Exhibit SV-2 TECHNICAL MEMORANDUM Date: To: From: Subject: December 3, 2012 Salinas Valley Water Coalition Timothy Durbin California

-American Water Company – Comments on proposal to pump groundwater from the Salinas Valley groundwater basin

Introduction The California-American Water Company (CalAm) is proposing wells in the Salinas Valley groundwater basin to produce feedstock for a desalinization plant. The annual pumpage would be about 20,000 acre-feet, which would produce an annual freshwater yield of about 10,000 acrefeet (9 million gallons per day). The desalinization plant is part of CalAm’s Monterey Peninsula Water Supply Project. The project description (California-American Water Company, 2012a) indicates that wells would be located immediately adjacent to Monterey Bay south of the Salinas River. Slanted wells would be screened within the 180-foot aquifer, and the wells would be 700 to 800 feet in length. The slant direction would be toward Monterey Bay. The general locations of the proposed wells are shown on Figure 1. CalAm additionally is proposing a contingency water supply (California-American Water Company, 2012b) that includes slant wells also immediately adjacent to Monterey Bay but screened within shallow dune deposits. Alternative well sites are located south of the Salinas River and south of Elkhorn Slough. For the site south of the Salinas River, the contingency plan includes options for horizontal well arrays referred to as Ranney collectors. The general locations of the proposed wells and Ranney collectors are shown on Figure 1. The groundwater-pumping proposals are described in the reports “North Marina Groundwater Model Evaluation of Potential Projects” prepared by Geosciences Support Services, Inc. (2008) and “Contingency Planning for the Monterey Peninsula Water Supply Project” by RBF Consulting (2012). The Geosciences report describes a groundwater model that was used to evaluate the groundwater impacts due to pumping from the 180-foot aquifer. The RBF report describes potential locations for wells or Ranney collectors within the bayshore dune deposits. This memorandum offers comments on these reports with respect to the potential impacts of the proposed CalAm project on the Salinas Valley groundwater basin, and it makes recommendations on how better to evaluate impacts.

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Hydrogeology The Salinas Valley groundwater basin extends from offshore beneath Monterey Bay to about 70 miles south of the bay. As described by the California Department of Water Resources (1947) and other investigators, the groundwater system within the northern part of the basin consists of the “180-foot aquifer”, the “400-foot aquifer”, and the “deep aquifer”. Those aquifers extend as much as 6 miles beneath Monterey Bay (Greene, 1970; Durbin and others, 1978; Monterey County Water Resources, 1994; Monterey County Water Resources Agency, 1997). The 180foot aquifer is overlain by an aquitard that is as much as 100 feet in thickness at the bayshore (Durbin , 1978), and that aquitard extends offshore. Similarly, aquitards that extend offshore occur between the 180-foot and 400-foot aquifers, and between the 400-foot and deep aquifers. The 180-foot and 400-foot aquifers crop out on the bottom of Monterey Bay, and the deep aquifer may or may not crop out beneath the bay (Figures 2 and 3). The hydrogeologic setting has been described by a number of investigators. A significant early report was prepared by the California Department of Water Resources (1947). The investigators delineated subareas within the Salinas Valley groundwater basin, and they identified and named the 180-foot and 400-foot aquifers. The report includes hydrogeologic cross sections that cover the northern part of the basin. Greene (1970, 1973, and 1977) developed information on the hydrogeologic setting underlying Monterey Bay. Based on marine seismic surveys, he mapped the offshore thickness of the deposits containing the 180-ft aquifer (Greene, 1970, Plate 2) and the thickness of the deposits containing the 400-foot aquifer (Greene, 1970, Plate 3). He additionally mapped the outcrop areas beneath Monterey Bay of the 180-foot aquifer and the 400-foot aquifer (Greene, 1970, Plate 1). Durbin and others (1978) mapped the base elevation of the offshore and onshore parts of the Salinas Valley groundwater basin (Durbin and others, 1978, Figure 9). They mapped also the onshore extent of an aquitard overlying the 180-foot aquifer within an area between Salinas and Monterey Bay (Durbin and others, 1978, Figure 8). Kennedy/Jenks Consultants (2004) conducted a hydrogeologic investigation of the northern part of the Salinas Valley groundwater basin for the Monterey County Water Resources Agency. The resulting report contains a number of hydrogeologic cross sections through the basin (Kennedy/Jenks Consultants, 2004, Figures 2 through 4). The hydrogeologic setting within the northern part of the Salinas Valley groundwater basin is summarized on Figures 1 and 2. These figures were constructed based on information contained in the references cited above. Figure 2 is a map showing the surficial extent of the hydrogeologic units occurring near and beneath Monterey Bay, which are identified on the map as “Qd” for dune deposits, “Qr” for younger river deposits, “Qf” for alluvial-fan deposits, and “QTp” for older river deposits. The center of the map is the mouth of the Salinas River. The 180-foot aquifer occurs within the younger river deposits, and the 400-foot aquifer occurs within the older

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river deposits. The map shows the outcrops on the Monterey Bay bottom of the 180-foot aquifer and the deposits containing the 400-foot aquifer, as delineated by Greene (1970, Plate 1). Figure 3 shows a generalized cross section through the hydrogeologic units forming the groundwater system. The section location is shown on Figure 2. The hydrogeologic units included an aquitard overlying the 180-foot aquifer, the 180-foot aquifer, an aquitard underlying the 180-foot aquifer, the 400-foot aquifer, and the deep aquifer and other deposits. Shown also on the section are the outcrops of the 180-foot and 400-foot aquifers beneath Monterey Bay. Not shown on the section are the dune deposits. At the section location, the dune deposits are thin, limited in onshore extent, and probably limited in offshore extent. These conditions generally occur northward from the Salinas River. South of the Salinas River, the aquitard overlying the 180-foot aquifer thins and the dune deposits thicken and perhaps extend further onshore, which increases the probability of finding sites that would support pumping from the dune deposits. However, the thinning of the aquitard increases the risk of adverse impacts on the 180-foot aquifer. Seawater intrusion has occurred within the 180-foot and 400-foot aquifers. The intrusion has been caused by groundwater pumping. Seawater intrusion was detected within the 180-foot aquifer as early as 1945, and now extends as much as 8 miles inland. Seawater intrusion was detected within the 400-foot aquifer as early as 1975, and now extends as much as 4 miles inland. The potential sources of seawater include mobilization of seawater that was naturally within the groundwater system beneath Monterey Bay before any pumping, newly intruded seawater through the aquifer outcrops beneath Monterey Bay, leakage through the aquitards, and the extrusion of naturally occurring seawater within the aquitards. With respect to the last mechanism, some aquitard material was deposited in brackish lagoons, and seawater was entrained within the deposited materials. When groundwater pumping caused a pressure decline within the groundwater system, the entrained seawater most likely was extruded from the aquitard. Izbicki (1996) documented this process within the Oxnard Plain. The Plain is underlain by aquifers materials deposited by rivers and intervening aquitards deposited in lagoons. Some of the aquitards were deposited in brackish lagoons, and seawater was entrained in the sediments as the deposits accumulated. Now the reduction of groundwater pressure has caused seawater to be extruded from the aquitards. Correspondingly, while part of the observed seawater intrusion within the Oxnard Plan results from intrusion at the offshore outcrops of the aquifers, a significant part results from the extrusion of saline water where aquitards occur onshore. This process most likely is occurring within the Salinas Valley groundwater basin.

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Proposal to Pump from 180-foot Aquifer The Geosciences model covers a localized square area along Monterey Bay. The model boundaries are about 8 miles in length, and the model area is centered at about the Salinas River mouth. Correspondingly, the model extends about 4 miles onshore and offshore. The model has six layers that are intended to represent the 180-foot aquifer, 400-foot aquifer, deep aquifer, and the aquitards. The onshore boundary conditions for the model are derived from the Salinas Valley Integrated Groundwater Surface-Water Model (SVIGSM, Monterey County Water Resources Agency, 1997). The SVIGSM covers the entire Salinas Valley groundwater basin from offshore to 70 miles south of Monterey Bay. The Geosciences model is linked to the SVIGSM by running a simulation with the SVIGSM, extracting from the SVIGSM the computed groundwater levels along the boundaries of the Geosciences model, and assigning the extracted groundwater levels as specified-head boundary conditions for the Geosciences model. By this approach, the groundwater-level fluctuations and trends simulated by the SVIGSM at the boundaries of the Geosciences model are reproduced in Geosciences model. The Geosciences model construction assumes a direct connection between the offshore extension of the 180-foot aquifer and Monterey Bay, which occurs in the model because of the high leakance (hydraulic conductivity divided by thickness) assigned to the material overlying the 180-foot aquifer. That does not represent the actual hydrogeologic setting. As described above, both onshore and offshore parts of the 180-foot aquifer are overlain by an aquitard which causes the actual groundwater system to respond much differently than simulated by the groundwater model. What would occur within the actual groundwater system is that wells near the Monterey Bay shore would draw in about equal amounts of groundwater from the onshore and offshore parts of the groundwater system. That reality is contrary to the Geoscience modeling result that wells near the shore would draw almost entirely seawater. Therefore, the model construction and simulation results are so different from reality that the model has no predictive value with respect to the proposed CalAm project. The model predicts that essentially none of the pumped groundwater would be extracted from the onshore part of the groundwater system, while the actual outcome would be that about one-half of the pumped groundwater would be extracted from the onshore part of the groundwater system. The functioning of the CalAm project is shown on Figures 4A through 4C. Figure 4A is a generalized cross section through the groundwater system near Monterey Bay showing a coastal slant well in the 180-foot aquifer for the pre-project condition (no pumping). The arrows on the figure indicate that groundwater flows from offshore to onshore across the section. The gray shades within the 180-foot aquifer indicate the level of seawater intrusion, where the darker shades represent the highest salinity. Figure 4B is the same cross section now showing the well
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in the 180-foot aquifer for the with-project condition (with pumping). The arrows on the figure now indicate that groundwater flows from offshore to the well and from onshore to the well. The onshore direction of groundwater flow is reversed from the pre-project condition. That reversal would provide some benefit to the Salinas Valley groundwater basin. However, an increased onshore component of groundwater flow will caused increased groundwater salinity both shoreward and landward from the well. Figure 4C is the same cross section now showing the well in the 180-foot aquifer for the post-project condition (pumping ceased). The arrows on the figure now indicate that groundwater flows (as for the pre-project condition) from offshore to onshore across the section. Furthermore, the groundwater flow is moving the salinity accumulated during the project operation westward such that the salinity landward from the well is higher than occurs without the project. This can be seen by comparing Figure 4A and 4C. The Geosciences model simulates quite different results because it assumes a different characterization of the hydrogeologic setting. Proper modeling likely would show a substantial adverse impact on the Salinas Valley groundwater basin. The offshore extent of the aquitard overlying the 180-foot aquifer exerts important controls on how pumping impacts the salinization of the aquifer due to sweater intrusion from Monterey Bay. However, the aquifer can be salinized additionally by the extrusion within onshore areas of naturally occurring seawater from the aquitards underlying and overlying the 180-foot aquifer. The proposed groundwater pumping will cause a cone of depressed groundwater levels surrounding a well, and the cone of depression will extend significantly beyond the well in both the offshore and onshore directions. Within the region of depressed groundwater levels, the lower groundwater pressures at the aquifer-aquitard interface most likely will induce the extrusion of naturally occurring seawater within the aquitards so as to increase the salinity within the aquifer. The effect of this process is that significant regions of an aquifer can be salinized without intrusion through an offshore aquifer outcrop. The Geosciences model does not address this process. The Geosciences model has a second major flaw, which is cumulative with the model problems discussed above. To evaluate the groundwater impacts of the CalAm project, a specification of baseline conditions was input into the Geosciences model (through the boundary conditions derived from the SVIGSM), and the model was used to simulate future groundwater conditions based on the specified baseline. While one part of the future scenario was the location and pumping rates for the proposed wells, another part was the specification of agricultural pumping in the coastal region of the Salinas Valley groundwater basin. That second part is the baseline condition. The historical agricultural pumping within the coastal region has been reduced by the implementation of the Castroville Seawater Intrusion Project (CSIP) and the Salinas Valley Water Project (SVWP). The purpose of the CSIP and SVWP is to reduce seawater intrusion by reducing groundwater pumping. The CSIP includes a distribution system for delivering water to growers within the Castroville area where the delivered water is used in lieu of groundwater
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pumping. The CSIP water supply includes reused wastewater from the Salinas Valley regional wastewater treatment facility and water diverted from Salinas River at the “rubber” dam near Marina. The CSIP and SVWP have resulted in an annual pumping reduction of about 20,000 acre-feet. No current plans exist for the expansion of CSIP facilities, service area, or water supply. Nevertheless, the Geosciences modeling assumes a baseline condition with a greatly expanded CSIP service area and a corresponding significant additional reduction in agricultural pumping within the coastal area of the Salinas Valley groundwater basin (a project anticipated at one time as SVWP Phase 2). The CalAm modeling assumes an addition annual pumping reduction of about 14,000 acre-feet. However, the appropriate baseline condition is for the continued operation of the CSIP project without additional acreage or water supplies. An expansion of CSIP is not in place or envisioned at this time, and it is not an appropriate or realistic depiction of baseline conditions for analyzing the potential impacts of the CalAm proposal. Putting aside for the moment the hydrologic flaws in the Geosciences model, let us explore how the assumption of additional reductions in regional agricultural pumping substantially masks the actual impacts of the proposed project. Were future large reductions in agriculture pumping actually to occur, it would tend to sweep offshore the salinity effects of the proposed pumping. Correspondingly, Figures 4A through 4C would need to be modified. Figure 4A shows the preproject condition with the existing pumping reduction. The arrows indicate groundwater flow (for the existing reduction in agricultural pumping) from offshore to onshore across the section. However, with additionally reduced agricultural pumping, the direction of groundwater flow would be reversed from that shown on Figure 4A. The direction of groundwater flow would be from onshore to offshore. Figure 4B shows the with-project condition. The arrows indicated groundwater flow (again, for the existing reduction in agricultural pumping) from onshore to the well and from offshore to the well. The result of additionally reduced agricultural pumping would be similar. Figure 4C shows the post-project condition. The arrows indicate groundwater flow (again, for the existing reduction in agricultural pumping) landward. With additionally reduced agricultural groundwater pumping, the direction of groundwater flow would be reversed from that shown on Figure 4C, with the result that salinity accumulated during the operation period would be flushed offshore. Correspondingly, the assumption of additionally reduced agricultural pumping represents a “best case” scenario. In the absence of such an assumption, the modeling of the project would show more adverse impacts. The valid characterization of the proposed CalAm pumping impacts will require redoing the modeling. That in turn will require improving the hydrogeologic characterization and using a realistic simulation scenario. The specific requirements are described later.

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Proposal to Pump from Dune Deposits The contingency proposal for pumping from the dune deposits most likely will show fewer adverse impacts than the principal proposal for pumping from the 180-foot aquifer. The contingency pumping effects most likely will be contained within the nearshore dune deposits. However, the contingency proposal has not been modeled, and that need s to occur in order to identify the pumping effects. The modeling needs are the same as for the primary proposal. The specific requirements are described below.

Recommendations Pumping from the dune deposits with shallow wells or Ranney collectors probably will not adversely impact the Salinas Valley groundwater basin. As has been noted, pumping from the 180-foot aquifer is much more likely to result in unacceptable impacts. For either case, the uncertainty must be reduced by conducting a through hydrologic investigation. Such an investigation would consist of five parts. 1. The understanding of the hydrologic setting along Monterey Bay must be refined. Previous investigations have established the general hydrologic setting, but additional work is needed to define the thickness and extent of the 180-foot aquifer, overlying aquitard, and dune deposits. Especially important are identifying the onshore and offshore extent, thickness, and continuity of the aquitard overlying the 180-foot aquifer and defining the hydraulic connections among the 180-foot aquifer, overlying aquitard, and dune deposits. The hydrogeologic investigation will require the compilation and analysis of existing hydrogeologic information, the construction of new boreholes, and perhaps conducting geophysical surveys. Whether the proposed pumping from the 180foot aquifer or the dune deposits will have adverse impacts will depend largely on the details of the actual hydrogeologic setting. 2. An understanding of the seawater-intrusion mechanisms must be developed. Historical seawater intrusion has occurred by some combination of the mobilization of naturally occurring seawater within the groundwater system, pumping-induced vertical leakage from Monterey Bay into the groundwater system, extrusion of naturally occurring seawater within the aquitards deposited as lagoonal sediments, and other mechanisms. The collection and analysis of geochemical and other information will be required to identify details of the seawater-intrusion processes. Whether the proposed pumping from the 180-foot aquifer or the dune deposits will have adverse impacts may depend significantly on the actual processes that will be activated by the proposed pumping. 3. Large-scale aquifer tests will be needed to supplement the hydrogeologic and seawaterintrusion investigations. Separate tests must be conducted with pumping from the 180foot aquifer and the dune deposits. The tests need to include monitoring wells within the 180-foot aquifer, the overlying aquitard, and the dune deposits. The pumping rates and
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test durations must be sufficient to identify processes that will be activated by the full implementation of the proposed water-supply pumping. 4. A local groundwater model must be developed that represents the essential elements of the groundwater system onshore and offshore along Monterey Bay. The model must simulate both groundwater flow and solute transport. The model must represent the hydrologic setting, including the thickness and extents of the dune deposits, 180-foot aquifer, 400-foot aquifer, and deep aquifer, and the intervening aquitards. The model must represent the hydraulic characteristics of the groundwater system, and it must represent the seawater-intrusion process active within the groundwater system. The development of an adequate model may require simulating the effects of water density on the hydrodynamics of the groundwater system. The boundary and initial conditions for the local model should be derived from SVIGSM. However, the simulation run on the SVIGSM must represent a realistic representation of baseline conditions. The appropriate baseline condition is for the continued operation of the CSIP project without additional acreage. An expansion of CSIP is not in place or envisioned at this time, and it is not an appropriate or realistic depiction of baseline conditions for analyzing the potential impacts of the CalAm proposal. The proposed CalAm pumping must be simulated for a finite period, and an extended post-project period must be simulated. 5. The modeling results for both the primary and contingency proposal must be subjected to a through sensitivity analysis. The modeling results will unavoidably always contain uncertainty, even though the objective of the modeling exercise and supporting investigations described above will be to minimize the uncertainty. The sensitivity analysis will quantify how the modeling results might change with different assumptions about the hydrogeologic setting, seawater intrusion processes, and the hydraulic characterization of groundwater system. The groundwater modeling work and supporting investigations should be conducted with continuing input from a technical advisory committee. The committee would provide advice on study plans and review study results. The committee would include representatives of the stakeholders and other experts. References Cited California-American Water Company, 2012a, Application of the California-American Water Company for approval of the Monterey Peninsula water supply project and authorization to recover all present and future costs in rates: Before the California Public Utilities Commission. California-American Water Company, 2012b, Application of the California-American Water Company for approval of the Monterey Peninsula water supply project and authorization to recover all present and future costs in rates, California-American Water Company contingency plan compliance filing: Before the California Public Utilities Commission. California Department of Water Resources, 1947, Salinas basin investigation: Bulletin No. 52.
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Durbin, T. J., Kapple, G. W., and Freckleton, J. R., 1978, Two-dimensional and threedimensional digital models for the Salinas Valley groundwater basin, California: U. S. Geological Survey Water Resources Investigations 78-113. Geosciences Support Systems, Inc., 2008, North Marina groundwater model evaluation of potential project, 2008: Report prepared for California American Water. Greene, H. G., 1970, Geology of southern Monterey Bay and its relationship to the ground water basin and salt water intrusion: U. S. geological Survey Open-File Report 70-141. Greene, H. G.; Lee, W. H. K.; McCulloch, D. S.; Brabb, E. E., 1973, Faults and earthquakes in the Monterey Bay region, California: U. S. Geological Survey Miscellaneous Field Studies Map 518. Greene, H. G., 1977, Geology of the Monterey Bay region: U. S. Geological Survey Open-File Report 77-718. Izbicki, J.A., 1996, Seawater intrusion into a California coastal aquifer: U. S. Geological Survey Fact Sheet 125-96. Monterey County Water Resources Agency, 1994, Salinas River basin water resources management plan Task 1.09, Salinas Valley groundwater flow and Quality model report: Report prepared by Montgomery Watson. Monterey County Water Resources Agency, 1997, Salinas Valley ground water and surface water model update: Report prepared by WRIME, Inc. Monterey County Water Resources Agency, 2004, Hydrostratigraphic analysis of the northern Salinas Valley: Report prepared by Kennedy/Jenks Consultants. RBF Consulting, 2012, Contingency planning for the Monterey Peninsula water supply project: Report prepared for California American Water.

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lo orn S Elkh

ugh

Wells in dune deposits

Wells in 180-foot aquifer

Wells or Ranney collectors in dune deposits

Sa li

na s
e Riv r

2

Miles

Figure 1 - Proposed locations for slant wells within 180-foot aquifer and slant wells or Ranney collectors within dune deposits. Geologic base map is from Durbin and others (1978).

W
Cr

Outcrop 180-ft aquifer

os s

Se c

tio n

Lin

e

Outcrop 400-ft aquifer

Sa li

na s
e Riv r

SE

2

Miles

Figure 2 - Outcrop of 180-foot and 400-foot aquifers beneath Monterey Bay. Geologic base map is from Durbin and others (1978).

Outcrop of 400-foot aquifer

Outcrop of 180-foot aquifer

Monterey Bay shore

W
Sea Level

SE
Aquitard Aquitard 0 Feet

180-foot aquifer 400-foot aquifer

Basement rocks

Deep aquifer and other deposits 1000 2 Miles

Figure 3 - Generalized cross section through groundwater system near Monterey Bay. Section location is shown on Figure 2.

Monterey Bay shore

Mon

ay terey B

Sea Level

Well
Aquitard 180-foot aquifer Aquitard 0.5

0 Feet

350

Miles

Figure 4A - Generalized cross section through groundwater system near Monterey Bay showing coastal well in 180-foot aquifer for pre-pumping condition. Gray shades show level of seawater intrusion. Arrows show direction of groundwater flow.

Monterey Bay shore

Pumping

Mon

ay terey B

Sea Level

Well
Aquitard 180-foot aquifer Aquitard 0.5 0 Feet

350

Miles

Figure 4B - Generalized cross section through groundwater system near Monterey Bay showing coastal well in 180-foot aquifer for with-pumping condition. Gray shades show level of seawater intrusion. Arrows show direction of groundwater flow.

Monterey Bay shore

Well
Aquitard 180-foot aquifer Aquitard 0.5 0 Feet

Mon

ay terey B

Sea Level

350

Miles

Figure 4C - Generalized cross section through groundwater system near Monterey Bay showing coastal well in 180-foot aquifer for after-pumping condition. Gray shades show level of seawater intrusion. Arrows show direction of groundwater flow.

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