Cal Am lawsuit targets public buyout process, alleging violations by water district

The latest hurdle in the effort to bring the Monterey Peninsula’s water system under public control is a lawsuit by the utility that currently owns it, California American Water.

In a lawsuit filed Nov. 25, Cal Am accused the government agency charged with acquiring the system of violating the law by failing to fully analyze how a public takeover would impact the environment. The Monterey Peninsula Water Management District certified its environmental analysis on Oct. 29, finding no significant impacts.

But Cal Am maintains that conclusion is based on flawed assumptions. According to the lawsuit, the district stated in the environmental review that it would operate the system in the same manner as Cal Am, but that planning documents from the district state otherwise.

The pursuit of a public takeover was mandated by voters in 2018 – provided that such a change would be financially sound. The district has since concluded that it could operate the system and lower rates. Cal Am says that if lower rates are expected, the district should have to analyze how the new rates might lead to more development and thus environmental impact.

“We filed comments to explain our objections and didn’t feel they were addressed,” says Cal Am spokesperson Catherine Stedman. “This matter is of great importance to our company and our employees as it’s part of the effort to condemn our system, which we strongly oppose.”

The district’s general manager, Dave Stoldt, calls the lawsuit “a little frivolous,” and says it’s a tactical move against the buyout. “The playbook on any attempt to buy out an investor is to sue and see whose pockets are deeper,” he says.