Morro Bay / Cayucos Wastewater Treatment Plant's October Surprise

by Jack McCurdy

Synopsis: The unpredictable Morro Bay-Cayucos wastewater treatment plant project got even murkier with a questionable environmental impact report (EIR), the exit of what many feel was the best hope for a top-quality and lowest-priced plant, confusion over what kind of forum would be held to dissect the EIR and a plant cost estimate by MWH that some found hard to add up.

Just when the topsy-turvy Morro Bay-Cayucos wastewater treatment plant adventure had seemed to settle on a clear course, it came up with its own version of an "October surprise."

First, the all-important report on the environmental impacts of the planned new, multimillion dollar Morro Bay-Cayucos wastewater treatment plant was met with thinly-cloaked derision by the Morro Bay City Planning Commission, which, along with criticisms from residents, could easily lead to the report having to be done all over. Basically, critics say the EIR did not examine alternative sites for the plant, as apparently is required by state law.

Next, the great hope that many saw in PERC Water's ideas for an advanced, less costly and top-quality recycled water-producing Morro Bay-Cayucos wastewater treatment plant was dashed with the withdrawal of the company from the competition for the contract to first design and possibly later build a new plant, leaving Morro Bay city staff's fingerprints all over the surprising and startling excision.

Then, the Morro Bay members of the Joint Powers Agreement (Morro Bay City Council and Cayucos Sanitary District) board seemed to promise an interactive workshop to answer residents' many remaining questions about the scope, size, looks, alternatives, functions, shared costs and operational features of the facility described in the EIR—and the city subsequently appeared to back out without telling the community. Instead, a "public meeting" was announced that could be interpreted as a conventional public hearing where each person gets only three minutes to ask questions and, based on experience, rarely receives any response. And when that mixup was pointed out, it was back to the original idea, with city manager Andrea Lueker telling the Journal—but not the public—that the "public meeting" announced in a newspaper ad "will be workshop style with an informal question and answer period."

And finally, MWH, the big sewage plant contractor that has been accused of improprieties as a design and construction management contractor on capital projects in other cities, came in with a plan at the Joint Powers Agreement (JPA) board meeting on October 14 containing a price to construct a new plant that MWH acknowledges will evolve into an ultimate cost that no one can predict at this point. PERC Water's promise of a guaranteed price, potentially $10 million less than MWH's previous estimate of $31 million, were echoing in not just a few ears.

No Investigations Planned

Meanwhile, the staffs of the Council and Sanitary District showed no signs of investigating the charges of MWH's wrongdoing, such as overbilling and violating "truth in negotiation" requirements by the Office of Inspector General In New Orleans. Why? Because those two elected bodies have had no public discussion and made no mention of directing their staffs to undertake a probe into the allegations—even though MWH or a firm tied to MWH could become the contractor for the construction of a new Morro Bay-Cayucos plant.

Yet, there may be no clear sailing for MWH yet. For the many who wanted to see intriguing details of the PERC Water plan for a new wastewater treatment plant, its withdrawal may be far from over. The plant development process seems to be in such a state of flux—and so many alleged flaws are being cited in it and so many residents are speaking out about them—that new opportunities for PERC Water may be just over the horizon.

Environmental Impact Report Deficient

By far the loudest—and potentially most influential— voice was that of the Planning Commission, which was the first to wade into the Environmental Impact Report (EIR) at its meeting on October 4 when all five members expressed individual opinions that the document is deficient, mainly because it fails to consider a range of alternative sites for the plant, as required by the California Environmental Quality Act (CEQA). To their amazement, the EIR assumes that the site for the new sewer plant will be right next door to where the present, outmoded one is: on the shore of Estero Bay, just off Atascadero Road and a stone's throw from Morro Bay High School.

Here are some highlights of what the commissioners said at their meeting on October 4 (in the order they spoke):

Michael Lucas: There are no real alternatives to this plant discussed in here (EIR) on other sites. The only one that is used is a partial relocation of some of the functions into the Chorro Valley. So there is no alternative that looks at another site. We have a site that is acknowledged to be in a flood plain, that in effect is creating an island to build upon, and there is nothing in here about what the emergency management implications are of building an island in a flood zone. It never really addressed the idea that people are populating the beach and treats the beach as an empty space. I was kind of shocked about how little concern there is for the sensitive receptors that are the beach tourists we have here. Now that I'm looking at it very carefully, I've got to tell you I think there are lots of issues in this that I think need quite a bit of exploration and authentication.  I think the site has far more impact as a site than was imagined when it was designated to be the primary site.

John Diodati: I was really disappointed to see (in the EIR) that there was no stand-alone treatment plant site location. The only alternative was a hybrid that would build two wastewater treatment plants in our community. And that just does not seem like a reasonable alternative. And the fundamental purpose of CEQA is to identify reasonable alternatives and to evaluate them. And I desperately wanted to see when I read this draft EIR, a site alternative analysis of some sort, a fine screening that listed viable sites in Cayucos, between Cayucos and Morro Bay, east of Highway 1, in the Chorro Valley, in the 41 corridor into the Morro Valley, anywhere other than the existing treatment plant. The EIR is lacking with that true, genuine site analysis. My other issue is, the EIR seems to hang its hat on the rationale that this (present plant) is a coastal dependent facility. Well, I read in the EIR and I heard tonight the existing facilities will be demolished. They're being moved (a new plant is proposed next door to the present one, which would be removed), so therefore, the existing plant is not being protected any more.

Gerald Luhr: I was really disappointed that we didn't have true alternative sitings. One of the alternatives that they haven't mentioned is to keep the present location, basically armor it from the flooding condition and use the money you would save from moving it essentially 200 feet to then confront the flood plain itself. By solving the flood plain issue, you solve an issue that's a regional issue for this whole area. This could also be done with an improvement district that would have beneficial effects for the high school, for the RV park, for the visitor serving area and uses in that area. None of this was taken into account. There also were energy usage issues. We're talking about doubling the energy usage at this plant for getting half as much treated water. So there was no alternative from possibly a methane recapture, or solar installations, integral to this plant that would solve some of the energy consumption issues. So there was a lot of stuff that I thought was just washed over and wasn't even cursorily presented in this EIR.

Jamie Irons: In reviewing the EIR, I was looking at it from the standpoint that the site location was already, pretty much dictated for us and so the EIR was basically just concentrating on that. One concern I had was the floodwater plain and the mitigation that was pointed out as a result of identifying the site in the plain. Energy consumption was not real clear in some of the EIR. The EIR said that the energy consumption was more but didn't identify a quantitative number.

Nancy Johnson, chair: As one of our commissioners said, the site location was already dictated, so this was an EIR, an environmental report, based on that specific site. Why we weren't given alternative sites, we don't know for sure. But this report itself was limited to that site. And the other thing, just to answer a question from the audience, and a concern I had about this composting and the use of trucks over Highway 41 to take effluent to Kern County or somewhere else seems like a terrible waste.
(See the Planning Commissioners' Complete Comments)

Scoping Report Fails to Present Alternative Sites

What do they mean by the site of the new plant being "dictated"? It is a reference to the document prepared by the staff and approved by the JPA board instructing the EIR contractor what to include in its study, sometimes called a scoping report or notice of preparation. But, as Luhr noted, that report did not come before the Planning Commission, which he said was "a fault of the scoping project." "I was sitting on the Planning Commission when the scoping meetings were taking place and this was never even bought up to us. And I think that is a problem with the process, and I think its going to bite us in the rear further down the process." So the Planning Commission, which was asked to review the EIR, never had an opportunity to review what the EIR was required to consider as possible sites for a new plant. 

One commissioner said it is very likely that the Commission will find the EIR "deficient." Although that could be overriden by the City Council, the Planning Commission's failure to find the EIR acceptable could carry considerable weight with the California Coastal Commission, which ultimately must approve any new plant project. 

Here is what the scoping document said about the location of a new plant: "The proposed project would upgrade the WWTP (waste water treatment plant)" and "the existing onsite composting program at the WWTP would remain unchanged as a result of the proposed project."

The revised notice of preparation states that "the MBCSD is proposing to build a new treatment plant next to the existing treatment plant," and "(t)he existing treatment plant would be demolished after the new treatment plant is constructed and brought online."

"The EIR also will discuss alternatives to the proposed project," it said. But this is the only alternative in the EIR:

 "The City of Morro Bay would construct additional wastewater treatment facilities in a new location separate from the existing WWTP." The location apparently would be near the intersection of Quintana Road and South Bay Boulevard. The EIR rejected that alternative.

No other stand-alone, complete treatment plant locations were cited or reviewed in the report, which seems to confirm what the members of the Planning Commission were objecting to: a predetermination of the site of the new plant. Some have wondered why the development of a new plant has been typically referred to as an "upgrade." It is because, as the EIR makes clear, "the JPA voted to proceed with the proposed project as the preferred alternative, upgrading the WWTP. . . . "

The EIR stated: "According to the CEQA Guidelines, an EIR must describe a reasonable range of alternatives to a proposed project that could feasibly attain most of the basic project objectives. . . . "

The 40-year-old CEQA requires state and local agencies within California to follow a protocol of analysis and public disclosure of the potential environmental impacts of development projects and has become a model for environmental protection laws in other states.

CEQA itself states: "Alternatives–the EIR must consider a reasonable range of alternatives (including off-site alternatives and even alternatives that are not within the jurisdiction of the lead agency), which must be capable of reducing or avoiding project impacts."

As Diodati noted at the October 4 meeting, the Coastal Commission has set criteria for evaluating the environmental impact of such a project—and whether it reflects the best use of land in the coastal zone in California—and "the first and foremost is siting" and consideration of alternatives.

The county Air Pollution Control District's letter containing comments on the city's notice of preparation of the EIR said "the EIR should include a range of alternatives that could effectively minimize air quality impacts."

PERC Drops Out

As all-important as the EIR's apparent shortcomings are, the decision by PERC Water to drop its "efforts on the wastewater project" was even more startling because last June, the JPA board agreed to consider PERC Water as an alternative to the plant being planned by MWH, the design contractor. The JPA agreed to cooperate and participate in receiving a PERC Water custom design report (CDR) for review. 

After months of ignoring that option, the JPA agreed to have an independent contractor conduct a "peer review" comparing the the PERC Water and MWH costs and designs for a new plant. 

Supporters of PERC Water maintain that its design will use the most up-to-date technology, will cost less to build, be cheaper to operate, offer lower sewer rates, and be cleaner than what MWH has described in its design. PERC Water also maintains it has the capability to produce recycled water that can be used for replenishing aquifers that serve the city's largely-depleted municipal wells and for outdoor irrigation, thereby saving Morro Bay taxpayers on the rising cost of importing state water.

PERC Water made the withdrawal announcement in a letter dated October 7 and addressed to Lueker following a meeting on September 23 between its officials and Morro Bay city and Cayucos Sanitary District staff, also attended by JPA board members Noah Smukler of the Morro Bay City Council and Mike Foster of the Cayucos Sanitary District board. As planned by the JPA board, PERC Water officials at that meeting reportedly went over its 250-page CDR on the design for the new facilities and options that could replace the present wastewater treatment plant.

This is the letter from PERC Water (MBCSD refers to Morro Bay City Council and Cayucos Sanitary District board): 
Dear Ms. Lueker,
 
Based on our recent receipt and review of the MBCSD’s existing contracts, the lack of cooperation of City staff and that the current draft EIR does not contemplate the PERC Water solution, at the direction of our attorneys we will no longer continue our efforts on the wastewater project and will not be presenting our draft CDR on October 14, 2010.

We greatly appreciate the support by many MBCSD JPA members and concerned citizens in connection with our efforts to present an alternative delivery approach for the proposed wastewater project. We wish the MBCSD JPA, you and your staff success with your proposed wastewater project.

Sincerely,
Brian Cullen (president of PERC Water)

PERC Water declined to comment or elaborate on the letter.

Lueker Accuses PERC of Wasting Her Time

During the September 23 meeting, Lueker reportedly criticized PERC Water for "wasting my time" by not including its estimated cost of building a new plant, even though both PERC Water and MWH apparently had been scheduled to present their construction costs on October 14. At that October 14 meeting, she read only part of PERC Water's letter and again attacked the corporation for withdrawing and by so doing, allegedly wasting "600 hours of staff time" and costing the city "thousands of dollars."

Stumbling Blocks All Over This Playground

One key stumbling block to PERC Water continuing in the plant review process was its request that the JPA board members and staff agree to a nondisclosure statement that would prevent its CDR contents possibly being made available to MWH prior to October 14 when both firms were supposed to present their designs and associated costs at a public JPA meeting. But the nondisclosure statement was turned down, according to informed sources. Since the city would not agree to the statement, copies of the PERC Water CDR were not left at the end of the meeting.

Had MWH gained access to PERC Water's ideas, MWH could conceivably have altered its October 14 presentation to better compete with PERC Water. Or it could have even taken PERC Water's ideas and placed some versions in their own report, thereby undercutting the uniqueness of what its competitor, PERC Water, had to offer.

Neither Morro Bay city attorney Rob Schultz and Tim Carmel, the Cayucos Sanitary District attorney, attended the meeting on September 23. But later Schultz said he advised staff against signing the nondisclosure statement because it is his legal opinion that the City should never execute such a document since the state Public Records Act prevents it. "Quite frankly, I am amazed and befuddled at attempts to try and make the PERC Water CDR confidential and not subject to public disclosure," he said.

But while PERC Water's CDR might have gotten into MWH's hands without a nondisclosure statement, there was no possibility of a quid pro quo for PERC Water to obtain an advance copy of MWH's planned October 14 presentation. The question that some are asking is: why was the September 23 meeting between PERC Water and the staffs scheduled if there was a possibility—absent a nondisclosure statement—that MWH might wind up obtaining an advance copy of PERC Water's design plan while PERC Water would not be given a vice versa opportunity? 

The meeting on September 23 reportedly was to wrap up the work on what was actually a "draft" CDR to obtain staff’s feedback prior to the costs being finalized for the final CDR document to be presented at the October 14 JPA meeting. 

Another sticking point for PERC Water was the EIR, which lacked site alternatives that might have made PERC Water's ideas for a new plant most feasible and attractive. In addition, PERC Water has strongly indicated that its design would provide the highest quality recycled water for possible use for irrigation and replenishment of the city's wells, enabling the city to cut reliance on its costly importation of state water. But the EIR seems to assume that the plant would be built with a capacity to generate a lower quality of recycled water with an option to improve that quality at a later time—and almost certainly at a higher cost than what MWH is quoting now.

But, if the EIR has to be revised—and alternative sites, designs and opportunities are included—then it might open the door to PERC Water once again.

In its presentation on October 14, MWH provided the JPA with a preliminary estimate of $27.5 million, which reflected little or no change from previous estimates. One aspect of MWH's estimates that are confusing to some residents is the reference to differing "project costs" and "costs." But on October 14, Steve Hyland of MWH in his presentation added a new term: "project cost/estimate" that appeared to include all costs, design fees and estimate for what was described as a $34.5 price—but with very little actual design completed at this point. 

However, that is not the final estimate of the cost for the project. In fact, Hyland told the JPA that additional cost estimates would be forthcoming in March, June and November, 2011. In contrast, the PERC Water CDR provided ample design development to give a guaranteed cost at this point. (Part of the MWH Presentation)

Under questioning from the audience, Steve Hyland of MWH said the $27.5 million would enable the plant to provide recycled water for limited use, but in order to make it top quality it would cost at least another $1.5 million, and then the amount would only treat one-fourth to one-third of all the plant's processed water when it is completed and operable in 2014, the target date. 

The plant would have to be upgraded at some unknown future cost and future date if all of its recycled water were to become top quality, the kind that would be required for farming irrigation and replenishment of city water wells. In contrast, PERC Water has said virtually all of the water from the plant described in its CDR would be of the highest quality when the plant was finished and operable.

A wide range of questions also were raised about the EIR by residents and some board members at the October 14 meeting, mainly regarding the absence of possible alternative sites for the new plant. Smukler said the lack of alternatives was "a major shortcoming" in the EIR. "Everything I have heard from the Coastal Commission was about the need to look at a range of alternatives. Everything done (in the EIR) was without that analysis. It's going to cost us to go back and do it."

The EIR also failed to address the impact of the new plant on cultural resources, said Fred Collins, spokesperson for the Northern Chumash Tribal Council. The Council's web site says the "Chumash Indians were the original inhabitants of most of the region now claimed by San Luis Obispo County." They still have a significant presence in the area.

The (planned new sewage) plant "is in the middle of a sacred area, a prehistoric area," Collins said. "The EIR lacked a serious survey into what is beneath the plant. We should have been contacted early on. The EIR is not taking the Chumash into consideration." He said some "test boring" is being conducted but it is inadequate. Later, Collins said the city staff had agreed to meet with Chumash representatives about their concerns.

With all the questions being raised by the Planning Commission, residents and Hyland's presentation, the JPA board on October 14 took the cue from Jennifer Jacobus of ESA, the EIR contractor's representative, who told the board that a "third workshop-style meeting" would seem to be in order. Mayor Janice Peters and Smukler voiced support, and Schultz said "a workshop would be more beneficial. Not another hearing—three minutes and sit down." Peters agreed, saying people can "ask questions in a casual setting." It would help inform residents on the EIR, she added.

The consensus seemed to be for a workshop on October 28 at a time and location to be determined, and the following was posted on the city's web site link for the Wastewaster Treatment Plant Upgrade Project:

"A Public Workshop is scheduled for October 28th from 5-8 pm at the Morro Bay Community Center Multi-Purpose Room. The purpose is to enable the public to review the draft EIR in an informal setting."

But it then added, "Public Meeting to receive public comment on the draft EIR October 28, 2010." That term could be taken for a hearing, not a workshop. And a followup newspaper ad by the city described it as a hearing—again with no mention of a workshop.

Ultimately, Lueker said, "the meeting will be workshop style with an informal question and answer period from about 5-6 pm" on October 28.
How confused all that left residents interested in the wastewater treatment plant remains to be seen.

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