X. Monterey County Health Code Section 10.72

DRA claims that Monterey County Health Code Section 10.72 makes the Coastal Water Project uncertain because the local ordinance requires a desalination plant to be owned and operated by a public entity. CalAm responds that although it does not necessarily plan to challenge the ordinance in court, it believes that the ordinance is unenforceable because it conflicts with and is preempted by state law. According to CalAm, there are three likely outcomes regarding the ordinance: (1) a public/private partnership will develop; (2) Monterey County will rescind the ordinance; or (3) if necessary, CalAm will challenge the ordinance in court. Nevertheless, CalAm says it will continue to cooperate with Monterey County and other local government agencies in their exploration of the feasibility of a regional project that could serve the needs of water users other than the Company's customers.

We agree that Section 10.72 must be addressed sooner or later, but at this time we are not persuaded that the issue creates a level of uncertainty sufficient to justify delaying implementation of the proposed surcharges.

In their comments on the proposed decision, citing Monterey County Health Code § 10.72, DRA and MPWD argue that it is legal error to require ratepayers to contribute to an "illegal project."

We note that the project, which has yet to be approved by the Commission, has not been declared illegal by any court. Also, the proposed decision sets out the steps to be taken by CalAm to address the Monterey County Health Code issue. We reject the assertions of DRA and MPWD.