CPUC building SF

The CPUC's building near San Francisco City Hall. 

It was a momentous decision Sept. 13 when the California Public Utilities Commission, in a unanimous 5-0 vote at a hearing in San Francisco, approved California American Water's desalination project in Marina. The project was first proposed in April 2012. 

Immediately after the vote, Cal Am spokesperson Catherine Stedman was all smiles, and said that a water supply solution for the Monterey Peninsula was "much closer at hand." 

The decision the CPUC approved Sept. 13 was slightly revised from a proposed decision published in mid-August, and had a few key differences. 

One is that the CPUC is requiring Cal Am, in the next six months, to investigate the feasibility of an expansion of Pure Water Monterey, a recycled water project still under construction that will deliver 3,500 acre-feet of water annually into the Cal Am system. 

However, the revised decision does not compel Cal Am to pursue an expansion if it's found feasible, and given that the CPUC has approved the desal project, Cal Am now has a financial incentive to pursue that project alone. 

The revised decision also did not address concerns the Monterey Peninsula Water Management District expressed in writing about the CPUC's proposed decision, which mainly touched on the lack of specificity in the decision's language about how the project's risk would be allocated between Cal Am's ratepayers and shareholders.

In short, it did not stipulate that Cal Am utilize the cheapest water supplies in its portfolio to meet demand, nor did it address who's on the hook—ratepayers or shareholders—if the project is found to cause harm to Marina's groundwater.

If anything, says MPWMD General Manager Dave Stoldt, the revised decision has slightly less protections for ratepayers than the original proposed decision, and what the rate structure will look like if and when the desal project is operational will be established at a future rate-setting hearing.

And while the CPUC's approval was a huge win for Cal Am, there are numerous hurdles awaiting the desal project going forward, which could get delayed—and perhaps sunk—by near-certain litigation from parties like Marina Coast Water District and the city of Marina, which have expressed concerns the project could harm Marina Coast's groundwater supply. (That's due to the placement of the plant in Marina.)

The fastest timeline for the project to break ground, Stedman says, would be sometime in the first half of 2019. 

To build the project, Cal Am will need to get permits from the city of Marina, whose City Council is expected to deny them. Cal Am would then appeal that denial to the California Coastal Commission, which could overturn it. 

If the Coastal Commission overturns the Marina City Council's vote, that decision could be subject to a lawsuit in superior court. 

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It is also possible that, sometime in roughly the next 30-day window, a party could sue the CPUC in state Supreme Court for its decision. Stoldt says that in the MPWMD's experience, cases in that venue typically take three to four years. 

Any party that sues over the project would likely also seek an injunction to prevent Cal Am from building the desal plant and slant wells until litigation is resolved. 

There is yet another potential legal track in play: In the CPUC's approved decision, new language was added affirming that it remains incumbent upon Cal Am to create an appropriative water right to pump the project's source water—brackish groundwater under the beach in Marina—and that it "will not injure other lawful users of water."

Marina Coast General Manager Keith Van Der Maaten expects that process—Cal Am trying to establish a water right—to play out either at the State Water Board or in the courts, and adds that one cannot gain an appropriative water right in an overdrafted groundwater basin. 

Van Der Maaten says he was not surprised by the CPUC's decision, but was disappointed the commission, in his opinion, didn't take interest in the data presented by Marina Coast which shows potential harm to the district's water supply, or in environmental justice issues. 

"This is a groundwater extraction plant disguised a desal plant, and they’re hoping nobody sees through the disguise," Van Der Maaten says, adding that the CPUC didn't look at the project from a regional perspective. "[Let's] not solve one problem by creating another."

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