Tapped Out

For at least 26 years, water utility California American Water has known it was drawing an illegal amount of water from the Carmel River. Knowledge of this all began with conservationists who, noticing the Carmel River was drying up more frequently, grew concerned about the fate of the Carmel River’s steelhead trout. (lower left) The Carmel River Steelhead Association’s Brian LeNeve says droughts, dams, pollution and extractions have all caused the steelhead’s decline. “I’m not saying don’t pump anything from the Carmel River,” LeNeve says. “I’m saying get rid of your goddammed lawn.”

AT THE END OF THIS YEAR, THE MONTEREY PENINSULA WILL BE THRUST INTO A NEW WATER REALITY. It will be the first year in at least 140 that residents and businesses will receive most of their water from a source other than the Carmel River. This is not a choice but a reprimand 26 years in the making that will force the Peninsula into an immediate period of water instability unseen since the 1970s.

On Dec. 31, 2021, private utility California American Water, by mandate of the state, has to cut the amount of water it takes from the Carmel River by more than 50 percent of what is allowed today. The state’s effort to push Cal Am off the Carmel River began in 1995. In the nearly three decades since, Cal Am successfully became a publicly-traded company and substantially increased its market value for shareholders but has failed to accomplish the mission mandated by the state: find an alternative source of water for its customers on the Peninsula. The embattled utility has lost much of the public’s trust and finds itself battling a voter-supported public takeover of its assets. What began as a relatively gentle push off the Carmel River now becomes a rigid shove with harsh financial penalties and the full weight of state government behind it.

This all began with an attempt to protect a federally designated threatened species: the Carmel River steelhead trout. The new year will be cause for celebration for one species dependent on the river but it could spell trouble for another: the people of the Monterey Peninsula. Although some progress has been made in developing alternative sources of water over the last few years, the area’s utility, residents and public agencies have been unable to agree on a major project to stabilize the area’s water needs in time for this deadline set long ago.

When the hammer comes down from the state on Dec. 31, the area’s supply of water and its demand for water will be uncomfortably close for a few years. A recycled water project known as Pure Water Monterey and what Carmel River water Cal Am can still legally draw will anchor the complicated water equation of piecemeal solutions that officials have worked out to carry the region through the next few years. However, with the looming possibility of a prolonged drought, some variables in that equation are questionable.

The nearest promise of future water stability revolves around a recently agreed upon, though long-contested, expansion of Pure Water Monterey but water from that project will not be available for more than three years. In the meantime, many see water rationing as likely.

“If we have anything like a dry winter a year from now, we’re going to be in trouble and we may face serious rationing problems,” says George Riley, a member of the Monterey Peninsula Water Management District’s board. The MPWMD oversees water distribution for the Peninsula. “We’re getting too close,” Riley says. “We’re talking about rationing at the district and I think we need to make it a little more public.”

The State Water Resources Control Board, which is implementing the restriction on the Carmel River, has made clear that its order is inflexible.

“It’s 26 years since 1995. I think we are to the point where the board has messaged… they don’t want to extend any more timelines,” says Erik Ekdahl, deputy director of the state water board’s division of water rights. “It really is time for the cease and desist order to become fully in effect.”

Beyond the promised recycled water expansion, what there is to show after nearly three decades of preparing for this day are failed projects, broken alliances, long-simmering resentments, lawsuits and attempted and ongoing buyouts.

Tapped Out

George Riley, of the Monterey Peninsula Water Management District, has long supported a public buyout of Cal Am.

AT THE CENTER OF THE PENINSULA’S WATER WOES SITS A FISH. To understand the arc of water issues here, one must also understand the arc of this fish and the awe and mobilization it inspires.

The steelhead trout, native to North America west of the Rocky Mountains, is a spawning fish, which means it hatches in freshwater rivers, swims out to the ocean to mature in saltwater, and eventually returns to its river to lay its eggs and begin the cycle all over again. Upon hatching, the fish is considered a rainbow trout. Rainbow trout can be as large as 16 inches and eight pounds. When a rainbow trout takes its multiple-year freshwater hiatus in the ocean – and not all do – it transforms into a steelhead and can reach a size of up to 45 inches and 55 pounds before returning to its home river to lay what can be thousands of eggs.

Brian LeNeve began fishing for steelhead trout in the Carmel River 70 years ago. But even today, the conservation chair of the Carmel River Steelhead Association emanates a childlike wonder when referring to the majesty of this fish. He brags about the steelhead as if it was his relative, highlighting the ways it outperforms the salmon, how it can swim up to 25mph and jump 11 feet high.

“They say the adrenaline rush you feel when you hook your first steelhead never leaves you. Well, it really doesn’t,” says LeNeve, who, in the same breath, laments the changes he’s seen. “No one is going to argue that at one point, in the 1850s, the Carmel River had 10,000 steelhead. My father, in the 1930s and 1940s, would catch about 150 steelhead in a year. In the 1960s, I would get about 30. My son has never caught a steelhead.”

The Carmel River has been a hub of human activity since the steelhead’s salad days of the 19th century. In the 1880s, Charles Crocker commissioned the construction of the Chinese Dam to secure a water source for his Hotel Del Monte, located on what is now the Naval Postgraduate School campus. In the early 20th century, developer Samuel F.B Morse obtained more Carmel River water rights and commissioned the San Clemente Dam. Utility California Water and Telephone Company, in 1949, built the Los Padres Dam to meet growing demand.

All dammed up, the river would become the main water resource for tens of thousands of people. Then, during the 1970s, on the heels of a water shortage, people on the Peninsula began to notice declines in the steelhead population, eventually prompting the Carmel River Steelhead Association and other environmental groups in the early 1990s to file a complaint against Cal Am, which took over the system in the 1960s. The complaint accused the utility of over-pumping the river. The state water board agreed, and in 1995 told Cal Am they had legal rights to only about one-third of the river water the company has been using.

The state ordered Cal Am to find alternative water for its system. Over the next two years, the steelhead trout was designated as a threatened species under the federal Endangered Species Act. LeNeve says this was a turning point and provided his organization with remarkable power in protecting the steelhead and the Carmel River.

By 2009, Cal Am and the community were still almost entirely dependent on the Carmel River for water, despite some failed and ongoing attempts toward a solution. Deciding the protection of the steelhead and its threatened habitat took priority, the state that same year issued Cal Am a cease and desist order. This new mandate went further than the 1995 order and prohibited new water hookups that use Carmel River water. It also set a deadline for the utility to reduce its river usage to its legal allocation – nearly 70-percent less than what it had been using – or face financial penalties. The state would end up extending the deadline from 2016 to Dec. 31, 2021; however, the board has made clear there will be no more extensions.

“Unauthorized diversions in excess of a water right are ultimately illegal,” says Edward Ortiz, spokesperson for the state’ water board. “And in the case of the Carmel River, [illegal pumping has] contributed to the extirpation of steelhead from the river in most dry years and the ongoing threat of extinction for this iconic California fishery.”

Even though it had been 21 years since the first order, LeNeve supported giving Cal Am extra time in 2016. Now, wielding the power of the Endangered Species Act, LeNeve says his sympathies for the Peninsula’s water issues have diminished.

“I’m sorry, but people can suffer a little bit. For me, protecting the steelhead is worth people suffering a little bit,” LeNeve says. “For the average person, they might say ‘Screw the fish, I want my 20-minute shower. I want my lawn.’ If it came to a vote, the Endangered Species Act is our hammer. You don’t have a choice, buddy.”

LeNeve says today there are only about 175 steelhead in the Carmel River. He’s confident that number will now start to go up.

Tapped Out

If the next two winters produce little rain, the 2022-23 water year is when some water officials predict supply issues. The Peninsula will have to rely on emergency (peak) capacity from Pure Water Monterey and extra Carmel River water Cal Am can bank during rain events for 12 percent of its water needs. Without rain, the Peninsula may not have enough water to meet demand.

HOW MUCH WATER THE PENINSULA HAS AND NEEDS, will have and will need, where best to get it, who is best suited to provide it and how much customers are willing to pay, are the points of contention that have contributed to slowed progress on water solutions. The impending deadline from the state places added pressure on the warring factions to work together while the possibility of drought places some uncertainty on the answers.

Cal Am and a large portion of business and tourism interests believe the Peninsula needs a desalination plant, which is considered to be a drought-proof water resource that draws and filters from what is viewed as an endless supply of subterranean ocean water. A desalination plant has the ability to be expansive and provide more water than the Peninsula would need. However, desalination is expensive, and cost, combined with the potential environmental impacts, has created obstacles to maintaining widespread buy-in from customers.

There was, at one point, community buy-in on desalination as part of the Monterey Peninsula Water Supply Project. Referred to as the three-legged stool solution, the proposal included water from three main sources: a $329 million desalination plant built by Cal Am, the Pure Water Monterey recycled water project built by wastewater agency Monterey One Water, and the Carmel River, with the public agency Monterey Peninsula Water Management District facilitating distribution. The proposal was a key proof of progress that encouraged the state’s water board to extend the Carmel River deadline from 2016 to 2021. Then politics happened.

The question of cost began to weigh more heavily after a 2017 study by Washington, D.C.-based Food and Water Watch reported that the Monterey Peninsula was home to the country’s most expensive water. This fueled resentment that Cal Am was working in the best interest of its shareholders rather than the community and boiled over in 2018 when, after decades of failed attempts, the public approved Measure J. The referendum directed the water management district to lead a public buyout of Cal Am’s local system.

The water management district’s board of directors – appointed by elected governing bodies throughout the region – then told the agency’s general manager, David Stoldt, that they no longer supported desalination, despite the project receiving approvals from the California Public Utilities Commission. The board asked him to re-analyze the Peninsula’s water demand numbers to see if the Peninsula could do without the expensive project. In 2019, the Stoldt Memo, as it has become known, found that successful water conservation over the years meant water demand was 20-percent less than previously assumed. Desalination, as initially proposed, was unnecessary and an expansion of the much less expensive Pure Water Monterey recycled water project could sustain growth through 2043.

The report furthered what was already a deepening schism in views on local water. On one side, broadly, was private enterprise and those who support it: Cal Am, the local business community and tourism industry, skeptical of Stoldt and his water demand analysis. On the other, the government and those who support it: the water management district, its board of directors, voters and public water advocates, skeptical of business interest motivations.

“When you have something that’s suddenly so viable, more environmentally friendly, cheaper to the ratepayers and you realize it’s going to be more than enough water for decades, then it needs some discussion,” Stoldt says. “So yeah, I alienated tons of people.”

John Tilley has been working on water issues with the Coalition of Peninsula Businesses for years and, like most business interests in the area, sees desalination as the final answer to the Peninsula’s water question.

“[Without desalination] I’m convinced this community will use every drop of water that is produced and, at the end of the day, we’re going to say, ‘Look, we produced everything that was needed,’” Tilley says.

Phase one of Pure Water Monterey began operating at the end of 2019. Phase two met initial political obstacles, but with the state’s deadline approaching, the water management district, Monterey One Water and Cal Am reached an agreement on the project on Sept. 27. Cal Am’s desalination plant sits in bureaucratic limbo.

However, the deadline is less than three months away and it will be three years until the Pure Water Monterey expansion can complete construction and come online.

Taped Out

A Pure Water Monterey recycled water project expansion, still three years from completion, is the closest hope for new water. In the interim, Monterey Peninsula Water Management District General Manager David Stoldt (below) says they are going squeeze every drop possible from the existing Pure Water plant.

OVER THE LAST 26 YEARS, STATE WATER OFFICIALS HAVE SHOWN AN EMPATHY in working with Cal Am and the Peninsula on its water issues. After the first order in 1995, the State Water Resources Control Board gave the utility 14 years before it officially issued a stronger order, with a “hard” deadline, to reduce its river use. Seven years later, the state extended the deadline another five years, to Dec. 31, 2021.

Local water officials have sought further flexibility in letters throughout 2020 and 2021. However, in a Sept. 1 letter to Stoldt, the water district and David Stivers, CEO of Pebble Beach Company, State Water Resources Control Board Executive Director Elleen Sobeck made clear her agency is done with empathy and that ending the overpumping of the Carmel River is a legal issue with no more wiggle room. After 26 years, this order is no longer a paper tiger. It indeed has teeth and it is prepared to bite with the force of the state government by the end of this year.

“Cal Am… and interested parties, all of whom would be affected in some way by a violation of the cease and desist order, should focus their time and efforts on actions necessary to ensure continued compliance,” Sobeck wrote.

Ekdahl says the state has worked “continuously” with Peninsula water officials on the approaching cutoff from the river and that, from the state’s perspective, “there is nothing quite like the Cal Am scenario.”

“It’s not that you will have three years of [tight supply and demand] but rather that you’ve had 26 years and it’s still not done,” Ekdahl says. “I mean, that’s a quarter of a century to have known that there is ongoing illegal diversion [from the river]. And it’s not just a little bit of illegal diversion – it’s almost a complete dewatering of the Carmel River during certain times of year and that has had disastrous consequences for native steelhead and other fisheries and riparian habitat.”

With much less water from the Carmel River, without desalination and with about three years until the recycled water expansion comes online, there is a growing concern over whether the Peninsula can drum up enough water to avoid rationing.

A handful of piecemeal water solutions will be called upon to carry the Peninsula in the interim. However, these now-crucial piecemeal water resources are much more reactive to short-term drought. Gov. Gavin Newsom in July declared the Monterey Peninsula as experiencing extreme drought. If that continues, the likelihood of water rationing increases.

A water year begins on Oct. 1 – which, historically, kicks off the rainy season – and runs through Sept. 30. The tighter restrictions on the Carmel River do not begin until Dec. 31, which means the first quarter of the current water year will be business as usual. Stoldt and Cal Am officials say the Peninsula will be OK through the 2021-22 water year. The situation becomes more grim by 2022-23, especially if the Peninsula gets minimal rainfall this winter and next.

Aside from the Carmel River and Pure Water Monterey, the Peninsula will have to rely on an aquifer in Seaside known as the Seaside Groundwater Basin, a small Sand City desalination plant and rainfall in order to provide adequate water over the next three years, and each will need to perform close to its maximum capacity to avoid water rationing.

The Carmel River needs to sustain a certain flow in order to protect the steelhead habitat. When it rains and is rushing, Cal Am, through a process known as aquifer storage and recovery, is allowed to pump any extra water above what the steelhead require and store it in the Seaside Groundwater Basin for use during the dry summer months. Due to dry conditions last winter, Chris Cook, director of operations for the local Cal Am division, says the utility pumped less than one-tenth of what it typically expects through the season. During the years of the 2014 drought, Cook says the utility was unable to store any excess Carmel River water. Prolonged drought could mean more of the same in the coming years.

“Our community has gone through rationing before and we don’t want to go back there,” Cook says. “We’re trying to do what we can with our supplies. It will go back to encouraging the community to conserve during this emergency drought time. That would help mitigate the path toward rationing.”

The Sand City desalination plant, which Stoldt says is so small it typically does not make an impact, will need to play a crucial role in maintaining a margin between water supply and demand. However, the amount of water it produces for the local system is volatile and prolonged drought of two to three years could limit its production to nominal.

Tilley says the business community is fully expecting the Peninsula to not have enough water at some point in the next three years. What that looks like and to what extent is unclear. In the 1970s, the last water rationing episode, locals kept buckets in their bathtubs so they could collect shower water to use to flush their toilets. Stoldt is more confident in the water system’s ability to avoid rationing, but says clearly that it will come down to the weather.

“If we don’t get rain for the next two [rainy] seasons, that’s where it gets too close for comfort,” Stoldt says. “We’ll be sitting here looking up at the clouds come December.”

Christopher Neely covers a mixed beat that includes the environment, water politics, and Monterey County's Board of Supervisors. He began at the Weekly in 2021 after five years on the City Hall beat in Austin, TX.

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