The state water board’s local opponents have rolled over on a major lawsuit involving the future of the Monterey Peninsula’s water supply – for a few years, at least.


In July a group of litigants including Monterey Peninsula Water Management District, California American Water and four Peninsula cities agreed to drop their suit against the State Water Resources Control Board to focus on the crisis at hand: finding a new water supply, and fast.


In October 2009, the state water board issued a cease-and-desist order for Cal Am to ratchet down its unlawful pumping of the Carmel River 70 percent by December 2016. The California Public Utilities Commission later banned most new water connections in Cal Am’s Monterey service district until a replacement water supply comes online.


A football team of local power players led by Cal Am and the Peninsula water district promptly challenged the cease-and-desist order. The parties went into mediation in early 2010 and, earlier this summer, reached a settlement: They dropped their consolidated case against the state water board, and the state agreed to “toll,” or freeze, the statute of limitations on the lawsuit from October 2009 to July 2016.


In other words, Cal Am and company can revive their lawsuit if there’s still no water project online by the state-imposed deadline.


The likelihood of having that alternative water project up and running seems ever dimmer. As local agencies spread the ashes of the defunct Regional Water Project, stakeholders say they’re finding legal weaknesses in Cal Am’s latest desalination proposal, the Water Supply Project.


State water board attorney Nathan Jacobsen says that’s not the state’s problem. 


“We are obviously aware of a lot of the political issues that have occurred and hiccups along the way,” he says. “It isn’t really our place to concern ourselves with those local political decisions.”


David Laredo, attorney for the Peninsula water district, says the settlement is mostly intended to put the lawsuit aside until it’s clear whether the water supply project is going to be online on time. 


“I think the litigants realize that the tremendous dedication of resources to try this case would be premature,” he says. “If this is a DVD, we hit the pause button.”


Cal Am spokeswoman Catherine Bowie sounds an optimistic note: “Once a project is built, the need for legal disputes over the [cease-and-desist order] should go away, so we all thought it best we direct our energies in a positive direction.”


In a related development, the Peninsula water district is poised to approve a deal that lets Cal Am ratepayers keep their untapped water credits – if a new water supply project ever gets flowing.


The ordinance came after Quail Lodge, Carmel Valley Ranch and Bernardus Lodge agreed in June to suspend their lawsuit against the state water board in exchange for tolling their water credits. 


“You can imagine how unfair it would be for someone to spend a lot of money on water credits and then be told, ‘Just kidding, you can’t use ‘em,’” says attorney Tony Lombardo, who represents the resorts. He says the three hotels have collectively spent millions on water conservation to earn credits for expansion projects – 16 new rooms at Bernardus, 12 lots at Carmel Valley Ranch and 40 new rooms at Quail.


The June settlement, if approved by the Peninsula water board, ensures they’ll still have those credits once a new water project is online. 


The water board voted 6-1 in favor of the ordinance at its Aug. 20 meeting and will hold its second reading Sept. 17.