Nearly 30 years after Cal Am was ordered to cut back on its pumping of the Carmel River, solutions brought by public agencies might finally end the Peninsula’s water poverty.

July 1770. Just five weeks after establishing a mission in Monterey, Father Junipero Serra sends out a missive on the departing San Antonio, a Spanish ship, asking the powers that be for permission to move the mission to Carmel. Among the reasons is better access to fresh water.

DRIP, DRIP, DRIP. So goes the flow of water news in recent decades on the Monterey Peninsula, where one chapter leads to another, which leads to another after that, rinse, repeat, year after year.

In that context, it’s hard to keep perspective of where we’re at, how we got here and where we may be heading.

Yet it’s a vitally important topic, and decisions made in the present can impact not only current residents, but also generations to come. And finally, after decades of failed proposed water supply projects, there is a glisten of light on the droplet coming out of the tap.

For some people, attending water meetings, writing letters and railing against California American Water – the investor-owned utility delivering water to the Peninsula’s taps – is something of a hobby.

Likewise, there are residents who have maintained steadfast, vocal support for Cal Am for two primary reasons: They believe a desalination project is the best path forward not only in the future, but also the present, and some express a belief that the private sector, as a rule, does things better and cheaper than a public agency.

Most everyone agrees the Peninsula needs a more robust water supply, but disagreements crop up in how much is enough, where more water should come from and if there’s a limit to how much residents should pay for it.

The Monterey Peninsula Water Management District contends the expansion of the recycled water project Pure Water Monterey, which is already underway, will add enough water to satisfy demand for at least the next 20 years.

Desalination is the most expensive option, and unlike, say, the Poseidon desal plant in Carlsbad in San Diego County – which produces an estimated 56,000 acre-feet annually, about six times the Monterey Peninsula’s water demand – Cal Am’s proposed project is only about 10 percent of that size, and thus lacks the economies of scale that go with it.

Does it make sense to build a project costing hundreds of millions of dollars – which ratepayers will pay for through their water bills – when it’s not clear there’s a demand for the water it will produce?

That’s not a rhetorical question, it’s a live one, and will be answered in the coming months and years by regulators. Even still, it’s not certain Cal Am will be able to clear the regulatory hurdles to build the project as proposed and approved, with a slew of conditions attached.

The stakes of the moment are clear: The lack of water – legally appropriated water, to be more precise – has increased its cost to ratepayers, and has exacerbated the local housing crisis, as the state-imposed cease-and-desist order against Cal Am’s pumping of the Carmel River has for the most part halted new development on the Peninsula since it went into effect in 2009.

That cease-and-desist order, issued by the State Water Board, came on the heels of an order the agency issued in 1995 that had less teeth: Under the 2009 order, the State Water Board chastised Cal Am for not “diligently” implementing actions to “terminate its unlawful diversion.” As a result, the order reads, Cal Am was prohibited from providing water to new service connections.

That’s why getting out from under the cease-and-desist order is critical to the Peninsula’s present and future. Will the Pure Water Monterey expansion be sufficient to do that? Ultimately, the State Water Board will weigh in on that question in the next few years.

The story of how the Peninsula got into this mess, and how it might get out of it, could fill a book. The current tension between two projects that could bring an end to the cease-and-desist order, Cal Am’s proposed desalination plant or a recycled water expansion, could also fill a game board. Each path is littered with pitfalls and red tape. The Weekly has created a game that captures the basic elements of that struggle, but before we get there, it’s useful to take a step back and look at the broader contours of the water supply story.

So let’s start at the beginning.

IN THE EARLY 1880S, the Pacific Improvement Company, which was led by four railroad barons, had purchased much of the Monterey Peninsula’s real estate, including the land where the company built the former Hotel Del Monte in 1880 at the current location of the Naval Postgraduate School. The hotel needed a better water supply, so the company facilitated the construction of the first-ever dam on the Carmel River, which supplied about 400 acre-feet annually to the hotel.

Samuel Morse, manager of the Pacific Improvement Company, which built the hotel, formed his own company in 1919, Del Monte Properties, and acquired PIC’s assets. But there was no water to develop Pebble Beach, so he initiated the construction of the San Clemente Dam, which was completed in 1921, to replace the old dam and facilitate the growth of the Monterey Peninsula. A company called California Water & Telephone Co. later acquired that dam and infrastructure, and constructed Los Padres Dam, which was built in 1949.

After a failed attempt at a public buyout, Cal Am bought the company’s assets in 1966.

Water rationing was imposed on the Peninsula in the mid-1970s due to drought, and in 1978, voters approved the formation of the Monterey Peninsula Water Management District. Its enabling legislation in the state water code reads, in part: “The Legislature finds and declares that it is necessary to create a public agency to carry out such functions which can only be effectively performed by government, including, but not limited to, management and regulation of the use, reuse, reclamation, conservation of water and bond financing of public works projects… The enactment of this special law is necessary for the public welfare and the protection of environmental quality and the health and property of the residents therein.”

Nonetheless, Cal Am kept pumping away, desiccating the riparian habitat along much of the Carmel River, which is vital habitat for life, including steelhead trout, which since 1997 have been classified as “threatened” under the Endangered Species Act.

That overpumping led to the Carmel River Steelhead Association to file a complaint with the State Water Board in 1987. Three other groups filed similar complaints in subsequent years: the Resident’s Water Committee in 1989, and the Sierra Club and the California Department of Parks and Recreation in 1991.

Those complaints led to the State Water Board, in 1995, issuing an order – Order 95-10 – to Cal Am that prescribed several measures the company should take to decrease its dependence and impact on the Carmel River.

It was essentially a cease-and-desist order lacking enforcement teeth. It states, “The imposition of monetary penalties make little sense.”

That same order established that Cal Am’s legal right to Carmel River was only 3,376 acre-feet annually, just a fraction of the approximately 14,000 acre-feet it was pumping from the river at the time.

(By comparison, Cal Am’s local customers used just 9,118 acre-feet from all sources – including the river, Seaside Basin, recycled and stored water – from Oct. 1, 2022 to Sept. 30, 2023. That’s less than the 9,516 acre-feet used in the 2022 water year, and well below the 10-year average of 9,813 acre-feet annually. The lowering demand is due to conservation measures, the impact of high prices – which reduce demand – but for 2023 specifically, less water was used for irrigation due to the wet winter.)

Also in 1995, Peninsula voters rejected, by a 57-43 margin, a new Los Padres Dam project. But Cal Am forged ahead nonetheless – ignoring the will of voters – and spent nearly $8.4 million on the project over the next eight years, which was passed on to ratepayers despite producing no new dam and zero drops added to the water supply.

In 2009, frustrated by Cal Am’s inability to augment its water supply, the State Water Board finally put some teeth into the matter, issuing a cease-and-desist order to force the utility to reduce its pumping of the Carmel River to its legal right by the end of 2016. Per the order, Cal Am had to stop setting new water meters within its service area, freezing new development.

Thus began the Peninsula’s current state of water poverty.

EVEN BEFORE THE CEASE-AND-DESIST ORDER, there was a push to start looking toward the sea as a potential water source.

The desalination project that emerged initially, in 2008, was called the Regional Water Project, which had a complex ownership and operating structure between public agencies and Cal Am. But in 2011, the project imploded amid felony conflict-of-interest charges against a Monterey County Water Resources Agency board member, Steve Collins, who was also acting as a consultant for Marina Coast Water District on the project.

So Cal Am started looking anew to create its own project, utilizing slant wells on the beach in Marina, at the site of the now-mothballed Cemex sand mine. That Cal Am chose to pursue a project with slant wells – which draw in brackish groundwater in a basin already severely impacted by saltwater intrusion – quickly became a lightning rod of controversy, as did the fact that the City of Marina didn’t want the project, which is proposed to be within city limits.

The city sued in 2020, alleging adverse impacts on the city’s groundwater supply, and claiming Cal Am didn’t have the water rights to pump there. Those claims remain in litigation.

But slant wells, Cal Am has maintained from the outset of the project being proposed, were the only type of desal project the company thought state and federal regulators would approve.

Since the implementation of the state’s Ocean Policy in 2015, slant wells are explicitly preferred by state regulatory agencies over open intake, which can harm marine life. It seems unlikely – or impossible, probably – for an open ocean intake desalination project to gain approval, particularly in a federally protected marine sanctuary.

But the rub is that, in an area with a critically overdrafted groundwater basin being ever more impacted by seawater intrusion, it’s also not clear slant wells can operate without harming other local water supplies.

Slant wells are also considerably more expensive to operate and maintain than open ocean intake desal projects. For one, pumping water through sand requires more energy.

Nonetheless, compelled by Cal Am’s arguments for an overwhelming need for the project, the California Public Utilities Commission approved it in September 2018, provided that it “will not injure other lawful users of water.”

At that meeting, which took place in San Francisco, former Marina Coast Water District general manager Keith Van Der Maaten told the Weekly, “This is a groundwater extraction plant disguised as a desal plant, and they’re hoping nobody sees through the disguise… [Let’s] not solve one problem by creating another.”

Whether or not the project can clear that hurdle alone – not “injure” local groundwater users in the eyes of regulators – is unclear, and remains the subject of active litigation.

Just over a year ago, the Coastal Commission approved a coastal development permit for Cal Am’s project – with many conditions that must be met prior to construction – but there was a potentially key difference from the CPUC’s approval: the Coastal Commission approved a project that would produce 4.8 million gallons of water per day, whereas the CPUC’s approval four years prior was explicitly for a 6.4 mgd plant.

Whether that discrepancy will ultimately matter to the CPUC is not known, but regardless, Cal Am will have to come back to the CPUC for permission on the matter.

And in order to get the coastal development permit that would be required to break ground, Cal Am must first produce a laundry list of reports to prove the project won’t harm Marina’s groundwater.

There hasn’t been a cost estimate for the desal project since 2017, when Cal Am pegged it at $298.2 million. (Cal Am spokesperson Josh Stratton says the cost estimate will be updated when design work on the first phase of the approved 4.8 mgd plant is finalized.)

Since that 2017 estimate, construction costs in the state have ballooned more than 40 percent.

If only there were another way.

AS CAL AM STARTED PURSUING ITS OWN DESAL PROJECT just over a decade ago, officials from MPWMD and Monterey One Water convened meetings to hash out a project utilizing water from another source: water that’s already been used.

It wasn’t the first time the region started recycling water: In the early 1990s, the Carmel Area Wastewater District, Pebble Beach Community Services District and Monterey Peninsula Water Management District entered into an agreement with the Pebble Beach Company to recycle already-treated water from CAWD’s wastewater treatment plant near Carmel River State Beach and use it to irrigate the seven golf courses in Pebble Beach.

That project was completed in 1994, and it’s since taken about 800 acre-feet annually from the demand for potable water in Cal Am’s service area – because why use potable water to irrigate grass in an area starved for water? (Dave Stoldt, now MPWMD’s general manager, was an investment banker brought into the mix from the private sector to help broker the finances of that deal. The district reached out to him a few years later to help analyze the finances of a regional desal project.)

M1W released a draft environmental impact report in April 2015 describing the proposal for an advanced water recycling program that became known as Pure Water Monterey. (It currently delivers about 3,500 acre-feet of water annually to the local water supply, treating municipal wastewater, stormwater and more.) In a statement at the time of that first draft environmental report, then-M1W general manager Keith Israel said the project could be online as early as fall of 2017.

It did not hit that mark – instead the groundbreaking for the first phase was May 5 of 2017, and the project came online in 2020. But the speed with which the project moved forward began to separate it from the parallel track of Cal Am’s desal project, which was more expensive and had a mountain of regulatory hurdles to clear before a shovel hits sand.

That separation has only increased since: An expansion of Pure Water Monterey to deliver another 2,250 acre-feet of water annually is already approved and underway, and was finally set in motion when Cal Am decided, after months of delay, to sign a water purchase agreement – necessary to finance the project – this past March.

That expansion will cost an estimated $75 million – $42 million of that is being funded through grants – and is expected to be completed just shy of two years from now. When it comes online, the Peninsula’s legal water supply portfolio will total more than 12,000 acre-feet, nearly 3,000 acre-feet more than demand in the last year.

Will that be enough to get the region out from under the cease-and-desist order? In theory, yes. In practice, it will come down to whatever the State Water Board decides, and it looks like that will happen next year.

When the CPUC approved the expansion of Pure Water Monterey in September 2022, part of the decision called for a supply-and-demand update from the parties to the case – Cal Am, M1W, MPWMD, MCWD and Cal Advocates, the public advocacy arm of the CPUC. Those estimates are scheduled to be filed with the CPUC early next year, as well as responses each party may have to another party’s assessment.

Then, the CPUC will take a look at all those assessments and make its own assessment – whether or not there’s an imminent need for a desal project – in a ruling likely to land sometime next summer.

Stratton says the company expects to begin construction on the desal plant in late 2025 and be online by the end of 2027. “The [cease-and-desist order] will be lifted when California American Water demonstrates a sustainable and resilient water supply,” he writes, and adds that Pure Water Monterey and aquifer storage and recovery are part of the supply portfolio.

Next year, with the Pure Water Monterey expansion about a year away from completion, MPWMD plans to apply to the State Water Board to vacate the cease-and-desist order when it comes online a year later.

Stoldt says the hope is that the CPUC will agree with the district’s assessment that foreseeable demand won’t require a new water source on the supply side.

That would make the decision easier for the State Water Board, but either way, Stoldt says, the district will make its case.

DEPENDING ON HOW YOU LOOK AT IT, it’s either ironic, fitting, or both that MPWMD is pursuing a buyout of Cal Am at the same time as it endeavors to lift the cease-and-desist order that for years has hung above the Peninsula’s door like an anvil.

For the past three decades, the agency has been fundamental in reviving the Carmel River, and created about 1,300 acre-feet annually of new water with its aquifer storage and recovery project.

In the coming days, the district intends to initiate its eminent domain proceedings in Monterey County Superior Court to buy out Cal Am, as directed by voters who passed Measure J in 2018. In the first part of that case a judge will decide whether the buyout meets the threshold for “public necessity.”

Outside of the courtroom, as the district makes its case to the CPUC and State Water Board next year, evidence for that necessity will be provided in real time.

The State Water Board has given no hints as to their thinking on how much additional water supply will be required in order to lift the cease-and-desist order – the board is a black box. If a desal project is ever built, it would unambiguously remove any doubts about water supply, and it seems certain the agency would lift the order. But the path to construction is laden with obstacles – cost, lawsuits and conditions imposed by the California Coastal Commission.

The other path, a recycled water supply that is being advanced by MPWMD and M1W, promises to produce less total water, but it might be enough to persuade the water board to lift the cease-and-desist order. There are fewer hurdles along the way, but the final outcome is unknown.

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To that end, the Weekly has created a board game that invites you and a competitor to choose a path – the desal approach or the recycled water approach – to getting the state board to lift the order.

It’s not clear how everything will wash out – but you can play the game and see how it goes with the roll of a dice. May the water odds be ever in your favor.