1. © POSEIDON WATER 2013 1 THESE MATERIALS HAVE BEEN PROVIDED TO THE COASTAL COMMISSION STAFF Huntington Beach Project Coastal Commission Hearing November 13, 2013

2. © POSEIDON WATER 2013 2  Use proven technology to affordably provide a long-term, local and reliable source of water not subject to the variations of drought or regulatory constraints  Reduce local dependence on imported water and strengthen regional self-reliance  Contribute desalinated water to satisfy regional water supply planning goals Key Objectives of the Huntington Beach Project

3. © POSEIDON WATER 2013 3 California and Orange County Counting on Seawater Desalination  California Department of Water Resources’ Water Plan Update sets a goal of up to 400,000 acre feet / AF of desalination by 2030  Project would provide 56,000 acre feet per year  Governor Brown’s recently released State Water Strategy identifies desalination as one of the pillars to increase regional water self-reliance  Metropolitan Water District of Southern California is counting on 150,000 acre feet of desalination by 2030  Project identified in Municipal Water District of Orange County’s RUWMP as necessary to reduce demand on imported water  50% of Orange County’s water supply is imported  Without seawater desalination, Orange County’s demand for imported water will increase

4. © POSEIDON WATER 2013 4 Project Permitting History

5. © POSEIDON WATER 2013 5 Proposed Project

6. © POSEIDON WATER 2013 6 Flow Schematic – Reusing Existing Industrial Facilities

7. © POSEIDON WATER 2013 7 RESPONSE TO STAFF REPORT

8. © POSEIDON WATER 2013 8 Applicant’s Request for Commission Approval  The Applicant requests that the Commission:  Approve the Project as submitted  Adopt the Applicant’s alternative conditions and findings  Primary differences with Staff recommendation:  Elimination of seafloor infiltration gallery requirement  Elimination of conditions that require a new design and a new entitlement process

9. © POSEIDON WATER 2013 9 STAFF REPORT – KEY ISSUES  Subsurface Intakes  Marine Life Effects  State Water Board’s Proposed Desalination Policy  Wetlands  Sea Level Rise  Special Conditions

10. © POSEIDON WATER 2013 10 ALTERNATIVE SUBSURFACE INTAKE SYSTEM SEAFLOOR INFILTRATION GALLERY

11. © POSEIDON WATER 2013 11 Subsurface Seafloor Infiltration Gallery

12. © POSEIDON WATER 2013 12 Subsurface Intakes: Site-Specific Project Analyses  The study and analysis of alternative subsurface intakes has been a primary focus throughout the Project’s entitlement process  Hundreds of pages of technical analyses of alternative intakes have been provided to permitting agencies that confirm the infeasibility of a seafloor infiltration gallery  The Regional Board relied on technical reports and site-specific data to reject a seafloor infiltration gallery and approve the Project’s use of the existing intake  Since 2006, the Applicant has provided Commission Staff with nine detailed submittals analyzing alternative subsurface intakes and site-specific conditions  The submittals include site-specific geotechnical reports analyzing offshore subsurface conditions at Huntington Beach

13. © POSEIDON WATER 2013 13 History of Subsurface Intake Analysis PSOMAS, 2007, Feasibility of Alternative Seawater Intakes for the Huntington Beach Desal Project PSOMAS, 2007, Supplemental Subsurface Intake Feasibility Assessment Water Globe Consulting, 2010, Evaluation of Alternative Desalination Plant Subsurface Intake Technologies Water Globe Consulting, 2011, Evaluation of Alternative Desalination Plant Subsurface Intake Technologies Tetra Tech, 2012, Technical Document Review for Site-Specific Hydraulic Conductivity Values Water Globe Consulting, 2012, Well Intake Capacity Updated Based on 2012 Soil Transmissivity Study Geosyntec, 2013, Review of Aquifer Properties and Potential Pumping Huntington Beach Desalination Plant Geosyntec, 2013, Feasibility Assessment of Shoreline Subsurface Collectors Geosyntec, 2013, Response to Requests from California Coastal Commission Staff Regarding Feasibility Assessment of Shoreline Subsurface Collectors Water Globe Consulting, 2013, Critical Review of 2013 Desalination Journal Publication on Subsurface Intakes

14. © POSEIDON WATER 2013 14 Subsurface Geotechnical Analysis Conducted  Staff requested that the Applicant conduct an offshore subsurface geotechnical analysis that included:  Seismic testing to determine subsurface characteristics of ocean floor  Assessment of seafloor sediment samples  Geosyntec conducted site-specific analyses, which included:  Seismic testing as requested by Staff; and  Analysis of existing site-specific sediment data in Huntington Beach Geosyntec Report corroborated earlier analyses and demonstrated:  Huntington Beach seafloor is not suitable for infiltration gallery  Seafloor sediments consist of “muddy sand” of low permeability

15. © POSEIDON WATER 2013 15 Locations of Offshore Sediment Samples

16. © POSEIDON WATER 2013 16 Location of Offshore Geotechnical Analysis

17. © POSEIDON WATER 2013 17 Results: Offshore Consists of “Muddy Sand”

18. © POSEIDON WATER 2013 18 Staff’s Recommendation Conflicts with the Regional Board’s Determination  In approving the Applicant’s NPDES Permit, the Regional Board analyzed a number of subsurface intake alternatives as well as the Project’s use of the existing intake  Subsurface intake alternatives analyzed included a seafloor infiltration gallery  The Regional Board found:  The Project’s use of the existing intake constitutes the best available technology feasible to minimize the intake and mortality of all forms of marine life in compliance with Water Code section 13142.5(b). (Permit, p. F-30)  “A seafloor infiltration gallery sized for the Facility would impact approximately 64 acres of benthic habitat and beachfront.” (Permit, p. F-27)  “The alternative subsurface intakes were determined not to be the environmentally preferred alternatives.” (Permit, p. F-28)  “Taking into account economic, environmental and technological factors, the Regional Water Board finds that the alternative subsurface intakes are not feasible.” (Permit, p. F-28)

19. © POSEIDON WATER 2013 19 A Seafloor Infiltration Gallery is Environmentally Inferior  Excavation of 63.6 acres of seafloor habitat and beachfront  Displacement of plant and animal organisms on the seafloor  Periodic maintenance dredging every 1 to 3 years to remove unsuitable material and sedimentation, resulting in ongoing impacts to benthic communities  Construction of substantial pumping facility(ies), including associated acoustical and visual shielding, security fencing on the shoreline, and access road(s), restricting public access to the beach  Doubles intake-related energy consumption and GHG emissions  Substantial noise and vibration impacts from dredging and sheet pile driving  Removal and disposal of 290,000 to 560,000 cubic yards of seafloor material

20. © POSEIDON WATER 2013 20 Seafloor Infiltration Gallery Conflicts with Coastal Act and LCP Policies Marine Environment (Coastal Act Sections 30230, 30231)  Excavation of the seafloor would repeatedly and permanently impact the offshore benthic environment Public Access and Recreation (Coastal Act Sections 30211, 30220, 30221)  Public access and recreation impacts from the construction of 33 intake water collection wells and trenches for connector piping along one-mile strip of shoreline, including service roads Energy Consumption (Coastal Act Section 30253(d))  Energy to convey source seawater from infiltration gallery to desalination plant will be approximately 2 times higher than from collecting seawater from existing intake system

21. © POSEIDON WATER 2013 21 Subsurface Intakes Are Infeasible “ Feasible means capable of being accomplished in a successful manner within a reasonable period of time, taking into account economic, environmental, social, and technological factors.” (Coastal Act § 30108)  Environmental: Staff’s recommendations are more environmentally impactful  Technological: Unproven technology; excessive risk  Economic: Not financeable; capital costs increase at least 50%  Social: Impairs coastal access and public recreation  Time: Would require a new entitlement process; current entitlements have taken 10 years

22. © POSEIDON WATER 2013 22 MARINE LIFE EFFECTS IMPINGEMENT & ENTRAINMENT

23. © POSEIDON WATER 2013 23 Marine Life Effects As proposed, Huntington Beach Project’s marine life effects are minimal - smaller than the Commissioned-approved Carlsbad project - and can be mitigated in compliance with Coastal Act.  Intake structure is not within an Area of Special Biological Significance (ASBS) or Marine Life Protected Area (MPA)  No threatened or endangered species; recreational species very uncommon  Estimated daily impingement of 0.78 lbs of fish/shellfish per day  92% reduction in fish impingement compared to HBGS’ impingement losses  Larval entrainment losses projected to affect only a small fraction of larvae  (0.02-0.28%) of the source water populations of 115 billion  Project would not affect the ability of species to sustain their populations

24. © POSEIDON WATER 2013 24 STATE WATER BOARD SEAWATER DESALINATION POLICY

25. © POSEIDON WATER 2013 25 SWB Proposed Desalination Policy  Acknowledges that seawater desalination is important to meeting State’s potable water demands  Designed to provide permitting guidance to Regional Boards  Draft plan has not been released  Requires public review and comment, CEQA clearance, & State Board and US EPA approval  Policy will be implemented through Regional Board’s NPDES permitting process  Project will have to comply with policy in order to maintain its NPDES permit  Poseidon proposed CDP special condition: Poseidon shall comply with all current and future Ocean Plan requirements applicable to the Project of the Talbert Aquifer.

26. © POSEIDON WATER 2013 26 WETLANDS

27. © POSEIDON WATER 2013 27 No Wetland Impacts  Staff incorrectly claims that areas within fuel storage tank containment berms were recently wetlands  SEIR Jurisdictional Determination concluded that vegetation, soils and hydrology onsite are not wetlands  No nexus to require wetland restoration  Staff incorrectly claims that adjacent wetlands will be impacted by project construction  Site design complies with LCP wetland setback policy  Only a portion of an access road and parking spaces are within 100 feet of a degraded pickleweed area  14-foot high, 60-foot wide containment berm provides buffer between Project site and pickleweed area  Mitigation measures minimize noise, light and vibration impacts

28. © POSEIDON WATER 2013 28 Pickleweed Area Buffer

29. © POSEIDON WATER 2013 29 SEA LEVEL RISE

30. © POSEIDON WATER 2013 30 No Sea Level Rise Impacts  Project site will not be affected by sea level rise  Project site is 9-14 ft above MSL  Worst-case sea level rise is 2 ft MSL by 2050 at Project Site  Project complies with Commission’s draft sea level rise guidance  Therefore, Project not affected by sea level rise  Poseidon proposed special condition: Permit expires 35 years after commercial operation; allows Commission to re-evaluate sea level rise impacts

31. © POSEIDON WATER 2013 31 APPLICANT’S PROPOSED PERMIT CONDITIONS

32. © POSEIDON WATER 2013 32 Applicant’s Proposed Permit Conditions  Poseidon proposing a separate set of Special Conditions to authorize approval of the Project as submitted  Incorporate elements of conditions recommended by Staff related to site-specific conditions in Huntington Beach  Eliminates requirement for a subsurface infiltration gallery  Eliminates requirements to start new entitlement and environmental review process, and to re-analyze issues that already have been thoroughly analyzed

33. © POSEIDON WATER 2013 33 Applicant’s Proposed Permit Conditions – Key Changes  Noise and Avian Protection (Special Condition 10)  Requires site-specific nesting surveys during construction periods  Establishes noise protection at active nest locations rather than site boundary  Utilizes 65 dBA standard consistent with Commission precedent  Seismic and Tsunami Protection (Special Conditions 15 and 16)  Applicant’s Special Condition 16 imposes all necessary structural stability requirements requested by Staff  Applicant’s Special Conditions eliminate duplicative requirement to study tsunami impacts that have already been evaluated and elaborate review and sign-off requirements from entities that do not have review authority  Applicant’s Special Condition 15 requires City approval of tsunami response plan and coordination with adjacent power plant on emergency response

34. © POSEIDON WATER 2013 34 Applicant’s Proposed Permit Conditions – Key Changes  Wetland Protection and Restoration  Sufficient buffers exist to avoid wetland impacts, consistent with LCP policy  Eliminates requirement to redesign Project to increase buffer width  Noise protection condition ensures no impacts to potential sensitive species  Eliminates obligation to create 14 acres of coastal wetland habitat since Jurisdictional Determination confirmed no wetlands on Project site  Marine Life Mitigation Plan & GHG Plan (Special Conditions 13 & 18)  Provides Commission ability to consider MLMP and GHG Plan at future hearing  Neither are deferred mitigation  Both must be approved prior to permit issuance & before development commences  GHG Plan with specific performance standards imposed as City condition  Applicant has already submitted proposed MLMP and GHG Plan, and the Commission has the discretion to approve those today

35. © POSEIDON WATER 2013 35 Conclusion  The Project is needed to meet to local, regional, and state water supply and reliability goals  Reduces Orange County’s need for imported water  The Project uses the best available technology feasible to minimize effects on marine life  The Staff’s recommendation is more environmentally impactful, conflicts with Coastal Act and LCP policies, and is infeasible  The Project as submitted is fully consistent with applicable Coastal Act and LCP policies

36. © POSEIDON WATER 2013 36 Applicant’s Requested Motions  November 11, 2013 Letter provides the following:  Applicant’s Proposed Conditions (Exhibit A – pink)  Applicant’s Suggested Basis for Findings (Exhibit B – yellow)  Motions and Resolutions to approve Applicant’s Proposed Project (Exhibit D – blue; Exhibit E – green)