This wasn't the answer that developers or the political leadership of the Monterey Peninsula wanted. They wanted enough water for unconstrained growth, and pumping it out of Carmel Valley was the easiest and cheapest way to get it. They needed help and, less than a year later, the State Department of Water Resources came riding to the rescue. Water Resources released a scientifically dubious report contradicting the PUC's finding and estimating that a whopping 15,000 acre-feet of water per year could be sustainably pumped from Carmel Valley. The PUC quickly capitulated and granted Cal-Am permission to pump more than 11,000 acre-feet per year.
But when large-scale pumping actually began, the river, embarrassingly for Cal-Am, started running dry right next to the pumps. This wasn't just an environmental problem; it was also a legal problem. It demonstrated that Cal-Am was capturing river water which they did not have a legal right to divert.
Picture from: GusC.A's photostream http://www.flickr.com/photos/38029403@N03/