September 18, 1997
Bruce Kaneshiro, Project
c/o Environmental Science Associates
225 Bush Street, Suite 1700
San Francisco, California 94104
SUBJECT: COMMENTS ON THE PROPOSED NEGATIVE DECLARATION FOR PG&E APPLICATION NO. 96-11-202 PROPOSAL FOR DIVESTITURE
Dear Mr. Kaneshiro:
Thank you for the opportunity to provide information and comments on the Mitigated Negative Declaration and Initial Study, California Public Utilities Commission, Pacific Gas and Electric Company's Application No. 96-11-020, Proposal for Divestiture. We have carefully reviewed the Initial Study, attended CPUC workshops on both June 13, 1997 and June 27, 1997, and met with Public affairs Management and ESA on March 27, 1997. After carefully reviewing the project and its potential environmental impacts, we have identified the following issues and concerns:
In general we are disappointed that the document does make a fair attempt to address the full range of issues and questions brought forward in our March 27, 1997 meeting with the consultant, the two workshops, or our two letters of April 9, 1997 and July 1, 1997. We believe there are critical issues that need to be addressed in order to meet the spirit and intent of the California Environmental Quality Act with respect to this project. While we are aware of the CPUC's desire to meet a certain time line, meeting that line cannot justify a failure to fully evaluate and disclose the full range of environmental impacts that may clearly result from this project.
Our review of the document shows that it still suffers from an incomplete, and variable, project description. As noted in our letter of July 1, certain elements of the project, most notably the issue of resumption of tankering at Morrow Bay, "float" in and out of the project description, seemingly in order to support a particular finding or other. The offshore terminal, together wit the on shore tank farm, are clearly part of the facilities to be sold. If these facilities have no chance of being utilized in the future, as assumed in various parts of the initial study, how can they reasonably be included as part of the divestiture process? More to the point, the document must either evaluate the resumption of tankering, or propose and evaluate a mitigation plan for both the offshore mooring and the on shore tank farm and related facilities. Otherwise, the tankering element becomes a "white elephant" which may contribute to long-term environmental degradation both on and offshore due to a lack of any coordinated plan to remediate the facility sites.
The Initial Study does not recognize the full scope of air quality impacts hat could result from the project. The resumption of tankering could, in and of itself, result in substantial impacts to local and regional air quality. Operation of tanker engines, off-loading operations, and the potential for a fuel change at the power plant itself have not been adequately addressed. The CPUC should be aware that air quality and odor impacts arising from the operation of the nearby Chevron Estero marine terminal continue to result in community complaints, and have resulted in consequent action by the APCD.
The Initial Study also concludes that no increased exposure of sensitive receptors to air pollutants would result from divestiture, despite a companion conclusion that air emissions could substantially increase. We recommend that the CPUC reexamine this issue in light of the long-standing and ongoing controversy regarding air quality impacts on sensitive populations within the neighborhood located directly downwind on the Morro Bay power plant. We believe that CEQA Guidelines section 15064(h)(1) requires hat the CPUC to conclude that sensitive receptors located in this neighborhood be given appropriate consideration in an EIR.
It is our understanding that PG&E has been working with the San Luis Obispo County APCD to develop changes in permits and regulations for the Morro Bay power plant that will, in the opinion of PG&E and the air district, fully mitigate any potential air quality impacts that could result form the divestiture of the Morro Bay plant. These conclusions appear to be based, at least in part, on CEQA guidelines section 15064(i). However, reducing the air emissions from the plant to a level that is in compliance with the limits set by applicable permits would not, in this case, result in less than significant impacts. As pointed out in our letter of April 9, the Morro Bay power plant has the potential to be the largest single stationary source of air pollutants in San Luis Obispo County. Deterioration of air quality is a regional issue that would result in far reaching impacts over the entire County. Regardless of the compliance status of the Morro Bay plant, any increase in emissions would impact the air district's overall attainment status. Having only recently been found to be in a better attainment status than previously considered, we have already seen the deleterious economic impacts of stricter air quality controls. In any scenario in which the Morro Bay power plant produces greater air emissions, all new development in the region would be constrained by stricter air quality requirements. Each and every new development project would face increased costs due to requirements to fully mitigate all incremental air quality impacts. In combination with the other regional economic impacts that could result from the full scope of deregulation activities undertaken by the CPUC, these impacts must be considered significant, as required by CEQA Guidelines section 15064(f).
The Morro Bay power plant is located to take advantage of the opportunity to utilize ocean water for cooling. The cooling water intake for the plant is located in the Morro Bay harbor, while the outfall is located at the base of Morro Rock. Changes in plant operation, including increased output, reduced output, or a change in the yearly patterns of output, could result in thermal impacts to the marine environment at Morro Rock and in the harbor. Morro Rock, and its associated marine resources, are an important element in the State Parks system as well as the overall ecology of the region. The marine resources present are unique to the region, if not to the entire state. Morro Rock provides critical nesting areas for the peregrine falcon, and the area is known to support the southern sea otter and California Brown pelican. All three of these species are state and federally listed as endangered, and al three are wholly dependent on the complex food chains of the area. There is little doubt that existing thermal inputs into the local marine food chin are of critical importance to these species.
In addition to concerns related to thermal impacts at the plant cooling system outfall, new information has recently comet to light indicating that significant numbers of marine organisms do not survive the cooling loop. Our understanding is that monitoring studies conducted at the San Onofre Nuclear Generating Station conform significant marine impacts to fish larvae and microscopic organisms. Similar impacts are, no doubt, ongoing at the Morro Bay power plant, as well as Moss Landing and Hunter's Point. Given that the cooling water intake at Morro Bay plant is located within the confines of the Morro Bay harbor, between the estuary and the outlet to the open ocean, any increase in plant output that results in an increase in cooling water flow would necessarily increase the loss of marine organisms. The relationship between these impacts and the health and productivity of a wide area of ocean is a critical concern that clearly deserves consideration on a full EIR. This issue gains additional prominence when the cumulative effects of this impact are considered. The potential for increased output at any of the plants proposed for divestiture, and as a consequence, increased marine impacts related to sea water cooling, could affect the health and productivity of near coastal waters along the entire California coast.
A plant operation scenario that results in resumption of operation of the marine terminal presents a full set of additional risks to marine resources. While highly regulated, the transport of crude oil by tankers, and the transfer of petroleum products at marine terminals, has and will continue to threaten marine life. oil spills related to historic tankering operations in Estero Bay have occurred in the past, and have undoubtedly contributed to the decline of sensitive marine species. The recent announcement by the Chevron corporation that they are working to end tankering operations in Estero Bay, and the designation of the Monterey Bay National Marine Sanctuary just north of Estero Bay, are tow developments which together hold promise for the continued recovery and protection of the marine environment in the area. Divestiture will, to some degree and in certain reasonable scenarios, encourage the tankering of petroleum fuel to the Morro Bay power plant. The impact of the resumption of tankering operations, as well as the potential for shipping routes to pass through or adjacent to the Monterey Bay National Marine Sanctuary, must be considered.
We feel that an EIR is necessary to fully disclose the potential for impacts to marine resources that could occur from thermal changes, microorganism entrainment, and tankering related issues, and to identify appropriate mitigation measures where necessary.
Social and Economic Impacts
State CEQA Guidelines Section 15064(f) describes the role that economic and social effects have in the initial study process.
"Economic and social changes resulting from a project shall not be treated as significant effects on the environment. Economic or social changes may be used, however, to determine that a physical change shall be regarded as a significant effect on the environment. Where a physical change is caused by economic or social effects of a project. the physical change may be regarded as a significant effect on the environment. Where a physical change is caused by economic or social effects of a project, the physical change may be regarded as a significant effect in the same manner as any other physical change resulting from the project. Alternatively, economic and social effects of a physical change may be used to determine that the physical change is a significant effect on the environment. If the physical change causes adverse economic or social effects to people, those adverse effects may be used as the basis for determining that the physical change is significant."
Section 15131(a) of the Guidelines describes the process wherein "An EIR may trace a chain of cause and effect from a proposed decision on a project through anticipated economic or social changes resulting from the project to physical changes caused in turn by the economic or social changes."
The Public Utilities
Commission is well aware of San Luis Obispo County's concerns
related to the ability of this agency to continue to provide and
acceptable level of public services in the face of declining
revenues (see Socioeconomic Impacts of Electrical Industry
Restructuring and their Physical Consequences in San Luis Obispo
County; County of San Luis Obispo, October 2, 1996).
Divestiture of the Morro Bay power plant could incrementally
reduce discretionary revenues to the County and other affected
jurisdictions. Such revenues are used primarily to fund fire,
police, parks, roads, and schools. As we have clearly documented,
these essential public services already operate well below
accepted statewide service level norms. Because PG&E
generating facilities in San Luis Obispo County comprise a
disproportionate share of the tax base, a worst case analysis of
the local economic ramifications of divestiture must be analyzed
in an EIR.
PG&E has already been given nearly overwhelming incentives by the CPUC to divest 50% o their generating capability as a step to implementing deregulation. We also understand that, if the Morro Bay power plant is not sold, PG&E could recover its investment through CTC. Section 15004(b) of the State CEQA Guidelines states "EIRs . . . should be prepared as early as feasible in the planning process to enable environmental considerations to influence [the] project program . . ." Given the actions taken by the CPUC in the divestiture process could ultimately lead to the closure of the Morro Bay power plant, in as much as the CPUC will control the conditions under which divestiture will or will not occur, the direct and indirect consequences of this alternative must be considered in an EIR. From the perspective of public service impacts that result from socioeconomic impacts, the closure of the plant could represent a reasonable worst case scenario.
Section 15065 of the State CEQA Guidelines contains "Mandatory Findings of Significance." According to Section 15065,
"A Lead Agency shall find that a project may have a significant effect on the environment and thereby require an EIR to be prepared for the project where any of the following conditions occur:
(c) The project has possible environmental effects which are individually limited but cumulatively considerable. AS used in the subsection, "cumulatively considerable" means that the incremental effects on an individual project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects."
The County of San Luis Obispo, together with local schools, faces the possibility of substantial revenue loss from both the divestiture of the Morro Bay power plant and other activities contemplated by the CPUC and PG&E at the Diablo Canyon Nuclear Power plant. There is no question that the cumulative economic effects of these potential actions will result in significant environmental effects in San Luis Obispo County (see Socioeconomic Impacts of Electrical Industry Restructuring and their Physical Consequences in San Luis Obispo County; County of San Luis Obispo, October 2, 1996).
The City of Morro Bay faces the potential closure of the Chevron marine terminal plus the eventual closure of the Morro Bay power plant. The socioeconomic and consequent environmental effects of these actions could prove devastating to the City. These effects would occur in concert with similar impacts to the County, to the degree that the County could not provide any meaningful relief to City residents. That is, County public services such as police (sheriff) protection, fire, road maintenance and park facilities simply could not be provided to the City.
Section 15065 clearly
mandates the CPUC's EIR to evaluate these cumulative impacts,
despite the documents' assertion that they have no relationship
to this project.
Section 150645(g)(1) of the State CEQA Guidelines requires the lead agency to prepare and EIR if it is presented with a fair argument that a project could have a significant effect on the environment, either directly or indirectly:
"If the Lead Agency finds there is substantial evidence in the record that the project may have a significant effect on the environment, the Lead Agency shall prepare and EIR (Friends of B Street v. City of Hayward, (1980) 106 Cal.App.3d. 988). Said another way if a Lead Agency is presented with a fair argument that a project may have a significant effect on the environment, the Lead Agency shall prepare an EIR even thought it may also be presented with other substantial evidence that the project will not have a significant effect (No Oil, Inc. v. City of Los Angeles, (1974) 13 Cal.3d 68)."
There is no question that a fair argument has been made that this project could result in significant impacts to air quality and marine resources, and that it has socioeconomic impacts that would lead to significant impacts to public services.
Section 15064(h)(1) of the State CEQA Guidelines requires the preparation of an EIR when there is "serious public controversy over the environmental effects of a project." The potential sale or closure of the Morro Bay power plant has been the subject of extensive local news coverage. Members of the public have expressed concerns to the County Board of Supervisors about the overall socioeconomic effects of deregulation and the indirect impacts to public services. An air of uncertainty exists in the public's mind as to the potential impacts that the actions of the CPUC may have in San Luis Obispo County. Section 15064(h)(1) requires the preparation of an EIR in cases such as this because one of the primary purposes of an EIR is to inform the public about the environmental effects of a project. In order to comply with the full disclosure requirements of CEQA, the CPUC must prepare and EIR.
Section 15064(h)(2) of the State CEQA Guidelines requires the preparation of an EIR when there is "serious public controversy over the environmental effects of a project." The potential sale or closure of the Morro Bay power plant has been the subject of extensive local news coverage. Members of the public have expressed concerns to the County Board of Supervisors about the overall socioeconomic effects of deregulation and the indirect impacts to public services. An air of uncertainty exists in the public's mind as to the potential impacts that the actions of the CPUC may have in An Luis Obispo County. Section 15064(h)(1) requires the preparation of an EIR in cases such as this because one of the primary purposes of an EIR is to inform the public about the environmental effects of a project. In order to comply with the full disclosure requirements of CEQA, the CPUC must prepare an EIR.
Section 15065(h)(2) of the State CEQA Guidelines requires the preparation of an EIR if there is disagreement between experts over the significance of an effect on the environment. We understand that both PG&E and SCE have issued opinions to the effect that an EIR is not required for the divestiture of their facilities. We do not know whether or how there two companies have evaluated the potential direct and indirect environmental impacts of divestiture on San Luis Obispo County. However, it is the express opinion of numerous local officials that this project could result in significant impacts to environmental, social, and economic resources in the area. We are certain that no other person or entity possesses the level of knowledge of these resources that lies with these local government officials. Therefore, while other "experts" may disagree, CEQA requires that these issues be evaluated in an EIR. A negative declaration is clearly not appropriate.
Section 15378(c) of the
State CEQA Guidelines notes that the term "project"
refers to the activity which is being approved and which may be
subject to several discretionary approvals. The term does not
mean each separate approval. It is inappropriate to chop a
project into small segments to avoid preparing an EIR (See Bozung
v. Local Agency Formation Commission (1975) 13 Cal.3d 263.)
Therefore, the CPUC should not treat each step in the
deregulation/divestiture process as a separate project for the
purposes of CEQA review. In addition, the separation of PG&E
facilities from SCE facilities for the purposes of conduction
separate environmental reviews appears to be a further improper
segmenting of the "project."
Based on the information provided in this letter, we believe that he CPUC should commit to the preparation of an EIR for this project at the earliest possible time. WE would welcome the opportunity to participate in the scoping process for the EIR. We are also available to work with you or your consultants as the development of the EIR progresses.
If you have any questions, or need more information from us, please feel free to contact:
Mark Hutchinson, Environmental Specialist
(805) 781-5458; [FAX (805) 781-1242
Ellen Carroll, Environmental Coordinator
(805) 781-5600; [FAX] (805) 781-1242
Timothy McNulty, Deputy County Counsel
(805) 781-5400; [FAX] (805) 781-4221
cc: Mark Hutchinson,
Timothy McNulty, Deputy County Counsel
Lee Williams, Deputy County Administrator
James B. Lindholm, County Counsel
Gere Sibbach, County Auditor/Controller
Rory Livingston, San Luis Coastal Unified School District
Shauna Nauman, City of Morro Bay