Coastal Commission Wearies of Poseidon Ocean Desalination Plan; $530 Million in Public Subsidized Funding is Next Hurdle


Posted on 14 December 2009

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By Joe Geever
Surfrider Foundation

Yesterday, after hours of deliberation the California Coastal Commission voted to reject a request by public-interest groups to revoke a permit for the largest desalination plant in the western Hemisphere in Carlsbad.

The groups had brought the revocation request after it was revealed that Poseidon Resources submitted incorrect environmental impact data – drastically underestimating the amount of marine life that would be killed by the plant. After the vote Commission staff disclosed new allegations of wrongdoing related to the plants greenhouse gas emissions.

One Commissioner, who voted against revoking the permit this time, commented that the repeated disclosure of misleading information from Poseidon was having a “cumulative effect.” “It’s like a rain of new problems,” according to Commissioner Burke – signaling what may be a sense of weariness by the Commission over the project’s proponent’s lack of accurate disclosures.

Taking away a developers permit after it has been granted is an extraordinary move and the Commission rarely takes this step. But members of the Commission expressed serious concern that Poseidon had withheld information from Commission staff on how much marine life would be killed in the ocean water intake.

When that information finally came at the last hour, it turned out to be erroneous and far underestimated the marine life mortality. According to Commissioner Sara Wan, “This is the clearest case for revocation I’ve seen in my many years on the Commission.” Other members, however, were not convinced that Poseidon had “intentionally” submitted false information and so voted not to revoke the permit.

In the end it remains unclear how the next revocation request may be viewed by the Commission. If Commissioner Burke’s observations reflect those of a majority of the Commissioners, Poseidon is setting what appears to be a pattern of misleading and erroneous information on the project that may sway some to believe these multiple misrepresentations were intentional and the project really does require a second look.

The project’s next hurdle is at the California Debt Limit Allocation Committee, a panel that allocates tax-free bonds to fund projects with public benefits. Poseidon has similarly misrepresented the cost and financing, originally saying it would require no public financing and cost $270 million.

The company, however, is seeking $530 million in tax-exempt bonds (representing a $70 million taxpayer subsidy of the project) on top of $350 million ratepayer subsidy from the Metropolitan Water District of Southern California. The committee, made up of state Treasurer Bill Lockyer, Controller John Chaing and Governor Schwarzenegger, will meet to decide if Poseidon should receive these funds on January 14.

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Joe Geever is the Southern California Coordinator of the Surfrider Foundation, a non-profit grassroots organization dedicated to the protection and enjoyment of our world’s oceans,waves and beaches.

The recent opinion piece by Surfrider Foundation’s Joe Geever published by the California Progress Report included factual misrepresentations and accusations that must be corrected.

As a progressive organization fighting for the rights of California ratepayers from all walks of life, the San Diego County Taxpayers Association strongly believes that projects like the Carlsbad Desalination Plant must be judged on sound science and not political hyperbole and innuendo.

We are disappointed that Mr. Geever’s article strongly implied that “Poseidon is setting what appears to be a pattern of misleading and erroneous information.” There is no evidence in the project’s public record that extends a decade to support this assertion, and it is reckless to suggest otherwise.

First, it must be noted that Poseidon Resources’ Carlsbad desalination project has been approved by every regulatory and permitting agency that has reviewed the project over the past ten years, including the Coastal Commission, State Lands Commission and Regional Water Quality Control Board. The project’s review has included over 15 public hearings and over 100 hours of public testimony and deliberation. In response to the project’s unanimous acceptance, Mr. Geever’s organization has unsuccessfully filed five lawsuits and another six permit appeals, and every single one of these legal challenges have been rejected.

Mr. Geever’s estimates of the desalination facility’s impacts on marine life are grossly overestimated. A super majority of the Coastal Commission rejected Surfrider’s request to revoke the permit because they determined that Poseidon didn’t intentionally provide inaccurate marine life data, and even taking into consideration the project’s corrected marine life data it still results in an insignificant impact. In fact, the project’s total fish impingement impact equals two-four pounds per day, or approximately the daily diet of two brown sea pelicans. This impact is manageable (Poseidon has proposed to create 66 acres of new coastal wetlands) and a far cry from the “environmental devastation” suggested by Mr. Geever and others. The project provides a net environmental benefit when you take into consideration that it will reduce pumping in the Bay Delta by providing a local drinking water supply for 300,000 Southern Californians.

What might be most disconcerting is that project opponents, unable to make a credible environmental argument against the project, have attacked the project’s financing despite the fact they clearly do not have a grasp of the project’s financial complexities.

Poseidon is not seeking or accepting public subsidies for the construction of the desalination facility and has never “misrepresented the project’s cost and financing.” The company will issue private bonds that carry a federal government sanctioned tax exemption because of the project’s public serving benefit. No California public entity will have its credit rating or bonding capacity tied to the project’s financing.

Finally, Poseidon is also not receiving a $350 million ratepayer subsidy from the Metropolitan Water District of Southern California (MWD) as Mr. Geever suggests. Instead MWD is providing a $250/acre foot financial incentive to local water agencies – not to Poseidon - to develop new water supplies, either through recycling or desalination in an effort to reduce Southern California’s dependence on imported water.

While the Taxpayers Association has always encouraged a vigorous debate among dissenting parties, we are concerned about the long-term impact on the credibility of well-meaning progressive groups like Surfrider that refuse to let go of a specific issue or project even when the law and science are definitive.

Mike McDowell, Chairman of the Board, San Diego County Taxpayers Association