This story has been updated with discussion of alternative conditions that could be imposed on Poseidon.
Ensuring that a desalination plant proposed for Huntington Beach adequately compensates for killing millions of small marine organisms poses the latest hurdle for Poseidon Water’s controversial project.
The Santa Ana Regional Water Quality Control Board spent most of its 12-hour hearing Friday, April 23 taking testimony and wrestling with how to incorporate mitigation guarantees into the permit that Poseidon is seeking from the agency. No resolution was reached, with the meeting to be continued on Thursday, April 29.
Going into the online meeting, the board’s staff recommended that operation of the plant be prohibited until Poseidon won all governmental approvals for mitigation plans.
But Poseidon argued persuasively that if it had to meet that condition, it would be unable to obtain financing for the $1.4 billion plant. Because of the uncertain timeline for winning mitigation permits, lenders would not know when the plant would start generating revenue to pay back loans, according to officials from Poseidon and Bank of America, a potential lender.
The board signaled Friday that it was open to a compromise.
“We’re trying to create the right level of assurance” that mitigation is adequate and timely, said Phil Wyels, a state water board attorney working with the regional board on the project. “We accept that the prohibition requirements could prevent financing.”
The meeting was the 10th public meeting for the project by the regional board over the past three years, and a resumption of three days of public hearings held last summer.
Opponents have consistently argued that there is technology that would be less harmful to marine life, that the cost of the water to consumers would be more than twice that of the imported water it would replace, and that there’s not a need for the water.
The Municipal Water District of Orange County, which distributes imported water to Orange County, released an analysis in 2018 that said there might be no water shortages and, in a worst-case crisis, there would be a shortage of 22,000 acre-feet a year.
Poseidon would produce 56,000 acre-feet a year — enough for about 450,000 people — and has reached a tentative agreement with the Orange County Water District that would obligate the agency to buy nearly all of that water. Desalination proponents see the water as insurance against worsening droughts and possible reductions of imported water.
The regional board has previously determined that need has been adequately demonstrated by water agencies and that more marine-friendly technology is not feasible at this location.
Since last summer, mitigation requirements have increased to include not only dredging of the Bolsa Chica wetlands inlet, which has exhausted its dedicated funding source, and restoration of portions of the wetlands. It also calls for creation of a 41-acre reef offshore of the Palos Verdes Peninsula.
Poseidon’s Carlsbad plant began operating in 2015, but mitigation work has not yet begun. Regional board staff said that delay was a key reason they recommend blocking Huntington Beach operations until mitigation for that plant was approved.
The state Coastal Commission, which will consider granting Poseidon its final permit if the company wins approval from the regional board, acknowledged at Friday’s meeting that the delays were due in part to a sluggish approval process for the mitigation, but also blamed Poseidon for not being more cooperative.
Poseidon offered several alternatives, including moving up the timeline for taking over dredging of the Bolsa Chica inlet and creating a mitigation fund that would ensure adequate money is set aside before the plant begins operating. The company also offered to pay $700 a day for each day it was late in performing mitigation tasks — in addition to the $5,000 per day fine the state is already authorized to levy.
Regional board member Daniel Selmi expressed concern that the additional fines provision was insufficient incentive and questioned how the mitigation fund amount would be calculated.
Selmi also suggested the operation prohibition be left in place while Poseidon pursued its Coastal Commission permit and a permit amendment needed from the state Lands Commission — and that Poseidon begin preparing mitigation plans during that time. Once Poseidon got that permit and amendment, it could return to the regional board to lift the prohibition.
Board members William Ruh and Letitia Clark requested staff return Thursday with information on mitigation alternatives to the Palos Verdes Peninsula reef proposal that would be closer to the proposed desalination plant site.
That request and other alternative conditions of the permit are expected to be prepared for the meeting next week. An additional meeting date, May 13, has been set aside in case there are issues that aren’t resolved at the next meeting.
