Amicus Curiae Brief — Utility Water Water Act Group Group v. Riverkeeper, Inc. (Nos. 07-597, 07-588, 07-589)

. pie me Court, "ate

GS) ® (28)

In The OCT 6 28 2008 '

Supreme Court of the Anited

ENTERGY CORPORATION, Petitioner,

7 O56

ENVIRONMENTAL PROTECTION

AGENCY, et al., Respondents.

a7

PSEG FOSSIL LLC, et al., Petitioners,

V.

RIVERKEEPER, INC., et cl., Respondents.

+

UTILITY WATER ACT GROUP, Petitioner,

V.

RIVERKEEPER, INC., et al., Respondents.

r

On Writs Of Certiorari To The

United States Court Of Appeals

For The Second Circuit

>

AMICUS CURIAE BRIEF OF VOICES OF THE

WETLANDS AND COASTAL ALLIANCE ON PLANT

EXPANSION IN SUPPORT OF RESPONDENTS

o

DEBORAH A. SIVAS*

*Counsel of Record

LEAH J. RUSSIN

ENVIRONMENTAL LAW CLINIC

MILLS LEGAL CLINIC AT

STANFORD LAW SCHOOL

559 Nathan Abbott Way

Stanford, California 94305-8610

(650) 723-0325

Attorneys for Amici Curtae

COCKLE LAW BRIEF PRINTING CO (800) 225-6964

OR CALL COLLECT +402) 342-2831

i

TABLE OF CONTENTS

Page

INTEREST OF AMICI CURIAE .....................2005- 1

SUMMARY OF ARGUMENT .............................. 2

IIIT cccociivoddiiietddnipaihinsienseenecpeelenapavionsanalion 4

I.

If.

THE CONTINUED USE OF ONCE-

THROUGH COOLING BY CALIFOR-

NIAS COASTAL POWER PLANT

FLEET IS DEGRADING MARINE RE-

SOURCES AND ESTUARINE ECOSYS-

IN ATTEMPTING TO DEVELOP MORE

ENVIRONMENTALLY PROTECTIVE

STATEWIDE GUIDANCE FOR EXIST-

ING OTC PLANTS, CALIFORNIA HAS

CONCLUDED THAT COASTAL FACILI-

TIES CAN UPGRADE TO ALTERNA-

TIVE COOLING SYSTEMS WITHOUT

SUBSTANTIALLY IMPAIRING ELEC-

TRICITY GRID RELIABILITY .................

A. California Is Developing a More Pro-

tective State Policy that Does Not Al-

low for Cost-Benefit Exemptions from

Performance Standard...................00+

B. Inefficient Physical Plant and Market

Forces Are Driving the OTC Fleet to

Modernize and Repower, Providing an

Ideal Opportunity Upgrade these

Sites to More Environmentally Sound

EE SID ccnsinennccsnsecsindinbigniintinnas

12

12

il

TABLE OF CONTENTS — Continued

Page

Ill. EPA'S ALLOWANCE OF SITE-SPECIFIC

COST-BENEFIT EXEMPTIONS UN-

DERMINES THE INTENT OF SECTION

316(b) AND WILL SET BACK CALI-

FORNIA’S EFFORTS TO ENCOURAGE

INSTALLATION OF AVAILABLE AL-

TERNATIVE COOLING TECHNOLOGY

AS THE OTC FLEET MODERNIZEG........ 19

A. Cost-Benefit Exemptions Not Only

Are Unwarranted, But Also Send the

Wrong Regulatory Signal to Existing

Facilities Contemplating Necessary

IED siicicheiinsetsspnsnnnniiintedstdeeiinmiinns 20

B. Recent Permitting Decisions in Cali-

fornia Demonstrate that the Technol-

ogy-Forcing Requirements of Section

316(b) Can Be Easily Circumvented

Through the Application of Dubious

Cost-Benefit Analysis .................0..c0000: 24

ST a saicesinintinennensdeindnnciecelbsseonnemanenets 29

ili

TABLE OF AUTHORITIES

Page

FEDERAL CASES ~

Natural Resources Defense Council, Inc. v. EPA,

GBB F.3d 104 (D.C. Civ. 1967).....c.ccccccscccccccscsccccsceees 20

Tanner’s Council of America, Inc. v. Train, 540

Ey SE Ey ERS Se nineacsncnnincsenntdrndcstantnincmniases 21

STATE CASES

Voices of the Wetlands v. Cal. State Water

Resources Control Board, 69 Cal. Rptr. 2d

487 (2007), rev. granted, 74 Cal. Rptr. 3d 453

cs desochethacunsieebsisebine dt basiie iaeaaniipdidibsebabibaciniddaiinseabeipiladbiainabuniniinel 25

FEDERAL STATUTES

I a ii a eeleistnhnpsareeniensennneniinined passim

Clean Water Act, Section 306.....................ccccessssesesees 21

Clean Water Act, Section 316(a) ...........0.0.. 0... cc ccc ee eee eee 5

Clean Water Act, Section 316(b) ..........0..0..0....... passim

Clean Water Act, Section 402................0.0.0cc ccc ccc ee eee 21

Marine Mammal Protection Act, 16 U.S.C.

a i lana shane eich elie iain 10

FEDERAL RULES AND FEDERAL REGISTER CITATIONS

SES Coen ene REN EET De SE Ae 1

8 ESS ie eee enna eens t 21

Oe ee ET SRT T - 21

iv

TABLE OF AUTHORITIES — Continued

Page

Be Se Oe IED crcarctnitedisncntcniccinesccensenssnsecdsicniinan 21

66 Fed. Reg. 29,046 (May 29, 2001)............... eee 8

66 Fed. Reg. 65,256 (Dec. 18, 2001)..................... 21, 22

69 Fed. Reg. 19,974 (Apr. 15, 2004) ........... ee 8

69 Fed. Reg. 41,576 (July 9, 2004)...........0..0..0..... 21, 22

73 Fed. Reg. 1,986 (Jan. 1, 2008)..................2....0..2eeeeee 8

73 Fed. Reg. 2,999 (Feb. 12, 2008)................0.... eee 10

STATE STATUTES

Ss, rc es I cece snpnaieiieeuiibaniie 16

AGENCY REPORTS, RESOLUTIONS, AND DECISIONS

Cal. Energy Commission, Comments on

SWRCB Scoping Document and Proposed

Statewide Policy on Clean Water Act State

Water Resources Control Board (Sept. 26,

2006), available at http://www.energy.ca.gov/

siting/documents/2006-09-25 LETTER TO_

INET scishatisniiensssipntansianasiniipisimiaaanpiaiidibins 7,11, 14, 15

Cal. Energy Commission Staff Report, /ssues

and Environmental Impacts Associated with

Once-Through Cooling at California’s Coastal

Power Plants (June 2005), available at http://

www.energy.ca.gov/2005publications/C EC-700-

2005-013/CEC-700-2005-013.PDF............ 4,5, 8, 11,12

TABLE OF AUTHORITIES — Continued

Page

Cal. Energy Commission Final Staff Report,

2007 Environmental Performance Report of

California’s Electrical Generation System

(Jan. 2008), available at http://www.energy.

ca.gov/2007 publications/CEC-700-2007-016/

CEC-700-2007-016-SF.PDF ................ 5, 7, 16, 17, 23

Cal. Energy Commission, Prepared by Moss

Landing Marine Laboratories, Understand-

ing Entrainment at Coastal Power Plants:

Informing a Program to Study Impacts and

Their Reduction (2008), available at http://www.

energy.ca.gov/2007 publications/CEC-500-2007-

120/CEC-500-2007-120.PDF.....................0.c:0ecee 6, 10

Cal. Energy Commission, Commission Decision

on Appliwation for Certification, Moss Landing

Power Plant Project, Docket No. 99-AFC-4 (Nov.

2000), available at http://www.energy.ca.gov/

sitingcases/mosslanding/documents/index.html#

I ocetctncecccnssninnnnenttvinniitiiannaciiaaminiaiivalanained 24

Cal. Energy Commission, Biological Resources

Errata to Final Staff Assessment (June 19,

2000), available at http://www.energy.ca.gov/

sitingcases/mosslanding/documents/index.html#

II ciceniessenctnaciametinmencinssnmiiiniaanamenad 25, 26

Cal. Energy Commission, 3rd Revised Presid-

ing Member’s Proposed Decision for Morro

Bay Power Plant Project, Docket No. 00-AFC-

12 (June 2004), available at http://www.energy.

ca.gov/sitingcases/morrobay/documents/index

I oe ccccecwedsctinictassisiinitiiisiaieiinaaiiiaa 27

vi

TABLE OF AUTHORITIES -— Continued

Page

Cal. Ocean Protection Council, California’s

Coastal Power Plants: Alternative Cooling

System Analysis (2008), available at http://

resources.ca.gov/copce/CCPP_ACSA.htm ...... 4,15,18

Cal. Ocean Protection Council and State Water

Resources Control Board, Electric Grid Reli-

ability Impacts from Once-Through Cooling

in California (2008), available at http://www.

swrcb.ca.gov/water_issues/programs/tmdl/docs/

power_plant_cooling/reliability_study.pdf.....17, 18, 23

Cal. State Water Resources Control Board,

Scoping Document: Water Quality Control

Policy on the Use of Coastal and Estuarine

Waters for Power Plant Cooling (Mar. 2008),

available at http://www.waterboards.ca.gov/

plans_policies/docs/coastal_estuarine/scope_doc

STN iltiisinians nincninneeehndiiedineénentmennadin 6, 7,11, 14

Cal. Regional Water Quality Control Board,

Draft Waste Discharge Requirements Order

No. R3-2004-0023, NPDES Permit No.

CA 0050610, Attachment 3 (Dec. 2, 2004),

available at http://www.swrcb.ca.gov/rwaqcb3/

Facilities/DukeEnergy/DukeMB.htm............... 27, 28

National Marine Fisheries Service, California

Sea Lion (Zalophus californianus califor-

CIES Grete HEMI GUID oc ccnssccncennscccccesccccccsccesscce 11

National Marine Fisheries Service, Harbor

Seal (Phoca vitulina richardsi): California

EERO ACRE TE EIN Ea ee a ae 11

Vil

TABLE OF AUTHORITIES — Continued

Resolution by the California State Lands

Commission Regarding Once-Through Cool-

ing in California Power Plants (Apr. 17,

2006), available at http//www.cacoastkeeper.

org/assets/pdf/SLC_Resolution_OTC.pdf.........

Resolution of the California Ocean Protection

Council Regarding the Use of Once-Through

Cooling Technologies in Coastal Waters (Apr.

20, 2006), available at http://resources.ca.

IG ccsnsnesarninietasnscmneonsencesnaneninnnacdidnsanitianaas

JOURNAL PUBLICATIONS

Alistair J. Hobday, Mia J. Tenger, & Peter L.

Haaker, Over-Exploitation of a Broadcast

Spawning Marine Invertebrate: Decline of the

White Abalone, 10 REv. IN FisH BioLocy &

SI eT ea ne OND

David R. Schiel, John R. Steinbeck, & Michael

S. Foster, Ten Years of Induced Ocean Warm-

ing Causes Comprehensive Changes in Ma-

rine Benthic Communities, 85 ECOLOGY 1833

icin viinintatnicicntnsnniainntalaminsntsiniinlinsmnvennidiaeiaten

F. J.-P. Briand, Effects of Power Plant Cooling

Systems on Marine Phytoplankton, 33 Ma-

IE TORII Bie CED veinccdccnvnciscnscccccceccorccacnss

MarK DENNY, HOW THE OCEAN WoRKS: AN

INTRODUCTION TO OCEANOGKAPHY, Princeton

ER ROOST NER REET Sev d

Page

vill

TABLE OF AUTHORITIES — Continued

Page

Sebestian R. Rodriguez, F. Patricio Ojeda, &

Nibalso C. Inestrosa, Settlement of Benthic

Marine Invertebrates, 97 MARINE ECOLOGY

Proc. SER. 193 (1993)

1

INTEREST OF AMICI CURIAE'

Amici curiae Voices of the Wetlands and Coastal

Alliance on Plant Expansion are community-based

non-profit organizations working to protect Califor-

nia’s coastal ecosystems from the impacts of “once-

through cooling” operations. Over the past several

years, Amici have participated extensively in the

Clean Water Act permitting processes for individual

coastal power plants engaged in once-through cooling

and have been active in ongoing state-level initiatives

to address the impacts of such cooling systems on

California’s coastal resources. Voices of the Wetlands

participated in the administrative process for the first

major “repower” of a coastal electric generating

facility, at Moss Landing, and subsequently litigated

the interpretation of Section 316(b), including specifi-

cally the use of cost-benefit analysis. That case is now

pending before the California Supreme Court. Coastal

Alliance on Plant Expansion participated as a for-

mally designated interested party in a multi-year

administrative site license process before the Califor-

nia Energy Commission for the proposed repowering

of the Morro Bay Power Plant and has closely fol-

lowed the facility’s intermittent Clean Water Act

permitting and Section 316(b) compliance process

' All parties have consented to the filing of this brief in

letters that are on file with the Clerk. Pursuant to S. Ct. Rule

37.6, Counsel for Amici state that no counsel] for a party au-

thored this brief in whole or in part and no person or entity

other than Amici or their counsel made a monetary contribution

to the preparation or submission of this brief.

2

before the California Regional Water Quality Control

Board for the Central Coast. Both organizations also

have provided input to the California State Water

Resources Control Board, the California State Lands

Commission, and the California Ocean Protection

Council as these agencies attempt to develop and

promote more ecologically protective standards for

cooling water systems used by California’s large fleet

of coastal power plants. Thus, Amici offer a unique

citizen perspective on the implementation of Section

316(b) and the use of cost-benefit analysis in deter-

mining facility compliance along the California coast.

¢

SUMMARY OF ARGUMENT

With over a thousand miles of vulnerable coastal

habitat and an aging fleet of 21 coastal power plants,

California has become a laboratory for implementing

Section 316(b) of the Clean Water Act. As state regu-

lators grapple with both individual facility permitting

decisions and the development of comprehensive

statewide guidance to protect coastal ecosystems,

California has learned three valuable lessons. First,

the State’s large “once-through cooling” fleet takes a

significant toll on California’s coastal resources and has

contributed to the precipitous decline in marine fish

populations over the last several decades. Second, with

careful planning, it is feasible to convert this obsoles-

cent fleet to commercially-available alternative cooling

3

technologies as plants modernize and repower’ over

the next decade, without significantly impairing

electricity grid reliability. And third, because the

Environmental Protection Agency (“EPA”) classifies

even entirely new replacement power plants as

“existing facilities,” the cost-benefit exemption al-

lowed by the Phase II Rule effectively negates the

technology-forcing intent of Section 316(b). Thus, at

least in California, there is no merit to the argu-

ments, advanced by several briefs filed in this case,

that site-specific cost-benefit analysis is necessary to

keep the lights turned on or that such an approach is

consistent with Congress’ intent in crafting the Clean

Water Act.

* The California Energy Commission uses the term “re-

power” to mean the replacement of existing generating capacity

with new generating facilities at the same site. In many cases,

repowering along the California coast will involve total demoli-

tion of all existing structures and their replacement with state-

of-the-art generating capacity. These old sites remain valuable,

‘however, due to their location and existing connection to the

electricity transmission system.

4

ARGUMENT

I THE CONTINUED USE OF ONCE-

THROUGH COOLING BY CALIFORNIA’S

COASTAL POWER PLANT FLEET DE-

GRADES MARINE RESOURCES AND ES-

TUARINE ECOSYSTEMS.

The California coastline hosts 21 once-through

cooling (“OTC”) power plants with the capacity to use

roughly 17 billion gallons of cooling water every

single day.’ The lead state agency involved in permit-

ting power plants equates the use of such large volumes

of water to a total habitat production loss of over

10,800 acres.* Cal. Energy Commission Staff Report,

* Not all of these plants currently operate at full capacity,

mostly due to market conditions and facility inefficiencies. See

Cal. Ocean Protection Council, California’s Coastal Power

Plants: Alternative Cooling System Analysis (“OPC Feasibility

Study”) at 1-6 (2008), available at http://resources.ca.gov/copc/

CCPP_ACSA. htm (noting that average age of fossil fuel facilities

along the California coast is 40 years and explaining that due to

inefficiencies, many of these plants are now used only for peak

load demands). As discussed below, however, because there is a

continuing need for local generation capacity in the highly

populated coastal areas of California, many of these facilities

have sought to repower by replacing their basic generating units

with new infrastructure on the same site. Thus, while recent

reductions in annual operating hours have somewhat reduced

the environmental impacts of coastal OTC plants, the potential

for ecological harm remains high as the fleet modernizes and

repowers.

* Total habitat production loss is a measure that attempts

to equate the ecological impacts of OTC intakes to an equivalent

amount of habitat destruction in similar coastal estuaries. Thermal

discharges from OTC plants, regulated under Section 316(a), also

(Continued on following page)

5

Issues and Environmental Impacts Associated with

Once-Through Cooling at California’s Coastal Power

Plants (“CEC 2005 Report”) at 30 (June 2005).° Most

of California’s OTC plants are located within bays

and coastal estuaries, where impacts can be particu-

larly severe due to the high biological productivity of

these ecosystems and the concentration of OTC

plants within them. Cal. Energy Commission Final

Staff Report, 2007 Environmental Performance Re-

port of California’s Electrical Generation System

(“CEC 2007 Report”) at 46-47 (Jan. 2008).°

Based on sporadic studies at individual power plants,

the California State Water Resources Control Board

(“State Water Board”)’ has very roughly estimated that

have negative impacts on the coastal environment. In fact, re-

searchers at Moss Landing Marine Labs have used the Diablo

Canyon OTC outfall to examine how species composition changes

in response to warming oceans and have found that there are

statistically significant shifts in species abundance adjacent to the

plant’s thermal discharges. David R. Schiel, John R. Steinbeck, &

Michael S. Foster, Ten Years of Induced Ocean Warming Causes

Comprehensive Changes in Marine Benthic Communities, 85

Eco.ocy 1833, 1835 (2004).

° Available at http://www.energy.ca.gov/2005publications/

CEC-700-2005-013/CEC-700-2005-013.PDF.

* Available at http://www.energy.ca.gov/2007publications/

CEC-700-2007-016/CEC-700-2007-016-SF. PDF.

* The State Water Board sets water policy in California and,

along with the nine Regional Water Quality Control Boards

(“Regional Water Boards”), implements the federally delegated

Clean Water Act program. In addition to ensuring compliance

with Section 316(b) and issuing federal permits, the State and

(Continued on following page)

6

over 9 million organisms are impinged and 79 billion

are entrained each year by California’s coastal power

plant fleet. Cal. State Water Resources Control

Board, Scoping Document: Water Quality Control

Policy on the Use of Coastal and Estuarine Waters for

Power Plant Cooling (“State Water Board Scoping

Document”) at 12-16 (Mar. 2008).° These totals,

moreover, very likely underestimate impacts by a

significant amount because many. existing monitoring

studies only measured for particular commercially-

valuable fish species, most did not measure for inver-

tebrates (abalone, crab, etc.), and virtually none

measured for phytoplankton (microscopic drifting

plant species). Indeed, an independent technical

study of how such impacts are assessed found that

only seven of California’s coastal power plants have

even conducted entrainment studies using current,

accepted scientific methods. See Cal. Energy Commis-

sion, Prepared by Moss Landing Marine Laboratories,

Understanding Entrainment at Coastal Power Plants:

Informing a Program to Study Impacts and Their

Reduction (“CEC Entrainment Study”) at 31 (2008).”

Both the State Water Board and the California

Energy Commission have expressed concern over the

Regional Water Bards also implement corresponding California

state water protection laws.

* Available at http://www.waterboards.ca.gov/plans_policies/

docs/coastal_estuarine/scope_doc031808. pdf.

* Available at http://www.energy.ca.gov/2007publications/

CEC-500-2007- 120/CEC-500-2007-120.PDF.

7

total number of fish killed by OTC power plants. In

Southern California alone, fish mortality estimates

range from 3.6 million fish per year for all 11 power

plants in the region to 3.6 million fish per year just

for the San Onofre Nuclear Generating Station.

Compare CEC 2007 Report, supra, at 47 with State

Water Board Scoping Document, supra, at 13. This

mortality represents somewhere between 8 and 30

percent of the total catch from all recreational fishing

activity in the Southern California study area. CEC

2007 Report, supra, at 47. While the raw numbers are

themselves alarming, the discrepancy between them

is even more troubling. Without significantly more

accurate and verified fish mortality data, state permit

writers cannot possibly understand fish mortality

impacts or, by extension, begin to monetize them in a

cost-benefit analysis.

We have even less data for plankton — tiny,

drifting plants and animals that form the basis of

marine food webs. While some monitoring studies

measure certain fish larvae and, on occasion, some

invertebrate lar:ue, the entrainment of many zoo-

plankton (animal species) and virtually all phyto-

plankton (plant species) is simply uncounted. Yet, the

loss of trillions of plankton unquestionably impairs

ecosystem functioning. Marine phytoplankton ac-

count for over 99 percent of the primary energy

production in marine ecosystems and play an essen-

tial role in transferring this energy up the food web to

8

larger animals.” Reductions in plankton abundance

can, therefore, have cascading effects through marine

food webs, as planktonic prey become scarcer, and

such cascading effects have been a scientific concern

in California for decades." For this reason, the true

effects of OTC systems on marine ecosystems ~ and

the benefits of converting power plants to an alterna-

tive cooling system — cannot be measured without a

much better understanding of how plankton are

impacted.

Although OTC systems are indiscriminant kill-

ers, the effects on already-imperiled species are

particularly problematic. See CEC 2005 Report,

supra, at 32. Consider, for example, California aba-

lone, which are an important part of the state’s

ecological and social heritage and are in serious

decline. The white abalone is listed as endangered

under federal law, the black abalone is proposed for

listing, and the green and pink abalone are consid-

ered “species of concern.” Like many other marine

species, abalone are broadcast spawners, meaning

that they reproduce by casting eggs and sperm into

'© See MARK DENNY, How THE OCEAN WorkS: AN INTRODUCTION

TO OCEANOGRAPHY, Princeton Univ. Press (2008) at 69-79, 124-28.

'' Id. See also F. J.-P. Briand, Effects of Power Plant Cooling

Systems on Marine Phytoplankton, 33 MARINE BIOLOGY 135, 143

(1975).

* 66 Fed. Reg. 29,046 (May 29, 2001) (white abalone); 73

Fed. Reg. 1,986 (Jan. 1, 2008) (black abalone); 69 Fed. Reg.

19,974, 19,977 (Apr. 15, 2004) (green and pink abalone).

9

the water where they are fertilized and develop into

free-swimming larvae. These larvae will ultimately

settle and become stationary adults. Abalone must

maintain a sufficient density of spawning adults for

reproduction to occur.” Abalone, like most marine

larvae, are not strong swimmers, and thus depend on

currents to move them toward favorable settlement

locations.“ But when abalone spawn near OTC

plants, they are drawn by intake currents toward and

into the plant, where they are unable to survive the

extreme temperatures of the cooling process. In this

way, OTC intake systems not only reduce the number

of juvenile abalone, but also decrease the “-nsity of

individuals near power plant intake structures and

thereby have particularly detrimental impacts on

future reproductive success and survival.

The abalone story is but one among many im-

pacts from OTC plants that are not captured by

current scientific monitoring and modeling. As scien-

tists at the Moss Landing Marine Laboratories have

explained: “Smaller larvae (other invertebrates)

'’ See Alistair J. Hobday, Mia J. Tenger, & Peter L. Haaker,

Over-Exploitation of a Broadcast Spawning Marine Invertebrate:

Decline of the White Abalone, 10 Rrv. IN FiSH Bio_oGy & FISHER-

IES 493, 494 (2001).

“ Sebestian R. Rodriguez, F. Patricio Ojeda, & Nibalso C.

Inestrosa, Settlement of Benthic Marine Invertebrates, 97

MARINE ECOLOGY PROG. SER. 193, 198 (1993).

10

typically cannot be identified with existing methods,

even though their populations are likely effected [sic].

Planktonic invertebrates and phytoplankton are

typically not sampled because of their excessively

small sizes and the commonly held assumptions that

their rapid growth and fast population turnover

suggest that ecological impacts are unlikely, although

this has not been studied.” CEC Entrainment Study,

supra, at 15. In the absence of even basic knowledge

about how OTC systems affect the fundamental

building blocks of marine ecosystems, any regulatory

weighing of costs against benefits is more fiction than

reality.

OTC plants also harm species at the other end of

the size spectrum, including California harbor seals,

elephant seals, and California sea lions, all of which

are protected under the Marine Mammal Protection

Act, 16 U.S.C. §§ 1361-1423. After years of denying

impacts to marine mammals, 13 coastal power plants

in Central and Southern California applied this year

for permits to “incidentally” harm or kill these species

in their OTC systems. 73 Fed. Reg. 2,999 (Feb. 12,

2008). In doing so, the power plants conceded that

seals and sea lions can become entrained in power

plant intake structures and die of stress or suffoca-

tion before plant operators are able to release them.

Id. In fact, the Marine Mamma! Stranding Network,

a group of scientists affiliated with the National

Oceanic and Atmospheric Administration, estimates

that 23 harbor seals died as a result of power plant

ll

entrainment between 1999 and 2003 and that 21 sea

lion were killed from entrainment in 2001 alone.”

California estimates annual impingement of marine

tetrapods (seals, sea lions, and sea turtles) at 57

animals, the vast majority of which are killed. State

Water Board Scoping Document, supra, at 16.

In short, as the California Energy Commission

staff explained in its recent report on OTC facilities:

“Coastal power plants are partly responsible for ocean

degradation. Recent studies required by the Califor-

nia Energy Commission and other State agencies

have shown that coastal power plants that use sea-

water for once-through cooling are contributing to

declining fisheries and the degradation of estuaries,

bay{s] and coastal waters.” CEC 2005 Report, supra,

at 1.

** See, National Marine Fisheries Service, Harbor Seal

(Phoca vitulina richardsi): California Stock at 3 (2005); National

Marine Fisheries Service, California Sea Lion (Zalophus

californianus californianus): U.S. Stock at 3 (2003).

12

Il. IN ATTEMPTING TO DEVELOP MORE

ENVIRONMENTALLY PROTECTIVE STATE-

WIDE GUIDANCE FOR EXISTING OTC

PLANTS, CALIFORNIA HAS CONCLUDED

THAT COASTAL FACILITIES CAN UP-

GRADE TO ALTERNATIVE COOLING SYS-

TEMS WITHOUT SUBSTANTIALLY

IMPAIRING ELECTRICITY GRID RELI-

ABILITY.

A. California Is Developing a More Protec-

tive State Policy that Does Not Allow

for Cost-Benefit Exemptions from Per-

formance Standards.

Faced with the substantial environmental im-

pacts caused by California’s OTC fleet, several state

agencies are pressing for greater ecological protec-

tion. For instance, after concluding that “California

marine and estuarine environments are in decline

and the once-through cooling systems of coastal

power plants are contributing to the degradation of

our coastal waters,” the staff of the California Energy

Commission recommended, among other things, that

the Commission develop new siting policies and

create incentives to promote alternative cooling

systems. CEC 2005 Report at 1, 4-6. Soon thereafter,

the California State Lands Commission, which exer-

cises leasing jurisdiction over state tidelands, adopted

a resolution recognizing that once-through cooling

“significantly harms the environment by killing large

numbers of fish and other wildlife, larvae and eggs,

by raising the temperature of the receiving

13

waters, and by killing and displacing wildlife and

plant life.” Resolution by the California State Lands

Commission Regarding Once-Through Cooling in

California Power Plants (Apr. 17, 2006)."* Accordingly,

the Lands Commission urged its sister agencies “to

expeditiously develop and implement policies that

eliminate the impacts of once-through cooling on the

environment, from all new and existing power plants

in California” and resolved not to approve or extend

any tideland leases for power plants unless the plant

complies with all state and federal requirements for

minimizing the impacts of cooling water systems. I/d.

The California Ocean Protection Council quickly

followed suit with a similar resolution acknowledging

the “multiple types of undesirable and unacceptable

environmental impacts associated with once-through

cooling technology” and urging, among other things,

that the State Water Board implement more strin-

gent state standards to reduce impacts from power

plant cooling systems. Resolution of the California

Ocean Protection Council Regarding the Use of Once-

Through Cooling Technologies in Coastal Waters (Apr.

20, 2006)."’

Responding to this call for action, the State

Water Board in June 2006 proposed new, more strin-

gent statewide regulations for power plant cooling

systems. Following EPA’s suspension of the Phase II

'* Available at http//www.cacoastkeeper.org/assets/pdf/SLC_

Resolution_OTC.pdf.

" Available at http://resources.ca.gov/cope/.

14

Rule in 2007, the State Water Board issued a revised

draft statewide policy, the express intent of which is

to “ensure that the beneficial uses of the State’s

coastal and estuarine waters are protected while also

ensuring that the electrical power needs essential] for

the welfare of the citizens of the State are met.” State

Water Board Scoping Document, supra, at 83-91."

Similar to the federal Phase I Rule, California’s draft

policy provides for compliance via one of two “tracks.”

The default track requires a reduction in intake flow

and velocity “at a minimum, to a level commensurate

with that which can be attained by a closed-cycle

cooling system.” Jd. at 84. Where the plant owner

demonstrates that it is not feasible to comply with the

first track, the draft policy requires compliance using

operational or structural controls that reduce im-

pingement mortality and entrainment of all stages of

marine life by at least 90 percent of the reduction

that would be achieved using a closed-cycle cooling

syst.m. Jd. Significantly, the proposed California

policy does not allow for any exemption from these

standards based on the weighing of compliance costs

against environmental benefits.

* The draft state policy focuses on existing power plants

because the State Water Board recognizes, for the reasons

explained below, that no new power plants will be sited along

the California coast. Due to market conditions and the age of the

fleet, most or al! cxisting coastal plants will be either repowered

or mothballed over the next several years.

15

B. Inefficient Physical Plant and Market

Forces Are Driving the OTC Fleet to

Modernize and Repower, Providing an

Ideal Opportunity to Upgrade these

Sites to More Environmentally Sound

Cooling Systems.

California’s coastal OTC fleet is in the midst of

modernizing, as plant owners gradually replace old

generation facilities with more efficient combined-

cycle generating capacity. This modernization trend

provides the state with an important opportunity to

increase power plant efficiency and move away from

the use of OTC. Cal. Energy Commission, Comments

on SWRCB Scoping Document and Proposed State-

wide Policy on Clean Water Act State Water Resources

Control Board at 7 (Sept. 26, 2006). In fact, the

Energy Commission has adopted an affirmative

policy to encourage the orderly retirement of aging,

inefficient coastal power plants and their replacement

with modern, efficient combined-cycle or peaking

facilities by the year 2012. Jd. at 2. The California

Ocean Protection Council similarly has concluded

that “[rjepowering is of particular interest in Califor-

nia, where many of the coastal power plants 30 to 40

years old, or more, and are likely to be replaced

with more efficient technologies in the coming years.”

OPC Feasibility Study, supra, at ES-1. In short,

newer, more efficient generation capacity is coming

" Available at http://www.energy.ca.gov/siting/documents/

2006-09-25 LETTER_TO_SWRCB PDF.

16

quickly in California, and much of it will be installed

at existing OTC power plant sites as a result of state

incentives that prioritize these coastal facilities for

repowering. See Cal. Pub. Util. Code § 454.6.

Recent OTC plant repowering decisions illustrate

that the economics of modernizing with an alterna-

tive cooling system are not prohibitive as long as

appropriate regulatory incentives are in place. Since

electricity market deregulation in the late 1990’s, six

large California coastal plants have applied to re-

power by retiring and replacing old steam boilers.

CEC 2007 Report, supra, at 17. Five of these facilities

(Moss Landing, Morro Bay, El Segundo, Huntington

Beach, and Gateway) sought approval soon after the

turn of the century, each proposing to use OTC for

their new generating units. Following issuance of the

Second Circuit’s decision at issue here, the El Se-

gundo and Gateway facilities sought to amend their

licenses to switch to alternative cooling technologies.

Having watched the Phase II Rule unfold in the

courts, subsequent applicants for repowering have all

proposed to use alternative cooling systems. See id. at

56-57. Thus, faced with a judicial interpretation of

the Clean Water Act that does not allow for a cost-

benefit exemption to national performance standards,

aging California OTC plants have begun to move

toward full compliance with Section 316(b)’s “best

technology” requirement. In doing so, they are falling

in line with new inland power plants that do not have

17

a ready source of free, cold water for cooling. See id.

at 39 (noting that proposals to use air cooling for new

power plants across the state increased significantly

in 2006 and 2007).

Moreover, a detailed study prepared by technical

consultants for the Ocean Protection Council and the

State Water Board concluded that implementation of

a more protective state policy without the cost-benefit

loophole contained in the Phase II Rule would not

significantly affect electricity grid reliability in Cali-

fornia. The authors first explained that mass retire-

ments of OTC plants in response to the proposed

state rule are “highly unlikely” for several reasons:

Older plant owners have many incentives for

repowering, including provisions in state law

and regulation that essentially give prefer-

ence to repowered coastal plants in the util-

ity power contracting process. They also have

ready availability of natural gas and trans-

mission infrastructure at the present site,

and the efficiency improvement offered by

new plant technologies will greatly improve

their ability to compete with other resources.

Cal. Ocean Protection Council and State Water Re-

sources Control Board, Electric Grid Reliability

Impacts from Once-Through Cooling in California

18

(“Grid Reliability Study”) at 3-4 (2008).” Based on

computer modeling, the authors then determined that

the repowering of old steam plants and the conver-

sion of combined-cycle plants to alternative cooling

systems is cost-effective and, with proper planning

and phasing of upgrades, can be achieved without

significantly affecting reliability of the electricity

grid. Id. at 4-5, 55-57.

A separate report prepared for the Ocean Protec-

tion Council reached a similar conclusion. That study

examined the technical, logistical, and regulatory

feasibility of converting the remaining active OTC

plants along the California coast to closed-cycle wet

recirculation cooling, concluding that such a conver-

sion was feasible for all but 3 of these facilities,”

where technical constraints may impede the use of

cooling towers and require the installation of other

technologies. See OPC Feasibility Study, supra, at

ES-1 to ES-10. Cost modeling indicates that, at worst,

the retrofitting of existing (unrepowered) facilities

would add 1.13 cents per kilowatt hour to retail

electricity rates. Id. at ES-9. Repowered facilities

* Available at http//www.swrcb.ca.gov/water_issues/programs/

tmdl/docs/power_plant_cooliny/reliability_study. pdf.

* Although there are 21 OTC plants along the California

coast, 3 of these have effectively stopped operating. Two of the

remaining 18 facilities have already committed to closed-cycle

cooling and one is preparing to close permanently for other

reasons. Thus, the feasibility study focused on the remaining 15

active facilities.

19

would, of course, enjoy increased efficiencies and

lower cost impacts.

Thus, while existing OTC plants play an impor-

tant role in providing power to so-called “local reli-

ability areas” along the California coast, these

facilities can be converted to alternative cooling

technologies without major economic dislocation or

disruption of the electricity transmission system.

Extensive study of this issue in California demonstrates

that what is needed for an orderly conversion, as the

OTC fleet inevitability modernizes to compete in the

contemporary energy market, is proper planning and

regulatory signals, not wholesale exemption from

Section 316(b)’s best technology-based performance

standards.

II. EPA’S ALLOWANCE OF SITE-SPECIFIC

COST-BENEFIT EXEMPTIONS UNDER-

MINES THE INTENT OF SECTION 316(b)

AND WILL SET BACK CALIFORNIA’S EF-

FORTS TO ENCOURAGE INSTALLATION

OF AVAILABLE ALTERNATIVE COOLING

TECHNOLOGY AS THE OTC FLEET MOD.-

ERNIZES.

Recent regulatory developments — including

importantly the Second Circwt’s affirmation that

cost-benefit exemptions from national performance

standards are not available under Section 316(b) —

have set the stage in California for precisely the kind

of technological advances that Congress envisioned

when it enacted the Clean Water Act. Yet, two of the

20

first repowering decisions for the state’s aging coastal

OTC fleet illustrate just how easily a site-specific

cost-benefit exemption can be manipulated to avoid

the installation of the best technology available even

at entirely new generating facilities. Neither congres-

sional intent nor public policy considerations support

the creation of such a major hole in the statutory

fabric.

A. Cost-Benefit Exemptions Not Only Are

Unwarranted, But Also Send the Wrong

Regulatory Signal to Existing Facilities

Contemplating Necessary Upgrades.

As the D.C. Circuit has explained, “the most

salient characteristic of [the Clean Water Act] statu-

tory scheme, articulated time and again by its archi-

tects and embedded in the statutory language, is that

it is technology-forcing.” Natural Resources Defense

Council, Inc. v. EPA, 822 F.2d 104, 123 (D.C. Cir.

1987) (citing relevant legislative history). Indeed,

“Itlhe essential purpose” of the statute’s “progres-

sively more demanding technology-based standards

was not only to stimulate but to press development of

new, more efficient and effective technologics. This

policy is expressed as a statutory mandate, not sim-

ply as a goal.” Id. at 124. To effectuate this purpose,

Congress expressly used the phrase “best technology

available” in Section 316(b), just as it intentionally

used similar language in other technology-forcing

provisions of the statute, “to reflect the need to press

21

for increasingly higher levels of control.” See Tanner’s

Council of America, Inc. v. Train, 540 F.2d 1188, 1195

(4th Cir. 1976).

In California, the use of site-specific cost-benefit

exemptions will directly undermine the technology-

forcing intent of Section 316(b). By bifurcating the

Section 316(b) implementing regulations into distinct

phases — a bifurcation that does not exist in the

statute itself — and then broadly defining “existing

facilities” to include brand new, more efficient gener-

ating capacity at existing power sites, EPA has virtu-

ally guaranteed that every single OTC replacement

plant along the California coast will fall within the

Phase II Rule and its provisions for a cost-benefit

exemption, an exemption that is not available to “new

facilities” under the Phase I Rule.” But the proffered

* As EPA explained in the preamble of the final Phase II

Rule, “existing facilities” are broadly defined to include “the

addition of new generating units at the same site, even where

they require{ ] an increase in cooling water intake structure

design capacity or the construction of a new cooling water intake

structure, as well as the complete demolition of an existing

facility and its replacement with a new facility, so long as it

{does} not increase the design capacity of the cooling water

intake structure.” 69 Fed. Reg. 41,576, 41,579 (July 9, 2004)

(emphasis added). This definition stands in stark contrast to

EPA's definition of “new source” under Sections 306 and 402 of

the Clean Water Act: “[MJajor modifications to existing facilities

... would be ‘new sources’ in 40 CFR 122.29 as that term is used

in the effluent guidelines and standards program.” 66 Fed. Reg.

65,256. See also 40 C.F.R. § 122.29(b\1); 122.22. High land

values along the California coast ensure that no electric generat-

ing plants will be constructed on entirely new sites to serve

(Continued on following page)

22

public policy justification for reading a cost-benefit

exemption into the law for existing facilities — higher

retrofit costs — does not actually apply here.” Coastal

replacement plants face essentially the same construc-

tion cost structure and the same market conditions as

do new “greenfield” facilities located elsewhere. If

anything, coastal replacement plants are financially

advantaged over their inland counterparts by both

special state incentives for repowering and the

these high population, high energy demand areas. Instead, all

new coastal facilities will be constructed on existing power plant

sites and will, therefore, be able to avail themselves of the

“existing facility” classification.

* EPA invoked as its primary justification the potential for

higher costs when retrofitting existing “Phase II” facilities, as

compared to the construction of new “greenfield” facilitics:

(The Phase I rule] does not apply to existing facilities

... [because] existing facilities might incur higher

compliance costs than new facilities. For example, ex-

isting facilities might need to upgrade or modify exist-

ing intake structures and cooling water systems to meet

requirements of the type contained in today’s rule, which

might impose greater costs than use of the same tech-

nologies at a new facility. Retrofitting technologies at an

existing facility might also require shutdown periods

during which the facility would lose both production

and revenues, and certain retrofits could decrease the

thermal efficiency of an electric generating facility.

66 Fed. Reg. 65,256 (Dec. 18, 2001).

“ In describing the Section 316(b) regulations, EPA used

the term “greenfield facility” to mean “a facility that is con-

structed at a site at which no other source is located or that

totally replaces the process or production equipment at an

existing facility,” including the cooling water intake structure.

69 Fed. Reg. 41,576, 41,578 (July 9, 2004).

23

absence of new land purchase costs. Competing

inland facilities, however, do not enjoy the public

subsidy of free cooling water and, as a result, gener-

ally do not engage in the ecologically destructive

practice of OTC. By reading a cost-benefit exemption

into Section 316(b), EPA has adopted a regulatory

policy that favors one set of plant operators over

another and will perpetuate the use of outmoded

cooling technology for generations to come, at the

direct expense of California’s dwindling fisheries and

other public trust resources.

EPA’s approach undercuts California’s slow but

steady progress toward the conversion of OTC facili-

ties to alternative cooling technologies. Following

electricity deregulation in California, the first several

coastal power plants to complete the repowering

approval process predated the Second Circuit’s deci-

sion in this case and each received approval to utilize

OTC. Grid Reliability Study, supra, at Table 1-1. As

illustrated by the Moss Landing and Morro Bay

examples below, these regulatory approvals relied, in

large part, upon an agency determination that the

economic costs of compliance outweighed the envi-

ronmental benefits. Following issuance of the Second

Circuit decision disallowing the use of cost-benefit

analysis, the owners of the as-yet-unconstructed El

Segundo and Gateway facilities sought to amend

their regulatory approvals to permit the use of dry

cooling technology instead of OTC. Id.; CEC 2007

Report, supra, at 56-57. Reversal of the Second Cir-

cuit decision by this Court will send a conflicting

24

signal to these and other facilities, cutting sharply

against California’s announced policy of converting

OTC facilities to environmentally superior cooling

technologies as they move through the repermitting

and repowering process.

B. Recent Permitting Decisions in Califor-

nia Demonstrate that the Technology-

Forcing Requirements of Section 316(b)

Can Be Easily Circumvented Through

the Application of Dubious Cost-Benefit

Analysis.

The Moss Landing Power Plant approval process

provides a window into how individual repower

permit decisions are likely to implement the cost-

benefit exemption contained in the Phase II Rule, if it

is allowed to stand. In the first major repowering

project at a coastal OTC plant, the Moss Landir7z

facility sought to replace five inefficient operating

units constructed in the 1950’s with two new state-of-

the-art combined-cycle natural gas-fired generating

units, at an estimated capital cost of $475 million.

Cal. Energy Commission, Commission Decision on

Application for Certification, Moss Landing Power

Plant Project, Docket No. 99-AFC-4 at 2 (Nov. 2000).”

The Moss Landing plant is located at the mouth of

* Available at http//www.energy.ca.gov/sitingcases/mosslanding/

documents/index .html#commission.

25

Elkhorn Slough, an acknowledged “biological gem”

that provides habitat for hundreds of bird, fish and

invertebrate species and serves as an important

nursery for the ecologically renowned Monterey Bay.

Cal. Energy Commission, Biological Resources Errata

to Final Staff Assessment (“Biological Errata”) at 7

(June 19, 2000).“ Operation of the plant’s OTC sys-

tem, which has the capacity to withdraw 1.224 billion

gallons of water a day from the estuary, entrains

roughly 28 percent of the slough’s total water volume

every single day and results in the destruction of all

living matter contained therein. The resulting 13

percent continuous loss in biological productivity is

considered to be ecologically “significant” by state

agency biologists. Jd. at 10-11.

In issuing a new Clean Water Act permit for the

repowered Moss Landing facility, the Regional Water

Board, as the delegated state permitting agency,

employed a_ site-specific cost-benefit analysis to

evaluate compliance with Section 316(b) and deter-

mined that an alternative closed-cycle cooling system

for the new generating units would add $12-13 mil-

lion to the cost of construction. Voices of the Wetlands

v. Cal. State Water Resources Control Board, 69 Cal.

Rptr. 2d 487, 524 n.7, 528 (2007), rev. granted, 74 Cal.

Rptr. 3d 453 (2008). State regulators attempted to

monetize the environmental benefits of such an

* Available at http://www.energy.ca.gov/sitingcases/mosslanding/

documents/index.htm]#commission.

26

alternative cooling system using a _ controversial

“habitat equivalency” conversion method and arrived

at an environmental benefit value of between $4.68

and $9.75 million. See Biological Errata, supra, at 13.

Regional Water Board staff then utilized these mone-

tary estimates to weigh the estimated incremental

costs ($12 to $13 million) against the estimated

incremental benefits ($4.68 to $9.75 million) and

concluded that the cost of installing commercially-

available alternative closed-cycle wet cooling technol-

ogy was not justified by — in fact, in staff’s view, was

“wholly disproportionate” to — its environmental

benefit. Thus, the Regional Board ultimately ap-

proved a new Clean Water Act permit that allowed

the repowered facility units to be designed, con-

structed, and operated using an old-fashioned OTC

system. Today, the Moss Landing facility stands as

California’s flagship natural gas-fired electric gener-

ating plant, running at significantly increased effi-

ciency and generating substantial profits for its private

owner, even as its highly damaging OTC system

continues to degrade Elkhorn Slough and the public

resources of Monterey Bay into the indefinite future.

A similar fate awaits the estuary just down the

coast at Morro Bay. There, the plant owner has

proposed — and the California Energy Commission

has preliminarily appro’ed — a repower project that

will involve (1) the construction of an entirely new,

modern combined-cycle generating facility adjacent to

the existing plant and (2) the subsequent demolition

of the existing structure. The sole connection between

27

the two parts of this repower project is a water intake

pipe running from the old cement cooling water

intake structure located on the public tidelands,

across the site, to the newly constructed facility. See

Cal. Energy Commission, 3rd Revised Presiding

Member’s Proposed Decision for Morro Bay Power

Plant Project, Docket No. 00-AFC-12 at 2 (June

2004).” Although the plant owner has elected to

continue operating, for now, pursuant to a long-term

administrative extension of its 1995 permit and has

not yet sought final project approval from state

regulators, the Regional Board has issued a draft

Clean Water Act permit document that mimics the

cost-benefit approach utilized for the Moss Landing

facility. At Morro Bay, the Regional Board calculated

a 33 percent larval loss from operating an OTC

system at the new facility, on which it placed a mone-

tary value of $28 million using the same dubious

“habitat equivalency” approach employed at Moss

Landing. See Cal. Regional Water Quality Control

Board, Draft Waste Discharge Requirements Order

No. R3-2004-0023, NPDES Permit No. CA 0050610,

Attachment 3, at 2 (Dec. 2, 2004).” Because the least

expensive alternative cooling water technology is

estimated to cost $30 million, id. at 4,” the draft

*” Available at http//www.energy.ca.gov/sitingcases/morrobay/

documents/index.html#commission.

* Available at http://www.swrcb.ca.gov/rwqceb3/F acilities/

DukeEnergy/DukeMB. htm.

* The incremental cost of this alternative closed-cycle

technology vis-a-vis once-through cooling technology is not

(Continued on following page)

28

permit proposes to allow the new facility to be de-

signed and operated using an OTC system. /d. at 8.

These leading examples — and undoubtedly there

will be more to follow if the Second Circuit decision is

reversed — demonstrate how state permit writers will

interpret and implement the Phase II cost-benefit

exemption as California’s power industry moves to

modernize and repower its highly inefficient OTC fleet

over the next several years. Despite a perfect market

opportunity to install the best cooling technology

available as part of the massive power plant mod-

ernization effort along California’s ecologically embat-

tled coastline, plant owners may use the regulatory

loophole of site-specific cost-benefit exemptions to

circumvent national technology standards. The result

could well be a series of new, more efficient and more

profitable electric generating units that nonetheless

employ outmoded cooling water systems which are

significantly less protective than the “best technology

available” on the market, further jeopardizing the

living marine resources that undergird California’s

vast coastal economy. Because EPA has already taken

account of cost-effectiveness in setting uniform per-

formance standards, there is no legitimate policy

rationale for permit writing agencies or the Court to

override the clear intent of Congress by allowing such

disclosed in the Regional Water Board documents, but it obvi-

ously is less than $30 million and more likely on the order of the

$12 to $13 million incremental cost estimate at sister facility

Moss Landing.

29

upgraded or newly constructed facilities to evade the

installation of commercially available, environmen-

tally superior cooling system technologies.

SJ

»

CONCLUSION

For the foregoing reasons, and the reasons set

forth in Respondents’ and other supporting amicus

briefs, the decision of the Second Circuit in this case

should be affirmed.

Dated: October 6, 2008 Respectfully submitted,

DEBORAH A. Sivas*

ENVIRONMENTAL LAW CLINIC

MILLS LEGAL CLINIC AT

STANFORD LAW SCHOOL

Crown Quadrangle

559 Nathan Abbott Way

Stanford, California 94305

(650) 723-0325

*Counsel of Record