Water Authority invited the General Manager of the MCWD to
serve on the TAC. As noted on the letter invitation," It is anticipated that your
participation will not only improve the deliberations of the TAC, but will provide the
Authority with a much-needed perspective of the MCWD and the residents of Marina."
Despite a great deal of progress in finding regional solutions to our water supply
problems, there still remain issues that prevent the Monterey Peninsula Cities and the
MCWD from working together toward solutions of mutual benefit. Not the least of the
impediments is the ongoing Cal Am-MCWD litigation over the now defunct Regional
Desal project.
Despite this litigation, it behooves public agencies such as the MPRWA and the MCWD
to try to finds ways to best serve the public's collective interests. Accordingly, it is
requested that the TAC discuss the needs and concerns of the MCWD and the public it
serves as well as those of the Monterey Peninsula.
ATTACHMENTS:
None
06/12

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Agenda

Monterey Peninsula Regional Water Authority (MPRWA)

Approve Minutes from March 7 and April 4, 2016 - Romero

Receive Update on GWR Schedule and Financing - Stoldt

Created date 06/16/2016 3:52 PM

Monday, June 20, 2016

Alternate Scott Dick, Huss, Riley, Sciuto, Stoldt,

Legal Counsel Freeman, Clerk Romero

Huss, Dick, Stoldt, Sciuto, Van Der Maaten,

Monday, March 7, 2016

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

Monday, March 7, 2016

Chair Cullem and the board addressed public comments.

MPRWA TAC Meeting Minutes

Monday, March 7, 2016

Tom Rowley, representing MPTA, questioned why a representative from Cal Am

Receiving no further requests to speak Chair Cullem closed public comments.

MPRWA TAC Meeting Minutes

Monday, March 7, 2016

Huss, Riley, Sciuto, Stoldt, Van Der Maaten

Monday, March 7, 2016

Huss, Dick, Stoldt, Sciuto, Van Der Maaten,

MPRWA TAC Meeting Minutes

Monday, March 7, 2016

Nova Romero, Committee Clerk

MPRWA TAC Meeting Minutes

Narigi, Riedl, Riley, Stoldt, Van Der Maaten, Cullem

Legal Counsel Freeman, Clerk Romero

Approve Minutes from January 27, 2016 - Romero

Narigi, Riedl, Riley, Stoldt, Van Der Maaten,

MPRWA TAC Minutes

Monday, April 4, 2016

Receiving no further requests to speak Director Cullem closed public comments.

Narigi, Riedl, Riley, Stoldt, Van Der Maaten, Cullem

Receive Update on GWR Schedule and Financing - Sciuto/Stoldt

MPRWA TAC Minutes

Monday, April 4, 2016

Receiving no further requests to speak Director Cullem closed public comments.

MPRWA TAC Minutes

Monday, April 4, 2016

MPRWA TAC Minutes

Monday, April 4, 2016

Nova Romero, Committee Clerk

Monterey Peninsula Regional Water Authority

Date: June 20, 2016

Executive Director Cullem

SUBJECT: Receive Report on the Submission of a Brine Disposal Agreement and a

BRINE DISCHARGE SETTLEMENT AGREEMENT (A.12-04-019)

BRINE DISCHARGE SETTLEMENT AGREEMENT (A.12-04-019)

report/environmental impact statement (RDEIR/DEIS) pursuant to the California

AGREEMENT TO NOT OPPOSE BRINE DISCHARGE

BRINE DISCHARGE SETTLEMENT AGREEMENT (A.12-04-019)

identified by a revised and recirculated DEIR to reduce or avoid the Projects

BRINE DISCHARGE SETTLEMENT AGREEMENT (A.12-04-019)

Record the amount of re-calibration required.

BRINE DISCHARGE SETTLEMENT AGREEMENT (A.12-04-019)

Alternative Monitoring Programs

BRINE DISCHARGE SETTLEMENT AGREEMENT (A.12-04-019)

BRINE DISCHARGE SETTLEMENT AGREEMENT (A.12-04-019)

BRINE DISCHARGE SETTLEMENT AGREEMENT (A.12-04-019)

If data collected from the Agreed or Alternative Monitoring

BRINE DISCHARGE SETTLEMENT AGREEMENT (A.12-04-019)

In the event a Party or the Commission, based on a

In the event of an exceedance at the Far Field Location,