To ensure consistency among its published policy, internal methodology, and indemnification agreements so that permit applicants are aware of the district's requirements and are treated equally, by July 2016 the district should update its internal methodology and indemnification agreements to contain equivalent information that reflect its revised published policy.
As noted in the audit report, the District had previously revised its published "CEQA Implementation" policy to clearly describe the case-by-case nature of decisions related to requiring indemnity agreements and letters of credit, and to require documentation of those decisions in each project's engineering evaluation report. See page 9 of the revised "CEQA Implementation Policy", APR 2010. District has updated its "Application Review Format" policy, APR 1010, to include specific language to document for the public relevant case-by-case risk management decisions regarding indemnity agreements and letters of credit in each project's engineering evaluation report prepared by the District. See CEQA section, specifically page 78. District has also updated its own internal methodology documentation, FYI-141, to explain and document obligations of District staff regarding indemnity agreements and letters of credit. District has reviewed its standard indemnity agreement language and did not identify any changes necessary to respond to the audit report recommendations.
The district provided revised versions of its published policy and internal methodology, and the documents are consistent and reflect the changes recommended in the audit. Further, as our concern with the district's indemnification agreement related to how it was described in the district's policy, which it revised, the district is correct in making no changes to its indemnity agreement.
To make certain that it can demonstrate consistency and transparency in its decision-making process when it determines which permit applicants it requires to provide additional financial security, the district—after it updates its guidance documents—should follow its revised published policy and updated internal methodology for requiring indemnification agreements and letters of credit.
This response is confirmation that the District is following, and will continue to follow, all external policies and internal methodologies developed by the District for requiring indemnification agreements and letters of credit.
The district provided examples of a project where it did require an indemnification agreement and one where it did not. In both cases, the district had included a paragraph explaining its decision to require an indemnification agreement, consistent with its revised policy.
To ensure that the district is adequately protected from the costs of litigation, it should develop a protocol to maintain all required legal documents accurately and to make sure that those documents remain in effect. By July 2016, the district should adopt such a protocol for management of its centralized system for requesting, tracking, storing, and following up on indemnification agreements and letters of credit.
District's internal methodology document, FYI-141, contains details of a centralized electronic tracking mechanism for indemnity agreements and letters of credit, including specific identification of staff responsibilities associated with that tracking process. This tracking mechanism has been implemented.
The district provided a copy of its revised internal methodology that requires staff to enter information regarding indemnification agreements and letters of credit into a database and provide a report from the database.
Agency responses received are posted verbatim.